EXHIBIT 10.19
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STOCK PURCHASE AGREEMENT
AMONG
CAVANAUGHS HOSPITALITY CORPORATION
And
XXXX XXXXXXXX-XXXXXXX,
XXXXXX X. XXXXX
And
D. XXXXXXX XXXXXX
December 17, 1999
STOCK PURCHASE AGREEMENT
Agreement entered for reference purposes as of December 17, 1999 by
and among Cavanaughs Hospitality Corporation, a Washington corporation
(the "Buyer"), Xxxx Xxxxxxxx-Xxxxxxx ("Xxxxxxx") as the owner of 100%
of the stock of PNW Holdings, Inc., a Washington corporation ("PNW")
which is the owner of 100% of the stock of WC Coast Holdings, Inc., a
Washington corporation ("Holdings"), Xxxxxx X. Xxxxx, a married man
("Xxxxx") and D. Xxxxxxx Xxxxxx, a married man ("Xxxxxx"). (Xxxxxxx,
Xxxxx and Xxxxxx shall be collectively referred to herein as the
"Sellers"). The Buyer and the Sellers are referred to collectively
herein as the "Parties."
The Sellers in the aggregate own all of the outstanding capital stock
of WestCoast Hotels, Inc., a Washington corporation (the "WestCoast").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Sellers, and the Sellers will sell to the Buyer, all
of the outstanding capital stock of WestCoast and any rights to
acquire such stock in return for cash, Buyer Bonds and the Retained
Equity Interests.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as
follows:
1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and
expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning
of Code Section 1504(a) or any similar group defined under a
similar provision of state, local, or foreign law.
"APPLICABLE RATE" means the corporate base rate of interest
publicly announced from time to time by US Bank, NA.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or
could form the basis for any specified consequence.
"BUYER" has the meaning set forth in the preface above.
"BUYER BONDS" has the meaning set forth in Section 2(b) below.
"CCI LOAN" means all indebtedness, whether secured or unsecured,
by Sellers, WestCoast or Holdings or their Affiliates or
Subsidiaries to Capital Consultants, Inc.
"CLOSING" has the meaning set forth in Section 2(f) below.
"CLOSING BALANCE SHEET" has the meaning set forth in Section
7(e).
"CLOSING DATE" has the meaning set forth in Section 2(f) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I
of ERISA and Code Section 4980B.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means (i) with respect to the Sellers
any information concerning the businesses and affairs of Buyer
and its subsidiaries that is not already generally available to
the public, and (ii) with respect to the Buyer, any information
concerning the businesses and affairs of WestCoast and its
Subsidiaries that is not already generally available to the
public.
"CONTROLLED GROUPS" has the meaning set forth in Code Section
1563.
"DISCLOSURE SCHEDULE" means that certain Disclosure Schedule
approved by the Parties, which is hereby incorporated into this
Agreement as if fully set forth herein.
"EFFECTIVE DATE" has the meaning described in Section 2(f).
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified
defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit or other
retirement, bonus, or incentive plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all
federal, state, local and foreign statutes, regulations,
ordinances and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations,
and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the
environment, including without limitation all those relating to
the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls,
noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means each entity which is treated as a single
employer with SELLER for purposes of Code Section 414.
"EXCESS WORKING CAPITAL" has the meaning described in Section
7(e).
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENT" has the meaning set forth in Section 4(g)
below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HOLDINGS GROUP" means Xxxx Xxxxxxx; WC Coast Holdings, Inc.; PNW
Holdings, Inc.; and 832 Properties, Inc.
"HOLDINGS SHARE" means any share of any class and of any par or
no-par value of Holdings.
"INCOME TAX" means any federal, state, local, or foreign income
tax, including any interest, penalty, or addition thereto,
whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim
for refund, or information return or statement relating to Income
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9(d)
below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9(d)
below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means actual knowledge of Xxxxxxx, Xxxxx or Xxxxxx.
"MOST RECENT BALANCE SHEET" means the balance sheet contained
within the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in
Section 4(g) below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in
Section 4(g) below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in
Section 4(g) below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section
3(37).
"OPTION REDEMPTION AGREEMENTS" has the meaning set forth in
Section 6(h), below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PNW SHARE" means any share of any class and of any par or no-par
value of PNW.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"PURCHASE PRICE" has the meaning set forth in Section 2(b) below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section
4043.
"RETAINED EQUITY INTERESTS" has the meaning set forth in Section
2(b)(iii).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for taxes
not yet due and payable, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SUBSIDIARY" means the following entities: WestCoast Hotel
Marketing, Inc.; WestCoast Management, Inc.; Xxxxxxx Street
Associates, Inc.; WestCoast Bellevue Inn, Inc.; WestCoast
Executive Park Acquisition, Inc., WestCoast Hotel Properties,
Inc., and the Bellevue Inn LLC.
"SHAREHOLDERS AGREEMENT" has the meaning set forth in Section
3(a)(vii) below.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9(d)
below.
"WESTCOAST" has the meaning set forth in the preface above.
"WESTCOAST GROUP" means WestCoast Hotels, Inc.; Xxxxxxx Street
Associates, Inc.; WestCoast Hotel Properties, Inc.; WestCoast
Bellevue Inn, Inc.; WestCoast Executive Park Investment, Inc.;
and WestCoast Marketing, Inc.
"WESTCOAST SHARE" means any share of any class and of any par or
no-par value of WestCoast.
"WESTCOAST STOCK OPTIONS" has the meaning set forth in Section
2(d).
2. PURCHASE AND SALE OF WESTCOAST SHARES.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase
from each of the Sellers, and the Sellers collectively agree
to sell to Buyer all of the WestCoast Shares (provided that
all WestCoast Shares owned by Holdings shall be sold
indirectly through a transfer by Xxxxxxx to Buyer of 100% of
the issued and outstanding stock of PNW) and each of the
Sellers individually agrees to sell to the Buyer, all of his
or its WestCoast Shares for the consideration specified
below in this Section 2
(b) PURCHASE PRICE. In consideration for the sale of the
Shares, the Buyer shall pay to the Sellers the following
(the "Consideration"):
(i) $20,051,000 in immediately available US funds at
closing;
(ii) $6,000,000 in private bonds, which have been
approved as to form to be delivered to Sellers at
closing;
(iii) Transfer to Sellers of all of WestCoast's right,
title and interest in the entities listed at Exhibit
2(b)(iii) (collectively, together with the
assignment of the rights to the "Paramount" service
xxxx in the form agreed upon by the Parties, the
"Retained Equity Interests") through the execution
and delivery at closing of Assignment and Assumption
Agreements, which have been approved as to form;
(iv) The Excess Working Capital to be delivered at or
after Closing in accordance with Section 7(e) to be
allocated among the Shareholders in accordance with
their instructions; and
(v) For the purposes of determining the Consideration
stated in subsection (b)(i.) of this section, the
Buyer and Sellers have assumed that:
(x) the consolidated 1999 tax liability for the Holdings Group and
WestCoast is Two Million and Six Hundred and Seventy-Five
Thousand dollars ($2,675,000.00). As part of the actions
described in Section 7(f), for the 1999 tax audit prepared by
Gunning, Stenson & Price, if the consolidated tax liability for
the Holdings Group and WestCoast for 1999 as determined by
Gunning & Xxxxxxx is more than $2,675,000, Sellers shall pay the
excess amount; in the event the tax liability is less than
$2,675,000, Buyer shall pay Sellers the difference on or before
30 days from the completion of the Financial Reports described in
Section 7(f) as an adjustment to the purchase price to be
allocated among the Sellers in accordance with their
instructions; and the tax liability shall account for any Federal
Income Tax payments made on or about December 15, 1999; and
(y) that the agreements described in the Disclosure Schedule for the
Vancouver Gateway Hotel project are completed in a form approved
by the Parties. If that has not been completed by the Closing
Date, the Consideration stated in subsection (b)(i.) of this
section will be reduced by $210,000; and
(z) that the management agreement for the WestCoast Long Beach Hotel,
in Long Beach, California remain in effect in its current form.
Buyer authorizes WestCoast, in the exercise of its sole
discretion prior to Closing, to terminate the existing management
agreement for the Long Beach, California hotel prior to Closing
and replace it with an agreement which allows cancellation by the
owner upon 6 months prior notice and payment of a termination fee
of $250,000. In the event of such termination prior to Closing,
the Consideration stated in subsection (b)(i.) of this section
will be reduced by $500,000 and Buyer shall pay Sellers as
deferred Compensation 50% of the management fee from the
WestCoast Long Beach Hotel (if, as and when received) until such
time as Sellers have received a total of $500,000(provided,
however, that Buyer shall be solely entitled to any termination
fee without splitting with Sellers).
(c) THE CONSIDERATION SHALL BE ALLOCATED AMONG THE SELLERS IN
ACCORDANCE WITH EXHIBIT 2(C).
(d) OPTIONS. As described in Section 6, prior to Closing
Sellers shall have caused WestCoast to accomplish the
complete execution and delivery of the Option Redemption
Agreements in form approved by the Parties at a price of One
Million Dollars ($1,000,000) in the aggregate to all of the
holders of all outstanding options to purchase stock of
WestCoast Hotels, Inc. 1998 Stock Option Plan (the
"WestCoast Stock Options"). At Closing Buyer shall assume
the obligations of WestCoast under the Option Redemption
Agreements and pay One Million Dollars ($1,000,000) (gross
payments, subject to applicable withholding obligations if
any) in the aggregate to all of the holders in full
satisfaction of all WestCoast Stock Options pursuant to the
Option Redemption Agreements. The employer portion of any
taxes applicable to the Option Redemption payments shall be
deemed to be an expense of WestCoast incurred on
December 31, 1999 for purposes of the calculations described
in Section 7(e).
(e) MARKETING MERGER. As described in Section 6, prior to
Closing Sellers shall have accomplished the merger of
WestCoast Hotel Marketing, Inc. into WestCoast pursuant to
RCW 23B.11.040 for all cash consideration and shall have
completed the notices, disclosures and tender of payment
required by RCW Chapter 23B.11 based upon the aggregate fair
market value of the shares of the 10% minority shareholders
(of which Xxxxxx Xxxxxxxx owns 70% of the 10%, or a 7%
interest in WestCoast Hotel Marketing, Inc.; and Xxxxxx Xxxx
owns 30% of the 10%, or a 3% interest in WestCoast Hotel
Marketing, Inc.) in WestCoast Hotel Marketing Inc. being
$800,000. At Closing, Buyer shall assume the obligations
to pay all amounts due to the minority shareholder of
WestCoast Hotel Marketing Inc. under RCW 23B.11.010,
regardless of whether that amount is greater than or less
than the $800,000 amount stipulated in this section.
(f) THE CLOSING. Provided that all conditions described in
Section 8 to the obligations of the Parties to consummate
the transactions contemplated hereby have been satisfied or
waived (other than conditions with respect to actions the
respective Parties will take at the Closing itself), the
closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Xxxxxx &
Xxxxx LLP/Xxxxxxx Xxxxxxxx X.X. in Seattle, Washington on
December 31, 1999 ("Closing Date"). The effective date of
the transaction described in this Agreement ("Effective
Date") shall be midnight of December 31, 1999, whether or
not Closing has occurred by that date. In order to
conveniently effectuate Closing, the parties will cooperate
to deposit all documents with Closing Agent under binding
delivery instructions on December 30, 1999 and arrange for
the transfer of all funds under binding delivery
instructions by 11:00 a.m. Seattle time on the day of the
Closing, but not earlier than December 31, 1999. To the
extent that all conditions described in Section 8 to the
obligations of the Parties to consummate the transactions
contemplated hereby have not been satisfied or waived (other
than conditions with respect to actions the respective
Parties will take at the Closing itself) on or before
December 31, 1999, the Closing Date shall be delayed until
such conditions have been satisfied without modifying the
Effective Date; provided however, in the event Closing does
not occur prior to April 1, 2000, this Agreement shall
automatically terminate with no penalty to either party,
unless the failure to close is due to any material breaches
of one of the Parties under this Agreement; and it is
further provided, in the event this Agreement terminates the
confidentiality Agreement previously entered into by the
Parties shall remain in full force and effect.
