1
EXHIBIT 99.1
AGREEMENT
OR PURCHASE AND SALE
BETWEEN
BILTMORE HOTEL PARTNERS, LLLP,
AS SELLER
AND
KSL BILTMORE RESORT, INC.,
AS BUYER
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................................1
ARTICLE II PURCHASE AND SALE.........................................12
ARTICLE III TRANSITION PERIOD.........................................16
ARTICLE IV CONDITIONS TO BUYER'S OBLIGATIONS.........................16
ARTICLE V CONDITIONS TO SELLER'S OBLIGATIONS........................18
ARTICLE VI SELLER'S REPRESENTATIONS..................................19
ARTICLE VII BUYER'S REPRESENTATIONS...................................26
ARTICLE VIII RISK OF LOSS AND INSURANCE PROCEEDS.......................28
ARTICLE IX CLOSING...................................................30
ARTICLE X SELLER'S COVENANTS........................................34
ARTICLE XI SELLER'S AND BUYER'S COVENANTS............................36
ARTICLE XII MISCELLANEOUS.............................................44
(i)
3
AGREEMENT OF PURCHASE AND SALE
This Agreement is made and entered into as of this 22nd day of
December, 2000, by and between BILTMORE HOTEL PARTNERS, LLLP, an Arizona limited
liability limited partnership, and KSL BILTMORE RESORT, INC., a Delaware
corporation ("Buyer").
RECITALS
A. Seller (as defined in Section 1.59 below) is the owner of certain
improved real property located at 00xx Xxxxxx and Missouri in Phoenix, Arizona
as more particularly described in Exhibit A attached hereto, commonly known as
the Arizona Biltmore Resort & Spa.
B. The "Hotel" (as defined in Section 1.36 below) and related assets
are encumbered by the "Existing Financing" which, as more expressly set forth
below, shall be assumed by Buyer upon the Closing (subject to the terms and
conditions of this Agreement).
C. Buyer desires to purchase the Property from Seller and Seller is
willing to sell the Property to Buyer upon and subject to the terms and
conditions of this Agreement.
D. Buyer and Seller desire to enter into this Agreement for the purpose
of providing for the consummation of the acquisition of the Property by Buyer
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Accounts Payable" or "A/P" shall mean all accrued amounts owed by
Seller as of the "Proration Time" (as defined in Section 1.54 below), and
arising out of the ownership or operation of the Hotel and the Hotel Business,
including, without limitation, the following: unpaid charges for utilities,
amounts payable to creditors from whom inventory, FF&E and other items have been
purchased and received (and the asset recorded on the books and records of the
Hotel), amounts payable under the Assumed Contracts, credit card commissions
payable, travel agent commissions, and with respect to maintenance, cleaning and
other services performed in connection with the operation of the Hotel and the
Hotel Business. A/P does not include: any closing costs incurred by Seller in
connection with the Closing; amounts owed to any affiliate of
4
the Seller other than with respect to commercial services being provided with
respect to the operation of the Hotel or the Hotel Business upon arm's length
terms and conditions (but specifically excluding any management services);
employment-related liabilities as more specifically set forth in Section 11.4
below, including benefit and insurance-related liability; accrued, but unpaid
attorneys fees; and amounts currently owed under the Existing Financing.
1.2 "Accounts Receivable" shall mean all accrued amounts owed to Seller
as of the Proration Time and arising out of the ownership or operation of the
Hotel and the Hotel Business, whether or not past due and whether or not a xxxx
or statement has been presented to the person or entity owing such amount,
including, without limitation, the following: items and amounts indicated on the
Accounts Receivable subledger and the related general ledger accounts of the
Hotel, lease rentals, percentage rentals, escalation rentals, operating cost
pass-throughs and all other sums and charges payable in connection therewith;
room, food and beverage charges, telephone or telecopy charges; valet charges,
charges for other services or merchandise; charges for banquets, meeting rooms,
catering and the like; sales, use and occupancy taxes due from the consumers of
goods and services; and amounts owed from credit card companies (gross, with
related commissions being part of A/P). Accounts Receivable excludes attorneys'
fees and costs payable to Seller in connection with the Golf Rights Litigation,
the Construction Litigation or any other litigation; excludes any amounts
receivable from employees of the Seller (travel advances); and excludes amounts
receivable from any affiliate of the Seller other than with respect to
commercial services being provided with respect to the operation of the Hotel
Business upon arm's length terms and conditions. Accounts Receivable will not be
reduced by an allowance for "bad debts."
1.3 "Advance Deposits" shall mean the amounts of any deposits made in
connection with Bookings, and under the Leases and/or Residency Agreements.
1.4 "Affiliate" means any Person controlling, controlled by or under
common control with another Person; control for the purposes hereof means the
possession of more than fifty percent (50%) of the economic or voting interest
as an entity or "control in fact".
1.5 "Agreement" shall mean this Agreement of Purchase and Sale and all
future amendments and modifications hereto.
1.6 "Assumed Contracts" means the Equipment Leases, Leases, Contracts,
Residency Agreements and Membership Agreements listed on Schedules 1.20, 1.40,
1.17, 1.58, respectively (exclusive, however, of any inter-company agreements of
Seller, and any hotel management, franchise and/or operating agreements (other
than those operating agreements listed on the Schedules being assumed by Buyer
such as agreements relating to operation of the pool cabanas, the business
center, and tee time scheduling), and the "Excluded Contracts" as defined in
Section 1.22 below). Each of these Schedules shall be updated at Closing to
reflect any new contracts approved, or deemed approved, by Buyer in accordance
with the terms of Section 10.2 below and/or any insurance policies assumed by
Buyer in accordance with the terms of Section 10.1 below (and reference to such
new contract(s) and/or insurance policies shall be added to the appropriate
Schedule prior to Closing). Assumed Contracts shall not include the Excluded
Contracts, those contracts or agreements which are not assignable and those for
which consent to assignment (as indicated on Schedule 6.1(b)) has not been
received from the
-2-
5
appropriate third party on or before that date which is six (6) months
following the date of Closing. Other than with respect to the Ground Lease
(which obligation to seek to obtain the consent of the Villas Association to the
assignment of the Ground Lease to Buyer shall be governed by the terms of
Section 12.15 below) if Seller fails to obtain the necessary third party consent
with respect to any of those agreements set forth on Schedule 6.1(b) within six
(6) months of the Closing Date, then such agreement shall be deemed to have not
been assigned by Seller to Buyer, nor assumed by Buyer, and Buyer shall have no
obligation therefor (other than for the cost of paying for services actually
received thereunder from and after the date of Closing until the earlier of
either: (a) the date upon which consent is expressly denied, or (b) that date
which is six-months following the Closing Date).
1.7 "Authorities" shall mean any judicial and/or governmental body or
agency having jurisdiction over the Property and/or Seller, including, without
limitation, the City of Phoenix, the County of Maricopa and the State of
Arizona.
1.8 "Bookings" means contracts or other written commitments for the
future use of guest rooms, banquet facilities, meeting or convention rooms, or
other Hotel facilities and off-site catering.
1.9 "Buyer's Knowledge" or words of similar import (i) shall mean to
the actual knowledge of Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxx Xxxx and Xxxx Xxxxxxx and
not any other Person, (ii) shall mean the actual knowledge (and not any implied,
constructive or imputed knowledge) of such individuals, it being understood and
acknowledged that such individuals are not charged with knowledge of any of the
acts and/or omissions of Buyer's agents or employees, (iii) shall not apply to
or be construed to apply to information or material which may be in the
possession of Buyer, generally or incidentally, but which is not actually known
to the aforesaid individuals who are directly engaged in the sale and purchase
transaction described herein, and (iv) shall not imply any duty of inspection,
examination or other inquiry undertaken by said individuals to determine the
accuracy of any representation, warranty or other statement made "to Buyer's
Knowledge" in this Agreement, and (v) personal liability on the part of any of
said individuals or his employer other than Buyer for any inaccuracy in such
representations, warranties or other statements.
1.10 "Cash" shall mean all cash, currency and funds owned by Seller in
connection with the Hotel Business, including, without limitation, all house
cash on hand, cash on hand, cash located within ATM's, xxxxx cash, and any and
all amounts held in any impound accounts, security accounts, reserve accounts
and other cash or collateral accounts called for or contemplated in the Existing
Financing Documents.
1.11 "CBA" shall mean that certain Agreement between the Arizona
Biltmore Hotel, Inc. and the International Union of Operating Engineers Local
No. 428, AFL-CIO, originally in effect for the initial term of November 16, 1995
to November 15, 1998, including the notation "Extended one year through 1999"
and that certain correspondence previously provided to Buyer by Seller with
respect to the negotiations to renew such agreement.
1.12 "Closing" shall mean the consummation of the sale of the Property
to Buyer, which Closing shall occur on the Closing Date.
-3-
6
1.13 "Closing Balance Sheet" shall mean the statement of financial
position of the Hotel and the Hotel Business disclosing as of the Closing Date,
the value of the assets, liabilities and owner's equity in conformity with GAAP
(as defined in Section 1.29).
1.14 "Closing Date" shall mean the date identified in Section 9.2,
which shall be the date on which the Deed is delivered to the Title Company for
recordation in the Official Records of Maricopa County, State of Arizona
("Official Records").
1.15 "Closing Documents" means the Deed, Assignment of Ground Lease
(which may not have the consent of Ground Lessor by the Closing Date),
Assignment of Contracts, Xxxx of Sale and all the other documents to be
delivered hereunder at, or for purposes of effecting Closing.
1.16 "Construction Litigation" shall mean that certain cause entitled
Xxxxx Contracting, Inc. and Federal Insurance Company v. Biltmore Hotel
Partners, et al., Cause No. CV 2000-006373 (Superior Court, Maricopa County,
Arizona).
1.17 "Contracts" means the contracts and agreements related to the
ownership, maintenance or operation of the Hotel and the Hotel Business other
than Equipment Leases, Leases, Residency Agreements and Membership Agreements,
including, without limitation, design and decorating contracts, space planning
contracts, applications for expenditures, utility contracts and water and sewer
service contracts, agreements with consultants, reservation service listing
agreements, parking contracts, advertising contracts, media purchase contracts,
sales and promotional agreements relating to the Hotel and the Hotel Business,
together with all supplements, amendments and modifications thereof, which are
described in Schedule 1.17, but specifically excluding any contract or agreement
related to the Construction Litigation.
1.18 "Deed" shall have the meaning set forth in Section 9.3(a)(i).
1.19 "Deposit" shall have the meaning set forth in Section 2.2(b)(i).
1.20 "Equipment Leases" shall mean all of the equipment leases, rental
or other agreements, oral or written, in effect as of the date hereof with
respect to the Property (but specifically excluding leases relating to any form
of tenancy at the Property and any agreement listed on Schedule 1.22),
including, but not limited to, those leases or agreements for the use of any of
the FF&E, and including all amendments, modifications and supplements, which are
described in Schedule 1.20.
1.21 "Excluded Accounts Receivable" shall mean any rights to collect
any amounts owing in connection with that certain receivable from Micro Age.
1.22 "Excluded Contracts" means those Contracts set forth on Schedule
1.22.
1.23 "Existing Expansion Entitlements" shall refer to all development
rights, building, use or other permits, approvals, authorizations, licenses and
consents obtained from any of the Authorities in connection with the proposed
construction of a multi-level parking structure, expansion of the existing
conference facilities, and construction of additional guest rooms upon
-4-
7
the Real Property, including, but not limited to, those entitlements described
in Schedule 1.23, to the extent that the foregoing are assignable.
1.24 "Existing Financing" shall have the meaning set forth in Section
2.2(b)(iii).
1.25 "Existing Financing Documents" shall have the meaning set forth in
Section 2.2(b)(iii).
1.26 "Existing Lender" shall mean collectively: American General Life
Insurance Company, a Texas corporation; The Variable Annuity Life Insurance
Company, a Texas corporation; The Franklin Life Insurance Company, an Illinois
corporation; and American General Life and Accident Insurance Company, a
Tennessee corporation, and their successors and assigns.
1.27 "FF&E" shall mean all of the furniture, fixtures and equipment
installed or used and located in the Hotel as of the date hereof, including,
without limitation, china, glassware, silverware and linens, with such additions
and deletions as may hereafter occur in the ordinary course of business;
provided, however, that FF&E shall not include the Operating Equipment and the
Operating Supplies. Buyer has hired Deloitte & Touche LLP ("D&T") to inventory
the FF&E for the benefit of Seller and Buyer, which such inventory shall not be
completed until after the date of Closing ("FF&E Inventory"). Buyer and Seller
shall each bear one-half (1/2) of the cost oF having such FF&E Inventory
prepared, provided, however, in no event shall Seller's share exceed the amount
of Twelve Thousand Five Hundred Dollars ($12,500). Seller's obligation to pay
such amount shall survive the Closing.
1.28 "Financial Information" shall mean year-end statements of
operation and balance sheets for the Hotel for the fiscal years 1999 and 2000,
and monthly statements of operation and balance sheets for 1999, 2000 and the
current fiscal year.
1.29 "GAAP" shall mean those accounting principles generally accepted
in the United States of America.
1.30 "Gift Certificates" shall mean all complimentary certificates
issued by Seller, all of which to "Seller's Knowledge" (as defined in Section
1.61 below) are shown on Schedule 1.30.
1.31 "Golf Rights" shall mean all rights of Seller relating to the use
and purchase of one or more golf courses owned by Kabuto Arizona Properties, LLC
("Kabuto") arising under that certain Golf and Maintenance Privilege Agreement
dated August 31, 1977, between Arizona Biltmore Estates, Inc., a Delaware
corporation, and Rostland Arizona, Inc., an Arizona corporation ("Rostland
Inc."), and recorded in Docket 12414, page 370 of the Official Records and that
certain Replacement Golf and Maintenance Privilege Agreement ("RGA") dated as of
January 1, 1980, between Rostland Inc. and Arizona Biltmore Golf Courses, an
Arizona corporation ("Arizona Biltmore Golf") and recorded in Docket 14448, page
140 of the Official Records, as amended by that certain First Amendment to
Replacement Golf and Maintenance Privilege Agreement dated as
-5-
8
of March 1, 1981, between Rostland Inc. and Arizona Biltmore Golf and recorded
in Docket 15422, page 1350 of the Official Records, as amended by that certain
Second Amendment to Replacement Golf and Maintenance Privilege Agreement dated
as of March 1, 1983, between Arizona Biltmore Hotel, Inc., an Arizona
corporation ("Arizona Biltmore Hotel"), and Arizona Biltmore Golf, and recorded
in the Official Records as Instrument No. 84-391051, as further amended by that
certain Third Amendment to Replacement Golf and Maintenance Privilege Agreement
between Biltmore Hotel Partners, an Arizona general partnership ("BHP GP"), and
Kabuto Arizona Properties, L.L.C., an Arizona limited liability company, Four M
Partners, an Arizona general partnership, and Xxxx X. Xxxxxxx, a married man
dealing with his sole and separate property, and recorded in the Official
Records as Instrument No. 96-0496197 (collectively, the "Golf Course
Agreements").
1.32 "Golf Rights Litigation" shall mean collectively that certain
cause entitled Biltmore Hotel Partners, an Arizona general partnership v. Kabuto
Arizona Properties, L.L.C., an Arizona limited liability company, Cause No. CV
97-09203 (Arizona Superior Court, Maricopa County, Arizona), and all related
arbitration matters ("Kabuto No. 1"), that certain Cause entitled Kabuto Arizona
Properties, L.L.C., an Arizona limited liability company v. Biltmore Hotel
Partners, L.L.L.P., an Arizona limited liability limited partnership, Cause No.
CV 98-16212 (Arizona Superior Court, Maricopa County, Arizona) ("Kabuto No. 2")
and that certain Cause entitled Kabuto Arizona Properties, L.L.C., an Arizona
limited liability company v. Xxxx X. Xxxxxx et al, Cause No. CV 97-13352
(Arizona Superior Court, Maricopa County, Arizona ("Londen Litigation").
1.33 "Governmental Regulations" shall mean any laws, statutes,
ordinances, rules, regulations, requirements, resolutions, codes, orders,
decrees, rulings, policy statements (including, without limitation, those
relating to land use, subdivision, zoning, environmental, toxic or hazardous
waste, energy, building, occupational health and safety, water, earthquake
hazard, disabled persons and zoning and fire codes and any issued permit or
occupancy certificate) of the Authorities bearing on the construction,
alterations, rehabilitation, maintenance, use, operation or sale of the
Property.
1.34 "Ground Lease" shall mean that certain Ground Lease Agreement
dated as of June 1, 1996, between Arizona Biltmore Hotel Villas Condominiums
Association, an Arizona non-profit corporation ("Villas Association"), as
lessor, and BHP GP, as lessee, with respect to certain real property more
specifically described therein (the "Ground Leased Property").
1.35 "Hazardous Materials" shall mean (i) any chemical, material or
substance defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other substances regulated as a consequence of their
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss.
