Document:

LGND-S-3ASR-FormofIndenture-2013

Exhibit 4.12
LIGAND PHARMACEUTICALS INCORPORATED
INDENTURE
Dated as of October 2, 2013
[Name of Trustee]
Trustee
    

TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE    
		
	Section 1.1. 
	Definitions.    1

		
	Section 1.2. 
	Other Definitions.    5

		
	Section 1.3. 
	Incorporation by Reference of Trust Indenture Act.    5

		
	Section 1.4. 
	Rules of Construction.    5

ARTICLE II. THE SECURITIES    
		
	Section 2.1. 
	Issuable in Series.    6

		
	Section 2.2. 
	Establishment of Terms of Series of Securities.    6

		
	Section 2.3. 
	Execution and Authentication.    8

		
	Section 2.4. 
	Registrar and Paying Agent.    9

		
	Section 2.5. 
	Paying Agent to Hold Money in Trust.    10

		
	Section 2.6. 
	Securityholder Lists.    10

		
	Section 2.7. 
	Transfer and Exchange.    11

		
	Section 2.8. 
	Mutilated, Destroyed, Lost and Stolen Securities.    11

		
	Section 2.9. 
	Outstanding Securities.    12

		
	Section 2.10. 
	Treasury Securities.    12

		
	Section 2.11. 
	Temporary Securities.    12

		
	Section 2.12. 
	Cancellation.    13

		
	Section 2.13. 
	Defaulted Interest.    13

		
	Section 2.14. 
	Global Securities.    13

		
	Section 2.15. 
	CUSIP Numbers.    14

ARTICLE III. REDEMPTION
		
	Section 3.1. 
	Notice to Trustee.    15

		
	Section 3.2. 
	Selection of Securities to be Redeemed.    15

		
	Section 3.3. 
	Notice of Redemption.    15

		
	Section 3.4. 
	Effect of Notice of Redemption.    16

		
	Section 3.5. 
	Deposit of Redemption Price.    16

		
	Section 3.6. 
	Securities Redeemed in Part.    16

ARTICLE IV. COVENANTS    
		
	Section 4.1. 
	Payment of Principal and Interest.    17

		
	Section 4.2. 
	SEC Reports.    17

		
	Section 4.3. 
	Compliance Certificate.    17

		
	Section 4.4. 
	Stay, Extension and Usury Laws.    18

		
	Section 4.5. 
	Corporate Existence.    18

ARTICLE V. SUCCESSORS    
		
	Section 5.1. 
	When Company May Merge, Etc.    18

		
	Section 5.2. 
	Successor Corporation Substituted.    19

ARTICLE VI. DEFAULTS AND REMEDIES    
		
	Section 6.1. 
	Events of Default.    19

		
	Section 6.2. 
	Acceleration of Maturity; Rescission and Annulment.    20

		
	Section 6.3. 
	Collection of Indebtedness and Suits for Enforcement by Trustee.    21

		
	Section 6.4. 
	Trustee May File Proofs of Claim.    22

		
	Section 6.5. 
	Trustee May Enforce Claims Without Possession of Securities.    22

		
	Section 6.6. 
	Application of Money Collected.    22

		
	Section 6.7. 
	Limitation on Suits.    23

		
	Section 6.8. 
	Unconditional Right of Holders to Receive Principal and Interest.    24

		
	Section 6.9. 
	Restoration of Rights and Remedies.    24

		
	Section 6.10. 
	Rights and Remedies Cumulative.    24

		
	Section 6.11. 
	Delay or Omission Not Waiver.    24

		
	Section 6.12. 
	Control by Holders.    24

		
	Section 6.13. 
	Waiver of Past Defaults.    25

		
	Section 6.14. 
	Undertaking for Costs.    25

ARTICLE VII. TRUSTEE    
		
	Section 7.1. 
	Duties of Trustee.    26

		
	Section 7.2. 
	Rights of Trustee.    27

		
	Section 7.3. 
	Individual Rights of Trustee.    28

		
	Section 7.4. 
	Trustee’s Disclaimer.    28

		
	Section 7.5. 
	Notice of Defaults.    28

		
	Section 7.6. 
	Reports by Trustee to Holders.    29

		
	Section 7.7. 
	Compensation and Indemnity.    29

		
	Section 7.8. 
	Replacement of Trustee.    30

		
	Section 7.9. 
	Successor Trustee by Merger, Etc.    31

		
	Section 7.10. 
	Eligibility; Disqualification.    31

		
	Section 7.11. 
	Preferential Collection of Claims Against Company.    31

ARTICLE VIII. SATISFACTION AND DISCHARGE; DEFEASANCE    
		
	Section 8.1. 
	Satisfaction and Discharge of Indenture.    31

		
	Section 8.2. 
	Application of Trust Funds; Indemnification.    32

		
	Section 8.3. 
	Legal Defeasance of Securities of any Series.    33

		
	Section 8.4. 
	Covenant Defeasance.    34

		
	Section 8.5. 
	Repayment to Company.    35

		
	Section 8.6. 
	Reinstatement.    35

ARTICLE IX. AMENDMENTS AND WAIVERS    
		
	Section 9.1. 
	Without Consent of Holders.    36

		
	Section 9.2. 
	With Consent of Holders.    36

		
	Section 9.3. 
	Limitations.    37

		
	Section 9.4. 
	Compliance with Trust Indenture Act.    37

		
	Section 9.5. 
	Revocation and Effect of Consents.    38

		
	Section 9.6. 
	Notation on or Exchange of Securities.    38

		
	Section 9.7. 
	Trustee Protected.    38

ARTICLE X. MISCELLANEOUS    
		
	Section 10.1. 
	Trust Indenture Act Controls.    38

		
	Section 10.2. 
	Notices.    38

		
	Section 10.3. 
	Communication by Holders with Other Holders.    40

		
	Section 10.4. 
	Certificate and Opinion as to Conditions Precedent.    40

		
	Section 10.5. 
	Statements Required in Certificate or Opinion.    40

		
	Section 10.6. 
	Rules by Trustee and Agents.    40

		
	Section 10.7. 
	Legal Holidays.    41

		
	Section 10.8. 
	No Recourse Against Others.    41

		
	Section 10.9. 
	Counterparts.    41

		
	Section 10.10. 
	Governing Laws.    41

		
	Section 10.11. 
	No Adverse Interpretation of Other Agreements.    41

		
	Section 10.12. 
	Successors.    41

		
	Section 10.13. 
	Severability.    41

		
	Section 10.14. 
	Table of Contents, Headings, Etc.    42

		
	Section 10.15. 
	Securities in a Foreign Currency.    42

		
	Section 10.16. 
	Judgment Currency.    42

		
	Section 10.17. 
	Force Majeure.    43

ARTICLE XI. SINKING FUNDS    

		
	Section 11.1. 
	Applicability of Article.    43

		
	Section 11.2. 
	Satisfaction of Sinking Fund Payments with Securities.    43

		
	Section 11.3. 
	Redemption of Securities for Sinking Fund.    44

LIGAND PHARMACEUTICALS INCORPORATED
Reconciliation and tie between Trust Indenture Act of 1939 and 
Indenture, dated as of ____________, 20__
§ 310(a)(1)            7.10
(a)(2)            7.10
(a)(3)            Not Applicable
(a)(4)            Not Applicable
(a)(5)            7.10
(b)            7.10
§ 311(a)            7.11
(b)            7.11
(c)            Not Applicable
§ 312(a)            2.6
(b)            10.3
(c)            10.3
§ 313(a)            7.6
(b)(1)            7.6
(b)(2)            7.6
(c)(1)            7.6
(d)            7.6
§ 314(a)            4.2, 10.5
(b)            Not Applicable
(c)(1)            10.4
(c)(2)            10.4
(c)(3)            Not Applicable
(d)            Not Applicable
(e)            10.5
(f)            Not Applicable
§ 315(a)            7.1
(b)            7.5
(c)            7.1
(d)            7.1
(e)            6.14
§ 316(a)            2.10
(a)(1)(A)            6.12
(a)(1)(B)            6.13
(b)            6.8

§ 317(a)(1)            6.3
(a)(2)            6.4
(b)            2.5
§ 318(a)            10.1
    
Note:  This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture.

Indenture dated as of __________, 20__ between Ligand Pharmaceuticals Incorporated, a company incorporated under the laws of Delaware (“Company”), and [______] (“Trustee”).
Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.
ARTICLE I. 
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1.     Definitions.
“Additional Amounts” means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified herein or therein and which are owing to such Holders.
“Affiliate” of any specified person means any other person directly or indirectly controlling or controlled by or under common control with such specified person.   For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities or by agreement or otherwise.
“Agent” means any Registrar, Paying Agent or Notice Agent.
“Board of Directors” means the board of directors of the Company or any duly authorized committee thereof.
“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certificate and delivered to the Trustee.
“Business Day” means, unless otherwise provided by Board Resolution, Officer’s Certificate or supplemental indenture hereto for a particular Series, any day except a Saturday, Sunday or a legal holiday in The City of New York (or in connection with any payment, the place 

of payment) on which banking institutions are authorized or required by law, regulation or executive order to close.
“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock.
“Company” means the party named as such above until a successor replaces it and thereafter means the successor.
“Company Order” means a written order signed in the name of the Company by an Officer.
“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business related to this Indenture shall be principally administered.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Depositary” means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities, the person designated as Depositary for such Series by the Company, which Depositary shall be a clearing agency registered under the Exchange Act; and if at any time there is more than one such person, “Depositary” as used with respect to the Securities of any Series shall mean the Depositary with respect to the Securities of such Series.
“Discount Security” means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2.
“Dollars” and “$” means the currency of The United States of America.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Foreign Currency” means any currency or currency unit issued by a government other than the government of The United States of America.
“Foreign Government Obligations” means, with respect to Securities of any Series that are denominated in a Foreign Currency, direct obligations of, or obligations guaranteed by, the government that issued or caused to be issued such currency for the payment of which obligations its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof.
“GAAP” means accounting principles generally accepted in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been 

 NSD\196024.2

approved by a significant segment of the accounting profession, which are in effect as of the date of determination.
“Global Security” or “Global Securities” means a Security or Securities, as the case may be, in the form established pursuant to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depositary for such Series or its nominee, and registered in the name of such Depositary or nominee.
“Holder” or “Securityholder” means a person in whose name a Security is registered.
“Indenture” means this Indenture as amended or supplemented from time to time and shall include the form and terms of particular Series of Securities established as contemplated hereunder.
“interest” with respect to any Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
“Maturity,” when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
“Officer” means the Chief Executive Officer, President, the Chief Financial Officer, the Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary, and any Vice President of the Company.
“Officer’s Certificate” means a certificate signed by any Officer.
“Opinion of Counsel” means a written opinion of legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company.
“person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“principal” of a Security means the principal of the Security plus, when appropriate, the premium, if any, on, and any Additional Amounts in respect of, the Security.
“Responsible Officer” means any officer of the Trustee in its Corporate Trust Office having responsibility for administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject.
“SEC” means the Securities and Exchange Commission.
“Securities” means the debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under this Indenture.

2

“Series” or “Series of Securities” means each series of debentures, notes or other debt instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.
“Stated Maturity” when used with respect to any Security, means the date specified in such Security as the fixed date on which the principal of such Security or interest is due and payable.
“Subsidiary” of any specified person means any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of that person or a combination thereof.
“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act as so amended.
“Trustee” means the person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each person who is then a Trustee hereunder, and if at any time there is more than one such person, “Trustee” as used with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series.
“U.S. Government Obligations” means securities which are direct obligations of, or guaranteed by, The United States of America for the payment of which its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation evidenced by such depository receipt.
Section 1.2.     Other Definitions.
TERM    DEFINED IN
SECTION
“Bankruptcy Law”    6.1
“Custodian”    6.1
“Event of Default”    6.1
“Judgment Currency”    10.16
“Legal Holiday”    10.7
“mandatory sinking fund payment”    11.1
“Market Exchange Rate”    10.15

3

“New York Banking Day”    10.16
“Notice Agent”    2.4
“optional sinking fund payment”    11.1
“Paying Agent”    2.4
“Registrar”    2.4
“Required Currency”    10.16
“successor person”    5.1
Section 1.3.     Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:
“Commission” means the SEC.
“indenture securities” means the Securities.
“indenture security holder” means a Securityholder.
“indenture to be qualified” means this Indenture.
“indenture trustee” or “institutional trustee” means the Trustee.
“obligor” on the indenture securities means the Company and any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used herein as so defined.
Section 1.4.     Rules of Construction.
Unless the context otherwise requires:
(a)       a term has the meaning assigned to it;
(b)       an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c)       “or” is not exclusive;
(d)       words in the singular include the plural, and in the plural include the singular; and
(e)       provisions apply to successive events and transactions.

4

ARTICLE II.     
THE SECURITIES
Section 2.1.     Issuable in Series.
The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited.  The Securities may be issued in one or more Series. All Securities of a Series shall be identical except as may be set forth or determined in the manner provided in a Board Resolution, supplemental indenture or Officer’s Certificate detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution. In the case of Securities of a Series to be issued from time to time, the Board Resolution, Officer’s Certificate or supplemental indenture detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined.  Securities may differ between Series in respect of any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture.
Section 2.2.     Establishment of Terms of Series of Securities.
At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2.1 and either as to such Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through 2.2.24) by or pursuant to a Board Resolution, and set forth or determined in the manner provided in a Board Resolution, supplemental indenture hereto or Officer’s Certificate:
2.2.1.        the title (which shall distinguish the Securities of that particular Series from the Securities of any other Series) and ranking (including the terms of any subordination provisions) of the Series;
2.2.2.        the price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued;
2.2.3.        any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 9.6);
2.2.4.        the date or dates on which the principal of the Securities of the Series is payable;
2.2.5.        the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;

5

2.2.6.        the place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, where the Securities of such Series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be delivered, and the method of such payment, if by wire transfer, mail or other means;
2.2.7.        if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company;
2.2.8.        the obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
2.2.9.        the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;
2.2.10.        if other than denominations of $1,000 and any integral multiple thereof, the denominations in which the Securities of the Series shall be issuable;
2.2.11.        the forms of the Securities of the Series and whether the Securities will be issuable as Global Securities;
2.2.12.        if other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;
2.2.13.        the currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, and if such currency of denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;
2.2.14.        the designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities of the Series will be made;
2.2.15.        if payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to such payments will be determined;
2.2.16.        the manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined, if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index;

6

2.2.17.        the provisions, if any, relating to any security provided for the Securities of the Series;
2.2.18.        any addition to, deletion of or change in the Events of Default which applies to any Securities of the Series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 6.2;
2.2.19.        any addition to, deletion of or change in the covenants set forth in Articles IV or V which applies to Securities of the Series;
2.2.20.        any Depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities of such Series if other than those appointed herein;
2.2.21.        the provisions, if any, relating to conversion or exchange of any Securities of such Series, including if applicable, the conversion or exchange price, the conversion or exchange period, provisions as to whether conversion or exchange will be mandatory, at the option of the Holders thereof or at the option of the Company, the events requiring an adjustment of the conversion price or exchange price and provisions affecting conversion or exchange if such Series of Securities are redeemed; and
2.2.22.        any other terms of the Series (which may supplement, modify or delete any provision of this Indenture insofar as it applies to such Series), including any terms that may be required under applicable law or regulations or advisable in connection with the marketing of Securities of that Series.
All Securities of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture hereto or Officer’s Certificate referred to above.
Section 2.3.     Execution and Authentication.
An Officer shall sign the Securities for the Company by manual or facsimile signature. 
If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the manual or facsimile  signature of the Trustee or an authenticating agent.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee shall at any time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or Officer’s Certificate, upon receipt by the Trustee of a Company Order.  Each Security shall be dated the date of its authentication.

7

The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officer’s Certificate delivered pursuant to Section 2.2, except as provided in Section 2.8.
Prior to the issuance of Securities of any Series, the Trustee shall have received and (subject to Section 7.2) shall be fully protected in relying on:  (a) the Board Resolution, supplemental indenture hereto or Officer’s Certificate establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities of that Series or of Securities within that Series, (b) an Officer’s Certificate complying with Section 10.4, and (c) an Opinion of Counsel complying with Section 10.4.
The Trustee shall have the right to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being advised by counsel, determines that such action may not be taken lawfully; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or vice-presidents or a committee of Responsible Officers shall determine that such action would expose the Trustee to personal liability to Holders of any then outstanding Series of Securities.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities.  An authenticating agent may authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.
Section 2.4.     Registrar and Paying Agent.
The Company shall maintain, with respect to each Series of Securities, at the place or places specified with respect to such Series pursuant to Section 2.2, an office or agency where Securities of such Series may be presented or surrendered for payment (“Paying Agent”), where Securities of such Series may be surrendered for registration of transfer or exchange (“Registrar”) and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be delivered (“Notice Agent”).  The Registrar shall keep a register with respect to each Series of Securities and to their transfer and exchange.  The Company will give prompt written notice to the Trustee of the name and address, and any change in the name or address, of each Registrar, Paying Agent or Notice Agent.  If at any time the Company shall fail to maintain any such required Registrar, Paying Agent or Notice Agent or shall fail to furnish the Trustee with the name and address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more co-registrars, additional paying agents or additional notice agents and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain a Registrar, Paying Agent and Notice Agent in each place so specified pursuant to Section 2.2 for Securities of any Series for such purposes.  The 

8

Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the name or address of any such co-registrar, additional paying agent or additional notice agent.  The term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying agent; and the term “Notice Agent” includes any additional notice agent.  The Company or any of its Affiliates may serve as Registrar or Paying Agent.
The Company hereby appoints the Trustee the initial Registrar, Paying Agent and Notice Agent for each Series unless another Registrar, Paying Agent or Notice Agent, as the case may be, is appointed prior to the time Securities of that Series are first issued.
Section 2.5.     Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on the Series of Securities, and will notify the Trustee in writing of any default by the Company in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for the money.  If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Securityholders of any Series of Securities all money held by it as Paying Agent.  Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Securities.
Section 2.6.     Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders of each Series of Securities and shall otherwise comply with TIA  § 312(a).  If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders of each Series of Securities.
Section 2.7.     Transfer and Exchange.
Where Securities of a Series are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met.  To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities at the Registrar’s request.  No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.11, 3.6 or 9.6).

