Exhibit 10.17
PURCHASE AND SALE AGREEMENT
Between
SUNSTONE HOTELS, L.L.C.
("Seller")
and
CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership
("Purchaser")
For the Purchase of the Boise Park Suites, Boise ID; Best Western
Colonial Park, Helena MT; Best Western Canyon Springs, Twin Falls ID;
and Quality Inn, Pocatello ID. and associated Restaurants, Rental
Space and Facilities.
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered by
and between Sunstone Hotels, L.L.C., a Delaware limited liability
company, ("Seller") the managing member of which is Sunstone Hotel
Investors, L. P., the sole general partner of which is Sunstone Hotel
Investors, Inc., a Maryland corporation; and Cavanaughs Hospitality
Limited Partnership, a Delaware Limited Partnership ("Purchaser") the
sole general partner of which is Cavanaughs Hospitality Corporation,
and is effective upon the date the last to sign executes and delivers
this document to the other party ("Effective Date"), but is dated for
reference purposes July 3, 1998.
RECITALS. Seller is the owner of the real properties and improvements
legally described in Exhibit A, which is attached to and incorporated
in this Agreement by this reference. In the event Exhibit A is
incomplete or inaccurate, the parties authorize the Title Company
(defined below) to correct this exhibit. The real properties and
improvements described in Exhibit A have been operated under the names
and consist of the Hotels and associated restaurants, bars, rental
space and meeting facilities located defined in Article I under
"Hotels").
Seller desires to sell to Purchaser, and Purchaser desires to acquire
from Seller, the Hotels and all associated assets described in this
Agreement on the terms and conditions hereinafter set forth.
Now, therefore, in consideration of the foregoing premises and the
respective representations, warranties and agreements and conditions
herein contained, and the deposit of One Hundred Thousand Dollars
($100,000) by Purchaser into the Escrow (defined below) which, with
all interest thereon, is collectively referred to as "Xxxxxxx Money"
and shall be applied to the purchase price or refunded as described
below, the parties hereto agree as follows:
Article I
---------
DEFINITIONS. For the purposes of this Agreement, the following terms
(in addition to terms given defined meanings elsewhere in this
Agreement) shall have the meanings set forth below in this Article I.
CAPITAL LEASES are Equipment Leases which are the equivalent of
installment purchase agreements and which are not represented as
operating expenses on the books and records of the Hotels.
CLOSING AND CLOSING DATE shall have the meaning defined in Section
9.1.
CONSUMABLES shall mean all supplies, including but not limited to food
and beverage, whether in use, or held in stock for future use, used in
connection with the operation and maintenance of the Hotels, subject
to such depletion and including such resupplies as shall occur and be
made in the normal course of business, excluding, however, all items
of personal property which are owned by Space Lessees or guests or
which are not usable by Purchaser due to license or name restrictions.
CUT-OFF TIME shall have the meaning defined in Section 9.2.
DUE DILIGENCE REQUEST LIST shall have the meaning defined in Section
5.1.3.
DUE DILIGENCE MATERIALS shall have the meaning defined in Section
5.1.4.
EQUIPMENT LEASES shall mean, to the extent transferable, the leases
covering items of the type listed as Service Equipment which are not
owned by Seller but are leased by Seller, and which are located in or
upon the Premises or are used or useable in connection therewith.
HOTEL(S) shall mean individually and collectively the real properties
and Improvements (and associated restaurants, bars, rental space and
meeting facilities) which have been operated under the following names
and located at the following addresses: Boise Park Suite Hotel, a 238
room hotel facility, 000 Xxxx Xxxx Xxxxxx Xxxx, Xxxxx, XX 00000;
Quality Inn Park Hotel & Convention Center, a 152 room hotel facility,
0000 Xxxxxxxxx Xxxxx Xxxx, Xxxxxxxxx XX, 00000; Best Western Colonial
Inn, 149 room hotel facility, 0000 Xxxxxxxx Xxxxx, Xxxxxx XX, 00000;
and Best Western Canyon Springs Park Hotel, a 112 room hotel facility,
0000 Xxxx Xxxxx Xxxx. Xxxxx Xxxx Xxxxx, XX, 00000; the legal
descriptions for which are set forth in Exhibit A which is attached to
and incorporated in this Agreement by this reference.
HOTEL CONTRACTS shall mean all service, maintenance, and other
contracts respecting the maintenance or operation of the Hotels.
IMPROVEMENTS shall mean all buildings and improvements on the Land.
INSPECTION DOCUMENTS and INSPECTION PERIOD shall mean the documents
described in Sections 5.1.4 and 5.3.1 and the longest time period for
Purchaser's review and inspection described in Section 5.3.
LAND shall mean the areas described in Exhibits A to this Agreement.
MISCELLANEOUS ASSETS shall mean all contract rights, leases,
concessions, permits, receipts, trademarks, logos, copyrights,
business records, and any items of intangible personal property
relating to the ownership or operation of the Hotels, excluding assets
not located in the same county as one of the properties and used in
the operation of property other than the Hotels.
NAMES shall mean the name "Boise Park Suites", "Canyon Springs" and
"Colonial Park", and any other names commonly used in the operation
of the Hotels including without limitation the names now used with the
restaurants, banquet rooms and meeting rooms in the Improvements, and
together in each case with the good will appurtenant thereto, but
excluding the name of any franchise under which a specific Hotel is
currently being operated or the names of any third party tenants of
the Hotels.
OPERATING EQUIPMENT shall mean all china, glassware, linen, silverware
and uniforms, and supplies of every kind and nature of all operating
departments, including, without limitation, cleaning supplies, guest
supplies, printing stationery, bar supplies, fuel, laundry supplies
and brochures and promotional material whether in use, or held in
stock for future use, in connection with the operation of the Hotels,
which are on hand on the date hereof, subject to such depletion and
including such resupplies as shall occur and be made in the normal
course of business.
PERMITS shall mean, to the extent transferable, all licenses,
franchises and permits used in the operation of the Hotels, including
but not limited to liquor licenses, as heretofore operated.
PERMITTED EXCEPTIONS shall have the meaning defined in Section 3.1.
PROPERTY shall mean all of the real, personal and intangible property
referred to in Article II.
SERVICE EQUIPMENT shall mean all fixtures, furnishings, fittings,
equipment, machinery, apparatus, vehicles, appliances and articles of
personal property of every kind whatsoever used or usable in
connection with any present or future operation of all or any part of
the Hotels, including without limitation all elevators, escalators,
boilers, furnaces, heating, ventilating and air-conditioning systems
and equipment, office furniture and equipment (including safes, cash
registers and accounting, duplicating and communication equipment) and
specialized hotel equipment (including equipment usable in the
operation of kitchens, laundries, meeting and banquet rooms, clubs,
rental spaces, drycleaning facilities, bars and cocktail lounges),
electrical equipment (including refrigerators, radios, television and
lighting equipment), fire prevention and extinguishing apparatus,
telephone system, pictures and ornaments, which are on hand as of the
date hereof, subject to such depletion and including such replacements
as shall occur or be made in the normal course of business; excluding,
however, all items of personal property which are owned by Space
Lessees or guests or reservation equipment owned by third party
franchisers.
SPACE LEASES shall mean all leases, subleases, licenses, concessions
and other occupancy agreements, written or oral, whether or not of
record, for use or occupancy of any portion of the Hotels; and "Space
Lessees" shall mean the tenants or occupants thereunder. These terms
do not include rental of hotel rooms unless such rental is based on an
agreement with a term of more than 30 days.
Article II
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PURCHASE AND SALE. Upon the terms, conditions, representations and
warranties herein set forth, Seller hereby agrees to sell the
following properties, rights and interests (sometimes hereinafter
referred to collectively as "Property") to Purchaser, and Purchaser
agrees to purchase the Property from Seller:
2.1 HOTELS - the Hotels, Land and the Improvements;
2.2 ADDITIONAL PROPERTY - all of Seller's right, title and interest
in and to the Names, Hotel Contracts, Space Leases, Permits,
Equipment Leases, Service Equipment, Consumables, Operating
Equipment, and all other Miscellaneous Assets.
Article III
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TITLE AND EXCEPTIONS TO TITLE.