(g) DELIVERIES AT THE CLOSING. At the Closing, (i) the Sellers
will deliver to the Buyer the various certificates,
instruments, and documents referred to in Section 8(a)
below, (ii) the Buyer will deliver to the Sellers the
various certificates, instruments, and documents referred to
in Section 8(b) below, (iii) each of the Sellers will
deliver to the Buyer stock certificates representing all of
his or its WestCoast Shares and Holdings Shares, endorsed in
blank or accompanied by duly executed assignment documents,
and (iv) the Buyer will deliver to each of the Sellers the
Consideration specified in Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the
Sellers with respect to itself or himself represents and
warrants to the Buyer that the statements contained in this
Section 3(a) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout
this Section 3(a)), subject to updating in connection with
Section 5:
(i) ORGANIZATION, ACTIVITIES AND OWNERSHIP OF PNW AND
HOLDINGS. Xxxxxxx represents:
(aa) that PNW and Holdings are duly organized,
validly existing, and in good standing under
the laws of the state of Washington and
engaged in no activity other than the
ownership of WestCoast Shares and that Xxxxxxx
holds of record and owns beneficially the
number of PNW Shares set forth next to her
name in Section 3(a)(i) of the Disclosure
Schedule, which collectively represent all PNW
Shares, free and clear of any restrictions on
transfer (other than any restrictions under
the Securities Act and state securities laws),
Security Interests or purchase rights;
(bb) and that PNW in turn holds of record and owns
beneficially the number of Holdings Shares set
forth next to its name in Section 3(a)(i) of
the Disclosure Schedule, which collectively
represent all Holdings Shares, free and clear
of any restrictions on transfer (other than
any restrictions under the Securities Act and
state securities laws), Security Interests or
purchase rights;
(cc) and that neither Xxxxxxx nor PNW nor Holdings
is a party to any agreement that requires any
of Xxxxxxx or PNW or Holdings to sell,
transfer, or otherwise dispose of any capital
stock of PNW, Holdings or WestCoast (other
than this Agreement);
(dd) and that neither Xxxxxxx nor PNW nor Holdings
is a party to any voting trust, proxy, or
other agreement or understanding with respect
to the voting of any capital stock of PNW or
Holdings or WestCoast, except for that certain
Shareholders Agreement among Sellers dated
June 1, 1997 (the "Shareholders Agreement")
which shall be terminated at or prior to
Closing;
(ee) and that PNW was organized in 1999 solely to
serve as a holding company to own the stock of
Holdings and 832 Properties, Inc, whose sole
asset is a residence in Seattle; and PNW has
no operations or other assets or liabilities;
(ff) and that Holdings has no other assets or
operations other than to own the stock of
WestCoast and Holdings has no operations or
other assets or liabilities.
(gg) and that any declaration of Xxxxxxx which has
been approved as to form by the Parties in
connection with the transactions described in
this Agreement is true;
(ii) USRPHC. Xxxxxxx, Holdings, and PNW represent that
none of WestCoast, PNW or Holdings is a United
States Real Property Holdings Company ("USRPHC")
within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section
897(c)(1)(A)(ii); and Xxxxxxx, Holdings and PNW each
indemnify and hold Buyer harmless from all Adverse
Consequences arising from any determination that any
of WestCoast, Holdings or PNW is a USRPHC.
(iii) AUTHORIZATION OF TRANSACTION. Each Seller
represents that it or he has full power and
authority (including, if a Seller is a corporation,
full corporate power and authority) to execute and
deliver this Agreement and to perform its or his
obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of each
Seller, enforceable in accordance with its terms and
conditions. Except as reflected in the Disclosure
Schedule, each Seller need not give any notice to,
make any filing with, or obtain any authorization,
consent, or approval of any government or
governmental agency in order to consummate the
transactions contemplated by this Agreement which
has not been obtained as of the execution of this
Agreement.
(iv) NONCONTRAVENTION. Each of the Sellers represents
that no third party has any right to preclude the
Sellers from agreeing to and consummating all the
transactions contemplated by this Agreement. In
addition, each of the Sellers represents, to the
Knowledge of Sellers, that neither the execution and
the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (A)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental
agency, or court to which any of the Sellers is
subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute
a default under, result in the acceleration of,
create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the
Sellers is a party or by which it or he is bound or
to which any of its or his assets is subject.
(v) BROKERS' FEES. Each of the Sellers represents that
it or he has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by
this Agreement for which the Buyer could become
liable or obligated.
(vi) INVESTMENT. Each of the Sellers: (A) understands
that the Buyer Bonds have not been, and will not be,
registered under the Securities Act, or under any
state securities laws, and are being offered and
sold in reliance upon federal and state exemptions
for transactions not involving any public offering,
(B) is acquiring the Buyer Bonds solely for its or
his own account for investment purposes, and not
with a view to the distribution thereof, except as
permitted under the terms of the Bond, (C) is a
sophisticated investor with knowledge and experience
in business and financial matters, (D) has received
certain information concerning the Buyer and has had
the opportunity to obtain additional information as
desired in order to evaluate the merits and the
risks inherent in holding the Buyer Bonds, (E) is
able to bear the economic risk and lack of liquidity
inherent in holding the Buyer Bonds, and (F) is an
Accredited Investor.
(vii) WESTCOAST SHARES. Each of the Sellers holds of
record and owns beneficially the number of WestCoast
Shares set forth next to its or his name in Section
3(a)(vii) of the Disclosure Schedule, which
collectively represent all WestCoast Shares, free
and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and
state securities laws), Security Interests or
purchase rights. None of the Sellers is a party to
any purchase right that requires any of the Sellers
to sell, transfer, or otherwise dispose of any
capital stock of WestCoast (other than this
Agreement and the CCI Loans which will be terminated
prior to, or at, closing). None of the Sellers is a
party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any
capital stock of WestCoast, except for that certain
Shareholders Agreement among Sellers dated June 1,
1997 which shall be terminated at or prior to
Closing.
(viii) THE SELLERS ARE NOT RELYING ON ANY REPRESENTATIONS
MADE BY OR ON BEHALF OF THE BUYER EXCEPT AS
EXPLICITLY SET FORTH IN THIS AGREEMENT.
(ix) DISCLOSURE. The representations and warranties
contained in this Section 3(a) do not contain any
untrue statement of a material fact or omit to state
any material fact necessary in order to make the
statements and information contained in this Section
3(a) not misleading.
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Sellers that the statements
contained in this Section 3(b) are correct and complete as
of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of
this Agreement throughout this Section 3(b), subject to
updating in accordance with Section 5.
(i) ORGANIZATION OF THE BUYER. The Buyer is a
corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of
its incorporation.
(ii) AUTHORIZATION OF TRANSACTION. The Buyer has full
power and authority (including full corporate power
and authority) to execute and deliver this Agreement
and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance
with its terms and conditions. The Buyer need not
give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any
government or governmental agency in order to
consummate the transactions contemplated by this
Agreement which has not been obtained at the time of
execution of this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (A)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental
agency, or court to which the Buyer is subject or
any provision of its charter or bylaws or (B)
conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create
in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or
other arrangement to which the Buyer is a party or
by which it is bound or to which any of its assets
is subject, except for obligations Buyer may have to
disclose the transactions contemplated by this
Agreement to the public pursuant to applicable laws
and regulations.
(iv) BROKERS' FEES. The Buyer has no liability or
obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the
transactions contemplated by this Agreement for
which any Seller could become liable or obligated.
(v) INVESTMENT. The Buyer is not acquiring WestCoast
Shares with a view to or for sale in connection with
any distribution thereof within the meaning of the
Securities Act.
(vi) BUYER BONDS. The Buyer Bonds issued to the Sellers
as part of the Consideration will be issued in
compliance with the Securities Act, the Securities
Exchange Act and related state securities
regulations, have been authorized and are
enforceable in accordance with their terms and
conditions. No event has occurred since the date of
the Buyer's latest quarterly filings with the
Securities and Exchange Commission which would
prevent Buyer from performing its obligations under
the Buyer Bonds.
(vii) RELIANCE. The Buyer is not relying on any
representations made by or on behalf of the Sellers
except as explicitly set forth in this Agreement.
(viii) DISCLOSURE. The representations and warranties
contained in this Section 3(b) do not contain any
untrue statement of a material fact or omit to state
any material fact necessary in order to make the
statements and information contained in this Section
3(b) not misleading.
4. REPRESENTATIONS AND WARRANTIES CONCERNING WESTCOAST AND ITS
SUBSIDIARIES.
The Sellers represent and warrant to the Buyer that the
statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 4), subject to updating in accordance
with Section 5.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of
WestCoast and its Subsidiaries is duly organized, validly
existing, and in good standing under the laws of the
jurisdiction of its formation. Each of WestCoast and its
Subsidiaries is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction where
such qualification is required, except where the lack of
such qualification would not have material Adverse
Consequences on the business, financial condition,
operations, or results of operations, of WestCoast and its
Subsidiaries. Each of WestCoast and its Subsidiaries has
full power and authority to carry on the businesses in which
they are engaged and to own and use the properties owned and
used by them. Section 4(a) of the Disclosure Schedule lists
the directors and officers (or members) of each of WestCoast
and its Subsidiaries.
(b) CAPITALIZATION. The entire authorized capital stock of
WestCoast consists of 80,000 shares of Class A Common Stock,
of which 80,000 shares are issued and outstanding (all of
which are owned of record by Holdings), and 25,263 shares of
Class B Common Stock, of which 20,000 shares are issued and
outstanding (of which 10,000 shares are owned of record by
Xxxxx and 10,000 are owned of record by Xxxxxx), which
together comprise all of the WestCoast Shares. All of the
issued and outstanding WestCoast Shares have been duly
authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the respective
Sellers as set forth above. There are no outstanding or
authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other
contracts or commitments that could require WestCoast to
issue, sell, or otherwise cause to become outstanding any of
its capital stock except for the WestCoast Stock Options
which will be redeemed at Closing in accordance with
Sections 2 and 6. Except as described in the Disclosure
Schedule, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or
similar rights with respect to WestCoast. There are no
voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital
stock of WestCoast other than the Shareholders Agreement
which shall be terminated at Closing.
(c) NONCONTRAVENTION. To the Knowledge of Sellers, neither the
execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which any of WestCoast and its Subsidiaries is
subject or any provision of the charter or bylaws of any of
WestCoast and its Subsidiaries or (ii) except as reflected
in the Disclosure Schedule, conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of WestCoast
and its Subsidiaries is a party or by which it is bound or
to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets),
except for such which will be satisfied by obtaining, prior
to Closing, consents to the transactions contemplated by
this Agreement or where the violation, conflict, breach,
default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest
would not have material Adverse Consequences on the
business, financial condition, operations or results of
operations of WestCoast and its Subsidiaries or on the
ability of the Parties to consummate the transactions
contemplated by this Agreement. None of WestCoast and its
Subsidiaries is required to give any notice to, make any
filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order
for the Parties to consummate the transactions contemplated
by this Agreement, except where such notice or filing will
be accomplished prior to Closing or the failure to give
notice, to file, or to obtain any authorization, consent, or
approval would not have material Adverse Consequences on the
business, finacial condition, operations or results of
operations of WestCoast and its Subsidiaries or on the
ability of the Parties to consummate the transactions
contemplated by this Agreement. Notwithstanding the
foregoing, the Parties have agreed that no filing is
required under the Xxxx-Xxxxx-Xxxxxx Act in connection with
this transaction; and all Parties are aware that certain
filings or consents may be required with various state
agencies in connection with the regulation of liquor sales.