9

Neither the Company nor the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of Securities of that Series selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities selected, called or being called for redemption in part.
Section 2.8.     Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity bond as may be required by each of them to hold itself and any of its agents harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that Series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.9.     Outstanding Securities.
The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in 

10

the interest on a Global Security effected by the Trustee in accordance with the provisions hereof and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding until the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of the Company) holds on the Maturity of Securities of a Series money sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding and interest on them ceases to accrue.
The Company may purchase or otherwise acquire the Securities, whether by open market purchases, negotiated transactions or otherwise.  A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
In determining whether the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.2.
Section 2.10.     Treasury Securities.
In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction, notice, consent or waiver, Securities of a Series owned by the Company or any Affiliate of the Company shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver only Securities of a Series that a Responsible Officer of the Trustee knows are so owned shall be so disregarded.
Section 2.11.     Temporary Securities.
Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a Company Order.  Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities.  Without unreasonable delay, the Company shall prepare and the Trustee upon receipt of a Company Order shall authenticate definitive Securities of the same Series and date of maturity in exchange for temporary Securities.  Until so exchanged, temporary securities shall have the same rights under this Indenture as the definitive Securities.
Section 2.12.     Cancellation.
The Company at any time may deliver Securities to the Trustee for cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for 

11

registration of transfer, exchange or payment.  The Trustee shall cancel all Securities surrendered for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Securities (subject to the record retention requirement of the Exchange Act and the Trustee) and deliver a certificate of such cancellation to the Company upon written request of the Company.  The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation.
Section 2.13.     Defaulted Interest.
If the Company defaults in a payment of interest on a Series of Securities, it shall pay the defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted interest, to the persons who are Securityholders of the Series on a subsequent special record date.  The Company shall fix the record date and payment date.  At least 10 days before the special record date, the Company shall mail to the Trustee and to each Securityholder of the Series a notice that states the special record date, the payment date and the amount of interest to be paid.  The Company may pay defaulted interest in any other lawful manner.
Section 2.14.     Global Securities.
2.14.1.        Terms of Securities.  A Board Resolution, a supplemental indenture hereto or an Officer’s Certificate shall establish whether the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depositary for such Global Security or Securities.
2.14.2.        Transfer and Exchange.  Notwithstanding any provisions to the contrary contained in Section 2.7 of the Indenture and in addition thereto, any Global Security shall be exchangeable pursuant to Section 2.7 of the Indenture for Securities registered in the names of Holders other than the Depositary for such Security or its nominee only if (i) such Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company fails to appoint a successor Depositary registered as a clearing agency under the Exchange Act within 90 days of such event or (ii) the Company executes and delivers to the Trustee an Officer’s Certificate to the effect that such Global Security shall be so exchangeable.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Securities registered in such names as the Depositary shall direct in writing in an aggregate principal amount equal to the principal amount of the Global Security with like tenor and terms.
Except as provided in this Section 2.14.2, a Global Security may not be transferred except as a whole by the Depositary with respect to such Global Security to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.
2.14.3.        Legend.  Any Global Security issued hereunder shall bear a legend in substantially the following form:

12

“This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of the Depositary or a nominee of the Depositary.  This Security is exchangeable for Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.”
2.14.4.        Acts of Holders.  The Depositary, as a Holder, may appoint agents and otherwise authorize participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture.
2.14.5.        Payments.  Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the principal of and interest, if any, on any Global Security shall be made to the Holder thereof.
2.14.6.        Consents, Declaration and Directions.  The Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of outstanding Securities of such Series represented by a Global Security as shall be specified in a written statement of the Depositary or by the applicable procedures of such Depositary with respect to such Global Security, for purposes of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.
Section 2.15.     CUSIP Numbers.
The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE III.     
REDEMPTION
Section 3.1.     Notice to Trustee.
The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Securities.  If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Series of Securities to be redeemed.  The Company shall give the notice at least 15 days before the redemption date.

13

Section 3.2.     Selection of Securities to be Redeemed.
Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, if less than all the Securities of a Series are to be redeemed, the Trustee shall select the Securities of the Series to be redeemed in any manner that the Trustee deems fair and appropriate, including by lot or other method, unless otherwise required by law or applicable stock exchange requirements, subject, in the case of Global Securities, to the applicable rules and procedures of the Depositary.  The Trustee shall make the selection from Securities of the Series outstanding not previously called for redemption.  The Trustee may select for redemption portions of the principal of Securities of the Series that have denominations larger than $1,000.  Securities of the Series and portions of them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or, with respect to Securities of any Series issuable in other denominations pursuant to Section 2.2.10, the minimum principal denomination for each Series and the authorized integral multiples thereof.  Provisions of this Indenture that apply to Securities of a Series called for redemption also apply to portions of Securities of that Series called for redemption.
Section 3.3.     Notice of Redemption.
Unless otherwise indicated for a particular Series by Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, at least 15 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities of the Series to be redeemed and shall state:
(a)       the redemption date;
(b)       the redemption price;
(c)       the name and address of the Paying Agent;
(d)       if any Securities are being redeemed in part, the portion of the principal amount of such Securities to be redeemed and that, after the redemption date and upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion of the original Security shall be issued in the name of the Holder thereof upon cancellation of the original Security;
(e)       that Securities of the Series called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f)       that interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date unless the Company defaults in the deposit of the redemption price;
(g)       the CUSIP number, if any; and

14

(h)       any other information as may be required by the terms of the particular Series or the Securities of a Series being redeemed.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense, provided, however, that the Company has delivered to the Trustee, at least 10 days (unless a shorter time shall be acceptable to the Trustee) prior to the notice date, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice.  
Section 3.4.     Effect of Notice of Redemption.
Once notice of redemption is mailed as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date and at the redemption price.  Except as otherwise provided in the supplemental indenture, Board Resolution or Officer’s Certificate for a Series, a notice of redemption may not be conditional.  Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price plus accrued interest to the redemption date.
Section 3.5.     Deposit of Redemption Price.
On or before 11:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be redeemed on that date.
Section 3.6.     Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security of the same Series and the same maturity equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV.     
COVENANTS
Section 4.1.     Payment of Principal and Interest.
The Company covenants and agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest, if any, on the Securities of that Series in accordance with the terms of such Securities and this Indenture.  On or before 11:00 a.m., New York City time, on the applicable payment date, the Company shall deposit with the Paying Agent money sufficient to pay the principal of and interest, if any, on the Securities of each Series in accordance with the terms of such Securities and this Indenture.
Section 4.2.     SEC Reports.
To the extent any Securities of a Series are outstanding, the Company shall deliver to the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing 

15

as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.  The Company also shall comply with the other provisions of TIA § 314(a). Reports, information and documents filed with the SEC via the EDGAR system will be deemed to be delivered to the Trustee as of the time of such filing via EDGAR for purposes of this Section 4.2.
Delivery of reports, information and documents to the Trustee under this Section 4.2 are for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute constructive or actual notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).
Section 4.3.     Compliance Certificate.
To the extent any Securities of a Series are outstanding, the Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officer’s Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his/her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which the Officer may have knowledge).
The Company will, so long as any of the Securities are outstanding, deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
Section 4.4.     Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture or the Securities; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.
Section 4.5.     Corporate Existence.
Subject to Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and rights (charter and statutory); provided, however, that the Company shall not be required to preserve any such right if the Board 

16

of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders.
ARTICLE V.     
SUCCESSORS
Section 5.1.     When Company May Merge, Etc.
The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, any person (a “successor person”) unless:
(i)       the Company is the surviving corporation or the successor person (if other than the Company) is a corporation organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes the Company’s obligations on the Securities and under this Indenture; and
(j)       immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing.
The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officer’s Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and any supplemental indenture comply with this Indenture.
Notwithstanding the above, any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties to the Company. Neither an Officer’s Certificate nor an Opinion of Counsel shall be required to be delivered in connection therewith.
Section 5.2.     Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor person has been named as the Company herein; provided, however, that the predecessor Company in the case of a sale, conveyance or other disposition (other than a lease) shall be released from all obligations and covenants under this Indenture and the Securities.
ARTICLE VI.     
DEFAULTS AND REMEDIES
Section 6.1.     Events of Default.
“Event of Default,” wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing Board Resolution, supplemental 

17

indenture or Officer’s Certificate, it is provided that such Series shall not have the benefit of said Event of Default:
(a)       default in the payment of any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior to 11:00 a.m., New  York City time, on the 30th day of such period); or
(b)       default in the payment of principal of any Security of that Series at its Maturity; or
(c)       default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than defaults pursuant to paragraphs (a) or (b) above or pursuant to a covenant or warranty that has been included in this Indenture solely for the benefit of Series of Securities other than that Series), which default continues uncured for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
(d)       the Company pursuant to or within the meaning of any Bankruptcy Law:
(i)    commences a voluntary case,
(ii)    consents to the entry of an order for relief against it in an involuntary case,
(iii)    consents to the appointment of a Custodian of it or for all or substantially all of its property,
(iv)    makes a general assignment for the benefit of its creditors, or
(v)    generally is unable to pay its debts as the same become due; or
(e)       a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i)    is for relief against the Company in an involuntary case,
(ii)    appoints a Custodian of the Company or for all or substantially all of its property, or
(iii)    orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 days; or

18

(f)       any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, in accordance with Section 2.2.18. 
The term “Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
Section 6.2.     Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred to in Section 6.1(d) or (e)) then in every such case the Trustee or the Holders of not less than 25% in principal amount of the outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities, such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid interest, if any, shall become immediately due and payable.  If an Event of Default specified in Section 6.1(d) or (e) shall occur, the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if all Events of Default with respect to Securities of that Series, other than the non-payment of the principal and interest, if any, of Securities of that Series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Default or impair any right consequent thereon.
Section 6.3.     Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(a)       default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or
(b)       default is made in the payment of principal of any Security at the Maturity thereof, or

19

(c)       default is made in the deposit of any sinking fund payment, if any, when and as due by the terms of a Security,
then, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any overdue interest at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.4.     Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(a)       to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b)       to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same,

20

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.5.     Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
Section 6.6.     Application of Money Collected.
Any money or property collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First:    To the payment of all amounts due the Trustee under Section 7.7; and
Second:    To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively; and
Third:    To the Company.
Section 6.7.     Limitation on Suits.
No Holder of any Security of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a)       such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that Series;

21

(b)       the Holders of not less than 25% in principal amount of the outstanding Securities of that Series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c)       such Holder or Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by the Trustee in compliance with such request;
(d)       the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e)       no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Securities of that Series;
it being understood, intended and expressly covenanted by the Holder of every Security with every other Holder and the Trustee that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders of the applicable Series.
Section 6.8.     Unconditional Right of Holders to Receive Principal and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Security on the Maturity of such Security, including the Stated Maturity expressed in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 6.9.     Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 6.10.     Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or 

22

remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.11.     Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 6.12.     Control by Holders.
The Holders of a majority in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such Series, provided that
(a)       such direction shall not be in conflict with any rule of law or with this Indenture,
(b)       the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, 
(c)       subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability, and
(d)       prior to taking any action as directed under this Section 6.12, the Trustee shall be entitled to indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
Section 6.13.     Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities of such Series waive any past Default hereunder with respect to such Series and its consequences, except a Default in the payment of the principal of or interest on any Security of such Series (provided, however, that the Holders of a majority in principal amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration).  Upon any such waiver, such Default shall cease to exist, and any Event of Default 

23

arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 6.14.     Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Security on or after the Maturity of such Security, including the Stated Maturity expressed in such Security (or, in the case of redemption, on the redemption date).
ARTICLE VII.     
TRUSTEE
Section 7.1.     Duties of Trustee.
(a)       If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b)       Except during the continuance of an Event of Default:
(i)    The Trustee need perform only those duties that are specifically set forth in this Indenture and no others.
(ii)    In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon Officer’s Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of this Indenture; however, in the case of any such Officer’s Certificates or Opinions of Counsel which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officer’s Certificates and Opinions of Counsel to determine whether or not they conform to the form requirements of this Indenture.
(c)       The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

24

(vi)    This paragraph does not limit the effect of paragraph (b) of this Section.
(vii)    The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.
(viii)    The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series in accordance with Section 6.12.
(d)       Every provision of this Indenture that in any way relates to the Trustee is subject to paragraph (a), (b) and (c) of this Section.
(e)       The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in performing such duty or exercising such right or power.
(f)       The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g)       No provision of this Indenture shall require the Trustee to risk its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its rights or powers, if adequate indemnity against such risk is not assured to the Trustee in its satisfaction.
(h)       The Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections and immunities as are set forth in paragraphs (e), (f) and (g) of this Section and in Section 7.2, each with respect to the Trustee.
Section 7.2.     Rights of Trustee.
(d)       The Trustee may rely on and shall be protected in acting or refraining from acting upon any document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.
(e)       Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.

25

(f)       The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.  No Depositary shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depositary.
(g)       The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, provided that the Trustee’s conduct does not constitute willful misconduct or negligence.
(h)       The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder without willful misconduct or negligence, and in reliance thereon.
(i)       The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(j)       The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
(k)       The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities generally or the Securities of a particular Series and this Indenture.
(l)       In no event shall the Trustee be liable to any person for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage.
(m)       The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so.
Section 7.3.     Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.  The Trustee is also subject to Sections 7.10 and 7.11.

26

Section 7.4.     Trustee’s Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication.
Section 7.5.     Notice of Defaults.
If a Default or Event of Default occurs and is continuing with respect to the Securities of any Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Securityholder of the Securities of that Series notice of a Default or Event of Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or Event of Default.  Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of any Series, the Trustee may withhold the notice if and so long as its corporate trust committee or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders of that Series.
Section 7.6.     Reports by Trustee to Holders.
Within 60 days after [______] 1 in each year, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear on the register kept by the Registrar, a brief report dated as of such [_______] 1, in accordance with, and to the extent required under, TIA § 313.
A copy of each report at the time of its mailing to Securityholders of any Series shall be filed with the SEC and each national securities exchange on which the Securities of that Series are listed.  The Company shall promptly notify the Trustee in writing when Securities of any Series are listed on any national securities exchange.
Section 7.7.     Compensation and Indemnity.
The Company shall pay to the Trustee from time to time compensation for its services as the Company and the Trustee shall from time to time agree upon in writing.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all reasonable out of pocket expenses incurred by it.  Such expenses shall include the reasonable compensation and expenses of the Trustee’s agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor Trustee (including the cost of defending itself) against any cost, expense or liability, including taxes (other than taxes based upon, measured by or determined by the income of the Trustee) incurred by it except as set forth in the next paragraph in the performance of its duties under this Indenture as Trustee or Agent.  The Trustee shall notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder, unless and to the extent that the Company is materially prejudiced thereby.  

27

The Company shall defend the claim and the Trustee shall cooperate in the defense.  The Trustee may have one separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.  The Company need not pay for any settlement made without its consent, which consent will not be unreasonably withheld.  This indemnification shall apply to officers, directors, employees, shareholders and agents of the Trustee.
The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee, shareholder or agent of the Trustee through willful misconduct or negligence.  
To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or collected by the Trustee, except that held in trust to pay principal of and interest on particular Securities of that Series.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(d) or (e) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this Indenture.
Section 7.8.     Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.
The Trustee may resign with respect to the Securities of one or more Series by so notifying the Company at least 30 days prior to the date of the proposed resignation.  The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee and the Company.  The Company may remove the Trustee with respect to Securities of one or more Series if:
(a)       the Trustee fails to comply with Section 7.10;
(b)       the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c)       a Custodian or public officer takes charge of the Trustee or its property; or
(d)       the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

28

If a successor Trustee with respect to the Securities of any one or more Series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least a majority in principal amount of the Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture.  A successor Trustee shall mail a notice of its succession to each Securityholder of each such Series.  Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee with respect to expenses and liabilities incurred by it for actions taken or omitted to be taken in accordance with its rights, powers and duties under this Indenture prior to such replacement.
Section 7.9.     Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee, subject to Section 7.10.
Section 7.10.     Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5).  The Trustee shall always have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition.  The Trustee shall comply with TIA § 310(b).
Section 7.11.     Preferential Collection of Claims Against Company.
The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.
ARTICLE VIII.     
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.1.     Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Order cease to be of further effect (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense of the Company, shall execute instruments acknowledging satisfaction and discharge of this Indenture, when
(n)       either

29

(i)    all Securities theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have been replaced or paid) have been delivered to the Trustee for cancellation; or
(ii)    all such Securities not theretofore delivered to the Trustee for cancellation
(1)    have become due and payable, or
(2)    will become due and payable at their Stated Maturity within one year, or
(3)    have been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or
(4)    are deemed paid and discharged pursuant to Section 8.3, as applicable;
and the Company, in the case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount sufficient for the purpose of paying and discharging the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable on or prior to the date of such deposit) or to the Stated Maturity or redemption date, as the case may be;
(o)       the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(p)       the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.7, and, if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.2 and  8.5 shall survive.
Section 8.2.     Application of Trust Funds; Indemnification.
(c)       Subject to the provisions of Section 8.5, all money deposited with the Trustee pursuant to Section 8.1, all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to 

30

the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Sections 8.3 or 8.4.
(d)       The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Foreign Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders.
(e)       The Trustee shall deliver or pay to the Company from time to time upon Company Order any U.S. Government Obligations or Foreign Government Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government Obligations or Foreign Government Obligations or money were deposited or received.  This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture.
Section 8.3.     Legal Defeasance of Securities of any Series.
Unless this Section 8.3 is otherwise specified, pursuant to Section 2.2.20, to be inapplicable to Securities of any Series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the outstanding Securities of any Series on the 91st day after the date of the deposit referred to in subparagraph (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, upon receipt of a Company Order, execute instruments acknowledging the same), except as to:
(a)       the rights of Holders of Securities of such Series to receive, from the trust funds described in subparagraph (d) hereof, (i) payment of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Maturity of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such Series;
(b)       the provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and
(c)       the rights, powers, trust and immunities of the Trustee hereunder and the Company’s obligations in connection therewith;
provided that, the following conditions shall have been satisfied:

31

(d)       the Company shall have deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for and dedicated solely to the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal of and interest, if any, on and any mandatory sinking fund payments in respect of all the Securities of such Series on the dates such installments of interest or principal and such sinking fund payments are due;
(e)       such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;
(f)       no Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date;
(g)       the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel to the effect that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred;
(h)       the Company shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(i)       the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this Section have been complied with.
Section 8.4.     Covenant Defeasance.
Unless this Section 8.4 is otherwise specified pursuant to Section 2.2.20 to be inapplicable to Securities of any Series, the Company may omit to comply with respect to the 

32

Securities of any Series with any term, provision or condition set forth under Sections 4.2, 4.3, 4.4, 4.5, and 5.1 as well as any additional covenants specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officer’s Certificate delivered pursuant to Section 2.2.20 (and the failure to comply with any such covenants shall not constitute a Default or Event of Default with respect to such Series under Section 6.1) and the occurrence of any event specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officer’s Certificate delivered pursuant to Section 2.2.18 and designated as an Event of Default shall not constitute a Default or Event of Default hereunder, with respect to the Securities of such Series, provided that the following conditions shall have been satisfied:
(a)       With reference to this Section 8.4, the Company has deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust for the purpose of making the following payments specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal of and interest, if any, on and any mandatory sinking fund payments in respect of the Securities of such Series on the dates such installments of interest or principal and such sinking fund payments are due;
(b)       Such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;
(c)       No Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit;
(d)       The Company shall have delivered to the Trustee an Opinion of Counsel to the effect that Holders of the Securities of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred;
(e)       The Company shall have delivered to the Trustee an Officer’s Certificate stating the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and

33

(f)       The Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the covenant defeasance contemplated by this Section have been complied with.
Section 8.5.     Repayment to Company.
Subject to applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal and interest that remains unclaimed for two years.  After that, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.
Section 8.6.     Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money deposited with respect to Securities of any Series in accordance with Section 8.1 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company under this Indenture with respect to the Securities of such Series and under the Securities of such Series shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 8.1; provided, however, that if the Company has made any payment of principal of or interest on or any Additional Amounts with respect to any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE IX.     
AMENDMENTS AND WAIVERS
Section 9.1.     Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Securityholder:
(f)       to cure any ambiguity, defect or inconsistency;
(g)       to comply with Article V;
(h)       to provide for uncertificated Securities in addition to or in place of certificated Securities;
(i)       to make any change that does not adversely affect the rights of any Securityholder;
(j)       to provide for the issuance of and establish the form and terms and conditions of Securities of any Series as permitted by this Indenture;

34

(k)       to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or
(l)       to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA.
Section 9.2.     With Consent of Holders.
The Company and the Trustee may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Securityholders of each such Series.  Except as provided in Section 6.13, the Holders of at least a majority in principal amount of the outstanding Securities of any Series by notice to the Trustee (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision of this Indenture or the Securities with respect to such Series.
It shall not be necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental indenture or waiver, but it shall be sufficient if such consent approves the substance thereof.  After a supplemental indenture or waiver under this section becomes effective, the Company shall mail to the Holders of Securities affected thereby, a notice briefly describing the supplemental indenture or waiver.  Any failure by the Company to mail or publish such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.
Section 9.3.     Limitations.
Without the consent of each Securityholder affected, an amendment or waiver may not:
(g)       reduce the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver;
(h)       reduce the rate of or extend the time for payment of interest (including default interest) on any Security;
(i)       reduce the principal or change the Stated Maturity of any Security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation;

35

(j)       reduce the principal amount of Discount Securities payable upon acceleration of the maturity thereof;
(k)       waive a Default or Event of Default in the payment of the principal of or interest, if any, on any Security (except a rescission of acceleration of the Securities of any Series by the Holders of at least a majority in principal amount of the outstanding Securities of such Series and a waiver of the payment default that resulted from such acceleration);
(l)       make the principal of or interest, if any, on any Security payable in any currency other than that stated in the Security;
(m)       make any change in Sections 6.8, 6.13 or 9.3 (this sentence); or
(n)       waive a redemption payment with respect to any Security, provided that such redemption is made at the Company’s option.
Section 9.4.     Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the TIA as then in effect.
Section 9.5.     Revocation and Effect of Consents.
Until an amendment is set forth in a supplemental indenture or a waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security.  However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date of the supplemental indenture or the date the waiver becomes effective.
Any amendment or waiver once effective shall bind every Securityholder of each Series affected by such amendment or waiver unless it is of the type described in any of clauses (a) through (h) of Section 9.3.  In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.
Section 9.6.     Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated.  The Company in exchange for Securities of that Series may issue and the Trustee shall authenticate upon request new Securities of that Series that reflect the amendment or waiver.