3.1 TITLE. Good and marketable title to the Property (and good
record title by statutory warranty deed to so much thereof as
shall constitute real property under the laws of the state in
which any of the Property is located) shall be sold and
conveyed to Purchaser subject to the following matters
("Permitted Exceptions"):
3.1.1 LIENS, ETC. All liens for real estate taxes, water and
sewer charges, provided they are not delinquent and are
prorated as of Closing.
3.1.2 LAWS, ETC. All present laws, ordinances, codes,
restrictions and regulations of all governmental
authorities relating to building and/or zoning.
3.1.3 SPACE LEASES. All terms and conditions of all Space
Leases delivered to Purchaser by Seller at the
beginning of the Inspection Period.
3.1.4 APPROVED HOTEL CONTRACTS. All terms and conditions of
the Hotel Contracts approved by Purchaser for
assumption by Purchaser during the Inspection Period.
3.1.5 EASEMENTS. Utility easements of record approved by
Purchaser during the Inspection Period.
3.1.6 APPROVED EQUIPMENT LEASES. The Equipment Leases
approved by Purchaser for assumption during the
Inspection Period.
3.1.7 TITLE COMMITMENT EXCEPTIONS. All defects in title
contained in the Title Commitment described in section
3.2 below accepted by Purchaser utilizing the procedure
described in section 3.2 below.
3.2 TITLE COMMITMENT EXCEPTIONS. Immediately upon execution of this
Agreement, Seller shall furnish Purchaser with commitment for
an ALTA Standard Form Owner's Policy of Title Insurance
insuring title in Purchaser to the Property in the amount of
the Purchase Price, together with legible copies of all
documents referred to therein ("Title Commitment") issued by
LandAmerica Financial Group Inc. in its capacity as the issuer
of Transnation or Commonwealth Title Insurance ("Title
Company"). Purchaser will place the order for the Title
Commitment. Purchaser shall give Seller written notice within
10 days following delivery to Purchaser of the Title Commitment
and legible copies of all documents referred to therein of
Purchaser's objection to any title exception; Seller shall,
within 5 days following receipt of any such objection, notify
Purchaser whether Seller shall remove such exception at or
prior to Closing; Purchaser shall, within 5 days of Seller's
responsive notice, provide Seller with written notice of
whether Purchaser will accept Seller's position or terminate
the transaction. Failure to provide notice within the
preceding time frames shall be treated as rejection of the
Title Commitment exceptions or rejection of the position stated
in the notice from Purchaser or Seller. The preceding
procedure shall not apply to monetary encumbrances totaling
less than the total Purchase Price, which shall be paid in full
at Closing as described in this Agreement.
Article IV
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PURCHASE PRICE.
4.1 AMOUNT. The purchase price payable by Purchaser to Seller for
the Property is Thirty Million Five Hundred Sixteen Thousand
Fifty Dollars ($30,516,050) (the "Purchase Price").
4.2 METHOD OF PAYMENT. The Purchase Price, as adjusted pursuant to
the express provisions of this Agreement, shall be paid by
Purchaser as follows:
4.2.1 EQUIPMENT LEASES. Purchaser shall receive a credit
against the Purchase Price at Closing in the amount of
the unpaid balances of the Capital Leases and the
amount required to purchase the equipment covered by
any other Equipment Leases, up to a maximum of $50,000.
4.2.2 CASH AT CLOSING. The balance of the Purchase Price
shall be payable all cash at Closing (against which
shall be credited the Xxxxxxx Money deposited with
Escrow by Purchaser in part consideration for this
Agreement)
4.2.3 ALLOCATION OF PURCHASE PRICE. An agreement, if any,
between Purchaser and Seller allocating the Purchase
Price to the various locations and components of those
locations will be documented during the Inspection
Period.
4.3 BULK TRANSFER ACT. Purchaser agrees to waive the Bulk Sales
provisions, if any, of the Uniform Commercial Code for the
State in which the Property is located, in consideration of
Seller's indemnification described in section 13.5 below.
Article V
---------
REPRESENTATIONS AND WARRANTIES OF SELLER; INSPECTION PERIOD.
5.1 REPRESENTATIONS AND WARRANTIES. Wherever used in this
Agreement, the phrase "Seller's Actual Knowledge" includes the
knowledge of the presidents, district managers, chief financial
officers and Hotel General Managers of Seller and Sunstone
Hotel Properties Inc. (the entity actually responsible for
managing each Hotel). Subject only to the exceptions set forth
in this Agreement, and as qualified by any written document
provided by Seller to Purchaser at the time of delivery of the
Due Diligence Materials, Seller represents and warrants to
Purchaser that the following statements are true:
5.1.1 ORGANIZATION AND STANDING. To Seller's Actual
Knowledge, Seller has all requisite power and authority
to own, lease and/or operate the Property and to carry
on the businesses as now being conducted, is in
compliance in all respects with all laws, regulations
and requirements applicable to the operation of the
Property, and has no knowledge of any threatened
violation of any such laws, regulations and
requirements.
5.1.2 AUTHORITY. This Agreement constitutes a valid and
legally binding obligation of Seller. Neither the
execution and delivery of this Agreement nor the
consummation by Seller of the transactions contemplated
hereby, nor compliance by Seller with any of the
provisions hereof will, as of Closing, conflict with or
result in a breach of or default under any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, or other
instrument or obligation to which Seller or any entity
controlled by Seller is a party or by which they or any
of their properties or assets may be bound or violate
any order, injunction, decree, statute, rule or
regulation applicable to either of them or any of their
assets or properties which would invalidate the
transaction described herein.
5.1.3 FINANCIAL STATEMENTS. Seller shall deliver to
Purchaser's accounting firm, at the time of the audit
to be performed following Closing at Purchaser's
expense of the last complete calendar year financial
statements of the Property, the representation letter
in the form attached to this Agreement as Exhibit B
with respect to the period Seller has owned the
Property. The application and form of the
representation letter with regard to the period prior
to Seller's ownership of the Property will be described
in an agreement, if any, reached between the parties
during the Inspection Period. Subject to the procedure
described in section 5.3.1, immediately upon execution
of this Agreement, Seller will furnish Purchaser with
copies of the financial information requested in the
Cavanaughs Due Diligence Request List, which is
attached to and incorporated in this Agreement by this
reference as Exhibit C ("Due Diligence Request List")
(or make the materials available at the Hotels if so
indicated on the Due Diligence Request List). To
Seller's Actual Knowledge, with respect to the period
Seller has owned the Property, the financial
information provided by Seller fairly present in all
respects the financial condition and results of
operations of each of the Hotels utilizing generally
accepted accounting procedures.
5.1.4 ACCURATE INFORMATION. Immediately upon execution of
this Agreement, utilizing the procedure described in
section, 5.3.1, Seller will furnish Purchaser with true
and correct copies (including all amendments thereto
and modifications thereof) of the documents described
in the Due Diligence Request List (which information
shall be updated throughout the Inspection Period and
immediately prior to Closing in the format normally
produced by Seller) which are within the possession or
control of or accessible to Seller ("Due Diligence
Materials"). Seller does not warrant the accuracy of
any information compiled by third parties. Seller
warrants, to Seller's Actual Knowledge, that the only
information it has on the subject matter of Phase I
Environmental Site Assessments and the Property
Condition Assessment Reports and the ALTA Surveys is
the information contained in those documents, and that,
to Seller's Actual Knowledge, Seller knows of no
inaccuracy in the information contained in the Phase I
Environmental Site Assessments and the Property
Condition Assessment Reports and the ALTA Surveys. To
Seller's Actual Knowledge, the information provided to
Purchaser in response to the Due Diligence Request List
which has been prepared by Seller is accurate and
complete and that there are, to Seller's Actual
Knowledge, no agreements with any entity, individual
person or group which are material to the operation of
the business of the Hotels heretofore conducted or to
the value of the Property. except as provided to
Purchaser pursuant to this paragraph. Seller shall
assign to Purchaser any warranties of information from
predecessor in title.
5.1.5 AGREEMENTS IN FORCE AND EFFECT. To Seller's Actual
Knowledge, all documents identified in Section 5.1.4
are valid and in full force and effect, and to Seller's
Actual Knowledge no party has breached any material
condition or provision thereof and is not in default in
any material respect under the terms thereof except as
is disclosed in writing by Seller to Purchaser at the
time of delivery of the documents.