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the
Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss. 2601 et seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq.),
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et
seq.), or Arizona Water Quality Control Act, Arizona Revised Statutes ("A.R.S.")
ss. 49-201 et seq.; Solid Waste
-6-
9
Management Act, A.R.S. ss. 49-701 et seq.; Arizona Hazardous Waste Disposal
Act, A.R.S. ss. 49-901 et seq.; Arizona Underground Storage Tanks Act, A.R.S.
ss. 49-1001 et seq.; Arizona Air Quality Act; A.R.S. ss. 49-401 et seq.; Arizona
Administrative Code, Title 18; Maricopa County Air Pollution Regulations, Rule
100 et seq.; Maricopa County Health Code, Chapter II, Section 1 et seq.; Phoenix
City Code, Article I, ss. ss. 27-2 et seq.; 39-3 et seq., and 28-1 et seq., and
Article IX, ss. 28-75 et seq.; (ii) any oil, petroleum, petroleum fraction,
petroleum additive or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(iv) pesticides; and (x) lead-based paint.
1.36 "Hotel" shall mean (a) the Real Property, and (b) all buildings,
structures, fixtures, landscaping and other improvements constructed on or
affixed to the Real Property. The definition of "Hotel" shall not include the
improvements known as "The Villas" which are located upon certain real property
located adjacent to the Real Property.
1.37 "Hotel Business" shall mean all business activities of every type
and kind being conducted by Seller and/or any affiliate of Seller relating to
the Hotel, including without limitation, ownership, leasing or operation of a
hotel, retail stores and all other business activities related thereto,
including the rental of those units in the Villas which are the subject of the
"Residency Agreements" (as defined in Section 1.58 below).
1.38 "Intangibles" shall mean (a) to the extent owned by or licensed to
Seller as of the date hereof, any trademarks, service marks, copyrights,
trademark, service xxxx and copyright registrations, applications for trademark
and service xxxx registrations, business and trade names or logos, patent and
patent applications, all URL registrations, domain names and other rights and
title related to the website for the Hotel (collectively, the "Intellectual
Property") and all existing phone numbers including, but not limited to,
reservation numbers, used in connection with the ownership and operation of the
Hotel, including, but not limited to, those items described in Schedule 1.38, to
the extent assignable, (b) to the extent assignable, all books and records
relating to the operation of the Hotel in the possession of control of the
Seller, including, without limitation, applicable computer software owned by or
licensed to Seller (to the extent assignable or to the extent that the necessary
approvals for the assignment thereof to Buyer can be reasonably obtained in
accordance with the terms and conditions contained in this Agreement); (c) to
the extent assignable, all entitlements (including, without limitation, the
Existing Expansion Entitlements) and the Licenses and Permits; and (d) to the
extent assignable, all warranties, guaranties and indemnities from any
contractors, subcontractors, manufacturers, suppliers or materialmen in
connection with any construction, repairs, or alteration of the Hotel
(collectively, the "Warranties and Guaranties") which definition shall
specifically exclude all warranties, guaranties and/or representations relating
to the Construction Litigation, it being recognized by Buyer that some or all
such warranties and/or representations may be compromised, canceled, modified or
terminated in whole or in part, at Seller's sole, unfettered and absolute
discretion in connection with Seller's retention of the Construction Litigation
provided nothing contained herein shall constitute an assignment by Seller nor
an assumption by Buyer of the Construction Litigation.
-7-
10
1.39 "Inventories" shall mean food and beverage, including, but not
limited to, wine, beer and distilled spirits, and retail merchandise held for
sale, valued at cost, in salable condition, but specifically excluding opened or
expired food and beverage and/or obsolete merchandise that is unsalable as
mutually and reasonably determined by Seller and Buyer at the cost at which is
carried. Buyer hereby acknowledges that Seller's wine inventory is in salable
condition and agrees to purchase such inventory the amount of which is included
in the Working Capital Calculation. With the exception of the Millennium Retail
Inventory the only retail inventory of Seller that Buyer has not acknowledged to
be in salable condition would be purchases made after November 10, 2000, the
date Buyer examined such retail inventory during its due diligence review.
Inventories shall not include Operating Supplies, Operating Equipment, and
Personal Property.
1.40 "Leases" shall mean all of the leases, licenses, concessions,
operating agreements and other similar occupancy agreements, oral or written, in
effect as of the date hereof with respect to the Property, other than those
agreements which contain an implied right of possession upon the Real Property
or license to enter upon the Real Property and other than any agreement listed
on Schedule 1.22, which are described in Schedule 1.40, to the extent
assignable.
1.41 "Licenses and Permits" shall mean all certificates of occupancy
and all zoning, land use, building, safety and health approvals, development
rights and all other permits needed for or used in connection with the
construction, use or operation of the Hotel (including, without limitation, the
Existing Expansion Entitlements, all applications for zone changes and variances
in connection with all or any part of the Hotel and all FCC licenses), but not
including the Liquor License.
1.42 "Liquor License" shall mean that certain liquor license No.
06070556 (Type 06, Bar License) issued by the Arizona Department of Liquor
License and Control, which license is owned by Seller.
1.43 "Material Adverse Change or Effect" shall mean any event,
circumstance or breach of this Agreement that, individually or in the aggregate,
will have a material adverse change or effect on the results of income,
operations or value of the Hotel and/or the Hotel Business taken as a whole.
1.44 "Membership Agreements" shall mean all of the membership
agreements relating to the pool, tennis and spa club(s) and as set forth on
Schedule 1.44 attached hereto, to the extent assignable.
1.45 "Millennium Retail Inventory" shall mean the remaining inventory
of Xxxxxxx Bowls, Xxxxxxx Treasure Boxes, Millennium Candles and Wine Crates
purchased by Seller with the anticipation of providing gifts to Millennium Party
guests (the value of which shall be excluded from the WC Calculation). The
Millennium Retail Inventory shall not be conveyed to Buyer, but instead will be
retained by Seller and removed by Seller promptly following the Closing.
1.46 "Morning Revenue Report" shall mean a report that lists all
revenue related to the Hotel and/or Hotel Business for a particular "revenue
day" prepared as of the Proration Time for
-8-
11
such day (e.g., the Morning Revenue Report for Thursday, December 21, 2000 would
be prepared as of 3:00 a.m. on Friday, December 22, 2000).
1.47 "Operating Equipment" shall mean all of the vehicles owned by
Seller as of the date hereof and used in the operation or maintenance of the
Hotel or the Hotel Business, which are described in Schedule 1.47.
1.48 "Operating Supplies" shall mean all items owned by Seller on the
Closing Date and used in the operation or maintenance of the Hotel or the Hotel
Business and which are consumable or, when once used, are disposed of,
including, without limitation, guest supplies, cleaning supplies, sales and
marketing materials, printed letterhead and stationery, menus, paper supplies,
utensils, spa supplies, engineering, accounting and office use, together with
paper supplies, and miscellaneous general supply items, and any construction
materials, whether located on the Real Property or off-site, including any
existing cast concrete block (with or without design) and any concrete block
molds related to the use, operation and maintenance of the Hotel.
1.49 "Permitted Exceptions" shall mean those exceptions to title set
forth in the "Title Commitment" (defined in Section 1.63 below).
1.50 "Person" shall mean any natural person, corporation, partnership,
limited liability company, firm, association, government, governmental agency or
any other entity and whether acting in an individual, fiduciary or other
capacity.
1.51 "Personal Property" shall mean all of the personal property
(tangible or intangible) owned by Seller as of the date hereof and used in
connection with the operation or maintenance of the Hotel or the Hotel Business,
including, without limitation, the FF&E; the Operating Equipment; the Operating
Supplies; the Intangibles owned by Seller; the Licenses and Permits in the name
of Seller; the Inventories; Seller's beneficial interest created under the
"Trust Agreement" (as defined in Section 1.67) and the Assumed Contracts.
1.52 "Prepaid Expenses" shall mean prepayments in respect of the
Assumed Contracts that are assignable to the Buyer and as shown in the WC
Calculation, but shall not include prepaid items that are not related to the
ongoing operation of the Hotel or the Hotel Business, such as any unassumed
prepaid insurance, prepaid license and permit fees, prepaid dues and
subscriptions and prepaid marketing brochures.
1.53 "Property" shall mean all of Seller's right title and interest in,
and ownership of the following: the Hotel and the Personal Property. The
Property specifically excludes the Excluded Accounts Receivable.
1.54 "Proration Time" means as of 3:00 a.m. Phoenix Time, on the
Closing Date.
1.55 "Prorations" shall mean the portion of the charges or expenses
allocated to Seller and Buyer, using GAAP or as otherwise mutually agreed upon
by the parties and as shown on the WC Calculation attached as Schedule 1.69,
calculated as of the Proration Time, as follows, with Buyer being obligated to
pay all expenses of the Property and being entitled to receive all income of the
Property after the Proration Time and with Seller being obligated to pay all
-9-
12
expenses of the Property and being entitled to receive all income of the
Property prior to the Proration Time: real property taxes; periodic charges
under the Assumed Contracts; utility charges; operating expenses of the Hotel
and the Hotel Business; rent and other payments owing under any Leases and/or
Residency Agreements; guest room revenue; income from any other operations at
the Hotel including, without limitation, video services, guest telephone
charges, spa charges, facility charges and room services; annual permits and/or
inspection fees and other actual operation and maintenance expenses of the
Property; and payment of interest under the Existing Financing for the month of
Closing as of the Proration Time. In furtherance of the foregoing, on the night
commencing prior to and ending on the day upon which the Proration Time occurs:
(a) Seller shall be entitled to receive and retain one hundred percent (100%) of
all revenue for the day prior to Closing with the understanding that the last
revenue outlet (bar) closes at 2:00 a.m. The "mini-bar" restocking and the
resulting revenue that occurs on the date of Closing will belong to the Buyer.
1.56 "Purchase Price" shall have the meaning set forth in Section
2.2(a).
1.57 "Real Property" shall mean the real property interests as more
particularly described in Exhibit A.
1.58 "Residency Agreements" shall mean Seller's rights under those
certain rental pool agreements set forth on Schedule 1.58 attached hereto, to
the extent assignable.
1.59 "Seller" shall mean Biltmore Hotel Partners, LLLP, an Arizona
limited liability limited partnership.
1.60 "Seller Affiliates" shall mean the constituent partners of Seller,
Coyote Holdings, Inc., a Delaware corporation, and Xxxxxx-Bilt Corp., a Delaware
corporation.
1.61 "Seller's Knowledge" or words of similar import (i) shall be
strictly construed and limited to the actual knowledge of Xxxxx Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxx and not any other Person, (ii) shall
mean the actual knowledge (and not any implied, constructive or imputed
knowledge) of such individuals, it being understood and acknowledged that (a)
certain of said individuals may not be involved in the day-to-day operation and
management of the Property and in many instances were not involved in the
negotiation or execution of leases, management contracts, service contracts or
other documents in question, and (b) such individuals are not charged with
knowledge of any of the acts and/or omissions of the predecessors in title to
the Property or of any Person or constituent partner of any Person which
previously held title to the Property or with knowledge of any of the acts
and/or omissions of Seller's agents or employees, (iii) shall not apply to or be
construed to apply to information or material which may be in the possession of
Seller, generally or incidentally, but which is not actually known to the
aforesaid individuals who are directly engaged in the sale and purchase
transaction described herein, (iv) shall not imply any duty of inspection,
examination or other inquiry undertaken by said individuals to determine the
accuracy of any representation, warranty or other statement made "to Seller's
Knowledge" in this Agreement; provided, however, that Xxxxx Xxxxx shall have the
duty to inquire of the Executive Committee with respect to the representations
and warranties set forth in Section 6.1 of this Agreement (consisting of Art
Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxx and Xxx Xxxxx), and (v) shall not imply any
personal liability
-10-
13
on the part of any of said individuals or his employer other than Seller for any
inaccuracy in such representations, warranties or other statements.
1.62 "Survey" shall mean an ALTA update of the existing ALTA survey of
the Property to be prepared by Xxxx Engineering Company ("Surveyor") such that
the updated Survey will meet the Title Company's requirements for issuance of
the Title Policy, including, but not limited to, a deletion of the general
survey exception, certified in favor of certain parties specified by Buyer,
including, but not limited to, Buyer, any Affiliate of Buyer, and the Existing
Lender.
1.63 "Title Commitment" shall mean that certain Commitment for Title
Insurance issued by the Title Company for the Real Property, dated December 22,
2000, under the Title Company's Order No. 000-000-0000000, a copy of which is
attached as Schedule 1.63.
1.64 "Title Company" shall mean First American Title Insurance Company,
000 Xxxx Xxxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx, 00000, Attn:
Xxxxx X. Xxxxxx, Vice President and Counsel, National Accounts, Phone No. (954)
000-0000, Fax No. (000) 000-0000.
1.65 "Title Policy" shall mean an ALTA Extended Coverage Owner's Policy
of Title Insurance (1970 Form B), in the amount of the Purchase Price showing
Buyer as the fee owner of Parcel 1 of the Real Property described in Exhibit A,
as the ground lessee as to Parcel 6 of the Real Property described in Exhibit A,
and showing as insured easement interests Parcels 2-5 and 7 of the Real Property
described in Exhibit A free and clear of all liens against the Real Property
(other than the Existing Financing), including, but not limited to, mechanics'
liens and judgment liens, and subject only to the Permitted Exceptions and with
such endorsements as shown on the Title Commitment.
1.66 "Transition Period" shall mean the period commencing on the date
of this Agreement and expiring upon Closing.
1.67 "Trust Agreement" shall mean that certain Trust Agreement dated as
of February 11, 1983, by and between Arizona Biltmore Hotel, Inc., Arizona
Biltmore Estates Village Association and Pioneer Trust Company of Arizona, as
amended by that certain letter agreement dated May 19, 1983, as subsequently
assigned.
1.68 "Villas" shall mean the seventy-eight (78) condominium units which
are located adjacent to the Real Property but not owned by Seller.
1.69 "Working Capital Calculation" or "WC Calculation" shall mean a
determination of the amount that the applicable "Total Current Assets" (as set
forth in the WC Calculation) of the Seller exceed (or, are less than) the "Total
Current Liabilities" (as set forth in the WC Calculation) of the Seller. The
Working Capital Calculation is intended to capture a good faith estimate of the
current assets and liabilities of the Hotel and the Hotel Business that will be
the responsibility of the Buyer after the Closing. The Working Capital
Calculation shall exclude certain current assets and liabilities that will
remain with Seller and for which Seller will remain responsible following the
Closing (including, but not limited to the employment obligations set forth in
Section 11.4 below). The format for, and listing of the applicable Total Current
Assets and Total Current Liabilities comprising the Working Capital Calculation
are set forth on
-11-
14
Schedule 1.69, and shall be updated in accordance with the terms of Section 2.3
below employing the methodologies identical to those employed in the WC
Calculation of Schedule 1.69.
1.70 "WC Calculation Estimate" shall mean an estimate of the WC
Calculation (determined pursuant to the terms of Section 1.69) to be
incorporated into the Settlement Statement at Closing.
1.71 "Final WC Calculation" shall mean the WC Calculation to be
determined as of the Closing Balance Sheet within ninety (90) days after
Closing.
ARTICLE II
PURCHASE AND SALE
2.1 Sale.
(a) Seller agrees to sell and assign (as applicable) to Buyer, and
Buyer agrees to purchase from Seller and accept the assignment from Seller of,
all of Seller's right, title and interest in and to the Hotel and the Personal
Property, subject to the terms, covenants and conditions set forth herein.
(b) Seller agrees to sell and assign (as applicable) to Buyer, and
Buyer agrees to purchase from Seller and accept the assignment from Seller and
to assume, all of Seller's right, title and interest in and Seller's obligations
arising with respect to the Assumed Contracts arising after the Closing, subject
to the terms, covenants and conditions set forth herein.
2.2 Purchase Price.
(a) The purchase price (the "Purchase Price") of the Property shall
be the sum of (i) Three Hundred Thirty-Five Million Dollars ($335,000,000), (ii)
plus the positive amount (or minus any negative amount) of the Working Capital
Calculation as of the Proration Time as shown on the Settlement Statement, (iii)
to the extent not previously paid by Seller, minus an amount, if any, of any
assumption fees required by Existing Lender with respect to Buyer's assumption
of the Existing Financing.
(b) The Purchase Price shall be paid as follows:
(i) Upon the execution of this Agreement by both Buyer and
Seller, Buyer shall deposit in escrow with Title Company a cash payment in an
amount equal to Eight Million Dollars ($8,000,000) (the "Deposit"). The Deposit
shall be held in an interest bearing account approved by Seller and Buyer; and
all interest thereon shall be deemed a part of the Deposit.