36

Section 9.7.     Trustee Protected.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Officer’s Certificate or an Opinion of Counsel or both complying with Section 10.4.  The Trustee shall sign all supplemental indentures upon delivery of such an Officer’s Certificate or Opinion of Counsel or both, except that the Trustee need not sign any supplemental indenture that adversely affects its rights.
ARTICLE X.     
MISCELLANEOUS
Section 10.1.     Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the TIA, such required or deemed provision shall control.
Section 10.2.     Notices.
Any notice or communication by the Company or the Trustee to the other, or by a Holder to the Company or the Trustee, is duly given if in writing and delivered in person or mailed by first‐class mail:
if to the Company:
Ligand Pharmaceuticals Incorporated
11119 North Torrey Pines Rd., Suite 200 
La Jolla, California 92130
Attention: Chief Executive Officer
Telephone: (858) 550-7500

with a copy to:
Latham & Watkins LLP
12636 High Bluff Drive, Suite 400 
San Diego, CA  92130
Attention:  Scott N. Wolfe
Telephone: (858) 523-5400

if to the Trustee:
[_____]
Attention: [____]
Telephone: [____]

37

with a copy to:

[_____]
Attention:  [____]
Telephone: [____]

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed by first-class mail to his address shown on the register kept by the Registrar.  Failure to mail a notice or communication to a Securityholder of any Series or any defect in it shall not affect its sufficiency with respect to other Securityholders of that or any other Series.
If a notice or communication is mailed or published in the manner provided above, within the time prescribed, it is duly given, whether or not the Securityholder receives it.
If the Company mails a notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time.
Notwithstanding any other provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event (including any notice of redemption) to a Holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given to the Depositary for such Security (or its designee) pursuant to the customary procedures of such Depositary. 
Section 10.3.     Communication by Holders with Other Holders.
Securityholders of any Series may communicate pursuant to TIA § 312(b) with other Securityholders of that Series or any other Series with respect to their rights under this Indenture or the Securities of that Series or all Series.  The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).
Section 10.4.     Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a)       an Officer’s Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b)       an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
Section 10.5.     Statements Required in Certificate or Opinion.

38

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:
(e)       a statement that the person making such certificate or opinion has read such covenant or condition;
(f)       a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(g)       a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(h)       a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
Section 10.6.     Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of Securityholders of one or more Series.  Any Agent may make reasonable rules and set reasonable requirements for its functions.
Section 10.7.     Legal Holidays.
Unless otherwise provided by Board Resolution, Officer’s Certificate or supplemental indenture hereto for a particular Series, a “Legal Holiday” is any day that is not a Business Day.  If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 10.8.     No Recourse Against Others.
A director, officer, employee or stockholder (past or present), as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Securityholder by accepting a Security waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.
Section 10.9.     Counterparts.
This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
Section 10.10.     Governing Laws.

39

THIS INDENTURE AND THE SECURITIES, INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THE INDENTURE OR THE SECURITIES, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
Section 10.11.     No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 10.12.     Successors.
All agreements of the Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this Indenture shall bind its successor.
Section 10.13.     Severability.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.14.     Table of Contents, Headings, Etc.
The Table of Contents, Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 10.15.     Securities in a Foreign Currency.
Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular action at the time outstanding and, at such time, there are outstanding Securities of any Series which are denominated more than one currency, then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose of taking such action shall be determined by converting any such other currency into a currency that is designated upon issuance of any particular Series of Securities.  Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, such conversion shall be at the spot rate for the purchase of the designated currency as published in the The Financial Times in the “Currency Rates” section (of, if The Financial Times is no longer published, or if such information is no longer available in The Financial Times, such source as may 

40

be selected in good faith by the Company) on any date of determination.  The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.
All decisions and determinations provided for in the preceding paragraph shall, in the absence of manifest error, to the extent permitted by law, be conclusive for all purposes and irrevocably binding upon the Trustee and all Holders.
Section 10.16.     Judgment Currency.
The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any Series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.  For purposes of the foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions are authorized or required by law, regulation or executive order to close.
Section 10.17.     Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Trustee shall use reasonable best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. 
ARTICLE XI.     
SINKING FUNDS
Section 11.1.     Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of a Series if so provided by the terms of such Securities PURSUANT TO Section 2.2 and except as otherwise permitted or required by any form of Security of such Series issued pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a “mandatory sinking fund payment” and any other amount provided for by the terms of Securities of such Series is herein referred to as an “optional sinking fund payment.”  If provided for by the terms of Securities of any Series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.2.  Each sinking fund payment shall be applied to the redemption of Securities of any Series as provided for by the terms of the Securities of such Series.
Section 11.2.     Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of such Securities (1) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than any of such Securities previously called for mandatory sinking fund redemption) and (2) apply as credit Securities of such Series to which such sinking fund payment is applicable and which have been repurchased by the Company or redeemed either at the election of the Company pursuant to the terms of such Series of Securities (except pursuant to any mandatory sinking fund) or through the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities, provided that such Securities have not been previously so credited.  Such Securities shall be received by the Trustee, together with an Officer’s Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.  If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a Company Order that such action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall from time to time upon receipt of a Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to the cash payment required to be released to the Company.
Section 11.3.     Redemption of Securities for Sinking Fund.
Not less than 45 days (unless otherwise indicated in the Board Resolution, supplemental indenture hereto or Officer’s Certificate in respect of a particular Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee an Officer’s Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated to pay the amount therein specified.  Not less than 30 days (unless otherwise indicated in the Board Resolution, Officer’s Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.2 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.3.  Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.4, 3.5 and 3.6.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
LIGAND PHARMACEUTICALS INCORPORATED
 

By:     
Name:
Its:

[_____], as Trustee 

By:    
Name:

41

Its:

 NSD\196024.2sppr8k_sept26agrmnt.htm

PURCHASE AND SALE AGREEMENT

 

By and Between

 

 

SUPERTEL LIMITED PARTNERSHIP, a Virginia limited partnership

 

(Seller)

 

and

 

WESTMONT USA DEVELOPMENT, INC., a Delaware corporation

 

(Purchaser)

 

 

SAVANNAH SUITES – MULTIPLE SITES

 

 

  

  

  

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (“Agreement”), dated as of the Effective Date, hereinafter defined, is made by and between SUPERTEL LIMITED PARTNERSHIP, a Virginia limited partnership (“Seller”) and WESTMONT USA DEVELOPMENT, INC., a Delaware corporation (“Purchaser”).

 

I.

 

Definitions; Sale and Purchase; Contingency Period

 

1.1 Definitions.

 

For the purpose of this Agreement, the following terms shall have the meanings indicated:

 

(a) Accrued Vacation and Sick Time shall have the meaning set forth in Section 7.7.

 

(b) Advance Deposits means the aggregate amount of any deposits received by or on behalf of Seller (whether paid in cash or by credit card) as a down payment for any Bookings.

 

(c) Agreement shall have the meaning set forth in the first paragraph of this Agreement.

 

(d) Approvals shall mean any building permits, environmental impact reports, or any other governmental permits, approvals, entitlements or acts in respect of the Property.

 

(e) Atlanta Hotel shall mean the leasehold interest in Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 140 Pine Street, Atlanta, Georgia 30308.

 

(f) Atlanta Land shall mean the leasehold interest in the land and all appurtenances thereto, as more particularly described in Exhibit “A-1” to this Agreement upon which the Atlanta Hotel is situated together with all appurtenances to the Atlanta Land.

 

(g) Augusta Hotel shall mean the Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 3421 Wrightsboro Road, Augusta, Georgia 30909.

 

(h) Augusta Land shall mean the land and all appurtenances thereto, as more particularly described in Exhibit “A-2” to this Agreement upon which the Augusta Hotel is situated together with all appurtenances to the Augusta Land.

 

(i) Baggage Inventory List shall have the meaning set forth in Section 7.3(b).

 

(j) Bill of Sale shall have the meaning set forth in Section 7.4(a).

 

(k) Bookings shall mean all contracts, reservations and sales files for the use or occupancy of guest rooms and/or the banquet facilities of the Hotel, to be provided and assigned to Purchaser at the Closing.

 

(l) Books and Records shall mean all of Seller’s books, records, files, computer data, operating reports, plans and specifications and other documentation relating exclusively to the ownership and operation of the Hotel, including the Employee List and records relating to the Bookings but excluding (i) the personnel files and employment records for all Hotel Employees, (ii) items that belong to or are proprietary to Seller or its affiliates or other third parties, (iii) internal memoranda regarding the sale, financing and/or valuation of the Hotel, and (iv) materials and information that are covered by the attorney-client privilege or any confidentiality agreement entered into by or binding on Seller or its affiliates.

 

(m) Business means the lodging business and all activities related thereto conducted exclusively at the Hotel, including, without limitation, (i) the rental of any guest, conference or banquet rooms or other facilities at the Hotel, (ii) the operation of any restaurant, bar or banquet services, together with all other goods and services provided at the Hotel, (iii) the rental of any commercial or retail space to tenants at the Hotel, (iv) the maintenance and repair of the Real Property and, to the extent applicable, the Personal Property, (v) the employment of the Hotel Employees, and (vi) the payment of taxes.

 

(n) Business day and business days shall have the meanings set forth in Section 9.9.

 

(o) CC&Rs shall mean any covenants, conditions and/or restrictions binding, restricting or benefiting the Property (including, without limitation, reciprocal easement agreements) which are set forth in the Title Commitment.

 

(p) Chamblee Hotel shall mean the Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 5280 Peachtree Industrial Boulevard, Chamblee, Georgia 30341.

 

(q) Chamblee Land shall mean the land and all appurtenances thereto, as more particularly described in Exhibit “A-3” to this Agreement upon which the Chamblee Hotel is situated together with all appurtenances to the Chamblee Land.

 

(r) Claims shall mean any demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, reasonable attorneys’ fees and expenses), whether direct or indirect, known or unknown, foreseen or unforeseen.

 

(s) Closing shall mean the consummation of the purchase and sale of the Property pursuant to this Agreement.

 

(t) Closing Date shall mean the date specified in Section 7.1.

 

(u) Code shall mean the Internal Revenue Code of 1986, as amended.

 

(v) Condemnation Threshold shall have the meaning set forth in Section 8.1(a).

 

(w) Consumables shall mean all opened and unopened food and beverages (non-alcoholic) whether in use or held in reserve storage for future use in connection with the operation of the Hotel.

 

(x) Contingency Period shall mean a period of time commencing on the Effective Date and ending at 5:00 p.m., Eastern Time, on the date which is seventy-five (75) days after the Effective Date.

 

(y) Cure Date shall have the meaning set forth in Section 4.1(a).

 

(z) Current Account shall have the meaning set forth in Section 7.2(i).

 

(aa) Cut-off Time shall mean 11:59 a.m. on the Closing Date.

 

(bb) Due Diligence Information shall mean those certain materials and information detailed on Exhibit “B” attached hereto.

 

(cc) Earnest Money shall have the meaning set forth in Section 2.2(a).

 

(dd) Effective Date shall mean the date this Agreement is last executed by Seller or Purchaser.

 

(ee) Employee Claims shall have the meaning set forth in Section 7.7(b).

 

(ff) Escrow Agent shall mean First Nationwide Title Agency LLC, 220 E. 42nd Street, Suite 3105, New York, New York 10017; phone 212-499-0600; email: shirsch@firstnationwidetitle.com

 

(gg) Excluded Assets shall mean (i) the License Agreement, including without limitation, all Seller’s rights and obligations thereunder; (ii) computer hardware, telecommunications and information technology systems and computer software that are the property of Licensor, including, but not limited to, all central reservation systems, sales systems, financial modeling, budget, group pace, incentive and human resource systems, any ancillary systems and all other proprietary systems; (iii) any employee training manuals or employee benefit manuals in use at the Hotel that are the property of Licensor; (iv) all service marks, copyrights, trade names, trademarks, symbols, logos, and all other intellectual property rights, marks or characteristics associated with a brand name of Licensor; (v) any fixtures, personal property or intellectual property owned by third parties, including, without limitation, equipment lease lessors, suppliers, vendors and licensors under Hotel Contracts or Permits, any Hotel Employees or any guests or customers of the Hotel; and (vi) all guest or customer data or information that is excluded from the definition of Hotel Guest Data and Information as described in clause (i) and (ii) of such definition below.

 

(hh) Existing Survey shall have the meaning set forth in Section 3.1(a).

 

(ii) Expendables shall mean all expendable supplies, including, without limitation, all china, glassware, linens, towels, silverware, kitchen and bar small goods, paper goods, guest supplies, cleaning supplies, operating supplies, printing supplies, stationery, uniforms and similar items, whether in use or held in reserve storage for future use in connection with the operation of the Hotel.

 

(jj) Greenville Hotel shall mean the Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 2015 Wade Hampton Boulevard, Greenville, South Carolina 29615.

 

(kk) Greenville Land shall mean the land and all appurtenances thereto, as more particularly described in Exhibit “A-4” to this Agreement upon which the Greenville Hotel is situated together with all appurtenances to the Greenville Land.

 

(ll) Ground Lease shall mean that certain Ninety Nine Year and Eleven Month Lease Agreement dated October 19, 1967 made by and between Criswell Baking Company, Inc., as landlord and Peachtree Road Biscayne, Inc., as tenant.

 

(mm) Ground Lease Assignment Agreement shall mean the assignment and assumption agreement for the Seller's interest as tenant under the Ground Lease, in the form attached hereto as Exhibit “F”.

 

(nn) Ground Lease Estoppel shall mean the estoppel certificate in the form attached hereto as Exhibit “G” executed by Ground Lessor.

 

(oo) Ground Lessor shall mean Alma W. Bennett, or her successor and assigns, as successor in interest of Criswell Baking Company, Inc., the ground lessor under the Ground Lease.

 

(pp) Jonesboro Hotel shall mean the Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 8240 Tara Boulevard, Jonesboro, Georgia 30236.

 

(qq) Jonesboro Land shall mean the land and all appurtenances thereto, as more particularly described in Exhibit “A-5” to this Agreement upon which the Jonesboro Hotel is situated together with all appurtenances to the Jonesboro Land.

 

(rr) License Agreement shall mean that certain License Agreement dated as of August 18, 2006 by and between Licensor and Seller.

 

(ss) Licensor shall mean Guest House Inn Corp., a Georgia corporation.

 

(tt) Furnishings shall mean all fixtures, furniture, furnishings, fittings, equipment, machinery, apparatus, appliances, vehicles and other articles of personal property (other than the Expendables, the Consumables, or the Excluded Assets) located at the Property or held in reserve storage for future use exclusively in connection with the Hotel (collectively, the “FF&E”), including, without limitation, those certain items listed on Exhibit “E” attached hereto and incorporated herein by this reference, but subject to such depletions, substitutions and replacements as shall occur and be made in the Ordinary Course of Business prior to the Closing Date.

 

(uu) Hazardous Substances shall mean any substance or material which (A) has been or is at any time determined by any state or federal court in a reported decision to be a waste, pollutant, contaminant, hazardous waste or hazardous substance, (B) has been or is determined by any governmental authority to be a waste, pollutant, contaminant, hazardous waste, hazardous substance or hazardous material capable of posing a risk of injury to health, safety or property, or (C) is described as, or has been or is determined to be a waste, pollutant, contaminant, hazardous waste, hazardous substance, or hazardous material under any Hazardous Waste Law.

 

(vv) Hazardous Waste Law shall mean any law, statute, ordinance, code, rule, regulation, decree, resolution or requirement promulgated by any governmental authority with respect to Hazardous Substances, including, without limitation, the following: (A) the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq.; (B) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section 9601 et seq.; (C) the Clean Water Act, 33 U.S.C. Section 1251 et seq.; (D) the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; (E) the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2629; (F) the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; (G) the Clean Air Act, 42 U.S.C. Section 7401 et seq.; (H) the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq.; and (I) the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.

 

(ww) Improvements shall mean the buildings, structures (surface and sub-surface), installations and other improvements, including such fixtures and appurtenances as shall constitute real property located on the Land.

 

(xx) Inspections and Studies shall have the meaning set forth in Section 1.3.

 

(yy) Intangible Personal Property shall mean all of Seller’s right, title and interest in all intangible personal property used in connection with the ownership, operation, leasing, occupancy or maintenance of the Property, including, without limitation, the following:  (1) the Permits; (2) telephone numbers, TWX numbers, post office boxes, warranties and guaranties, signage rights, utility and development rights and privileges, general intangibles, business records, site plans, surveys, environmental and other physical reports, plans and specifications pertaining to the Land, the Improvements and/or Furnishings; and (3) all websites and domains exclusively used for the Hotel, including access to the FTP files of the websites to obtain website information and content pertaining to the Hotel (so long as not an Excluded Asset).

 

(zz) Land shall mean collectively the Atlanta Land, the Augusta Land, the Chamblee Land, the Greenville Land, the Jonesboro Land, the Savannah Land, and the Stone Mountain Land upon which the Hotels are situated.

 

(aaa) Laws shall have the meaning set forth in Section 5.1(i).

 

(bbb) Ledger shall have the meaning set forth in Section 7.2(i).

 

(ccc) Hotel shall mean, collectively the Atlanta Hotel, the Augusta Hotel, the Chamblee Hotel, the Greenville Hotel, the Jonesboro Hotel, the Savannah Hotel, and the Stone Mountain Hotel.

 

(ddd) Hotel Contracts shall mean all service and maintenance contracts, supply contracts, collective bargaining agreements, equipment leases, and other contracts or agreements by which Seller or the Hotel are currently bound relating to the maintenance, operation, provisioning or equipping of the Hotel, together with all related written warranties and guaranties, except for any management agreements for the Property and any other contracts or agreements that are Excluded Assets.

 

(eee) Hotel Employee Schedule shall mean such employment information for all Hotel Employees as is provided to the Purchaser by Seller, it being understood and agreed that the Hotel Employee Schedule may consist only of a list of employees (without names or Social Security Numbers), with an identification of each such employee’s department, position, pay rate (hourly or annually), tenure (start date) and status (whether full-time or part-time).

 

(fff) Hotel Employees shall mean the persons employed by Seller to operate the Hotel.

 

(ggg) Hotel Guest Data and Information means all guest or customer profiles, contact information (e.g., addresses, phone numbers, facsimile numbers and email addresses), histories, preferences and any other guest or customer information obtained or collected by Seller in the Ordinary Course of Business from guests of the Hotel relating specifically to such guests’ stay at the Hotel.  Hotel Guest Data and Information does not include (i) any information maintained by Seller or its affiliates or Licensor or its affiliates in their corporate databases that is not specific to guest stays at the Hotel including, without limitation, websites, central reservation databases, operational databases and preferred guest programs of Seller or affiliates of Seller or Licensor or affiliates of Licensor, and (ii) any data and information collected by Seller or Licensor the transfer or disclosure of which is prohibited or restricted by applicable Laws.