5.1.6 ABSENCE OF ADVERSE FACTORS OR CHANGE. There has not
been, or Seller has not, as the case may be:
(i) acquired knowledge of any event directly relating
to the physical condition of the Hotels which
threatens materially to disrupt, prevent or impair
the conduct of the business of the Hotels; or
(ii) conducted the business of the Hotels otherwise
than in the ordinary course, except as otherwise
expressly provided in this Agreement.
5.1.7 GOVERNMENT REPORTS AND RETURNS. To Seller's Actual
Knowledge, Seller has filed in a timely manner, all
material reports and returns relating to any of the
Property required to be filed by any applicable law or
governmental regulation, except such reports and
returns the late filing of which (or the failure to
file which) would not have a material and adverse
effect on the conduct of the business of the Hotels.
5.1.8 SELLER'S OBLIGATIONS PAYMENTS. All payments due and
payable under the Hotel Contracts, Equipment Leases,
wages and benefits of employees, Permits and Space
Leases and encumbrances on the Property ("Seller's
Obligations") have been paid to date, and Seller
covenants that Seller's Obligations will be paid
through the Closing.
5.1.9 NAMES. Seller represents and warrants that, to
Seller's Actual Knowledge, there is no litigation,
claim or assertion, pending or threatened, which
challenges the validity of or Seller's title to or
right to use any Names.
5.1.10 ABSENCE OF LITIGATION AND LIENS. There is no pending
litigation against the Seller which involves a claim
against the Property which will impair the free and
clear transfer of title. To the Seller's actual
knowledge and belief there are no assessments pending
which would constitute a lien or charge against the
Property on the Closing Date, other than non-delinquent
real or personal property taxes.
5.1.11 HAZARDOUS SUBSTANCES AND CODE REQUIREMENTS. Seller does
not warrant the accuracy of any information compiled by
third parties. Seller warrants, to Seller's Actual
Knowledge, that the only information it has on the
subject matter of Phase I Environmental Site
Assessments and the Property Condition Assessment
Reports and the ALTA Surveys is the information
contained in those documents, and that, to Seller's
Actual Knowledge, Seller knows of no inaccuracy in the
information contained in the Phase I Environmental Site
Assessments and the Property Condition Assessment
Reports and the ALTA Surveys. "Hazardous Substances"
are defined as toxic, dangerous, or hazardous
substances, pollutants, or contaminants, including
without limitation, petroleum products or asbestos or
PCB's or any substance designated as hazardous by
Federal or State or local law or regulation . Seller
warrants, except as disclosed as described in the Phase
I Environmental Site Assessments and the Property
Condition Assessment Reports, that the Property does
not contain any Hazardous Substances as of Closing
("Existing Hazardous Substances") placed upon or
released into the Property due to the action or failure
to act of Seller or Seller's agents or employees during
the period of Seller's ownership or control other than
in full compliance with all applicable laws, rules, and
regulations. Seller represents and warrants that as of
the date hereof , except as is disclosed in the Phase I
Environmental Site Assessments and the Property
Condition Assessment Reports provided to Purchaser at
the time of delivery of the documents described in the
Due Diligence Request List, it has not received
notification of any kind from any regulatory agency
stating that the Property is or may be targeted for a
federal or state Hazardous Substances cleanup or may be
contaminated with any Hazardous Substances or is
currently in violation of any applicable zoning,
building, safety or accessibility law or regulation
Seller shall indemnify and hold Purchaser harmless from
and against any and all loss, damage, claims,
penalties, liabilities, suits, costs, and expense
(including, without limitation, cost of remedial
actions or cleanup), suffered or incurred by Purchaser
arising out of Existing Hazardous Substances released
into the Property due to the action or failure to act
of Seller or Seller's agents or employees during the
period of Seller's ownership or related to the breach
of the foregoing representations and warranties.
5.1.12 CONDITION OF PROPERTY. Purchaser acknowledges that
Seller has acquired the Property within the past year
based upon information provided to Seller by the prior
owner and information developed by Seller in the course
of its due diligence investigation (collectively
"Seller's Due Diligence Materials"). Seller represents
and warrants that it is providing to Purchaser at the
initial delivery of the Due Diligence Materials all of
the Seller's Due Diligence Materials. Seller does not
warrant the accuracy of any information compiled by
third parties. Seller warrants, to Seller's Actual
Knowledge, that the only information it has on the
subject matter of Phase I Environmental Site
Assessments and the Property Condition Assessment
Reports and the ALTA Surveys is the information
contained in those documents, and that, to Seller's
Actual Knowledge, Seller knows of no inaccuracy in the
information contained in the Phase I Environmental Site
Assessments and the Property Condition Assessment
Reports and the ALTA Surveys.
5.1.13 EMPLOYEE AGREEMENTS. There are no collective
bargaining agreements, no deferred compensation or
profit-sharing plans or arrangements presently in
force, or any other agreement with employees which
would affect the transfer of Property contemplated by
this Agreement or require Purchaser to continue any
employment or compensation arrangement with any person.
Seller has no commitment to create any of the above-
referenced plans nor will they do so while this
Agreement is in effect. As of the Closing, Seller shall
terminate all employees in the operation of the Hotels.
Purchaser represents to Seller that Purchaser will
offer employment to the minimum percentage of the
number of employees then normally employed at each
Hotel as of the date of Closing as would be required to
prevent this transaction triggering the provisions of
the WARN Act, but is not otherwise required to, hire
some or all such employees in connection with
Purchaser's operation of the Hotels. Seller shall be
responsible for all salaries, taxes, benefits, and
vacation (including accrued but unused vacation) for
all employees up to the Closing date.
5.1.14 NON-FOREIGN STATUS. Seller is not a "foreign person"
(i.e., a nonresident alien individual or foreign
corporation) within the meaning of Section 897(a) of
the Code. At Closing, Seller will furnish Purchaser,
in accordance with Code Section 1445 and the
Regulations thereunder, with an affidavit stating,
under penalty of perjury, that Seller is not a "foreign
person," and stating Seller's taxpayer identification
number.
5.2 LIMITATION ON SELLER'S REPRESENTATIONS AND WARRANTIES.
Purchaser acknowledges that, except as expressly set forth in
this Agreement, neither Seller nor any agent or representative
of Seller has made, and Seller is not liable for or bound in
any manner by, any express or implied warranties, guaranties,
promises, statements, inducements, representations or
information pertaining to the Property or any part thereof the
physical condition, income, expenses or operation thereof, the
uses which can be made of the same or any other matter or thing
with respect thereto, including, without limitation, any
existing or prospective Space Leases. Without limiting the
foregoing, Purchaser acknowledges and agrees that, except as
expressly set forth in this Agreement, Seller is not liable for
or bound by (and Purchaser has not relied upon) any verbal or
written statements, representations, financial statements
pertaining to the operation of the Hotels or any other
information respecting the Property furnished by Seller or any
employee, agent, consultant or other person representing or
purportedly representing Seller; and that the Property is being
purchased "AS IS WHERE IS" with the exception of those
representations and warranties expressly set forth in this
Agreement.
5.3 INSPECTION PERIOD.
5.3.1 PURCHASER'S INSPECTION AND WAIVER. Purchaser shall have
20 days after the later of the Effective Date or
delivery by Seller to Purchaser of the last of the Due
Diligence Materials which are within the possession or
control of or accessible to Seller ("Inspection
Period") within which to inspect the Property and
review all documents requested in the Due Diligence
Request List ("Due Diligence Materials") to determine
whether the Property in its current status is suitable,
in the exercise of the sole business judgment
discretion of Purchaser, for the purposes of Purchaser,
which inspection may, at Purchaser's discretion and
cost, include environmental assessments. Purchaser
shall only use the Due Diligence Materials for the
purpose of evaluating the Property, as opposed to any
competitive use, and shall restrict access to the Due
Diligence Materials to those persons required to
evaluate the Property. This Agreement shall terminate,
the Xxxxxxx Money shall be refunded to Purchaser, and
all responsibilities of the parties to one another
shall terminate unless, prior to the end of the
Inspection Period, Purchaser notifies Seller that
Purchaser has determined to its satisfaction the
Property can be used for these purposes to Purchaser's
satisfaction.
