AGREEMENT TO PURCHASE MOTEL
BETWEEN
TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS
AND
HOST FUNDING INC.
DATED: _______________, 1996
AGREEMENT TO PURCHASE MOTEL
TABLE OF CONTENTS
ARTICLE PAGE
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1 DEFINITIONS AND REFERENCES. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 References and Interpretation. . . . . . . . . . . . . . . . . . . 4
2 SALE AND PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Sale and Purchase. . . . . . . . . . . . . . . . . . . . . . . . . 5
3 PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Payment of the Balance of the Purchase Price . . . . . . . . . . . 6
4 PURCHASER'S INSPECTIONS AND INVESTIGATIONS. . . . . . . . . . . . . . . 6
4.1 Deliveries to Purchaser. . . . . . . . . . . . . . . . . . . . . . 6
4.2 Review and Inspection. . . . . . . . . . . . . . . . . . . . . . . 8
4.3 "As Is" Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 11
5.1 Representations and Warranties of Seller . . . . . . . . . . . . . 11
5.2 Representations and Warranties of Purchaser. . . . . . . . . . . . 13
5.3 Duration of Representations and Warranties . . . . . . . . . . . . 13
6 CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Closing Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7 CLOSING DELIVERIES; POSSESSION. . . . . . . . . . . . . . . . . . . . . 15
7.1 Seller's Deliveries. . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Purchaser's Deliveries . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Concurrent Transactions. . . . . . . . . . . . . . . . . . . . . . 16
7.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5 Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8 ADJUSTMENTS AND PRORATIONS: CLOSING STATEMENTS . . . . . . . . . . . . 16
8.1 Adjustments and Prorations . . . . . . . . . . . . . . . . . . . . 16
8.2 Closing Statements . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE PAGE
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9 CONDITIONS TO SELLER'S OBLIGATIONS. . . . . . . . . . . . . . . . . . . 19
9.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.2 Failure of Conditions. . . . . . . . . . . . . . . . . . . . . . . 19
10 CONDITIONS TO PURCHASER'S OBLIGATIONS . . . . . . . . . . . . . . . . . 19
10.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Failure of Conditions. . . . . . . . . . . . . . . . . . . . . . . 19
11 ACTIONS AND OPERATIONS PENDING CLOSING. . . . . . . . . . . . . . . . . 20
11.1 Actions and Operations Pending Closing . . . . . . . . . . . . . . 20
12 CASUALTIES AND TAKINGS. . . . . . . . . . . . . . . . . . . . . . . . . 20
12.1 Casualties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.2 Takings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13 EMPLOYEE MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.1 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15 ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 22
15.1 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . 22
16 EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.1 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.2 Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Exhibit A Legal Description
Exhibit B Permitted Exceptions
Exhibit C FIRPTA Certificate
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AGREEMENT TO PURCHASE MOTEL
THIS AGREEMENT TO PURCHASE MOTEL ("AGREEMENT") is made as of this
______ day of _______________, 1996, by and between TEACHERS' RETIREMENT
SYSTEM OF THE STATE OF ILLINOIS, a retirement system created under the laws
of the State of Illinois ("Seller") and HOST FUNDING, INC., a Maryland
corporation or its permitted assignee as provided herein ("Purchaser").
R E C I T A L S:
A. Seller is the fee owner of the real property approximately 1.414
acres in size and legally described in Exhibit A hereto, which real property
has been improved with (i) two (2) two (2) story motel buildings containing
90 guest rooms; (ii) parking areas; and (iii) certain other improvements and
which is commonly known as the Flagstaff Super 8 Motel located in Flagstaff,
Coconino County, Arizona (collectively, the "Motel").
B. Seller desires to sell, and Purchaser desires to purchase, the Motel
upon and subject to the terms and conditions hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements, covenants and conditions herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and Purchaser agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
1.1 DEFINITIONS. As used herein, the following terms shall have the
respective meanings indicated below:
ACCOUNTANTS: As defined in Section 8.2.
AGREEMENT: This Agreement to Purchase Motel, including the Exhibits
attached hereto, which are incorporated herein by this reference.
BOOKINGS: Contracts for the use or occupancy of guest rooms of the
Motel.
CAPITAL: Capital Associates Realty Advisors Corp., an Illinois
corporation.
CLOSING: As defined in Section 6.1.
CLOSING DATE: As defined in Section 6.1.
CLOSING STATEMENTS: The Preliminary and Final Closing Statements
required under the provisions of Section 8.2.
CONSUMABLES: All engineering, maintenance, housekeeping and guest
supplies, including soap, cleaning materials and matches, stationery and
printing, and other supplies of all kinds, in each case whether partially
used, unused or held in reserve storage for future use or in connection with
the maintenance and operation of the Motel, which are on hand on the date
hereof, subject to such depletion and restocking as shall occur and be made
in the normal course of business, excluding, however, (i) Operating
Equipment, and (ii) property owned by guests, Manager or its employees or
other persons furnishing services to the Motel.
CONTINUING OBLIGATIONS: All commitments, promotional and other
obligations to provide free or discounted guest rooms at the Motel which have
not been satisfied in full as of the Closing Date and which are not included
in the Motel Contracts.
CUT-OFF TIME: 12:01 A.M. local time on the Closing Date.
DEPOSIT: As defined in Section 3.2.
ESCROW: The escrow to be created for the purpose of facilitating the
Closing.
ESCROWEE: Near North National Title Corporation.
ESCROW INSTRUCTIONS: The escrow instructions to be executed and
delivered by the parties hereto (or their respective attorneys, who are
hereby authorized by the parties to execute same) and the Escrowee for
closing of the transactions contemplated hereby.
FINAL CLOSING STATEMENT: The Final Closing Statement required under the
provisions of Section 8.2.
FIXTURES AND TANGIBLE PERSONAL PROPERTY: All fixtures, furniture,
furnishings, fittings, equipment (including laundry equipment), cars, trucks,
machinery, apparatus, signage, appliances, draperies, carpeting and other
articles of personal property used or useable in connection with any part of
the Motel, subject to such depletion, resupply, substitutions and
replacements as shall occur and be made in the normal course of business but
in accordance with present standards, excluding, however: (i) Consumables;
(ii) Operating Equipment; (iii) equipment and property leased pursuant to
Motel Contracts; (iv) property owned by guests, Manager or its employees or
other persons furnishing services to the Motel; and (v) Improvements.
FIRPTA CERTIFICATE: A certificate in the form attached hereto as
Exhibit C, to be delivered by Seller to Purchaser at the Closing.
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IMPOSITIONS: All general and special real estate, personal property and
other ad valorem taxes and assessments assessed or levied against or with
respect to the Property, or any part thereof or any interest therein, and all
sales, occupancy, room and other taxes incurred in connection with the
Motel's operation.
IMPROVEMENTS: The buildings, structures (surface and sub-surface) and
other improvements, including such fixtures as shall constitute real
property, located on the Real Property and constituting the Motel located in
Flagstaff, Arizona.
LEGAL REQUIREMENTS: All laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits,
licenses, authorizations, directions and requirements of all governments and
governmental authorities having jurisdiction over the Motel and the operation
thereof.
MANAGER: Crossroads Hospitality Company, L.L.C., a Delaware limited
liability company.
MOTEL: As defined in Recital A to this Agreement.
MOTEL CONTRACTS: All service, maintenance, purchase order, lease and
other contracts and agreements, including equipment leases, and any
amendments thereto, with respect to the maintenance, operation, provisioning
or equipping of the Motel or the Property, as well as written warranties and
guaranties relating thereto, if any, including those relating to heating and
cooling equipment and/or mechanical equipment, but excluding, however (i)
insurance policies and (ii) the Bookings.
NOTICES: As defined in Section 14.1.
OPERATING EQUIPMENT: All linens and uniforms, whether in use or held in
reserve storage for future use, in connection with the operation of the
Motel, which are on hand on the date hereof, subject to such depletion and
restocking as shall be made in the normal course of business, excluding,
however, (i) Consumables, and (ii) property owned by guests, Manager or its
employees or other persons furnishing services to the Motel.