(d) BROKERS' FEES. None of WestCoast and its Subsidiaries has
any liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. WestCoast and its Subsidiaries have good
and marketable title to, or a valid leasehold interest in,
the properties and assets reflected on the Most Recent
Balance Sheet or acquired after the date thereof, free and
clear of all Security Interests, except for: Security
Interests reflected on the most recent Balance Sheet;
Security Interests listed on the Disclosure Schedule; and
properties and assets disposed of in the Ordinary Course of
Business since the date of the Most Recent Balance Sheet.
(f) SUBSIDIARIES. Each of the Subsidiaries is formed under the
laws of the State of Washington, and WestCoast owns all of
the issued and outstanding stock, membership interests or
limited partnership interests, as applicable, of each of the
Subsidiaries except for the Bellevue Inn LLC and WestCoast
Hotel Marketing, Inc. (which is in the process of being
merged into WestCoast) and all of the issued and outstanding
shares of capital stock of each corporate Subsidiary have
been duly authorized and are validly issued, fully paid, and
nonassessable. WestCoast holds of record and owns
beneficially all of the outstanding shares of each corporate
Subsidiary, free and clear of any restrictions on transfer
(other than restrictions under the Securities Act and state
securities laws), Security Interests or purchase rights.
WestCoast Bellevue Inn, Inc. holds of record and owns
beneficially 50% of the outstanding membership interests of
Bellevue Inn LLC. Except as set forth in Section 4(f) of
the Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other
contracts or commitments that could require any of WestCoast
or its Subsidiaries to sell, transfer, or otherwise dispose
of any capital stock, membership interest or partnership
interest of any of the Subsidiaries. There are no
outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any
Subsidiary. Except as set forth in Section 4(f) of the
Disclosure Schedule, there are no voting trusts, proxies, or
other agreements or understandings with respect to the
voting of any capital stock, partnership interest or
membership interest held by any Subsidiary of WestCoast.
(g) FINANCIAL STATEMENTS. The Sellers have provided to Buyer
the following financial statements (collectively the
"Financial Statements"): (i) audited consolidated balance
sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended
December 31, 1994, 1995, 1996, 1997 and 1998, (the "Most
Recent Fiscal Year End") for WestCoast and its wholly owned
Subsidiaries; and (ii) unaudited consolidated balance sheets
and statements of income (the "Most Recent Financial
Statements") as of and for the 10 months ended October 31,
1999 (the "Most Recent Fiscal Month End") for WestCoast and
its wholly owned Subsidiaries; and (iii) will provide to
Buyer the updated Most Recent Fiscal Month End through the
end of each subsequent month by the 20th of the following
month, a yearly financial statement 45 days after year-end,
and an audited financial statement by February 29, 2000.
The Financial Statements (including the notes thereto) have
been and will be prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered thereby
and present fairly the financial condition of WestCoast and
its Subsidiaries as of such dates and the results of
operations of WestCoast and its Subsidiaries for such
periods; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which
will not be material individually or in the aggregate) and
lack footnotes and other presentation items.
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL MONTH END. Since
the Most Recent Fiscal Month End, there has not been any
changes in the business, financial condition, operations, or
results of operations of WestCoast and its Subsidiaries
which would have material Adverse Consequences, taken as a
whole. Without limiting the generality of the foregoing,
since that date and except as described on the Disclosure
Schedule:
(i) none of WestCoast and its Subsidiaries has sold,
leased, transferred, or assigned any material
assets, tangible or intangible, outside the Ordinary
Course of Business;
(ii) none of WestCoast and its Subsidiaries has entered
into any material agreement, contract, lease, or
license outside the Ordinary Course of Business;
(iii) no party (including any of WestCoast and its
Subsidiaries) has accelerated, terminated, made
material modifications to, or canceled any material
agreement, contract, lease, or license to which any
of WestCoast and its Subsidiaries is a party or by
which any of them is bound;
(iv) none of WestCoast and its Subsidiaries has imposed
any Security Interest upon any of its assets,
tangible or intangible;
(v) none of WestCoast and its Subsidiaries has made any
material capital expenditures outside the Ordinary
Course of Business;
(vi) none of WestCoast and its Subsidiaries has made any
material capital investment in, or any material loan
to, any other Person outside the Ordinary Course of
Business;
(vii) WestCoast and its Subsidiaries have not created,
incurred, assumed, or guaranteed aggregate
indebtedness for borrowed money and capitalized
lease obligations except to replace or refinance an
equal amount of previously existing indebtedness;
(viii) none of WestCoast and its Subsidiaries has granted
any license or sublicense of any material rights
under or with respect to any Intellectual Property
except for marketing agreements in the Ordinary
Course of Business;
(ix) there has been no change made or authorized in the
charter or bylaws of any of WestCoast and its
Subsidiaries;
(x) none of WestCoast and its Subsidiaries has issued,
sold, or otherwise disposed of any of its capital
stock, partnership interests or membership
interests, as applicable, or granted any options,
warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise)
any of its capital stock, partnership interests or
membership interests, as applicable;
(xi) none of WestCoast and its Subsidiaries has declared,
set aside, or paid any dividend or made any
distribution to its partners or members, as
applicable, or with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased,
or otherwise acquired any of its capital stock or
any of its partners' or members' partnership or
membership interest, as applicable, except in the
Ordinary Course of Business of a Subsidiary;
(xii) none of WestCoast and its Subsidiaries has
experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its
property;
(xiii) none of WestCoast and its Subsidiaries has made any
loan to, or entered into any other transaction with,
any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xiv) none of WestCoast and its Subsidiaries has entered
into any employment contract or collective
bargaining agreement, written or oral, or modified
the terms of any existing such contract or
agreement;
(xv) none of WestCoast and its Subsidiaries has granted
any increase in the base compensation of any of its
directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) none of WestCoast and its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit-
sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of
its directors, officers, and employees (or taken any
such action with respect to any other Employee
Benefit Plan);
(xvii) none of WestCoast and its Subsidiaries has made any
other material change in employment terms for any of
its directors, officers, and employees outside the
Ordinary Course of Business; and
(xviii) none of WestCoast and its Subsidiaries has committed
to any of the foregoing.
(i) UNDISCLOSED LIABILITIES. To the Knowledge of Sellers, none
of WestCoast and its Subsidiaries has any liability, which
would have material Adverse Consequences except for (i)
liabilities set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto); (ii) liabilities
which have arisen after the Most Recent Fiscal Month End in
the Ordinary Course of Business; (iii) liabilities disclosed
in the Disclosure Schedule; and (iv) liabilities not within
the Knowledge of any of the Sellers resulting from
operations in the Ordinary Course of Business.
(j) LEGAL COMPLIANCE. To the Sellers' Knowledge, each of
WestCoast and its Subsidiaries has materially complied with
all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply, except where
the failure to comply would not have a material adverse
effect on the business, financial condition, operations, or
results of operations of WestCoast and its Subsidiaries.
(k) TAX MATTERS. Xxxxxxx, Xxxxx and Xxxxxx make the following
representations on behalf of the WestCoast Group (as if it
were not consolidated for tax purposes with the Holdings
Group); and Xxxxxxx, in addition, makes the following
representations with respect to the Holdings Group (as if it
were not consolidated for tax purposes with WestCoast
Group):
(i) Each of Holdings, WestCoast and its Subsidiaries has
filed all Income Tax Returns that it was required to
file. All such Income Tax Returns were correct and
complete in all material respects. All Income Taxes
owed by any of Holdings, WestCoast and its
Subsidiaries have been paid. None of WestCoast and
its Subsidiaries (whether or not shown on any Income
Tax Return) currently is the beneficiary of any
extension of time within which to file any Income
Tax Return.
(ii) There is no material dispute or claim concerning any
Income Tax liability of any of Holdings, WestCoast
and its Subsidiaries either (A) claimed or raised by
any authority in writing or (B) as to which any of
the Sellers has Knowledge based upon personal
contact with any agent of such authority.
(iii) Holdings, WestCoast and Subsidiaries have filed all
tax returns required for the last six years. None
of those Income Tax Returns are currently the
subject of audit. The Sellers have delivered to the
Buyer correct and complete copies of all federal
Income Tax Returns, examination reports, and
statements of deficiencies assessed against, or
agreed to by any of Holdings, WestCoast and its
Subsidiaries since 1993. None of Holdings,
WestCoast and its Subsidiaries has waived any
statute of limitations in respect of Income Taxes or
agreed to any extension of time with respect to an
Income Tax assessment or deficiency.
(iv) None of Holdings, WestCoast and its Subsidiaries has
filed a consent under Code Section 341(f) concerning
collapsible corporations. None of Holdings,
WestCoast and its Subsidiaries has made any material
payments, is obligated to make any material
payments, or is a party to any agreement that under
certain circumstances could obligate it to make any
material payments that will not be deductible under
Code Section 280G. None of Holdings, WestCoast and
its Subsidiaries is a party to any tax allocation or
sharing agreement. None of Holdings, WestCoast and
its Subsidiaries (A) has been a member of an
Affiliated Group filing a consolidated federal
Income Tax Return (other than a group the common
parent of which was Holdings) or (B) has any
liability for the taxes of any Person (other than
any of WestCoast and its Subsidiaries) under Reg.
Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(v) The unpaid Income Taxes of Holdings, WestCoast and
its Subsidiaries (A) did not, as of the Most Recent
Fiscal Month End, exceed by any material amount the
reserve for Income Tax liability (rather than any
reserve for deferred taxes established to reflect
timing differences between book and tax income) set
forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) and (B) will not
exceed by any material amount that reserve as
adjusted for operations and transactions through the
Closing Date in accordance with the past custom and
practice of Holdings, WestCoast and its Subsidiaries
in filing their Income Tax Returns plus all tax
liabilities arising out of the transfer of the
Retained Equity Interests.
(vi) WestCoast is not a United States Real Property
Holdings Company within the meaning of Code Section
897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii).
(l) REAL PROPERTY.
Section 4(l)(i) of the Disclosure Schedule lists and
describes briefly all real property that any of WestCoast
and its Subsidiaries owns or leases. With respect to each
such parcel of owned real property, except as disclosed in
Section 4(l)(i):
(A) WestCoast or its Subsidiary has good and marketable
fee title or leasehold title to the parcel of real
property, free and clear of any Security Interest
except those listed at Section 4(l)(i) of the
Disclosure Schedule, easement;
(B) there are no pending or, to the Knowledge of any of
the Sellers, threatened condemnation proceedings,
lawsuits, or administrative actions relating to the
property or other matters affecting materially and
adversely the current use, occupancy, or value
thereof;
(C) to the Knowledge of Sellers, the legal description
for the parcel contained in the deed or lease
thereof describes such parcel fully and adequately,
the buildings and improvements are located within
the boundary lines of the described parcels of land,
are not in material violation of applicable setback
requirements, zoning laws, and ordinances (and none
of the properties or buildings or improvements
thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure"
classifications), and do not encroach on any
easement which may burden the land;
(D) to the Knowledge of Sellers, all facilities have
received all approvals of governmental authorities
(including material licenses and permits) required
in connection with the ownership or operation
thereof, and have been operated and maintained in
accordance with applicable laws, rules, and
regulations in all material respects;
(E) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral,
granting to any party or parties other than
WestCoast or its Subsidiary the right of use or
occupancy of any portion of the parcel of real
property;
(F) there are no outstanding options or rights of first
refusal to purchase the parcel of real property, or
any portion thereof or interest therein, except
those for which WestCoast or its Subsidiary is the
optionee;
(G) there are no parties (other than WestCoast and its
Subsidiaries) in possession of the parcel of real
property, other than tenants under any leases
disclosed in Section 4(l)(i) of the Disclosure
Schedule who are in possession of space to which
they are entitled.
