PURCHASE AGREEMENT
THIS AGREEMENT is made as of March 17, 2000, between SHAGAWA RESORT,
INC., a Minnesota corporation ("Seller"), and GRAND ELY LODGE, LLC, a Minnesota
limited liability company ("Buyer") and or its Assigns.
In consideration of the mutual promises and covenants contained in this
Agreement, Seller and Buyer agree as follows:
1. SALE OF PROPERTY. Seller agrees to sell to Buyer, and Buyer agrees
to buy from Seller, the following property (collectively, "Property"):
(a) Real Property. The real property, commonly known as
Holiday Inn Sunspree Resort, located in Ely, St. Xxxxx County,
Minnesota, described on the attached Exhibit A (the "Land") together
with (1) all buildings and improvements constructed or located on the
Land ("Buildings") and (2) all easements and rights benefitting or
appurtenant to the Land (collectively the "Real Property").
(b) Personal Property. All of the personal property situated
in or about the Real Property owned by Seller that is used in
connection with the operation of, or located at, the Real Property, all
as described on the inventory attached to this Agreement as Exhibit B
("Personal Property").
(c) Plans. All originals and copies of the as-built
blueprints, plans and specifications regarding the Real Property and
the Personal Property, if any ("Plans").
(d) Contracts, Agreements and Leases. Seller's interests in
those existing service and maintenance contracts, equipment leases,
franchise/licensing agreements, and other contracts regarding the Real
Property and the Personal Property, including but not limited to those
described on the attached Exhibit C ("Contracts"), which Buyer desires
to purchase (all others shall be terminated by Seller as of the date of
closing).
(e) Permits. Seller's interests in all the permits and
licenses currently possessed by Seller relating to the Real Property
and/or Personal Property, and the operation thereof, including, but not
limited to, those described on attached Exhibit D ("Permits").
(f) Records. All records of Seller regarding the Real Property
and the Personal Property, including, without limitation, all records
regarding management and leasing, real estate taxes and assessments,
insurance, maintenance, repairs, capital improvements and services, but
excluding tax returns (but Seller agrees to provide to the SBA or its
agent tax returns which they have requested) ("Records").
(g) Warranties. All of Seller's interest in and to all
warranties and guaranties given to, assigned to, or benefitting Seller
or the Real Property or the Personal Property regarding the
acquisition, construction, design, use, operation, management, or
maintenance of the Real Property and the Personal Property (the
"Warranties").
(h) Website. To the extent not prohibited by the existing
Holiday Inn franchise/license agreement, all of Seller's interest in
and to the domain name registration for "XxxXxxxxxxXxx.xxx" and the
accompanying right to use such domain name, which is currently being
used in connection with the Real Property.
(i) Trademarks/Service Xxxx. To the extent not prohibited by
the existing Holiday Inn franchise/license agreement, all of Seller's
interest in and to the Trademarks and Service Marks used in connection
with the Property, together with the goodwill of the businesses with
which the Trademarks and Service Marks are used.
2. PURCHASE PRICE, ASSURED OBLIGATIONS AND MANNER OF PAYMENT. The total
purchase price ("Purchase Price") to be paid by Buyer to Seller for the Property
shall be Two Million Three Hundred Thousand ($2,300,000.00) Dollars. The
Purchase Price shall be payable as follows:
(a). Xxxxxxx Money. Seventy-Five Thousand Dollars ($75,000.00)
as xxxxxxx money ("Xxxxxxx Money") which Xxxxxxx Money shall be held by
Crow Wing Abstract & Title ("Title") as escrow agent.
(b). Remainder.
(1) Eight Hundred and Fifty-Eight Thousand One
Hundred Twenty-Five and 93/100ths ($858,125.93) Dollars
(pay-off figure assumes all regular payments are made between
the date of the Agreement and the Closing), or such other
amount confirmed as of the date of closing by assumption of
the outstanding balance due under that certain Small Business
Administration ("SBA") promissory note and mortgage, dated May
23, 1996, between Seller, as borrower, and Minnesota Business
Finance, Inc., as lender (the "SBA Mortgage"), and the release
of Seller therefrom, to the extent consented to by SBA and
lender; and/or
(2) The remaining balance of the Purchase Price in
certified funds or by wire transfer of U.S. Federal Funds to
be received in Title's trust account on or before 12:00 p.m.
on the Closing Date.