OPERATING LEASE: The Super 8 Lease Agreement dated December 15, 1994,
by and between Seller and Manager.
PERMITS: All licenses, franchises and permits, certificates of
occupancy, authorizations and approvals issued to Seller and used in or
relating to the ownership, occupancy or operation of any part of the Motel,
excluding any the foregoing which are not transferable by Seller.
PERMITTED EXCEPTIONS: Any and all liens, encumbrances, restrictions,
exceptions and other matters specified in Exhibit B.
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PRELIMINARY CLOSING STATEMENT: The Preliminary Closing Statement
required by Section 8.2.
PROPERTY: The following items, collectively, as they relate to the
Motel: (i) the Real Property; (ii) the Fixtures and Tangible Personal
Property; (iii) the Operating Equipment; (iv) the Consumables; (v) all
transferable right, title and interest of Seller in, to and under the Motel
Contracts and Bookings; and (vi) all transferable right, title and interest
of Seller in, to and under the Permits.
PURCHASE PRICE: As defined in Section 3.1.
REAL PROPERTY: Title to the real property legally described on Exhibit
A hereto and to the Improvements.
RECEIVABLES: The accounts receivable of the Motel operation (including,
without limitation, credit card receivables) incurred in the ordinary course
of business in accordance with the Motel's credit policies in existence as of
the Cut-off Time.
TITLE COMMITMENT: The commitment for title insurance issued in
accordance with Section 6.3(b).
TITLE COMPANY: Near North National Title Corporation, as agent for
First American Title Insurance Company.
TITLE POLICY: As defined in Section 7.1(d).
VIOLATION: Any condition with respect to the Property which constitutes
a violation of any Legal Requirements.
1.2 REFERENCES AND INTERPRETATION. Except as otherwise specifically
indicated, all references herein to Section and Subsection numbers refer to
Sections and Subsections of this Agreement, and all references herein to
Exhibits refer to the Exhibits attached hereto. The words "hereby,"
"hereof," "herein," "hereto," "hereunder," "hereinafter," and words of
similar import refer to this Agreement as a whole and not to any particular
Section or Subsection hereof. The word "hereafter" shall mean after, and the
term "heretofore" shall mean before, the date of this Agreement. The terms
"include," "including" and similar terms shall be nonreturnable and construed
as if followed by the phrase "without being limited to." Captions used
herein are for convenience only and shall not be used to construe the
meaning of any part of this Agreement. Words of the masculine, feminine or
neuter gender shall mean and include the correlative words of other genders,
and words importing the singular number shall mean and include the plural
number and vice versa. Words importing persons shall include firms,
associations, partnerships (including limited partnership), trusts,
corporations and other legal entities, including public bodies, as well as
natural persons. Whenever under the terms of this Agreement the time for
performance of a covenant or condition falls upon a Saturday, Sunday
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or legal holiday, such time for performance shall be extended to the next
business day; otherwise, all references herein to "days" shall mean calendar
days.
ARTICLE 2
SALE AND PURCHASE
2.1 SALE AND PURCHASE. Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, the Property on the terms
and subject to the conditions set forth in this Agreement.
ARTICLE 3.
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price ("Purchase Price") for the
Property shall be Five Million Two Hundred Fifty Thousand Dollars
($5,250,000.00).
3.2 DEPOSIT.
(a) Within two (2) business days following Seller's acceptance of
this Agreement, Purchaser shall initially deposit with the Title Company
the sum of Seventy-Five Thousand Dollars ($75,000.00) (the "Initial
Deposit"), which Initial Deposit shall be increased to One Hundred Thousand
Dollars ($100,000.00) (the "Final Deposit," and, together with the Initial
Deposit, the "Deposit") upon the expiration of the Due Diligence Period (as
hereinafter defined) if Purchaser does not elect to terminate this
Agreement at that time. The Deposit shall be held in escrow by the Title
Company pursuant to the Title Company's standard form of strict joint order
escrow instructions. If Purchaser elects to extend the Closing Date
pursuant to Section 6.1, the additional Twenty-Five Thousand Dollars
($25,000.00) to be deposited therefor shall be part of the Deposit and the
Deposit shall then be One Hundred Twenty-Five Thousand Dollars
($125,000.00) as of the expiration of the Due Diligence Period.
(b) In the event the Initial Deposit is not delivered within the
period provided in Section 3.2(a), then Seller shall have the right to
terminate this Agreement, whereupon this Agreement shall be null and void
and neither party shall have any rights or obligations hereunder. The
Deposit (together with any interest earned thereon) shall be held and
invested in U.S. Government obligations, certificates of deposit, money
market funds or such other interest-bearing investment as Seller shall
determine, and all interest and other earnings thereon shall become a part
of the Deposit. The funds representing the Final Deposit shall be
deposited in the joint order escrow and shall be governed thereby.
Purchaser shall be responsible to pay for any and all costs related to the
investment of the Deposit. At Closing, the Deposit (together with any
interest earned thereon) shall be paid and applied against the Purchase
Price. Purchaser shall have the right to terminate this Agreement for any
reason by written notice thereof delivered to
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Seller within the Due Diligence Period, and upon such termination, the
Deposit (together with any interest earned thereon) shall be returned to
Purchaser and the parties shall have no further rights or obligations
hereunder. Upon the expiration of the Due Diligence Period, as extended,
if applicable, the Deposit shall be non-refundable, except as otherwise
provided herein, and Purchaser shall be deemed to have accepted the
condition of the Property. If this Agreement is terminated by Seller
pursuant to Section 9.2 hereof, then except as expressly provided in said
Section 9.2, the parties agree that Seller shall be entitled to receive the
entire Deposit as liquidated damages. The parties agree that the amount of
liquidated damages described in the preceding sentences, as applicable, is
a reasonable sum considering all of the circumstances existing as of the
date hereof, including the relationship of such sum to the amount of harm
to Seller that reasonably could be anticipated, Seller's anticipated use of
the proceeds of sale and the fact that actual damages would be impossible
to determine.
PURCHASER AND SELLER AGREE THAT BASED UPON THE CIRCUMSTANCES NOW
EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT
TO ESTABLISH SELLER'S DAMAGE BY REASON OF PURCHASER'S DEFAULT. SELLER AND
PURCHASER ACKNOWLEDGE AND AGREE THAT THE APPLICABLE FOREGOING AMOUNT OF
LIQUIDATED DAMAGES IS REASONABLE AS LIQUIDATED DAMAGES AND SHALL BE
SELLER'S SOLE AND EXCLUSIVE REMEDY IN LIEU OF ANY OTHER RELIEF, RIGHT OR
REMEDY, AT LAW OR IN EQUITY, TO WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY
REASON OF PURCHASER'S DEFAULT. SELLER AND PURCHASER ACKNOWLEDGE THAT THEY
HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 3.2 AND BY THEIR
INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
Seller's Initials __________ Purchaser's Initials __________
3.3 PAYMENT OF THE BALANCE OF THE PURCHASE PRICE. On the Closing
Date, Purchaser agrees to pay to Seller and Seller agrees to accept payment
of the balance of the Purchase Price, subject to prorations and adjustments
as provided in Section 8.1, and after application of the Deposit as provided
in Section 3.2, by wire transfer of federal funds, to an account specified by
the Escrowee pursuant to the Escrow Instructions.
ARTICLE 4
PURCHASER'S INSPECTIONS AND INVESTIGATIONS
4.1 DELIVERIES TO PURCHASER. The obligation of Purchaser to close the
transaction contemplated hereby is subject to Purchaser's receipt, review,
inspection and approval of the Property, and such other books, records,
documents and agreements as may be reasonably requested by Purchaser and
delivered by Seller and any other information that Purchaser may obtain
regarding the Property; provided, however, that Purchaser's right to inspect the
Property shall be subject to Section 4.2. Purchaser shall have until 5:00 p.m.