(m) INTELLECTUAL PROPERTY.
(i) WestCoast holds the Intellectual Property
registrations listed in the Disclosure Schedule.
Except as listed on the Disclosure Schedule, none of
WestCoast and its Subsidiaries has interfered with,
infringed upon, misappropriated, or violated any
material Intellectual Property rights of third
parties in any material respect, and none of the
Sellers, WestCoast or the Subsidiaries has ever
received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement,
misappropriation, or violation (including any claim
that any of WestCoast and its Subsidiaries must
license or refrain from using any Intellectual
Property rights of any third party). To the
Knowledge of any of the Sellers, no third party is
interfering with, infringed upon, misappropriated,
or violated any material Intellectual Property
rights of any of WestCoast and its Subsidiaries in
any material respect.
(ii) Section 4(m)(ii) of the Disclosure Schedule
identifies each material license, agreement, or
other permission which any of WestCoast and its
Subsidiaries has granted to any third party with
respect to any of its Intellectual Property
(together with any exceptions) other than rights to
use the name "WestCoast," granted in connection with
a Joint Marketing Agreement with WestCoast Hotel
Members, Inc. The Sellers have delivered to the
Buyer correct and complete copies of all such
licenses, agreements, and permissions (as amended to
date). Section 4(m)(ii) of the Disclosure Schedule
also identifies each material trade name or
unregistered trademark used by any of WestCoast and
its Subsidiaries in connection with any of its
businesses. With respect to each item of
Intellectual Property required to be identified in
Section 4(m)(i) or (ii) of the Disclosure Schedule:
(A) WestCoast and its Subsidiaries possess all
right, title, and interest in and to the item,
free and clear of any Security Interest,
license, or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of any
of the Sellers, is threatened which challenges
the legality, validity, enforceability, use,
or ownership of the item; and
(D) none of WestCoast and its Subsidiaries has
ever agreed to indemnify any Person for or
against any interference, infringement,
misappropriation, or other conflict with
respect to the item.
(iii) Section 4(m)(iii) of the Disclosure Schedule
identifies each material item of Intellectual
Property that any third party owns and that any of
WestCoast and its Subsidiaries uses pursuant to
license, sublicense, agreement, or permission other
than commercially available software licenses. The
Sellers have delivered to the Buyer correct and
complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property
required to be identified in Section 4(m)(iii) of
the Disclosure Schedule:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid,
binding, enforceable, and in full force and
effect in all material respects;
(B) no party to the license, sublicense,
agreement, or permission is in material breach
or default, and no event has occurred which
with notice or lapse of time would constitute
a material breach or default or permit
termination, modification, or acceleration
thereunder;
(C) no party to the license, sublicense,
agreement, or permission has repudiated any
material provision thereof; and
(D) none of WestCoast and its Subsidiaries has
granted any sublicense or similar right with
respect to the license, sublicense, agreement,
or permission.
(n) TANGIBLE ASSETS. The buildings, machinery, equipment, and
other tangible assets that WestCoast and its Subsidiaries
own and lease are on the Closing Date in sufficient
operating condition for the operations of WestCoast and its
Subsidiaries as they are presently conducted.
(o) INVENTORY. The inventory of WestCoast and its Subsidiaries
consists of supplies, all of which are merchantable and fit
for the purpose for which they were procured.
(p) CONTRACTS. The Sellers have provided to Buyer access to or
copies of, as requested by Buyer, the following material
contracts and other agreements as listed on the Disclosure
Schedule to which any of WestCoast and its Subsidiaries is a
party:
(i) all agreements (or group of related agreements) for
the lease of personal property to or from any Person
providing for lease payments in excess of $50,000
per annum;
(ii) all agreements (or group of related agreements) for
the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or
for the furnishing or receipt of services, involve
annual consideration in excess of $50,000, which
cannot be terminated by notice of 90 days without
penalty;
(iii) all agreements concerning partnerships or joint
ventures;
(iv) all agreements (or group of related agreements)
under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation or under which it
has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) all material agreements concerning confidentiality
or noncompetition;
(vi) all material agreements with any of the Sellers and
their Affiliates (other than WestCoast and its
Subsidiaries);
(vii) all currently existing profit sharing, stock option,
stock purchase, stock appreciation, deferred
compensation, severance, or other material plans or
arrangements for the benefit of its current or
former directors, officers, and employees;
(viii) all collective bargaining agreements;
(ix) all agreements at the WestCoast or wholly owned
subsidiary level for the employment of any
individual on a full-time, part-time, consulting, or
other basis providing annual compensation in excess
of $50,000 or providing material severance benefits;
(x) all agreements under which it has advanced or loaned
any amount to any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xi) all other agreements which require payments from
WestCoast or any of the Subsidiaries in excess of
$50,000 per year, which cannot be terminated by
WestCoast or a Subsidiary on notice of 90 days or
less.
To the best of Seller's knowledge, the Sellers have provided
to Buyer access to or copies of, as requested by Buyer, each
complete written agreement listed in Section 4(p) of the
Disclosure Schedule (as amended to date) and have provided
to Buyer a written summary setting forth the material terms
and conditions of each oral agreement referred to in Section
4(p) of the Disclosure Schedule. With respect to each such
agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all material
respects; (B) no party is in material breach or default, and
no event has occurred which with notice or lapse of time
would constitute a material breach or default, or permit
termination, modification, or acceleration, under the
agreement; and (C) no party has repudiated any material
provision of the agreement.
(q) NOTES AND ACCOUNTS RECEIVABLE. All notes and
accounts receivable of WestCoast and its
Subsidiaries are reflected properly on their books
and records in accordance with GAAP, are valid
receivables subject to no setoffs or counterclaims,
are current and collectible, subject only to the
reserve for bad debts set forth on the face of the
Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for operations and transactions
through the Closing Date in accordance with the past
custom and practice of WestCoast and its
Subsidiaries.
(r) POWERS OF ATTORNEY. To the Knowledge of any of the
Sellers, there are no material outstanding powers of
attorney executed on behalf of any of WestCoast or
any of its Subsidiaries.
(s) INSURANCE. To the Knowledge of Sellers, the Sellers
have provided to Buyer access to or copies of, as
requested by Buyer, each material insurance policy
(including policies providing property, casualty,
liability, and workers' compensation coverage and
bond and surety arrangements) with respect to which
any of WestCoast and its Subsidiaries is a party, a
named insured, or otherwise the beneficiary of
coverage. With respect to each such insurance
policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect in all
material respects; (B) neither any of WestCoast and
its Subsidiaries nor any other party to the policy
is in material breach or default (including with
respect to the payment of premiums or the giving of
notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a
material breach or default, or permit termination,
modification, or acceleration, under the policy; and
(C) no party to the policy has repudiated any
material provision thereof. Section 4(s) of the
Disclosure Schedule describes any material self-
insurance arrangements affecting any of WestCoast
and its Subsidiaries.
(t) LITIGATION. To the Knowledge of Sellers, Section 4(t) of
the Disclosure Schedule sets forth each instance in which
any of WestCoast and its Subsidiaries (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party or, to the Knowledge of any of the
Sellers, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or
before any arbitrator.
(u) Reserved.
(v) Reserved.
(w) EMPLOYEES. Except as set forth in Section 4(w) of the
Disclosure Schedule, none of WestCoast and its Subsidiaries
is a party to or bound by any collective bargaining
agreement, nor is any of them currently experiencing any
strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute which
remains unresolved. None of the Sellers has any Knowledge
of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect
to employees of any of WestCoast and its Subsidiaries.
Except for Xxxxx and Xxxxxx, whose current employment
agreements are being terminated at Closing, all agreements
relating to employment for employees of WestCoast or at the
SeaTac or Bellevue properties may be terminated at will,
following the end of the Transition Agreement to be
delivered at Closing in accordance with Section 8 without
payment of other than then accrued wages and benefits (with
the exception of the obligation to purchase options
described in Section 2 (d)) except to the extent such right
to terminate is restricted by applicable laws and
regulations and vacation pay accruals for WestCoast
employees who work at individual hotels whose payroll
expense is charged against individual hotels in accordance
with WestCoast practice but for which accruals are not
maintained on WestCoast books.
(x) EMPLOYEE BENEFITS.
(i) Section 4(x) of the Disclosure Schedule lists each
Employee Benefit Plan that any of WestCoast and its
Subsidiaries maintains or to which any of WestCoast
and its Subsidiaries contributes or has any
obligation to contribute.
(A) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund)
complies in form and in operation in all
material respects with the applicable
requirements of ERISA, the Code, and other
applicable laws.
(B) All required reports and descriptions
(including Form 5500 Annual Reports, summary
annual reports, PBGC-l's, and summary plan
descriptions) have been timely filed and
distributed appropriately with respect to each
such Employee Benefit Plan. The requirements
of COBRA have been met in all material
respects with respect to each such Employee
Benefit Plan which is an Employee Welfare
Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction
contributions) which are due have been paid to
each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all
contributions for any period ending on or
before the Closing Date which are not yet due
have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the
past custom and practice of WestCoast and its
Subsidiaries. All premiums or other payments
for all periods ending on or before the
Closing Date have been paid with respect to
each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the
requirements of a "qualified plan" under Code
Section 401(a), has received, within the last
two years, a favorable determination letter
from the Internal Revenue Service that it is a
"qualified plan," and Seller is not aware of
any facts or circumstances that could result
in the revocation of such determination
letter.
(E) Except as set forth in Section 4(x)(i)(E) of
the Disclosure Schedule, the market value of
assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan
(other than any Multiemployer Plan) equals or
exceeds the present value of all vested and
nonvested liabilities thereunder determined in
accordance with PBGC methods, factors, and
assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for
determination.
(F) The Sellers have provided to Buyer access to
or copies of, as requested by Buyer, the plan
documents and summary plan descriptions, the
most recent determination letter received from
the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other
funding agreements which implement each such
Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that any
of WestCoast, its Subsidiaries, and any ERISA
Affiliate maintains or ever has maintained or to
which any of them contributes, ever has contributed,
or ever has been required to contribute:
(A) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or
partially terminated or been the subject of a
Reportable Event as to which notices would be
required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to
the Knowledge of any of the Sellers and the
directors and officers of WestCoast and its
Subsidiaries, threatened.
(B) There have been no Prohibited Transactions
with respect to any such Employee Benefit
Plan. No Fiduciary has any liability for
material breach of fiduciary duty or any other
material failure to act or comply in
connection with the administration or
investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the
administration or the investment of the assets
of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or, to
the Knowledge of any of the Sellers and the
directors and officers of WestCoast and its
Subsidiaries, threatened.
(C) None of WestCoast and its Subsidiaries has
incurred any material liability (whether known
or unknown, whether asserted or unasserted,
whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become
due) to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA
(including any withdrawal liability as defined
in ERISA Section 4201) or under the Code with
respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(iii) Except as set forth in Section 4(x)(iii) of the
Disclosure Schedule, none of WestCoast, its
Subsidiaries, and the other members of the
Controlled Group that includes WestCoast and it
Subsidiaries contributes to any Multiemployer Plan
or has any material liability, including any
withdrawal liability (as defined in ERISA Section
4201), under any Multiemployer Plan.
(iv) None of WestCoast and its Subsidiaries maintains or
ever has maintained or contributes, ever has
contributed, or ever has been required to contribute
to any Employee Welfare Benefit Plan providing
medical, health, or life insurance or other welfare-
type benefits for current or future retired or
terminated employees, their spouses, or their
dependents (other than in accordance with COBRA).
(y) GUARANTIES. Except as set forth in Section 4(y) of the
Disclosure Schedule. None of WestCoast and its Subsidiaries
is a guarantor or otherwise is responsible for any liability
or obligation (including indebtedness) of any other Person.
(Z) ENVIRONMENT, HEALTH, AND SAFETY MATTERS.