(c) In addition to the purchase price stated above, Buyer
shall (subject to Buyer's reasonable review and approval thereof)
reimburse Seller at closing for
the then-outstanding receivables, inventories, and prepaid expenses,
including, but not limited to, insurance and Holiday Inn franchise
fees, at the amounts carried on Seller's books as of the closing date.
Provided that Buyer shall not purchase any receivables that Buyer
reasonably deems to be "bad debts." Seller shall retain all cash in
Seller's bank accounts, including the replacement reserve account. All
cash, checks, and other funds on-site, including without limitation,
till money at the time of closing shall purchased by Buyer at closing,
and paid for in addition to the purchase price stated above.
(d) Buyer shall assume the obligations of Seller to its
employees for accrued paid vacation amounts as of the Closing Date. The
aggregate of such amounts is estimated to be approximately $10,500 as
of the Closing Date. Buyer shall also assume all payroll obligations
with respect to Seller's employees, as of 7:00 a.m. on May 1, 2000.
(e) The Real Property is presently subject to a mortgage in
favor of the SBA. If Buyer is unable to assume the SBA Mortgage, Buyer
shall be responsible for the pre-payment penalty assessed by the SBA as
a result of the pre-payment of the SBA mortgage occurring as a result
of this sale, and shall hold Seller harmless from payment of same. At
closing, Buyer shall pay the SBA mortgage pre-payment penalty, if any,
in addition to the Purchase Price.
(f) Buyer intends to apply to transfer the Holiday Inn
franchise license held by Seller to Buyer. Regardless of whether such
transfer is approved or denied, or whether Buyer is granted a new
Holiday Inn franchise license, Buyer shall assume and pay, and
indemnify, defend and hold Seller harmless with respect to, all
franchise fees, damages, or other amounts accruing to Holiday
Hospitality Franchising, Inc. after the Closing Date.
(g) The Purchase Price shall be allocated as set forth in the
attached Exhibit E.
3. CONTINGENCIES. The obligations of Buyer under this Agreement are
contingent upon each of the following:
(a) Representations and Warranties. The representations and
warranties of Seller contained in this Agreement must be true now and
on the Closing Date as if made on the Closing Date.
(b) Title. Title shall have been found acceptable, or been
made acceptable, in accordance with the requirements and terms of
Section 7 below.
(c) Performance of Seller's Obligations. Seller shall have
performed all of the obligations required to be performed by Seller
under this Agreement, as
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and when required by this Agreement. Included within the obligations of
Seller under this Agreement shall be the following:
(1) Seller shall allow Buyer, and Buyer's agents,
access to the Real Property without charge and at all
reasonable times upon 24 hours written notice to Seller, for
the purpose of Buyer's investigation and testing of the same.
Buyer shall pay all costs and expenses of such investigation
and testing and shall hold Seller and the Real Property
harmless from all costs and liabilities relating to the
Buyer's activities. Buyer shall further repair and restore any
damage to the Real Property caused by or occurring during
Buyer's testing and return the Real Property and/or Personal
Property to substantially the same conditions as existed prior
to such entry.
(2) Seller shall, without charge to Buyer, cooperate
in Buyer's attempts to obtain: (i) the assignment of Seller's
rights under the existing Holiday Inn franchise/license
agreement; and (ii) all governmental approvals necessary in
Buyer's judgment in order to make that use of the Property
which Buyer intends, which use shall be for resort operations
a lawful use of the Property. Buyer shall pay all filing fees,
legal fees and other expenses related to its obtaining such
governmental approvals, and hold Seller harmless form payment
of same.
