Exhibit 10.2
HOTEL PURCHASE AGREEMENT
BY AND BETWEEN
HWB 2507 KALAKAUA, LLC
AND
XXXXXXX ENTERTAINMENT CO.
DATED AS OF:
APRIL 6, 2005
HOTEL PURCHASE AGREEMENT
_________________
This HOTEL PURCHASE AGREEMENT (this "AGREEMENT") is made as of April
6, 2005 between HWB 2507 KALAKAUA, LLC, a Delaware limited liability company
("SELLER") and XXXXXXX ENTERTAINMENT CO. a Delaware corporation ("BUYER").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of
which are hereby acknowledged, Seller and Buyer agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the meanings given to them below.
"ALTA SURVEY" means the survey of the Land and Improvements
described in the Title Report, as that survey may be updated pursuant to
Section 10.2(e).
"ASSIGNMENT AND ASSUMPTION" shall have the meaning given such term
in Section 8.3(b).
"ASSIGNMENT OF LEASE" shall have the meaning given such term in
Section 8.3(a).
"ASSUMED LIABILITIES" shall have the meaning given such term in
Section 3.3(a).
"BOOKING" means a contract or reservation for the use of guest
rooms, banquet facilities or meeting rooms in the Hotel other than single
or group reservations of less than fifty (50) rooms on any single night.
"BUYER'S CONDITIONS" shall have the meaning given such term in
Section 10.2.
"BUYER'S RELEASE DATE" means the date upon which Buyer's Specific
Contingency (hereinafter defined) is extinguished, determined at the sole
discretion of Buyer.
"BUYER'S SPECIFIC CONTINGENCY" is approval of purchase by Buyer's
Board of Directors at a meeting currently scheduled on or about May 5,
2005.
"CLOSING" means the completion of the exchanges set forth in
Section 8.
"CLOSING DATE" means the date on which Closing occurs.
"CLOSING STATEMENT" means the closing statement required pursuant
to Section 9.3.
"CONSUMABLES" means all food and beverages in closed boxes;
engineering, maintenance and housekeeping supplies, including soap and
cleaning materials, fuel, and materials in closed boxes; stationery and
printing items and supplies in closed boxes; and other supplies of all
kinds in closed boxes, all of which are unused or held in reserve storage
for future use in connection with the maintenance and operation of the
Hotel. The term "Consumables" does not include, however, Operating
Equipment, Fixtures and Tangible Personal Property or items of personal
property owned by guests or employees or other persons furnishing food or
services to the Hotel.
"CUTOFF TIME" means 12:01 a.m. on the Closing Date, or as may be
agreed as to a specific category of adjustment.
"DEPOSIT" means the deposit made by Buyer pursuant to Section 3.1
as such deposit may be increased pursuant to Section 8.2.
"EMPLOYMENT AGREEMENTS" means all agreements affecting the Hotel
or the Hotel Employees, including pension, profit sharing, employee benefit
and similar plans, if any, and all written employment and consulting
contracts with regard to any Hotel Employee.
"ESCROW AGENT" means the Title Company hereinafter defined.
"EXCLUDED PERMITS" means those Permits which, under applicable
law, are nontransferable and such other Permits to be designated as
Excluded Permits on Schedule 4.3C.
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"FINANCIAL STATEMENTS" mean the balance sheet and profit and loss
statements for the Hotel as of February 28, 2005, together with supporting
documentation, all of which are included in the Offering Schedules.
"FIRPTA" shall mean the federal law known as the Foreign
Investment in Real Property Tax Act.
"FIXTURES AND TANGIBLE PERSONAL PROPERTY" means all fixtures,
furniture, furnishings, fittings, equipment, machinery, apparatus,
appliances and other articles of personal property now located on the Land
or in the Hotel as of the date of this Agreement and used or usable in
connection with any present or future occupation or operation of all or any
part of the Hotel. The term "Fixtures and Tangible Personal Property" does
not include (i) Consumables, (ii) Operating Equipment, (iii) equipment
leased by Seller and the interest of Seller in any equipment provided to
the Hotel for use pursuant to Hotel Contracts but not owned or leased by
Seller, or (iv) property owned or leased by Tenants and guests, employees
or other persons furnishing goods or services to the Hotel.
"GOVERNMENTAL AUTHORITY" means any governmental or
quasi-governmental agency, body or entity.
"GROUND LEASE" means the lease described in EXHIBIT A.
"GUEST LEDGER RECEIVABLES" means amounts, including, without
limitation, room charges, accrued to the accounts of guests occupying rooms
in the Hotel as of the Cutoff Time.
"HARPTA" shall mean the Hawaii Real Property Tax Act.
"HAZARDOUS DISCHARGE" means any event involving the use, deposit,
disposal, spill, release or discharge of any Hazardous Material on, within
or under the Property.
"HAZARDOUS MATERIALS" means and includes any and all radioactive
materials, radon and asbestos, organic compounds known as polychlorinated
biphenyls, chemicals known to cause cancer or reproductive toxicity,
pollutants, contaminants, hazardous wastes, toxic substances, toxic
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pollutants, petroleum substances or petroleum products, pesticides, and any
and all other substances or materials defined as, or included in the
definition of "hazardous substances" "hazardous wastes" "hazardous
materials" "toxic substances" or "toxic pollutants" under, or for the
purposes of, any Hazardous Materials Law.
"HAZARDOUS MATERIALS CLAIM" means and includes (i) any and all
enforcement, clean-up, removal, mitigation or other governmental or
regulatory actions instituted or, to Seller's knowledge, contemplated or
threatened, in respect of the Property pursuant to any Hazardous Materials
Law, and (ii) any and all claims made or, to Seller's knowledge,
contemplated or threatened, by any third party seeking damages,
contribution, cost recovery, compensation, injunctive relief, specific
performance, or other relief resulting from any actual or alleged Hazardous
Discharge or from the existence or alleged existence of any Hazardous
Material on, within or under the Property.
"HAZARDOUS MATERIALS LAWS" means and includes all federal, state
or local laws, statutes, ordinances, rules, regulations and other
requirements of any Governmental Authority, now or hereafter in effect,
relating to environmental conditions, industrial hygiene or Hazardous
Materials on, within, under or about the Property, including without
limitation, the Federal Water Pollution Control Act, 33 U.S.C. Section
1251, et seq., the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, et seq. the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et M., the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 through 2629, the Safe Drinking Water
Act, 42 U.S.C Sections 300f through 300j, the Occupational Safety and
Health Act, 29 U.S.C. Section 651, et seq., the Oil Pollution Act, 33
U.S.C. Section 2701, et seq., the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001, et seq., the National
Environmental Policy Act, 42 U.S.C. Section-4321, et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 15 U.S.C. Section 136, et seq.,
the Medical Waste Tracking Act, 42 U.S.C. Section 6992, and Hawaii laws
regarding Management and Disposal of Infectious Waste, Hawaii Revised
Statutes Section 321-21, Solid Waste, Hawaii Revised Statutes Chapter 340E,
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the provisions of Chapter 128D, Section 328-21, Chapter 340A, Chapter 340E,
and Chapters 342B through P of the Hawaii Revised Statutes, as amended, or
any judicial or administrative interpretation of such laws, rules or
regulations, and any similar federal, state or local law, statute,
ordinance, rule, regulation or requirement, now or hereafter adopted
published and/or promulgated, and any amendments thereto.
"HOTEL" means the property currently known as the Aston Waikiki
Beach Hotel, located in Waikiki, Honolulu, Hawaii.
"HOTEL CONTRACTS" means all written contracts or agreements, such
as franchise, maintenance, service, or utility contracts which relate to
the ownership, maintenance, construction or repair and/or operation of the
Land and Improvement, which have a term beyond May 31, 2006 and which are
not cancelable on 90 days' or shorter notice, except Bookings and Tenant
Leases.
"HOTEL EMPLOYEES" means all employees of Seller and/or its
managing agent (but not employees of Tenants or any of their affiliates)
who work at the Hotel as of the date of the Agreement.
"IMPROVEMENTS" means the buildings, structures (surface and
subsurface) and other improvements (including fixtures other than those
owned by Tenants that constitute real property) located on the Land.
"INFORMATION" shall have the meaning given such term in Section
5.4.
"INSPECTION PERIOD" shall be the period in time commencing one (1)
business day following the execution of this Hotel Purchase Agreement and
ending on April 19, 2005.
"INSURED CLAIMS" shall have the meaning given such term in Section
4.3(b).