Central Standard Time on
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January 15, 1997, to conduct such inspections (the "Due Diligence Period"),
subject to extension as provided in Section 3.2 above. Within ten (10) days
after the execution of this Agreement by Seller and Purchaser, Seller shall
deliver to Purchaser the following items, data and/or information to the
extent Seller is in possession or control of such items:
(i) the most recent environmental report(s) with respect to the
Property;
(ii) maintenance, service or utility contracts; warranties,
guarantees, licenses, permits (including franchise or license
agreements relating to the operation of the Motel), plans, drawings,
engineering reports, specifications, site plans, and certificates of
occupancy, relating to the Property or the operation of the Motel;
(iii) all of the real estate and personal property tax statements,
if any, with respect to the Property for the years 1995 and 1996;
(iv) utility invoices relating to the Property from January 1,
1996 to the present, to the extent available;
(v) any financial statements prepared by or for Seller regarding
the Property and/or the Motel, including monthly income and expense
statements for the Property and/or the Motel from January 1, 1994, to
the present, in the form customarily used by Seller (and accompanying
data), and such other financial and operational data as Purchaser
shall reasonably require for the years 1994, 1995, and 1996;
(vi) a list of the amount and nature of the capital expenditures
incurred with respect to the Property and/or the Motel during the
preceding twenty-four (24) months;
(vii) the most recent franchise inspection reports prepared by the
franchisor or licensor and with respect to the Property and/or the
Motel;
(viii) an inventory of the Fixtures and Tangible Personal Property,
if any;
(ix) any leases and other documents relating to existing
telephone, computer and other support services with respect to the
Property and/or the Motel; and
(x) any ground or similar type leases with respect to or
associated with the Property and/or the Motel.
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If, for any reason, Purchaser, in its sole discretion, is not satisfied
with any of the foregoing on or before expiration of the Due Diligence
Period, then Purchaser, at its option, upon giving Seller written notice
thereof at any time on or before expiration of the Due Diligence Period, may
elect to terminate this Agreement, in which event the Deposit shall forthwith
be returned to Purchaser, and thereupon, this Agreement shall become null and
void and neither party shall have any further rights and obligations
hereunder. Purchaser's failure to give Seller such notice of termination on
or before the expiration of the Due Diligence Period shall be deemed to be
Purchaser's election to accept this Agreement and close this transaction as
aforesaid. Any and all information delivered to Purchaser by Seller pursuant
to this Agreement shall be confidential and Purchaser shall not disclose the
same to any person or entity other than Purchaser's counsel, accountant,
agents, contractors, representatives and lender consulted in connection with
the acquisition of the Motel; and Purchaser covenants that it shall use its
best efforts to require such persons to also keep the same confidential. In
the event Purchaser causes to be conducted on the Real Property an
environmental assessment (the "Report"), Purchaser shall immediatly deliver
to Seller a copy of the Report upon receipt thereof.
4.2 REVIEW AND INSPECTION.
(a) INSPECTION OF MOTEL. Prior to the close of the Due Diligence
Period, subject to the rights of Manager under the Operating Lease, Seller
shall allow Purchaser and its agents or representatives to enter upon and
inspect the Real Property for such purposes as Purchaser may reasonably
require, provided such inspections do not unreasonably interfere with the
continued operation of the Motel in the ordinary course of business.
Purchaser agrees that the results of any inspections, tests, investigations
and examinations as Purchaser may desire to perform pursuant to the
foregoing shall be treated as confidential, and Purchaser shall not
disclose the same to any person or entity other than Purchaser's counsel,
accountants, agents, contractors, representatives and lenders consulted in
connection with the acquisition of the Motel; Purchaser covenants that it
shall use its best efforts to require such persons to also keep the same
confidential. In the event that the transaction contemplated hereby is not
consummated, any and all reports, financial and operating information
obtained by Purchaser or its representatives from Seller or its
representatives shall be immediately returned to Seller. Purchaser hereby
agrees to indemnify, defend and hold Seller harmless from and against any
and all loss, damage, liability and expense (including reasonable
attorneys' fees and other litigation expense) which Seller may suffer,
sustain or incur arising from property damage or personal injury or claim
of lien against the Property resulting from the activities permitted by
this Section 4.2. The provisions of this Section 4.2 shall survive the
Closing or termination of this Agreement.
(b) MOTEL FRANCHISOR COMMUNICATIONS. Following the execution and
delivery of this Agreement by Seller and the payment of the Deposit by
Purchaser, and prior to the Closing, Purchaser shall have the right to
communicate, both in writing and verbally, with the franchisor of the Motel
upon reasonable prior notice to Seller. Except as otherwise expressly set
forth in Section 5.1 herein, Purchaser acknowledges and
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agrees that Seller has made no representation, warranty or covenant whatso-
ever pertaining to any motel franchises, license agreements or related
matters, it being expressly agreed and understood that Purchaser's
obligation to purchase the Property is not conditioned in any way upon
Seller, Purchaser or any other party breaching any agreement pertaining to
motel franchises or license agreements. Purchaser further acknowledges and
agrees that, prior to Closing, it must obtain (i) the written approval of
Super 8 Motels, Inc. of the transfer of the existing motel franchise agree-
ment from Seller to Purchaser, and (ii) the execution of a new franchise
agreement between Super 8 Motels, Inc. and Purchaser.
4.3 "AS IS" SALE.
(a) Purchaser acknowledges that Purchaser is acquiring the Property
"AS IS, WHERE IS, WITH ALL FAULTS" and that, except as otherwise provided
in Section 5.1 below, no representations, warranties, guaranties, promises,
statements or estimates regarding the Property, its motel franchise
affiliation, its physical condition, past or future income, expenses or
operations, of any nature whatsoever upon which Purchaser is relying,
whether written or oral, express or implied, in fact or in law, have been
made by Seller, any real estate broker, agent, employee, attorney-in-fact
or at law or other person representing or purporting to represent Seller,
or otherwise, and that Purchaser is entering into this Agreement knowing
that Purchaser's decision whether or not to purchase the Property will be
based solely on its own examination, investigation and judgment. Purchaser
hereby acknowledges and agrees that (i) it understands that Seller has not
authorized any real estate broker, agent, employee, attorney-in-fact or at
law or other person to make any representation, statement or agreement on
behalf of Seller in connection with the transactions contemplated hereby;
(ii) except as otherwise provided in Section 5.1 below, Seller has made and
shall make no representations or warranties whatsoever concerning the
information or materials furnished to Purchaser; and (iii) it is aware that
Super 8 Motels, Inc. may deliver to Seller a punchlist of work, which work
is required to be completed at the Property and, if Purchaser acquires the
Property, Purchaser shall be solely responsible for all costs to complete
such punchlist.
(b) EXCEPT AS OTHERWISE PROVIDED IN SECTION 5.1 BELOW, SELLER HAS NOT
MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES (OTHER THAN THOSE SPECIFICALLY SET FORTH HEREIN
OR IN ANY DOCUMENT WHICH MAY BE EXECUTED BY SELLER AND DELIVERED AT
CLOSING) PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT, OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (i) THE VALUE,
NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT
LIMITATION, SUBSURFACE CONDITION OF THE PROPERTY; (ii) THE INCOME TO BE
DERIVED FROM THE PROPERTY; (iii) THE SUITABILITY OF THE PROPERTY FOR ANY
AND ALL ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THERE-
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ON; (iv) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY
LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL
AUTHORITY OR BODY; (v) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (vi)
THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY; (vii) THE MANNER, QUALITY, STATE OF REPAIR
OR LACK OF REPAIR OF THE PROPERTY; OR (viii) ANY OTHER MATTER WITH RESPECT
TO THE PROPERTY. EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR IN SECTION 5.1,
SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY
REPRESENTATIONS REGARDING COMPLIANCE WITH ANY ENVIRONMENTAL LAWS OR LAND
USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS, OR THE EXISTENCE IN
OR ON THE PROPERTY (OR ANY PORTION THEREOF) OF HAZARDOUS MATERIALS.
PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR ITS RELIANCE ON THE
REPRESENTATIONS OF SELLER SET FORTH HEREIN AND SECTION 5.1, THAT HAVING
BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, PURCHASER IS RELYING ON
ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED
OR TO BE PROVIDED BY OR ON BEHALF OF SELLER. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS-WHERE IS"
CONDITION AND BASIS WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED THAT THE
CONSIDERATION PAID FOR THE PURCHASE OF THE PROPERTY REFLECTS THAT ALL OF
THE PROPERTY IS SOLD BY SELLER AND PURCHASED BY PURCHASER SUBJECT TO THE
FOREGOING. IN ADDITION, PURCHASER ACKNOWLEDGES THAT SELLER IS UNDER NO
OBLIGATION TO RESEARCH OR INVESTIGATE ANY MATTER OR CONDITION RELATING TO
THE PROPERTY AND KNOWLEDGE OF ANY MATTER BY SELLER, IF ANY, IS LIMITED
SOLELY TO THE ACTUAL KNOWLEDGE OF SELLER, IF NOT FURTHER LIMITED BY EXPRESS
PROVISIONS OF THIS AGREEMENT.
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY,
PURCHASER HEREBY RELEASES SELLER FROM ANY LIABILITY, CLAIMS, DAMAGES,
PENALTIES, COSTS, FEES, CHARGES, LOSSES, CAUSES OF ACTION, DEMANDS,
EXPENSES OF ANY KIND OR NATURE, STATUTORY OR COMMON LAW, RESULTING FROM THE
PRESENCE, REMOVAL OR OTHER REMEDIATION OF HAZARDOUS MATERIALS, IN, ON,
UNDER OR ABOUT THE PROPERTY OR WHICH HAS MIGRATED FROM ADJACENT LANDS TO
THE PROPERTY OR FROM THE PROPERTY TO ADJACENT LANDS.
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As used in this subparagraph (b) the term "Hazardous Materials" shall
mean and include (A) any "hazardous substance" as now or hereafter defined
in the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et. seq.) ("CERCLA") or any
regulations promulgated under or pursuant to CERCLA; (B) any "hazardous
waste" as now or hereafter defined in the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et. seq.) ("RCRA") or regulations
promulgated under or pursuant to RCRA; (C) any substance regulated by the
Toxic Substances Control Act (15 U.S.C. Section 2601 et. seq.); (D) oil and
petroleum products; (E) asbestos and asbestos containing materials, in any
form, whether friable or non-friable; (F) polychlorinated biphenyls; (G)
radon gas; and (H) any additional substances or materials which are now or
hereafter classified or considered to be hazardous or toxic to human health
or the environment under any Environmental Laws. As used herein,
"Environmental Laws" shall mean and include all laws, ordinances, statutes,
codes, rules, regulations, agreements, judgments, orders, and decrees, now
or hereafter enacted, promulgated, or amended, of the United States, the
states, the counties, the cities, or any other political subdivisions in
which any portion of the Property is located, and any other political
subdivision, agency or instrumentality exercising jurisdiction over the
owner of any portion of the Property, or the use of any portion of the
Property, relating to pollution, the protection or regulation of human
health, natural resources, or the environment, or the emission, discharge,
release or threatened release of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or waste or Hazardous Materials
into the environment (including, without limitation, ambient air, surface
water, ground water or land or soil).
Except as expressly included within the meaning of a Breach (as
hereinafter defined), Purchaser hereby waives, relinquishes and releases
any and all rights, claims and causes of action which Purchaser may have or
may be entitled to assert against Seller under or with respect to the
Property or the condition thereof, including without limitation, any and
all rights, claims and causes of action under or with respect to Title 42
of the United States Code, Section 9601 et seq., or both. Purchaser
expressly understands and acknowledges that it is possible that unknown
losses or claims exist or that present losses may have been underestimated
in amount or severity, and Purchaser explicitly took that into account in
determining the consideration for the execution of this Agreement, and a
portion of said consideration, having been bargained for between the
parties with the knowledge of the possibility of such unknown losses or
claims, was given in exchange for a full accord, satisfaction and discharge
of all such losses or claims.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF SELLER. As of the date Seller and
Purchaser have executed this Agreement, Seller represents and warrants to
Purchaser that:
(a) This Agreement and all other documents executed and delivered, or
to be executed and delivered, by Seller in connection with the transaction
contemplated hereby
11
have been, or at the appropriate time will be, duly executed and
delivered and constitute or, upon such execution and delivery will
constitute, the legal, valid and binding obligations of Seller
enforceable in accordance with their respective terms, subject, however,
to general principles of equity and to the effect of any bankruptcy,
reorganization, moratorium, insolvency or other laws affecting the
rights of creditors generally;
(b) Seller has taken all action required to authorize its execution
of this Agreement and such other documents;
(c) Seller has good and marketable fee simple title to the Property,
which will be subject to the Permitted Exceptions;
(d) No condemnation or other eminent domain proceedings have been
instituted for which Seller has notice thereof or, to best of Seller's
current actual knowledge, threatened against the Property;
(e) To the best of Seller's current actual knowledge, (i) all laws,
ordinances, rules and regulations of any government, or any agency, body or
subdivision thereof, relating to the Property, have been mutually complied
with, (ii) the present operation of the Property is in substantial
compliance with all such ordinances, rules and regulations, and (iii) the
present occupation of the Property is in accordance with certificates of
occupancy and other permits and licenses issued or required by appropriate
governmental authorities;
(f) All items furnished to Seller in accordance with Section 4.1 of
this Agreement are, to the best of Seller's knowledge, in all material
respects, accurate, complete, and true as of the date furnished and will be
as of the Closing Date;
(g) Seller has received no written notice of any threatened, and
there currently is no pending, litigation which involves or affects the
Property, except to the extent covered by insurance maintained by Seller or
on behalf of Seller;
(h) Other than as set forth herein, or disclosed to Purchaser by
Seller, there are and will be no material agreements at Closing which
Purchaser will be required to assume with respect to the operation of the
Property. The term "material agreements" for the purposes of this
Section 5.1 shall mean any agreements requiring an annual expenditure by
Seller in excess of $10,000.00, or which are for a term in excess of one
(1) year;
(i) Seller has no employees at the Property;
(j) Seller has granted no rights of first refusal or options to
purchase the Property;
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(k) To the best of Seller's current actual knowledge, the franchise
and/or licensing agreements with respect to the Super 8 Motels, Inc. are in
full force and effect and Seller is not in default thereunder;
(l) At closing, there shall be at least thirty (30) days of normal
and/or customary operating supplies located at the Property; and
(m) At closing, there shall be 2 1/2 turns of linens at the
Property.
Seller's representations and warranties contained in this Section
5.1 shall survive the Closing for a period of twelve (12) months from
the date of Closing ("Survival Period"). In the event that any breach
of representation or warranty ("Breach") of Seller is discovered by
Purchaser after Closing and Purchaser notifies Seller of such Breach
within the Survival Period, Seller shall have a reasonable period of
time, not to exceed thirty (30) days, to use all due diligence to cure
such Breach and, upon Seller's failure to cure same, Seller shall be
liable for, and Seller hereby indemnifies and holds Purchaser harmless
against, all claims, losses, damages, liabilities, costs, expenses and
charges which Purchaser may actually incur as a direct result of any
such Breach. In order to retain rights pursuant to this grammatical
paragraph with respect to a Breach, Purchaser shall file a written claim
with Seller within the Survival Period or any claim with respect to such
Breach shall be deemed waived. If Seller does not cure the Breach, any
legal action relating to such claim must then be filed with the
appropriate court within six (6) months after the Survival Period. If a
legal action is not so filed, Purchaser shall be deemed to have waived
any legal action relating to the subject claim. If Purchaser or any of
its officers, agents or employees discover, are informed of or acquire
actual knowledge of any Breach prior to the Closing Date, Purchaser
shall notify Seller thereof. Purchaser shall have no right or remedy
under this grammatical paragraph with respect to, and shall be deemed to
have waived, any Breach of Seller if Purchaser had knowledge of the
Breach prior to the Closing Date and Purchaser failed to notify Seller
in writing prior to such date. For purposes of this Section 5.1,
phrases "to the best of Seller's knowledge" and "to the best of Seller's
current knowledge" mean the knowledge, without due inquiry, of Xxxxxx X.