The start date of the Inspection Period shall be
established as follows: Seller shall deliver (or make
available at the Hotels if so provided in the Due
Diligence Request List) all Due Diligence Materials to
Purchaser within five business days of the Effective
Date, or such earlier date as Seller can accomplish,
together with a listing of the materials furnished and
a written certification to Purchaser that such delivery
constitutes all of the Due Diligence Materials except
materials which, to Seller's Actual Knowledge, do not
exist or cannot be obtained by Seller. In the event
Seller discovers additional Due Diligence Materials
after the certification and delivery described in the
preceding sentence, Seller shall immediately deliver
such materials together with a supplemental
certification in the same form as described in the
preceding sentence, in which event the Inspection
Period, as to such additional materials only, will be
presumed to have commenced on the date of this
supplemental delivery and certification by Seller.
Immediately upon execution of this Agreement, Seller
shall provide Purchaser with continuing access to the
Property and complementary guest rooms for Purchaser's
inspection personnel to complete such inspections and
reports as Purchaser may elect, provided they shall be
conducted without disruption of the operation of the
Hotels and at Purchaser's sole expense and Purchaser
shall indemnify Seller against any physical damage to
the Property or claim resulting from negligent or
unlawful actions by Purchaser or Purchaser's agents
arising out of Purchaser's inspection activities. To
facilitate this inspection, and for information
purposes only, with no recourse to Seller for mistakes,
Seller shall have its onsite staff complete, to the
best of their knowledge and ability, and deliver to
Purchaser within five business days of the Effective
Date, the Facility Inspection Questionnaire which is
attached to and incorporated in this Agreement by this
reference as Exhibit D.
Article VI
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REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents to
Seller that the following statements are true:
6.1 ORGANIZATION AND STANDING. Purchaser is duly organized and in
good standing in the state of its formation. Purchaser, at
Closing, will be duly organized, validly existing and in good
standing under the laws of the State in which the Property is
located and will have all requisite power and authority to own,
lease and/or operate the Property after the Closing and to
carry on the businesses thereat as now being conducted.
6.2 AUTHORITY. Purchaser has full power to carry out the
transactions provided for in this Agreement. The execution and
delivery of this Agreement by Purchaser and the consummation by
it of the transactions contemplated herein have been duly and
validly authorized by all necessary Corporate action on its
part, and this Agreement constitutes a valid and legally
binding obligation of Purchaser, enforceable against it in
accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy and similar laws
and by equitable principles generally. Neither the execution
and delivery of this Agreement nor the consummation by
Purchaser of the transactions contemplated hereby, nor
compliance by it with any of the provisions hereof will (i)
conflict with or result in a breach of or default under any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, or other instrument or
obligation to which it is a party or by which it or any of its
properties or assets may be bound, or (ii) violate any order,
writ, injunction, decree, statute, rule or regulation
applicable to it or any of its assets or properties.
Article VII
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CONDUCT OF BUSINESS PRIOR TO CLOSING. Seller agrees that, between the
date of this Agreement and the Closing Date, Seller will operate the
Premises and the business of the Hotels in substantially the same
manner as conducted prior to the date hereof. Purchaser
correspondingly will use its best efforts to effect continuity of
operations between the date of this Agreement and the Closing.
Without limiting the generality of the foregoing, Seller agrees that
between the date of this Agreement and the Closing Date:
7.1 NOTICE OF CHANGE. Seller will notify Purchaser promptly if
Seller becomes aware of any transaction or occurrence prior to
the Closing which would make any of the representations and
warranties in Section 5 untrue in any material adverse respect
if such representations and warranties had been given as of the
date on which Seller becomes aware of any such transaction or
occurrence.
7.2 SPACE LEASES. Seller will not, without the prior written
consent of Purchaser, which consent Purchaser agrees not
unreasonably to withhold or delay, modify or amend any Space
Lease or cancel or renew any existing Space Lease or enter into
any new Space Lease. If Purchaser fails to respond to a
request for the consent referred to in the preceding sentence
within five business(5) days after its receipt of such request,
it shall be deemed to have so consented. Subject to this
Section 7.2, Seller agrees to notify Purchaser of any
modification amendment or cancellation of any existing Space
Lease and of Seller's entry into any new or renewal Space Lease
whether or not Purchaser's consent is required under the
provisions of this Section 7.2, and Seller agrees to furnish
Purchaser with a copy of any new or renewal Space Leases
entered into after the date of this Agreement.
7.3 HOTEL CONTRACT AND EQUIPMENT LEASES. Seller will not enter
into any new Hotel Contracts or Equipment Leases, or renew or
amend any existing Hotel Contracts or Equipment Leases at an
annual expenditure under any such new or renewal Hotel Contract
or Equipment Lease at a rate exceeding the rate currently
prevailing under the existing Hotel Contract or Equipment Lease
for the corresponding service or product without the written
consent of Purchaser which Purchaser may withhold at its
discretion. Seller agrees to notify Purchaser of any proposed
renewal, modification, amendment or cancellation of any
existing Hotel Contract or Equipment Lease and to furnish
Purchaser with a copy of any proposed, new or renewal Hotel
Contract or Equipment Lease prior to execution.
7.4 ENCUMBRANCES. Seller agrees that no borrowings or
hypothecation which would encumber the Property or any part
thereof after the Closing shall be made without the prior
written consent of Purchaser, which consent may be withheld at
Purchaser's absolute discretion.
7.5 BOOKING BUSINESS. Seller shall continue to accept booking
contracts and reservations for the Hotels' facilities in
accordance with past practices, at not less than standard rates
for the Hotels.
7.6 INSURANCE. Seller shall keep in full force and effect through
the Closing all the existing fire and extended coverage and
other insurance policies.
7.7 GOODWILL AND BUSINESS. Seller shall use its best efforts to
preserve intact the good will of the Hotels and the Names with
its existing clientele and to preserve its business
relationships with all wholesalers, suppliers, or other parties
with whom it has an existing business relationship.
7.8 MAINTENANCE AND REPAIR. Seller shall make, at its sole cost
and expense, whatever repairs and replacements may be necessary
to maintain and keep the Property in its present state of
repair (ordinary wear and tear and casualty excepted).
Article VIII
------------
ADDITIONAL AGREEMENTS.
8.1 TITLE INSURANCE. Title exceptions will be handled as described
above.
8.2 ASSIGNMENTS OF SERVICE EQUIPMENT, PERMITS. Seller shall
execute all applications and instruments required in connection
with the transfer to Purchaser of all Service Equipment and all
transferable Permits in order to effect such transfer on the
Closing under this Agreement. All government charges incurred
in connection with said transfers shall be paid by Purchaser.
Seller will use its best efforts to keep all existing Permits
in force, and to renew any of the same which expire prior to
the Closing. In the event that any Permit is suspended or
revoked, Seller shall promptly notify Purchaser of that fact,
and Seller, at its sole cost and expense, shall use its best
efforts to have the Permit reinstated without limitation or
conditions.
8.3 APPLICATIONS FOR PERMITS. Purchaser will use its best efforts
to have issued to it, on the Closing Date, all non-assignable
Permits required for the operation of the Hotel, and Seller
agrees to cooperate with Purchaser in such efforts in any way
reasonably requested, at Purchaser's cost and expense.
8.4 RECORDS. Possession of all records, documents and papers of
every kind and nature pertaining to the Property and the
operation of the Hotel relating to the period of time prior to
the Closing in possession of Seller, shall be transferred to
Purchaser and included in the Xxxx of Sale described below.
Purchaser shall either deliver copies to Seller or make access
available to Seller to the records which Seller may reasonably
require for use in connection with tax records or other reports
following Closing, and shall provide Seller with space in the
Hotel for that purpose.
8.5 COOPERATION. Seller and Purchaser will cooperate with each
other in every way and will exercise their best efforts in
carrying out the transactions contemplated herein, in obtaining
all required approvals, authorizations, and clearances, and in
delivering all documents, instruments, or copies thereof or
other information deemed necessary or useful by the other
party.