(i) To the Knowledge of the Sellers, each of WestCoast
and its Subsidiaries has complied and is in
compliance, in each case in all material respects,
with all Environmental, Health, and Safety
Requirements.
(ii) Without limiting the generality of the foregoing, to
the Knowledge of the Sellers, each of WestCoast and
its Subsidiaries has obtained, has complied, and is
in compliance with, in each case in all material
respects, all material permits, licenses and other
authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation
of its business.
(iii) To the Knowledge of the Sellers, none of WestCoast
or its Subsidiaries has received any written or oral
notice, report or other information regarding any
actual or alleged material violation of
Environmental, Health, and Safety Requirements, or
any material liabilities or potential material
liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any material
investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising
under Environmental, Health, and Safety
Requirements.
(iv) To the Knowledge of Sellers, except as set forth on
Section 4(z) of the Disclosure Schedule, none of the
following exists at any property owned or leased by
WestCoast or its Subsidiaries: (1) underground
storage tanks, (2) asbestos-containing material in
any friable and damaged form or condition, (3)
materials or equipment containing polychlorinated
biphenyls, or (4) landfills, surface impoundments,
or disposal areas.
(v) To the Knowledge of Sellers, none of WestCoast or
its Subsidiaries has treated, stored, disposed of,
arranged for or permitted the disposal of,
transported, handled, or released any substance,
including without limitation any hazardous
substance, or owned or operated any property or
facility (and no such property or facility is
contaminated by any such substance) in a manner that
has given rise to material liabilities, including
any material liability for response costs,
corrective action costs, personal injury, property
damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or the Solid Waste Disposal Act,
as amended ("SWDA") or any other Environmental,
Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement
will result in any material obligations for site
investigation or cleanup, or notification to or
consent of government agencies or third parties,
pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH WESTCOAST AND ITS
SUBSIDIARIES. Except as described in the Disclosure
Statement, none of the Sellers and their Affiliates owns any
material asset, tangible or intangible, which is used in the
business of any of WestCoast and its Subsidiaries.
(bb) DISCLOSURE. The representations and warranties contained in
this Section 4 do not contain any untrue statement of a
material fact or omit to state any material fact necessary
in order to make the statements and information contained in
this Section 4 not misleading.
(cc) LIMITATION ON REPRESENTATIONS AS TO CERTAIN SUBSIDIARIES.
Sellers represent and warrant that to their Knowledge, no
material liabilities have arisen and no material contractual
obligations have been incurred by the Xxxxx Hotel Associates
Limited Partnership and the Executive Park Acquisitions
Limited Partnership since the effective date of the loans
from Archon Financial L.P. and Sellers agree to provide to
Buyer complete copies of the disclosure documents provided
to Archon Financial L.P. that enabled Archon Financial L.P.
to provide the above-mentioned loans prior to the Effective
Date.
5. UPDATING OF REPRESENTATIONS AND WARRANTIES.
Each of the Parties shall be entitled to update its or his
representations and warranties contained in Section 3 and 4 by
written notice (an "Updating Notice") delivered to the other
Parties between the date of this Agreement and December 29, 1999;
provided that any such Updating Notice may only reflect events,
conditions or facts of which Sellers acquired Knowledge or Buyer
became aware subsequent to the date of this Agreement and
provided that the Party delivering the notice has not caused the
event, condition or fact which is the subject of the Updating
Notice. Upon receipt of an Updating Notice containing a
disclosure which reasonably causes or will reasonable cause the
recipient to suffer material Adverse Consequences, the recipient
shall have the right to terminate this Agreement without any
further obligation hereunder.
In the event that the recipient of the Updating Notice elects to
close despite noncompliance by the Party delivering the Updating
Notice with Section 6(c) or 6(b), the noncompliance reflected in
the Updating Notice shall be deemed waived.
6. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between
the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its reasonable
best efforts to take all action and to do all things
necessary in order to consummate and make effective the
transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set
forth in Section 8 below).
(b) NOTICES AND CONSENTS. To the extent not already given or
obtained, the Sellers will cause each of WestCoast and its
Subsidiaries to give any notices to third parties, and will
obtain any third party consents which are material to the
business of WestCoast and/or of its Subsidiaries in
connection with the matters referred to in Section 4(c)
above. Each of the Parties will (and the Sellers will cause
each of WestCoast and its Subsidiaries to) give any notices
to, make any filings with, and use its reasonable best
efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in
connection with the matters referred to in Section 3(a)(ii),
Section 3(b)(ii), and Section 4(c) above.
(c) OPERATION OF BUSINESS. The Sellers will not cause or permit
any of WestCoast and its Subsidiaries to engage in any
practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting
the generality of the foregoing, except as reflected in the
Disclosure Schedule with reference to this Section, the
Sellers will not cause or permit any of WestCoast and its
Subsidiaries to (i) declare, set aside, or pay any dividend
or make any distribution with respect to its capital stock
or redeem, purchase, or otherwise acquire any of its capital
stock, or (ii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described
in Section 4(h) above without the prior written consent of
Buyer, which consent shall not be unreasonably withheld.
The existing Sprint long distance contract will be continued
without replacement on a month to month basis to allow Buyer
to negotiate a replacement long distance contract following
Closing. In the event that Wildcat and Buyer agree to
participate in a long-term long distance telephone contract
following Closing, the parties will negotiate any payment
following Closing.
(d) PRESERVATION OF BUSINESS. The Sellers will cause each of
WestCoast and its Subsidiaries to keep its business and
properties substantially intact, including its present
operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers,
and employees; provided that the Buyer is aware that certain
employees of WestCoast have been offered employment by the
Sellers.
(e) FULL ACCESS. Between the Effective Date of this Agreement
and the Closing Date, each of the Sellers will permit, and
the Sellers will cause each of WestCoast and its
Subsidiaries to permit, representatives of the Buyer to have
full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of
WestCoast and its Subsidiaries, to all premises, properties,
personnel, books, records (including tax records),
contracts, and documents of or pertaining to each of
WestCoast and its Subsidiaries. The Buyer will treat and
hold as such any Confidential Information it receives from
any of the Sellers, WestCoast, and its Subsidiaries in the
course of the reviews contemplated by this Section 6(e),
will not use any of the Confidential Information except in
connection with this Agreement.
(f) NOTICE OF DEVELOPMENTS. The Sellers will give prompt
written notice to the Buyer of any material adverse
development causing a breach of any of the representations
and warranties in Section 4 above. Each Party will give
prompt written notice to the others of any material adverse
development causing a breach of any of his or its own
representations and warranties in Section 3 above.
(g) EXCLUSIVITY. None of the Sellers will (and the Sellers will
not cause or permit any of WestCoast and its Subsidiaries
to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities,
or any substantial portion of the assets, of any of
WestCoast and its Subsidiaries (including any acquisition
structured as a merger, consolidation, or share exchange)
except those specifically contemplated by this Agreement; or
(ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist
or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the
foregoing. None of the Sellers will vote their WestCoast
Shares in favor of any such acquisition structured as a
merger, consolidation, or share exchange.
(h) OPTION REDEMPTION AGREEMENTS. Prior to December 30, 1999,
Sellers shall have caused WestCoast to accomplish the
complete execution and delivery of the Option Redemption
Agreements at a price of One Million Dollars ($1,000,000) in
the aggregate to all of the holders of all outstanding
options to purchase stock of WestCoast Hotels, Inc. 1998
Stock Option Plan (the "WestCoast Stock Options"). The
Option Redemption Agreements shall be contingent upon the
Closing and shall be subject to the Buyer's prior approval,
which approval Buyer may withhold in Buyer's reasonable
discretion.
(i) DEBT OBLIGATIONS. Prior to December 30, 1999, the Sellers
shall obtain releases (which may be contingent on Closing)
from all debts or guaranties under which PNW or Holdings or
WestCoast or their Subsidiaries is a debtor or guarantor or
any asset of WestCoast or its Subsidiaries is security,
except for any debt or guaranty by WestCoast or its
Subsidiaries as (i) the loan from Seafirst Bank to WestCoast
Hotel Properties, Inc. secured by the leasehold interest in
the WestCoast SeaTac Hotel; (ii) the loan from Archon
Financial to Medallion Bellevue Inn, L.L.C. secured by a
deed of trust on the Best Western Bellevue Inn; (iii) the
loan from U.S. bank in the original principal amount of
$2,650,000 for the Best Western Bellevue Inn which Buyer
will pay at Closing; and (iv) that certain loan from the
Sakagami Corporation to WestCoast Maui Coast LLC providing
for the principal amount of $13,400,000 for which WestCoast
has provided a guarantee (the "Maui Guarantee"). The Maui
Guarantee may remain in effect at and following Closing,
provided that the Sellers shall jointly and severally
defend, indemnify and hold WestCoast harmless against any
Adverse Consequences resulting from the Maui Guarantee after
Closing, and provided further that Sellers shall provide
Buyer with a demand letter of credit from U. S. Bank in the
full amount of the Maui Guarantee callable immediately upon
any demand being made upon the Maui Guarantee or failure to
renew the letter of credit a minimum of 30 days prior to its
expiration.
(j) TERMINATION OF AGREEMENTS. Prior to December 30, 1999, the
Sellers shall cause all agreements of PNW or Holdings or
WestCoast or their Subsidiaries with or for the benefit of
Sellers or their Affiliates to be terminated except for
those agreements listed on the Disclosure Schedule which do
not specify they are being terminated, and provide Buyer
with reasonable evidence of such terminations. Such
terminations may be contingent upon Closing.
(k) ACCOUNTING AGREEMENT. Prior to Closing, Sellers shall
obtain an agreement for the benefit of PNN/Holdings and
Buyer for the provision of the accounting services described
in Section 7 (e) and (f).
(l) BELLEVUE INN AGREEMENT MODIFICATIONS. Prior to Closing,
Sellers shall cause the agreements between Bellevue Inn LLC
and Medallion Bellevue Inn, LLC to be modified substantially
in the form provided to Buyer, with the addition of any
consents of Lessor required to the transactions contemplated
by this Agreement.
(m) WESTCOAST MANAGEMENT. Prior to Closing, Sellers shall cause
the formation of WestCoast Management Inc. in the form
previously provided to Buyer and the transfer in the form
previously provided to Buyer of the management and marketing
agreements described in the Xxxxxx and Xxxxx employment
agreements to WestCoast Management.
(n) MERGER OF MARKETING INC. INTO WESTCOAST. Prior to December
30, 1999 Sellers shall have accomplished the merger of
WestCoast Hotel Marketing, Inc. into WestCoast pursuant to
RCW 23B.11.040 for all cash consideration and shall have
completed the notices and disclosures required by RCW
Chapter 23B.11 based upon the aggregate fair market value of
the shares of the 10% minority shareholders in WestCoast
Marketing Inc being $800,000, which is based upon the fair
market value of a 100% interest in WestCoast Hotel Marketing
Inc. being valued at $8 million in the judgment of Sellers
and Buyer, and reflects no discount for the minority status
of the 10% interest.
(o) Merger of Holdings into PNW and Elimination of 832
Properties Xxxxxxx, Holdings and PNW shall have eliminated
(at Closing) 832 Properties, Inc. as a subsidiary of PNW and
shall have merged Holdings into PNW, with all Adverse
Consequences arising from these transactions being the sole
responsibility of Xxxxxxx to the extent not already
accounted for in Section 2(b)(v).
7. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following
the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further
instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to
indemnification therefor under Section 9 below). From and
after the Closing, the Buyer will be entitled to possession
of all documents, books, records (including tax records),
agreements, and financial data of any sort relating to PNW,
Holdings, WestCoast and its Subsidiaries which Buyer shall
retain in accordance with its standard corporate policy
regarding retention of records; and the Sellers shall be
entitled to review and copy any of that material relating to
periods prior to Closing, upon reasonable notice to Buyer
following Closing.