(3) On or before ten (10) days after the date of this
Agreement is signed, Seller shall deliver to Buyer true and
correct copies of Seller's copies of all Contracts, Permits,
Plans, Records, Existing Encumbrances (as hereinafter defined)
and other material information regarding the Property for
Buyer's review and analysis. Buyer hereby agrees that it will
not share, divulge, or communicate in any manner whatsoever or
to any person or entity whatsoever, except to attorneys,
lenders, consultants and others involved in the transaction
contemplated in this Agreement, or as required by law, any
information which Buyer may obtain during its investigation of
the Property or which Seller may provide pursuant to the terms
of this Agreement and designate thereon as "CONFIDENTIAL" (the
"Confidential Information"). Buyer acknowledges that if Buyer
breaches the confidentiality terms of this Agreement Seller
shall be entitled to a mandatory injunction restraining Buyer
from violating the confidentiality terms of this Agreement.
Upon termination of this Agreement Buyer shall return all
Plans and Records concerning the Property.
(d) Survey. On or before the Contingency Date, Buyer, may
obtain a current ALTA/ACSM survey (the "Survey") of the Real Property,
certified to Buyer, Buyer's lender, and Title, by a Registered Land
Surveyor properly licensed to practice in the State of Minnesota. The
survey shall locate all xxxxx and storage
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tanks, which are on the Real Property. Buyer and Seller shall split the
cost of such survey.
(e) Environmental Testing. On or before the Contingency Date,
Buyer shall be satisfied, in Buyer's reasonable discretion, with: (i)
soil tests, engineering inspections, hazardous waste and environmental
reviews and other tests and inspections of the Property, as provided by
Seller; and (ii) any additional tests and inspections of the Property
undertaken at Buyer's sole cost and expense, all to assure Buyer that
the Property is suitable for its intended use.
(f) Document Review. Buyer shall have determined, on or before
the Contingency Date, that it is satisfied with its review and analysis
of the Plans, Contracts, Permits, Warranties, Records and Existing
Encumbrances.
(g) Access. On or before the Contingency Date, Buyer shall be
satisfied, in Buyer's reasonable discretion, that the Real Property has
direct legal access to, abuts, and is served by a publicly-dedicated
and maintained road that provides a valid means of ingress and egress
to and from the Real Property, and that Seller has received no notice
that any abutting roads are under threat of condemnation.
(h) Compliance with Laws. On or before the Contingency Date,
Buyer shall have reasonably determined that the Property and the
current use thereof fully complies with all existing local, state, and
federal regulations concerning the maintenance and operation of the
Property, including zoning, building, health and safety, fire safety,
and environmental codes and laws and such use is a legal conforming
use.
(i) TIF Commitment. On or before the Contingency Date, Buyer
shall have obtained a binding commitment from the City of Xxx, in form
and substance satisfactory to Buyer in Buyer's sole judgment, that the
transaction contemplated herein will not accelerate any debt payments
and that any revenue to the Property generated by a "pay-as-you-go"
project will be assigned to Buyer.
(j) Holiday Inn License. On or before the Contingency Date,
Buyer shall have received approval of its pending request to transfer
the existing Holiday Inn Franchise License from Seller to Buyer in form
and substance satisfactory to Buyer.
The "Contingency Date" shall be the April 19, 2000. If any contingency
except those set forth in subparagraphs a, b and c described herein has not been
satisfied on or before the Contingency Date, then this Agreement may be
terminated, at Buyer's option, by written notice from Buyer to Seller. Such
notice of termination may be given at any time on or before the Contingency
Date. Upon such termination, the Xxxxxxx Money and any interest accrued thereon
shall be returned to Buyer and Buyer shall execute a
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release of all rights in and to the Purchase Agreement and the Property by quit
claim deed in favor or Seller. Provided, however, that if the purchase agreement
is terminated based upon the contingency set forth in either subparagraph (i) or
(j), $25,000 of the xxxxxxx money shall be forfeited and paid to Seller. All the
contingencies set forth in this Agreement are specifically stated and agreed to
be for the sole and exclusive benefit of the Buyer and the Buyer shall have the
right to unilaterally waive any contingency by written notice to Seller. The
contingencies set forth in subparagraphs a, b and c shall survive until the
closing.