Xxxxxx and Xxxxxxxx Xxxxxx of Capital.
5.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby represents and warrants to and covenants with Seller that this
Agreement and all other documents executed and delivered, or to be
executed and delivered, by Purchaser in connection with the transaction
contemplated hereby have been, or at the appropriate time will be, duly
executed and delivered and constitute or, upon such execution and
delivery will constitute, the legal, valid and binding obligations of
Purchaser enforceable in accordance with their respective terms and
provisions, subject, however, to general principles of equity and to the
effect of any bankruptcy, reorganization, moratorium, insolvency or
other laws affecting the rights of creditors generally, that Purchaser
has taken all action required to authorize its execution of this
Agreement and such other documents to acquire the Property.
5.3 DURATION OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in Sections 5.1 and 5.2 shall
be deemed restated on and as of the Closing Date and shall not, except
as otherwise expressly provided herein, survive the Closing.
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ARTICLE 6
CLOSING MATTERS
6.1 CLOSING. The closing of the transaction contemplated hereby
(the "Closing") shall take place at the offices of the Title Company in
Chicago, Illinois, on February 17, 1997 (the "Closing Date"). So long
as Purchaser is not in default hereunder, Purchaser shall have the right
to extend the Closing Date to March 19, 1997, by giving written notice
thereof to Seller upon the expiration of the Due Diligence Period and,
at that time, depositing an additional Twenty-Five Thousand Dollars
($25,000.00) into the Deposit escrow.
6.2 CLOSING ESCROW. The transaction contemplated hereby shall be
closed by means of an escrow, with the concurrent delivery of the
documents of title, transfer of interests, delivery of the Title Policy
and payment of the Purchase Price. Seller and Purchaser shall each pay
fifty percent (50%) of any charges of the Title Company for such escrow
closing. This Agreement shall not be merged into the Escrow
Instructions, but the Escrow Instructions shall be deemed auxiliary to
this Agreement, and, as between the parties hereto, the provisions of
this Agreement shall govern and control.
6.3 TITLE COMMITMENT. Seller shall deliver to Purchaser the
following, at Seller's expense:
(a) TITLE COMMITMENT. No later than thirty (30) days following the
date hereof, Seller shall deliver to Purchaser a title commitment for a
ALTA Owner's Title Insurance Policy (the "Title Commitment"), issued by the
Title Company, showing Purchaser as the proposed insured and Seller as the
current holder of fee simple title to the real property described on
Exhibit A hereto, subject to the standard printed exceptions. The amount
of coverage provided by the Title Commitment shall be equal to the Purchase
Price. If Purchaser objects to any exceptions to title shown in the Title
Commitment or the Survey (as hereinafter defined), other than Permitted
Exceptions (which Purchaser, by execution of this Agreement, has agreed to
accept) and mortgage liens (which Seller shall release on or before the
Closing Date), Purchaser shall give Seller written notice of such objection
within five (5) business days following the date of Purchaser's receipt of
both the Title Commitment and Survey. Any exceptions to title shown on the
Title Commitment or the Survey to which Purchaser does not so object shall
become additional "Permitted Exceptions" for purposes of this Agreement.
If the Title Commitment or Survey disclose exceptions to title to which
Purchaser has so objected, Seller shall, at its option, have thirty (30)
days from the date of Purchaser's notice of objection to have such
exceptions removed from the Title Commitment or Survey (or to have the
Title Company commit to insure over such unpermitted exceptions) and
provide evidence thereof to Purchaser, and the Closing Date shall be
delayed if necessary to allow for said thirty (30) day period. If Seller
fails to have such unpermitted exceptions removed (or insured over to
Purchaser's reasonable satisfaction), Purchaser may elect, as its sole
remedy, by notice to Seller given within five (5) days following the
earlier to occur of: (i) the date Seller informs Purchaser that such
unpermitted exceptions will not be removed or insured over; or (ii) the
expiration of said thirty (30) day period, to (a) terminate this Agreement
(in which event the Deposit shall be forthwith returned to Purchaser), or
(b) accept title subject to such unpermitted exceptions and close the
transactions contemplated hereby.
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6.4 SURVEY. Seller shall obtain and deliver to Purchaser a current
survey (the "Survey") of the Property within thirty (30) days following the
date hereof. The cost of obtaining the Survey shall be borne solely by
Seller. The Survey shall be in form sufficient to permit the Title Company
to delete the standard survey exception, except as to shortages in area, and
be certified to Seller, Purchaser and Title Company.
ARTICLE 7
CLOSING DELIVERIES; POSSESSION
7.1 SELLER'S DELIVERIES. At Closing, Seller shall deliver, or cause
to be delivered, to Purchaser the following, each of which shall be in form
and substance reasonably acceptable to counsel for Purchaser, and none of
which shall contain any representations or warranties, express or implied by
Seller except to the extent specifically provided hereinbelow:
(a) Recordable special warranty deed from Seller to Purchaser
conveying the Real Property, subject only to the Permitted Exceptions;
(b) A Xxxx of Sale transferring to Purchaser without recourse all of
Seller's right, title and interest in and to the Fixtures and Tangible
Personal Property, Consumables and Operating Equipment;
(c) An assignment conveying and transferring to Purchaser without
recourse all of Seller's right, title and interest in, to and under any and
all Bookings, Motel Contracts and Permits (to the extent assignable, and
with the specific exception of the Motel franchise agreement);
(d) An ALTA Owner's Title Insurance Policy (the "Title Policy"),
issued in favor of Purchaser by the Title Company, in the amount of the
Purchase Price, insuring Purchaser's fee simple title to the Real Property,
subject only to the Permitted Exceptions and otherwise in conformity with
the Title Commitment;
(e) The FIRPTA Certificate;
(f) A counterpart of the Preliminary Closing Statement, executed by
Seller;
(g) A copy of a letter addressed to and accepted by the Manager
terminating the Operating Lease as to the Motel as of the Closing Date;
(h) IRS Form 1099 and any State, County or local transfer
declarations required by any governmental authority having jurisdiction
over the Property; and
(i) A list certified by the Manager of all Continuing Obligations and
Motel Contracts as of the Closing Date.
Purchaser acknowledges that all documents executed and delivered by
Seller at Closing will contain the exculpation provisions set forth in
Article 16 of this Agreement.
15
7.2 PURCHASER'S DELIVERIES. At Closing, Purchaser shall cause to be
delivered to Seller the Purchase Price, together with the following, each of
which shall be in form and substance reasonably acceptable to Seller and its
counsel:
(a) An assumption of all obligations of Seller arising from and
after the Closing Date under the items assigned to Purchaser pursuant to
Section 7.1(c) hereof;
(b) A counterpart of the Preliminary Closing Statement, executed by
Purchaser; and
(c) A fully executed Super 8 Motels, Inc. franchise agreement for
the Property between Super 8 Motels, Inc. and Purchaser.
7.3 CONCURRENT TRANSACTIONS. All documents or other deliveries
required to be delivered by Purchaser or Seller at Closing, and all
transactions required to be consummated concurrently with Closing, shall be
deemed to have been delivered and to have been consummated simultaneously
with all other transactions and all other deliveries, and no delivery shall
be deemed to have been made, and no transaction shall be deemed to have been
consummated, until all deliveries required to be made by Purchaser and Seller
shall have been made, and all transactions contemplated hereby shall have
been consummated, except to the extent that such delivery or transaction may
be waived by the party to be benefited thereby.
7.4 FURTHER ASSURANCES. Seller and Purchaser will, at the Closing, or
at any time or from time to time thereafter, upon request of either party,
execute such additional instruments, documents or certificates as either
party or the Title Company deems reasonably necessary, including, without
limitation, State, County, or local transfer declarations, in order to
convey, assign and transfer the Property to Purchaser and otherwise to carry
out this Agreement.
7.5 POSSESSION. Possession of the Property shall be delivered to
Purchaser at Closing, subject to the Permitted Exceptions.