"LAND" means (a) the leasehold interest in the land underlying a
portion of the Hotel owned of record or beneficially owned by Seller under
the Ground Lease, and (b) the fee interest in the balance of the Hotel, as
both are more particularly described in EXHIBIT A.
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"LIQUOR LICENSE" means the Permit, if any, issued to Seller by the
Alcoholic Beverage Commission of the State of Hawaii.
"LITIGATION" means action, suit, administration proceeding,
investigation, condemnation or governmental enforcement proceeding relating
to Seller, the Property or the operation of the Hotel.
"MISCELLANEOUS HOTEL ASSETS" means all contract rights, leases,
concessions, trademarks, servicemarks, logos, names of hotel restaurants
and other food and beverage outlets, technology and technical information,
copyrights, warranties, plans, drawings and other items of intangible
personal property relating to the ownership or operation of the Hotel and
owned by Seller, excluding, however, (i) receivables, other than Guest
Ledger Receivables, (ii) Hotel Contracts, (iii) Tenant Leases, (iv)
Permits, (v) cash or other funds, whether in xxxxx cash or house banks, or
on deposit in bank accounts or in transit for deposit, (vi) refunds,
rebates or other claims, or any interest thereon, for periods or events
occurring prior to the Cutoff Time, (vii) utility and similar deposits,
(viii) insurance or other prepaid items or (ix) books and records, except
to the extent that Seller receives a credit on the Closing Statement for
any such item.
"OFFERING SCHEDULES" mean each Schedule attached to this Agreement
and each supplemental or amended schedule provided to Buyer during its
review of the Hotel's operations prior to or on the Closing Date.
"OUTSIDE ACCOUNTANTS" shall have the meaning given such term in
Section 9.3.
"OPERATING EQUIPMENT" means all china, glassware, linens and
silverware used or held in reserve storage for future use in connection
with the operation of the Hotel, which are on hand on the date hereof,
subject to such depletion and restocking as shall be made in the normal
course of business.
"PERMITS" means all licenses (including the Liquor License) and
permits granted by a Governmental Authority and held by Seller and used in
or relating to the ownership, occupancy or operation of the Hotel or any
part thereof not subject to a Tenant Lease.
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"PERMITTED EXCEPTIONS" means liens, encumbrances and other matters
to which the title to the Real Property is subject and which are described
or listed in the Title Report.
"PERSONAL PROPERTY" means all Property other than Real Property.
"PROPERTY" means (i) the Real Property, (ii) the Fixtures and
Tangible Personal Property, (iii) the Operating Equipment, (iv) the
Consumables, (v) the transferable right, title and interest, if any, of
Seller in and to Hotel Contracts and the Tenant Leases, (vi) the Permits
(other than Excluded Permits), (vii) the Bookings, (viii) the Transferable
Insurance Policies and (ix) the Miscellaneous Hotel Assets.
"PURCHASE PRICE" shall mean One Hundred Seven Million Dollars
($107,000,000) allocated between the parcels as set forth in Section 2..3.
"REAL PROPERTY" means the Land and the Improvements.
"RETAINED LIABILITIES" shall have the meaning given such term in
Section 3.3(b).
"SCHEDULED CLOSING DATE" means the first business day which is ten
(10) days after Buyer's Release Date, or such a later date as may be
determined pursuant to Section 8.2.
"SELLER'S ACCOUNTANTS" shall have the meaning given such term in
Section 9.3.
"SELLER'S CONDITIONS" shall have the meaning given such term in
Section 10.1.
"SELLER'S KNOWLEDGE," "KNOWN TO SELLER" and other like phrases
shall mean the current actual knowledge of Xxxxxx Xxxxxx, vice president of
Seller.
"TENANT LEASES" means the interest of Seller in and to all leases,
subleases, licenses and other occupancy agreements, whether or not of
record, which provide for the use or occupancy of space or facilities on or
relating to the Real Property and which are in force as of the date hereof.
This term shall not include agreements providing for the occupancy by
guests of Hotel rooms or for the occupancy or use of the reception or
meeting facilities of the Hotel, which are Bookings.
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"TENANT" means any person or entity entitled to use or occupy any
portion of the Real Property under a Tenant Lease.
"TITLE COMPANY" means First American Title Insurance Company.
"TITLE POLICY" shall have the meaning given such term in Section
9.1.
"TITLE REPORT" means the report prepared by the Title Company
describing the title to the Land and the liens, encumbrances and other
matters relating to the Land, which report and related documents are
included in the Offering Schedules.
"TRANSFERABLE INSURANCE POLICIES" means insurance policies, if
any, which are transferable relating to the Property or operation of the
Hotel, except for property insurance and casualty insurance policies.
2. AGREEMENTS.
2.1. SALE AND PURCHASE. Seller agrees to sell to Buyer, and Buyer agrees to
purchase from Seller, the Property for the Purchase Price, on the terms and
subject to the conditions of this Agreement.
3. PURCHASE PRICE. The PURCHASE PRICE for the Property shall be
A. Ninety-Six Million Three Hundred Thousand Dollars ($96,300,000)
allocated to the leasehold parcel
B. Ten Million Seven Hundred Thousand Dollars ($10,700,000) allocated
to the fee parcel.
3.1 DEPOSIT AND PAYMENT OF PURCHASE PRICE.
a) Upon execution of this Agreement, Buyer shall deposit the sum of Two
Million Dollars ($2,000,000) ("DEPOSIT") in an interest bearing account
maintained by Escrow Agent, and which Deposit shall be held subject to the
condition that, if Buyer elects to terminate this contract prior to that day
which is the expiration of the Inspection Period, the Deposit and any accrued
interest shall be paid to Seller.
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b) Upon the expiration of the Inspection Period, if Buyer has not
elected to terminate this contract, Buyer shall increase the Deposit by the
additional amount deposit of Three Million Dollars ($3,000,000) in the interest
bearing account maintained by Escrow Agent. Such increased Deposit shall be held
subject to the condition that, if Buyer elects to terminate this contract prior
to that day which is the Buyer's Release Date, the total Deposit to the extent
of Three Million Dollars ( $3,000,000.00 ) and any accrued interest allocable
thereto shall be paid to Seller and the balance of the Deposit of Two Million
Dollars ($2,000,000) and any accrued interest allocable thereto shall be paid to
Buyer.
c) From and after the Buyer's Release Date, the total Deposit and all
interest allocable thereto shall be payable to Seller.
d) If a Closing occurs, the Deposit will be credited to Buyer on the
Closing Statement and paid to Seller. Any accrued interest shall be paid to
Seller with the Deposit.
e) Buyer shall pay the balance of the Purchase Price in the amount of
One Hundred and Two Million ($102,000,000) in the form of immediately available
funds at the Closing, plus or minus the adjustments and prorations called for
herein.
3.2 ALLOCATION OF PURCHASE PRICE.
a) The allocation between parcels as set forth in regard to the
Purchase Price shall be binding on the parties. Seller shall determine the
allocation of Purchase Price among the assets in each parcel in the first
instance and advise Buyer of the allocation it proposes, provided that such
allocation shall be in accordance with Internal Revenue Code Section 1060.
b) At the request of Buyer, Seller shall reasonably consider a
different allocation among the assets in each parcel (but not between the
parcels), provided however that any increased tax or transfer cost to Seller
resulting from such allocation shall be indemnified to Seller by Buyer to the
extent that the Buyer's allocation is used.
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c) Buyer and Seller shall execute such evidence of the allocation as
may be deemed reasonably advisable to document its terms in compliance with the
requirements of the Internal Revenue Service.
3.3 ASSUMPTION OF LIABILITIES; RETAINED LIABILITIES.
a) Buyer shall assume at Closing and pay the following obligations
("ASSUMED LIABILITIES") arising from and after Closing: (i) Seller's obligations
and liabilities with respect to the Property or operation of the Hotel
(including obligations for commissions and similar charges in regard to
Bookings) which are disclosed to Buyer in the Offering Schedules; and (ii) any
liabilities or obligations relating to the Property or operation of the Hotel
arising from acts, omissions, occurrences or matters that take place from and
after the Cutoff Time.
b) Buyer shall have no liability or obligation for the following
("RETAINED LIABILITIES"): (i) federal, state and local income, franchise, sales,
payroll or other taxes (other than real estate taxes, water and sewer charges,
vault charges and assessments, which shall be prorated as of the Cutoff Time) of
Seller or for which Seller is liable, including (i) any interest and/or
penalties thereon; (ii) any liability the existence of which would constitute a
breach of any of Seller's representations or warranties contained in Section 3;
and (iii) any liability or obligation of Seller related to the Litigation
described in Schedule 4.3B or if not on Schedule 4.3B which arises from acts,
omissions, or occurrences that take place prior to the Cutoff Time.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. As an inducement to Buyer to
enter into this Agreement and to consummate the transactions contemplated
herein, Seller represents and warrants to Buyer as follows:
4.1 ORGANIZATION OF SELLER. Seller is duly a organized Delaware limited
liability company qualified to hold property and conduct business in Hawaii.