 

(hhh) Material Contract shall mean any Hotel Contract requiring aggregate annual payments in excess of $5000 for any year during the term of such Hotel Contract after Closing that are not cancellable with 30 days prior notice with no penalties.

 

(iii) Notice shall have the meaning set forth in Section 9.3.

 

(jjj) Objection Period shall have the meaning set forth in Section 4.1.

 

(kkk) OFAC shall have the meaning set forth in Section 5.1(r).

 

(lll) Ordinary Course of Business shall mean the ordinary course of business consistent with Seller’s past custom and practice for the Business, taking into account the facts and circumstances in existence from time to time.

 

(mmm) Other Tangible Personal Property shall mean the Seller’s interest in all tangible personal property used exclusively in connection with the ownership, operating, leasing, occupancy or maintenance of the Property or the Hotel and not otherwise included within the other categories of the definition of Property (all to the extent that they are not Excluded Assets).

 

(nnn) Permits shall mean all licenses, franchises, permits, certificates of occupancy, authorizations and approvals used in or relating to the ownership, maintenance, occupancy, operation or use of any part of the Hotel and/or the Property.

 

(ooo) Permitted Exceptions shall mean, collectively, (i) any lien, encumbrance or security interest created by Purchaser at Closing in connection with Purchaser’s acquisition of the Property, (ii) any exceptions to title that are mutually agreed upon by Seller and Purchaser in writing, and (iii) any title exceptions to which Purchaser does not object in accordance with Section 3.1 or Section 4.1, and any title exceptions to which Purchaser objects that are not cured and which Purchaser is deemed to have accepted and approved in accordance with Section 3.1 or Section 4.1; provided, however, that the following items will be deemed Permitted Exceptions whether or not Purchaser objects thereto:  (w) taxes and assessments which are not yet due and payable, (x) zoning ordinances and regulations, (y) mechanic’s liens caused by Purchaser or its agents, and (z) standard printed title exceptions, other than those that may be removed by endorsement or deletion or by the execution and delivery of a customary affidavit or indemnity of Seller (in form reasonably acceptable to the Title Company) in favor of the Title Company.

 

(ppp) Personal Property shall mean, collectively, Seller’s interest in: (i) the Furnishings, (ii) the Consumables (subject to the credit to Seller in Section 7.2(l)), (iii) the Expendables, (iv) the Hotel Contracts, (v) the Books and Records, (vi) the Hotel Guest Data and Information, (vii) the Bookings, (viii) the Advance Deposits, (ix) the assignable Permits (to the extent transferable by Seller), and (x) the Intangible Personal Property (to the extent transferable by Seller); but expressly excluding any Excluded Assets.

 

(qqq) Post-Closing Expenses shall have the meaning set forth in Section 7.2(e).

 

(rrr) Property shall have the meaning set forth in Section 1.2.

 

(sss) Purchase Orders shall have the meaning set forth in Section 7.2(e).

 

(ttt) Purchase Price shall have the meaning set forth in Section 2.1.

 

(uuu) Purchaser shall have the meaning set forth in the first Paragraph of this Agreement.

 

(vvv) Real Property shall mean the Land and Improvements.

 

(www) Reporting Person shall have the meaning set forth in Section 7.9(a).

 

(xxx) Retained Accounts shall have the meaning set forth in Section 7.2(i).

 

(yyy) Savannah Hotel shall mean the Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 60 W. Montgomery Cross Road, Savannah, Georgia 31406.

 

(zzz) Savannah Land shall mean the land and all appurtenances thereto, as more particularly described in Exhibit “A-6” to this Agreement upon which the Savannah Hotel is situated together with all appurtenances to the Savannah Land.

 

(aaaa) Seller shall have the meaning set forth in the first Paragraph of this Agreement.

 

(bbbb) Stone Mountain Hotel shall mean the Land, the Improvements and related amenities commonly referred to as Savannah Suites hotel located at 4893 Memorial Drive, Stone Mountain, Georgia 30083.

 

(cccc) Stone Mountain Land shall mean the land and all appurtenances thereto, as more particularly described in Exhibit “A-7” to this Agreement upon which the Stone Mountain Hotel is situated together with all appurtenances to the Stone Mountain Land.

 

(dddd) Surviving Obligations shall have the meaning set forth in Section 1.3(e).

 

(eeee) Tax Certificates shall have the meaning set forth in Section 7.5(d).

 

(ffff) Title Commitment shall have the meaning set forth in Section 4.1(a).

 

(gggg) Title Company shall have the meaning set forth in Section 4.1(a).

 

(hhhh) Title Policy shall have the meaning set forth in Section 5.4(f).

 

(iiii) Updated Survey shall have the meaning set forth in Section 3.1.

 

(jjjj) WARN Act shall have the meaning set forth in Section 7.7 (a).

 

(kkkk) Warranty deed shall have the meaning set forth in Section 7.4(a).

 

1.2 Sale and Purchase.

 

Seller agrees to sell the Real Property and the Personal Property (collectively, the “Property”) to Purchaser, and Purchaser agrees to acquire the Property from Seller, subject to the terms, covenants, conditions and provisions set forth in this Agreement.

 

1.3 Contingency Period; Access; Review of Materials.

 

(a) During the Contingency Period, Seller shall use commercially reasonable efforts to cooperate with Purchaser in connection with Purchaser’s investigations and inspections of the Property and the operation of the Hotel thereon.  Within three (3) business days after the Effective Date, Seller shall provide to Purchaser the Due Diligence Information, and Seller shall promptly provide or make available to Purchaser such additional information relating to the Property in Seller’s possession or control as Purchaser may reasonably request.  During the Contingency Period, Purchaser may, subject to the rights of the guests of the Hotel and the limitations set forth below, perform such physical inspections (including, without limitation, Phase I environmental site assessments), surveys and studies, and review such other matters related to the Hotel (including, without limitation, the Hotel Contracts, the Engineering Report, the Environmental Report, the Permits, and the Books and Records), as Purchaser reasonably deems necessary for its review of the Property (collectively, “Inspections and Studies”).  In connection with the Inspections and Studies, Purchaser shall have the right, at its sole risk, responsibility, cost and expense, to enter upon the Property, with at least 24 hours advance notice to Seller, only during normal business hours and only accompanied by an agent for Seller, for the purpose of conducting such Inspections and Studies.  Purchaser’s right to perform the Inspections and Studies shall be subject to and will not interfere with or disturb the rights of guests at the Hotel.  Notwithstanding anything in this Agreement to the contrary, Purchaser shall not be permitted to conduct invasive or destructive testing or sampling of the Property (including drilling or boring) without the prior written consent of Seller, which consent will not be unreasonably withheld; provided, however, that after any such invasive testing, Purchaser shall promptly repair and restore the Property to its condition prior to such testing.

 

(b) In connection with Purchaser’s Inspections and Studies, upon Seller’s written request, Purchaser shall provide, at its expense, evidence of its commercial general liability insurance and personal injury liability coverage naming Seller as an additional insured, from an insurer and in amounts reasonably acceptable to Seller.

 

(c) Purchaser shall indemnify, defend and hold harmless Seller and its Affiliates, officers, directors, members, shareholders, employees, representatives and agents for, from and against any Claims arising from or related to Purchaser’s or its agents or contractors entry upon the Property or any such Inspections and Studies, except (i) for the discovery of existing conditions at the Hotel so long as following such discovery Purchaser does not exacerbate such conditions through its actions, and (ii) to the extent caused by the willful misconduct or negligence of Seller or its agents, employees or contractors.  After any such entry, Purchaser shall promptly restore the Property to its prior condition, if its condition was changed by such entry.  This Section 1.3(c) shall survive the Closing and any termination of this Agreement.

 

(d) Prior to the expiration of the Contingency Period, Purchaser shall not interview any Hotel Employees without Seller’s prior consent, which consent shall not be unreasonably withheld or delayed.  During the four (4) weeks prior to Closing and provided that this Agreement has not been terminated in accordance herewith, Purchaser shall have the right to interview any such Hotel Employees for possible employment.

 

(e) If Purchaser elects on or before expiration of the Contingency Period, for no reason or for any reason whatsoever, in its sole and absolute discretion, not to proceed with the transaction contemplated by this Agreement, Purchaser will deliver written notice of such decision to Seller and Escrow Agent, whereupon this Agreement shall terminate and the Escrow Agent shall release and return the Earnest Money to Purchaser; provided, however, that in the event of a termination by Purchaser under this Section 1.3(e), each party shall continue to be obligated under the indemnity and other provisions in the Agreement that expressly survive termination, (collectively, the “Surviving Obligations”).  Purchaser’s failure to deliver to Seller and Escrow Agent a written notice of termination within the time period set forth above shall be deemed to constitute Purchaser’s election to proceed with the transaction contemplated hereby.

 

(f) If, during the Contingency Period, Purchaser determines that there are any Hotel Contracts that it does not wish to assume, Purchaser will provide Seller with written notice of its election not to assume such designated Hotel Contract(s) (the “Hotel Contracts Termination Notice”) and Seller shall terminate the same prior to Closing.

 

(g) By closing on its acquisition of the Property, Purchaser agrees to assume and honor all of the Bookings.  Further, Purchaser shall assume all Hotel Contracts except those listed in the Hotel Contracts Termination Notice.  Seller shall not be responsible for any type of termination fees or liquidated damages under any Hotel Contract as a result of the assignment and assumption of such Hotel Contract in connection with the transfer of the Property or the termination of such Hotel Contracts.  Seller will be responsible for obtaining the consent to the transfer of any Hotel Contract which requires such consent; provided that Purchaser shall cooperate as reasonably necessary in obtaining any such consent.

 

II.

 

Consideration

 

2.1 Purchase Price.

 

The Purchase Price for the Property shall be TWENTY TWO MILLION FIVE HUNDRED THOUSAND and No/100 Dollars ($22,500,000.00) (the “Purchase Price”), as increased or decreased by prorations and adjustments provided for in this Agreement, and will be paid by Purchaser by wire transfer of immediately available good funds to Escrow Agent on or before the Closing.  There is no financing contingency to Purchaser’s obligation to purchase hereunder.

 

2.2 Earnest Money.

 

(a) No later than 5:00 p.m. on the date that is two (2) business days after the Effective Date hereof, Purchaser shall deposit the sum of TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS  ($250,000.00) in cash as an earnest money deposit (together with any interest earned thereon, the “Earnest Money”) by wire transfer to Escrow Agent.  If the Earnest Money is not timely made, Seller may terminate this Agreement at any time prior to receipt by the Escrow Agent of the Earnest Money, in which case this Agreement shall terminate.

 

(b) No later than 5:00 p.m. on the third (3rd) day after the expiration of the Contingency Period, Purchaser shall increase the Earnest Money deposit to the total sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00).  Except if Purchaser terminates this Agreement during the Contingency Period pursuant to Section 1.3, if the additional Earnest Money is not timely paid, Seller may terminate this Agreement at any time after the Contingency Period has expired but prior to receipt by the Escrow Agent of the additional Earnest Money, in which event this Agreement shall terminate and Seller shall be entitled to retain any Earnest Money then being held by Escrow Agent.

 

(c) The Earnest Money shall be delivered to and held by Escrow Agent in escrow in an interest-bearing account pursuant to the terms of this Agreement.  If the Closing occurs in accordance with the terms and provisions of this Agreement, the Earnest Money and any interest earned thereon shall be paid to Seller and credited against the Purchase Price.  If the Closing does not occur, the Earnest Money and any interest earned thereon shall be held and delivered as provided in this Agreement.  At the time of delivering the Earnest Money deposit, Purchaser shall deliver to Escrow Agent a completed W-9 form for the attribution of any interest earned on the Earnest Money.

 

(d) Seller and Purchaser acknowledge and agree that if Purchaser does not terminate this Agreement as set forth in Section 1.3(e), the Earnest Money will be deemed earned by Seller and non-refundable to Purchaser for any reason other than (i) the failure of any condition precedent to Purchaser’s obligation to purchase the Property, (ii) Seller’s default (after the expiration of the notice and cure period provided in Section 6.2) under this Agreement in any material respect, or (iii) Purchaser’s termination of this Agreement pursuant to Article VIII (Condemnation and Risk of Loss) or any other provision of this Agreement expressly authorizing Purchaser to terminate this Agreement and receive a return of the Earnest Money.

 

2.3 Allocation.

 

Attached hereto as Schedule 2.3 is Seller’s proposed allocations of the Purchase Price among the Hotels and between the real property versus personal property. Seller and Purchaser will negotiate in good faith to agree to the final allocation during the Contingency Period.  Seller and Purchaser agree to file federal, state and local tax returns consistent with such allocations agreed upon between the parties.

 

III.

 

Survey

 

3.1 Survey.

 

Within three (3) days after the Effective Date, Seller shall deliver to Purchaser a copy of its most recent survey in respect of the Property (the “Existing Survey”).  Purchaser, at Purchaser’s expense, may have the Existing Survey updated or otherwise modified (the “Updated Survey”) as required by Purchaser and so as to be sufficient to allow the Title Company to issue at the Closing an ALTA owner’s policy of title insurance in favor of Purchaser covering the Property with the survey exception modified to reflect specifically only those matters appearing on the Updated Survey.  If Purchaser obtains the Updated Survey within the Objection Period, Purchaser may provide any objections to matters appearing thereon during the Objection Period, and those objections will be addressed in the same manner as title objections pursuant to Section 4.1(a) below.  If the Title Company will accept a “survey affidavit of no change” from Seller in lieu of requiring an Updated Survey in order to delete the standard survey exceptions, Seller shall provide such affidavit, but only to the extent the statements requested therein are true and correct.

 

IV.

 

Title Insurance

 

4.1 Title Commitment.

 

(a) Within thirty (30) days after the Effective Date, Purchaser will obtain, at Purchaser’s expense (which expense shall be commercially reasonable), a preliminary title commitment (and complete legible copies of all documents or items referenced therein as exceptions) issued by an insurance company licensed in Georgia and South Carolina (with respect to the Greenville Land) (referred to herein as the “Title Company”), in respect of the Property (collectively, the “Title Commitment”).  Purchaser shall, on or before the expiration of the Contingency Period (the “Objection Period”), object in writing to any matters shown in the Title Commitment to which it wishes to object.  Purchaser’s failure to timely object to any such matters shall be deemed to constitute Purchaser’s approval of same, and such shall then become Permitted Exceptions.  If Purchaser timely objects to any item set forth in the Title Commitment, then Seller shall take reasonable good faith efforts to cure such objections, or agree and acknowledge in writing that such objections will be cured prior to or upon Closing.  Seller shall have until 5:00 p.m. (Eastern Time) on the date which is five (5) days after the expiration of the Objection Period (the “Cure Date”) to cure such objections or agree and acknowledge in writing that such objections will be cured prior to or upon Closing.  If Seller timely cures or commits in writing to cure such objections, then the Title Commitment shall be deemed approved, and all other exceptions therein shall then become Permitted Exceptions.  If Seller does not timely cure such objections prior to the Cure Date, then Purchaser shall, on or before the expiration of the Contingency Period, either (i) terminate this Agreement by delivering to Seller a written notice of termination, whereupon Escrow Agent shall disburse the Earnest Money to Purchaser, the Agreement will terminate and each party shall continue to be obligated under the Surviving Obligations, or (ii) waive its objection to the disapproved items that Seller has not cured or committed to cure, which shall then become Permitted Exceptions.  Purchaser’s failure to timely deposit with Seller and Escrow Agent a written notice of termination shall be deemed to constitute Purchaser’s waiver of its objection to said items and such items shall become Permitted Exceptions.

 

(b) Purchaser shall have five (5) business days after receipt of any updates to the Title Commitment (including receipt of any documents referenced in such update) to object to any matters disclosed therein which were not disclosed in the original Title Commitment, and the procedure for objecting to such matters and Purchaser’s right to terminate this Agreement, if applicable, shall be as set forth in Section 4.1(a) above except that the “Objection Period” shall mean the five (5) business day period referred to in this clause (b).

 

V.

 

Representations, Warranties, Covenants

 

and Conditions Precedent

 

5.1 Seller’s Representations and Warranties.  Seller makes the following representations and warranties to Purchaser, which shall be deemed to have been made as of the Effective Date and as of the Closing:

 

(a) Seller is a duly organized and validly existing limited partnership, is in good standing in the State of Virginia, and has full power to enter into this Agreement and to perform its obligations under this Agreement.

 

(b) The execution and delivery of this Agreement has been or will be, prior to Closing, duly authorized by all necessary and appropriate limited partnership action of Seller.

 

(c) No consent or approval of any person, entity, or governmental authority is required with respect to the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby or the performance by Seller of its obligations under this Agreement.  The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby by Seller will not (i) violate any provision of the Seller’s organizational or governing documents; (ii) violate any Law binding on Seller; (iii) result in a violation or breach of, or constitute a default under, any of the Material Contracts, except to the extent such violation, breach or default would not have a material adverse effect on the Business, or the Seller’s ability to consummate the transaction described in this Agreement; or (iv) result in the creation or imposition of any lien or encumbrance on the Property or any portion thereof.

 

(d) Seller has not made any general assignment for the benefit of creditors, become insolvent or filed a petition for voluntary bankruptcy or filed a petition or answer seeking reorganization or an arrangement or composition, extension or readjustment of its indebtedness or consented, in any creditors’ proceeding, to the appointment of a receiver or trustee of Seller or the Property or any part thereof of either of them or been named in an involuntary bankruptcy proceeding and to Seller’s knowledge, no such actions are contemplated or have been threatened.

 

(e) Except as set forth on Schedule 5.1(e) attached hereto, there are no leases or occupancy agreements affecting all or any portion of the Property except for the standard transient accommodation agreements between Seller and guests of the Hotel.

 

(f) There are no Material Contracts affecting the Property except as set forth in Exhibit “C” to this Agreement.  True and complete copies of the Material Contracts (including all amendments) have been provided to Purchaser or will be provided to Purchaser no later than five (5) business days after the Effective Date.  All of the Material Contracts described in Exhibit “C” are in full force and effect, and, to Seller’s knowledge, there are no material defaults by any party thereunder.

 

(g) Except for the Material Contracts set forth in Exhibit “C” to this Agreement, there are no existing management agreements or license agreements relating to the Hotel other than Seller’s existing management agreement with Strand Development Company, LLC (the “Management Agreement”) and the License Agreement.  Each Management Agreement and Material Contract shall be terminated at Seller’s sole cost and expense as of the date of the Closing unless Purchaser notifies Seller in writing otherwise.

 

(h) To Seller’s knowledge, all Permits necessary for the operation of the Hotel are set forth in Exhibit “D” to this Agreement.  True and complete copies of the Permits have been provided to Purchaser or will be provided to Purchaser no later than five (5) business days after the Effective Date.  Except as otherwise disclosed to Purchaser on Exhibit “D”, Seller has not received any written notice of any uncured violations of any Permit, and to Seller’s knowledge, all of the Permits described in Exhibit “D” are in full force and effect.

 

(i) Seller has not received any written notice of uncured violations (or investigation of potential violation) of laws, ordinances, orders or regulations (collectively, “Laws”) of governmental or quasi-governmental authorities with respect to the Property, nor has Seller received any written notice of any uncured violation of any CC&Rs.

 

(j) To Seller’s knowledge, other than (i) Hazardous Substances used in the ordinary course of maintaining, operating and cleaning the Hotel in commercially reasonable amounts and in accordance with all Hazardous Waste Laws, (ii) Hazardous Substances used as fuels, lubricants or otherwise in connection with vehicles, machinery and equipment located at the Hotel in commercially reasonably amounts and in accordance with all Hazardous Waste Laws, (iii) matters disclosed in the Environmental Report, no Hazardous Substances are, or have been during any period of Seller’s ownership of the Hotel, present on, under or in the Hotel in violation of any Hazardous Waste Laws.  A true and complete copy of the Environmental Report, to the extent in Seller’s or manager’s possession or control, has been provided to Purchaser or will be provided to Purchaser no later than five (5) business days after the Effective Date.