(ii) Upon consummation of the sale of the Property as
contemplated, the Deposit shall be paid to Seller and credited against the
Purchase Price. In the event this Agreement is terminated by Buyer in accordance
with Buyer's right to do so under the terms and provisions hereof, the Deposit
shall be promptly returned to Buyer. IN THE EVENT THAT
-12-
15
BUYER SHOULD OTHERWISE FAIL TO CONSUMMATE THE PURCHASE OF THE PROPERTY FOR ANY
REASON, EXCEPT SELLER'S DEFAULT, OR THE TERMINATION OF THIS AGREEMENT BY BUYER
PURSUANT TO A RIGHT TO DO SO UNDER ONE OF THE TERMS OR PROVISIONS REFERENCED
BELOW, THEN THE $8,000,000 DEPOSIT SHALL BE PROMPTLY PAID BY TITLE COMPANY TO
SELLER AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL
DAMAGES, IN THE EVENT OF FAILURE BY BUYER TO CONSUMMATE THIS SALE AS SPECIFIED
ABOVE, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER
NEGOTIATION AND CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE DATE OF
THIS AGREEMENT, THE PARTIES HAVE AGREED UPON THE AMOUNT OF THE DEPOSIT, AS A
REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT AND AS
SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A
DEFAULT HEREUNDER BY BUYER; PROVIDED, HOWEVER, THAT THE DEPOSIT SHALL IN NO
EVENT LIMIT BUYER'S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 11.1 AND 12.8,
FOR WHICH THERE SHALL BE NO MANDATORY LIMITATIONS; AND FURTHER PROVIDED,
HOWEVER, THAT THIS DOLLAR LIMITATION SHALL NOT LIMIT BUYER'S OBLIGATIONS TO PAY
SELLER ALL ATTORNEYS' FEES AND COSTS OF SELLER TO ENFORCE THE PROVISIONS OF THIS
SECTION 2.2.
In the event that Seller should fail to consummate the sale of
the Property for any reason, except Buyer's default, or a termination of this
Agreement by Seller pursuant to a right to do so under the terms and provisions
hereof, Buyer, as its sole and exclusive remedy, may elect any one of the
following remedies: (A) to terminate this Agreement by written notice to Seller
and receive a prompt return of the Deposit, and Seller shall pay to Buyer any
out-of-pocket title, escrow, legal and inspection fees, costs and expenses
actually incurred by Buyer in connection with the performance of its due
diligence review of the Property and the negotiation and performance of this
Agreement, up to a maximum of Five Hundred Thousand Dollars ($500,000),
provided, however, that this dollar limitation shall not limit Seller's
obligation to pay Buyer all attorneys' fees and costs of Buyer to enforce the
provisions of this Section 2.2; or (B) to xxx for specific performance, without
the right to seek damages (subject to the following sentence). In the event
specific performance is not available because Seller is no longer the owner of
the Hotel or otherwise not granted to Buyer following an action for specific
performance brought by Buyer, then Buyer shall have the right to bring an action
against Seller for all of Buyer's damages in an amount not to exceed Eight
Million Dollars ($8,000,000); provided, however, that this limitation shall not
limit Seller's indemnification obligations under Section 12.8 for which there
shall be no mandatory limitation.
(iii) Subject to the terms of Section 10.3 below, Buyer shall
acquire title to the Property subject to, and Buyer shall assume, that certain
loan in the original principal amount of $65,000,000 made by Existing Lender to
Seller, as secured by a lien and other security documents encumbering the
Property (the "Existing Financing"). Seller agrees that it will pay the
assumption fee imposed by Existing Lender with respect to Buyer's assumption of
the Existing Financing For purposes of this Agreement, "Existing Financing
Documents" means all documents and instruments executed by Seller which evidence
and/or secure payment of the Existing Financing.
-13-
16
(iv) The Purchase Price, less (a) any portion of the Deposit
that may have been applied to the Purchase Price, and (b) the amount of the
then-outstanding principal balance of the Existing Financing, shall be paid to
Seller in immediately available funds at the Closing.
2.3 Working Capital Calculation.
(a) Not later than 9:00 a.m. Los Angeles time on the date which is
at least five (5) business days prior to the Closing Date, Seller shall prepare
and deliver to Buyer a draft good faith estimate of the Working Capital
Calculation as of the most recent month end together with reasonable
documentation supporting the information set forth in such estimate; however,
the Working Capital Calculation will be adjusted based upon the most current
Accounts Payable and Accounts Receivable subsidiary ledgers to reflect known
changes. To the extent that the WC Calculation Estimate balance is positive,
then the positive balance shall be added to the Purchase Price and if the WC
Calculation Estimate balance is negative, then the negative balance shall be a
credit against the Purchase Price. Buyer shall review the draft WC Calculation
Estimate, and not later than 5:00 p.m. Los Angeles time on the date which is
three (3) business days prior to the Closing Date, Buyer shall furnish to Seller
any comments which Buyer may have with respect thereto, or any objection it may
have to the amounts shown thereon, together with its reasons for such objection.
Thereafter, Seller and Buyer (each acting reasonably and in good faith) shall
attempt to resolve, prior to the Closing Date, any disagreement with respect to
such draft of the WC Calculation Estimate. Should an adjustment be necessary to
the WC Calculation Estimate, the Seller shall deliver to Title Company and Buyer
a revised WC Calculation Estimate no later than 7:00 A.M. Los Angeles time on
the Closing Date.
(b) Each party shall provide to the other reasonable access to the
books, records, computer runs and other documents relating to the Hotel Business
which contain information relevant to completing the Final WC Calculation as of
the Closing Date.
(c) As part of the determination of the Final WC Calculation, on
the date which is ninety (90) days following the Closing, Seller and Buyer shall
reconcile the amount of Accounts Receivable collected by Buyer following the
Closing with the amount of Accounts Receivable and shall update all of the other
calculations included in the WC Calculation Estimate. If the Accounts Receivable
included in the final calculation is greater than the amounts collected by Buyer
as of such date, then Seller shall promptly reimburse Buyer for such excess
amount, and Buyer shall reassign to Seller the right to collect any Accounts
Receivable remaining unpaid as of such date. Although ninety-five percent (95%)
of the Accounts Receivable is included in the WC Calculation Estimate pursuant
to Section 2.3(a), it is the intent that 100% of all Accounts Receivable
collected will be remitted to Seller through the Final WC Calculation pursuant
to this Section 2.3(c) and all uncollected Accounts Receivable will be assigned
to Seller.
(d) For any Accounts Payable pertaining to the period prior to the
Proration Time that were not included in the WC Calculation Estimate (the
"Uncredited AP"), Buyer will forward a copy of such Uncredited APs to Seller for
Seller's approval. If Seller does not notify Buyer within five (5) days of
receipt of such item of Seller's disapproval thereof, then Seller shall be
deemed to have approved such item and Buyer will proceed to make the appropriate
payment.
-14-
17
If Seller determines not to approve the Uncredited AP, Seller shall so notify
Buyer in writing and then Seller shall be solely responsible for such Uncredited
AP. In no event shall Buyer be deemed to have assumed Uncredited APs. If the
amount of Uncredited APs paid by Buyer exceeds $250,000 prior to 90 days after
Closing (or such extended period), Seller shall promptly reimburse Buyer for
such entire amount. Seller shall reimburse Buyer on or before ninety (90) days
after Closing for all Uncredited APs if less than $250,000.
(e) If the Final WC Calculation, as agreed upon between Buyer and
Seller, shows any amount due from Seller to Buyer, or vice versa, the party
owing such amount shall pay such amount (in immediately available funds) within
five (5) business days. If Seller and Buyer are unable to agree on a Final WC
Calculation or the amounts to be prorated pursuant to this Agreement after a
ninety (90) day period following Closing, then either party may submit the
matter to a mutually agreed upon "Big Five" certified public accounting firm
("CPA Firm") for determination, and the party electing to submit such matter for
determination shall provide written notice to the other party setting forth such
election, along with reasonable detail of the matters of objection, no later
than five (5) days after the expiration of the ninety (90) day period referred
to in Section 2.3(b). In the absence of such notice the Final WC Calculation
will be deemed final. Within thirty (30) days of the date of notice requesting
determination, the CPA Firm shall review the information presented by Seller and
Buyer regarding the Working Capital Calculation matters on which Seller and
Buyer disagree, and shall determine the matter in a manner consistent with the
provisions of this Section 2 as a neutral arbitrator. The CPA Firm's
determination shall be binding and conclusive upon both parties and enforceable
in any court of competent jurisdiction. The responsibility of payment for the
CPA firm's fees, charges and other expenses will be either (i) if the CPA Firm's
determination identifies an amount owed to the party requesting such
determination which is greater than $100,000 in excess of the disputed portion
of the WC Calculation then Seller and Buyer each shall pay fifty percent (50%)
of the fees, charges and other expenses of the CPA Firm for making such
determination, or (ii) if the CPA Firm's determination identifies an amount owed
to the requesting party which is less than $100,000 in excess of the disputed
portion of the WC Calculation, then the party requesting the determination shall
pay all of the CPA Firm's fees. If the CPA Firm's determination discloses that
either Seller or Buyer owes any sum to the other party, the party which owes
such sum shall pay the full amount thereof within fifteen (15) business days
after the CPA Firm's determination.
(f) The provisions of this Section 2.3 shall survive the Closing.
2.4 Settlement Statement. Not later than 7:00 a.m. Los Angeles time on
the Closing Date, Seller shall deliver to Title Company and Buyer the settlement
statement agreed upon by the parties (the "Settlement Statement") setting forth
the amounts due to Seller and owing from Buyer at the Closing, including the WC
Calculation Estimate and the Prorations not inconsistent with the WC Calculation
Estimate, and Title Company shall rely conclusively thereon in settling the
accounts of Buyer and Seller.
-15-
18
ARTICLE III
TRANSITION PERIOD
3.1 Buyer's Transition Period. During the Transition Period, Buyer
shall have the right to interview applicants for employment, which applicants
may include present Hotel employees (and applicants not among the Hotel
employees) and which interview process may include drug testing. Further, during
the Transition Period Buyer shall have the right to engage in "shadow
management" in accordance with the terms of Section 12.13 below. During the
Transition Period, Seller shall provide Buyer at no charge with meeting
facilities reasonably satisfactory to Buyer so that Buyer may engage in the
activities described hereinabove.
ARTICLE IV
CONDITIONS TO BUYER'S OBLIGATIONS
4.1 Conditions to Buyer's Obligations. The obligation of Buyer to
purchase the Property shall be subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, which are intended solely for
the benefit of Buyer:
(a) Delivery of Documents. Seller shall have delivered to Buyer or
to the Title Company, as applicable, all of the items listed in Section 9.3(a)
(provided, however, that Seller's failure to deliver the Villas Association
Consent to the Assignment of Ground Lease shall not be governed by the terms of
this Section 4.1, and shall not be a condition to Buyer's obligation to close,
but instead shall be governed by the provisions of Sections 12.15 and 12.16
below).
(b) Title Policy. The Title Company shall have issued or be
prepared to issue the Title Policy to Buyer at the Closing, upon the sole
condition of the payment of the negotiated premium, indicating that the Real
Property is vested in Buyer as of the Closing, subject only to the pre-printed
exclusions and the Permitted Exceptions shown in the Title Commitment. Seller
hereby agrees to take all action(s) necessary to deliver the Real Property to
Buyer free and clear of any liens other than the lien of the Existing Financing
(including, but not limited to any liens related to the Construction
Litigation),which such actions shall include, without limitation, Seller's
delivery to the Title Company of affidavits of ownership and mechanic's liens,
lien reconveyances and/or other release documents. Seller shall also comply with
all other requirements imposed by the Title Company upon Seller so that the
Title Policy may be issued to Buyer.
(c) Representations. All of Seller's representations contained in
or made pursuant to this Agreement shall have been true and correct in all
material respects when made or, in the case of Schedules, when updated as
expressly permitted herein, and shall be true and correct in all material
respects as of the Closing Date as if made on the Closing Date such that no
Material Adverse Change or Effect shall have occurred.
-16-
19
(d) Compliance. Seller shall have performed, observed and complied
with all covenant and agreements to be performed by Seller pursuant to this
Agreement in all material respects.
(e) Assumption of Existing Financing. Seller shall have obtained
the consent of Existing Lender to the assignment of the Existing Financing to
Buyer, on substantially the same terms (i.e., interest rate, maturity date as
currently existing).
(f) Existing Financing Beneficiary Statement. Buyer shall have
received a beneficiary statement ("Beneficiary Statement") from the Existing
Lender setting forth (i) the unpaid principal balance of the Existing Financing
as of the date of such Beneficiary Statement, (ii) the annual interest rate of
the Existing Financing for the remaining term thereof, (iii) confirmation of all
impounds, security accounts, reserve accounts, and other cash or collateral
accounts called for or contemplated in the Existing Financing Documents, and
(iv) such other matters as the Existing Lender is required to include in a
beneficiary statement by law and/or as otherwise provided in the Existing
Financing Documents.
(g) Sale of Personal Property. Seller shall be prepared to deliver
the Personal Property to Buyer free of any liens, encumbrances or interests of
third parties or of Seller except for the Existing Financing and any vendor
liens with respect to that portion of the Personal Property which is being
leased by Seller, materialmen liens or other vendor liens arising in the
ordinary course of business and which are otherwise reflected in the Accounts
Payable and except for any software licensing restrictions disclosed in writing
to Buyer during the Transition Period). Further, Seller shall have paid all
sales and use taxes arising from or attributable to the business and operations
of the Hotel and/or the Hotel Business as conducted by Seller prior to the
Closing Date.
If any of the foregoing conditions are not satisfied by Seller or the
Existing Lender, or otherwise waived by Buyer, on or before the Closing Date,
then Buyer shall notify Seller in writing of those conditions which have not
been satisfied and otherwise waived by Buyer (the "Buyer's Closing Conditions
Failure Notice"). Seller shall have two (2) business days after Buyer has
delivered to Seller the Buyer's Closing Conditions Failure Notice (and the
Closing shall be extended, if necessary to give Seller such two (2) business day
period) in which to cure such matters to Buyer's reasonable satisfaction prior
to the day of Closing (as same may be extended). If Seller fails to cure such
matters, then within two (2) business days after the expiration of such 2-day
business period (and the Closing shall be extended, if necessary, to give Buyer
such two (2) business day period), Buyer, at its sole option, may elect to do
any of the following: (i) if the condition in question is any of those
conditions specified in Sections 4.1(b), (e), (f) or (g), and Seller is not in
any material manner responsible for the deviation or failure of such condition,
then Buyer may elect to terminate this Agreement by delivering written notice
thereof to Seller, in which event Seller shall promptly cause the return to
Buyer of the Deposit, and the parties shall have no further obligations
hereunder except for the indemnity contained in Sections 11.1 and 12.8 hereof;
(ii) if the Buyer closing condition in question is any of those conditions
specified in Sections 4.1(d), or if the closing condition in question is any of
those specified in Sections 4.1(b), (e) or (f) and Seller is actually
responsible for the deviation or failure of such closing condition, then Buyer
may pursue the remedies available to it pursuant to Section 2.2; or (iii) Buyer
may elect to waive the closing condition(s) in question and proceed
-17-
20
with the purchase of the Property in which case Buyer shall have no recourse
against Seller for the deviation or failure of such Closing condition. If Seller
elects to cure such matters as set forth in the Buyer's Closing Conditions
Failure Notice, Seller shall promptly take any and all actions as may be
necessary to cure same provided that the Closing shall not be extended for a
period of time beyond two (2) business days to enable Seller to accomplish same
unless reasonably acceptable to both Seller and Buyer.
ARTICLE V
CONDITIONS TO SELLER'S OBLIGATIONS
5.1 Conditions to Seller's Obligations. The obligation of Seller to
sell the Property to Buyer shall be subject to the satisfaction, on or before
the Closing Date, of each of the following conditions, which are intended solely
for the benefit of Seller:
(a) Delivery of Documents. Buyer shall have delivered to Seller or
to the Title Company, as applicable, all of the items listed in Section 9.3(b).
(b) Representations. All of Buyer's representations contained in or
made pursuant to this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Closing Date as if made on the Closing Date.
(c) Compliance. Buyer shall have performed, observed and complied
with all covenants, and agreements to be performed by Buyer pursuant to this
Agreement in all material respects except where the failure to perform, observe
or comply will not result in a Material Adverse Change.
(d) Existing Lender Release of Seller. Existing Lender shall have
released Seller from any obligations under the Existing Financing.