4.2 AUTHORITY. Seller has taken all actions of members required to
authorize this Agreement and the transaction contemplated here.
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4.3 LIST OF PROPERTIES, HOTEL CONTRACTS AND PERSONNEL DATA. The
schedules described in the following paragraphs (a) through (h) list all items,
if any, within the term or description of the corresponding paragraph and no
other items within such term or description exist. True and complete copies of
the documents referred to in paragraphs (a), (c), (d), (e), (f), (g), and (h)
are included in the Offering Schedules or have been furnished to or made
available to Buyer:
a) TENANT LEASES. The Tenant Leases ("SCHEDULE 4.3A").
b) LITIGATION. A brief description of pending Litigation, other than
matters with respect to which Seller is or believes itself to be fully insured
against the total claim under comprehensive liability policies of insurance
("INSURED CLAIMS") and matters whose resolution is a condition to the Closing.
The description shall specify the damage or relief sought, the name of counsel
for Seller in charge of such matter and the current status of such action
("SCHEDULE 4.3B").
c) PERMITS. The Permits ("SCHEDULE 4.3C").
d) HOTEL CONTRACTS. The Hotel Contracts ("SCHEDULE 4.3D").
e) BOOKINGS. Bookings related to the Hotel which pertain to any period
after the Closing Date ("SCHEDULE 4.3E").
f) HOTEL EMPLOYEES. The Hotel Employees ("SCHEDULE 4.3F").
g) INSURANCE. Transferable Insurance Policies ("SCHEDULE 4.3G").
h) EMPLOYMENT AGREEMENTS. Employment Agreements ("SCHEDULE 4.3H").
4.4 STATUS OF TITLE TO PROPERTY. To Seller's knowledge, the Ground
Lease at Closing, as then amended to include the Sixth Amendment of Lease, will
be in full force and effect with neither Seller nor the lessor under the Ground
Lease in default thereunder, and no event having occurred which, merely by
notice or the passage of time or both, would constitute a default under the
Ground Lease.
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4.5 HOTEL CONTRACT. Except as described in Schedule 4.3D, Seller has
received no written notice of any default with respect to any Hotel Contract and
to Seller's knowledge, all the Hotel Contracts are in full force and effect,
neither Seller nor the other parties thereto are in default thereunder, and no
event has occurred which, merely by notice or the passage of time or both, would
constitute such a default by Seller or such other parties to such Hotel
Contracts. Except as noted on Schedule 4.3D, all of the Hotel Contracts may be
terminated on no more than ninety (90) days' notice without termination penalty
or other cost.
4.6 PERMITS. To Seller's knowledge, the Permits are in full force and
effect except as set forth in the Offering Schedules, all the requirements and
conditions of the Permits have been fully complied with, and no event has
occurred which, merely by notice or the passage of time or both, would render
Seller or operation of the Hotel not in compliance with such requirements and
conditions. The Permits constitute all of the material consents, authorizations
or approvals required in connection with the ownership, lease, and operation of
the Property as it is presently operated.
4.7 LITIGATION. Except as described in SCHEDULE 4.3B and Insured
Claims, to Seller's knowledge there is no pending Litigation which, if adversely
determined, might (i) restrain the consummation of any of the transactions
herein described, (ii) have a material adverse effect on the Property or any
significant part thereof or operation of the Hotel following the Closing or
(iii) result in a lien or encumbrance on all or part of the Property.
4.8 TENANT LEASES. Except as described in SCHEDULE 4.3A, to the
knowledge of Seller, the Tenant Leases are in full force and effect, all rent
due thereunder has been paid in full, no rent thereunder has been prepaid, and
neither Seller nor the Tenants are in default thereunder, and no event has
occurred which, merely by notice or the passage of time or both, would
constitute such a default by Seller or the Tenants.
4.9 TAXES. To the knowledge of Seller, all business, occupation, sales,
use and other similar taxes imposed with respect to the Hotel, or the operation
thereof, which are due and payable by Seller have been paid in full or are
current and Seller has not received any written notice that any such tax is
overdue or has not been paid.
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4.10 SUFFICIENCY OF INVENTORIES. To Seller's knowledge, the quantities
of Fixtures and Tangible Personal Property, Consumables and Operating Equipment
in the Hotel, including provisions for reserve, are sufficient for the operation
of the Hotel in accordance with the standard of operation heretofore maintained
by Seller.
4.11 HAZARDOUS MATERIALS. To Seller's knowledge, the Land and the
Improvements are not subject to (i) any federal, state, or local investigation,
(ii) any Litigation alleging the violation of or liability under any Hazardous
Materials Law, (iii) any outstanding written order or agreement with any
Governmental Authority or private party relating to any Hazardous Materials Laws
or Hazardous Materials Claims and (iv) any pending or, to the knowledge of
Seller, threatened Claims with respect to any Hazardous Materials against or
affecting Seller or the Property or the Hotel or any Hazardous Materials Claims.
4.12 FOREIGN PERSON. Seller is not a foreign person for purposes of
the withholding provisions of Section 1445 of the Internal Revenue Code of 1986.
4.13 FINANCIAL STATEMENTS. THE FINANCIAL STATEMENTS ARE TRUE AND
CORRECT.
4.14 EMPLOYMENT CONTRACT. There are no union contracts, labor
agreements or Employee Benefit Plans as defined in Section 3(3) of the Employee
Retirement Income and Security Act of 1974, as amended from time to time, or
written employment contracts relating to the Hotel Employees other than the
Employment Agreements. Except as described in SCHEDULE 4.3H, Seller has not
received or given any written notice of default under the terms of any
Employment Agreements.
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5. REPRESENTATIONS AND WARRANTIES OF BUYER. As an inducement to Seller to
enter into this Agreement and to consummate the transactions contemplated
herein, Buyer hereby represents and warrants to Seller:
5.1 ORGANIZATION OF BUYER. Buyer is duly a organized Delaware company
qualified to hold property and conduct business in Hawaii.
5.2 AUTHORITY. By the Closing Date, Buyer will have obtained all
necessary approvals for this transaction, including the approval of its Board of
Directors.
5.3 DISCLOSURES. No representation or warranty by Buyer herein contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein not misleading.
5.4 AS-IS PURCHASE.
(a) Buyer acknowledges, represents and warrants that, except as expressly
provided in Section 4 above, (i) any information ("INFORMATION") supplied
or made available by Seller, whether written or oral, or in the form of
maps, surveys, plats, soil reports, engineering studies, environmental
studies, inspection reports, plans, specifications, or any other
information whatsoever, without exception, pertaining to the Property, any
and all records, rent rolls, and other documents pertaining to the use and
occupancy of the Property, income thereof, the cost and expenses of
maintenance thereof, and any and all other matters concerning the
condition, suitability, integrity, marketability, compliance with law, or
other attributes or aspects of the Property, or a part thereof, is
furnished to Buyer solely as a courtesy; (ii) THE INFORMATION IS PROVIDED,
AND THE PROPERTY IS PURCHASED, ON AN AS-IS-WHERE-IS BASIS AND SELLER MAKES
NO REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW OR
OTHERWISE, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF FUTURE
PERFORMANCE, CONDITION, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR
PURPOSE AS TO THE INFORMATION OR THE PROPERTY; and (iii) no
representations, whether written or oral, have been made by Seller, or its
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agents or employees in order to induce Buyer to enter into this Agreement.
Without limiting the generality of the foregoing, Buyer acknowledges,
warrants and represents to Seller that neither Seller nor its agents or
employees have made any representations or statements, whether written or
oral, to Buyer concerning the investment potential, operation or resale of
the Property at any future date, at a profit or otherwise, nor has Seller
or its agents or employees rendered any advice or expressed any opinion to
Buyer regarding any tax consequences of ownership of the Property.
(b) Buyer acknowledges, represents and warrants that as of the Closing Date,
Buyer will be familiar with the Property and will have made such
independent investigations as Buyer deems necessary or appropriate
concerning the Property. If Buyer elects to proceed with the purchase of
the Property after the Inspection Period, any objections which Buyer may
have with respect to the Property as of that date shall be waived by Buyer.