8.6 ITEMS NOT INCLUDED IN PURCHASE AND SALE. It is expressly
understood between the parties hereto that the following items
are not included in the "Property" under Article II hereof,
and, accordingly, are not included in this sale and purchase,
except to the extent specifically indicated below:
8.6.1 BANK ACCOUNTS. All cash on hand or on deposit in banks
or in transit for deposit for the account of Seller.
8.6.2 OTHER EXCLUDED INTANGIBLES. All (i) prepaid insurance
premiums and other prepaid items, (ii) deposits with
utilities, insurance deposits and other similar
deposits (except that any deposit for rooms or use of
facilities or contracts for use of facilities or made
under terms of any Space Leases shall be transferred to
Purchaser subject to the rights of the depositor).
8.7 ACCOUNTS RECEIVABLE AND PAYABLE. It is the intention of the
parties that the operating revenues of the Hotel shall be
prorated as of the Cut-off Time. Accordingly, all Hotel
accounts receivable, including without limitation, all credit
and charge card receivables, ("Receivables") occurring prior to
the Cut-off Time shall be the property of Seller. All
Receivables occurring subsequent to the Cut-off Time shall be
the property of Purchaser. Except for obligations expressly
approved by Purchaser to be assumed by Purchaser during the
Inspection Period and except for the prorations at Closing
described in this Agreement, all accounts payable arising prior
to Closing are the sole responsibility of Seller. Purchaser
assumes no liability for collection of Receivables of Seller
except to report accurately and remit to Seller any payment of
a Receivable of Seller which comes to Purchaser.
8.8 COLLECTIONS OF ACCRUED RENT UNDER SPACE LEASES. If at the
Closing there are any past due rents owing to Seller under any
Space Leases, said amounts shall be considered a Receivable of
Seller.
8.9 CONSUMABLES. All Consumables which are useable by Purchaser
(excluding any Consumables prohibited for use by reason of the
termination of any franchise/license agreement) as of the Cut-
off Time shall be inventoried at the Cut-off Time by Purchaser
and Seller. The amount of Consumables located in or issued to
the operating departments in each Hotel will be substantially
at the same levels as have heretofore been maintained in
connection with the operation of the Hotel.
8.10 POST CLOSING ASSISTANCE AND ARRANGEMENTS.
8.10.1 SELLER'S ASSISTANCE AFTER CLOSING. For a period of
sixty (60) days following the Closing, Seller shall at
reasonable times and upon reasonable notice provide
Purchaser's representatives with such information and
assistance as shall be reasonably required in order for
them to familiarize themselves with the Hotel
operations.
8.10.2 DELIVERY OF DOCUMENTS AFTER CLOSING; INSTRUMENTS OF
FURTHER ASSURANCE. Following the Closing, Seller
agrees, on request of Purchaser, to execute and deliver
to Purchaser such further instruments in writing as may
be reasonably required to complete or evidence the
transaction provided for and Purchaser shall, on
request, execute and deliver like instruments to
Seller.
Article IX
----------
CLOSING.
9.1 CLOSING. Without waiving the use of the full time allowed to
close described in the next sentence, Purchaser will endeavor
to close this transaction by July 27, 1998. The Closing for
the consummation of the transactions contemplated by this
Agreement ("Closing"), including the sale and purchase of the
Property, shall, unless another date and/or place is agreed to
in writing by the parties hereto, take place at the Title
Company ("Escrow"), on the date ("Closing Date") which is on or
before the Monday which is 20 days after the waiver of all
contingencies described in Section 5.3. All proceedings to
take place at the Closing shall take place simultaneously, and
no delivery shall be considered to have been made until all
such proceedings have been completed. Upon completion of the
Closing, Purchaser shall immediately be entitled to actual and
be charged with constructive possession of the Property, and
all risk of loss with regard thereto shall pass to Purchaser.
9.2 CUT-OFF TIME. The Cut-off Time shall be as of 11:59 p.m. on
the day preceding the Closing Date, except that Seller shall
receive the income and shall be charged for the expenses
attributable to the restaurants, bar facilities or room service
up to 2:00 a.m. on the Closing Date.
9.3 CLOSING STATEMENTS. At the Closing, Escrow shall deliver a
Preliminary Closing Statement setting forth in reasonable
detail prorations required under Article X based upon such
preliminary audits and inventories as they have made up to the
Closing Date. Within thirty (30) days following the Closing
Date, Escrow shall deliver a Final Closing Statement setting
forth the final determination of the adjustments and
prorations; PROVIDED, HOWEVER, that no adjustment shall be made
for any item included in the Preliminary Closing Statement if
the said item has been approved by Purchaser prior to the
Closing. A payment to cover any changes as a result of such
Final Closing Statement will be made by Seller or Purchaser, as
the case may be, within five (5) days after the receipt of such
Final Closing Statement.
In the event that, at any time within ninety (90) days after
the Closing, either party discovers any item which should have
been included in the Final Closing Statement but was not
included for any reason, then such item shall be adjusted in
accordance with this Agreement as if its existence had been
known at the time of the preparation of the Final Closing
Statement.
Article X
---------
CLOSING ADJUSTMENTS; OTHER CLOSING MATTERS.
10.1 CLOSING ADJUSTMENTS. On the Closing Date the following items
shall be apportioned between Purchaser and Seller as of the
Cut-Off Time:
10.1.1 RENTS AND OTHER REVENUE. All Hotel revenues, including
percentage rents (if any) as and when collected;
PROVIDED, HOWEVER, that in connection with the
preparation of the Preliminary Closing Statement, as
provided in Section 9.3, any percentage rentals under
any Space Lease shall be estimated to the Cut-off Time
on the basis of sales, receipts or profits for
immediately preceding fiscal periods, and an adjustment
shall be made based upon actual figures, if available,
or again upon recently completed fiscal periods for the
purpose of making a final estimate of the amounts of
such percentage rentals in connection with the
preparation of the Final Closing Statement as provided
in Section 9.4. Guest room revenues for the night
immediately prior to the Closing Date shall be divided
equally between Seller and Purchaser;
10.1.2 TAXES, LEVIES, ETC. Real estate taxes and personal
property taxes, if any, levied or imposed upon the
Property on the basis of the fiscal year for which
assessed;
10.1.3 WATER CHARGES. Unmetered water charges on the basis of
the fiscal year;
10.1.4 UTILITIES. Charges and fees due under telephone
contracts and contracts for the supply of heat, water,
steam, electric power, gas and lighting or sewer; it
being further agreed that all deposits (including
interest actually accrued) made by Seller as security
under any such public service contracts (or any other
contracts being assumed by Purchaser hereunder) shall
be assigned to Purchaser and credited to Seller;
10.1.5 TENANT CHARGES. Charges due Seller for electric power,
steam or other utilities, submetering fees, charges for
chilled water and other charges for services furnished
to Space Lessees to the extent not adjusted pursuant to
Section 10.1.1;
10.1.6 HOTEL CONTRACTS AND EQUIPMENT LEASES. Charges and
receipts under all Hotel Contracts and Equipment
Leases;
10.1.7 PERMIT CHARGES AND FEES. Purchaser shall pay all
transfer or application fees for transferable Permits;
10.1.8 PAYMENTS TO OR FOR EMPLOYEES. Employees' wages
(including without limitation federal withholding and
employment taxes, and all state and local taxes, if
any, required to be collected by employers on personnel
working at the Hotels) vacation pay and other amounts
payable under any Seller's Obligations (in accordance
with the terms thereof) and payroll expenses shall be
paid by Seller.
10.1.9 OTHER ADJUSTMENTS. Such other items as are provided
for in this Agreement including but without limitation
all cash in house banks, the deposits under the Space
Leases, and advance payments under booking
arrangements.
10.2 Excise Taxes. To the extent of their existence, Seller shall
pay any transfer charges or taxes imposed by state or local
jurisdictions on the Land and Improvements and Purchaser shall
pay any sales tax on the personal property.
10.3 CLOSING COSTS AND TITLE INSURANCE. Purchaser and Seller shall
each pay one-half of the applicable escrow fees and recording
costs. Seller shall pay the costs of title insurance
attributable to an owner's standard ALTA coverage. Purchaser
may, at Purchaser's sole option, require extended form title
insurance and pay for the additional cost of such coverage
beyond that of standard form coverage and for any required
survey. Each party shall bear its own attorney's fees in
connection with this transaction.