If any of the foregoing conditions are not satisfied by Buyer or the
Existing Lender, or otherwise waived by Seller, on or before the Closing Date,
then Seller shall notify Buyer in writing of those conditions which have not
been satisfied and otherwise waived by Seller (the "Seller's Closing Conditions
Failure Notice"). Buyer shall have two (2) business days after Seller has
delivered to Buyer the Seller's Closing Conditions Failure Notice (and the
Closing shall be extended, if necessary to give Buyer such two (2) business day
period) in which to cure such matters to Seller's reasonable satisfaction prior
to the day of Closing (as same may be extended). If Buyer fails to cure such
matters, then within two (2) business days after the expiration of such two (2)
business day period (and the Closing shall be extended, if necessary, to give
Seller such two (2) business day period), Seller, at its sole option, may elect
to do any of the following: (i) if the condition in question is the condition
specified in clause (d) then Seller may terminate this Agreement by delivering
written notice thereof to Buyer, in which event Seller shall promptly cause the
return of the Deposit to Buyer, and the parties shall have no further
obligations hereunder except for the indemnity contained in Sections 11.1 and
12.8 hereof; (ii) if the condition in question is specified in clauses (a), (b)
or (c), Seller may elect to terminate this Agreement by delivering written
notice thereof to Buyer, in which event Seller
-18-
21
shall be entitled to its remedies under Section 2.2 and the parties shall have
no further obligations hereunder except pursuant to the indemnity contained in
Section 11.1 hereof; or (iii) Seller may elect to waive the closing condition(s)
in question and proceed with the sale of the Property in which case Seller shall
have no recourse against Buyer for the deviation or failure of such Closing
condition. If Buyer elects to cure such matters as set forth in the Seller's
Closing Conditions Failure Notice, Buyer shall promptly take any and all actions
as may be necessary to cure same provided that the Closing shall not be extended
for a period of time beyond two (2) business days to enable Buyer to accomplish
same unless reasonably acceptable to both Buyer and Seller.
ARTICLE VI
SELLER'S REPRESENTATIONS
6.1 Representations of Seller. Seller hereby represents and warrants to
Buyer, as of the date of this Agreement and as of the Closing Date, that:
(a) (i) Seller is duly organized and legally and validly existing
under the laws of the State of Arizona and is qualified to do business in the
State of Arizona, (ii) the execution and delivery by Seller of, and Seller's
performance under, this Agreement are within Seller's powers and have been duly
authorized by all requisite limited liability limited partnership action, (iii)
the Persons executing this Agreement on behalf of Seller have full power and
authority to do so, (iv) no attachments, execution proceedings, assignments for
the benefit of creditors, insolvency, bankruptcy, dissolution or other similar
legal proceedings are pending or, to Seller's Knowledge, threatened against
Seller and/or any of its direct or indirect constituent partners, nor are any
such proceedings contemplated by them, and (v) neither Seller nor any of its
direct or indirect constituent partners have ever been a debtor under any case
commenced under the United States Bankruptcy Code.
(b) The execution, delivery and performance of this Agreement by
Seller will not violate any judicial order or any material provision of any
material agreement by which any of the material assets comprising the Hotel
and/or the Hotel Business may be bound, to which Seller is a party, or, to
Seller's Knowledge, to which the "Pre-Conversion Seller" (as defined below) was
a party. This Agreement and the other documents and instruments to be executed
by Seller hereunder shall, once executed and delivered by Seller, constitute
legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally. Except as set forth on Schedule
6.1(b), to Seller's Knowledge no government, or third-party approval or consent
which has not already been obtained is required for Seller's execution and
delivery of, or performance of obligations under, this Agreement.
(c) To Seller's Knowledge any and all existing agreements, other
than employment agreements, material to the ownership, operation and management
of the Hotel and/or the Hotel Business, as currently conducted by Seller, are
included within the Assumed Contracts and/or the Excluded Contracts. To Seller's
Knowledge, the copies of the Assumed Contracts heretofore delivered Seller to
Buyer are true, correct and complete copies of such
-19-
22
documents and include any and all amendments, modifications or supplements
thereto, except as otherwise indicated on the applicable Schedule(s). To
Seller's Knowledge, there are no other Equipment Leases, Leases, and Contracts
(including, without limitation, contracts for the provision of management
services) whether written or oral which will affect all or any material portion
of the Hotel and/or the Hotel Business following the Closing except as set forth
on Schedules 1.20, 1.40 and 1.17. To Seller's Knowledge, (i) neither Seller, nor
the Pre-Conversion Seller, has violated any of the material terms or conditions
of any Assumed Contract which is material to the operation, management or
business of the Hotel and/or the Hotel Business which would permit termination
or material modification of any Assumed Contract which is material to the
operation, management or business of the Hotel, and (ii) Seller has received no
notice of default or termination under any Assumed Contract.
(d) Seller has not received, and to Seller's Knowledge, the
Pre-Conversion Seller has not received, written notice from any of the
Authorities that the Hotel is presently the subject of any assessment or similar
proceeding (including assessments for public improvements), except assessments
that may be reflected on property tax bills heretofore delivered by Seller and
received by Buyer or disclosed in the Title Commitment, nor to Seller's
Knowledge have any such proceedings been threatened against the Hotel. To
Seller's Knowledge, there are no on-site or off-site public improvements
required pursuant to any written agreement or issued permit authorizing the
construction or operation of the existing improvements located upon the Real
Property which Seller has yet to complete and which are required in connection
with the current use, operation and/or maintenance of the Hotel except as may be
disclosed in documents previously provided by Seller to Buyer.
(e) Seller is not a "foreign person" within the meaning of Section
1445 of the Internal Revenue Code of 1986 (i.e., Seller is not a nonresident
alien, foreign corporation, foreign partnership, foreign trust or foreign estate
as those terms are defined in said Section 1445 and the Treasury Regulations
promulgated thereunder).
(f) Seller has not received, and to Seller's Knowledge, the
Pre-Conversion Seller has not received, written notice from any of the
Authorities that the Hotel is the subject of any investigation with respect to,
nor in material violation of any material law, statute, ordinance, building or
zoning regulation.
(g) Except as set forth in Schedule 6.1(g), there is no litigation,
suit, arbitration or other legal or administrative proceeding pending or, to
Seller's Knowledge, threatened against the Seller, any Seller Affiliate, Boca
Resorts, Inc., with respect to the Hotel, the Hotel Business or any portion
thereof, including, without limitation, any condemnation, eminent domain,
environmental, zoning or other land use regulation proceedings.
(h) Intentionally Omitted.
(i) Neither Seller or any Seller Affiliate, nor to Seller's
Knowledge, the Pre-Conversion Seller, has filed notices of protest or appeal
against, or commenced proceedings to recover, real property tax assessments
except for those which have been previously resolved. Further, neither Seller or
any Seller Affiliate, nor to Seller's Knowledge, the Pre-Conversion Seller, has
received notice from any of the Authorities that sales or personal property
taxes have
-20-
23
been levied against the Hotel, the Hotel Business or any portion thereof, which
notices of protest, or proceedings are pending as of the date hereof.
(j) Seller has not, and to Seller's Knowledge the Pre-Conversion
Seller has not, received written notice from any Authority stating that (i) all
licenses and permits necessary for the current operation, use and maintenance of
the Hotel are not in full force and effect, or (ii) there is any uncured or
uncorrected violation of any such licenses or permits. Seller has provided to
Buyer true, correct and complete copies of all of the licenses or permits issued
by Authorities to operate, maintain and use the Hotel as it is currently
operated, including, without limitation licenses and permits relative to the
handling of Hazardous Materials disclosed in the Environmental Reports disclosed
as Schedule 6.1(l).
(k) The Financial Information (i) has been prepared in accordance
with the books and records of Seller and in conformity with GAAP consistently
applied, (ii) is true and correct in all material respects and accurately sets
forth the results of the operations of the Hotel and the Hotel Business in each
of the periods covered thereby, and (iii) does not reflect any write-up or
revaluation increasing the book value of any of the assets comprising the Hotel
and the Hotel Business. Since the expiration of the period last covered by the
Financial Information, Seller has not (A) paid any bonus to or increased the
rate of compensation of any of its officers or salaried employees or amended any
other terms of employment of such persons except in the ordinary course of
business, (B) sold, leased or transferred any of its properties or assets other
than in the ordinary course of business, (C) made or obligated itself to make
any capital expenditures other than in the ordinary course of business, (D)
incurred any obligations or liabilities (including any indebtedness) in
connection with any transaction or series of transactions involving in excess of
$50,000 in the aggregate, except for this Agreement and the transactions
contemplated hereby or other than in the ordinary course of business, (E)
waived, canceled, compromised or released any rights having a value in excess of
$50,000 in the aggregate other than in the ordinary course of business, (F) made
or adopted any significant change in its accounting practice or policies, (G)
made any adjustment to its books and records other than in respect of the
conduct and operation of its normal and customary business activities, (H)
entered into, terminated, amended or modified any Assumed Contract, other than
in the ordinary course of business (I) delayed paying any accounts payable which
are due and payable except to the extent being contested in good faith, other
than in the ordinary course of business (J) made or pledged any charitable
contribution other than in the ordinary course of business, or (K) agreed to do
or authorized any of the foregoing, other than in the ordinary course of
business.
(l) Except to the extent specifically disclosed in the
Environmental Reports set forth in Schedule 6.1(l), or any new environmental
reports commissioned by Buyer, or except to the extent as would not result in or
cause a Material Adverse Change or Effect upon the Hotel and/or the Hotel
Business: (i) Seller has not received, and to Seller's Knowledge, the
Pre-Conversion Seller has not received written notice of pending proceedings or
written inquiries by any Authority relating to or arising under any applicable
laws regarding Hazardous Materials with respect to the Real Property; (ii)
Seller has not received, and to Seller's Knowledge, the Pre-Conversion Seller
has not received written notice from any Authority threatening any such
proceeding or inquiry; (iii) Seller has not received, and to Seller's Knowledge,
the Pre-Conversion Seller has not received written notice from any Authority of
any material violation
-21-
24
that remains uncured of any applicable law regarding Hazardous Materials; and
(iv) Seller has not used, stored, disposed of or released any Hazardous
Materials in violation of any Governmental Regulations in, on, under or about
the Hotel,
(m) There are no underground storage tanks under the Hotel, except
to the extent specifically disclosed in the Environmental Reports or any new
environmental reports commissioned by Buyer prior to the date of this Agreement
or as heretofore disclosed in writing by Seller to Buyer.
(n) The list of Membership Agreements listed on Schedule 1.44 is a
complete list of members on the date of execution of this Agreement. With
respect to those agreements entered into by Seller from and after March 2, 1998,
and to Seller's Knowledge, with respect to those membership agreements entered
into prior to such date, the contractual rights of such members to use all or
any of the facilities comprising the Hotel are solely as set forth in the
Membership Agreements which are included within the Assumed Contracts.
(o) The list of Persons participating in "The Villas" rental pool
program set forth on Schedule 1.58 is a complete list of such participants on
the date of execution of this Agreement. With respect to those agreements
entered into by Seller from and after March 2, 1998, and to Seller's Knowledge,
with respect to those agreements entered into prior to such date, the Residency
Agreements, the Hotel Amenities Agreement dated January 23, 1995 between BHP GP
and Villas Association, the Property Management Agreement ("Villas Management
Agreement") dated January 1, 1997, between Villas Association and AZ Biltmore
Hotel Limited Partnership, a Delaware limited partnership ("AZ Biltmore"), and
that certain Service Agreement dated January 1, 1997, between Villas Association
and BHP GP ("Villas Service Agreement"), and any other related documents
referenced in the Title Commitment (collectively, the "Villas Agreements") set
forth the contractual relationships of the parties thereto. To the extent in
Seller's possession or control, Seller has heretofore delivered to Buyer true,
correct and complete copies of all such Villas Agreements, including, without
limitation, any amendments, modification or supplements thereto.
(p) To Seller's Knowledge, Seller is not in material default under
any agreement, document or other instrument evidencing and/or securing the
Existing Financing, nor to Seller's Knowledge has any event occurred (other than
the filing of a construction lien in connection with the Construction Litigation
and/or the possibility that the Ground Lease may be characterized as "after
acquired property") which constitutes, or after notice or the passage of time,
or both, would constitute a material default by Seller thereunder; provided
however, no representation is made by Seller hereunder with respect to whether
or not any default has occurred under 6.10 of the Deed of Trust constituting
part of the Existing Financing Documents.
(q) Since March 2, 1998, the Villas participating in the rental
pool have been operated in accordance with the terms of the Villas Agreements in
all material respects. Seller has not received, and to Seller's Knowledge, the
Pre-Conversion Seller has not received, any written notice from any Authority,
any owner of a unit within The Villas complex or any other third party regarding
the failure of The Villas to comply with any law, ordinance, rule, regulation,
statute or decree.
-22-
25
(r) Intentionally Omitted.
(s) The list of trade-outs set forth on Schedule 6.1(s) attached
hereto and the values accorded thereto, is true, accurate and complete in all
material respects.
(t) Seller has provided Buyer with copies of the Golf Course
Agreements, which to Seller's Knowledge are true, correct and complete copies,
and Seller has authorized Seller's counsel to give Buyer complete access to all
pleadings and related exhibits and correspondence in connection with the Golf
Rights Litigation (the "Golf Rights Litigation Pleadings"). To Seller's
Knowledge, the Golf Course Agreements, as may be modified, supplemented or
amended (if at all), by the Golf Rights Litigation, the Golf Rights Litigation
Pleadings and the agreement with Spectrum Golf, Inc. are all the agreements with
Seller pertaining to the operation or use of the Adobe or Links golf courses or
granting any option or right of first refusal to acquire any portion of the golf
courses.
(u) To Seller's Knowledge, Seller has heretofore delivered or
otherwise made available to Buyer's representatives all material agreements,
contracts (including, but not limited to, the Assumed Contracts and the Excluded
Contracts, the Licenses and Permits and materials regarding the Existing
Expansion Entitlements and Existing Financing), documents, studies and reports
(including, but not limited to, engineering, soils and environmental studies and
reports) and other materials relating to the condition, ownership, management,
maintenance, operation, development, construction and financing of the Property
in the possession or control of Seller (collectively, the "Due Diligence
Materials"), and the Due Diligence Materials delivered to Buyer by or on behalf
of Seller, to Seller's Knowledge (i) are correct copies of what they purport to
be, and (ii) have not been modified except as expressly set forth therein.
(v) Seller has good and transferable title to the Personal Property
that is owned by Seller and except for the Existing Financing and any vendor
liens with respect to that portion of the Personal Property which is being
leased by Seller, materialmen liens or other vendor liens arising in the
ordinary course of business and which are otherwise reflected in the Accounts
Payable, there will be no liens or encumbrances with respect to the Personal
Property upon transfer of the Personal Property to Buyer at Closing.
(w) Neither Seller, nor to Seller's Knowledge, the Pre-Conversion
Seller, has received written notice from any insurance company of any defects or
inadequacies in the Hotel, that any such insurance company has advised Seller or
the Pre-Conversion Seller if not corrected would result in a termination of
Seller's existing insurance coverage with respect to the Hotel or any material
increase in the premiums payable thereunder. Seller has heretofore delivered to
Buyer true and correct copies of certificates evidencing all of the property and
liability insurance policies maintained by Seller with respect to the Property
on the date hereof.
(x) Except to the extent attributable to Seller's proposed sale of
the Property to Buyer in accordance with this Agreement, (i) to Seller's
Knowledge, no work stoppage is being threatened which should materially
adversely affect the operations of the Hotel, and (ii) except for the CBA and
except as otherwise disclosed in writing, there are presently no labor contract
negotiations in progress by Seller with any union representing any Hotel
employees. Neither
-23-
26
Seller, nor to Seller's Knowledge, the Pre-Conversion Seller, has received
written notice of any pending charge of unfair labor practices.
(y) There are no pending or, to Seller's Knowledge, threatened
actions, suits or proceedings to revoke, attack, invalidate, rescind or modify
the Existing Expansion Entitlements.
(z) To Seller's Knowledge, Schedule 1.38 sets forth all licenses,
written agreements or other documents affecting Seller's current use and
operation of the Intellectual Property of the Hotel and/or the Hotel Business
(the "Intellectual Property Agreements"). Except as alleged in the Golf Course
Litigation, Seller has not received, and to Seller's Knowledge, the
Pre-Conversion Seller has not received, any written notice that Seller's current
use of the Intellectual Property in connection with the use and operation of the
Property, and the unrestricted conduct, use and exploitation of the Intellectual
Property, infringes or misappropriates any rights held or asserted by any
Person. Except as specifically set forth in any Assumed Contract relating to any
of the Intellectual Property, to Seller's Knowledge no payments, other than
license payments, are required for the continued use of the Intellectual
Property, and Seller has not licensed, transferred or otherwise granted use
rights relative to the Intellectual Property to any third party or any Affiliate
of Seller except as otherwise set forth on Schedule 6.1(z).
(aa) Intentionally Omitted.
(bb) Except as otherwise disclosed in Schedule 1.38, neither Seller
nor, to Seller's Knowledge, the Pre-Conversion Seller, has entered into any
licensing agreement or franchise agreement utilizing the name of the Hotel or
any Intellectual Property of the Hotel with respect to any line of merchandise,
including, but not limited to, spa products, other than for use or sale at the
Hotel.
(cc) Seller has not utilized any of the services with respect to
the ITM trade-out listed on Schedule 6.1(s) that is not represented as a
liability in the WC Calculation.