Except as expressly provided in Section 4 above, Seller makes no
representations or warranties and specifically disclaims any
representation, warranty, or guaranty, oral or written, past, present or
future with respect to the physical condition or any other aspect of the
Property, including, without limitation, the structural integrity of the
Improvements, the manner, construction, condition, and state of repair or
lack of repair of any of the Improvements, the conformity of the
Improvements to any plans or specifications for the Property, including,
but not limited to, any plans and specifications that may have been or
which may be provided to Buyer, the conformity of the Property to past,
current or future applicable zoning or building code requirements or the
compliance with any other laws, rules, ordinances, or regulations of any
government or other body, the financial earning capacity or history or
expense history of the operation of the Property, the nature and extent of
any right-of-way, lease, possession, lien encumbrance, license,
reservation, condition, or otherwise, the existence of soil instability,
past soil repairs, soil additions or conditions of soil fill,
susceptibility to landslides, sufficiency of undershoring, sufficiency of
drainage, whether the Property is located wholly or partially in a flood
plain or a flood hazard boundary or similar area, the existence or
non-existence of hazardous waste or other toxic materials of any kind
(including, without limitation, asbestos) or any other matter affecting the
stability or integrity of the Land and/or the Improvements.
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(c) Seller shall not be responsible for any negligent misrepresentation or
failure to investigate the Property on the part of Seller, any real estate
broker or sales agent, or any other agent or employee of Seller or any
third party.
(d) Except as expressly provided in Section 4, as part of Buyer's agreement to
purchase and accept the Property AS-IS-WHERE-IS, and not as a limitation on
such agreement, BUYER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES AND
RELEASES ANY AND ALL ACTUAL OR POTENTIAL RIGHTS BUYER MIGHT HAVE REGARDING
ANY FORM OF WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE, RELATING TO
THE PROPERTY AND THE INFORMATION. SUCH WAIVER AND RELEASE IS ABSOLUTE,
UNCONDITIONAL, IRREVOCABLE, COMPLETE, TOTAL AND UNLIMITED IN ANY WAY. SUCH
WAIVER AND RELEASE INCLUDES, BUT IS NOT LIMITED TO, A WAIVER AND RELEASE OF
EXPRESS WARRANTIES, IMPLIED WARRANTIES, WARRANTIES OF FITNESS FOR A
PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF HABITABILITY,
STRICT LIABILITY RIGHTS AND CLAIMS OF EVERY KIND AND TYPE, INCLUDING, BUT
NOT LIMITED, TO CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT
DISCOVERABLE, PRODUCT LIABILITY CLAIMS, PRODUCT LIABILITY TYPE CLAIMS, ANY
RIGHTS AND CLAIMS RELATING TO OR ATTRIBUTABLE TO ENVIRONMENTAL CONDITIONS,
ALL OTHER EXTANT OR LATER CREATED OR CONCEIVED OF STRICT LIABILITY OR
STRICT LIABILITY TYPE CLAIMS AND RIGHTS.
(d) Seller's Initials Buyer's Initials
/ZJ/ /DK/
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6 ACTION PRIOR TO THE CLOSING DATE. The parties covenant to take the
following actions:
6.1 APPROVALS AND CONSENTS.
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(a) The parties will use reasonable efforts to acquire all necessary approvals
of Governmental Authorities and all necessary consents of all third parties
to the end of expediting consummation of the transactions contemplated
herein.
(b) With the exception of State transfer taxes and recording fees, the cost of
which shall be born by the parties as per Section 9.1 (k), Buyer shall
promptly prepare or cause to be prepared and submit all filings and
applications, and pay all fees and make all deposits required to consummate
the Closing, on or before the Scheduled Closing Date, and diligently pursue
the necessary procedures, in connection with the transactions contemplated
by this Agreement, including, but not limited to, issuance of business
licenses and other matters, if any, relating to the operation of the Hotel.
If Buyer is unable to obtain a necessary license on or before the Scheduled
Closing Date, Buyer, by notice to Seller, shall be entitled to elect
pursuant to Section 8.2 to postpone the Scheduled Closing Date for a number
of days that Buyer reasonably deems necessary to obtain that license;
provided, however, that Buyer proceeds with due diligence to obtain such
license and the number of days shall not exceed sixty (60) days from the
original Scheduled Closing Date.
6.2 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
parties hereto shall refrain from taking any action which would render any
representation and warranty contained in Sections 4 and 5 of this Agreement
inaccurate as of the Closing Date. Seller promptly will notify Buyer of all
Litigation that may be threatened, brought, asserted or commenced against Seller
(a) involving the transactions called for by this Agreement or (b) which might
have a material adverse effect on the Property or operation of the Hotel.
6.3 MAINTAIN SELLER AND HOTEL. Seller shall timely perform all of
Seller's obligations under the Hotel Contracts, pay all business, occupation,
sales, use and other similar taxes imposed with respect to the Property, the
Hotel, or the operation thereof when such taxes become due and payable, maintain
the Property in accordance with past practices, continue to meet the contractual
obligations incurred in the ordinary course of business and pay all of Seller's
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obligations as they mature in the ordinary course of business, use reasonable
efforts to maintain the present level of service at the Hotel, including the
present level of staffing, and use reasonable efforts to preserve the good
relations of the suppliers, customers and others related to the Property with
whom Seller has business relations. Seller shall maintain an inventory of
Consumables, Fixtures and Tangible Personal Property and Operating Equipment
reasonably sufficient for the operation of the Hotel in the ordinary course of
business and shall, generally in accordance with its past practices, resupply,
substitute or replace any of such items as may be depleted in order that Buyer
can continue to operate the Hotel generally in accordance with past practices.
Seller will continue to operate and maintain the Hotel in accordance with
present standards of operations. New Bookings shall be made only in the ordinary
course of business, and only upon terms and conditions usual and customary in
accordance with past business practices of Seller.
6.4 MAKE NO MATERIAL CHANGE IN THE PROPERTY. Prior to the Closing Date,
Seller shall not without the written consent of Buyer, which consent shall not
be unreasonably withheld or delayed; (a) make any material change in the
Property; (b) sell or otherwise dispose of any of the Real Property or enter
into any new Tenant Leases; (c) enter into any contract, license, franchise or
commitment relating to the Property other than in the ordinary course of
business; (d) significantly alter or revise the accounting principles,
procedures, methods or practices in place at the Hotel; (e) remove or permit to
be removed from the Hotel any material item of machinery, equipment, fixtures,
vehicles or other similar personal property or parts thereof, except in the
ordinary course of business; (f) materially change its credit policies; (g)
transfer or otherwise dispose of any of the Property except Consumables in the
ordinary course of business; or (h) settle or compromise any Litigation relating
to Tenant Leases.
7 INFORMATION AND RECORDS CONCERNING THE PROPERTY.
7.1 BUYER'S ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING. Seller
shall give Buyer, its employees, accountants and other representatives full
access throughout the period prior to the Closing Date upon reasonable notice
and during normal business hours to all of its books and records, and furnish to
Buyer during such period all such information concerning the Property as Buyer
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may reasonably request. Prior to Closing, Buyer may at its election prepare an
inventory of the Fixtures and Tangible Personal Property, Consumables and
Operating Equipment. Seller agrees to cause a representative of Seller to
cooperate with Buyer in the preparation of the inventory. Buyer shall conduct
its activities hereunder in a manner to minimize any disturbance to Seller or
its employees and Hotel guests. Buyer shall indemnify Seller for any loss, cost
or damage Seller incurs as a result of the presence or activity in the Property
of Buyer or Buyer's authorized consultant or representative pursuant to this
Section or pursuant to any inspection or study within the Property.
7.2 ACCESS TO RECORDS AFTER CLOSING. Seller agrees to preserve at
Seller's business offices either in New York or elsewhere until that date which
is five (5) years from the Closing Date all records pertaining to the operation
of the Hotel in his hands which were not transferred to Buyer hereunder and
relating to the Property or to the transactions contemplated herein. Similarly,
Buyer agrees to preserve at the Hotel all employment records and sales records
conveyed by Seller until that date which is five (5) years from the Closing
Date.. Where there is a legitimate purpose not injurious to the other party or
if there is a tax audit, other governmental inquiry, or litigation or
prospective litigation to which Seller or Buyer is, or may become, a party,
making necessary Seller's access to such records of Buyer or making necessary
Buyer's access to such records of Seller, each party, as the case may be, will
allow representatives of the other party access to such records during regular
business hours at such party's place of business for the sole purpose of
obtaining information for use as aforesaid. Both parties agree to indemnify,
hold harmless and defend the other party from and after the date of this
Agreement, from and against any and all loss, damage, claim, cost and expense
and any other liability whatsoever, including, without limitation, reasonable
accountants' and attorneys' fees, charges and costs, incurred by either party by
reason of the other party's failure to provide access to the records described
above.