10.4 TERMINATION OF QUALITY INN FRANCHISE. Seller shall negotiate
and pay to Quality Inn, the amount of the charges for
termination of the Quality Inn franchise for the Pocatello
property at any time following Closing at which Purchaser
elects, in its sole discretion, or Quality Inn otherwise
requires, to terminate the Quality Inn relationship. This
obligation will be documented at Closing in the manner
required to survive Closing.
Article XI
----------
DELIVERIES ON CLOSING.
11.1 DELIVERIES BY SELLER. Seller shall make the following
deliveries to Purchaser at the Closing:
11.1.1 DEED. Seller shall execute, acknowledge and deliver to
Purchaser a warranty deed sufficient to convey to
Purchaser the fee simple title to the Land together
with the Improvements thereon, subject to and in
accordance with the provisions of this Agreement.
11.1.2 XXXX OF SALE AND REGISTRATIONS. Seller shall execute,
acknowledge and deliver to Purchaser a xxxx of sale and
title registration transfer documents (if any)
sufficient to transfer clear title and interest in and
to the Service Equipment, Consumables and Operating
Equipment subject to and in accordance with the
provisions of this Agreement and subject to Permitted
Exceptions.
11.1.3 ASSIGNMENTS OF SPACE AND EQUIPMENT LEASES. Seller
shall execute, acknowledge and deliver to Purchaser, in
counterparts, an assignment of all of Seller's right,
title and interest as lessor under all Space Leases and
as lessee and owner under the Equipment Leases. Seller
shall also execute, acknowledge and deliver to
Purchaser, in counterparts, an assignment of all
security deposits then held by Seller pursuant to the
terms of Space Leases. Purchaser will decide and
notify Seller prior to the end of the Inspection Period
whether the estoppel statements provided by tenants
under Space Leases in excess of one year in length are
adequate for Purchaser's purposes.
11.1.4 ASSIGNMENT OF HOTEL CONTRACTS, TRANSFERABLE PERMITS,
NAMES AND MISCELLANEOUS ASSETS. Seller shall execute,
acknowledge and deliver to Purchaser an assignment of
all of Seller's right, title and interest under the
Hotel Contracts, transferable Permits, Names (to extent
transferable) and the Miscellaneous Assets to be sold
pursuant to this Agreement and shall deliver Seller's
original counterparts of all documents which are in
writing together with such correspondence and other
records, if any, pertaining thereto which Seller has.
Purchaser will decide and notify Seller prior to the
end of the Inspection Period if Purchaser wishes to
cancel any of the Hotel Contracts which are cancelable.
11.1.5 DOCUMENTATION REGARDING NON-TRANSFERABLE PERMITS. As
to any non-transferable Permits, Seller will, at
Purchaser's cost and expense, execute and deliver to
Purchaser any documents reasonably required to be
signed by Seller to effect the reissuance thereof in
the name of Purchaser.
11.1.6 CONSENTS/ESTOPPEL CERTIFICATES. Seller, to the extent
it is able to require the same under current
agreements, shall obtain and deliver to Purchaser
certificates from the lessees under the Space Leases in
excess of one year in length and from parties to each
of the Hotel Contracts in excess of one year in length
stating that said leases and/or contracts are in full
force and effect in accordance with their terms, that
to the best of their knowledge there are no defaults
thereunder, and that, to the extent that the consent of
such party is required for the assignment thereof, such
consent has been given. To the extent Seller is
unable to obtain the certificates described in the
preceding sentence, Seller shall warrant to Purchaser
that the status of such agreements is as stated in the
preceding sentence.
11.1.7 SELLER'S RECORDS. Seller shall deliver to Purchaser
all records pertaining to the then registration of
guests, advance bookings of banquets and similar
functions, advance room reservations, promotion
records, due bills, records of the purchasing and
engineering departments of the Hotels and all other
records, instruments, documents and deposits for
Hotels' operation, except for such summaries or copies
of such records as Seller chooses to retain at its off-
site office.
11.1.8 EMPLOYMENT AGREEMENTS AND CONTRACTS. Seller and
Purchaser shall provide a written notice to all
employees of the Hotels to terminate all employees of
the Hotels as of the Cut-off Date. The notice shall be
made in form reasonably acceptable to Purchaser.
11.1.9 TITLE INSURANCE AND ADDITIONAL ITEMS. Seller shall
deliver to Purchaser all other instruments and
documents to which Purchaser may be entitled at the
Closing under any of the other provisions of this
Agreement, including the policy of Title Insurance.
11.2 DELIVERIES BY PURCHASER. Purchaser shall make the following
deliveries to Seller at the Closing.
11.2.1 PURCHASE PRICE. Purchaser will execute and deliver
such documents as are necessary to reflect that the
Property is taken subject to the items described in
Article IV, and shall make any other payments required
by it hereunder.
11.2.2 ASSUMPTION OF SELLER'S OBLIGATIONS. Purchaser shall
execute, acknowledge and return to Seller counterparts
of the assignments delivered pursuant to Section 11.1
to evidence its agreement to assume and perform all of
the Seller's obligations under the Lease (as
negotiated), Space Leases, Hotel Contracts, and
transferable Permits from and after the Closing Date;
together with its obligation to pay all items for which
it has received a credit at Closing and to indemnify
Seller with regard thereto.
11.2.3 ASSUMPTION OF BOOKINGS. Purchaser shall perform all
booking arrangements at the Hotels from and after the
Closing insofar as the same have been made by Seller
pursuant to Section 7.5.
11.2.5 ADDITIONAL ITEMS. Purchaser shall deliver to Seller
all instruments and documents to which Seller may be
entitled at the Closing under any of the other
provisions of this Agreement.
11.3 NOTICES.
11.3.1 TENANTS UNDER LEASES. Seller and Purchaser shall
execute and deliver all notices to all Space Lessees
advising them of the sale of the Property, the
assignment to Purchaser of the Space Leases, and the
assumption by Purchaser of the lessor's obligations
under such Space Leases.
11.3.2 OTHER NOTICES. Upon request of either party, Seller
and Purchaser will execute and mail a notice addressed
to the other party under any Equipment Lease, Hotel
Contract, or to the governmental or other authority
issuing any Permit assigned to Purchaser, notifying
such person or authority of such assignment, and of the
assumption of Purchaser of Seller's obligations
thereunder.
Article XII
-----------
CONDITIONS TO CLOSING OBLIGATIONS.
12.1 CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligation of
Seller to consummate the transactions contemplated by this
Agreement, including the sale of the Property, is expressly
conditioned upon the fulfillment by and as of the time of
Closing of each of the conditions listed below in this Section
12.1; PROVIDED, HOWEVER, that Seller, at its election, may
waive all or any of such conditions:
12.1.1 PERFORMANCE OF AGREEMENTS. Purchaser shall have
performed all of its agreements contained in this
Agreement required to be performed by it prior to the
Closing Date (including but without limitation the
adjustments and other closing matters provided for in
Articles IX and X).
12.1.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser contained in this Agreement
shall, except as contemplated or permitted by this
Agreement, be true (regardless of the knowledge, or
lack thereof, of Purchaser) on and as of the Closing
Date, as if made on and as of the Closing Date, in all
respects except for instances which are, in the
aggregate, not material.
12.1.3 TENDER. Purchaser shall have tendered to Seller the
delivery of the items contemplated in Section 11.2.
12.2 CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The obligation
of Purchaser to consummate the transactions contemplated by
this Agreement, including the sale and purchase of the
Property, is expressly conditioned upon the fulfillment by and
as of the time of the Closing of each of the conditions listed
below in this Section 12.2; PROVIDED, HOWEVER, that Purchaser,
at its election evidenced by written notice delivered to Seller
prior to or at the Closing, may waive any or all of such
conditions:
12.2.1 PERFORMANCE OF AGREEMENTS; ADVERSE CHANGES. Seller
shall have performed all of its agreements contained in
this Agreement required to be performed by it prior to
the Closing Date (including but without limitation the
adjustments and other closing matters provided for in
Articles IX and X)
12.2.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller contained in this Agreement
shall, except as contemplated or permitted by this
Agreement to be limited to Seller's Actual Knowledge,
or as required or consented to by Purchaser under
Section 7.2, be true on and as of the Closing Date, as
if made on and as of the Closing Date, in all respects
except for instances which are, in the aggregate, not
material.