ARTICLE 8
ADJUSTMENTS AND PRORATIONS: CLOSING STATEMENTS
8.1 ADJUSTMENTS AND PRORATIONS. The following matters and items shall
be apportioned between the parties hereto or, where appropriate, credited in
total to a particular party, as of the Cut-off Time:
(a) RECEIVABLES; TRADE ACCOUNTS PAYABLE; CONTINUING OBLIGATIONS.
Receivables and trade accounts payable shall be identified as of the
Cut-off Time. Seller shall retain all Receivables. Following the Closing,
Seller shall have the right to collect all Receivables, and if Purchaser
shall receive any payment on account of any Receivables at any time
following the Closing, Purchaser shall promptly remit such payment to
Seller. Notwithstanding the foregoing, Seller shall receive a credit for
guest ledger amounts accrued as of the Cut-off Time, including the amount
of guest room rentals for the full night which begins on the day
immediately preceding the Closing Date. Purchaser will honor, for its
account, the terms and rates of all pre-closing
16
reservations confirmed fordates after the Closing Date. Any pre-closing
down payments on such confirmed reservations and other advance payments
made with respect to Bookings for Motel facilities for dates on or
after the Closing Date will be credited to Purchaser at the Closing.
Seller shall pay all trade accounts payable due as of the Cut-off Time
for goods and services received prior to the Cut-off Time. Purchaser
may either refuse delivery of or accept and pay for goods and services
received following the Cut-off Time. Purchaser shall establish its own
new trade accounts with vendors to be effective from and after the
Cut-off Time. All Continuing Obligations shall be identified as of the
Cut-Off Time, and Purchaser shall receive a credit against the Purchase
Price in an amount equal to the projected cost actually to be incurred
by Purchaser in fulfilling such Continuing Obligations (subject to a
discount reasonably determined by Seller and Purchaser to reflect the
degree of likelihood that Purchaser will be required to satisfy such
Continuing Obligations).
(b) TAXES AND ASSESSMENTS. All Impositions, water and sewer rents,
rates and charges, vault charges, canopy permit fees, and other municipal
permit fees shall be prorated on an accrual basis as of the Cut-off Time.
If the amount of any such item is not ascertainable on the Closing Date,
the credit therefor shall be based on the most recent available xxxx and
shall be reprorated upon receipt of the actual tax xxxx. In the case of
real and personal property AD VALOREM taxes, Seller shall pay all such
taxes assessed by the respective jurisdictions for all fiscal periods prior
to the fiscal period in which the closing occurs; such taxes assessed for
the fiscal period in which the closing occurs shall be prorated as of the
Cut-off Time. Seller shall pay any sales or transfer taxes or fees
(including all documentary transfer taxes) resulting from the sale of the
Property pursuant to this Agreement.
(c) UTILITY CONTRACTS. Amounts payable under telephone and telex
contracts and contracts for the supply of heat, steam, electric power, gas,
lighting and any other utility service shall be prorated on an accrual
basis as of the Cut-off Time, and Seller shall receive a credit for each
deposit, if any, made by or on behalf of Seller as security under any such
public service contracts provided that the same is transferable and remains
on deposit for the benefit of Purchaser. Where possible, cut-off readings
will be secured for all utilities on the Closing Date.
(d) MOTEL CONTRACTS. Any amounts prepaid or payable under any Motel
Contracts shall be prorated on an accrual basis as of the Cut-off Time.
(e) MANAGEMENT FEES AND REIMBURSEMENTS. Seller shall pay all
management fees and reimbursements (if any) due the Manager under the
Operating Lease through the Closing Date.
(f) VENDING MACHINE RECEIPTS. All receipts in vending machines at
the Motel at the Cut-off Time shall become the property of Purchaser at
Closing, and Seller shall receive a ratable credit therefor.
(g) CONSUMABLES. All Consumables at the Motel at the Cut-off Time
shall become the property of Purchaser at Closing, and Seller shall receive
a ratable credit therefor.
17
(h) OTHER. Such other items (except as provided to the contrary in
this Agreement) which are normally prorated and adjusted in the sale of a
motel shall be prorated and adjusted as of the Cut-off Time, including all
xxxxx cash funds transferred to Purchaser, for which Seller shall receive a
credit, and all deposits and prepaid items which inure to the benefit of
the Purchaser, for which Seller shall also receive a credit. Purchaser
specifically understands that Purchaser shall not be entitled to any cash
funds of Seller other than said xxxxx cash funds, and that Seller shall
receive a proration credit with respect to said xxxxx cash funds as
provided above.
8.2 CLOSING STATEMENTS. Each party shall cause its designated
representatives to enter the Motel at reasonable times and without
unreasonably interfering with operations, both before and after the
Closing Date, for the purpose of making such inventories, examinations
and audits of the Motel, and of the books and records of the Motel, as
they deem necessary to make the adjustments and prorations required
under this Article 8, or under any other provisions of this Agreement.
Based upon such inventories, examinations and audits, at the Closing,
the representatives of the parties shall jointly prepare and deliver to
each party a Preliminary Closing Statement which shall show the net
amount due either to Seller or Purchaser as a result thereof, and such
net amount will be added to or subtracted from the cash balance of the
Purchase Price to be paid to Seller pursuant to Section 3.3 hereof. The
closing statement shall reflect that Purchaser shall receive a credit
relating to maintenance items in the amount of $46,000.00. Within sixty
(60) days following the Closing Date, Seller and Purchaser shall agree
on a Final Closing Statement setting forth the final determination of
all items to be included on the Closing Statements. The net amount due
Seller or Purchaser, if any, by reason of adjustments in the Preliminary
Closing Statement as shown in the Final Closing Statement, shall be paid
in cash by the party obligated therefor within ten (10) days following
the date of delivery of the Final Closing Statement to the parties. In
the event the representatives of the parties are unable to reach
agreement with respect to the Closing Statements, the parties shall
submit their dispute to a firm of independent certified public
accountants of recognized standing in the hotel industry (the
"Accountants"), and the determination of such firm shall be conclusive
on both parties hereto.
ARTICLE 9
CONDITIONS TO SELLER'S OBLIGATIONS
9.1 CONDITIONS. Seller's obligation to close hereunder shall be
subject to the satisfaction of each of the following conditions, any one
or more of which may be waived by Seller in writing:
(a) PURCHASER'S COMPLIANCE WITH OBLIGATIONS. Purchaser shall have
complied in all material respects with all obligations required by this
Agreement to be complied with by Purchaser as of the Closing Date.
(b) TRUTH OF PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser contained in Section 5.2 shall
have been true in all material respects when made, and shall be true in all
material respects on the Closing Date.
18
9.2 FAILURE OF CONDITIONS. If any condition precedent to Closing
of Purchaser as set forth in Section 9.1 has not been fulfilled and
satisfied as of the Closing Date, provided that Seller is not itself in
default, Seller shall have the right, as its sole and exclusive remedy
in lieu of any other remedies to which Seller might otherwise be
entitled at law or in equity, to terminate this Agreement and to pursue
the rights and remedies available to Seller under Section 3.2.
ARTICLE 10
CONDITIONS TO PURCHASER'S OBLIGATIONS
10.1 CONDITIONS. Purchaser's obligation to close hereunder shall
be subject to the satisfaction of each of the following conditions, any
one or more of which may be waived by Purchaser in writing:
(a) SELLER'S COMPLIANCE WITH OBLIGATIONS. Seller shall have complied
in all material respects with all obligations required by this Agreement to
be complied with by Seller as of the Closing Date.
(b) TRUTH OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in Section 5.1 shall
have been true in all material respects when made, and shall be true in all
material respects on the Closing Date.
(c) SELLER'S COMPLIANCE WITH FRANCHISE AGREEMENT. Seller shall have
complied in all material respects with all obligations with its franchisor
so as not to inhibit Purchaser's ability to obtain a franchise with such
franchisor.