4. RIGHT OF FIRST REFUSAL. The parties to this Purchase Agreement
acknowledge and agree that the transaction contemplated herein is subject to a
right of first refusal held by Holiday Hospitality Franchising, Inc. ("HHF")
pursuant to the September 25, 1998 Renewal License Agreement between Seller and
HHF. Upon execution of this Agreement, Seller shall give notice to HHF of
Buyer's offer to purchase the property in order to commence the thirty (30) day
right of first refusal period. In the event that HHF exercises its right of
first refusal, the parties agree that this Purchase Agreement shall be null and
void, and that neither party shall have any further obligation to one another
hereunder, except that Seller shall instruct Title to return the Xxxxxxx Money
to Buyer.
5. CLOSING. The closing of the purchase and sale contemplated by this
Agreement (the "Closing") shall occur on or before May 1, 2000, or such other
date as may be mutually agreed on by the parties (the "Closing Date"). The
Closing shall take place at 10:00 a.m. local times of the office of Title or at
such other place as may be agreed to by Buyer and Seller. Seller agrees to
deliver sole and exclusive possession of the Property to Buyer at 12:00 p.m. on
the Closing Date.
(a) Seller's Closing Documents. On the Closing Date, Seller
shall execute and/or deliver to Buyer the following (collectively,
"Seller's Closing Documents"):
(1) Deed. A General Warranty Deed, in form reasonable
satisfactory to Buyer, conveying the Real Property to Buyer,
free and clear of all encumbrances, except the Permitted
Encumbrances hereafter defined.
(2) Xxxx of Sale. A Xxxx of Sale, in form reasonable
satisfactory to Buyer conveying the Personal Property to
Buyer.
(3) Assignment of Contracts and Agreements. An
Assignment of Contracts and Agreements in form reasonably
satisfactory to Buyer, conveying Seller's interest in such
Contracts and Agreements as desired by Buyer, to Buyer, free
and clear of all encumbrances.
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(4) Assignment of Permits. An Assignment of Permits
and Licenses, in form reasonably satisfactory to Buyer,
conveying the Permits and Licenses to Buyer, free and clear of
all encumbrances.
(5) Title Commitment. A currently updated Commitment
for Title Insurance initiated by Title, in the form required
by this Agreement.
(6) Opinion of Seller's Counsel. An opinion of
Seller's counsel, dated as of the Closing Date, in form
reasonably satisfactory to Buyer, that Seller has been duly
organized and is in good standing under the laws of the State
of Minnesota; that Seller is duly qualified to transact
business in the State of Minnesota; that Seller has the
requisite power and authority to enter into and perform this
Agreement, and those Seller's Closing Documents signed by it;
that such documents have been duly authorized by all necessary
action on the party of Seller and have been duly executed and
delivered; that the execution, delivery and performance by
Seller of such documents to not conflict with or result in a
violation of Seller's organizational documents or, to the
knowledge of Seller's counsel, any judgment, order or decree
of any court of arbiter to which Seller is a party; that such
documents are valid and binding obligations of Seller,
enforceable in accordance with their terms.
(7) Seller's Affidavit. An Affidavit of Title by
Seller indicating that on the Closing Date there are not
outstanding, unsatisfied judgments, tax liens or bankruptcies
against or involving Seller or the Real Property; that there
has been no skill, labor or material furnished to the Real
Property for which payment has not been made or for which
mechanics' liens could be filed; and that there are not other
unrecorded interests in the Real Property, together with
whatever standard owner's affidavit and/or indemnity which may
be required by Title to issue and Owner's Policy of Title
Insurance in the form required by Section 7.
(8) Original Documents. Original or copies of the
Plans, Permits, Contracts, Warranties, and the Records, if
any.
(9) FIRPTA Affidavit. A non-foreign affidavit,
properly executed and in recordable form, containing such
information as is required by IRC Section 1445(b) (2) and its
regulations.
(10) Owner's Duplicate Certificates of Title. The
owner's duplicate certificates of title regarding the Real
Property, if any.