8. CLOSING MATTERS.
8.1 CLOSING. A pre-closing of the transactions contemplated herein
shall take place by deposit into escrow with the Title Company pursuant to
Hawaii closing practice at the offices of Rush, Moore, LLP, Honolulu, Hawaii,
one day prior to the Scheduled Closing Date and one day prior to the Closing
Date, if different. At the Closing the actions specified in Sections 8.3 and 8.4
below shall be taken, all of which will be deemed taken simultaneously at the
Closing and no one of which will be deemed completed until all have been
completed and the Closing shall have occurred.
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8.2 ADJOURNMENT OF CLOSING. Notwithstanding anything to the contrary in
Section 8.1, the Scheduled Closing Date may be postponed by either party by
notice to the other party for a number of days set forth in the notice in order
to satisfy a condition to Closing or for any other reason, provided, however,
that the aggregate number of days of such adjournment by a party shall not
exceed fifteen (15) days from the original Scheduled Closing Date. In the event
that Buyer seeks to adjourn for a period or periods in aggregate exceeding such
fifteen (15) days, Buyer shall not be entitled to such longer adjournment unless
it deposits, as an addition to the total Deposit, the total of One Million
Dollars ($1,000,000) plus an amount equal to interest on the full Purchase Price
at the rate of six percent (6%) per annum for the period of the adjournment. The
amount equal to interest shall be deemed an increase in, and not a credit
against, the Purchase Price. In no event shall Buyer be entitled to adjourn the
Closing to a date later than thirty (30) days after the original Scheduled
Closing Date.
8.3 SELLER'S DELIVERIES.
(a) At Closing Seller shall deliver an assignment of lease in the
form of EXHIBIT B assigning all of Seller's right, title and interest in and to
the Land and the Improvements to Buyer, subject only to the Permitted Exceptions
(the "ASSIGNMENT OF LEASE"), a special warranty Deed for the conveyance of the
Mauka Tower in fee (the "Deed"), evidence of the settlement or dismissal of any
pending litigation or claims affecting title, and such other instruments,
documents or certificates as may be reasonably required by Title Company as a
condition to the issuance of the Title Policy consistent with the terms of this
Agreement.
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(b) Seller shall deliver to Buyer (i) a xxxx of sale in the form of
EXHIBIT C transferring and assigning to Buyer each and every item of Personal
Property to be transferred hereunder; and (ii) originals, to the extent in the
possession of Seller, of all Hotel Contracts, Tenant Leases, Bookings, Permits
(other than Excluded Permits), Transferable Insurance Policies and other
Miscellaneous Hotel Assets, together with an assignment and assumption in the
form of EXHIBIT D conveying and transferring the same to Buyer (the "ASSIGNMENT
AND ASSUMPTION"). Except for the Assignment and Assumption which will be
delivered at Closing, delivery of any such documents shall be deemed made by
Seller to Buyer if Seller leaves such documents at the Hotel in their customary
place of storage or in the custody of Buyer's representatives.
(c) To the extent requested, estoppel certificates for major Tenants
in accordance with their Leases.
(d) Joint escrow instructions for the deposit and recordation of
documents and issuance of the Title Policy by the Title Company.
8.4 BUYER'S DELIVERIES. Buyer shall pay the balance of the Purchase
Price, plus or minus the adjustments and prorations called for in this
Agreement, shall countersign the documents delivered by Seller as appropriate,
and shall deliver such other instruments, documents or certificates and joint
escrow instructions as are required to be delivered by Buyer to Seller in
accordance with any of the other provisions of this Agreement. Buyer shall
assume the obligations under the Assignment of Lease and the Assignment and
Assumption.
8.5 FORM OF DOCUMENTS. All documents required to be delivered at or
prior to the Closing in accordance with the provisions of this Agreement shall
be in the form of the Exhibits attached hereto or if not attached, in a form
reasonably acceptable to the receiving party.
9. ADJUSTMENTS AND PRORATIONS - CLOSING STATEMENT.
9.1 ADJUSTMENTS AND PRORATIONS. The following matters and items
pertaining to the Property shall be apportioned between the parties hereto or,
where applicable, credited in total to a particular party, as of the Cutoff
Time. Net credits in favor of Buyer shall be deducted from the balance of the
Purchase Price at the Closing and net credits in favor of Seller shall be paid
21
in cash at the Closing. Unless otherwise indicated below, Buyer shall receive a
credit for any of the following items to the extent the same are accrued but
unpaid as of the Cutoff Time (whether or not due, owing or delinquent as of the
Cutoff Time), and Seller shall receive a credit to the extent any of the
following items shall have been paid prior to the Closing Date to the extent the
payment thereof relates to any period of time after the Cutoff Time.
(a) GUEST LEDGER RECEIVABLES; FOOD AND BEVERAGE RECEIVABLES. Guest
Ledger Receivables shall be prorated between Buyer and Seller. Seller shall
receive a credit for all Guest Ledger Receivables for all room nights up to but
not including the room night during which the Cutoff Time occurs, and Buyer
shall be entitled to the amounts of Guest Ledger Receivables for the room nights
after the Cutoff Time. Seller and Buyer shall each receive a credit equal to
one-half of the amount of Guest Ledger Receivables for the full room night
during which the Cutoff Time occurs. All restaurant and bar facilities will be
closed as of the Cutoff Time and Seller shall receive the income from the same
until the Cutoff Time. Commissions and similar charges associated with
receivables shall be prorated in the accordance with the related receivable.
(b) TAXES AND ASSESSMENTS. All nondelinquent ad valorem taxes, special
or general assessments, real property taxes, hotel occupancy tax, water and
sewer rents, rates and charges, vault charges, and any municipal permit fees. 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 adjusted as
necessary post-closing as contemplated in Section 9.3.
(c) UTILITY CONTRACTS. Telephone and telex contracts and contracts for
the supply of heat, steam, electric power, gas, lighting and any other utility
service, with Seller receiving a credit for all deposits, if any, made by Seller
as security under any such public service contracts if the same are transferable
and provided such deposits remain on deposit for the benefit of Buyer. Where
possible, cutoff readings will be secured for all utilities as of the cutoff
Time. To the extent they are not available, the cost of such utilities shall be
apportioned between the parties on the basis of the latest actual (not
estimated) xxxx for such service and adjusted as necessary post-closing as
contemplated in Section 9.3.
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(d) HOTEL CONTRACTS AND TENANT LEASES. Any amounts prepaid or payable
under any Hotel Contracts or Tenant Leases. All amounts known to be due under
Hotel Contracts with reference to periods prior to the Closing Date shall be
paid by Seller or credited to Buyer as a reduction of the Purchase Price. Any
additional amounts not known at the Closing will be part of the post-closing
adjustments contemplated in Section 9.3.
(e) LICENSE FEES. Fees paid for Permits (except for Excluded Permits)
in the current period.
(f) OTHER HOTEL MATTERS.
(i) Buyer shall receive a credit for advance payments, if any, net of
associated commissions and similar charges previously paid, under Bookings to
the extent the Bookings relate to a period after the Cutoff Time and have been
incurred in accordance with the terms hereof.
(ii) Vending machine monies will be removed by Seller as of the Cutoff
Time for the benefit of Seller.
(g) XXXXX CASH FUNDS AND HOUSE BANKS. Buyer shall purchase and Seller
shall sell to Buyer (or receive a credit therefor) all xxxxx cash funds and cash
in house banks at 100% of face value at the Cutoff Time. All other cash shall
retained by Seller and is not part of the sale of the Property.
(h) SECURITY DEPOSITS. Buyer shall be entitled to a credit for all
security and other deposits held by Seller as of the Cutoff Time with respect to
Tenant Leases and Hotel Contracts which are assumed by Buyer.
(i) EMPLOYEE SALARIES. Salaries and benefits paid to the Hotel
Employees.
(j) INSURANCE POLICIES. Premiums paid for the Transferable Insurance
Policies.
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(k) CLOSING EXPENSES. Seller shall pay 0.1% of the Purchase Price
toward title premium and related costs. Buyer shall pay any amount in excess of
that for title and survey costs. Each party shall bear one-half of escrow costs.