 

(k) Except as disclosed on Schedule 5.1(k) attached hereto, Seller is not currently involved in any litigation, investigations or other proceedings which, if, adversely determined, could reasonably be expected to have a material adverse effect on the operation of the Property, the financial condition or results of operations of the Property or Seller’s ability to consummate the transaction contemplated by this Agreement, nor has Seller received any written notice that any such litigation, investigations or other proceedings are to be instituted nor does Seller have any knowledge that any such litigation, investigations or other proceedings are threatened.

 

(l) Seller has not received written notice from any condemning authority of any pending or threatened condemnation action affecting any portion of the Property.

 

(m) Seller has provided to Purchaser, or within five (5) business days after the Effective Date, Seller will provide to Purchaser true and complete copies, to the extent in Seller’s possession or control, of all bills for real estate and personal property taxes and assessments for the current tax year and the two (2) immediately preceding tax years.

 

(n) Seller has provided to Purchaser, or within five (5) business days after the Effective Date Seller will deliver to Purchaser, financial statements for the Hotel (consisting of un-audited financial statements for the last three (3) years (or Seller’s ownership period, whichever is less) and any year-to-date financial statements and operating budgets prepared for the Hotel for the current year).  To Seller’s knowledge, all of these financial statements are in all material respects true and complete and fairly represent the financial condition of the Hotel as of the dates stated therein.

 

(o) Seller owns good and marketable title to the Consumables, Expendables, and Furnishings free and clear of all liens, leases and encumbrances; subject to a GE loan, which will be paid at Closing.

 

(p) Seller is not a “foreign person” as defined in the Foreign Investment in Real Property Tax Act of 1980, as amended.

 

(q) All sales and use taxes (other than those sales taxes, if any, arising from the sale of the Property from Seller to Purchaser, which will be paid by Seller at Closing), hotel/motel occupancy taxes, real and personal property taxes, employer withholding taxes and similar taxes that are due as of the Closing Date (or applicable to any period prior to Closing) have been paid in full (or will be provided for at the Closing pursuant to the provisions of Section 7.2 below), and all required reports and returns relating thereto have been, or will be, timely filed.  Seller has not received written notice of any special tax assessment relating to the Hotel, the Property or any portion thereof, and there are no tax agreements in place affecting the Hotel or the Property.

 

(r) Neither it nor any of its affiliates, nor, to Seller’s knowledge, any of their respective partners, members, shareholders or other equity owners, or to Seller’s knowledge, any of their respective employees, officers directors, representatives or agents is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action, and Seller is not and will not assign or otherwise transfer this Agreement to, contract with or otherwise engage in any dealings of transactions or be otherwise associated with such persons or entities.

 

(s) A true and complete copy of any engineering reports, to the extent in Seller’s possession, has been provided to Purchaser or will be provided to Purchaser no later than five (5) business days after the Effective Date.

 

(t) The representations and warranties of Seller shall survive the Closing. Seller shall indemnify and hold Purchaser harmless for, from and against any Claim arising or resulting from a material breach of any of Seller’s representations or warranties pursuant to Section 9.14.

 

5.2 Purchaser’s Representations and Warranties.  Purchaser makes the following representations and warranties to Seller, which shall be deemed to have been made as of the Effective Date and as of the Closing:

 

(a) Purchaser is a duly organized and validly existing corporation, is in good standing in the State of Delaware and has full power to enter into this Agreement and to perform its obligations under this Agreement.

 

(b) The execution and delivery of this Agreement has been or will be duly authorized by all necessary and appropriate action of Purchaser.

 

(c) No consent or approval of any person, entity, or governmental authority is required with respect to the execution and delivery of this Agreement by Purchaser or the consummation by Purchaser of the transactions contemplated hereby or the performance by Purchaser of its obligations under this Agreement except for such consents as shall be obtained by Purchaser prior to the Closing.

 

(d) Neither Purchaser nor any of its affiliates, nor, to Purchaser’s knowledge, any of their respective partners, members, shareholders or other equity owners, or their respective employees, officers directors, representatives or agents is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under any OFAC regulations (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action, and Purchaser is not and will not assign or otherwise transfer this Agreement to, contract with or otherwise engage in any dealings of transactions or be otherwise associated with such persons or entities.

 

(e) Seller has not authorized Purchaser to use the name “Savannah Suites” or any variation thereof.

 

(f) The representations and warranties of Purchaser shall survive the Closing. Purchaser shall indemnify and hold Seller harmless for, from and against any Claim arising or resulting from a material breach of any of Purchaser’s representations or warranties pursuant to Section 9.19.

 

5.3 Covenants.

 

Seller and Purchaser, as applicable, covenant and agree to perform the following covenants from the Effective Date to the Closing:

 

(a) Seller shall assist Purchaser and Purchaser’s agents, on or before Closing, in acquiring all information necessary to enable Purchaser’s agents and Seller’s agents to compute the prorations described in Section 7.2.

 

(b) Seller will not, without the prior approval of Purchaser, which approval shall not be unreasonably withheld or delayed, sell exchange, assign, transfer, convey, lease or otherwise dispose of, or enter into any agreement or negotiate any agreement to sell exchange, assign, transfer, convey, lease or otherwise dispose of, all or any part of the Property or any interest therein except for Furnishings, Consumables, and Expendables in the Ordinary Course of Business; provided, however, that in the event Purchaser fails to respond to Seller within three (3) business days after Purchaser is notified of such desired disposition, such failure to respond shall be deemed to constitute Purchaser’s approval of same.

 

(c) Seller will not amend in any material respect or terminate any Material Contracts or Permits (except as required by the terms of this Agreement) without the prior approval of Purchaser, which approval shall not be unreasonably withheld or delayed; provided, however, that in the event Purchaser fails to respond to Seller within three (3) business days after Purchaser is notified of such proposed amendment or termination, such failure to respond shall be deemed to constitute Purchaser’s approval of same.  Notwithstanding the foregoing, Seller will be allowed to (i) amend, extend or terminate Material Contracts and Permits in the Ordinary Course of Business, and (ii) enter into new Material Contracts if they are terminable by Purchaser without any termination fee upon not more than thirty (30) days notice.  Seller will pay all charges prior to delinquency under such Material Contracts, and Seller will perform all of its obligations under such Material Contracts.

 

(d) Seller will not enter into any contracts, licenses, easements or other agreements relating to the Property which will obligate Purchaser or be a charge or lien against the Property, except those necessary to continue the Business and operation of the Hotel in the Ordinary Course of Business and which are terminable without penalty on no more than thirty (30) days notice, without the prior approval of Purchaser, which approval shall not be unreasonably withheld or delayed; provided, however, that in the event Purchaser fails to respond to Seller within three (3) business days after Purchaser is notified of Seller’s intention to take such proposed actions, such failure to respond shall be deemed to constitute Purchaser’s approval of same.  Seller shall promptly provide written notice to Purchaser of any new agreements entered into by Seller that are not in the Ordinary Course of Business or are otherwise incompatible with the requirements set forth in this Section 5.4(d), along with a copy of any such agreements.

 

(e) Seller will cause the Property to be operated and maintained in the Ordinary Course of Business which undertaking includes, but is not limited to, (i) maintaining Expendables, Furnishings, and Consumables in the Ordinary Course of Business, (ii) entering into Bookings in the Ordinary Course of Business, and (iii) performing maintenance and repairs for the Property in the Ordinary Course of Business.

 

(f) Seller will terminate any existing management agreement to be effective on the Closing Date, at Seller’s sole cost and expense.

 

(g) Seller will maintain until the Closing Date the existing insurance coverage for the Property.

 

(h) Seller shall maintain its Books and Records in the Ordinary Course of Business, in accordance with sound accounting principles applied on a basis consistent with the basis used in keeping its Books and Records in prior years.  At the Closing, Purchaser shall become the owner of all Books and Records.

 

(i) Seller shall promptly notify Purchaser of any event or circumstance that constitutes a material change to any of Seller’s representations and warranties set forth in this Agreement.

 

(j) Seller shall continue to use Seller’s commercially reasonable efforts to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in the Ordinary Course of Business; and all advance room bookings and reservations and all meetings and function bookings shall be booked at rates, prices and charges heretofore customarily charged by Seller for such purposes in the Ordinary Course of Business. Seller acknowledges that the Purchase Price includes the transfer of Bookings.

 

(k) Seller shall not modify or release any warranties or guaranties applicable to the Property other than in the Ordinary Course of Business.

 

(l) Promptly after the Effective Date, Seller shall request that Ground Lessor execute the Ground Lease Assignment Agreement and Ground Lease Estoppel, and shall diligently pursue Ground Lessor’s execution and delivery of the Ground Lease Assignment Agreement and Ground Lease Estoppel to Escrow Agent, which documents shall be held in escrow by Escrow Agent pending closing.

 

(m) Seller shall maintain the quantities of Consumables through closing at approximately the same quantities existing at the expiration of the Contingency Period.

 

5.4 Conditions Precedent to Purchaser’s Obligations.

 

Purchaser’s obligations under this Agreement are conditioned upon the satisfaction of the following conditions:

 

(a) Seller’s representations and warranties set forth in this Agreement shall continue to be true and accurate in all material respects.

 

(b) Seller shall have performed all of its obligations in all material respects under this Agreement, including, without limitation, the delivery of the documents set forth in Section 7.4(a).

 

(c) There shall be no judicial, quasi-judicial, administrative or other proceeding initiated by a person or entity that is not an affiliate of Purchaser pending that seeks to enjoin the consummation of the sale and purchase hereunder as of the Closing Date.

 

(d) Subject to the provisions of Article VIII, the Property shall on the Closing Date be in the same condition as on the Effective Date except as attributable to ordinary wear and tear and depletion and replenishment of Consumables and Expendables in the Ordinary Course of Business.

 

(e) At Seller’s sole cost and expense, any and all management agreements for the Property shall be terminated as of the Closing Date and Seller shall deliver possession of the Property to Purchaser at the Closing Date free and clear of such management agreements.

 

(f) On or prior to Closing, the Title Company shall irrevocably commit to issue to the Purchaser an owner’s policy of title insurance for the Land pursuant to a marked title commitment or pro forma policy effective as of the date of Closing in the amount of the Purchase Price (or such amount allocated pursuant to Section 2.3 above), subject only to the Permitted Exceptions (the “Title Policy”).

 

(g) That Purchaser has not received any written notification from Ground Lessor that withdraws their consent to the Ground Lease Assignment Agreement, or that materially and negatively revises any information provided in the Ground Lessor Estoppel.

 

If any of the foregoing conditions have not been satisfied as of the Closing Date for reasons other than a Purchaser default, then Purchaser, subject to any applicable notice and cure periods as provided in other provisions of this Agreement (including, without limitation, Section 6.2 below), shall be entitled to terminate this Agreement pursuant to this Section 5.4 by giving Seller written notice to such effect, whereupon Escrow Agent shall disburse the Earnest Money to Purchaser as set forth in Section 2.2 and the parties shall thereafter have no further rights or liabilities under this Agreement, except that (i) each party shall pay one-half (1/2) of the expenses of escrow unless the termination is solely due to Seller’s failure to perform its obligations hereunder in which event Seller shall pay the expenses of escrow, and (ii) each party shall continue to be obligated under the Surviving Obligations.  Notwithstanding the foregoing, in the event that Purchaser terminates this Agreement due to a Seller’s default, Section 6.2 shall control the obligations of the parties and disbursements of the Earnest Money.

 

5.5 Conditions Precedent to Seller’s Obligations.

 

Seller’s obligations under this Agreement are conditioned upon the satisfaction of the following conditions:

 

(a) Purchaser’s representations and warranties set forth in this Agreement shall continue to be true and accurate in all material respects.

 

(b) Purchaser shall have performed all of its obligations in all material respects under this Agreement, including, without limitation, the delivery of the documents set forth in Section 7.4(b).

 

(c) There shall be no judicial, quasi-judicial, administrative or other proceeding initiated by a person or entity that is not an affiliate of Seller pending that seeks to enjoin the consummation of the sale and purchase hereunder as of the Closing Date.

 

If any of the forgoing conditions have not been satisfied as of the Closing Date for reasons other than a Seller default, then Seller, subject to any applicable notice and cure periods as provided in other provisions of this Agreement (including without limitation, Section 6.1 below), shall be entitled to terminate this Agreement pursuant to this Section 5.5 by giving Purchaser written notice to such effect, whereupon Escrow Agent shall disburse the Earnest Money as set forth in Section 2.2 and the parties shall thereafter have no further rights or liabilities under this Agreement, except that (i) each party shall pay one-half (1/2) of the expenses of escrow unless the termination is solely due to Purchaser’s failure to perform its obligations hereunder in which event Purchaser shall pay the expenses of escrow, and (ii) each party shall continue to be obligated under the Surviving Obligations.  If Seller has actual knowledge that a condition remains unsatisfied but nonetheless elects not to terminate this Agreement or to pursue any remedies it may have under Article VI and proceeds with the Closing, then such unsatisfied condition shall be deemed waived by Seller.  Notwithstanding the foregoing, in the event that Seller terminates this Agreement due to a Purchaser default, Section 6.1 shall control the obligations of the parties and disbursements of the Earnest Money.

 

VI.

 

Remedies

 

6.1 Seller’s Remedies.

 

Prior to entering into this transaction, the parties have agreed that it would be extremely difficult and impracticable, if not impossible, to ascertain with any degree of certainty the amount of damages which would be suffered by Seller in the event of Purchaser’s failure to perform its obligations under this Agreement to purchase the Property.  Accordingly, the parties hereby agree that a reasonable estimate of Seller’s damages in such event is the amount of the Earnest Money, and if Purchaser defaults in any material respect in performing the obligations under this Agreement to close the purchase of the Property, including, but not limited to, its obligations under Section 7.4(b), then Seller, as its sole remedy therefor, after delivery of written notice to Purchaser of such failure and the expiration of a five (5) business day cure period from delivery of such notice, shall be entitled to immediately terminate this Agreement by giving Purchaser and Escrow Agent written notice to such effect, and receive and retain the Earnest Money as liquidated damages, whereafter the parties shall have no further rights or liabilities under this Agreement, except that (i) Purchaser shall pay the expenses of escrow, and (ii) each party shall continue to be obligated under the Surviving Obligations.

 

6.2 Purchaser’s Remedies.

 

If, prior to Closing, Seller defaults in any material respect in performing its obligations under this Agreement, including but not limited to its obligations under Section 7.4(a), then Purchaser shall have the right, after delivery of written notice to Seller of such failure and the expiration of a five (5) business day cure period from delivery of such notice, to exercise any one of the following as Purchaser’s sole and exclusive remedy:

 

(a) proceed to Closing without any reduction in or set-off against the Purchase Price; or

 

(b) terminate this Agreement by giving Seller and Escrow Agent written notice of such election prior to or at the Closing whereupon (i) Escrow Agent shall promptly return the Earnest Money to Purchaser, (ii) neither party to this Agreement shall thereafter have any further rights or liabilities under this Agreement, except that (A) Seller shall pay the expenses of escrow, (B) each party shall continue to be obligated under the Surviving Obligations; or

 

(c) seek specific performance on the part of Seller under the terms of this Agreement.

 

6.3 Attorneys’ Fees.

 

If any litigation or other enforcement proceeding is commenced in connection with this Agreement, then the prevailing party shall be entitled to receive payment of its reasonable attorneys’ fees and expenses and court costs from the other party (and in addition to any liquidated damages under Section 6.1).

 

6.4 Survival.

 

The provisions of this Article VI shall survive the Closing or earlier termination of this Agreement.

 

VII.

 

Closing Matters

 

7.1 Closing Date.

 

The Closing shall be held on or before forty-five (45) days after the expiration of the Contingency Period (the “Closing Date”).  If the Closing Date has not occurred by December 31, 2013, except if Closing does not occur by then due to Seller’s default, then Purchaser shall be considered to be in default. The Closing shall be effected through the escrow with Escrow Agent on terms reasonably acceptable to Seller, Purchaser and Escrow Agent (including that all of the funds and documents to be transferred hereunder shall be delivered through the escrow with Escrow Agent).  Purchaser and Seller shall execute appropriate instructions to implement the closing of such escrow.

 

7.2 Adjustment and Prorations.

 

The matters and items set forth below shall be apportioned between Seller and Purchaser or, where applicable, credited in total to a particular party:

 

(a) Taxes.  All real and personal property taxes and special assessments, if any, whether payable in installments or not, shall be prorated as of the Cut-Off Time and Seller shall be responsible for all such amounts attributable to the period prior to the Cut-Off Time, and Purchaser shall be responsible for all such amounts attributable to the period after the Cut-Off Time.  If the actual amount of taxes due for the tax year in which the Closing occurs are not available from the taxing authority as of the Closing Date, then such taxes shall be prorated on an estimated basis using the taxes levied for the prior tax year, assuming a payment by November 30.

 

(b)   Reservation Deposits.  Prepaid and unearned reservation deposits and other such third party prepaid items relating to periods after the Cut-Off Time shall be transferred to Purchaser, or the amounts thereof credited to Purchaser, at the Closing.

 

(c) Utility Charges.  Utility charges for telephone, gas, electricity, sewer, water and other services shall not be prorated to the extent that Seller can make arrangements for the rendering of final bills based on meter readings as of the Cut-Off Time.  Seller shall be responsible for the payment at the Closing of all bills for utility charges up to and including the Cut-Off Time.  To the extent that utility bills cannot be rendered as of the Closing Date, such charges for the period through the Cut-Off Time shall be prorated as of the Cut-Off Time based upon the most recent available bills.  Any utility deposits shall be transferred to Purchaser and credited to Seller at the Closing.

 

(d) Operating Expenses and Trade Accounts.  At Closing, Seller shall receive a credit for all unconsumed portions of prepaid expenses except to the extent they pertain to Hotel Contracts or Permits not assumed by or transferred to Purchaser at Closing.  Seller shall be responsible for all operating expenses and trade accounts of the Property (including, without limitation, charges and fees payable under the Hotel Contracts and all hotel/motel sales and occupancy taxes) up to and including the Cut-Off Time, unless Seller and Purchaser mutually agree that Purchaser shall assume any such payables, in which case Purchaser shall receive a credit for the amount of the assumed payables at Closing; provided, however, that Purchaser shall be responsible for all purchase orders (“Purchase Orders”) made by Seller in the Ordinary Course of Business for Expendables or Consumables not delivered to the Hotel as of the Closing Date.  To the extent the amounts of such items (i.e., other than Purchase Orders) are then known, Seller shall pay such items at the Closing, and Seller shall pay the balance of such items in the Ordinary Course of Business, but in no event later than the date which is forty-five (45) days after the date on which Seller receives written invoices for such items.  Notwithstanding the foregoing, Purchaser acknowledges and agrees that Seller may postpone and/or contest payment of any operating expense or trade account which is the subject of a bona fide dispute.  Seller agrees to indemnify, defend and hold Purchaser harmless from and against any Claims or other matters relating to such contested operating expenses and trade accounts.  All operating expenses and trade accounts accruing after the Cut-Off Time (“Post-Closing Expenses”) shall be the responsibility of Purchaser and Purchaser agrees to indemnify, defend and hold Seller harmless for, from and against any Claims or other matters relating to (i) the Purchase Orders, or (ii) the Post-Closing Expenses.

 

(e) Food, Beverage and Other Income.  Revenues from food, beverage and banquet services, room service, public room revenues, health club revenues and other services rendered to guests of the Hotel and the expenses related thereto attributable to the night prior to Closing shall be the property of Seller.