(11) IRS Form. A Designation Agreement designating
the "reporting person' for purposes of completing
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(12) Well Certificate. A Certificate signed by Seller
warranting that there are no "Xxxxx" on the Property within
the meaning of Minn. Xxxx.xx. 1031 or if there are "Xxxxx," a
Well Certificate in the form required by law, which may be
incorporated into the deed.
(13) Assignment of Franchise/License Agreement. If
approved by the franchisor/licensor under the existing Holiday
Inn franchise/license agreement, a transfer or assignment to
Buyer of all of Sellers' rights in such franchise/license
agreements affecting the Property, including a waiver of all
rights to purchase the Property that may exist in favor of the
franchisor or licensor, in form reasonably satisfactory to
Buyer.
(14) Resolution. A current corporate resolution of
Seller, authorizing the transaction contemplated by this
Agreement and the execution and delivery of Seller's closing
documents.
(15) Other Documents. All other documents reasonably
determined by Buyer to be necessary to transfer the Property
to Buyer free and clear of all encumbrances except pPermitted
eEncumbrances.
B. Buyer's Closing Documents. On the Closing Date, Buyer will
execute and/or deliver to Seller the following (collectively "Buyer's
Closing Documents"):
(1) Purchase Price. The Purchase price, by wire
transfer of U.S. Federal Funds or by certified check to be
received in Title's trust account on or before 12:00 p.m. on
the Closing Date.
(3) Title Documents. Such affidavits of Buyer,
Certificates of Value or other closing documents as may be
reasonably required by Title in order to record the Seller's
Closing Documents and issue the Title Insurance Policy
required by this Agreement.
(4) IRS Form. A Designation Agreement designating the
"reporting person" for purposes of completing Internal Revenue
Form 1099 and, if applicable, Internal Revenue Form 8594.
6. PRORATIONS. Seller and Buyer agree to the following prorations and
allocation of costs regarding this Agreement:
(a) Title Insurance and Closing Fee. Seller will pay all costs
of Title Evidence. Buyer will pay all premiums required for the
issuance of any Title
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Policy required by Buyer. Seller and Buyer will share in the Cost of
all reasonable and customary closing fee or charge imposed by any
closing agent designated by the Title Company.
(b) Deed Tax. Seller shall pay all state deed tax regarding
the Warranty Deed to be delivered by Seller under this Agreement. Buyer
shall pay all Mortgage Registry Tax regarding the recording of the
mortgage securing the Buyer's loan.
(c) Real Estate Taxes and Special Assessments. Seller will
pay, on or before the Closing Date, any installments of special
assessments including interest payable with general real estate taxes
in 1999 and prior years. General real estate taxes payable in 1999 and
all prior years will be paid by Seller. General real estate taxes and
installments of special assessments payable in 2000 shall be prorated
by Seller and Buyer as of the Closing Date based upon a calendar fiscal
year. Seller shall pay all deferred real estate taxes, if any, which
may become payable as a result of the sale contemplated hereby. Buyer
shall assume and pay all real estate taxes and special assessments,
levied, or pending from and after the Closing Date.
(d) Recording Costs. Seller will pay the cost of recording all
documents necessary to place record title in the condition warranted by
Seller in this Agreement. Buyer will pay the cost of recording all
other documents.
(e) Security Deposits and Advance Payments. The aggregate
amount of deposits and advance payments received by Seller prior to the
Closing Date for future services and bookings not yet performed, shall
be paid to Buyer at Closing.
(f) Other Costs. All other operating costs of the Property
will be allocated between Seller and Buyer as of the Closing Date so
that Seller pays that part of such other operating costs attributable
to the period of time before the Closing Date, and Buyer pays that part
of such operating costs attributable to the period of time from and
after the Closing Date.