(dd) There is no agreement with any third party, written or oral,
with respect to the management and operation of the Hotel and/or the Hotel
Business taken substantially as a whole by third parties (e.g., a franchise or
management agreement with Hyatt).
Notwithstanding any other terms of this Agreement to the contrary, for
purposes of Sections 6.1(a), (b), (c), (d), (e), (f), (i), (j), (l), (p), (q),
(t), (w), (x), (z), (bb) and (cc) only, all references to "Seller" shall mean
Biltmore Hotel Partners, LLLP, an Arizona limited liability limited partnership,
and shall not include the entity Biltmore Hotel Partners, an Arizona general
partnership. Further, all references in said Sections to "Pre-Conversion Seller"
shall mean only Biltmore Hotel Partners, an Arizona general partnership, and
shall not include the entity Biltmore Hotel Partners, LLLP.
6.2 Survival and Limitations. Seller's representations and warranties
set forth in this Agreement or in any document, certificate or exhibit given or
delivered pursuant to or in connection with this Agreement shall survive the
Closing until June 30, 2001 (the "Survival Period") and shall not be deemed to
merge into any of the Closing Documents, provided,
-24-
27
however, Seller shall have no liability to Buyer for any breach of such
representations and warranties or breach of any covenants under this Agreement
unless:
(a) Buyer has given Seller written notice claiming such breach, and
stating in reasonable detail the factual basis for such claim, prior to the
expiration of the Survival Period; and
(b) The loss from any single such breach of Seller's
representations and warranties (or, if Buyer incurs losses from a series of
repetitive breaches of substantially identical matters, the aggregate losses for
such breaches) exceeds $25,000; and
(c) The aggregate losses from all such breaches of Seller's
representations and warranties satisfying the requirement of subparagraph (b)
above, exceeds $1,350,000 and then only to the extent that such aggregate losses
exceed $1,350,000; and
(d) Notwithstanding anything to the contrary contained herein, in
no event shall Seller's aggregate liability for all such breaches of its
representations and warranties herein exceed $25,000,000. A violation of
Seller's representation in Section 6.1(dd) above is not subject to clauses
(a)-(c) above.
(e) A violation of the representations and warranties contained in
the Assignment of Ground Lease, Consent to Assignment of Ground Lease, the
Sublease and/or the Tri-Party Agreement Regarding Ground Lease shall not be
subject to clauses (a)-(d) above.
6.3 Notice of Subsequent Events or Discovery. Prior to Closing, Buyer
and Seller shall each give the other prompt written notice of its discovery of
any event or condition which has the effect of making any representations and
warranties contained in Section 6.1 materially inaccurate. In the event Seller
makes such disclosure to Buyer or if Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxx Xxxx or Xxxx
Xxxxxxx discovers or learns of information from whatever source prior to the
Closing Date which would, as a result of the operation of Section 4.1(c),
entitle Buyer not to honor its obligation to purchase the Property, then Buyer
may either (i) terminate this Agreement by giving Seller and Title Company
written notice of such election prior to or upon the Closing Date, in which
event the Deposit shall be returned to Buyer, or (ii) accept the Property and
such changed condition resulting in a Material Adverse Change or Effect, and
proceed to Closing hereunder in which case Buyer shall have no further recourse
against Seller as a result of such breach. In the event Seller makes such
disclosure to Buyer or if Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxx Xxxx or Xxxx Xxxxxxx
discovers or learns of information from whatever source prior to the Closing
Date which makes the representations and warranties contained in Section 6.1
materially inaccurate but does not result in a Material Adverse Change or
Effect, then Buyer shall proceed to Closing hereunder and Buyer shall have the
right to proceed against Seller for damages in connection therewith pursuant to
the terms of this Section 6.2. The terms of Article VI shall survive the
Closing.
-25-
28
ARTICLE VII
BUYER'S REPRESENTATIONS
7.1 Representations of Buyer. Buyer hereby represents to Seller, as of
the date of this Agreement and the Closing Date, that:
(a) (i) Buyer is duly organized and legally existing under the laws
of the State of Delaware, and is qualified to do business in the State of
Arizona, (ii) the execution and delivery by Buyer of, and Buyer's performance
under, this Agreement are within Buyer's powers and have been duly authorized by
all requisite corporate, partnership, or limited liability company action, (iii)
the assumption of the Existing Financing by Buyer has been duly authorized by
all requisite corporate, partnership or limited liability company action, (iv)
the person executing this Agreement on behalf of Buyer has the authority to do
so, (v) no attachments, execution proceedings, assignments for the benefit of
creditors, insolvency, bankruptcy, dissolution or other similar legal
proceedings are pending or, to Buyer's Knowledge, threatened against Buyer
and/or any of its direct or indirect equity holders, nor are any such
proceedings contemplated by them, and (vi) neither Buyer nor any of its direct
or indirect equity holders has ever been a debtor under any case commenced under
the United States Bankruptcy Code.
(b) The execution, delivery and performance of this Agreement and
the assumption of the Existing Financing by Buyer will not violate any provision
of any agreement, judicial order, or any applicable law to which Buyer is a
party or to which Buyer is a party or by which Buyer or any of the assets
comprising the Property may be bound. This Agreement and the other documents and
instruments to be executed by Buyer hereunder shall, once executed and delivered
by Buyer, constitute legal, valid and binding obligations of Buyer enforceable
against Buyer in accordance with their terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally. No government,
internal, or third-party approval or consent which has not already been obtained
is required for Buyer's execution and delivery of, or performance of obligations
under, this Agreement.
(c) There is no litigation pending against Buyer that would
adversely affect or interfere with Buyer's ability to perform its obligations
under this Agreement.
7.2 Survival. Buyer's representations and warranties set forth in this
Agreement, or any document, certificate or exhibit given or delivered pursuant
to or in connection with this Agreement shall survive until the expiration of
the Survival Period and shall not be deemed to merge into any of the Closing
Documents, provided, however, Buyer shall have no liability to Seller for any
breach of such representations and warranties unless:
(a) Seller has given Buyer written notice claiming such breach, and
stating in reasonable detail the factual basis for such claim, prior to the
expiration of the Survival Period; and
-26-
29
(b) The loss from any single breach of Buyer's representations and
warranties (or, if Seller incurs losses from a series of repetitive breaches of
substantially identical matters, the aggregate losses for such breaches) exceeds
$25,000; and
(c) The aggregate losses from all breaches of Buyer's
representations and warranties satisfying the requirement of subparagraph (b)
above, exceeds $1,350,000 and then only to the extent that such aggregate losses
exceed $1,350,000; and
(d) Notwithstanding anything to the contrary contained herein, in
no event shall Buyer's aggregate liability for all breaches of its
representations and warranties herein exceed $25,000,000.
(e) A violation of the representations and warranties contained in
the Assignment of Ground Lease, Consent to Assignment of Ground Lease, the
Sublease and the Tri-Party Agreement Regarding Ground Lease shall not be subject
to clauses (a)-(d) above.
7.3 Buyer's Independent Investigation.
(a) Buyer acknowledges and agrees that it has been given before the
Closing a full opportunity to inspect and investigate each and every aspect of
the Property and to interview all management, including the general manager, the
chief engineer, director of sales and marketing, other department
representatives, existing tenants under the Leases, service providers and their
representatives, either independently or through agents of Buyer's choosing (and
Seller acknowledges and agrees that subject to the provisions of Section 11.1
hereof, Seller has heretofore given and shall provide Buyer with reasonable
access to the Property (subject to the rights of tenants under the Leases) to
facilitate such inspection and investigation), including, without limitation:
(i) All matters relating to title, together with all
governmental and other legal requirements such as taxes, assessments, zoning,
use permit requirements and building codes (including, without limitation, the
Americans with Disabilities Act (the "ADA")).
(ii) The physical and environmental condition and all other
aspects of the Property, including, without limitation, the interior, the
exterior, the square footage within the improvements on the Real Property, the
structure, the mechanical, electrical, HVAC and plumbing components, the roofs,
the paving, the utilities, and all other physical and functional aspects of the
Property. Such examination of the physical condition of the Property has
included an examination for the presence or absence of Hazardous Materials.
(iii) Any easements and/or access rights affecting the
Property.
(iv) The Leases and all matters in connection therewith,
including, without limitation, the ability of the tenants to pay the rent.
(v) The Equipment Leases, Contracts, insurance policies and any
other documents or agreements of significance affecting the Property.
-27-
30
(vi) All other matters that Buyer deems to be of significance
affecting the Property.
(b) BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS
SELLING AND BUYER IS PURCHASING THE PROPERTY AND THE GOLF RIGHTS ON AN "AS IS,
WHERE IS, WITH ALL FAULTS" BASIS AND THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS OR BROKERS AS TO ANY
MATTERS CONCERNING THE PROPERTY, INCLUDING WITHOUT LIMITATION: (i) the quality,
nature, adequacy and physical condition and aspects of the Property, including,
but not limited to, the structural elements, foundation, roof, appurtenances,
access, landscaping, parking facilities and the electrical; mechanical, HVAC,
plumbing, sewage, and utility systems, facilities and appliances, (ii) the
quality, nature, adequacy, and physical condition of soils, geology and any
groundwater, (iii) the existence, quality, nature, adequacy and physical
condition of utilities serving the Property, (iv) the development potential of
the Property, and the Property's use, habitability, merchantability, or fitness,
or the suitability, value or adequacy of the Property for any particular
purpose, (v) the zoning or other legal status of the Property or any other
public or private restrictions on use of the Property, (vi) the compliance of
the Property or its operation with any applicable codes, laws, regulations,
statutes, ordinances, covenants, conditions and restrictions of any governmental
or quasi-governmental entity or of any other person or entity (including,
without limitation, the Americans with Disabilities Act), (vii) the presence of
Hazardous Materials on, under or about the Property or the adjoining or
neighboring property, (viii) the quality of any labor and materials used in any
improvements on the Real Property, (ix) the condition of title to the Property,
(x) the Leases, Equipment Leases, Contracts or any other agreements affecting
the Property and (xi) the operating performance and economics of the Property
(Buyer hereby expressly acknowledging that Seller has not made and is not making
any representations or guarantees of any kind concerning the future operating
performance and profitability of the Hotel and that Buyer shall make its own
investigation and arrive at its own determination concerning the future
performance and profitability of the Hotel).
(c) Subject to Seller's express representations set forth in
Sections 6.1(f), (g), (j), (l) and (m) above (which representations are subject
to any written reports and materials provided by Seller to Buyer and any reports
prepared on behalf of Buyer), Buyer acknowledges and agrees that it has
conducted engineering and environmental inspections and investigations of the
Property to its satisfaction and Buyer is satisfied with the engineering and
environmental conditions of the Property and Buyer will not claim any
environmental or engineering defect, fault or deficiency as a basis not to close
the purchase or to seek a reduction of the Purchase Price.
ARTICLE VIII
RISK OF LOSS AND INSURANCE PROCEEDS
8.1 Damage by Casualty. Seller shall bear all risk of loss with respect
to the Property up to the Closing Date. Notwithstanding the foregoing, Seller
shall promptly notify Buyer if, prior to the Closing, the Property or any
portion thereof is damaged or destroyed by casualty. If
-28-
31
the cost to repair such damage or destruction to the Property (as reasonably
estimated by Seller and Buyer) would cost less than Seven Million Five Hundred
Thousand Dollars ($7,500,000), Buyer shall not have the right to terminate
Buyer's obligations under this Agreement by reason thereof, but Seller shall
either repair and restore the Property prior to the Closing or assign and
transfer to Buyer on the Closing Date all of Seller's right, title and interests
in and to all insurance proceeds including business interruption insurance after
the Closing Date paid (and to be paid) to Seller on account of such casualty,
and Seller shall additionally credit Buyer with the amount of any deductible
under Seller's insurance policies. Notwithstanding anything to the contrary
contained herein, in the event such casualty is deemed to be "Major Damage" (as
defined herein below), then this Agreement may be terminated at the option of
either party, which option shall be exercised, if at all, by providing written
notice to the other party, which notice shall be given within ten (10) business
days prior to the Closing Date, provided, however, if Buyer first receives such
notification less than ten (10) business days prior to the Closing Date, Buyer
may, by notice delivered to Seller, delay the Closing Date to a date not later
than ten (10) business days after the date Buyer first receives such
notification, and Buyer may elect to terminate this Agreement, as provided
herein, during such ten (10) business day period. In the event that a party
exercises its election to terminate this Agreement by reason of this Section
8.1, this Agreement shall terminate, Buyer and Seller shall each pay one-half
(1/2) of the escrow charges, if any, the Deposit shall be promptly returned to
Buyer and neither party shall have any further rights or obligations hereunder,
except pursuant to the indemnity contained in Sections 11.1 and 12.8. For
purposes hereof, "Major Damage" shall be deemed to be any uninsured damage or
destruction to the Property, or any insured damage or destruction to the
Property where (a) the cost of repair or replacement is estimated to be Seven
Million Five Hundred Thousand Dollars ($7,500,000) or more (as reasonably
determined by Seller and Buyer), or (b) the work of repair or replacement shall
take more than one hundred eighty (180) days from the date of such damage or
destruction to repair or replace (as determined in the parties' good faith
judgment), or (c) the net operating income from the Property is (or would be)
diminished after the repair or restoration is completed, and/or the proceeds of
any rental loss insurance paid shall not cover the diminishment in the net
operating income from the Property during the period of repair (as determined in
the parties' good faith judgment). Upon the exercise of such option by Buyer,
the Deposit shall be returned to Buyer, and upon such return the Agreement shall
terminate, except with respect to any indemnity contained in Sections 11.1 and
12.8. If Buyer does not so elect to terminate this Agreement, then Seller shall
assign and transfer to Buyer on the Closing Date all of Seller's right, title
and interest in and to all insurance proceeds paid or payable (other than the
business interruption proceeds payable or paid prior to Closing) to Seller on
account of such casualty, and Buyer shall receive a credit equal to any
deductibles under such insurance policies and Seller shall have no obligation to
repair or restore the Property.
8.2 Condemnation. Seller shall promptly notify Buyer if, prior to the
Closing, the Property or any interest therein, is taken pursuant to the power of
eminent domain, or Seller becomes aware of any proceeding with respect thereto
which is instituted. In such event, and provided that such taking would have a
Material Adverse Effect on the continued use and operation of the Property as a
hotel, Buyer may elect, at its option, to terminate this Agreement as to the
Property by delivering notice of such termination to Seller not later than ten
(10) business days after the date Buyer first receives notification from Seller
of such taking, institution of proceeding or threat. If Buyer first receives
such notification less than ten (10)
-29-
32
business days prior to the Closing Date, Buyer may, by notice delivered to
Seller, delay the Closing Date to a date not later than ten (10) business days
after the date Buyer first receives such notification. In the event Buyer
exercises its election to terminate this Agreement by reason of this Section
8.2, this Agreement will terminate, Buyer and Seller shall each pay one-half
(1/2) of the escrow charges, if any, the Deposit shall be promptly returned to
Buyer and neither party shall have any further rights or obligations hereunder,
except pursuant to the indemnity contained in Sections 11.1 and 12.8. In the
event Buyer does not elect to terminate this Agreement by reason of this Section
8.2, the Closing shall occur on the Closing Date, the Purchase Price shall not
be reduced, and Seller shall assign to Buyer all of its rights to compensation
from the condemning authority and Buyer shall have no further recourse against
Seller as a result of such action.
ARTICLE IX
CLOSING
9.1 Escrow Instructions. Upon execution of this Agreement, Seller shall
deposit an executed copy of this Agreement with the Title Company, and this
instrument shall serve as the instructions to the Title Company as the escrow
holder for consummation of the purchase and sale contemplated hereby. Seller and
Buyer agree to execute such reasonable additional and supplementary escrow
instructions as may be appropriate to enable the Title Company to comply with
the terms of this Agreement; provided, however, that in the event of any
conflict between the provisions of this Agreement and any supplementary escrow
instructions, the terms of this Agreement shall control. Without limiting the
foregoing, no provision of the printed escrow instructions shall modify the time
for any performance required by either party under this Agreement, extend the
time for Closing, nor give either party any grace period not otherwise provided
in this Agreement.
9.2 Closing. The Closing hereunder shall occur on December 22, 2000, or
such earlier date as Buyer and Seller may mutually agree upon in writing (the
"Closing Date"). Except as otherwise expressly provided herein, the Closing Date
may not be extended without the prior written approval of both Seller and Buyer.