12.2.3 LITIGATION. There shall be no pending or threatened
litigation seeking to restrain, prevent, rescind, or
change the terms of the sale and purchase of the
Property from that which is set forth herein.
12.2.4 TENDER. Seller shall have tendered to Purchaser the
delivery of the items contemplated in Section 11.1.
12.2.5 ASSUMED DEBT AND EQUIPMENT LEASES. The holders of the
Assumed Debt and the Equipment Leases shall have
approved the transfer of the Property without change in
terms or charge to Purchaser.
Article XIII
------------
GENERAL PROVISIONS.
13.1 FIRE OR OTHER CASUALTY OR CONDEMNATION.
13.1.1 NOTICE TO PURCHASER. Seller agrees to give Purchaser
prompt notice of any fire or other casualty occurring
at or to the Property between the date of this
Agreement and the Closing Date, or of any actual or
threatened condemnation of all or any part of the Land
of which Seller has knowledge.
13.1.2 MAJOR CASUALTY OR TAKING. If, prior to the Closing,
there shall occur (i) Damage to the Property caused by
fire or other casualty which would cost Five Hundred
Thousand Dollars ($500,000) per Hotel or more to repair
and has a material impact on operations, or (ii) a
taking by condemnation of any part of the Improvements
or which materially interferes with the operation or
use of the Hotels, then, and in either such event,
Purchaser may terminate its obligations under this
Agreement by written notice given to Seller within
fifteen (15) days after Seller has given Purchaser the
notice referred to in Section 13.1.1, or at the
Closing, whichever is earlier and receive the return of
the Xxxxxxx Money. If Purchaser does not so elect to
terminate its obligations under this Agreement, then
the Closing shall take place as herein provided without
abatement of the Purchase Price, and Seller shall
assign to Purchaser at the Closing, by written
instrument, all of Seller's interest in any insurance
proceeds (except use and occupancy insurance and
business interruption insurance for the period ending
with the Closing Date) or condemnation awards which may
be payable to Seller on account of any such fire,
casualty or condemnation awards which may be payable to
Seller on account of any such fire, casualty or
condemnation, or the amount thereof not expended for or
required to reimburse Seller for actual expenditures on
account of restoration and Purchaser shall off-set
against the Purchase Price at Closing the amount of any
portion of the damage not covered by insurance.
13.1.3 OTHER CASUALTY OR TAKING. If, prior to Closing, there
shall occur (i) damage to the Premises caused by fire
or other casualty which would cost less than Five
Hundred Thousand Dollars ($500,000) to repair, or, (ii)
a taking by condemnation of any part of the Premises
which does not include a material part of the
Improvements or does not materially interfere with the
operation or use of the Hotels, then, and in any such
event, neither party shall have the right to terminate
its obligations under this Agreement by reason thereof
and the Closing shall take place without abatement of
the Purchase Price, but Seller shall assign to
Purchaser at the Closing, by written instrument all of
Seller's interest in any insurance proceeds (except use
and occupancy insurance and business interruption
insurance for the period ending with the Closing Date)
or condemnation awards which may be payable to Seller
on account of any such fire, casualty or condemnation,
or the amount thereof not previously expended for or
required to reimburse Seller for actual expenditures on
account of restoration, and Purchaser shall off-set
against the Purchase Price at Closing the amount of any
portion of the damage not covered by insurance.
13.1.4 DEFINITION OF MATERIAL TAKING. For purposes of this
Section 13.1, a taking of a material part of the
improvements shall mean any taking which leaves
remaining a balance of the Premises which may not be
economically operated for the purpose for which the
Premises was operated prior to such taking. Without
limiting the generality of the foregoing, a taking of
more than ten percent (10%) of the common areas of the
Improvements (including, without limitation, the
lobbies, ballrooms, bars, dining areas, corridors,
cellars, storage or service equipment areas) or more
than fifteen percent (15%) of the guest areas of the
Improvements (including, without limitation, all
private rooms, bathrooms and the like) shall be deemed
to be material and materially to interfere with the
business and operation of the Hotels.
13.2 TERMINATION.
13.2.1 BY SELLER. Seller may terminate this Agreement by
providing 15 days notice and opportunity to cure to
Purchaser at any time prior to the Closing Date if a
material default under or a material breach of this
Agreement or any representation or warranty set forth
in this Agreement or in any instrument delivered by
Purchaser pursuant hereto shall be made by Purchaser.
13.2.2 BY PURCHASER. Purchaser may terminate this Agreement
by 15 days notice and opportunity to cure to Seller at
any time prior to the Closing Date if:
(A) A condition to the performance of Purchaser
hereunder shall not be satisfied on or before the
date specified for the satisfaction thereof; or
(B) A material default under or a material breach of
this Agreement or of any representation or
warranty set forth in this Agreement or in any
instrument delivered by Seller pursuant hereto
shall be made by Seller, provided that the
obligations of Purchaser under section 5.3 with
regard to its due diligence inspection shall
continue.
13.2.3 EFFECT OF TERMINATION. In the event of termination of
this Agreement under this Section 13.2, then:
(A) The Xxxxxxx Money deposit of Purchaser shall be
returned unless Purchaser is the party in default;
and
(B) In the event the Agreement is terminated and the
Closing is not consummated by reason of default of
a party hereunder, if Purchaser is the defaulting
party, Seller shall retain the Xxxxxxx Money as
its sole and exclusive remedy; and if Seller is
the defaulting party, Purchaser may bring an
action for specific performance, or xxx for actual
damages.
13.3 ASSUMPTION OF LIABILITIES.
13.3.1 LIMITATION ON ASSUMED LIABILITIES. Purchaser is not
assuming any liabilities of Seller except liabilities
which the terms of this Agreement expressly require
Purchaser to assume.
13.3.2 SPECIFIC EXCLUSION OF ASSUMED LIABILITIES. Without
limiting the generality of Section 13.3.1, Purchaser is
not assuming any liability of Seller in respect of the
following:
(A) Any of Seller's trade payables applicable to the
period prior to Closing;
(B) Any contingent liability of Seller whether for
taxes or otherwise;
(C) Any liability on account of any employment
agreement, welfare or other employee or fringe
benefit plan, or any other or similar plan or any
retirement, bonus, severance pay, insurance,
profit sharing or deferred compensation plan; or
(D) Any liability of Seller hereunder for fees,
expenses or taxes incurred in connection with the
sale and transfer of the Property.
13.3.3 EFFECTIVE DATE OF ASSUMPTION. Wherever it is provided
in this Agreement that Purchaser shall assume all
obligations of Seller, such assumption shall be
effective only from and after the Closing Date and no
such assumption shall require Purchaser to assume, nor
shall it assume, any liabilities or obligations of
Seller relating to or arising from Seller's performance
of, or failure to perform, any of the terms of the
assumed obligation prior to the Closing Date (except as
otherwise expressly provided in this Agreement.)
13.4 SURVIVAL OF REPRESENTATIONS, ETC. Subject to the time
limitations described in section 5.2, the respective
representations, warranties, obligations, covenants and
agreements of Seller and Purchaser contained herein shall
survive Closing. Except to the extent of any environmental or
structural warranties of Seller under sections 5.1.11 and
5.1.12, any action by Purchaser against Seller based upon a
violation of Seller's representations and warranties must be
commenced within one year of Closing.
13.5 INDEMNIFICATION.
13.5.1 AGREEMENT TO INDEMNIFY. Subject to the express
provisions of this Agreement to the contrary, the
Seller will indemnify Purchaser against any liability
for claims arising out of events, acts, or omissions of
Seller that occurred in connection with the operation
of the Hotels up to the Closing Date, and Purchaser
will indemnify the Seller against any liability for
claims arising out of events, acts or omissions of
Purchaser that occur in connection with the operation
of the Hotels on or after the Closing Date.