7. TITLE EXAMINATION. Title Examination will be conducted as follows:
(a) Seller's Title Evidence. Seller shall, within ten (10)
days after the date of this Agreement, furnish the following
(collectively, "Title Evidence") to Buyer:
(1) Title Insurance Commitment. A commitment ("Title
Commitment") for an ALTA Form B 1970 Owner's Policy of Title
Insurance insuring title to the Real Property, deleting
standard exceptions
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and including affirmative insurance regarding zoning,
contiguity, appurtenant easements and such other matters as
may be identified by Buyer, in the amount of the Purchase
Price, issued by Title. If the Property is abstract property,
Seller shall also deliver to Title or Buyer an Abstract of
Title to the Real Property certified to a current date to
include all appropriate judgment and bankruptcy searches.
(2) Survey. The Survey.
(3) UCC Searches. A report of UCC Searches made of
the Uniform Commercial Code records of the Secretary of State
of Minnesota and the County in which the Property is located,
made by said Secretary of State, or by a search firm
acceptable to Buyer, showing no UCC filings regarding any of
the Property.
(b) Buyer's Objections. Within fifteen (15) days after
receiving the last of the Title Evidence, Buyer will make written
objections ("Objections") to the form and/or contents of the Title
Evidence. Buyer's failure to make Objections within such time period
will constitute waiver of Objections. Any matter shown on such Title
Evidence and not objected to by Buyer shall be a "Permitted
Encumbrance" hereunder. Seller shall use its best efforts to cure the
Objections, but such efforts shall not postpone the Closing. To the
extent an Objection can be satisfied by the payment of money, Buyer
shall have the right to apply a portion of the cash payable to Seller
at the Closing to satisfaction of such Objection and the amount so
applied shall reduce the amount of cash payable to Seller at the
Closing. If the Objections are not cured by the Closing Date, Buyer
will have the option to:
(1) Terminate this Agreement and receive a refund of
the Xxxxxxx Money and the interest accrued and unpaid on the
Xxxxxxx Money, if any; and
(2) Withhold from the Purchase Price an amount which,
in the reasonable judgement of Title, is sufficient to assure
cure of the Objections. Any amount so withheld will be placed
in escrow with the Title, pending such cure. If Seller does
not cure such Objections within ninety (90) days after such
escrow is established, Buyer may then cure such Objections and
charge the costs of such cure (including reasonable attorney's
fees) against the escrowed amount. If such escrow is
established, the parties agree to execute and deliver such
documents as may be reasonably required by Title, and Seller
agrees to pay the charges of Title to create and administer
the escrow.
(3) Waive the Objections and proceed to close.
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Notwithstanding anything to the contrary herein, Buyer understands that
the real property is subject to a Tax Increment Financing Agreement.
(c) Title Policy. Seller will furnish to Buyer at closing a
suitably marked up Commitment initialed by Title undertaking to issue
such a Title Policy in the form required by the Commitment as approved
by Buyer.
8. OPERATION PRIOR TO CLOSING. During the period from the date of
Seller's acceptance of this Agreement to the Closing Date (the "Executory
Period"), Seller shall operate and maintain the Property in the ordinary course
of business in accordance with prudent, reasonable business standards, including
the maintenance of adequate liability insurance and insurance against loss by
fire, windstorm and other hazards, casualties and contingencies, including
vandalism and malicious mischief. However, Seller shall execute no contracts,
leases or other agreements regarding the Property during the Executory Period
that are not terminable on or before the Closing Date, without the written
consent of Buyer, which consent may be withheld by Buyer in its sole discretion.
9. REPRESENTATIONS AND WARRANTIES BY SELLER. As an inducement for Buyer
to enter into this Agreement and consummate the transaction contemplated hereby,
Seller hereby represents and warrants to Buyer that each and all of the
following are true and correct as of the date of this Agreement and will be true
and correct as of the date of Closing:
(a) Seller is duly organized and in good standing under the
laws of the State of Minnesota; duly qualified to transact business in
the State of Minnesota. The execution, delivery and performance of this
Agreement, including the documents, instruments and agreements to be
executed and/or delivered by Seller pursuant to this Agreement, and the
consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on
the part of Seller. This Agreement and the documents, instruments and
agreements to be executed and/or delivered by Seller pursuant to this
Agreement have been or will be on or before the date of Closing duly
and validly authorized, executed and delivered by Seller and the
obligations of Seller hereunder and thereunder are or will be upon such
execution or delivery valid, legally binding, and enforceable against
Seller in accordance with their respective terms.