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date
involving any of PNW, Holdings, WestCoast and its
Subsidiaries, each of the other Parties will cooperate with
him or it and his or its counsel in the contest or defense,
make available their personnel, and provide such testimony
and access to their books and records as shall be necessary
in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to
indemnification therefor under Section 9 below).
(c) TRANSITION AGREEMENT. The parties will comply with the
terms of the Transition Agreement.
(d) CONFIDENTIALITY. The Buyer and Sellers will treat and hold
as such all of the Confidential Information, refrain from
using any of the Confidential Information except in
connection with this Agreement. In the event that the Buyer
or any of the Sellers is requested or required (by oral
question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any
Confidential Information (the "Disclosing Party"), the
Disclosing Party will notify the other Party promptly of the
request or requirement so that the other Party may seek an
appropriate protective order or waive compliance with the
provisions of this Section 7(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, the
Disclosing Party is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or
else stand liable for contempt, the Disclosing Party may
disclose the Confidential Information to the tribunal;
provided, however, that the Disclosing Party shall use its
reasonable best efforts to obtain, at the reasonable request
of the other Party, an order or other assurance that
confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the
other Party shall designate.
(e) EXCESS WORKING CAPITAL. Within sixty (60) days following the
Closing, the Sellers shall cause the accounting firm of
Gunning, Stenson & Price (the "Accountants"), the regular
outside accounting firm for WestCoast, Holdings, and PNW, to
prepare an audited, consolidated balance sheet for the
WestCoast, Holdings, and PNW and their subsidiaries ( the
Holding Group and the WestCoast Group), prepared as of the
Effective Date in accordance with GAAP ("Closing Balance
Sheet"), stated as though all the Retained Equity Interests
have been removed. As part of the preparation of the audited
balance sheets, the Accountants shall calculate the amount,
if any, of Excess Working Capital for the WestCoast,
Holdings, PNW, and subsidiaries as of the Effective Date.
("Excess Working Capital" means the amount, if any, by which
current assets for the consolidated Holdings Group and
WestCoast Group exceeds current liabilities for the group on
the Effective Date). Current assets shall be determined in
accordance with GAAP and shall include, but not limited to,
cash, restricted cash according to loan escrow requirements
(reduced by any amounts required for replacement or FF&E
reserves), health care cash, reserves for property taxes and
property/casualty insurance, marketable securities, accounts
receivable, inventories, prepaid expenses, and deposits.
With respect to entities in which WestCoast has an equity
interest of less than 100%, Excess Working Capital shall be
calculated for each of those entities and that amount shall
be multiplied by the equity percentage ownership of
WestCoast (either directly or through wholly owned
affiliates). Current liabilities will be determined in
accordance with GAAP as of the Effective Date and will
include but not limited to: accounts payable, accrued
expenses, accrued payroll and related taxes, accrued
vacation benefits, accrued sales/room/business occupancy
taxes, reserves for incurred but not reported health
insurance claims, property taxes, current maturities (which
are principal amounts payable within one year excluding the
CCI Loan and U.S. Bank loan for the Bellevue Inn LLC),
advance deposits for future business, except income taxes
which shall be excluded from this calculation to the extent
they were included in the adjustment to the purchase price.
For purposes of this calculation, the Parties agree that
WestCoast owns 100% of the SeaTac Hotel, 100% of WestCoast
Hotel Properties, Inc., 15% of the Xxxxx Hotel Limited
Partnership, .3% of the Executive Park Limited Partnership,
7.1% of the Shoreview Associates Limited Partnership (which
owns the Hotel La Jolla,) and 90% of WestCoast Hotel
Marketing, Inc. A sample calculation is attached as Exhibit
7 e for illustration only. The Buyer and its accountants
shall have the right to review the calculation of Exces
Working Capital and have access to the detailed financial
records utilized by the Accountants in making the
determination. In the event the Buyer objects to the
calculation of the Excess Working Capital in writing within
thirty (30) days following delivery of the Closing Balance
Sheet and Excess Working Capital calculation, the dispute
shall be resolved by arbitration in accordance with Section
12. In the event the Buyer does not object to the
calculation of Excess Working Capital or in the event the
amount of Excess Working Capital is determined through
arbitration or agreement of the Parties, Excess Working
Capital, if any, shall be paid to the Sellers within ten
(10) days following that determination to the extent that
the Excess Working Capital constitutes cash. In the event
the Excess Working Capital does not constitute cash, Buyer
shall cause WestCoast to continue collection of the accounts
receivable at the Effective Date, through the exercise of
commercially reasonable collection efforts, and pay to
Sellers cash received through such efforts, on a monthly
basis for 12 months following Closing. In the event Excess
Working Capital is a deficit the Seller shall pay to Buyer
within ten (10) days the amount required to bring the Excess
Working Capital calculation to zero.
During the period starting on the Effective Date through the
Closing Date Seller will cause all revenue and expenses
reasonably attributed to the Retained Equity Interests, the
compensation of Xxx Xxxxx, Xxxxxxx Xxxxxx, and 25% of all
other WestCoast corporate office and personnel expenses to
be charged to the Retained Equity Interests books.
(f) 1999 YEAR END AUDIT. Sellers will retain the accounting
firm of Gunning, Stenson & Price to complete an audit
report prior to February 28, 2000 of WC Coast Holdings, Inc.
which will also reflect the consolidated operations of
WestCoast Hotels, Inc. and its Subsidiaries as of and for
the year ended December 31, 1999, the audit shall be in a
form that meets the Securities and Exchange Commission
requirements for filing in an 8-K/A. The financial
information to be included in the Form 8-K/A is as follows:
Audited financial statements of WC Coast Holdings, Inc
including WestCoast Hotels, Inc. and its subsidiaries (WC
Coast) as of December 31, 1999 for the year then ended.
Pro forma balance sheet reflecting the distribution of
Retained Equity Assets to Sellers in accordance with Section
2 as of the Closing Date.
Pro forma balance sheet and income statement, which reflects
the distribution of the Retained Equity Assets as though the
transaction had been completed as of January 1, 1999.
Explanatory Footnotes to the Pro Forma Statements.
A copy of a Financial Statement Disclosure Checklist has been
delivered to Gunning, Stenson & Price to help ensure that all SEC
financial statement requirements have been met. Gunning, Stenson
& Price as auditors of WC Coast will consent to their audit
report being included in Purchaser's Form 8-K/A. They will
accomplish this by giving the Purchaser a manually signed audit
opinion. The form of consent which Gunning, Stenson & Price will
use in order to document and transmit their manually signed
opinion to the Purchaser in March prior to filing of the Form 8-
K/A has been provided to Xxxxxxx Xxxxxxx & Price.
(g) BENEFITS PROVIDED TO OFFICERS AND DIRECTORS. All of the
rights of exculpation and indemnification provided to the
officers and directors of the WestCoast Group as stated in
the Articles and Bylaws in effect as of the Effective Date
shall remain in full force and effect after the Closing Date
as to any obligations thereunder as of the Effective Date
and if any of the Articles and Bylaws in effect as of the
Effective Date for the WestCoast Group are amended, such
amendment shall have no application to any officer and
director who was an officer and director prior to the
Closing Date.
8. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of
the Buyer to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction
of the following conditions:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and
correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied with
all of their covenants hereunder in all material
respects through the Closing;
(iii) WestCoast and the Sellers shall have procured all of
the material third party consents listed on Schedule
8(a) 3 of the Disclosure Schedule.
(iv) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of
any of the transactions contemplated by this
Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the
right of the Buyer to own WestCoast Shares and to
control WestCoast and its Subsidiaries, or (D)
affect materially and adversely the right of any of
WestCoast and its Subsidiaries to own its assets and
to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be
in effect).
(v) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the
conditions specified above in Section 8(a)(i)-(iv)
is satisfied in all respects;
(vi) the Buyer shall have received from counsel to the
Holdings Group an opinion or opinions (including but
not limited to an opinion from Counsel to Holdings
relating to existence, powers and ownership rights
of Holdings, which has been approved as to form) in
form and substance subject to the reasonable
approval of Buyer, addressed to the Buyer, and dated
as of the Closing Date;
(vii) Buyer and Xxxxx shall have entered into the
Executive Services and Non-Competition Agreement,
which has been approved as to form;
(viii) Buyer and Xxxxxx shall have entered into the
Executive Services and Non-Competition Agreement,
which has been approved as to form;
(ix) Buyer and Sellers shall have entered into the
Transition Agreement, which has been approved as to
form;
(x) Buyer shall have simultaneously closed the
acquisition of all of the ownership of the equity of
Bellevue Inn LLC which is not owned by WestCoast for
a total acquisition price of $1,250,000 cash and
$1,000,000 in Buyer Bonds under the terms of the
Membership Interest Purchase Agreement in the form
which has been approved by the parties;
(xi) WestCoast shall have obtained the commitment of the
lender for the CCI Loan to deposit with U.S. Bank
for delivery on Closing to Buyer all WestCoast
Shares and any other security held for the CCI Loan
and to accept at Closing $4,500,000 in complete
payment of the CCI loans (with any excess over
$4,500,000 to be paid by Sellers as part of the
process described in Section 7(e)) and Sellers shall
arrange for the release of the WestCoast Share
certificates and any other security upon payment of
the $4,500,000 by the Closing Date;
(xii) The Sellers shall have obtained agreements from each
holder of WestCoast Stock Options sufficient to
redeem all of the WestCoast Stock Options at Closing
with the funds described in Section 2;
(xiii) WestCoast and WestCoast Hotel Marketing, Inc. shall
have been merged;
(xiv) The Buyer shall have received the resignations,
effective as of the Closing Date, of each director
and officer of Holdings, WestCoast and its wholly
owned Subsidiaries, or Sellers shall have removed
such officers and directors;
(xv) All actions to be taken by the Sellers in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments,
and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer;
(xvi) Sellers shall have performed their obligations under
the covenants described in Section 6; and
(xvii) Sellers shall have obtained the modification of the
marketing agreements for the Maui and Seattle
Paramount properties in the form provided in the
Commission Agreement.
The Buyer may waive any condition specified in this Section 8(a)
if it executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of
the Sellers to consummate the transactions to be performed
by them in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3(b) above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all
of its covenants hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent performance by
Buyer of any of the transactions contemplated by
this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded by
Buyer following consummation (and no such
injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the
conditions specified above in Section 8(b)(i)-(iii)
is satisfied in all respects;
(v) Buyer shall have executed the Assignment and
Assumption Agreement in substantially the form
approved by the Parties.
(vi) Buyer shall have executed the Buyer Bonds in the
form approved by the Parties.
(vii) Buyer and Sellers have entered into the Transition
Agreement in the form approved by the Parties.
(viii) Buyer shall have simultaneously closed the
acquisition of all of the ownership of the equity of
Bellevue Inn LLC and pay, at Closing, the loan from
U.S. Bank in the original amount of $2,650,000 for
the Best Western Bellevue Inn.
(ix) Buyer and the Sellers have entered into the
Commission Agreement, which has been approved as to
form.
(x) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments,
and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Requisite
Sellers.
(xi) Buyer shall have delivered Four Million Five Hundred
Thousand Dollars ($4,500,000.00) to CCI in payment
of the CCI obligation.