13.5.2 INDEMNIFICATION REGARDING ASSUMED OBLIGATIONS.
Whenever it is provided in this Agreement that an
obligation of one party will be assumed by the other
party from and after the Closing Date, the party so
assuming such liability shall be deemed to have also
agreed to indemnify and hold harmless the other party,
its successors and assigns, from all claims, losses,
liabilities and expenses (including reasonable
attorneys' and accountants' fees) arising from any
failure of the assuming party to perform the obligation
so assumed from and after the Closing Date.
13.5.3 NOTICE AND COOPERATION ON INDEMNIFICATION. Subject to
the time limitations contained in section 5.2, whenever
any party shall learn through the filing of a claim or
the commencement of a proceeding or otherwise of the
existence of any liability for which another party is
or may be responsible under this Agreement, such party
shall notify said other party promptly and furnish such
copies of documents (and make originals thereof
available) and such other information as such party may
have which may be used or useful in defense of such
claims and shall afford said other party full
opportunity to defend the same in the name of any party
and shall generally cooperate with said other party in
the defense of any such claim.
13.6 ASSIGNMENTS. Without the prior written consent of the other
party, neither party may assign its rights hereunder except
that Purchaser may assign its rights hereunder to any entity of
which Cavanaughs Hospitality Corporation is the parent, manager
or general partner, so long as Cavanaughs Hospitality
Corporation remains liable for and responsible for performance
of all obligations hereunder and payment of the Purchase Price.
Cavanaughs Hospitality Corporation shall be liable for all
obligations of Purchaser under this Agreement.
13.7 BROKERS. Seller shall be responsible for payment of all
compensation to any agent or broker utilized by Seller in the
sale of the Property; provided, however, that Seller shall
have no liability for any compensation to CIBC Xxxxxxxxxxx and
that Purchaser shall be responsible for a fee to Xxxxxxxx,
Xxxxxxx & Associates totaling one-quarter of one percent of the
purchase price. The parties represent and warrant to one
another that they have not dealt with any other broker to whom
they are obligated to pay a fee in connection with the sale of
the Property.
13.8 EXPENSES, FEES AND DISBURSEMENTS OF COUNSEL. Except as
otherwise provided in this Agreement, each of the parties
hereto shall bear and pay their respective expenses, including
without limitation the fees and disbursements of their own
counsel, accountants and other advisors, in connection with the
negotiation and preparation of this Agreement and the Closing.
13.9 NOTICES. Except as otherwise provided in this Agreement,
notices, demands, requests, consents, approvals or other
communications (for the purpose of this Section 13.9
collectively called "Notices") required or permitted to be
given hereunder or which are given with respect to this
Agreement shall be in writing and shall be considered given
when sent by United States registered or certified mail,
postage prepaid, (or by private overnight courier) addressed to
Purchaser at 000 X. Xxxxx Xxxxx Xxxxx Xxxxx 000, Xxxxxxx, XX
00000 (Fax 000-000-0000) Attn. President; and to Seller at
Sunstone Hotel Investors, Inc., General Partner, 000 Xxxxx xx
Xxxxxxxxxx, Xxx Xxxxxxxx, XX 00000, (Fax to:000-000-0000),
attn. Xx. Xxxxxx X. Alter, President and CEO; or such other
place as a party may from time to time designate by notice, or
when personally delivered.
13.10 COUNTERPARTS, FACSIMILES, CAPTIONS, ETC. This Agreement may be
executed in counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same
instrument. The facsimile transmittal of an executed document,
to be followed as soon as practical by delivery of the original
signed document, shall be considered delivery of an original
when transmitted to Seller or to Purchaser. The captions are
for convenience of reference only, and shall not affect the
meaning or construction to be given any of the provisions
hereof. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties may require.
13.11 GOVERNING LAW. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance
with, the laws of the State of California, except to the extent
required to enforce specific performance under the laws of a
state in which the Property is located. In addition to any
other remedy, the substantially prevailing party in any dispute
arising out of this Agreement shall be entitled to recover
their reasonable attorney fees and costs of litigation.
13.12 ENTIRE AGREEMENT; NO RECORDING. This Agreement contains the
entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior understandings
with respect thereto. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed by the
party to be charged by its agent duly authorized in writing or
as otherwise expressly permitted herein. Subject to Section
13.6, this Agreement shall be binding upon and inure to the
benefit of their successors and assigns. The parties do not
intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto. The parties each
agree that neither this Agreement nor any memorandum thereof
shall be recorded.
13.13 NO WAIVERS. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other
agreement or provision herein contained. No extension of time
for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations
or acts.
13.14 CONFIDENTIALITY. Neither party will make any disclosure of
this Agreement except to the extent required to comply with the
obligations of the parties under this Agreement or to comply
with the obligations of that party under applicable laws and
regulations. In the event Purchaser does not waive its
contingencies to its obligations to purchase, Purchaser shall
return to Seller all materials which it obtains from Seller,
and Seller may acquire from Purchaser any third party reports
on the Property ordered by Purchaser during the Inspection
Period by reimbursing Purchaser for the cost of such report.
13.15 SECTION 1031 EXCHANGE. Purchaser agrees to cooperate with
Seller in allowing Seller to accomplish a deferral of taxes
under the provisions of Section 1031 of the Internal Revenue
Code, provided that such cooperation shall not result in any
expense or liability to Purchaser or defect in title or risk to
acquiring title to the Property other than that which Purchaser
would have in a simple all cash purchase transaction. The
deferral of tax arising out of this transaction is not a
contingency to the obligations of Seller under this Agreement
or the occasion for any delay in Closing.
THE OFFER REPRESENTED BY THE FIRST PARTY EXECUTING AND DELIVERING THIS
AGREEMENT IS WITHDRAWN UNLESS THE OTHER PARTY EXECUTES THIS AGREEMENT
WITHOUT MODIFICATION AND DELIVERS IT TO THE ORIGINAL SIGNING PARTY ON
OR BEFORE 5:00 P.M. OF THE THIRD BUSINESS DAY FOLLOWING THE DATE OF
THE FIRST PARTY SIGNING.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by and through its managing partner and
attested to by its officers thereunto duly authorized, all on the date
first above written.
SELLER:
SUNSTONE HOTELS, L.L.C.
-----------------------
By: Sunstone Hotel Investors, L. P., it s Managing Member
By: Sunstone Hotel Investors, Inc., its General Partner
By: /s/ Xxxxxx X. Alter
-----------------------------
Xxxxxx X. Alter
Its: President and CEO
PURCHASER:
CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP
------------------------------------------
by Cavanaughs Hospitality Corporation, General Partner
By: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx
Its: Executive Vice President
STATE OF WASHINGTON
) SS.
County of Spokane
I certify that I know or have satisfactory evidence Xxxxxx Xxxxxx is
the person who appeared before me, and said person acknowledged that
he signed this instrument, on oath stated that he was authorized to
execute the instrument and acknowledged it as the Executive Vice
President of Cavanaughs Hospitality Corporation, the sole General
Partner of Cavanaughs Hospitality Limited Partnership, to be the free
and voluntary act of such party for the uses and purposes mentioned in
the instrument.
Dated: July 2, 1998.
-------------
Type/Print Name of Notary: X. Xxxxxx
-----------------------------
Notary Public in And For the State of
Washington,residing at Spokane, WA.
My appointment expires: April 29, 2001.
STATE OF CALIFORNIA
) SS.
County of Orange
I certify that I know or have satisfactory evidence that Xxxxxx X.
Alter is the person who appeared before me, and said person
acknowledged that (he/she) signed this instrument, on oath stated that
(he/she) was authorized to execute the instrument and acknowledged it
to be the free and voluntary act of such party as the President of
Sunstone Hotel Investors, Inc. in its capacity as the sole general
partner of Sunstone Hotel Investors, L. P. in its capacity as the
Managing Member of Sunstone Hotels, L.L.C. for the uses and purposes
mentioned in the instrument.
Dated: July 9, 1998.
-------------
Xxxxxxxx Xxxxxx
Type/Print Name of Notary: Xxxxxxxx Xxxxxx
---------------------------------------
Notary Public in And For the State of
California, residing at Costa Mesa, CA.
My appointment expires: March 5, 2001.