 

(f) Employees.  Seller shall pay or arrange for the payment to Hotel Employees, as provided in Section 7.7, all wages and benefits (including, without limitation, all Accrued Vacation and Sick Time) that any Hotel Employee is owed, as of the Closing Date, pursuant to statute or contract, including any collective bargaining agreement, if applicable.

 

(g) Cash.  All cash on hand in house banks (including petty cash fund) on the morning of the Closing Date shall become the property of Purchaser and the amount thereof shall be credited to Seller at the Closing.  All other funds of Seller shall remain its property and shall be withdrawn by or transferred or credited to Seller at Closing.

 

(h) Ledger and Other Receivables.  All accounts receivable of any kind attributable to guests in the Hotel on the night preceding the Closing (the “Ledger”) shall be prorated as provided in this Agreement, Seller’s share shall be credited to Seller at Closing and the Ledger shall become the property of Purchaser.  All other accounts receivable of Seller for the period prior to Closing shall remain the property of Seller (“Retained Accounts”).  Purchaser shall use commercially reasonable efforts (which shall mean the normal collection procedures followed by Hotel staff) to collect such receivables for Retained Accounts (provided that in no event shall Purchaser be required to commence any litigation in connection therewith) and shall cooperate with Seller, at Seller’s cost, in reasonable respects in connection with any collection efforts of Seller, which efforts may include, without limitation, the commencement of litigation by Seller against the applicable debtor.  If any receivables for Retained Accounts shall be collected by Purchaser, Purchaser shall remit the same to Seller within fifteen (15) days after receipt, provided that Purchaser may offset against such collections any amounts unpaid by Seller under Section 7.2(e).  Any monies collected by Purchaser from any customer after the Closing Date who then owes amounts both on a Retained Account and on an account with the Hotel accruing after Closing (a “Current Account”), shall be applied to the invoices specified by the payor or to which such payment (by the amount thereof or other indicia) plainly applies, and, if the payor makes such payment without reference to a specific invoice and the applicable invoice is not otherwise obvious, then such payment shall be allocated to the Retained Account and the Current Account on a pro-rata basis based on the amounts then currently owed to each.

 

(i) Possession.  Seller shall deliver possession of the Property to Purchaser at the time of Closing, subject to the current tenant’s rights under that certain Option and Lease Agreement dated December 14, 1994, as amended, originally made by and between CLC Foundation, Inc. as lessor and Bellsouth Mobility Inc. as tenant.

 

7.3 Guest Property in Seller’s Possession on Closing Date.

 

Property of guests of the Hotel in Seller’s care, possession or control (excluding that in guest rooms) on the Closing Date shall be handled in the following manner:

 

(a) Safe Deposit Boxes.  On the day prior to the Closing Date, Seller shall notify all guests of the Hotel who have safe deposit boxes advising them of the pending sale of the Property and requesting the removal and verification of the contents of such safe deposit boxes within three days thereafter.  Seller may have a representative present at the Hotel during such period for the purpose of viewing such removal and verification.  Boxes of guests not responding to the written notice shall be listed at the end of such three day period.  Such boxes shall be opened on the following day in the presence of representatives of Seller and Purchaser to be agreed upon between Seller and Purchaser and the contents thereof shall be recorded.  Any property contained in the safe deposit boxes and so recorded and thereafter remaining in the hands of Purchaser shall be the responsibility of Purchaser; and Purchaser hereby agrees to indemnify, defend and save and hold Seller harmless for, from and against any Claim or obligation arising out of or with respect to such recorded property.  Seller shall be responsible for, and shall indemnify, defend and hold Purchaser harmless for, from and against, any Claim arising with respect to property placed in the safe deposit boxes before the Closing that is not listed in said inventory.  The indemnities set forth in this Section 7.3(a) shall survive the Closing.

 

(b) Baggage Inventory.  All guest baggage and other guest property checked and left in the possession, care and control of Seller shall be listed in an inventory to be prepared in duplicate and signed by Seller’s and Purchaser’s representatives on the day prior to the Closing Date (the “Baggage Inventory List”).  Purchaser shall be responsible from and after the Closing Date for all baggage (and the contents thereof) and other guest property listed on the Baggage Inventory List.  Purchaser agrees to indemnify, defend and save and hold Seller harmless for, from and against any Claim arising out of or with respect to the baggage listed on the Baggage Inventory List, and Seller agrees to indemnify, defend and save and hold Purchaser harmless from and against any Claim arising prior to the Closing Date out of or with respect to any guest baggage or other guest property not listed on the Baggage Inventory List.  The indemnities set forth in this Section 7.3(b) shall survive the Closing.

 

7.4 Closing Documents.

 

(a) On or before the Closing Date, Seller shall deliver to Escrow Agent or to Purchaser, as appropriate, the following, dated as of the Closing Date (as applicable):

 

	
(i)  

	
a Special Warranty Deed conveying fee simple title in each parcel of the Real Property, except for the Atlanta Hotel which will be conveyed using an assignment of a ground lease, to Purchaser free of all encumbrances except the Permitted Exceptions, duly authorized, executed and acknowledged by Seller, in the form commonly used in the state where the Property is located and reasonably approved by Seller and Purchaser (the “Warranty Deed”);

 

	
(ii)  

	
two (2) counterparts of an Assignment Agreement in the form attached hereto as Exhibit “H” (the “Assignment”) whereby Purchaser assumes those certain contracts relating to the Property as more particularly described in Exhibit 1 to the Assignment transferring to Purchaser all of the Leases and the Hotel Contracts, which Assignment shall contain an indemnity by Seller of Purchaser with respect to obligations arising thereunder prior to the Closing Date, and a reciprocal indemnity by Purchaser of Seller with respect to obligations arising thereunder subsequent to the Closing Date, duly authorized and executed by Seller, in the form reasonably approved by Seller and Purchaser, together with original certificates of title for all vehicles that are part of the Property (if any), endorsed to transfer same to Purchaser (and any necessary governmental forms to effect the transfer);

 

	
(iii)  

	
two (2) counterparts of a Bill of Sale (the “Bill of Sale”), in the form attached hereto as Exhibit “I”, transferring to Purchaser all of the Furnishings, Expendables and Consumables, the Other Tangible Personal Property, the Intangible Personal Property, the Bookings, the Books and Records, and the assignable Permits, which Bill of Sale shall contain an indemnity by Seller of Purchaser with respect to obligations arising thereunder prior to the Closing Date, and a reciprocal indemnity by Purchaser of Seller with respect to obligations arising thereunder subsequent to the Closing Date, duly authorized and executed by Seller, in the form reasonably approved by Seller and Purchaser, together with original certificates of title for all vehicles that are part of the Property (if any), endorsed to transfer same to Purchaser (and any necessary governmental forms to effect the transfer);

 

	
(iv)  

	
two (2) counterparts or the Ground Lease Assignment Agreement, duly authorized and executed by Seller and Ground Lessor;

 

	
(v)  

	
one (1) copy or original of the Ground Lease Estoppel, duly executed by Ground Lessor;

 

	
(vi)  

	
possession of the Property and any and all keys, access codes and plans and specifications for the Improvements on the Property in Seller’s possession;

 

	
(vii)  

	
a certified copy of such authorizations, approvals and incumbencies of Seller as the Title Company shall reasonably require;

 

	
(viii)  

	
a FIRPTA Affidavit executed by Seller in form required by the Internal Revenue Service;

 

	
(ix)  

	
an executed copy of the safe deposit inventory list and Baggage Inventory List;

 

	
(x)  

	
a customary settlement statement reflecting the parties respective costs of Closing hereunder;

 

	
(xi)  

	
if applicable, the Tax Certificates required by Section 7.5(e) of the Agreement;

 

	
(xii)  

	
to the extent not previously delivered to Purchaser, copies (or originals if available) of the Hotel Contracts and assignable Permits, and all Books and Records, which shall be deemed to be delivered to Purchaser upon delivery of possession of the Hotel if located at the Hotel on the Closing Date;

 

	
(xiii)  

	
evidence reasonably acceptable to Purchaser and Title Company of termination of any management agreements; and

 

	
(xiv)  

	
any other agreements, documents and/or instruments as may be reasonably required or requested by the Title Company to consummate this transaction.

 

(b) On or before the Closing Date, Purchaser shall deliver to Escrow Agent or to Seller, as appropriate, the following, dated as of the Closing Date (as applicable):

 

	
(i)  

	
funds evidencing the Purchase Price (as adjusted by the application of the Earnest Money), plus or minus costs and prorations as set forth herein and any other funds needed to satisfy Purchaser’s obligations hereunder;

 

	
(ii)  

	
two (2) counterparts of the Bill of Sale and Assignment, duly authorized and executed by Purchaser;

 

 

	
(iii)  

	
two (2) counterparts or the Ground Lease Assignment Agreement, duly authorized and executed by Purchaser;

 

	
(iv)  

	
such authorizations, approvals and incumbency of Purchaser as the Title Company shall reasonably require;

 

	
(v)  

	
if applicable, the Tax Certificates required by Section 7.5(e) of the Agreement;

 

	
(vi)  

	
an executed copy of the safe deposit inventory list and Baggage Inventory List;

 

	
(vii)  

	
a customary settlement statement reflecting the parties respective costs of Closing hereunder;

 

 

	
(viii)  

	
any other agreements, documents and/or instruments as may be reasonably required or requested by the Title Company or Seller to consummate this transaction.

 

7.5 Closing Costs.

 

(a) In addition to the other costs and expenses to be paid by Seller set forth elsewhere in this Agreement, Seller shall pay for the following costs in connection with this transaction:  (i) the fees and expenses of its own accountants and attorneys; (ii) the real property transfer taxes associated with the property located in the state of South Carolina and one-half of the real property transfer taxes due for the remaining properties in Georgia; (iii) one-half of any reasonable closing/escrow fees and costs, and (vi) one-half of the transfer/assignment taxes imposed in connection with the Ground Lease Assignment.

 

(b) In addition to the other costs and expenses to be paid by Purchaser set forth elsewhere in this Agreement, Purchaser shall pay for the following costs in connection with this transaction:  (i) the fees and expenses of its own accountants and attorneys; (ii) the cost of the base premium for the Title Policy, the cost of any endorsements or modifications to the Title Policy, including extended coverage, as requested by Purchaser, and the cost of any mortgagee policy; (iii) all fees, costs and expenses with respect to the Updated Survey; (iv) the fees, costs and expenses incurred by Purchaser in connection with its due diligence activities; (v) the fees, costs and expenses for recording any of the Closing Documents (except any title curative instruments which are Seller’s expense); (vi) the sales and use taxes in connection with the conveyance of the Property; (vii) one-half of the real property transfer taxes due for the properties located in Georgia; (viii) one-half of the transfer/assignment taxes imposed in connection with the Ground Lease Assignment and (ix) one-half of any reasonable closing/escrow fees and costs.

 

(c) All other fees, costs and expenses not expressly addressed in this Section 7.5 or elsewhere in this Agreement shall be allocated between Seller and Purchaser for the Property in accordance with local custom for similar transactions.

 

(d) Seller and Purchaser shall execute and deliver such transfer and sales tax returns, exemption certificates and/or occasional sales certificates, tax affidavits and statements (collectively, the “Tax Certificates”) as may be required by law or deemed reasonably necessary by either party.

 

(e) The provisions of this Section 7.5 shall survive the Closing.

 

7.6 Real Estate Commissions.

 

(a)           Seller and Purchaser agree that Warmbrodt Hotel Investments, Inc. (“Broker”) is the sole broker involved in the sale and purchase of the Property, and represents Seller as Seller’s agent pursuant to the terms of a separate agreement between Seller and Broker.

 

(b)           Seller and Purchaser further covenant and agree that to the extent any third party claims a broker or finder’s fee through a party, the party claimed through will defend, indemnify and hold the other party harmless for, from and against any and all claims, losses, judgments, liabilities, suits, costs of suits, and all other costs and expenses which either party may incur in connection therewith, including attorney’s fees and costs to enforce this indemnity.  This Section 7.6 shall survive the Closing or earlier termination of this Agreement.

 

7.7 Hotel Employees.

 

(a) Seller shall terminate or arrange for the termination of all Hotel Employees to be effective as of the Closing and shall pay (i) to Hotel Employees all wages, severance pay, bonuses, benefits and other compensation (including earned or accrued but not taken vacation and sick time of any Hotel Employee (the “Accrued Vacation and Sick Time”)) and (ii) all payroll taxes and other employment taxes that any Hotel Employee is owed through termination, pursuant to statute or contract.  Purchaser covenants to Seller that Purchaser or its management company shall, before the Closing, offer employment (to be effective as of the Closing) to a sufficient number of Hotel Employees on substantially the same terms and conditions as their employment prior to the Closing Date and for a sufficient period of time so that the actions of the parties pursuant to this Agreement shall not trigger the application of the federal Worker Adjustment and Retraining Notification Act (the “WARN Act”) or applicable state laws with respect to employees regarding transfers of businesses.  Nothing in this Section, however, shall require Purchaser to retain for any period of time any Hotel Employee who is unable to establish identity and work authorization for employment verification, who does not pass a criminal background check or who fails to pass any drug test requirement of Purchaser.  It is further agreed, that nothing within this Section  shall prohibit the Purchaser from terminating any rehired Hotel Employee for cause in accordance with the WARN Act and its implementing regulations.  In addition, no part of this provision is intended to alter, nor does it alter, the at will status of the Hotel Employees.  Seller will use commercially reasonable efforts to cause an orderly transfer of the Hotel Employees to the employ of Purchaser.  Seller shall remain fully responsible for all liability and obligations to the any Hotel Employees who are not rehired by Purchaser and to Hotel Employees who do not accept Purchaser’s offer of employment. No Hotel Employee shall be obligated to accept Purchaser’s or its management company’s offer for employment.  Nothing in this Agreement shall require Purchaser to assume any obligations under any employee benefit plans, programs or arrangements currently maintained for Hotel Employees, and Seller shall retain and be solely responsible for all obligations under such plans, programs or arrangements.

 

(b) Seller will indemnify and hold Purchaser harmless from and against any loss, damage, liability, claim, cost or expense (including, without limitation, reasonable attorneys’ fees) (“Employee Claims”) that may be incurred by, or asserted against, Purchaser relating to a past or present Hotel Employee to the extent arising from acts or omissions occurring prior to the date of Closing (including, without limitation, any Employee Claims which have not yet been asserted by the Closing).  Purchaser will indemnify and hold Seller harmless for, from and against any Employee Claims that may be incurred by, or asserted against, Seller after the date of Closing relating to a past or present Hotel Employee who accepts Purchaser’s offer of employment to the extent arising from acts or omissions occurring on or subsequent to the date of Closing.  These indemnities apply, without limitation, to all forms of civil labor and/or employment claims under state, federal or local law, whether brought in judicial, administrative, arbitration or other proceedings, private or public.  Seller and Purchaser acknowledge and agree that nothing in this Agreement is intended to create a “joint employer” relationship between them with respect to any Hotel Employee.

 

(c) The provisions of this Section 7.7 shall survive the Closing.

 

7.8 Disbursements and Other Actions by Escrow Agent.

 

At the Closing, Escrow Agent shall promptly undertake all of the following as and to the extent reflected on the settlement statement executed by Seller at Closing:

 

(a) Disburse all funds deposited with Escrow Agent by Purchaser as follows:

 

	
(i)  

	
If, as a result of the prorations and credits pursuant to Section 7.2 above, amounts are to be charged to the account of Seller, deduct the total amount of such charges;

 

	
(ii)  

	
Deduct and pay to the appropriate third party all items chargeable to the account of Seller pursuant to Section 7.5 above;

 

	
(iii)  

	
Pay to the appropriate third party from funds deposited by Purchaser all items chargeable to the account of Purchaser pursuant to Section 7.5 above;

 

	
(iv)  

	
Disburse the balance of the funds due to Seller to or as directed by Seller; and

 

	
(v)  

	
Disburse any remaining funds to or as directed by Purchaser.

 

All amounts and payees with respect to the items listed above shall be shown on settlement statements executed at the Closing.

 

(b) Cause the Special Warranty Deed (and any other item delivered to Escrow Agent and required to be recorded) to be recorded in the Office of the County Recorder where the Property is located (with the original recorded Warranty Deed to be delivered to Purchaser by Title Company together with the Title Policy);

 

(c) Cause the Ground Lease Assignment Agreement (or such other instrument necessary to evidence the assignment of Seller's interest to the Ground Lease) to be recorded in the Office of the County Recorder where the Atlanta Land is located.

 

(d) As soon after Closing as practically possible, to issue to Purchaser the Title Policy (including any endorsements issued in connection therewith);

 

(e) Deliver to Purchaser and Seller the other applicable fully-executed documents; and

 

(f) Take such other actions as Seller and Purchaser may deem necessary or convenient for the consummation of the Closing.

 

7.9 Escrow Agent as Reporting Person.

 

In order to assure compliance with the requirements of Section 6045 of the Code, and any related reporting requirements of the Code, the parties hereto agree as follows:

 

(a) Escrow Agent agrees to assume all responsibilities for information reporting required under Section 6045(e) of the Code, and Seller and Purchaser hereby designate Escrow Agent as the person to be responsible for all information reporting under Section 6045(e) of the Code (the “Reporting Person”).

 

(b) Seller and Purchaser hereby agree (i) to provide to the Reporting Person all information and certifications regarding such party, as reasonably requested by the Reporting Person or otherwise required to be provided by a party to the transaction described herein under Section 6045 of the Code; (ii) to provide to the Reporting Person such party’s taxpayer identification number and a statement (on Internal Revenue Service Form W-9 or an acceptable substitute form, or on any other form the applicable current or future Code sections and regulations might require and/or any form requested by the Reporting Person), signed under penalties of perjury, stating that the taxpayer identification number supplied by such party to the Reporting Person is correct; and (iii) to retain this Agreement for not less than four (4) years from the end of the calendar year in which the Closing occurred, and to produce it to the Internal Revenue Service upon a valid request therefore.

 

7.10 Survival.

 

The provisions of Article VII shall survive the Closing.

 

VIII.

 

Condemnation and Risk of Loss

 

8.1 Condemnation and Casualty.

 

Seller shall promptly notify Purchaser in writing of any condemnation proceeding filed or any casualty to the Property occurring prior to the Closing.

 

(a) Condemnation.  If any condemnation proceeding filed prior to the Closing may result in a loss of all of the Property or any portion of the Property that would cause a loss of ingress or egress to the Property or otherwise materially and adversely impair the operation of the Property (any or all of the foregoing instances shall be referred to herein as the “Condemnation Threshold”), then this Agreement shall, at Purchaser’s sole election, either (i) continue in effect without modification of the terms thereof, in which event, upon the Closing, Purchaser shall be entitled to any compensation, awards, or other payments or relief resulting from such condemnation proceeding, or (ii) terminate by Purchaser’s written notice to Seller and Escrow Agent delivered within five (5) business days after receipt by Purchaser of notice of such condemnation, in which event Escrow Agent shall return the Earnest Money to Purchaser, and all obligations, duties, rights and entitlements of Seller and Purchaser shall terminate, except that Seller and Purchaser shall (A) share equally the expenses of escrow, and (B) continue to be obligated under the Surviving Obligations.  If Purchaser does not elect to terminate this Agreement within such time period, or if any such occurrence does not meet the Condemnation Threshold, then this Agreement shall continue in effect without modification of the terms thereof, in which event, upon the Closing, Purchaser shall be entitled to any compensation, awards, or other payments or relief resulting from such condemnation proceeding.