The Sellers may waive any condition specified in this
Section 8(b) if they execute a writing so stating at or
prior to the Closing.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in
Section 3 and Section 4 above shall survive the Closing
hereunder and continue in full force and effect for a period
of two (2) years thereafter, provided, however that the
preceding notwithstanding, the representations of the Seller
contained in Section 3(a)(i) and (iii) and Sections
4(a)(b)(f) shall remain in effect for the full term of any
applicable statute of limitations and Section 4(k) shall
remain in effect for the full term for which any tax year
through 1999 remains open to audit by the Internal Revenue
Service.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event any of the Sellers breaches any of his
or her representations, warranties, and covenants
contained herein, provided that the Buyer makes a
written claim for indemnification against the
Sellers pursuant to Section 12(h) below within the
survival period specified in Section 9(a), then each
of the Sellers agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences
the Buyer may suffer through and after the date of
the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of
any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or
caused by the breach; provided, however, that:
(A) the Sellers shall not have any obligation to
indemnify the Buyer from and against any Adverse
Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the
breach of any representation, warranty or covenant
of the Sellers until (and only to the extent that)
the Buyer has suffered Adverse Consequences by
reason of any such breaches in excess of $75,000 per
occurrence or $125,000 in the aggregate of all such
breaches; (B) each Shareholder shall be solely
responsible for his or her own representations
contained in Section 3(a); (C) responsibility for
any claim arising under any other representation,
warranty or covenant shall be allocated among the
Shareholders as follows (with each Shareholder's
responsibilities limited to that percentage):
Xxxxxxx 75%; Xxxxx 13% and Xxxxxx 12%; and (D) the
aggregate amount of all such claims shall not exceed
Thirty Million Dollars ($30,000,000).
(ii) In addition to the indemnification provided for in
Section 9(b)(i.) above, (a) Each of the Sellers
agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may
suffer resulting from, arising out of, relating to,
in the nature of, or caused by any liability of any
of the WestCoast Group as if it were not
consolidated for tax purposes with the Holdings
Group and (b) Xxxxxxx agrees to indemnify the Buyer
from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or
caused by any liability of the Holdings Group as if
it were not consolidated for tax purposes with the
WestCoast Group: (x) for any Income Taxes or other
tax however measured of WestCoast with respect to
any tax year or portion thereof ending on or before
the Closing Date (or for any tax year beginning
before and ending after the Closing Date to the
extent allocable (determined in a manner consistent
with Section 9(c)) to the portion of such period
beginning before and ending on the Effective Date),
to the extent such Income Taxes or other taxes are
not reflected in the reserve for Income Tax or other
tax liability (rather than any reserve for deferred
taxes established to reflect timing differences
between book and tax income) shown on the face of
the Most Recent Balance Sheet (rather than in any
notes thereto), as such reserve is adjusted for the
passage of time through the Effective Date in
accordance with the past custom and practice of
WestCoast in filing their Tax Returns, and (y) for
the unpaid taxes of any Person (other than any of
WestCoast and its 100% owned Subsidiaries) under
Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(iii) In addition to the indemnification provided for in
Section 9(b)(i.) and (ii) above, Sellers shall
indemnify the Buyer from and against the entirety of
any Adverse Consequences the Buyer may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by any liability of any of the
WestCoast Group: (x) arising out of the management
or ownership of the Retained Equity Interests,
whether before or following the Effective Date, and
whether or not disclosed in the Disclosure Schedule;
or (y) any claim by the prior owner of the Ridpath
Hotel in Spokane Washington arising out of the
management by WestCoast of the Xxxxxxx Hotel in
Spokane prior to the sale of that hotel to
Cavanaughs.
(iv) With respect to any tax liability arising out of
this section, the WestCoast Group shall be treated
as if it were not part of a consolidated group with
the Holdings Group and liability shall be allocated
among the Shareholders as follows (with each
Shareholder's responsibilities limited to that
percentage): Xxxxxxx 75%; Xxxxx 13% and Xxxxxx
12%. Responsibility for any claim arising under
this Section with respect to the tax liabilities of
the Holdings Group shall be treated as if it were
not part of a consolidated group with WestCoast and
shall be the sole responsibility of Xxxxxxx.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. In
the event the Buyer breaches any of its representations,
warranties, and covenants contained herein, provided that if
any of the Sellers makes a written claim for indemnification
against the Buyer pursuant to Section 12(h) below within
survival period specified in Section 9(a), then the Buyer
agrees to indemnify each of the Sellers from and against the
entirety of any Adverse Consequences the Seller may suffer
through and after the date of the claim for indemnification
(including any Adverse Consequences the Sellers may suffer
after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or
caused by the breach.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim
for indemnification against any other Party (the
"Indemnifying Party") under this Section 9, then the
Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is
prejudiced.
(ii) Any Indemnifying Party will have the right to assume
the defense of the Third Party Claim with counsel of
his or its choice reasonably satisfactory to the
Indemnified Party at any time within 15 days after
the Indemnified Party has given notice of the Third
Party Claim; provided, however, that the
Indemnifying Party must conduct the defense of the
Third Party Claim actively and diligently thereafter
in order to preserve its rights in this regard; and
provided further that the Indemnified Party may
retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third
Party Claim.
(iii) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third Party Claim in
accordance with Section 9(d)(ii) above, (A) the
Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with
respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be
withheld unreasonably) unless the judgment or
proposed settlement involves only the payment of
money damages by one or more of the Indemnifying
Parties and does not impose an injunction or other
equitable relief upon the Indemnified Party and (B)
the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be
withheld unreasonably).
(iv) In the event none of the Indemnifying Parties
assumes and conducts the defense of the Third Party
Claim in accordance with Section 9(d)(ii) above,
however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third
Party Claim in any manner he or it reasonably may
deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any
Indemnifying Party in connection therewith) and (B)
the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim
to the fullest extent provided in this Section 9.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
make appropriate adjustments for tax consequences and
insurance coverage and take into account the time cost of
money (using the Applicable Rate as the discount rate) in
determining Adverse Consequences for purposes of this
Section 9. All indemnification payments under this Section 9
shall be deemed adjustments to the Purchase Price.
(f) EXCLUSIVE REMEDY. Except for the failure of Sellers or
Buyer to accomplish all preconditions to and perform all
actions required to close the transactions contemplated by
this Agreement, for which failure each Party retains every
remedy at law or at equity, Buyer and the Seller acknowledge
and agree that the foregoing indemnification provisions in
this Section 9 shall be the exclusive remedy of the Buyer
and the Seller with respect to WestCoast, its Subsidiaries,
and the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, the Buyer
and the Seller hereby waive any statutory, equitable, or
common law rights or remedies relating to any environmental
matters, including without limitation any such matters
arising under any Environmental, Health, and Safety
Requirements and including without limitation any arising
under the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"). Each of the
Sellers hereby agrees that he or it will not make any claim
for indemnification against any of WestCoast and its
Subsidiaries by reason of the fact that he or it was a
director, officer, employee, or agent of any such entity or
was serving at the request of any such entity as a partner,
trustee, director, officer, employee, or agent of another
entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses,
expenses, or otherwise and whether such claim is pursuant to
any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against
such Seller (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
10. TAX MATTERS.
The following provisions shall govern the allocation of
responsibility as between Buyer and Sellers for certain tax
matters following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. On or
before the due date (including extensions), Sellers shall,
at Seller's sole expense, cause the regular outside
accountants for WestCoast prior to the Closing Date (the
"Accountants") to prepare or cause to be prepared and file
or cause to be filed all Tax Returns for Holdings, WestCoast
and its 100% owned Subsidiaries for all periods ending on or
prior to the Closing Date which are filed after the Closing
Date. Subject to the allocation provisions of Section 9
(b), Sellers will pay all Taxes of Holdings, WestCoast or
its 100% owned Subsidiaries with such return. Sellers shall
permit Buyer and WestCoast to review and approve each such
Tax Return described in the preceding sentence prior to
filing and shall make such revisions to such Tax Returns as
are reasonably requested by Buyer. Sellers shall pay any
Income Taxes of Holdings, WestCoast and its Subsidiaries
with respect to such periods within thirty (30) days
calculation by Buyer or WestCoast and its Subsidiaries of
such Income Taxes to the extent such Income Taxes are not
reflected in the reserve for Income Tax liability (rather
than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the
face of the Closing Balance Sheet.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Buyer shall prepare or cause to be prepared and file
or cause to be filed any Tax Returns of WestCoast and its
Subsidiaries for Tax periods which begin before the Closing
Date and end after the Closing Date. Buyer shall not file
such Tax Returns without the approval of Sellers, which
shall not be unreasonably withheld. Sellers shall pay to
Buyer within thirty (30) days after the date on which Taxes
are paid with respect to such periods an amount equal to the
Taxes which relates to the portion of such Taxable period
ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face
of the Closing Balance Sheet.
(c) REFUNDS AND TAX BENEFITS. Any Tax refunds that are received
by Buyer, Holdings or WestCoast and its Subsidiaries, and
any amounts credited against Tax to which Buyer, Holdings or
WestCoast and its Subsidiaries become entitled, that relate
to Tax periods or portions thereof ending on or before the
Closing Date shall be for the account of Sellers, and Buyer
shall pay over to Seller any such refund or the amount of
any such credit within fifteen (15) days after receipt or
entitlement thereto. In addition, to the extent that a claim
for refund or a proceeding results in a payment or credit
against Tax by a taxing authority to the Buyer, Holdings or
WestCoast and its Subsidiaries of any amount accrued on the
Closing Balance Sheet, the Buyer shall pay such amount to
Sellers within fifteen (15) days after receipt or
entitlement thereto.
(d) COOPERATION ON TAX MATTERS.
(i) Buyer, Holdings, WestCoast and its Subsidiaries and
Sellers shall cooperate fully, as and to the extent
reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant
to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other
party's request) the provision of records and
information which are reasonably relevant to any
such audit, litigation or other proceeding and
making employees available on a mutually convenient
basis to provide additional information and
explanation of any material provided hereunder.
WestCoast and its Subsidiaries, Sellers (with
respect to records pertaining to the Retained Equity
Interests) and Buyer agree (A) to retain all books
and records with respect to Tax matters pertinent to
WestCoast and its Subsidiaries and the Retained
Equity Interests relating to any taxable period
beginning before the Closing Date until the
expiration of the statute of limitations (and, to
the extent notified by Buyer or Sellers, any
extensions thereof) of the respective taxable
periods, and to abide by all record retention
agreements entered into with any taxing authority,
and (B) to give the other party reasonable written
notice prior to transferring, destroying or
discarding any such books and records and, if the
other party so requests, WestCoast and its
Subsidiaries, Buyer or Sellers, as the case may be,
shall allow the other party to take possession of
such books and records. For periods prior to the
Closing Date, Buyer and WestCoast shall not amend
any previously filed Tax Returns or take any
position in the future which is inconsistent with
positions taken in prior Tax Returns without the
consent of the Shareholders, which shall not be
unreasonably withheld. In addition, Buyer shall not
take any position that is inconsistent with the
classification of Holdings or any entity within the
Holdings Group and WestCoast as non-U.S. Real
Property Holding Corporations.
(ii) Buyer and Sellers further agree, upon request, to
use their best efforts to obtain any certificate or
other document from any governmental authority or
any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the
transactions contemplated hereby).
(iii) Buyer and Seller further agree, upon request, to
provide the other party with all information that
either party may be required to report pursuant to
Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
(e) TAX SHARING AGREEMENTS. All tax sharing agreements or
similar agreements between WestCoast and the Retained Equity
Interests shall be terminated as of the Closing Date and,
after the Closing Date, WestCoast and its Subsidiaries shall
not be bound thereby or have any liability thereunder.
(f) CERTAIN TAXES. All real estate excise taxes incurred in
connection with this Agreement, shall be allocated to
Sellers and paid at Closing, and the Parties agree to
cooperate to file all necessary Tax Returns and other
documentation with respect to all such transfer taxes and to
join in the execution of any such Tax Returns and other
documentation.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Buyer and the Sellers may terminate this
Agreement by mutual written consent at any time
prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to
the Closing (A) in the event any of the Sellers has
breached any material representation, warranty, or
covenant contained in this Agreement in any material
respect, the Buyer has notified the Sellers of the
breach, and the breach has continued without cure
for a period of 10 days after the notice of breach,
(B) if the Closing shall not have occurred on or
before December 31, 1999, by reason of the failure
of any condition precedent under Section 8(a) hereof
(unless the failure results primarily from the Buyer
itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) the Sellers may terminate this Agreement by giving
written notice to the Buyer at any time prior to the
Closing (A) in the event the Buyer has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
any of the Sellers has notified the Buyer of the
breach, and the breach has continued without cure
for a period of 10 days after the notice of breach
or (B) if the Closing shall not have occurred on or
before December 31, l999, by reason of the failure
of any condition precedent under Section 8(b) hereof
(unless the failure results primarily from any of
the Sellers themselves breaching any representation,
warranty, or covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 11(a) above, all rights and
obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for
any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in
Section 7(d) above shall survive termination.