9.3 Deposit and Delivery of Documents.
(a) At or before the Closing, Seller shall deposit into escrow with
the Title Company or deliver to Buyer the following items relating to the
Property or to this transaction:
(i) a special warranty deed from Seller conveying all of its
right, title and interest in and to the fee interest and the easement interests
contained in the legal description of Exhibit A and all buildings, structures,
fixtures, landscaping and other improvements constructed on or affixed to such
described Real Property, in the form of attached Exhibit C, duly executed and
acknowledged by Seller and subject only to the Permitted Exceptions applicable
to such Real Property;
(ii) one (1) counterpart of the Assignment of Ground Lease
assigning Seller's right, title and interest in and to the Ground Leased
Property, and all buildings,
-30-
33
structures, fixtures and other improvements thereon, in the form of attached
Exhibit B, and including the Consent of Ground Lessor duly executed and
acknowledged by Ground Lessor ("Assignment of Ground Lease"); provided, however,
Seller's failure to deliver the Consent of Ground Lessor as part of the
Assignment of Ground Lease shall not be a default under this Agreement, shall
not be the basis for Buyer to delay Closing the transaction and Buyer shall have
no right to terminate this Agreement with respect thereto;
(iii) two (2) counterparts of the xxxx of sale from Seller with
respect to the Personal Property owned by Seller, in the form of attached
Exhibit D (the "Xxxx of Sale"), duly executed by Seller;
(iv) two (2) counterparts of an assignment of the Contracts,
Equipment Leases, Leases, Residency Agreements, Membership Agreements and
Warranties and Guaranties to the extent such items are (A) owned by Seller, (B)
assignable (and/or any necessary consents thereto have been obtained), and (C)
in effect as of the Closing, in the form of Exhibit E (the "Assignment of
Contracts"), duly executed by Seller;
(v) an affidavit that Seller is not a "foreign person," in
compliance with Section 1445 of the Internal Revenue Code, in the form of
Exhibit F (the "FIRPTA Affidavit"), duly executed by Seller;
(vi) the Beneficiary Statement with respect to the Existing
Financing;
(vii) three (3) counterparts of the Assignment of Beneficial
Interest in the form attached hereto as Exhibit H ("Assignment of Beneficial
Interest"), duly executed and acknowledged by Seller and Trustee;
(viii) one (1) counterpart of the Assignment of Recorded
Agreements in the form attached hereto as Exhibit K ("Assignment of Recorded
Agreements"), duly executed and acknowledged by Seller with respect to the Golf
Rights;
(ix) the Seller Guaranty in the form of Exhibit I ("Seller
Guaranty") duly executed by Boca Resorts, Inc., a Delaware corporation
("Guarantor");
(x) all applicable tax clearances to indicate that the Property
is being conveyed free and clear of all existing liens, other than the Existing
Financing;
(xi) one (1) counterpart of the Affidavit of Real Property
Value ("Affidavit of Real Property Value"), duly executed by Seller;
(xii) resolutions of Seller, certified as true and correct by
the appropriate officer of Seller, authorizing the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein;
(xiii) one (1) counterpart of the Assignment and Assumption of
Declarant rights under CC&Rs in the form of Exhibit L attached hereto
("Assignment of Declarant Rights"), duly executed and acknowledged by Seller;
-31-
34
(xiv) such other instruments and documents as may be reasonably
be required by the Title Company to eliminate exceptions for unfunded mechanics'
or materialmen's liens (including, but not limited to any liens related to the
Construction Litigation), for the occupancy of any party other than tenants,
licensees or other occupants under the Leases and transient lodging guests.
Seller shall deliver originals or certified copies of any resolutions, trust
indentures, agency agreements, powers of attorney, consents and other
documentation, and shall execute such affidavits and indemnities, as may be
required by the Title Company, with respect to the authority of Seller or of the
person(s) signing on behalf of Seller;
(xv) a Certificate of Good Standing for Seller;
(xvi) the original books and records of the Hotel (excluding
personnel files), to the extent in Seller's possession or reasonable control,
including, but not limited to, the Financial Information), and originals (or to
the extent not in Seller's possession or reasonable control, copies) of the
Assumed Contracts, Licenses and Permits, all plans, specifications and drawings
to the improvements upon the Real Property (but specifically excluding the
Villas), and all master keys to all locks located at the Hotel; provided,
however, such materials shall be retained at the Hotel and not delivered to the
Title Company;
(xvii) the Assignment of Golf Course Agreement in the form of
attached Exhibit G, duly executed and acknowledged by Seller;
(xviii) Special Warranty Deed re: Parcels X-0, X-0 and A-4 of
the ground Leased Property (which such Ground Leased Property is referred to as
Parcel 6 in the Title Commitment) in the form attached hereto as Exhibit P
("Ground Lease Parcels Deed"), duly executed and acknowledged by Seller;
(xix) Special Warranty Deed re: improvements on the Ground
Leased Property in the form attached hereto as Exhibit Q ("Ground Lease
Improvements Deed");
(xx) two (2) counterparts of the Sublease Agreement in the form
attached hereto as Exhibit R ("Sublease Agreement"), duly executed by Seller;
(xxi) one (1) counterpart of the Memorandum of Sublease in the
form attached hereto as Exhibit S ("Memorandum of Sublease"), duly executed and
acknowledged by Seller; and
(xxii) three (3) counterparts of the Tri-Party Agreement
Regarding Ground Lease in the form attached hereto as Exhibit T ("Tri-Party
Agreement"), duly executed by Seller and Title Company.
(b) At or before the Closing, Buyer shall deposit into the escrow
or deliver to Seller the following items relating to the Property or to this
transaction:
(i) funds necessary to pay the Purchase Price and any other
amounts necessary to close this transaction;
(ii) two (2) counterparts of the Xxxx of Sale;
-32-
35
(iii) two (2) counterparts of the Assignment of Contracts, duly
executed by Buyer;
(iv) such assignment and assumption documents, certificates,
opinions and other documents as Existing Lender may reasonably request, all in
form and substance reasonably required by Existing Lender or as set forth in the
Existing Financing documents;
(v) one (1) counterpart of the Assignment of Ground Lease, duly
executed and acknowledged by Buyer;
(vi) three (3) counterparts of the Assignment of Beneficial
Interest, duly executed and acknowledged by Buyer;
(vii) one (1) counterpart of the Assignment of Declarant
Rights, duly executed and acknowledged by Buyer;
(viii) one (1) counterpart of the Assignment of Recorded
Agreements duly executed and acknowledged by Buyer;
(ix) one (1) counterpart of the Affidavit of Real Property
Value, duly executed by Buyer;
(x) resolutions of the board of directors of Buyer, certified
as true and correct by the secretary or other appropriate officer of Buyer,
authorizing the execution and delivery of this Agreement and the consummation of
the transaction contemplated herein;
(xi) a Certificate of Good Standing for Buyer;
(xii) two (2) counterparts of the Sublease Agreement, duly
executed by Buyer;
(xiii) one (1) counterpart of the Memorandum of Sublease duly
executed and acknowledged by Buyer;
(xiv) three (3) counterparts of the Tri-Party Agreement
Regarding Ground Lease, duly executed by Buyer; and
(xv) any other agreements, documents and other items expressly
required to be delivered to Seller by Buyer pursuant to this Agreement.
(c) Buyer and Seller shall each deposit such other instruments as
are reasonably required by the Title Company or otherwise required to close the
escrow and consummate the purchase and sale of the Property in accordance with
the terms hereof.
-33-
36
9.4 Closing Costs and Fees.
(a) Attorneys' Fees. Buyer and Seller shall each pay their own
attorneys' fees and other fees and costs incurred in connection with the
negotiation and consummation of this Agreement and the transaction contemplated
hereunder.
(b) Closing Costs. Seller shall pay for: (i) the premium for the
Title Policy; (ii) one-half (1/2) of any personal property sales taxes
applicable to the sale of the Personal Property but specifically excluding any
personal property sales taxes solely attributable to Buyer's failure to obtain a
re-sale certificate or license, provided, however, Seller shall be fully liable
for all personal property sales taxes attributable to Seller's failure to
qualify for the "casual sale" exemption set forth in Section 60-590 of the
Arizona Revised Statutes; (iii) one-half (1/2) of the escrow charges, if any, of
the Title Company; (iv) any fees and costs charged by the Existing Lender
related to Buyer's assumption of the Existing Financing; (v) all costs related
to bonding over or otherwise providing assurances to the Title Company such that
the liens related to the Construction Litigation do not appear upon Buyer's
Title Policy and all title costs (including endorsements) related to Seller's
inability to obtain the Villas Association consent to the assignment of Ground
Lease to Buyer; (vi) one-half (1/2) of any trustee fee paid in connection with
the Assignment of Beneficial Interest; (vii) one-half (1/2) of the legal fees of
the Existing Lender in connection with the assignment to Buyer of the Existing
Financing; and (viii) one-half (1/2) of the cost of having D&T prepare the FF&E
Inventory, up to a maximum amount of $12,500. Buyer shall pay: (A) the entire
cost of any endorsements to the Title Policy and any coinsurance or reinsurance
coverage required by the Buyer (but specifically excluding any endorsement or
other title costs related to Sellers' inability to obtain the consent of the
Villas Association to the Assignment of Ground Lease to Buyer); (B) one-half
(1/2) of the escrow charges, if any, of the Title Company; (C) the balance of
the cost of D&T preparing the FF&E Inventory, less Seller's contribution thereto
pursuant to clause (viii) herein; (D) all of the fee for the update of the
survey; (E) one-half (1/2) of the fee paid to the trustee in connection with the
Assignment of Beneficial Interest; (F) one-half (1/2) of any personal property
sales taxes applicable to the sale of the Personal Property (but all of the
personal property sales taxes attributable to Buyer's failure to obtain a
re-sale certificate or license) and specifically excluding any personal property
taxes attributable to Seller's failure to qualify for the casual sale exemption;
(G) one-half (1/2) of the legal fees of the Existing Lender in connection with
the assignment to Buyer of the Existing Financing and all of the cost for the
endorsement to Existing Lender's policy of title insurance; and (H) all of the
fees related to the transfer of the Assumed Contracts to Buyer. Any other
closing costs shall be paid in accordance with the custom of Maricopa County.
(c) Survival. The provisions of this Section 9.4 shall survive the
Closing.
ARTICLE X
SELLER'S COVENANTS
10.1 Maintenance of the Property. From the date hereof until the
Closing Date, consistent with Seller's prior operation of the business of the
Hotel, Seller shall (a) maintain the Property in substantially the same manner
as prior to the date hereof pursuant to Seller's normal
-34-
37
course of business and customary for the Property, subject to reasonable wear
and tear and further subject to the occurrence of any damage or destruction to
the Property by casualty or other causes or events beyond the control of Seller,
provided, however, that Seller's obligation under this Section 10.1 shall not
include any obligation to make capital expenditures except for Seller's Capital
Projects (as defined below) if any; (b) continue to maintain its existing
insurance coverage on the Property (which insurance shall be terminated by
Seller at Closing unless Buyer otherwise elects to assume such insurance
coverage by providing Seller with written notice thereof on or prior to
Closing); (c) not grant or permit the creation of any voluntary liens or
encumbrances affecting the Hotel other than in the ordinary course of business;
(d) not enter into any lease, amendment of lease or other contract pertaining to
the Hotel, except as provided in Section 10.2; (e) maintain usual and customary
levels/inventories of Operating Equipment and Operating Supplies, FF&E, liquor
inventory and other Personal Property pursuant to Seller's normal course of
business and customary for the Hotel; (f) not remove or fail to replace any FF&E
from the Hotel (other than in the ordinary course of business in which case
adequate replacements shall have been made in the ordinary course of business);
(g) not hire, discharge and set compensation levels for Hotel employees except
in the ordinary course of business or otherwise in accordance with Seller's
current and customary practices and policies; and (h) proceed with the capital
improvements set forth on Schedule 10.1 attached hereto ("Seller's Capital
Projects") through the Closing Date.
10.2 Buyer's Approval of New Contracts Affecting the Property. Seller
shall not, between the date of this Agreement and the Closing Date, enter into
any lease, amendment of any existing Lease, contract or agreement pertaining in
any way to the Property, or modify in any way any Assumed Contracts pertaining
in any way to the Property, or waive any rights of Seller thereunder, without in
each case obtaining Buyer's prior written consent thereto, which consent shall
not be unreasonably withheld or delayed (excluding, however, (a) any booking or
room reservation agreements or contracts which are on commercially reasonable
terms with unaffiliated third parties, (b) any new leases, amendments of any
existing Leases, contracts or agreements with unaffiliated third parties which
are on commercially reasonable terms and which will not survive the Closing or
which may be canceled without penalty on not more than thirty (30) days' notice,
and (c) those new leases, amendments to existing Leases, contracts or agreements
which involve an aggregate annual expenditure of less than Ten Thousand Dollars
($10,000). If Buyer fails to give notice of its approval or disapproval of any
such proposed action within three (3) business days after Seller notifies Buyer
in writing of such decision to take such action, Buyer shall be deemed to have
given its approval thereto. For purposes of this Section 10.2, notice shall be
given by Seller to Buyer by facsimile sent to Xxxxx Xxxxxxx at (000) 000-0000,
with a facsimile copy sent to Xxxx X. Xxxx, Esq. at (000) 000-0000.
10.3 Termination of Existing Agreements. On or prior to the Closing
Date, Seller shall use its reasonable good faith efforts to provide written
notice of termination with respect to any agreement, contract, and/or lease
relating to the use, operation, management and/or business of the Hotel which is
not an Assumed Contract effective as of the date of Closing.
10.4 Termination of Voluntary Title Exception(s). Seller hereby
covenants to deliver title to the Real Property at Closing free and clear of any
"Voluntary Title Exception(s)" and take, or cause to be taken, all necessary
actions on or prior to Closing such that the Voluntary Title Exception(s) shall
not appear upon Buyer's Title Policy. The term "Voluntary Title
-35-
38
Exception(s)" shall mean any lien or encumbrance against the Hotel that is
knowingly or intentionally created by Seller, provided, however, that the
Voluntary Title Exception(s) shall not include those exceptions set forth in
Schedule B, Section 2 of the Title Commitment. If prior to Closing either Seller
or Buyer becomes aware of any Voluntary Title Exception(s), then Seller or
Buyer, as applicable, shall promptly notify the other party thereof, which
notice shall describe in reasonable detail the Voluntary Title Exception(s) at
issue and Seller shall eliminate or cure all such Voluntary Title Exception(s)
on or prior to Closing. Buyer shall reasonably cooperate as necessary to assist
Seller to eliminate or cure any such Voluntary Title Exception; provided,
however, in no event shall Buyer be required to incur any cost or expend any
funds in connection with its reasonable cooperation with Seller.
10.5 Estoppel Certificates. Seller hereby covenants and agrees that it
will cooperate with Buyer and use good faith efforts in distributing any and all
estoppel certificates reasonably requested by Buyer with respect to (a) tenants,
occupants or concessionaires under the Leases, (b) the Villas Association with
respect to the Property Management Agreement dated January 1, 1997 and the
Service Agreement dated January 1, 1997, and/or (c) any other entity,
organization or association disclosed in the Title Commitment, provided,
however, that Buyer's receipt of such estoppel certificates shall not be a
condition to its obligation to close under this Agreement and Buyer shall not
have any recourse against Seller if any such certificates are not obtained
despite Seller's compliance with the terms of this provision.
ARTICLE XI
SELLER'S AND BUYER'S COVENANTS
11.1 Access. Seller shall give Buyer and its employees,
representatives, agents, third party consultants and advisors full access to:
(a) the Property; (b) all of the books, contracts, files, commitments, permits,
licenses and any other records relative to the Hotel Buyer deems appropriate
with respect thereto, but specifically excluding any personnel files; (c) all
management, the chief engineer, director of sales and marketing and other
department representatives of the Property, and other employees of the Property;
and (d) contact any Authorities that may have information and/or documentation
concerning the Property; subject, however, to Buyer's coordination and
scheduling of all initial contracts with such persons and/or entities with Xxxxx
Xxxxx, the Senior Vice President and Managing Director of the Hotel, who shall
diligently respond to Buyer's requests and reasonably cooperate with Buyer in
connection with Buyer's inquiries. Further, Buyer shall coordinate access to
Seller's outside counsel with Xxxxxxx Xxxxxxx and access to Seller's accountants
with Xxxx Xxxxxx, each of whom shall reasonably respond to Buyer's requests and
reasonably cooperate with Buyer in connection with Buyer's inquiries. Seller
will cause its accountants to furnish such additional financial and operating
data and other information, within the possession and control of such
accountants, as Buyer may from time to time reasonably request.