 

(b) Casualty.  In the event of fire, casualty or any other damage of any kind whatsoever (insured or uninsured) to the Property which is reasonably estimated to cost five percent (5%) of the Purchase Price or more to repair, replace or remediate (the “Casualty Threshold”), Purchaser may, at its option, terminate this Agreement and escrow by written notice to Seller within 30 days after Purchaser’s receipt of the notice of casualty referred to above or at Closing, whichever is earlier, whereupon Escrow Agent shall return the Earnest Money to Purchaser, and all obligations, duties, rights and entitlements of Seller and Purchaser shall terminate, except that Seller and Purchaser shall (i) share equally the expenses of escrow, and (ii) continue to be obligated under the Surviving Obligations.  If Purchaser does not elect to terminate this Agreement within such time period, or if any such occurrence costs less than the Casualty Threshold to repair, replace or remediate, then

 

	
(i)  

	
the parties shall proceed to the Closing pursuant to the terms and conditions hereof, without modification of the terms of this Agreement and without any reduction in the Purchase Price except as set forth in this Section 8.1(b); and

 

	
(ii)  

	
Seller shall assign to Purchaser at Closing all of Seller’s interest in any insurance proceeds, subject to the consent of any lender holding a mortgage, deed of trust or other lien on the Property (except only, rent loss and business interruption insurance, and any similar insurance attributable to the period preceding the Closing Date) that may be payable to Seller on account of any such fire, casualty or other damage (provided that the amount of such insurance proceeds credited to Purchaser plus any other credits to Purchaser set forth below will never exceed the Purchase Price), and Purchaser will receive a credit against the Purchase Price for any such proceeds that are received and retained by any creditor of Seller and for the amount of any deductibles under any policies related to such proceeds, to the extent such deductibles or insurance proceeds have not been previously expended or are otherwise required to reimburse Seller for actual expenditures of restoration or the reasonable cost of securing the insurance proceeds.

 

IX.

 

Miscellaneous

 

9.1 Entire Agreement.

 

This Agreement (including the Exhibits attached hereto) constitutes the complete and final expression of the agreement of the parties relating to the Property and supersedes all previous contracts, agreements, and understandings of the parties, either oral or written, relating to the Property.  This Agreement cannot be modified, or any of the terms hereof waived, except by an instrument in writing (referring specifically to this Agreement) executed by the party against whom enforcement of the modification or waiver is sought.

 

9.2 Binding Effect; Assignment.

 

(a) This Agreement shall inure to the benefit of and be binding upon the heirs, personal representatives, successors and permitted assigns of each of the parties to this Agreement; provided, however, the same is not intended nor shall it be construed as creating any rights in or for the benefit of any person or entity other than the parties to this Agreement and their respective personal representatives, successors and permitted assigns.

 

(b) Provided that all the conditions in subsection (c) below are satisfied, Purchaser may assign its rights under this Agreement without Seller’s consent to (i) any entity, partnership or limited liability company over which Purchaser or its principals possess, directly or indirectly, the power to influence the direction of the management and policies thereof, either through the ownership of voting securities, as a managing general partner or member, or by contract or otherwise, (ii) to any partnership or limited liability company in which Purchaser, any entity managed or controlled by the principals or any person or entity controlling, controlled by or under common control with Purchaser, is a managing partner, general partner, or limited liability company member, (iii) or to any corporation in which Purchaser, or any entity controlling, controlled by or under common control with Purchaser, owns fifty percent (50%) or more of the voting stock, or (iv) any subsidiary of any of the foregoing; otherwise, neither Purchaser nor Seller may not assign this Agreement without the other party’s prior written consent, which consent may be withheld only in such party’s reasonable discretion.

 

(c) The following are conditions to any assignment of this Contract by Purchaser pursuant to the terms of this Section 9.2: (i) Purchaser may exercise its right to assign no more than once; (ii) no such assignment will release Purchaser from any of its liabilities under this Contract; (iii) such assignment shall not delay the Closing; and (iv) such assignment shall not require Seller to obtain any additional, or revised third party consents, certificates or approvals.

 

9.3 Notices.

 

Any notice, communication, request, reply or advice (collectively, “Notice”) provided for or permitted by this Agreement to be made or accepted by either party must be in writing.  Notice may, unless otherwise provided herein, be given or served (a) by depositing the same in the United States mail, postage paid, registered or certified, and addressed to the party to be notified, with return receipt requested; or (b) by delivery by hand or overnight courier; or (c) by facsimile transmission evidenced by confirmed receipt by the transmitting machine; or (d) by e-mail with proof of delivery.  Notice deposited in the mail in the manner hereinabove described shall be effective two (2) business days after such deposit.  Notice by overnight courier shall be effective one (1) business day after deposit with the courier service.  Notice given by facsimile transmission or email shall be effective on the business day delivered as evidenced by the printed delivery confirmation receipt retained by the sender, provided that such notice is also sent concurrently by registered or certified mail or overnight courier.  Notwithstanding the foregoing, any Notice received after 5:00 p.m. local time of the recipient shall be deemed to have been delivered the following business day.  For the purposes of Notice, the addresses of the parties shall be:

 

	
Seller:

	
SUPERTEL LIMITED PARTNERSHIP

11422 Miracle Hills Drive, Suite 501

Omaha, Nebraska 68154

Fax No.: 402-548-5796

Email: lgreen@supertelinc.com

Phone: 402-371-2520

Attention: Ms. Lauren Green, J.D.

	
with copy to:

	
McGrath, North, Mullin & Kratz, PC LLO

1601 Dodge Street, Suite 3700

Omaha, NE 68102

Fax No.: ____________________

Email: rdailey@mcgrathnorth.com

Phone: 402-341-3070

Attention:  Robert Dailey

	
Purchaser:

	
WESTMONT USA DEVELOPMENT, INC.

5847 San Felipe, Suite 4650

Houston, TX  77057

Fax No.: 713-782-9600

Email: Richard.Agee@whg.com; Larry.Bowman@whg.com

Phone: 212-247-5333 (Richard) and 816-283-8100 (Larry)

Attention:  Richard Agee and Larry Bowman

	
with copy to:

	
Baker & Hostetler LLP

200 South Orange Avenue, Suite 2300

Orlando, Kentucky 32801

Email: jmalchow@bakerlaw.com; jmelicharek@bakerlaw.com

Phone:  407-649-4000

Facsimile: 407-841-0168

Attention: Jessica P. Malchow, Esq and John Melicharek, Jr., Esq.

 

The parties shall have the right from time to time to change their respective addresses for notice by at least five (5) business days’ written notice to the other party.  The Email addresses of the parties are set forth above, and they may be relied on for purposes of Notice.

 

  

  

  

 

9.4 Governing Law.

 

This Agreement shall be governed by and construed in accordance with the internal laws of the State of Georgia, except to the extent that (i) the applicability of any of such laws may now or hereafter be preempted by Federal Law, in which case such Federal law shall so govern and be controlling, or (ii) the laws and policies of each state where the Property is located require that the laws of such state apply, in which case the laws of such state shall control and be governing.

 

9.5 Section Headings.

 

The section headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several sections of this Agreement.

 

9.6 Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

9.7 Time of the Essence.

 

Time is of the essence of this Agreement and of the obligations of the parties to purchase and sell the Property, it being acknowledged and agreed by and between the parties that any delay in effecting a closing pursuant to this Agreement may result in loss or damage to the party in full compliance with its obligations hereunder.

 

9.8 Invalid Provisions.

 

If any one or more of the provisions of this Agreement, or the applicability of any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Agreement and all other applications of any such provision shall not be affected thereby.

 

9.9 Computation of Time.

 

The time in which any act under this Agreement is to be done shall be computed by excluding the first day and including the last day.  If the last day of any time period stated herein shall fall on a Saturday, Sunday or legal holiday, then the duration of such time period shall be extended so that it shall end on the next succeeding day which is not a Saturday, Sunday or legal holiday.  Unless preceded by the word “business,” the word “day” shall mean a calendar day.  The phrase “business day” or “business days” shall mean those days on which the state courts of the county in which the Property is located are open for business.

 

9.10 Confidentiality.

 

(a) The terms of the transfers contemplated in this Agreement, including the Purchase Price and all other financial terms, as well as the non-public information discovered by, provided to or otherwise obtained by Purchaser and Seller and their respective agents either prior to or after the Effective Date in connection with the Property or the Business (the “Confidential Information”) shall remain confidential and shall not be disclosed by Purchaser or Seller without the prior written consent of the other party except to each party’s affiliates, officers, directors, lenders, investors and prospective investors, employees, agents and representatives (including legal counsel, accountants and similar professionals to the extent the party deems it reasonably necessary to inform such person(s), in which case they shall inform each of the foregoing persons of such party’s obligations under this Section and shall secure the agreement of such persons to be bound by the terms hereof).   Each party shall indemnify and hold the other party harmless for, from and against any and all Claims suffered or incurred by the other party and arising out or in connection with a breach by the other party of the provisions of this Section 9.10.

 

(b) The parties shall be entitled to an injunction restraining the other party or its agents or representatives from disclosing, in whole or in part, the Confidential Information governed by this Section 9.10 and any prior confidentiality agreement with the Broker.  Nothing herein shall be construed as prohibiting a party from pursuing damages or any other available remedy at law or in equity for such breach or threatened breach of this Section 9.10 or Section 1.3(e) by the other party; provided that no breaching party shall be liable to the other party for any special, indirect, incidental, punitive, exemplary or consequential damages.

 

(c) The provisions of this Section 9.10 shall survive the termination of this Agreement.

 

9.11 Offers.

 

Following the mutual execution of this Agreement and continuing until any termination of this Agreement, Seller agrees not to negotiate or enter into any other agreement with any other prospective purchaser for the sale and purchase of the Property.

 

9.12 Tax-Free Exchange.

 

In the event either party desires to effectuate a tax-free exchange under Section 1031 of the Code, the other party agrees to fully cooperate in the structure and documentation of the transaction in order to facilitate such Section 1031 exchange at no cost or other liability to such party and with no obligation to acquire title to any property other than the Property; provided, however, (a) there shall be no delay in the Closing, (b) the party requesting the Section 1031 exchange shall reimburse the other party at Closing for all reasonable additional costs and expenses incurred by such other party in cooperating with such exchange and (c) the party requesting the Section 1031 exchange shall indemnify the other party against any Claims resulting solely from structuring the transaction as an exchange, rather than as a direct purchase, which indemnification obligations shall survive the Closing and shall not merge with the Warranty Deeds or any other documents executed and delivered at the Closing.

 

9.13 Amendment to the Agreement/Waiver of Matters or Conditions.

 

No term or condition of this Agreement will be deemed to have been amended or waived unless expressed in writing, and the waiver of any condition or of the breach of any term will not be a waiver of any subsequent breach of the same or any other term or condition.

 

9.14 Indemnity.

 

(a) From and after the Closing, the Seller shall indemnify, defend and hold the Purchaser harmless for, from and against any and all Claims, suffered or incurred by any such indemnified party in connection with, arising out of, or in any way relating to (i) any breach of any express representation or warranty of the Seller contained in this Agreement or in any Seller closing document, (ii) any breach of any covenant of the Seller contained in this Agreement that expressly survives the Closing or in any Seller closing document, including, without limitation, any amount due and owing to the Purchaser following the Closing pursuant to Article VII, (iii) Claims made by Hotel Employees to the extent attributable to their employment at the Property prior to the Closing Date, (iv) any physical or personal injury or death caused to any person, or damage to property of unaffiliated third parties, to the extent such injury, death or damage occurred prior to the Closing Date in connection with the Property, and (v) except (x) as may be the obligation of Purchaser pursuant to an express provision of this Agreement or (y) for any item for which Purchaser receives a credit at Closing (to the extent of such credit), any Claims brought by any unaffiliated third party to the extent arising from acts, omissions or occurrences that occur or accrue in connection with the Property prior to the Closing Date, including, without limitation, with respect to the Hotel Contracts and the litigation in Schedule 5.1(k).

 

(b) From and after the Closing, the Purchaser shall indemnify, defend and hold the Seller harmless for, from and against any and all Claims arising out of, or in any way relating to (i) any breach of any representation or warranty by the Purchaser contained in this Agreement or in any Purchaser closing document, (ii) any breach of any covenant of the Purchaser which survives the Closing contained in this Agreement or in any Purchaser closing document including, without limitation, any amounts due and owing to the Seller following the Closing pursuant to Article VII, (iii) claims made by Hotel Employees to the extent attributable to their employment at the Property from and after the Closing Date, but only to the extent that such claims accrue from or after the Closing Date, (iv) any physical or personal injury or death caused to any person, or damage to property of unaffiliated third parties, to the extent such injury, death or damage occurred on or after the Closing Date in connection with the Property, and (v) except (x) as may be the obligation of Seller pursuant to an express provision of this Agreement and with respect to which Purchaser did not receive a credit at Closing or (y) for any item for which Seller receives a credit at Closing (to the extent of such credit), any Claims brought by an unaffiliated third party to the extent arising from acts, omissions, or occurrences that occur or accrue in connection with the Property on or after the Closing Date, including, without limitation, with respect to the Hotel Contracts, Permits and the litigation listed on Schedule 5.1(k).

 

(c) The provisions of this Section 9.14 shall survive the Closing for a period of two (2) years, and a party will be entitled to indemnification only for those matters as to which it has given written notice to the party which is to provide indemnification prior to the expiration of the two (2) year period following the Closing.

 

9.15 Privacy Laws.

 

To the extent Purchaser reviews, is given access to or otherwise obtains any Hotel Guest Data and Information or other customer or guest information as part of the purchase of the Property and the Business, Purchaser shall at all times comply in all material respects with all applicable Laws concerning (i) the privacy and use of such data and information and the sharing of such information and data with third parties (including, without limitation, any restrictions with respect to Purchaser’s or any third party’s ability to use, transfer, store, sell, or share such information and data), and (ii) the establishment of adequate security measures to protect such data and information. This Section 9.15 shall survive the Closing or earlier termination of this Agreement.

 

9.16 Further Assurances.

 

From the Effective Date until the Closing or earlier termination of this Agreement, Seller and Purchaser shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate the transaction described in this Agreement, including, without limitation, (i) obtaining all necessary consents, approvals and authorizations required to be obtained from any governmental authority or other person under this Agreement or applicable laws, and (ii) effecting all registrations and filings required under this Agreement or applicable laws. After the Closing, Seller and Purchaser shall use commercially reasonable efforts (at no cost or expense to such party, other than any de minimis cost or expense or any cost or expense which the requesting party agrees in writing to reimburse) to further effect the transaction contemplated in this Agreement.  The immediately preceding sentence of this Section 9.16 shall survive the Closing.

 

9.17 WAIVER OF TRIAL BY JURY.

 

SELLER AND PURCHASER EACH HEREBY WAIVE ITS RIGHT TO A TRIAL BY JURY IN ANY LITIGATION OR OTHER COURT PROCEEDING WITH RESPECT TO ANY MATTER ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY.  THIS SECTION 9.17 SHALL SURVIVE THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT.

 

9.18 Bulk Sales.

 

Purchaser and Seller agree to cooperate and take any actions reasonably necessary to comply with the bulk sales or other sales tax statutes, if any, of the State in which the Property is located, in connection with the transactions contemplated by this Agreement.  The provisions of this Section 9.18 shall survive the Closing.

 

9.19 Facsimile/E-mail Execution.

 

For purposes of negotiating and finalizing this Agreement, any signed document transmitted by fax machine with automatic telephonic confirmation of receipt or by e-mail with confirmation of receipt shall be treated in all manners and respects as an original document.  The signature of any party transmitted as aforesaid shall be considered for all purposes as an original signature and any such document shall be considered to have the same binding legal effect as an original document executed, delivered and exchanged between the parties.  At the request of either party, any fax or email document shall be re-executed by both parties in original form, and each party agrees to deliver to Escrow Agent an original signature and acknowledgment for any document required to be recorded.  Seller and Purchaser hereby agree that neither shall raise the use of a fax or email transmission of signatures as a defense to this Agreement and each hereby waives such a defense.

 

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

  

  

  

IN WITNESS WHEREOF, this Purchase and Sale Agreement has been duly executed in multiple counterparts by the parties hereto on the dates set forth below.

 

SELLER:

Date:  September 26, 2013

SUPERTEL LIMITED PARTNERSHIP,

a Virginia limited partnership

 

By:        /s/ Kelly A. Walters                                                        

 

Printed:   Kelly A. Walters

Title:  President

 

 

 

 

PURCHASER:

Date:________________________

WESTMONT USA DEVELOPMENT, INC.,

a Delaware corporation

 

By:      /s/ Mohamed Thowfeek                                                                     

Name:   Mohamed Thowfeek

Title:   Authorized Representative

  

  

  

 

SIGNATURE BY ESCROW AGENT

 

The undersigned hereby acknowledges receipt of a fully-executed copy of this Agreement and upon receipt of the Earnest Money, agrees to accept, hold, deliver and disburse the Earnest Money strictly in accordance with the terms of the Agreement and to otherwise perform the obligations of Escrow Agent and Reporting Person as set forth in the Agreement.

 

Date:  September 27, 2013

ESCROW AGENT

 

FIRST NATIONWIDE TITLE AGENCY LLC

 

By:      /s/ Debra Paoli                                                                     

 

Name:    Debra Paoli                                                                       

 

Title:      Vice President and National Underwriter                                                                     

 

  

  

  

Table of Schedules and Exhibits

Schedule 2.3 – Seller’s Proposed Purchase Price Allocation

 

Schedule 5.1(e) – Seller's Disclosure Relating to Leases and Occupancy Agreements

 

Schedule 5.1(k) – Seller's Disclosure Relating to Litigation, Investigations and other Proceedings

 

Exhibit “A-1” – Legal Description of Atlanta Land

 

Exhibit “A-2” – Legal Description of Augusta Land

 

Exhibit “A-3” – Legal Description of Chamblee Land

 

Exhibit “A-4” – Legal Description of Greenville Land

 

Exhibit “A-5” – Legal Description of Jonesboro Land

 

Exhibit “A-6” – Legal Description of Savannah Land

 

Exhibit “A-7” – Legal Description of Stone Mountain Land

 

Exhibit “B” – Due Diligence Materials

 

Exhibit “C” – Material Contracts

 

Exhibit “D” – Permits

 

Exhibit “E” – List of FF&E

 

Exhibit "F" – Form of Assignment of Ground Lease Agreement

 

Exhibit “G” – Form of Ground Lease Estoppel

 

Exhibit “H” – Form of Assignment

 

Exhibit “I” – Form of Bill of Sale

 

  

  

  

Schedule “2.3” – Purchase Price Allocations

 

The Purchase Price shall be allocated as follows:

 

	
1. Atlanta, Georgia

 

Land:

Building and Improvements:

Tangible Personal Property:

 

	
 

$1,000,000.00

$1,565,000.00

$285,000.00

 

	
Augusta, Georgia

Land:

Building and Improvements:

Tangible Personal Property:

	
 

$750,000.00

$3,024,272.00

$419,364.00

 

	
Chamblee, Georgia

Land:

Building and Improvements:

Tangible Personal Property:

	
 

$1,650,000.00

$2,585,928.00

$470,659.00

 

	
Greenville, South Carolina

Land:

Building and Improvements:

Tangible Personal Property:

	
 

$2,000,000.00

$260,084.00

$251,120.00

 

	
Jonesboro, Georgia

Land:

Building and Improvements:

Tangible Personal Property:

	
 

$1,700,000.00

$224,205

$213,801.00

	
Savannah, Georgia

Land:

Building and Improvements:

Tangible Personal Property:

	
 

$1,000,000.00

$1,899,887.00

$322,210.00

 

	
Stone Mountain, Georgia

Land:

Building and Improvements:

Tangible Personal Property:

	
 

$550,000.00

$2,040,623.00

$287,847.00

  

  

  

Schedule “5.1(e)” – Leases and Occupancy Agreements

Atlanta, Georgia Leases

 

	
Lease Type

	
Lessor

	
Lessee

	
Renewal Date

	
Term

	
Rent

	
Cell Tower Lease

	
Supertel

	
Cingular Wireless

	
06/09/10

	
Tenant has one more 5-year renewal term available

	
original term - $9,800; 1st renewal term - $10780; 2nd renewal term - $11858.