12. MISCELLANEOUS.
(a) NATURE OF CERTAIN OBLIGATIONS.
(i) The covenants of each of the Sellers in Section 2(a)
above concerning the sale of his or its WestCoast
Shares to the Buyer and the representations and
warranties of each of the Sellers in Section 3(a)
above concerning the transaction are several
obligations. This means that the particular Seller
making the representation, warranty, or covenant
will be solely responsible to the extent provided in
Section 9 above for any Adverse Consequences the
Buyer may suffer as a result of any breach thereof.
(ii) The remainder of the representations, warranties,
and covenants of Sellers in this Agreement are joint
and several obligations, but each Seller will only
be responsible to the extent provided in Section 9
above for the entirety of any Adverse Consequences
the Buyer may suffer as a result of any breach
thereof.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement
relating to the subject matter of this Agreement without the
prior written approval of the Buyer and the Sellers;
provided, however, that any Party may make any public
disclosure which is required by applicable law or any
listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Parties prior to
making the disclosure); provided further, that
notwithstanding anything to the contrary in this Agreement,
Buyer shall have the right after Closing to issue such press
releases and make such public announcements relating to the
subject matter of this Agreement without the prior written
approval of the Sellers so long as Buyer provides Sellers'
legal counsel a summary of such issuance or announcement
prior to such issuance or announcement.
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall
notconfer any rights or remedies upon any Person other than
the Parties and their respective successors and permitted
assigns.
(d) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among
the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to
the subject matter hereof.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of his or its
rights, interests, or obligations hereunder without the
prior written approval of the Buyer and the Sellers, which
approval shall not be unreasonably withheld; provided,
however, that the Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder). For
purposes of this Section, the term "assign" shall mean an
any direct or indirect change in majority ownership through
the sale of equity interests, merger, consolidation or
reorganization or any other change in control of an entity.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument. Any execution and delivery of this Agreement or
any agreement or instrument contemplated hereby may be
delivered by facsimile and such delivery shall constitute
delivery of an original counterpart for all purposes
hereunder.
(g) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in
any way the meaning or interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two business days
after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below:
If to the Sellers: Xxxx Xxxxxxxx-Xxxxxxx
000 00xx Xxxxxx X.
Xxxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxx
Xxxxxx & Xxxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Fax 000-000-0000
With a copy to: Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxxx X.X.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Fax 000-000-0000
And to: Xxxxxx X. Xxxxx
XX Xxx 00
Xxxxxx, XX 00000-0000
Xxxxxxx Xxxxxx
00000 000xx Xxxxxx XX
Xxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxxx X.X.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Fax 000-000-0000
If to the Buyer: Cavanaughs Hospitality Corporation
Attn: Xxxxxx X. Xxxxxxxx,
President
000 X. Xxxxx Xxxxx Xxxxx,
XXX Xxxxxxxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
With a copy to: Xxxxxxx X. Xxxxxxxx, General
Counsel
000 X. Xxxxx Xxxxx Xxxxx,
XXX Xxxxxxxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner
herein set forth.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State
of Washington without giving effect to any choice or
conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the
State of Washington.
(j) ARBITRATION. Any dispute arising out of or relating to this
Agreement or any breach hereof shall be settled by panel of
three arbitrators, with each side to the dispute selecting
an arbitrator and those two arbitrators selecting a third
neutral arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association
and judgement upon any award rendered may be entered in any
court having jurisdiction thereof. Arbitration proceedings
hereunder shall be held in Seattle, Washington. In addition
to all other relief, the substantially prevailing party in
any arbitration or court action shall be entitled to its or
their reasonable attorneys' fees and costs incurred by
reason of the dispute (including any appellate review and
bankruptcy or enforcement proceedings) and the substantially
losing party shall pay all fees and costs of the arbitrators
and arbitration. Notwithstanding anything to the contrary
herein, this Section shall in no way prevent either party
from seeking equitable relief as set forth in Section 12(k),
below.
(k) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably
in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 12(l)
below), in addition to any other remedy to which they may be
entitled, at law or in equity.
(l) SUBMISSION TO JURISDICTION. Subject to the provisions of
Section 12(j), above, each of the Parties submits to the
jurisdiction of any state or federal court sitting in
Seattle, Washington in any action or proceeding arising out
of or relating to this Agreement and agrees, subject to the
provisions of Section 12(j), above, that all claims in
respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to
bring any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any
other Party with respect thereto. Any Party may make
service on any other Party by sending or delivering a copy
of the process to the Party to be served at the address and
in the manner provided for the giving of notices in this
Agreement. Nothing in this Section 12(l), however, shall
affect the right of any Party to serve legal process in any
other manner permitted by law or at equity. Each Party
agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on
the judgment or in any other manner provided by law or at
equity.
(m) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in
writing and signed by the Buyer and the Requisite Sellers.
No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence.
(n) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
(o) EXPENSES. The Sellers' expenses in connection with
negotiating this Agreement and the transactions contemplated
thereby shall be paid by WestCoast prior to Closing and
deducted from current assets. Buyer shall be responsible
for its expenses in negotiating this Agreement and the
transactions contemplated thereby. All expenses associated
with obtaining any approval of any lender or other third
party required to accomplish the transactions described in
this Agreement shall be paid by WestCoast prior to or at
Closing and deducted from current assets or, if current
assets are insufficient, from the cash paid by Buyer to
Sellers at Closing.
(p) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by
the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean
including without limitation.
(q) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
*****SIGNATURES ON FOLLOWING PAGE
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
"BUYER"
Cavanaughs Hospitality Corporation,
a Washington corporation
By: ________________________________
Its: Authorized Officer
"SELLERS"
____________________________________
Xxxx Xxxxxxxx-Xxxxxxx
____________________________________
Xxxxxx X. Xxxxx
____________________________________
D. Xxxxxxx Xxxxxx
** Spousal consents on the following page. **
SPOUSAL CONSENT
Each of the undersigned hereby represents and warrants that he or she
has read the foregoing Stock Purchase Agreement, fully understands its
terms, and agrees that any community property or other interest he or
she has in the capital stock to be purchased thereunder is bound
pursuant to the terms of the Agreement. Each of the undersigned
further represents and warrants that he or she has been advised by the
Parties to consult with counsel of her choice regarding the provisions
of the Agreement and that he or she has either waived her right to do
so or has consulted with counsel of his or her choice with regard to
the provisions of the Agreement.
___________________________________
Xxxxxx Xxxxx
___________________________________
Xxxxx Xxxxxx
XXXXXX XXXXXXX ACKNOWLEDGEMENT
Xxxxxx Xxxxxxx is the husband of Xxxx Xxxxxxxx-Xxxxxxx and
acknowledges that he has no right, title or interest in PNW Holdings,
Inc.; WC Coast Holdings, Inc.; and WestCoast Hotels, Inc.; or any of
WestCoast Hotels, Inc.'s subsidiaries, and he further acknowledges
that the above-mentioned corporations constitute the separate property
of Xxxx Xxxxxxxx-Xxxxxxx.
___________________________________
Xxxxxx Xxxxxxx
SCHEDULE OF EXHIBITS:
2(b)(iii) List of Retained Equity Interests
2(c) Allocation of Consideration among Assets and Among Sellers
TABLE OF CONTENTS
1. DEFINITIONS
2. PURCHASE AND SALE OF WESTCOAST SHARES
(a) Basic Transaction
(b) Purchase Price
(c) The consideration shall be allocated among the Sellers in
accordance with Exhibit 2(c)
(d) Options
(e) Marketing Merger
(f) The Closing
(g) Deliveries at the Closing
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
(a) Representations and Warranties of the Sellers
(i) Organization and Ownership of Holdings
(ii) Closing
(iii) Authorization of Transaction
(iv) Noncontravention
(v) Brokers' Fees
(vi) Investment
(vii) WestCoast Shares
(viii) The Sellers are not relying on any representations
made by or on behalf of the Buyer except as
explicitly set forth in this Agreement
(ix) Disclosure
(b) Representations and Warranties of the Buyer
(i) Organization of the Buyer
(ii) Authorization of Transaction
(iii) Noncontravention
(iv) Brokers' Fees
(v) Investment
(vi) Buyer Bonds
(vii) Reliance
(viii) Disclosure
4. REPRESENTATIONS AND WARRANTIES CONCERNING WESTCOAST AND ITS
SUBSIDIARIES
(a) Organization, Qualification, and Corporate Power
(b) Capitalization
(c) Noncontravention
(d) Brokers' Fees
(e) Title to Assets
(f) Subsidiaries
(g) Financial Statements
(h) Events Subsequent to Most Recent Fiscal Month End
(i) Undisclosed Liabilities
(j) Legal Compliance
(k) Tax Matters
(l) Real Property
(m) Intellectual Property
(n) Tangible Assets
(o) Inventory
(p) Contracts
(q) Notes and Accounts Receivable
(r) Powers of Attorney
(s) Insurance
(t) Litigation
(u) Reserved
(v) Reserved
(w) Employees
(x) Employee Benefits
(y) Guaranties
(z) Environment, Health, and Safety Matters
(aa) Certain Business Relationships With WestCoast and Its
Subsidiaries
(bb) Disclosure
5. UPDATING OF REPRESENTATIONS AND WARRANTIES
6. PRE-CLOSING COVENANTS
(a) General
(b) Notices and Consents
(c) Operation of Business
(d) Preservation of Business
(e) Full Access
(f) Notice of Developments
(g) Exclusivity
(h) Option Redemption Agreements
(i) Guaranteed Debts
(j) Termination of Agreements
(k) Merger of Marketing Inc. into WestCoast
7. POST-CLOSING COVENANTS
(a) General
(b) Litigation Support
(c) Transition Agreement
(d) Confidentiality
(e) [Reserved] Excess Working Capital
(f) 1999 Year End Audit
(g) Benefits Provided to officers and directors
8. CONDITIONS TO OBLIGATION TO CLOSE
(a) Conditions to Obligation of the Buyer
(b) Conditions to Obligation of the Sellers
9. REMEDIES FOR BREACHES OF THIS AGREEMENT
(a) Survival of Representations and Warranties
(b) Indemnification Provisions for Benefit of the Buyer
(c) Indemnification Provisions for Benefit of the Sellers
(d) Matters Involving Third Parties
(e) Determination of Adverse Consequences
(f) Exclusive Remedy
10. TAX MATTERS
(a) Tax Periods Ending on or Before the Closing Date
(b) Tax Periods Beginning Before and Ending After the Closing
Date
(c) Refunds and Tax Benefits
(d) Cooperation on Tax Matters
(e) Tax Sharing Agreements
(f) Certain Taxes
11. TERMINATION
(a) Termination of Agreement
(b) Effect of Termination
12. MISCELLANEOUS
(a) Nature of Certain Obligations
(b) Press Releases and Public Announcements
(c) No Third-Party Beneficiaries
(d) Entire Agreement
(e) Succession and Assignment
(f) Counterparts
(g) Headings
12. MISCELLANEOUS, CONTINUED
(h) Notices
(i) Governing Law
(j) Arbitration
(k) Specific Performance
(l) Submission to Jurisdiction
(m) Amendments and Waivers
(n) Severability
(o) Expenses
(p) Construction
(q) Incorporation of Exhibits and Schedules
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