EXHIBIT 10.21
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FIRST AMENDMENT TOMEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT ("First
Amendment") is made this 30th day of December, 1999, by and among
Cavanaughs Hospitality Corporation, a Washington corporation (the
"Buyer"), October Hotel Investors, LLC, a Washington limited liability
company ("October") and M and S Hotel LLC, a Washington limited
liability company ("MS")(October and MS shall be referred to
collectively herein as the "Seller").
R E C I T A L S
A. Bellevue Inn, LLC ("Bellevue Inn") is a limited liability company
organized and existing under the laws of the state of Washington.
Bellevue Inn has three Members (as that term is defined in the
Bellevue Inn Operating Agreement (the "Operating Agreement")) with
the following ownership percentages: October - 25%; MS 25%; and
WestCoast Bellevue Inn, Inc., a Washington corporation ("WC
Bellevue") 50%.
B. WC Bellevue is a wholly owned subsidiary of WestCoast Hotels,
Inc., a Washington corporation ("WCH").
C. The shareholders of WCH are selling the stock of WCH (the "WCH
Sale") under the terms of a Stock Purchase Agreement (the "Stock
Purchase Agreement") by and among Buyer, Xxxx Xxxxxxxx Xxxxxxx,
Xxxxxx X. Xxxxx and D. Xxxxxxx Xxxxxx (Xxxxxxx, Xxxxx and Xxxxxx
shall be collectively referred to herein as "WCH Sellers") dated
December 17, 1999. In exchange for their stock in WCH, the
shareholders will receive cash, corporate bonds and certain assets
of the Company. The WCH Sale will transfer indirect ownership of
fifty percent (50%) of Bellevue Inn to Buyer.
D. Under the terms and conditions of a MEMBERSHIP INTEREST PURCHASE
AGREEMENT ("Purchase Agreement") dated as of 30th day of
December, 1999, by and among Buyer and Seller, and conditioned
upon the closing of the transactions contemplated in, and as
defined in, the Stock Purchase Agreement ("Stock Purchase
Closing"), Buyer will acquire from Seller, and Seller sells to
Buyer the remaining fifty percent (50%) membership interest of
Bellevue Inn, which is all of Seller's ownership interest in
Bellevue Inn ("Bellevue Inn Interests").
E. The sole purpose of this First Amendment is to incorporate into
the Purchase Agreement the provisions from the Stock Purchase
Agreement which provide for handling of Excess Working Capital as
defined below.
NOW, THEREFORE, in consideration of the mutual promises herein made,
and in consideration of the representations, warranties, and covenants
herein contained, the parties agree as follows.
EXCESS WORKING CAPITAL. Within sixty (60) days following the Closing,
and in coordination with the preparation of the Excess Working Capital
calculation for WestCoast described in Section 7(e) of the Stock
Purchase Agreement, the Sellers shall cause the accounting firm of
Gunning, Stenson & Price (the "Accountants"), the regular outside
accounting firm for WestCoast, to prepare an audited, balance sheet
for the Bellevue Inn Interests, prepared as of the Effective Date in
accordance with GAAP ("Closing Balance Sheet"). As part of the
preparation of the audited balance sheets, the Accountants shall
calculate the amount, if any, of Excess Working Capital for the
Bellevue Inn Interests as of the Effective Date. ("Excess Working
Capital" means the amount, if any, by which current assets for the
Bellevue Inn LLC exceeds current liabilities for Bellevue Inn LLC 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 the Bellevue Inn Interests, Excess Working Capital
shall be calculated for Bellevue Inn LLC and that amount shall be
multiplied by the equity percentage ownership of Sellers. 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 U.S. Bank loan for the Bellevue Inn LLC), advance
deposits for future business. The Buyer and its accountants shall
have the right to review the calculation of Excess 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 determinatio 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.
IN WITNESS WHEREOF, Cavanaughs has caused this instrument to be signed
in its corporate name by its duly authorized officer and dated the day
and year first above written.
CAVANAUGHS HOSPITALITY CORPORATION
By:
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Its: Senior Vice President
000 X. Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