	
Land

	
Alma W. Bennett

	
Supertel

	
 

	
Expires 11/30/2067

	
 

$1,100 through 12/31/2017;  $1,200 through 12/31/2032; $1,300 through  12/31/2042; $1,400 through 12/31/2052; $1,500 through 12/31/2062; $1,600 through 11/30/2067

  

  

  

Schedule “5.1(k)” – Litigation, Investigations, and other Proceedings

 

Greenville, South Carolina

Tamitha Smith vs. Supertel

On May 16, 2013, our registered agent was served with a complaint filed in Greenville County Court of Common Pleas, South Carolina.    Ms. Smith is alleging injury from a slip and fall at the Greenville, South Carolina Savannah Suites.  Travelers has assigned the Law Office of Clarkson, Walsh, Terrell & Coulter to defend this matter.   This claim is fully insured by Travelers.

McFadden vs. Simmons, et al

On July 12, 2013, our registered agent was served with a complaint filed in Greenville County Court of Common Pleas, South Carolina.    Mr. McFadden is alleging injury from an altercation with a security guard at the Greenville, South Carolina Savannah Suites.     The security guard is a named defendant in this matter, as is the security company that employed him (AP Professional Security).     This claim is fully insured by Travelers.   The insurance company for the security company has also been put on notice for this claim.

Although a complaint has not been filed, we have been contacted by a representative of the estate of Ledrekius Sloan. Mr. Sloan was shot by a security guard working for AP Professional Security while on the hotel property. We believe  a claim, if made, would be fully-insured by Travelers and Travelers has been made aware of the incident and is actively working on this matter. There was at the time of the incident an indemnity agreement in place wherein AP Professional Security agrees to indemnify, defend and hold harmless Supertel against any and all claims or actions made by or filed by any third party arising out of or attributable to any alleged act, omission or breach of Security Provider related to its engagement.  Travelers has provided a copy of this indemnification agreement to the insurance company for AP Security.

  

  

  

Schedule “A-1” – Legal Descriptions of Atlanta Land

See following pages.

  

  

  

Schedule “A-2” – Legal Descriptions of Augusta Land

See following pages.

  

  

  

Schedule “A-3” – Legal Descriptions of Chamblee Land

See following pages.

  

  

  

Schedule “A-4” – Legal Descriptions of Greenville Land

See following pages.

  

  

  

Schedule “A-5” – Legal Descriptions of Jonesboro Land

See following pages.

  

  

  

Schedule “A-6” – Legal Descriptions of Savannah Land

See following pages.

  

  

  

Schedule “A-7” – Stone Mountain Land

See following pages.

  

  

  

Exhibit “B” – List of Due Diligence Materials

	
1

	
-

	
Accounts Payable Aging

	
2

	
-

	
Accounts receivable

	
3

	
-

	
Bonus Plan Information

	
4

	
-

	
Booking Pace Report

	
5

	
-

	
Budget (Current and Future)

	
6

	
-

	
Call Accounting Reports (12-month history) – Not Available

	
7

	
-

	
Capital Expenditure (3-yr History)

	
8

	
-

	
Certificate of Occupancy

	
9

	
-

	
City Ledger

	
10

	
-

	
Contract or Base Commitments With Rate

	
11

	
-

	
Contracts & Leases (Schedule and Copies)

	
12

	
-

	
Convention Calendar – Not Available

	
12a

	
-

	
College Sports Calendar

	
13

	
-

	
Current STR Report & Prior Three Year-Ends

	
14

	
-

	
Employee Accrued Vacation

	
15

	
-

	
Employee Benefit Plans

	
16

	
-

	
Employee List to include department, rate of pay and hire date)

	
17

	
-

	
Employment Contracts, if any

	
18

	
-

	
FF&E Inventory – Not Available

	
19

	
-

	
Financials (3-yr History and Monthly Detail for YTD)

	
20

	
-

	
Fire Inspection (Most Recent)

	
21

	
-

	
Health Inspection (Most Recent)

	
22

	
-

	
Insurance Certificate

	
 23

	
-

	
Insurance Claims (Prior and Settled)

	
24

	
-

	
Linen Inventory

	
25

	
-

	
Litigation Pending

	
26

	
-

	
Lost Business Log – Not Available

	
27

	
-

	
OCC / ADR (3-yr Month-by-Month History)

	
28

	
-

	
Occupancy Tax Returns (3 years history)

	
29

	
-

	
Operating Equipment Inventory – Not Available

	
30

	
-

	
Outstanding Repairs List

	
31

	
-

	
Payroll Summary Report (Most current)

	
32

	
-

	
Performance Information Kept On Comp Set – Available on STAR Report #4

	
33

	
-

	
Permits & Licenses (Other than Liquor and CO)

	
34

	
-

	
Rate schedule

	
35

	
-

	
Real and Personal Taxes (3-yr History)

	
36

	
-

	
Renovation Budget – Not Available

	
37

	
-

	
Revenue Leases – Not Available

	
38

	
-

	
Sales Manager Profile

a.  Brief summary of experience

b.  Markets covered

c.  Goals/actual/incentive payments (last 12 months)

d.  Salary

e.  Last month activity report

f.  Future bookings summarized by month

	
39

	
-

	
Sales System Evaluation (Delphi, Act, Number of Computers, etc.) – We use Salesforce (Passwords conveyed at Closing)

	
40

	
-

	
Sales Tax Returns (12 month history)

	
41

	
-

	
Standard Group Contract (Copy) – Not Available

	
42

	
-

	
Top Corporate Account Production and Rate Schedule

	
43

	
-

	
Unfunded Pension or Workers Comp Obligations – Workers Compensation obligation disclosed in #23; No Unfunded Pension

	
44

	
-

	
Union Contracts, if any – None

	
45

	
-

	
Utility Bills to include phone bills for all phones

(6-month History)

	
46

	
-

	
Vendor List

	
47

	
-

	
Warranties

	
48

	
-

	
Wholesale Production and Rate Schedule With Allotments

	
49

	
-

	
Inventory of all PC’s, phone systems, voice mail systems, network gear, and software licensing

	
50

	
-

	
Circuit inventory – voice & data

	
51

	
-

	
PCI- the results of the last external vulnerability scans for sites conveyed with the sale, latest penetration test results, latest PCI Self Assessment Questionnaire and Attestation of Compliance; and an Attestation of Compliance for any third party service providers that handle credit card or Personally Identifiable Information.

	
52

	  	
Trial balance sheet

	
53

	  	
General Ledger

  

  

  

Exhibit “C” – List of Material Contracts

See following pages.

 

  

  

  

Exhibit “D” – Permits

[To be attached during the Contingency Period]

  

  

  

Exhibit “E” – List of FF&E

[To be attached during the Contingency Period]

  

  

  

Exhibit "F" – Form of Assignment of Ground Lease Agreement

THIS ASSIGNMENT AND ASSUMPTION OF GROUND LEASE (this "Assignment") is made and entered into effective as of the ______ day of ___________, 2013 (the "Effective Date") by and between SUPERTEL LIMITED PARTNERSHIP, a Virginia limited partnership (the "Assignor"), and WESTMONT USA DEVELOPMENT, INC., a Delaware corporation (“Assignee”).

RECITALS:

This Assignment is made with respect to the following facts:

A.           This Assignment is made pursuant to that certain Purchase and Sale Agreement by and between Assignor and Assignee, effective as of ________________, 2013 (as amended the “Agreement”).

B.           Assignor is the tenant of the property described in Exhibit A hereto (the "Premises"), pursuant to the lease described in Exhibit B hereto (the "Lease").

C.           Assignor wishes to assign all of its right, title and interest in and to the Lease and the leasehold estate thereunder to Assignee, and Assignee has agreed to assume and perform all of Assignor's liabilities and obligations arising under the Lease on and after the Effective Date as set forth herein.

ASSIGNMENT:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           Assignment.  Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest as tenant or lessee in, to and under the Lease and the leasehold estate thereunder. subject to any municipal or other governmental zoning laws, regulations and ordinances, if any, affecting the Property that is subject to the Lease, and the “Permitted Encumbrances” listed in Exhibit B-1 hereto, TO HAVE AND TO HOLD  the said Lease, the estate created thereby, and any buildings and improvements thereon, unto Assignee, its successors and assigns forever.

2.           Covenants.  The Assignor does hereby covenant with the Assignee and its successors and assigns, that the Assignor (i) is the true and lawful owner of the leasehold estate created by the Lease, (ii) has good right to bargain, sell and transfer hereby, (iii) as of the date hereof there is no default by Assignor under the Lease, and (iv) from and after the Effective Date, the Assignor will not have any interest in the Lease or the leasehold estate created under the Lease.

3.           Assumption.  Assignee hereby assumes all covenants, liabilities and obligations of Assignor under the Lease which relate to the periods on and after the Effective Date as and when performance is due after the effective date of this Assignment and agrees to perform all covenants and obligations of Assignor under the Lease which are to be performed or which become due on or after the Effective Date. Assignee agrees that the Landlord under the Lease will have the right to enforce such covenants directly against Assignee.

4.           Indemnity by Assignee and by Assignor.

(a)           Assignee shall be responsible for and shall defend, indemnify and hold Assignor (and its successors and assigns) harmless from and against any and all losses, liabilities, damages, injuries, penalties, fines, costs, expenses and claims of any and every kind whatsoever (including, without limitation, reasonable attorneys' fees and expenses) paid, incurred or suffered by, or asserted against, Assignor (and its successors and assigns) under the Lease on or after the Effective Date and relating to events occurring or liabilities or obligations accruing under the Lease on or after the Effective Date.

(b)           Assignor shall be responsible for and shall defend, indemnify and hold Assignee (and its successors and assigns) harmless from and against any and all losses, liabilities, damages, injuries, penalties, fines, costs, expenses and claims of any and every kind whatsoever (including, without limitation, reasonable attorneys' fees and expenses) paid, incurred or suffered by, or asserted against, Assignee (and its successors and assigns) under the Lease prior to the Effective Date and relating to events occurring or liabilities or obligations accruing as a result of Assignor under the Lease before the Effective Date.

5.           Improvements.  Assignor does hereby ASSIGN, TRANSFER, SET OVER, and DELIVER to Assignee, all right, title and interest of Assignor in and to the buildings and permanent improvements (collectively, the “Improvements”) located on (including underground) the Premises.  By acceptance hereof, Assignee agrees that its ownership of the Improvements shall be subject to the terms and provisions of the Lease.  By acceptance hereof, Assignee further hereby agrees that its ownership of the Improvements, together with all alterations thereto and any other improvements then existing on (including underground) the Land, will automatically revert to the then owner of the Land and the landlord under the Lease upon expiration or earlier termination of the Lease, without compensation to Assignee and free and clear of all claims by Assignee.

6.           Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the parties' respective successors and assigns.

7.           Counterparts. This Assignment may be executed in counterparts, each of which

shall be deemed a duplicate original.

[SIGNATURE PAGES FOLLOW]

  

  

  

IN WITNESS WHEREOF, this Assignment and Assumption of Ground Lease Agreement has been duly executed in multiple counterparts by the parties hereto on the dates set forth below.

 

ASSIGNOR:

Date:________________________

SUPERTEL LIMITED PARTNERSHIP,

a Virginia limited partnership

 

By:                                                                

Printed: _____________________________

Title: _______________________________

 

 

ASSIGNEE:

Date:________________________

WESTMONT USA DEVELOPMENT, INC.,

a Delaware corporation

 

By:                                                                           

Name: ____________________________________

Title: _____________________________________

  

  

  

CONSENT OF GROUND LESSOR TO ASSIGNMENT AND ASSUMPTION OF GROUND LEASE

In accordance with Section [______] of the Lease, Alma W. Bennett ("Ground Lessor"), on behalf of itself, and its successors and assigns, hereby consents to the terms and provisions of the Assignment from Assignor to Assignee and whereby Assignee shall have the right to use the Premises (as defined in the Lease), and Ground Lessor hereby releases Assignor from all obligations of the Ground Lease from and after the date of this consent.  Ground Lessor hereby acknowledges that the Lease is in full force and effect and, to its knowledge, Assignor is not in default under the terms thereunder.   Ground Lessor hereby represents and warrants to Assignee that the undersigned individual executing this Consent of Landlord on behalf of Ground Lessor is fully empowered and authorized to execute this Consent of Ground Lessor on behalf of Ground Lessor.

GROUND LESSOR:

Date:________________________

[_________________________________]

 

By:                                                                

Printed: _____________________________

Title: _______________________________

 

EXHIBIT A TO ASSIGNMENT AND ASSUMPTION OF GROUND LEASE

[INSERT DESCRIPTION OF THE ATLANTA LAND]

EXHIBIT B TO ASSIGNMENT AND ASSUMPTION OF GROUND LEASE

[ATTACH GROUND LEASE]

EXHIBIT B-1 TO ASSIGNMENT AND ASSUMPTION OF GROUND LEASE

Permitted Encumbrances

1.           To be included.

  

  

  

Exhibit “G” - Form of Assignment of Ground Lease Estoppel

Date:  ________________, 2013

Baker & Hostetler LLP

Attn: Jessica Parker Malchow, Esq.

200 South Orange Avenue

Suite 2300

Orlando, Florida 32801

Facsimile: 407-841-0168

Email: jmalchow@bakerlaw.com

Re:  Ground Lease dated October 19, 1967  (collectively, the "Lease") executed between Criswell Baking Company, Inc., as original lessor, and Peachtree Road-Biscayne, Inc. as original lessee and that Alma W. Bennett is presently the owner of record of the Property, as successor-in-interest to Criswell Baking Company, inc. (“Landlord”), and Supertel Limited Partnership, a Virginia limited partnership, as successor-in-interest to Peachtree Road-Biscayne, Inc. (“Tenant”), for that premises known as the Savannah Suites hotel located at 140 Pine Street, Atlanta, Georgia 30308 (the “Property”).

To Whom It May Concern:

The undersigned Landlord understands that Tenant intends to convey its leasehold interest pursuant to the Lease for that certain property located at 140 Pine Street, Atlanta, Georgia 30308  (the "Property") to a purchaser thereof.  The undersigned Landlord does hereby certify as follows:

A.           Tenant and Landlord have entered into the Lease together with all amendments as described above and as attached hereto as Schedule “1”.

B.           The Lease is in full force and effect and has not been modified, supplemented, or amended except as set forth above.

C.           Landlord has not given Tenant written notice of any default under the Lease, and Landlord is not aware of any events which, given the passage of time or delivery of notice, would become a Tenant default under the Lease.

D.           Tenant has paid a security or other deposit with respect to the Lease in the amount of $__________.

E.           Rent due from Tenant pursuant to the Lease is $_____________ due on the first day of each month, and Tenant has fully paid rent to and including the month of __________, 2013.

F.           Other sums that Tenant is responsible for under the Lease are $_____________ and are paid in full through the month of _______________, 2013, except: _______________________

G.           The Lease expires on November 30, 2067, and Tenant does not have any options to renew or extend the term of the Lease.

This Certificate may be relied upon by Supertel Limited Partnership, a Virginia limited partnership, any purchaser of the Property and any lender to any of the foregoing and shall inure to the benefit of their respective successors and assigns.

LANDLORD:

Alma W. Bennett

  

  

  

 

EXHIBIT “H” – FORM OF ASSIGNMENT

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS AGREEMENT made as of _________, 2013 (the “Effective Date”) by and between Supertel Limited Partnership (“Assignor”) and Westmont USA Development, Inc. (“Assignee”).

 

WITNESSETH:

 

Pursuant to that certain Purchase and Sale Agreement, simultaneous herewith, Assignor is selling and conveying to Assignee that certain real property more particularly described on the attached Exhibit “A” (the “Property”).

 

In connection with the sale of the Property and in consideration of the sum of Ten Dollars ($l0.00) and other good and valuable consideration, Assignor, for itself and its successors and assigns, does hereby assign and transfer unto Assignee, its successors and assigns, all Assignor’s right, title and interest in and to the agreements described in Exhibit “B” attached hereto and incorporated by reference herein (the “Agreements”), and the licenses, permits, certificates of occupancy, authorizations and approvals used in or relating to the ownership, maintenance, occupancy, operation or use of any part of the Property or the hotels located thereon (to the extent transferable by Assignor) as more particularly described on the attached Exhibit “C” (the “Permits”).

 

Assignee, for itself and its successors and assigns, does hereby accept, assume, take over, and succeed to all Assignor’s right, title and interest in and to the Agreements and Permits and all their terms, conditions, provisions, covenants and obligations contained therein, and in any amendments thereto, which Assignor is obligated to keep or perform that accrue from and after the Effective Date, and hereby covenants with Assignor, its successors and assigns, to fully and faithfully make, keep and perform all payments, terms, conditions, covenants and obligations contained in the Agreements and Permits, to be made, kept, or performed by Assignor on or after the Effective Date.  Assignee does hereby agree, for itself and its successors and assigns, to indemnify, save and hold harmless Assignor, its successors and assigns, from any loss, damage, claim, cost or expense arising from the failure of Assignee, its successors or assigns, to perform any of the terms, conditions, covenants and obligations of the Agreements; provided such indemnity shall extend only as to failures occurring on or after the Effective Date.

 

Assignor does hereby agree, for itself and its successors and assigns, to indemnify, save and hold harmless Assignee, its successors and assigns, from any loss, damage, claim, cost or expense arising from the failure of Assignor, its successors or assigns, to perform any of the terms, conditions, covenants and obligations of the Agreements; provided such indemnity shall extend only as to failures occurring prior to the Effective Date.

 

  

  

  

 

IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Assumption Agreement to be executed by their proper officers, hereunto duly authorized, as of the day and year first written above.

 

	
ASSIGNOR:

 

SUPERTEL LIMITED PARTNERSHIP,

a Virginia limited partnership

 

   By:  Supertel Hospitality REIT Trust

   Its:  General Partner

 

By:                                                                

Its:                                                                

	
ASSIGNEE:

 

WESTMONT USA DEVELOPMENT, INC., a Delaware corporation

 

 

By:                                                                

Its:                                                                

	  	  

[Attach Exhibits A, B and C]

  

  

  

Exhibit “I” - Form of Bill of Sale

BILL  OF  SALE

This BILL OF SALE (“Bill of Sale”) is entered into pursuant to that certain Purchase and Sale Agreement (“Contract”), dated ___________, 2013, by and between __________________________ (“Seller”) and ________________________ ("Buyer"), which Contract relates to certain real property more particularly described on the attached Exhibit "A" ("Property").

KNOW ALL PEOPLE BY THESE PRESENTS, that the Seller, for and in consideration of the sum of Ten and No/100 Dollars ($10.00), lawful money of the United States and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, paid by Buyer to the Seller, the receipt of which is acknowledged, has granted, bargained, sold, conveyed, transferred and delivered, and by this Bill of Sale, does grant, bargain, sell, convey, transfer, and deliver to Buyer, its successors and assigns, all right, title and interest, legal and equitable, in and to the following (as each capitalized term is defined in the Contract, and collectively referred to as the “Property”): (i) the Furnishings, (ii) the Consumables, (iii) the Expendables, (iv) the Books and Records, (v) the Hotel Guest Data and Information, (vi) the Bookings, (vii) the Advance Deposits, and (viii) the Intangible Personal Property (to the extent transferable by Seller); but expressly excluding any Excluded Assets.

TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns forever.

 

SELLER warrants that the Property is free of all liens and encumbrances made by Seller, and that the Seller will defend the title of the Property against the lawful claims of all persons claiming by, through or under the Seller, but against none other;

AND the Seller agrees to perform all such further acts and execute and deliver all such further agreements, instruments and other documents as Buyer may reasonably request in order to evidence more effectively the conveyance, transfer, assignment and distribution made by Seller under this Bill of Sale.

IN WITNESS WHEREOF, the Seller has signed and sealed this Bill of Sale effective as of  the ____ day of _____________________, 2013.

SELLER:

[Attached Exhibit “1” legal description]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}]]