(b) Seller owns the Real Property, free and clear of all
encumbrances, except the Existing Encumbrances identified on Exhibit F
attached hereto (the "Existing Encumbrances").
(c) Seller owns the Personal Property, free and clear of all
encumbrances, except those identified on Exhibit B.
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(d) There are no condemnation proceedings pending or, to
Seller's knowledge, threatened as of the date of this Agreement with
respect to all or any part of the Real Property.
(e) Except as otherwise described in Exhibit G attached
hereto, no major or structural repairs have been performed, or to the
best of Seller's knowledge, without inquiry, have been necessary, with
respect to the improvements on the Real Property during the two (2)
years immediately preceding the date hereof. The physical condition of
such improvements on the Closing Date will not differ in any material
adverse respect from the condition of such improvements on the date of
this Agreement.
(f) Mechanic's Liens. All labor and materials which have been
provided to the Property have been fully paid for or will be fully paid
for, or will be fully paid for, prior to the Closing Date.
(g) Utilities. Gas, sanitary, and storm sewer and water lines
are connected to the Property and all charges for such connections have
been paid. Seller has received no notice of actual or threatened
reduction or curtailment of any utility service now supplied to the
Property.
(h) Personal Property and Equipment. The physical condition of
the Personal Property and equipment located on the Real Property on the
Closing Date will not differ in any material adverse respect from the
condition of such items on the date of this Agreement.
(i) Compliance with Laws. To the best of Seller's knowledge,
without inquiry, the Property and the current use thereof fully
complies with all existing local, state, and federal regulations
concerning the maintenance and operation of the Property, including
zoning, building, health and safety, fire safety, and environmental
codes and laws and such use is a legal conforming use. No notice of
violations of the same have been received. To the best of Seller's
knowledge (i) the Permits are in full force and Seller is not in
default thereunder, and (ii) no other permits or licenses are required
in order to operate the Property as it is now operated.
(j) Litigation and Other Matters. Seller has received no
notice, and has no knowledge of any pending notice, of a violation of
any statutes, ordinances, regulations, judicial decrees, or orders, or
the pendency of any lawsuits, administrative or arbitration hearings,
governmental investigations, proceedings, applications, petitioners, or
other matters affecting the Property or the use thereof.
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(k) Rights of Others to Purchase Property. Except for the
right of first refusal granted to licensor/franchisor under the
existing Holiday Inn license/franchise agreement, Seller has not
entered into any other contracts, agreements or understandings, whether
oral or written, for the sale of all or any portion of the Property,
and there are no existing rights of first refusal or options to
purchase all or any portion of the Property, or any other rights of
others that might prevent the consummation of this Agreement.
(l) Access. To the best of Seller's knowledge, without
inquiry, the Real Property has direct legal access to, abuts, and is
served by a publicly dedicated and maintained road that provides a
valid means of ingress and egress to and from the Real Property, and
Seller has received no notice that any abutting roads are under threat
of condemnation.
(m) Private Restrictions. To the best of Seller's knowledge,
without inquiry, except as already disclosed in this Agreement, there
are no contracts, leases, private restrictions or agreements with any
public authority that will not appear in the Title Commitment and that
will affect the present or future uses that may be made of the
Property, including but not limited to size or cost of buildings or
structures; limitation on use or restrictions in regard to fences,
roofs, garages, and heights of buildings or structures, except for
building and zoning codes; agreements to subject architectural plans to
an association or other group; provisions requiring improvements;
provisions requiring the joining of others in group actions; or
restrictions imposed on the Property due to its historical
significance.
(n) Hazardous Substances. To the best of Seller's knowledge,
without inquiry, no toxic or hazardous substances, or wastes,
pollutants, or contaminants (including, without limitation, any
hazardous substance as defined in, or regulated under, federal, state
or local laws, rules or regulations) have been generated, treated,
stored, released, or disposed of on the Property. To the best of
Seller's knowledge, no substances or conditions exist in or on the
Property that may support a claim or cause of action under any federal,
state, or local environmental statutes, regulations, ordinances, or
other environmental regulatory requirements. To the best of Seller's
knowledge, no above-ground or underground tanks are located in or about
the Property or have been located under, in, or about the Property and
have subsequently been removed or filled.