Each party shall pay its own legal and professional fees.
(l) OTHER. Such other items as are provided for in this Agreement or as
are normally prorated and adjusted in the sale of a hotel in Hawaii .
9.2 RECEIVABLES. Seller shall receive a credit for and Buyer shall take
the receivables of the Hotel as of the Cutoff Time.
9.3 CLOSING STATEMENT. Seller shall cause its accounting staff
("SELLER'S ACCOUNTANTS") to make such inventories, examinations and audits of
the Hotel, and of the books and records of the Hotel, as Seller's Accountants
may deem necessary to make the adjustments and prorations required under this
Section 8, or under any other provisions of this Agreement. Buyer or its
designated representatives may be present at such inventories, examinations and
audits of the Hotel. Based upon such audits and inventories, Seller's
Accountants will prepare and deliver to the parties no later than two (2) days
prior to the Closing a closing statement (the "CLOSING STATEMENT"). The Closing
Statement shall contain Seller's best estimate of the amounts of the items
requiring the prorations and adjustments in this Agreement. The amounts set
forth on the Closing Statement shall be the basis upon which the prorations and
adjustments provided for herein shall be made at the Closing.
The Closing Statement shall be binding and conclusive on all parties
hereto to the extent of the items covered by the Closing Statement, unless
within thirty (30) days after receipt by Buyer of the Closing Statement, either
Buyer or Seller notifies the other that it disputes such Closing Statement, and
specifies in reasonable detail the items and reasons that it so disputes. The
parties shall attempt to resolve such dispute. If such dispute is not resolved
within forty-five (45) days after delivery of the original notice by Buyer or
Seller, then the parties shall submit such dispute to Ernst & Young, LLP
("OUTSIDE ACCOUNTANTS"), and the determination of the Outside Accountants, which
shall be made within a period of fifteen (15) days after such submittal by the
parties, shall be conclusive. The fees and expenses of the Outside Accountants
shall be paid equally by Buyer and Seller.
24
Within ninety (90) days following the Closing Date, Seller's
Accountants shall deliver a final report to Buyer setting forth the final
determination of all items to be included on the Closing Statement. In the event
that, at any time within said 90-day period, either party discovers any items
which should have been included in the Closing Statement but were omitted
therefrom, such items shall be adjusted in the same manner as if their existence
had been known at the time of the preparation of the Closing Statement. The
foregoing limitation shall not apply to any item which, by its nature, cannot be
finally determined within the period specified. However, no further adjustments
shall be made beyond twelve (12) months after the Closing Date.
10. COVENANTS AND CONDITIONS TO OBLIGATIONS.
10.1 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of Seller to
close the transaction and deliver the documents and instruments required
hereunder shall be subject to satisfaction in full of the following conditions
("SELLER'S CONDITIONS") on or before the Closing Date:
(a) Buyer shall have performed on or before the Closing Date the
obligations required to be performed by it on or before such Closing Date.
(b) Buyer shall have completed all the deliveries and actions required
to be made by Buyer under section 8.4 and elsewhere in this Agreement.
(c) There shall be no material breach of any of Buyer's
representations, warranties and covenants set forth in this Agreement.
(d) There shall not then be any pending or, to the knowledge of either
Buyer or Seller, threatened Litigation which, if determined adversely, would
restrain the consummation of any of the transactions referred to herein, or
declare illegal, invalid or nonbinding any of the covenants or obligations of
the parties herein.
(e) Title Company shall be committed to issue to Buyer a policy of
title insurance insuring title in the amount of the Purchase Price subject only
to the Permitted Exceptions ("TITLE POLICY").
25
(f) Buyer shall have produced evidence reasonably satisfactory to
Seller of compliance with Xxxx-Xxxxx-Xxxxxx Act requirements or the
non-applicability thereof to this transaction.
Seller's Conditions are solely for the benefit of Seller and may be
waived only by Seller. Any such waiver or waivers shall be in writing and shall
be delivered to Buyer. Seller shall not act or fail to act for the purpose of
permitting or causing any of Seller's Conditions to fail. If any of Seller's
Conditions is not satisfied or has not been so waived by notice to Buyer prior
to the Scheduled Closing Date, Seller shall give written notice to Buyer
describing the condition or conditions that have not been satisfied or waived
and either Seller or Buyer by notice to the other party shall be entitled to
postpone the Scheduled Closing Date as provided in Section 8.2 for the purpose
of attempting to satisfy such condition or conditions. Nothing contained in this
Agreement shall require Buyer or Seller to postpone the Scheduled Closing Date
or to bring any suit or other proceeding or, except as otherwise expressly
required by this Agreement, to pay any substantial sum, to satisfy any
conditions to Closing.
10.2 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to
make payment of the Purchase Price and other sums provided for herein and to
close the transactions contemplated hereby is subject to satisfaction in full of
each of the following conditions ("Buyer's Conditions") on or before the Closing
Date:
(a) The representations, warranties and agreements of Seller contained
in Section 4 shall be true and accurate in all material respects on the Closing
Date, as if made on such date.
(b) Seller shall have performed on or before the Closing Date the
obligations required to be performed by it on or before the Closing Date.
(c) Seller shall have completed all the deliveries required to be made
by Seller under Section 8.3 and elsewhere in this Agreement.
(d) Title Company shall be committed to issue the Title Policy to Buyer
(e) The ALTA Survey shall have been updated showing no material
modification from the ALTA Survey specified in the Title Report .
26
(f) Buyer shall have received an affidavit to the effect that Seller is
not a foreign person for purposes of the withholding provision of Section 1445
of the Internal Revenue Code of 1986 or, to the extent such withholding is
required, instructions as to the required withholding.
(g) Buyer shall have received an estoppel certificate as specified in
the Ground Lease of a date within thirty (30) days prior to the Closing.
Buyer's Conditions are solely for the benefit of Buyer and may be
waived only by Buyer. Any such waiver or waivers shall be in writing and shall
be delivered to Seller. Buyer shall not act or fail to act for the purpose of
permitting or causing any of Buyer's Conditions to fail. If any of Buyer's
Conditions is not satisfied or has not been so waived by Buyer prior to the
Scheduled Closing Date, Buyer shall give written notice to Seller describing the
condition which has not been satisfied or waived and either Buyer or Seller by
notice to the other party shall be entitled to postpone the Scheduled Closing
Date as provided in Section 8.2 for the purpose of attempting to obtain
satisfaction of such condition or conditions. Nothing contained in this
Agreement shall require Buyer or Seller to postpone the Scheduled Closing Date
or to bring any suit or other proceedings or, except as otherwise expressly
required by this Agreement, to pay any substantial sum to satisfy any of
Buyer's Conditions.
10.3 REMEDIES FOR BUYER'S OBLIGATIONS; LIQUIDATED DAMAGES
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IF THE
SALE OF THE PROPERTY TO BUYER IS NOT CONSUMMATED BY REASON OF BUYER'S DEFAULT OF
ITS OBLIGATION TO PURCHASE THE PROPERTY PURSUANT TO THE TERMS OF THIS AGREEMENT,
SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE DEPOSIT AS SELLER'S SOLE AND
EXCLUSIVE REMEDY. THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY
DIFFICULT TO FIX THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S
FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT, AND
THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, THE
LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENT A REASONABLE ESTIMATE
OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE, PROVIDED,
27
HOWEVER, THAT THIS PROVISION SHALL NOT WAIVE OR AFFECT SELLER'S RIGHTS AND
BUYER'S OBLIGATIONS UNDER SECTION 10.1(b). NOTWITHSTANDING THE FOREGOING, IF
BUYER INTERFERES WITH OR MAKES ANY ATTEMPT TO INTERFERE WITH SELLER RECOVERING
THE DEPOSIT HELD BY THE ESCROW HOLDER, INCLUDING, WITHOUT LIMITATION, GIVING ANY
NOTICE OF INSTRUCTIONS TO ESCROW HOLDER NOT TO DELIVER THE DEPOSIT TO SELLER,
SELLER SHALL HAVE THE ELECTION TO NULLIFY THE TERMS AND PROVISIONS OF THIS
SECTION 9.3(a) BY GIVING WRITTEN NOTICE TO BUYER, WHEREUPON THIS SECTION 9.3(a)
SHALL BE DEEMED NULL AND VOID, AND SELLER SHALL HAVE ALL RIGHTS AND REMEDIES
AGAINST BUYER PROVIDED AT LAW AND IN EQUITY, AND SELLER SHALL HAVE THE RIGHT TO
REQUIRE THAT BUYER SPECIFICALLY PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT.
THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH
THE LIQUIDATED DAMAGE PROVISIONS CONTAINED IN THIS SECTION.
Seller's Initials Buyer's Initials
/ZJ/ /DK/
------------ ------------
(a) BUYER'S RIGHT TO RETURN OF DEPOSIT. In the event the Closing fails
to occur solely because of Seller's failure to perform Seller's obligations
under this Agreement including Buyer's Conditions, Buyer shall have the right to
request return of the Deposit and Additional Deposit, plus accrued interest, by
written notice sent to the Escrow Agent and, if such failure is a result of
issues within the reasonable control of Seller, Buyer shall also have the right
to all other legal or equitable remedies, including specific performance. Upon
such request the Escrow Agent shall confirm that Seller has received notice.. If
Buyer has not given notice to Escrow Agent within ten (10) business days that
Seller has cured the failure to perform its obligations, Escrow Agent shall
return to Buyer the Deposit and Additional Deposit, together with all interest
accrued thereon, and any documents and other monies deposited by Buyer. If
however Escrow Agent shall have then received notice of dispute of such
distribution from Seller, Escrow Agent shall hold the Deposit, Additional
Deposit and any interest thereon pending either joint instruction of the parties
or a final order of a court of competent jurisdiction.
28
10.4 EMPLOYEE OBLIGATIONS. Buyer and/or its managing agent shall offer
employment after the Cutoff Time to substantially all of the Hotel Employees on
substantially the same terms and conditions as such Hotel Employees were
employed by Seller or its managing agent and assume all liabilities arising
under the Employment Agreements from and after the Cutoff Time. Seller shall be
entitled to rely on Buyer's covenant as assuring continuity of employment.
Seller and Buyer recognize that Seller's managing agent is the employer of the
Hotel Employees and that notification under any plant closing notification law
may be inapplicable to this transaction. Seller, at its option, may make a
precautionary filing and notice under state or federal law. Nothing in this
provision shall be construed to limit Buyer's right to terminate, to the extent
it is the employer and at Buyer's sole cost and expense, any Hotel Employees
subsequent to the Cutoff Time, subject to the requirements of applicable law and
Employment Agreements. Nothing herein shall waive or diminish obligations to
comply with Hawaii plant closing notification and other procedural requirements
in regard to Hotel Employees retained in a transfer of ownership.
10.5 DAMAGE OR DESTRUCTION: CONDEMNATION. In the event of any casualty
loss, damage or destruction prior to the Closing, or any condemnation of all or
a part of the Real Property which results in the loss of use of not more than
25% of the rooms within the Hotel for not more than a thirty (30) day period,
Seller and Buyer shall remain obligated under this Agreement and all proceeds of
insurance or condemnation awards shall be assigned to Buyer at Closing. For any
larger casualty loss, damage or destruction prior to Closing, or any larger
condemnation of the Hotel, Buyer may terminate this Agreement, and upon such
termination the Escrow Agent shall return to Buyer the Deposit and Additional
Deposit (if submitted by Buyer), and the parties will have no further
obligations or liabilities to each other, except for those which survive
termination. If Buyer terminates this Agreement under this Section, Seller shall
be entitled to receive all insurance proceeds or condemnation proceeds paid for
that portion of the property taken or destroyed. If Buyer is obligated to or
elects to proceed to Closing, the Buyer shall be entitled to receive all
insurance proceeds or condemnation proceeds paid for that portion of the
property taken or destroyed.
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10.6 MISCELLANEOUS COVENANTS AND PROVISIONS OF THE PARTIES. In addition
to each of the terms, covenants and conditions herein set forth, the parties
hereby agree as follows:
(a) BROKERAGE. Seller will pay any brokerage commission or other
amounts due to Secured Capital Corp. and/or MW Commercial Real Estate, Inc. upon
and subject to the Closing of the sale of the Property pursuant to the terms of
a separate agreement between Seller and such exclusive brokers. Buyer hereby
represents and warrants to Seller that Buyer has not dealt with any other broker
or finder in connection with the transactions contemplated hereby, and Buyer
hereby agrees to indemnify, defend and hold Seller harmless of and from any and
all manner of claims, liabilities, loss, damage, attorneys' fees and expenses
incurred by the indemnified party and arising out of, or resulting from, any
claim by any such broker or finder if such representation and warranty herein
contained is untrue or incorrect in any respect.
(b) GUEST BAGGAGE. Any baggage or other property of departed guests
held by Seller may be left at the Hotel for a period not to exceed ninety (90)
days following the Closing Date. After such period, all such baggage or property
will, at the option of Seller, be removed by Seller or abandoned by Seller and
Buyer shall dispose of such baggage in any manner deemed appropriate by Buyer.
Seller hereby indemnifies Buyer against all claims, losses and liabilities in
connection with the holding of such baggage or other property for such period
and the disposal of same by Seller. Buyer hereby indemnifies Seller against all
claims, losses and liabilities in connection with Buyer's disposal of such
baggage. All baggage of guests who are still in the Hotel on the Closing Date
which has been checked with or left in the care of Seller shall be inventoried,
sealed and tagged jointly by Seller and Buyer immediately after the Closing.
Buyer hereby indemnifies Seller against all claims, losses or liabilities with
respect to such baggage arising out of the acts or omissions of Buyer after the
Closing. Seller hereby indemnifies Buyer against all claims, losses or
liabilities with respect to such baggage arising out of the acts or omissions of
Seller prior to the Closing.
(c) SAFE DEPOSITS. Immediately after the Closing, Seller shall send
written notice to guests or tenants or other persons who have safe deposit
boxes, advising of the sale of the Hotel to Buyer, and requesting verification
or removal of the contents within five (5) days. The safe deposit boxes of
guests or tenants not responding to said written notice shall be opened only in
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the presence of representatives of both Seller and Buyer. The contents of all
boxes opened as aforesaid shall be listed at the time such boxes are opened,
each such list shall be signed by or on behalf of Seller and Buyer, and Buyer
shall not be liable or responsible for any items claimed to have been in said
boxes unless such items are included in such list. Seller agrees to indemnify
and hold harmless Buyer from and against any liability or responsibility for any
items claimed to have been in said boxes but not included on such list, and
Buyer agrees to indemnify and hold Seller harmless from and against any
liability or responsibility for items claimed to have been in said boxes and
included on such list.
(d) INSURANCE. Seller shall keep in full force all insurance policies,
except for the Transferable Insurance Policies, relating to the Property or
operation of the Hotel until 11:59 p.m. of the Closing Date.
11. OTHER PROVISIONS.
11.1 INDEMNIFICATION.
a) SELLER'S INDEMNIFICATION. Seller hereby agrees to indemnify, hold
harmless and defend Buyer from and against any and all loss, damage, claim, cost
and expense and any other liability whatsoever, including, without limitation,
reasonable accountants' and attorneys' fees, charges and costs, incurred by
Buyer by reason of (i) Seller's breach of any representations, warranties and
covenants of Seller contained in this Agreement which survive the Closing, and
(ii), without limiting the generality of the foregoing, Seller's failure to duly
perform and discharge Retained Liabilities or perform the obligations of Seller
under the Assignment and Assumption, for one (1) year from and after the
Closing. This indemnity shall terminate and be of no force and effect as of one
(1) year after the Closing Date. The indemnification provided for in the Section
10.1(a) shall from and after the Closing be the sole remedy for any matters
referred to herein.
b) BUYER'S INDEMNIFICATION. Buyer hereby agrees to indemnify, hold
harmless and defend Seller from and against any and all loss, damage, claim,
cost and expense and any other liability whatsoever, including, without
limitation, reasonable accountants' and attorneys' fees, charges, and costs
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incurred by Seller by reason of (i) Buyer's breach of any representations,
warranties and covenants of Buyer contained in this Agreement which survive the
Closing and (ii), without limiting the generality of the foregoing, Buyer's
failure to duly perform the obligations of Buyer under the Assignment and
Assumption at all times. . The indemnification provided for in the Section
10.1(b) shall from and after the Closing be the sole remedy for any matters
referred to herein, provided that nothing herein shall waive or modify the
assumption of and agreement to discharge future liabilities provided in the
documents to be executed and delivered at Closing.