In connection with any entry by Buyer, or its agents, employees or
contractors onto the Property, Buyer shall give Seller reasonable advance notice
of such entry and shall conduct such entry and any inspections in connection
therewith so as to minimize, to the extent reasonably possible, interference
with Seller's business, the business of Seller's tenants, or guests of the
Hotel, and otherwise in a manner reasonably acceptable to Seller. Without
limiting the
-36-
39
foregoing, prior to any entry to perform any on-site inspections or testing,
Buyer shall give Seller written notice thereof, including the identity of the
company or persons who will perform such testing and the proposed scope of the
testing. Buyer shall maintain, and shall ensure that its contractors maintain,
public liability and property damage insurance in amounts and in form and
substance reasonably adequate to insure against all liability of Buyer and its
agents, employees or contractors, arising out of any entry or inspections of the
Property pursuant to the provisions hereof; and Buyer shall provide Seller with
evidence of such insurance coverage upon request by Seller. Buyer shall fully
restore the Hotel to the condition in which the same was found before any such
inspections, tests or studies were undertaken. Buyer shall indemnify and hold
Seller harmless from and against any costs, damages, liabilities, losses,
expenses, liens or claims (including, without limitation, reasonable attorneys'
fees) relating to personal injury or property damage arising out of or relating
to any entry on the Property by Buyer, its agents, employees or contractors in
the course of performing the inspections, testings or inquiries provided for in
this Agreement. The indemnification provisions of this Section 11.1 shall
survive the Closing or any termination of this Agreement and shall be in
addition to any liability under Section 2.2(b)(ii).
Buyer will permit the Hotel accounting staff ("Staff") to close the
books as of the Closing Date and prepare the Closing Balance Chart and Income
Statement by January 10, 2001. In addition, Buyer will permit the Staff to
prepare a monthly Balance Sheet and Income Statement through the 90 day "true
up" period in order to determine the Final Working Capital Calculation.
11.2 Confidentiality: Return of Information to Seller. Prior to the
Closing Date, neither party shall directly or indirectly use or disclose any
confidential information concerning the Property, the other party, the other
party's assets or the transactions contemplated by this Agreement to any Person
except that such matters may be disclosed (a) to such party's directors,
officers, partners, and employees; (b) to such party's legal counsel,
accountants, engineers, architects, financial advisors, lenders and similar
professionals and consultants to the extent such party deems it reasonably
necessary or appropriate in connection with the evaluation of the transaction
contemplated hereby; (c) to third parties having an ownership interest in or
relationship with the Hotel (such as existing mortgagees and equipment lessors)
to whom disclosure is necessary or desirable in order to facilitate the
consummation of the transactions contemplated hereby; and (d) to the extent
deemed reasonably necessary to satisfy the Governmental Regulations (including,
without limitation, the requirements of a party under all applicable state or
federal securities laws). Buyer shall also advertise, interview, test and
recruit for employment positions and to make such other disclosures to third
parties as Buyer determines, in its reasonable judgment, to consummate the
transaction contemplated by this Agreement. For the purpose of this Section
11.2, the term "confidential information" shall mean information which is or
becomes known to a party or its respective affiliates or to their employees,
former employees, consultants or others in a confidential relationship with such
party, including, without limitation, pursuant to the terms of this Agreement,
and which relates to the Property, the transactions contemplated by this
Agreement or the business of either party; provided, however, that confidential
information shall not include (i) information which is or becomes generally
available to the public other than through a violation of law or obligation
hereunder, (ii) information which, in the opinion of counsel to either party,
such party is required by law, court order, governmental order or decree to
disclose, except that the other party may at its own expense appeal such court
order, (iii) information which was developed by such party on its own,
independent from the proprietary information made available to such party
hereunder,
-37-
40
and (iv) information which was subsequently made available to such party by a
third party who was not violating the law or any obligation hereunder in making
such disclosure. In addition, except as required by law (which disclosure shall
be governed by the terms of clause (ii) hereinabove) neither party shall issue
any press release to the public without the prior written consent of the other
party; provided, however, that each party acknowledges and agrees that the other
party may need to communicate with the press (or applicable governmental entity
in connection with securities laws) on an expedited basis both prior to and upon
Closing and each party agrees to respond rapidly to any request by the other
party with respect thereto and the failure by the party from whom approval is
requested to approve or disapprove any press release within twenty-four (24)
hours after delivery thereof will be deemed such party's approval of such press
release. In any event, each of the parties acknowledge, agree and consent that
the press release attached hereto as Exhibits O-1 and O-2 has been approved by
the parties and will be released simultaneous with the execution hereof. In the
event the transaction contemplated by this Agreement fails to close for any
reason, then upon Seller's written request therefor, Buyer shall promptly return
to Seller and/or destroy all documents, instruments, copies of materials and
other written information furnished to Buyer pursuant to the terms of this
Agreement.
11.3 Further Assurances. Subject to the terms and conditions hereof,
each party agrees to use its best efforts to do, or cause to be done, all
things, not inconsistent with the terms of this Agreement, necessary, proper, or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement as expeditiously as practicable, including,
without limitation, the performance of such further acts or the execution and
delivery of such additional instruments or documents, not inconsistent with the
terms of this Agreement, as any party may reasonably request in order to carry
out the purposes of this Agreement and the transactions contemplated hereby,
including, without limitation, in connection with the transfer to Buyer of the
Assumed Contracts. Additionally, Seller hereby agrees to reasonably cooperate
with Buyer with respect to the assignment of the Golf Rights Litigation,
including, but not limited to, executing all documents reasonably requested by
Buyer to effectuate a transfer of the Golf Rights Litigation to Buyer , subject,
however, to the provisions of this Section 11.3 (including executing a conflict
waiver, a limited waiver of attorney-client privilege sufficient to effectuate
the transfer to Buyer of the Golf Rights Litigation and a waiver of work product
privilege limited to the Golf Rights Litigation, if requested by Xxxxx & Xxxx,
P.A., if Buyer elects to retain such firm for representation in the Golf Rights
Litigation) and requesting that Persons testify, at Buyer's expense and as
reasonably requested of such Persons, on behalf of Buyer in connection with such
Golf Rights Litigation. Further, Buyer hereby agrees to reasonably cooperate
with Seller with respect to Seller's on-going prosecution of the Construction
Litigation as more fully set forth in the "Litigation Support Agreement"
attached hereto as Exhibit N. Notwithstanding the foregoing, in no event shall
either party be required to incur any expenses in connection with its reasonable
cooperation with the other party. Further, with respect to actions identified in
the Golf Course Litigation and the Construction Litigation (collectively, the
"Actions"), the parties hereto shall have the following duties and
responsibilities with respect to the Actions:
(a) Kabuto No. 1.
(i) If the Arizona Supreme Court denies review of Kabuto No. 1,
then Seller shall be entitled to pursue, and retain, any award of attorneys'
fees, costs, expenses, expert
-38-
41
fees and other costs (collectively "Costs") awarded to Seller by any court in
Kabuto No. 1. Seller shall be responsible for processing through to completion
any dismissals, orders, judgments and other documents and for taking such
further actions as are necessary and/or appropriate to document the dismissal of
the matter. Prior to the Arizona Supreme Court determination, Seller shall not
settle, compromise or otherwise affect any of Buyer's rights in Kabuto No. 1
without the express consent of Buyer, which consent shall not be unreasonably
withheld.
(ii) If the Arizona Supreme Court accepts review, then Buyer
shall be responsible, and shall have the right, to defend and to otherwise
control, in its sole and absolute discretion, the Kabuto No. 1 litigation, which
control includes, but is not limited to, litigation decisions, witness
decisions, decisions to settle and all other decisions related to the Kabuto No.
1 litigation, and Seller shall pay all of the Costs related to the Arizona
Supreme Court's review, including, but not limited to, reasonable attorneys'
fees, provided, however, that (A) in no event shall Seller be responsible for
any amount in excess of Fifty Thousand Dollars ($50,000) in the aggregate
(including any costs related to the Arizona Supreme Court review of Kabuto No.
2) (it being understood that all Costs in excess of such $50,000 amount shall be
the responsibility of Buyer), and (B) Buyer shall not settle the Kabuto No. 1
litigation without Seller's consent which shall not be unreasonably withheld or
delayed recognizing that Buyer shall not compromise the award of attorneys' fees
and Costs to Seller, without Seller's consent, which Seller may withhold in its
sole discretion. If the Arizona Supreme Court subsequently affirms the decision
of the Arizona Court of Appeals or otherwise rules against Kabuto in the Kabuto
No. 1 litigation, Seller shall be entitled to pursue its award of attorneys'
fees as set forth in paragraph (a)(i) above.
(iii) If the Arizona Supreme Court reverses the judgment of the
appellate court, and/or if the Arizona Supreme Court remands the matter to the
Arizona Court of Appeals or to the trial court for substantive review (i.e., for
other than a determination of attorneys' fees or for clarification of procedural
matters), then Buyer shall be responsible, and shall have the right, to pay for,
defend and to otherwise control, in its sole and absolute discretion, the Kabuto
No. 1 litigation. This control includes, but is not limited to, litigation
decisions, witness decisions, decisions to settle and all other decisions
related to the Kabuto No. 1 litigation. Additionally, any award of Costs that
may be made in the future (but not previously awarded Costs the original award
of which has not been vacated, reversed or otherwise eliminated and not
subsequently reinstated), by the trial, appellate or Arizona Supreme Court to
Seller, shall be assigned and otherwise transferred by Seller to Buyer, and
Buyer shall be entitled to pursue and retain any and all such future Costs
associated with Kabuto No. 1, excluding previously awarded Costs the original
award of which has not been vacated, reversed or otherwise eliminated and not
subsequently reinstated (which may not be compromised by Buyer if it has not
been vacated, remanded or otherwise eliminated and not subsequently reinstated).
(b) Kabuto No. 2.
(i) If the Arizona Supreme Court summarily denies review of
Kabuto No. 2, then Seller shall be entitled to pursue, and retain, any award of
attorneys' fees, costs, expenses, expert fees and other costs (collectively
"Costs") that may be awarded to Seller by any
-39-
42
court in Kabuto No. 2. Seller shall be responsible for processing through to
completion any dismissals, orders, judgments and other documents, and for taking
such further actions as are necessary and/or appropriate to document the
dismissal of the matter. Prior to the Arizona Supreme Court determination,
Seller shall not settle, compromise or otherwise affect any of Buyer's rights in
Kabuto No. 2 without the express consent of Buyer, which consent shall not be
unreasonably withheld.
(ii) If the Arizona Supreme Court accepts review, then Buyer
shall be responsible, and shall have the right, to defend and to otherwise
control, in its sole and absolute discretion, the Kabuto No. 2 litigation, which
control includes, but is not limited to, litigation decisions, witness
decisions, decisions to settle and all other decisions related to the Kabuto No.
2 litigation, and Seller shall pay all of the Costs related to the Arizona
Supreme Court's review, including, but not limited to, reasonable attorneys'
fees, provided, however, that (A) in no event shall Seller be responsible for
any amount in excess of Fifty Thousand Dollars ($50,000) in the aggregate
(including any costs related to the Arizona Supreme Court review of Kabuto No.
1) (it being understood that all Costs in excess of such $50,000 amount shall be
the responsibility of Buyer), and (B) Buyer shall not settle the Kabuto No. 1
litigation without Seller's consent which shall not be unreasonably withheld or
delayed recognizing that Buyer shall not compromise the award of attorneys' fees
and Costs to Seller, without Seller's consent, which Seller may withhold in its
sole discretion. If the Arizona Supreme Court subsequently affirms the decision
of the Arizona Court of Appeals or otherwise rules against Kabuto in the Kabuto
No. 2 litigation, Seller shall be entitled to pursue its award of attorneys'
fees as set forth in paragraph (b)(i) above.
(iii) If the Arizona Supreme Court reverses the judgment of the
appellate court, and/or if the Arizona Supreme Court remands the matter to the
Arizona Court of Appeals or to the trial court for substantive review (i.e., for
other than a determination of attorneys' fees or for clarification of procedural
matters), then Buyer shall be responsible, and shall have the right, to pay for,
defend and to otherwise control, in its sole and absolute discretion, the Kabuto
No. 2 litigation. This control includes, but is not limited to, litigation
decisions, witness decisions, decisions to settle and all other decisions
related to the Kabuto No. 2 litigation. Additionally, any award of Costs that
may be made in the future (but not previously awarded Costs the original award
of which has not been vacated, reversed or otherwise eliminated and not
subsequently reinstated), by the trial, appellate or Arizona Supreme Court to
Seller, shall be assigned and otherwise transferred by Seller to Buyer, and
Buyer shall be entitled to pursue and retain any and all such future Costs
associated with Kabuto No. 2, excluding previously awarded Costs the original
award of which has not been vacated, reversed or otherwise eliminated and not
subsequently reinstated (which may not be compromised by Buyer if it has not
been vacated, remanded or otherwise eliminated and not subsequently reinstated).
(c) Londen Litigation. As of the effective date of this Agreement,
Buyer shall be responsible, and shall have the right, to pay for, defend and to
otherwise control, in its sole and absolute discretion, the Londen Litigation.
This control includes, but is not limited to, litigation decisions, witness
decisions, decisions to settle and all other decisions related to the Londen
Litigation.
-40-
43
(d) Construction Litigation. As more fully set forth in the
Litigation Support Agreement attached hereto as Exhibit N, Buyer hereby agrees
to reasonably cooperate with Seller with respect to Seller's on-going
prosecution of the Construction Litigation. Buyer acknowledges and agrees that
some or all such claims may be compromised, cancelled, modified or terminated in
whole or in part, at Seller's sole and unfettered discretion in connection with
Seller's retention of the Construction Litigation. At Closing, Buyer shall
execute and deliver the Litigation Support Agreement in the form attached hereto
as Exhibit N.
The provisions of this Section 11.3 shall survive the Closing.
However, in no event shall Seller have any recourse to Buyer in respect of any
Golf Rights Litigation, Construction Litigation or Londen Litigation.
11.4 Employees. Buyer will decide in its sole and absolute discretion
whether to employ any of the existing Hotel employees or other applicants
interviewed during the Transition Period. Further, notwithstanding any decision
made by Buyer with respect thereto, Seller shall be responsible for terminating,
at Closing all employees in accordance with the terms of Section 11.4(a) below;
provided, however, that Buyer shall rehire employees of Seller to the extent and
for the period after Closing as required to permit Seller to perform this action
without requiring that Seller give any notice or otherwise comply with the
Worker Adjustment and Retraining Notification Act U.S.C. ss. 2101 et seq. (the
"WARN Act") and, Buyer agrees to indemnify, defend and hold Seller harmless from
and against any and all claims of the employees of Seller, employee
representatives, and applicable units of local government based on failure to
comply with the WARN Act, to the extent applicable. Unless otherwise agreed
between Seller and Buyer, Seller shall be responsible for any liability for
payment of all employees' wages, accrued vacation pay, sick leave, bonuses,
severance obligations, pension benefits and other benefits, including, without
limitation, any COBRA rights, earned by and due to or accrued to employees at
the Property as of the day prior to the Closing Date, together with FICA,
unemployment and other taxes and benefits due from any employer of such
employees, and including COBRA benefits that are due to employees of Seller that
Buyer does not hire upon the Closing Date.
(a) Future Employment of Employees. At Closing, the employment by
Seller of all employees whose employment is at or for the Hotel, shall terminate
and such employees shall cease to participate in any employee benefit plans
maintained by or for the benefit of Seller. Seller shall retain responsibility
for the payment of any employee benefits or entitlements, including severance
pay, accrued vacation, sick or holiday pay, to all terminated employees pursuant
to any employee benefit plan, fund, program, contract, policy or arrangement of
Seller or applicable law or regulation as a result of the consummation of the
transactions contemplated hereby. Subject to the WARN Act obligations described
in the first paragraph of Section 11.4, nothing in this Agreement, express or
implied, shall confer upon any employee of Seller, or any representative of any
such employee, any rights or remedies, including any right to employment,
continued employment for any period, or seniority rights, of any nature
whatsoever, provided, however, that any employee seniority rights shall "vest"
with respect to any employees re-hired by Buyer upon Closing and who thereafter
remain in Buyer's employment for at least a one (1) year continuous period.
Further, Buyer hereby agrees that with respect to any medical benefits provided
by Buyer to any employees of the Hotel re-hired by Buyer upon Closing, all
"waiting periods" relating to such benefits shall be waived. With respect to the
401(K) benefit plan(s)
-41-
44
provided by Buyer to any employees of the Hotel re-hired by Buyer upon Closing,
such employees shall be subject to the applicable "qualification" period(s) set
forth in such 401(K) benefit plan(s).
(b) Health Care Continuation Requirements. The parties acknowledge
that the transactions contemplated hereby will result in obligations on the part
of Seller and one or more of Seller's employee benefit plans that is a welfare
benefit plan (within the meaning of Section 3(1) of ERISA) to comply with the
health care continuation requirements of Part 6 of Title 1 of ERISA and Code
Section 4980B, as applicable. Seller and each such employee benefit plan that is
such a welfare benefits plan shall comply with the applicable requirements of
such laws. Seller shall take all actions to insure continuation of each such
employee benefit plan that is such a welfare benefit plan for a minimum period
of one hundred twenty (120) days from and after the Closing Date. The parties
expressly agree that Buyer and Buyer's benefit plans, if any, shall have no
responsibility for compliance with such health care continuation requirements
(i) for qualified beneficiaries who previously elected to receive continued
coverage under Seller's ERISA benefit plans or who between the date of this
Agreement and the Closing Date elect to receive continued coverage, or (ii) with
respect to those employees or former employees of Seller who may become eligible
to receive such continued coverage as a result of the transactions provided for
in this Agreement.