10.2 FAILURE OF CONDITIONS. If any condition precedent to Closing of
Seller as set forth in Section 10.1 has not been fulfilled and satisfied as of
the Closing Date, provided that Purchaser is not itself in default, Purchaser
shall have the right, as its sole and exclusive remedy, either (a) to terminate
this Agreement, in which event the provisions of Section 3.2 shall apply, or
(b) to seek specific performance of this Agreement. Notwithstanding the
foregoing, if the failure of such condition precedent is due to matters outside
Seller's control, Purchaser agrees that its sole remedy shall be either (i) to
terminate this Agreement and receive a refund of the Deposit, whereupon the
parties shall have no further obligation or liability to each other hereunder,
or (ii) to close the transactions contemplated hereby notwithstanding the
failure of such conditions precedent, in which event such failure shall be
deemed to have been waived by Purchaser.
ARTICLE 11
ACTIONS AND OPERATIONS PENDING CLOSING
11.1 ACTIONS AND OPERATIONS PENDING CLOSING. Seller agrees that
from the date hereof through the Closing Date:
(a) The Motel will continue to be operated, managed and maintained
substantially in accordance with Seller's present standards.
(b) Seller will maintain in effect all policies of casualty and
liability insurance, or similar policies of insurance, with the same limits
of coverage which it now carries with respect to the Motel.
19
(c) Seller will not dispose of any of the Property, except for
personal property, fixtures and Consumables, as the case may be, disposed
of in the ordinary course of business.
(d) Seller will not, after the expiration of the Due Diligence
period, enter into any Motel Contracts without the prior written approval
of Purchaser.
(e) Seller will pay all expenses, accrued or otherwise, and of any
type or kind whatsoever, through the Closing Date with regard to the
Property and/or the Motel, subject to prorations at Closing;
(f) Prior to or at Closing, Seller will cancel or terminate the
agreement (operating lease) with the Manager; and
(g) Seller will not, during the pending of this Agreement, place any
new encumbrances on the Property or modify any franchise or licensing
agreements or other documents material to the operation of the Property as
a Super 8 Motel, without prior written consent of Purchaser.
ARTICLE 12
CASUALTIES AND TAKINGS
12.1 CASUALTIES. In the event that, subsequent to the date
hereof and prior to Closing, any portion of the Real Property shall be
damaged or destroyed by fire or other casualty in excess of One Hundred
Thousand Dollars ($100,000.00), Purchaser may, at its option, either (a)
terminate this Agreement by written notice thereof to Seller within ten
(10) days after Seller notifies Purchaser of the casualty, at which xxxx
Xxxxxx shall direct the Escrowee to promptly return the Deposit to
Purchaser or (b) proceed to close the transaction described herein
pursuant to the terms hereof, in which event Seller shall, at
Purchaser's option, deliver to Purchaser at Closing any insurance
proceeds received by Seller attributable to the Property from such
casualty or allow Purchaser at Closing a credit against the Purchase
Price in the amount of such agreed upon insurance proceeds. In the
event that such damage is an amount less than One Hundred Thousand
Dollars ($100,000.00), Purchaser shall proceed to closing as
contemplated herein provided that Purchaser may, at its option, (i) pay
the full balance of the Purchase Price, in which event Purchaser shall
be entitled to any insurance proceeds received attributable to the
Property from such casualty or (ii) reduce the Purchase Price in an
amount equal to the fair market value of the cost to repair the damages
(as mutually agreed upon by Seller and Purchaser), in which event Seller
shall be entitled to any insurance proceeds attributable to the Property
from such casualty.
12.2 TAKINGS. In the event of the institution of any proceeding for the
taking or condemnation of a substantial portion of the Real Property prior to
Closing, Purchaser may, at its option, either (a) terminate this Agreement by
written notice thereof to Seller within ten (10) days after Seller notifies
Purchaser of the proceedings for condemnation or taking, at which xxxx Xxxxxx
shall direct the Escrowee to promptly return the Deposit to Purchaser or (b)
proceed to close the transaction described herein pursuant to the terms hereof,
in which event Seller shall, at Purchaser's option, deliver to Purchaser at
Closing any proceeds received by Seller attributable to the Property from such
condemnation or eminent domain proceeding or allow
20
Purchaser at Closing a credit against the Purchase Price in the amount
of such condemnation or taking. As used in this paragraph, the taking
of a "substantial portion" of the Property shall mean (i) a taking in
excess of Fifty Thousand Dollars ($50,000.00) of the fair market value
of the Property or (ii) a taking which materially affects the value of
the Property as used for the operation of a motel.
ARTICLE 13
EMPLOYEE MATTERS
13.1 EMPLOYEES. Purchaser shall have the continuing right to
review all employment records and files of, and to interview, employees
working at the Motel. Purchaser acknowledges that (i) all employees
working at or in connection with the Motel are employees of Manager,
(ii) prior to the consummation of the Closing, Purchaser shall have no
rights whatsoever in connection with the hiring or discharge of said
employees, or in connection with any other matters relating to said
employees, and (iii) Manager shall have the right to retain, discharge
or transfer any or all of said employees at any time, and Seller makes
no representation to Purchaser as to whether any of said employees will
or will not be available for hire by Purchaser.
ARTICLE 14
NOTICES
14.1 NOTICES. Except as otherwise provided in this Agreement,
all notices, demands, requests, consents, approvals and other
communications (herein collectively called "Notices") required or
permitted to be given hereunder shall be in writing and shall be
personally delivered or sent by United States registered or certified
mail, postage prepaid, return receipt requested, or by overnight express
courier, postage prepaid, addressed to the party to be so notified as
follows:
If intended for Seller, to: Capital Associates Realty Advisors Corp.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx
With a copy to: Xxxxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
If intended for Purchaser to: Host Funding, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
XxXxxxx, Xxxxxxxxxx 00000
Attn: Chap Riedel
Notices mailed by registered or certified mail shall be deemed
received by the addressee three (3) business days after mailing thereof.
Notices personally delivered shall be deemed
21
received by the addressee when delivered. Notices transmitted by
overnight express courier shall be deemed received by the addressee on
the next business day following the date of transmittal thereof. Either
party may at any time change the address for notice to such party by
mailing a Notice as aforesaid.
ARTICLE 15
ADDITIONAL COVENANTS
15.1 ADDITIONAL COVENANTS. In addition, the parties agree as
follows:
(a) EXPENSES. Seller shall be responsible for the payment of all
title insurance premiums and charges for the issuance of the Title Policy,
fifty percent (50%) of all escrow fees, all documentary transfer taxes and
the entire cost of the survey. Purchaser shall be responsible for the
payment of fifty percent (50%) of all escrow fees, all recording charges
and all additional title coverages and endorsements. The fees and expenses
of Seller's designated representatives, accountants and attorneys shall be
borne by Seller, and the fees and expenses of Purchaser's designated
representatives, accountants and attorneys shall be borne by Purchaser.
(b) BROKERAGE. Seller hereby represents and warrants to Purchaser
that Seller has not dealt with any broker or finder with respect to the
transaction contemplated hereby, other than Hotel Partners, Inc.
("Broker"). Seller agrees to pay any and all brokerage commissions to
which Broker shall be entitled in connection with this transaction and
agrees to indemnify Purchaser for any claim for brokerage commission or
finder's fee in connection with this transaction asserted by Broker.
Seller and Purchaser each represent and warrant to the other that it has
not authorized any broker, agent or finder to act on its behalf (other than
the Broker), nor does it have any knowledge of any other broker, agent or
finder purporting to act on its behalf in respect of this transaction, and
Seller and Purchaser each hereby covenant and agree to indemnify, defend
and hold harmless the other from and against any cost, expense, claim,
liability or damage (including, without limitation, reasonable attorneys'
fees and court costs) resulting from any breach of the representation and
warranty contained herein.
(c) BOOKS AND RECORDS. The transfer of the Property contemplated
hereby includes the books and records of Seller pertaining strictly to the
business of the Motel. Purchaser covenants and agrees that such books and
records will remain in the Motel or at Purchaser's office for examination
and audit by Seller and its agents after the Closing as provided in this
subsection (c). To the extent said books and records are located in a
centralized location, such books and records will be delivered to Purchaser
at the Closing. Books and records not pertaining strictly to the business
of the Motel may be removed by Seller within a reasonable time after the
Closing Date. Purchaser agrees to preserve all books and records, files
and correspondence, and not to destroy or dispose of the same, for at least
five (5) years following the Closing Date. Purchaser agrees to provide
Seller and its representatives access to such books, records, files and
correspondence at all reasonable times.