c) THIRD PARTY CLAIMS. If a claim by a third party is made against
either of the indemnified parties, and if either of the indemnified parties
intends to seek indemnity with respect thereto under this Section 10.1, such
indemnified party shall promptly notify Buyer or Seller, as the case may be, of
such claim. The indemnifying party shall have thirty (30) days after receipt of
the above-mentioned notice to undertake, conduct and control, through counsel of
its own choosing (subject to the consent of the indemnified party, such consent
not to be unreasonably withheld or delayed) and at its expense, the settlement
or defense therefor, and the indemnified party shall cooperate with it in
connection therewith; provided that: (i) the indemnifying party shall not
thereby permit to exist any lien, encumbrance or other adverse charge upon any
asset of any indemnified party (ii) the indemnifying party shall permit the
indemnified party to participate in such settlement or defense through counsel
chosen by the indemnified party, provided that the fees and expenses of such
counsel shall be borne by the indemnified party and (iii) the indemnifying party
shall agree promptly to reimburse the indemnified party for the full amount of
any loss resulting from such claim and all related expenses incurred by the
indemnified party within the limits of this Section 11.1. So long as the
indemnifying party is reasonably contesting any such claim in good faith, the
indemnified party shall not pay or settle any such claim. Notwithstanding the
foregoing, the indemnified party shall have the right to pay or settle any such
claim, provided that in such event they shall waive any right to indemnity
therefor by the indemnifying party. If the indemnifying party does not notify
the indemnified party within thirty days after receipt of the indemnified
party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the indemnified party shall have the right to contest, settle
or compromise the claim in the exercise of its exclusive discretion at the
expense of the indemnifying party.
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d) SURVIVAL.
I. The representations, warranties, covenants and agreements of Seller
contained in Sections 7, 9, 10.6 and 11 shall survive the Closing.
II. The representations, warranties, covenants and agreements of Buyer
contained in Sections 7, 9, 10.4, 10.6 and 11 shall survive the Closing.
e) LIMITATION OF LIABILITY. Notwithstanding anything to the contrary in
this Agreement, Seller shall have no liability for any of Seller's post-closing
obligations, including the indemnification obligations set forth in Section
11.1, unless the aggregate amount of the losses exceed , in the 90 day period
for final adjustment set forth in Section 9.3, $100,000, and after such period
$250,000 (in which event liability shall extend only to amounts in excess of
$100,000 or $250,000 as applicable), provided, however in no event shall the
such liability shall exceed 1% of Purchase Price or One Million Seventy Thousand
Dollars ($1,070,000), in the aggregate for all such losses or liabilities.
Seller shall retain not less that such amount of net assets in its financial
accounts until the one year anniversary of the Closing Date or shall provide an
undertaking by a credit-worthy affiliate to be liable up to such amount for
Seller's obligations under this Section. Such amounts shall be made available
for the purpose of (i) post-Closing adjustments pursuant to Section 9.3 and (ii)
payment of all indemnities and other amounts due under this Agreement, subject
to Seller's maximum liability for any indemnities as set forth here. Unless an
action for indemnity is commenced within one (1) year from the Closing Date and
thereafter diligently pursued, Seller shall have the right to distribute or
otherwise liquidate such amount and any affiliate undertaking shall be released.
After such distribution or release, Buyer shall have no further recourse against
Seller or its affiliate.
11.2 NOTICES. All notices, consents or waivers required or permitted in
this Agreement shall be in writing and be deemed to have been duly given (a)
when delivered to the recipient personally; (b) 72 hours after being mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the recipient as set forth below; or (c) upon electronically
verified transmission by telecopier, whichever is earlier. A party may change
its address for notice by such notice.
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If to Seller:
HWB 2507 KALAKAUA, LLC
c/o Leucadia National Corporation
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attention: Xxxxxx Xxxxxx
With a copy to:
KMZ Rosenman
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attention: X.X. XxXxxxxx
Email: x.x.xxxxxxxx@xxxx.xxx
If to Buyer:
XXXXXXX ENTERTAINMENT CO.
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxx Xxxxxxxx
With a copy to:
_______________
_______________
Fax: ___________
Attention: _______
11.3 TIME. Time is of the essence of this Agreement with respect to the
Scheduled Closing Date, subject to any provisions provided for herein for
extension thereof, and the notice periods set forth in Section 11.1, and for the
termination of post-closing claim periods.
11.4 ENTIRE AGREEMENT. This Agreement, including the Exhibits, Offering
Schedules and other documents referred to herein, contains the entire agreement
between the parties pertaining to the subject matter hereof and fully supersedes
all prior agreements and understandings between the parties pertaining to such
subject matter. No change in or amendment to this Agreement shall be valid
unless set forth in writing and signed by all of the parties after the execution
of this Agreement.
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11.5 APPLICABLE LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of New York pertaining to contracts made
and to be performed solely in the State of New York, except that matters
relating to real estate title shall be governed by the laws of Hawaii. The
parties agree that the courts located in New York County in New York State are a
convenient forum and agree to submit to their jurisdiction for any dispute
arising under this Agreement.
11.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, and all such executed counterparts shall constitute the same
agreement. It shall be necessary to account for only one such counterpart in
proving this Agreement.
11.7 READINGS, GENDER AND NUMBER. The section headings used in this
Agreement are intended solely for convenience of reference and shall not
amplify, limit, modify or otherwise be used in the interpretation of any
provision of this Agreement. The masculine, feminine or neuter gender and the
singular or plural number shall be deemed to include the others whenever the
context so indicates or requires.
11.8 BINDING AGREEMENT; ASSIGNMENT. The provisions of this Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto. Neither Seller nor Buyer shall be permitted to
assign all of its rights or obligations under this Agreement without the prior
written consent of the other; provided, however, Buyer may assign its rights and
obligations under this Agreement without the prior written consent of Seller to
a wholly-owned subsidiary of or affiliated company wholly under "control" with
Buyer, provided, further, that the subsidiary or the affiliated company is duly
organized, validly existing and in good standing under the law of the state of
its incorporation and qualified to do business in the State of Hawaii. For
purposes hereof, "control" shall be deemed to mean ownership of not less than
fifty percent (50%) of all of the legal and equitable interest in any other
business entity. Such assignee shall become Buyer under this Agreement and, upon
the written assumption by the new Buyer of all of the obligations of Buyer under
this Agreement, the original Buyer shall be released therefrom.
11.9 SEVERABILITY. If any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid or unenforceable, the remainder
of this Agreement shall nonetheless remain in full force and effect.
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11.10 EXHIBITS AND SCHEDULES. References in this Agreement to Exhibits
mean the exhibits described in the List of Exhibits attached hereto, all of
which are incorporated by reference into this Agreement. References in this
Agreement to Schedules mean the schedules described in the List of Schedules
attached hereto or included in the Offering Schedules, all of which are
incorporated by reference into this Agreement.
11.11 LIMITATION ON RECOURSE. Except as and to the extent an affiliate
undertaking may be provided pursuant to Section 11(e), no parent, member,
affiliate, director, officer, agent, representative or other party related to
Seller shall be obligated or liable for any obligation of Seller in regard to
the Hotel, this Agreement or the transaction contemplated here. No such excluded
party shall be named by Buyer or its successors or affiliates in any claim or
action brought to enforce any liability or obligation of Seller or any other
party in regard to the Hotel.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLER: BUYER:
HWB 2507 KALAKAUA, LLC XXXXXXX ENTERTAINMENT CO.,
a Delaware limited liability company a Delaware Corporation
By: /s/ Xxxxxx Xxxxxx/ By: /s/ X. Xxxxxxxx
------------------------- -------------------------
An Officer
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LIST OF EXHIBITS
TO
HOTEL PURCHASE AGREEMENT
Exhibit Description
A Legal Description of the Land
B Assignment of Ground Lease
C Xxxx of Sale
D Assignment and Assumption
LIST OF SCHEDULES
TO
HOTEL PURCHASE AGREEMENT
Schedule Description
-------- -----------
4.3A Tenant Leases
As on website and on file with managing agent
4.3B Litigation
Tikis Restaurant parking rate arbitration
Blanton v. HWB 2507 (ADA claim) settled
2/2005. Settlement agreement will be
provided.
Xxxxxxxx Xxxxx as Trustee et al. v. Leucadia
National et al. To be settled simultaneous
with closing.
Employee claims, if any, known to managing
agent
Insured Claims, if any, known to managing agent.
4.3C Permits
As on file with managing agent
4.3D Hotel Contracts
As on website and on file with managing agent
4.3E Bookings
As per managing agent
4.3F Hotel Employees
As per managing agent.
No non-Honolulu employees are included
4.3G Transferable Insurance Policies
None other than employee coverages that may
be maintained by managing agent
4.3H Employment Agreements
None other than as maintained by managing
agent for its own employees