(c) Employee Benefit Plans. Except as specifically set forth in
this Agreement: (i) Buyer shall not be obligated to assume, continue or maintain
any of Seller's employee benefit plans; (ii) no assets or liabilities of such
employee benefit plans shall be transferred to, or assumed by, the Buyer or the
Buyer's benefit plans; and (iii) Seller shall be responsible solely for funding
and/or payment of any benefits under any such employee benefit plans, including
any termination benefits and other employee entitlements accrued under such
plans by or attributable to employees of Seller prior to the Closing Date.
(d) CBA. Seller shall not amend, terminate, extend, or otherwise
modify any provision of the CBA.
(e) Indemnification of Buyer. Seller agrees to pay and be liable to
Buyer, its affiliates and their respective directors, officers and employees
(herein individually a "Buyer Indemnified Party" and collectively, "Buyer
Indemnified Parties") and shall assume, indemnify, defend and hold harmless the
Buyer Indemnified Parties from and against and in respect of any and all losses,
damages, liabilities, taxes, sanctions that arise (A) under Section 4980E of the
Code and Part 6 of Title I of ERISA, interest and penalties, costs and expenses
(including, without limitation, disbursements and reasonable legal fees incurred
in connection therewith and in seeking indemnification therefor, and any amounts
or expenses required to be paid or incurred in connection with any action, suit,
proceedings, claim, appeal, demand, assessment or judgment) imposed upon,
incurred by, or assessed against any Buyer Indemnified Party arising by reason
of or relating to any failure to comply with the health care continuation
coverage requirements of Section 4980B of the Code and Part 6 of Title I or
ERISA which failure occurred or occurs (i) on or prior to the Closing Date with
respect to any current or former employee of Seller or any qualified beneficiary
of such employee (as defined in Section 4980B(g)(1) of the Code), or (ii) after
the Closing Date with respect to any current or former employee of Seller who
does not at any time become entitled to coverage under any group health plan,
within the meaning of
-42-
45
Section 5000(b)(1) of the Code, of Buyer, or with respect to any dependent of
such employee and for any failure to comply with the notice or other
requirements of the Act, and/or (B) in connection with any employee complaints
and/or matters pending before any applicable administrative agencies, including
without limitation, the National Labor Relations Board, EEOC, Department of
Labor, Department of Fair Employment Housing, and/or any applicable collective
bargaining dispute resolution forums prior to the Closing Date or relating to
incidents arising prior to the Closing Date.
(f) Indemnification of Seller. Buyer agrees to pay and be liable to
Seller, its affiliates and their respective officers and employees (herein
individually a "Seller Indemnified Party" and collectively, "Seller Indemnified
Parties") and shall assume, indemnify, defend and hold harmless Seller
Indemnified Parties from and against and in respect of any and all losses,
damages, liabilities, taxes, sanctions that arise (A) under Section 4980B of the
Code and Part 6 of Title I of ERISA, interest and penalties, costs and expenses
(including, without limitation, disbursements and reasonable legal fees incurred
in connection therewith and in seeking indemnification therefor, and any amounts
or expenses required to be paid or incurred in connection with any actions,
suit, proceedings, claim, appeal, demand, assessment or judgment) imposed upon,
incurred by, or assessed against any Seller Indemnified Party arising by reason
of or relating to any failure to comply with the health care continuation
coverage requirements of Section 4980B of the Code and Part 6 of Title I of
ERISA which failure occurs with respect to any current or former employee of
Seller actually hired as an employee of Buyer or any qualified beneficiary of
such employee, as defined in Section 4980B(g)(1) of the Code, who after the
Closing Date becomes entitled to coverage under any group health plan, within
the meaning of Section 5000(b)(1) of the Code, of Buyer, and/or (B) in
connection with any employee complaints and/or matters before any applicable
administrative agencies, including without limitation, the National Labor
Relations Board, EEOC, Department of Labor, Department of Fair Employment
Housing, and/or any applicable collective bargaining dispute resolution forums
on and after the Closing Date or relating to incidents arising on and after the
Closing Date.
For purposes of this Agreement, references to the Code shall mean the
Internal Revenue Code of 1986 and references to the Code and ERISA shall include
references to any provision of such statutes as they may be amended from time to
time. The provisions of this Section 11.4 shall survive the Closing.
11.5 Liquor License.
(a) Surrender of Existing License/Application for New License.
Seller covenants and agrees not to transfer or encumber or allow the transfer or
encumbrance of the Liquor License in any manner whatsoever. Buyer and Seller
covenant and agree to do and perform such further acts and to cooperate fully
with each other and with the Arizona Department of Liquor Licenses and Control
("Department") and the City of Phoenix so as to consummate the surrender of the
Liquor License to Buyer (in connection with Buyer's application for a new
license to replace the surrendered Liquor License), or its nominee, as
contemplated by this Agreement in a timely manner. Without limiting the
foregoing, Seller agrees to maintain the Liquor License in an active condition
and in good standing and to execute and deliver to Buyer (and to cause Seller's
agents in relation to the Liquor License to execute and deliver to Buyer) as
reasonably requested by Buyer all Department forms and documents
-43-
46
necessary to effect an issuance of a new liquor license to Buyer (based upon the
surrender of the Liquor License), including, without limitation, applications
and surrender forms, and to deliver the original of the Liquor License to Buyer,
or a designated representative of Buyer (which shall be personally delivered by
Seller (or a representative of Seller) to Buyer outside of escrow) for surrender
to the Department. Buyer shall pay all fees required by the Department in
connection with Buyer's application for replacement of the Liquor License;
provided, however, that Seller agrees to pay (or cause to be paid) all Arizona
Department Liquor License and Control, Arizona Department of Revenue, and City
of Phoenix charges, fees, taxes assessments and, to the extent applicable, fines
and penalties relating to the period prior to the date of Closing.
(b) Allocation of Purchase Price to Bar License. Buyer and Seller
agree to allocate Thirty-Five Thousand Dollars ($35,000) of the Purchase Price
to the Liquor License.
(c) Survival. The terms of this Section 11.5 shall survive the
Closing.
11.6 Collection Actions. Buyer covenants and agrees to diligently
pursue the collection of all of the Accounts Receivable following the Closing
Date. In connection therewith Buyer shall permit Seller's representatives to
monitor and assist Buyer in the collection effort.
11.7 Indemnification. Subject to the limits set forth in Section 6.2,
each party (each, an "Indemnifying Party") hereby agrees to indemnify and defend
the other party and its respective officers, partners, directors, shareholders,
affiliates and agents (the "Indemnified Parties") and hold the Indemnified
Parties harmless from and against any and all losses, damages, liabilities,
claims, costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses) paid or incurred by the Indemnified Parties due to
misrepresentations or breach of warranty or breach of covenant made by the
Indemnifying Party in this Agreement or in any document, certificate, or exhibit
given or delivered to the other party hereto pursuant to or in connection with
this Agreement, and the indemnification provisions of this Section 11.7 shall
survive the Closing.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. Any notices required or permitted to be given hereunder
shall be given in writing and shall be delivered (a) in person, (b) by certified
mail, postage prepaid, return receipt requested, (c) by facsimile, or (d) by a
commercial overnight courier that guarantees next day delivery and provides a
receipt, and such notices shall be addressed as follows:
TO BUYER: KSL BILTMORE RESORT, INC.
00-000 XXX Xxxxxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx Xxxx, Xxxx Xxxxxxx
Facsimile No: (000) 000-0000
and cc: Legal Department
Facsimile No. (000) 000-0000
-44-
47
WITH A COPY TO: XXXXX XXXXXXX XXXX XXXXXX & XXXXXXX LLP
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No: (000) 000-0000
TO SELLER: BILTMORE HOTEL PARTNERS, LLLP.
Boca Resorts, Inc.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No: (000) 000-0000
WITH A COPY TO: AKERMAN, SENTERFITT & XXXXXX, P.A.
28th Floor, SunTrust International Center
Xxx XX Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx, Esq.
Facsimile No: (000) 000-0000
or to such other address as either of the parties may from time to time specify
in writing to the other parties. Any notice shall be effective only upon
delivery, which for any notice given by facsimile shall mean notice which has
been received by the party to whom it is sent as evidenced by confirmed answer
back. The inability to deliver because of a changed address of which no notice
was given, or rejection or other refusal to accept any notice, shall be deemed
to be the receipt of the notice as of the date such inability to deliver or
rejection or refusal to accept. Any notice to be given by any party hereto may
be given by the counsel for such party.
12.2 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona.
12.3 Interpretation of Agreement. The article, section and other
headings of this Agreement are for convenience of reference only and shall not
be construed to affect the meaning of any provision contained herein. All
Exhibits and Schedules described herein and attached hereto are fully
incorporated into this Agreement for all purposes by this reference. Where the
context so requires, the use of the singular shall include the plural and vice
versa and the use of the masculine shall include the feminine and the neuter.
The parties acknowledge that, with respect to the transactions contemplated by
this Agreement, (a) each party and its attorneys have reviewed and revised this
Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments, Exhibits or Schedules
thereto and (b) each party has relied solely on the advice of its own
accounting, tax, legal and other advisors. All dates and times referred to in
this Agreement (unless otherwise specified) shall refer to the local time or
date in Phoenix, Arizona. In the event that the specified date by which any
notice is to be delivered hereunder falls on a Saturday, Sunday or a legal
holiday, then such date shall be deemed to be extended to the next following
business day.
-45-
48
12.4 Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto, contains all representations, warranties and covenants made by
Buyer and Seller and constitutes the entire understanding between the parries
hereto with respect to the subject matter hereof. Any prior correspondence,
memoranda or agreements are replaced in total by this Agreement together with
the Exhibits and Schedules hereto.
12.5 Severability. If any provision of this Agreement, or the
application thereof to any Person, place, or circumstance, except for any item
which constitutes a material element of the consideration between the parties,
shall be held by a court of competent jurisdiction to be invalid, unenforceable,
or void, the remainder of this Agreement and such provisions as applied to other
Persons, places, and circumstances shall remain in full force and effect.
12.6 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
12.7 Successors and Assigns. Buyer shall not have the right to assign
all or any part of its interest in this Agreement without obtaining the prior
written consent of Seller, which consent may be withheld in Seller's sole and
absolute discretion, except Buyer may assign this Agreement or any portion
thereof to any of its subsidiaries and affiliates upon notice thereof to Seller
(a "Permitted Assignment"). In no event shall Buyer be released from any of its
obligations or liabilities hereunder whether or not Seller approves of any
assignment of this Agreement or there is a Permitted Assignment. Buyer hereby
agrees that any assignment by Buyer in contravention of this provision shall be
void and shall not relieve Buyer of its obligations and liabilities hereunder.
Subject to the foregoing, this Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors, heirs,
administrators and assigns.
12.8 Finders and Financial Advisors. Except as expressly provided to
the contrary in this Agreement, each party hereto shall pay its own expenses
(including, without limitation, attorneys' fees) incurred in connection with
this Agreement and the transactions contemplated hereby. The parties represent
and warrant to each other that no broker or finder was involved in arranging or
bringing about this transaction and there are no claims or rights for brokerage
commissions or finders' fees in connection with the transactions contemplated by
this Agreement. Chase Securities Inc. ("Chase"), acts as financial advisor to
Seller in connection with the transaction which is the subject of this Agreement
and Chase's compensation shall be paid by Seller pursuant to a separate
agreement between Seller and Chase. An affiliate of Chase engaged Diamond
Realty, Inc., an Arizona real estate broker ("Diamond"), and Diamond's
compensation shall be paid by Chase, or Chase's affiliate, pursuant to a
separate agreement between Chase and/or Chase's affiliate and Diamond Realty,
Inc. In the event that any broker or finder brings a claim for a commission or
finder's fee based upon any contact, dealings or communication with Buyer or
Seller, the party through whom the broker or finder makes his claim shall defend
the other party from such claim, and shall indemnify the other party and hold
the other party harmless from any and all damages, liabilities, losses, costs
and expenses (including reasonable attorneys' fees and disbursements) paid or
incurred by the other party in defending against the claim. The provisions of
this Section 12.8 shall survive the Closing or any termination of this Agreement
and shall be in addition to any liability under Section 2.2(b)(ii).
-46-
49
12.9 Attorneys' Fees. In the event either party hereto fails to perform
any of its obligations under this Agreement or in the event any dispute arises
between the parties hereto concerning the meaning or interpretation of any
provision of this Agreement, the defaulting party or the party not prevailing in
such dispute, as the case may be, shall pay any and all costs and expenses
incurred by the other, party on account of such default and/or in enforcing or
establishing its rights hereunder, including, without limitation, court costs
and reasonable attorneys' fees and disbursements.
12.10 Waiver of Compliance. Any failure of Seller, on the one hand, or
Buyer, on the other, to comply with any provision of this Agreement may be
expressly waived in writing by Buyer or Seller, respectively, but such waiver or
failure to insist upon strict compliance with such provision shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided
herein or by law or in equity. The waiver by any party of the time for
performance of any act or condition hereunder does not constitute a waiver of
the act or condition itself.
12.11 Amendments. This Agreement may not be amended or modified except
by a written instrument signed by both Buyer and Seller.
12.12 Time of the Essence. Time is of the essence in the performance of
Buyer's obligations under this Agreement.
12.13 Shadow Management. During the Transition Period, Seller shall
permit Buyer to establish and maintain a shadow management operation with
respect to the Hotel. Personnel from Buyer's shadow management operation shall
have reasonable access during normal business hours to all books, records and
other information in the possession or control of records and other information
in the possession or control of Seller or its agents concerning the Hotel and
shall have the right (at Buyer's expense) to establish duplicate books and
records (whether in tangible or electronic form) in order to effect a smooth
transition in the ownership and management of the Hotel; provided, however, that
Buyer and its shadow management operation and employees shall not unreasonably
interfere with the normal management and operation of the Hotel, shall repair
any damage to the physical condition of the Hotel caused by Buyer or its agents
in any such shadow management operation, shall have no decision making
authority, no supervisory authority, and shall not be deemed to have assumed
management responsibilities prior to Closing by virtue of such shadow
management.
12.14 Seller's Guarantor. The Guarantor shall guarantee to Buyer the
due and punctual payment and performance of those certain obligations of Seller
("Seller Obligations") as set forth in the Seller Guaranty attached hereto as
Exhibit I.
12.15 Ground Lease Assignment. Following the execution of this
Agreement, Seller shall use reasonable efforts to obtain the consent of Villas
Association to the Assignment of Ground Lease, which consent shall be in the
form of "Consent of Ground Lessor" contained within the Assignment of Ground
Lease attached hereto as Exhibit B, duly executed and
-47-
50
acknowledged by Villas Association. Seller and Buyer shall cooperate with each
other and use reasonable efforts to satisfy the foregoing condition, and Buyer
shall provide any documentation reasonably requested by Villas Association
relating to Villas Association's review of Buyer as the proposed successor
lessee under the Ground Lease.
12.16 Seller Indemnification Regarding Ground Lease. In addition to the
indemnification provided in Section 11.7 above, in the event that Seller fails
to obtain the consent of the Villas Association to the Assignment of Ground
Lease prior to the Closing Date, Seller shall indemnify, defend, protect and
hold Buyer, each of the parties comprising Buyer, and each of their respective
Indemnified Parties, from and against any and all claims, demands, liabilities,
judgments, penalties, losses, costs, damages and expenses, including, without
limitation, reasonable attorneys' and experts' fees and costs relating to or
arising in any manner whatsoever from the failure to obtain such consent prior
to Closing. Buyer hereby covenants and agrees that Buyer shall first pursue all
claims related to the consent of the Villas Association to the Assignment of
Ground Lease to Buyer against the Title Company and Buyer's Title Policy
including, without limitation, claims made by Buyer against the Title Company
and Seller under that certain Tri-Party Agreement Regarding Ground Lease among
Buyer, Seller and Title Company dated of even date herewith, prior to making any
claims against Seller therefor.
12.17 Dissolution/Liquidation of Seller. Neither Seller nor any of its
direct or indirect constituent partners shall dissolve nor liquidate prior to
the expiration of the Survival Period. The provisions of this Section 12.17
shall survive the Closing.
12.18 Audit of Financial Information. From and after the date of
Closing, Seller shall reasonably cooperate with Buyer with respect to the audit
of the Financial Information, which cooperation shall include Seller providing
authorization to Xxxxxx Xxxxxxxx to make available working papers and related
information, provided, however, that Buyer shall reimburse Seller for its
reasonable third-party costs incurred in connection therewith.
-48-
51
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SELLER: BILTMORE HOTEL PARTNERS, LLLP,
AN ARIZONA LIMITED LIABILITY LIMITED
PARTNERSHIP
By: Xxxxxx-Bilt Corp., a Delaware
corporation, its general partner
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
BUYER: KSL BILTMORE RESORT, INC.,
A DELAWARE CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-49-