22
(d) PUBLICITY. All notice to third parties and all other publicity
concerning the transactions contemplated hereby shall be jointly planned
and coordinated by and between Purchaser and Seller. Neither of the
parties shall act unilaterally in this regard without the prior written
approval of the other; however, such approval shall not be unreasonably
withheld or delayed.
(e) ASSIGNMENT. Notwithstanding the foregoing, except for an
assignment of this Agreement to CrossHost, Inc., a Maryland corporation,
which is a wholly owned subsidiary of Purchaser, or to such other assignee
which is affiliated with Purchaser and is reasonably acceptable to Seller,
neither Seller nor Purchaser shall have the right to assign its interest in
this Agreement without the prior written consent of the other party, which
consent may be given or withheld in the sole discretion of the party whose
consent is requested; provided, however, the party assigning its interest
in this Agreement shall remain liable for any and all of its obligations
hereunder.
(f) LITIGATION COSTS. In the event of any action or proceeding at
law or in equity between Seller and Purchaser to enforce any provision of
this Agreement or to protect or establish any right or remedy of either
party hereunder, the unsuccessful party to such litigation shall pay to the
prevailing party all costs and expenses, including reasonable attorneys'
fees incurred therein by such prevailing party (collectively, "Litigation
Costs"), and if such prevailing party shall recover judgment in any such
action or proceeding, such Litigation Costs shall be included in and as a
part of such judgment.
(g) INTEGRATION/CHOICE OF LAW. This Agreement (including all
exhibits hereto) contains the entire agreement between the parties with
respect to the subject matter hereof, supersedes all prior understandings,
if any, with respect thereto and may not be amended, supplemented or
terminated, nor shall any obligation hereunder or condition hereof be
deemed waived, except by a written instrument to such effect signed by the
party to be charged or as otherwise expressly provided in this Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona.
(h) EXECUTION. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original but all of which,
taken together, shall constitute but one and the same instrument. This
Agreement may be executed and delivered by facsimile transmission of
signature pages, following which executed original counterparts shall be
exchanged in the ordinary course of business.
(i) REAL ESTATE COMMITTEE APPROVAL. The execution and delivery of
this Agreement by Seller and the obligation of Seller to close the
transaction contemplated hereby is subject to review and approval of this
Agreement and of the transaction contemplated hereby by Seller's real
estate investment committee. If Seller's real estate investment committee
does not approve this transaction, Seller shall deliver written notice to
Purchaser of such committee's disapproval decision prior to execution of
this Agreement by Seller.
23
(j) EXECUTIVE COMMITTEE APPROVAL. Purchaser hereby acknowledges that
its Executive Committee, which is composed of a majority of the Board of
Directors, has approved this Agreement and the transaction contemplated
hereby.
ARTICLE 16
EXCULPATION
16.1 EXCULPATION. Except to the extent of proceeds received by
Seller as a result of the closing of this transaction and except for a
period of eighteen (18) months after the closing of this transaction,
neither Seller nor any present or future officer, director, employee,
trustee, member or agent of Seller shall have any personal liability,
directly or indirectly, and recourse shall not be had against Seller or
any such officer, director, employee, trustee, member or agent, under or
in connection with this Agreement or any other document or instrument
heretofore or hereafter executed in connection with same. Except as
otherwise expressly provided in this Section 16.1, Purchaser hereby
waives and releases any and all such personal liability and recourse.
Except as otherwise expressly provided in this Section 16.1, Purchaser
and its successors and assigns and all other persons claiming by,
through or under Purchaser shall look solely to Seller' interest in the
Property with respect to any claim against Seller arising under or in
connection with this Agreement or any other document or instrument. The
limitations of liability provided in this Section are in addition to,
and not in limitation of, any limitations on liability otherwise set
forth herein or applicable by law or in any other contract, agreement or
instrument. All documents executed by Seller in connection with this
Agreement shall contain this provision and the provision in Section 16.2.
16.2 AGENCY. Capital is acting solely as the duly authorized
agent for Seller in connection with this Agreement. All of the terms,
provisions, stipulations, covenants and conditions to be performed by
Seller are undertaken solely as said agent and not personally or
individually by Capital. No personal liability shall be asserted or
enforceable against Capital or any of its employees, officers,
directors, shareholders or agents by reason of any of the terms,
provisions, stipulations, covenants, conditions and statements contained
in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed, all as of the day and year first above written.
SELLER:
TEACHERS' RETIREMENT SYSTEM OF
THE STATE OF ILLINOIS
By: CAPITAL ASSOCIATES REALTY ADVISORS CORP.,
its Investment Manager
By:
----------------------------------
Xxxxxx X. Xxxxxx
Executive Vice President
24
PURCHASER:
HOST FUNDING INC.,
a Maryland Corporation
By:
-----------------------------------
Name:
------------------------------
Its:
------------------------------
25
EXHIBIT A
LEGAL DESCRIPTION
COUNTY OF COCONINO
STATE OF ARIZONA
PROPERTY: Flagstaff Super 8 Motel
Flagstaff, Arizona
A-1
EXHIBIT B
PERMITTED EXCEPTIONS
Flagstaff Super 8 Motel
Flagstaff, Arizona
PERMITTED ENCUMBRANCES
1. Rights or claims of parties in possession not shown by public records.
2. Easements, or claims of easements, not shown by the public records.
3. Encroachments, overlaps, boundary line disputes or other matters which
would be disclosed by an accurate survey or inspection of the premises.
4. Any lien, or right to a lien, for services, labor, or material heretofore
or hereafter furnished, imposed by law and not shown by the public records.
5. Taxes or special assessments which are not shown as existing liens by the
public records.
6. Real estate taxes which have become a lien against the Real Estate but
which are not yet due and payable.
7. Any encumbrances to title shown on title commitment dated November 7, 1996
and issued by Near North National Title Corporation, as agent for First
American Title Insurance Company and title exceptions caused by and/or
resulting from the acts of Purchaser.
8. Acts of Purchaser or any contractor, agent, representative or employee of
Purchaser or those acting under them.
B-1
EXHIBIT C
FIRPTA CERTIFICATE
TO: Host Funding, Inc.
("Transferee")
Section 1445 of the Internal Revenue Code ("FIRPTA") provides that a
transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. TEACHERS' RETIREMENT SYSTEM OF THE STATE OF
ILLINOIS, a Delaware limited partnership (the "Transferor"), hereby certifies
the following to Transferee:
1. The Transferor is not a foreign person as that term is defined in
the Internal Revenue Code and Income Tax Regulations;
2. The Transferor's U.S. employer identification number is 37-131436;
and
3. The Transferor's office address is: c/o Capital Associates Realty
Advisors Corp., 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000-0000.
The undersigned understands that this certification may be disclosed to
the Internal Revenue Service by Transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury the undersigned declares that it has examined
this certification and to the best of its knowledge and belief the
information contained herein is true, correct and complete, and the
undersigned further declares that it has the requisite authority to sign this
document.
Further, the undersigned hereby agrees to indemnify and hold harmless
Transferee, Transferee's agents and the agents of the undersigned from and
against any and all loss, liability, costs, damages, claims or causes of
action which may arise or be incurred by Transferee, Transferee's agents or
the agents of the undersigned by reason of any failure of any certification
made herein to be true and correct in all respects or by reason of any
failure to withhold any amount required under FIRPTA, as a result of the
transfer.
_______________, 1996
TEACHERS' RETIREMENT SYSTEM OF THE
STATE OF ILLINOIS
By: CAPITAL ASSOCIATES REALTY ADVISORS CORP.,
its Investment Manager
By:
--------------------------------------
Xxxxxx X. Xxxxxx
Executive Vice President
C-1