(o) Assessments. Seller has not received any notice of any
actual or proposed special assessments or reassessments of the Real
Property.
(p) Americans With Disabilities Act. To the best of Seller's
knowledge, without inquiry, the improvements located on the Real
Property are readily accessible to and usable by persons with
disabilities, and the primary function
13
areas of such improvements, including without limitation the common
areas, public areas, lobbies, dining areas, parking areas, wash and
toilet rooms, and public telephone and drinking fountain areas, and the
path of travel to and from any such primary function area, comply with
Title III of the Americans With Disabilities Act of 1990 (the "ADA")
and the ADA Accessibility Guidelines for Buildings and Facilities.
(q) Agents and Employees. No management agents or other
personnel employed in connection with the operation of the Property
have the right to continue such employment after the Closing Date.
There are no claims for brokerage commissions or other payments with
respect to the Property that will survive and remain unpaid after the
Closing Date.
The representations and warranties set forth in this paragraph 8 shall
be continuing and shall be true and correct on and as of the date of Closing
with the same force an effect as if made at that time and all such
representations, warranties and covenants shall survive closing and shall not be
affected by any investigation, verification or approval by any party hereto or
by anyone on behalf of any party hereto and shall not merge into Seller's deed
being delivered at Closing.
Notwithstanding anything contained herein to the contrary, it is
understood and agreed that, except as specifically provided in this agreement
and the documents, instruments and agreements to be executed and/or delivered by
Seller pursuant to this Agreement, Seller, its affiliates and agents have not
made and are not now making and they specifically disclaim any warranties,
representations or guaranties of any kind or character, express or implied, oral
or written, past, present or future, with respect to the Real Property, and
Buyer has not relied upon and will not rely upon, either directly or indirectly,
any representation or warranty of Seller or its affiliates or agents. Buyer
represents that it is knowledgeable, experienced and sophisticated purchaser of
real estate and that it is relying solely on the representations, warranties,
covenants and agreements of Seller contained in this Agreement and the
documents, instruments and agreements to be executed and/or delivered by Seller
pursuant to this Agreement, as well as on its own expertise and that of Buyer's
consultants in purchasing the Real Property. Buyer will or will have had the
opportunity to conduct such inspections and investigations of the Real Property
and Personal Property as Buyer deems necessary, including, but not limited to,
the physical and environmental conditions thereof, and shall rely upon the same.
Buyer acknowledges and agrees that except as otherwise provided in this
Agreement, Seller shall sell and convey to Buyer and Buyer shall accept the Real
Property and Personal Property "AS IS", "WHERE IS", with all faults. The terms
and conditions of this paragraph 8 shall survive the closing of the purchase and
sale transaction contemplated in this Agreement and shall not merge with the
provisions of any closing documents. Seller is not liable or bound in any manner
by any oral or written statements, representations or information concerning the
Real Property or Personal Property furnished by any real estate broker, agent,
employee, servant or
14
other person. Buyer acknowledges that the Purchase Price reflects the "AS IS"
nature of this sale and any faults, liabilities, defects or other adverse
matters that may be associated with the Real Property and Personal Property.
Buyer has fully reviewed the disclaimers and waivers set forth in this agreement
with its counsel and understands the significance and effect thereof. Buyer, on
its own behalf and on behalf of its affiliates and designees, hereby
acknowledges the disclaimer of representations and warranties set forth in this
paragraph 9.
10. REPRESENTATIONS AND WARRANTIES BY BUYER. Buyer represents and
warrants to Seller that Buyer is a duly organized and is in good standing under
the laws of the State of Minnesota; that Buyer has the requisite power and
authority to enter into this Agreement and the Buyer's Closing Documents signed
by it; such documents have been duly authorized by all necessary action on the
part of Buyer and have been duly executed and delivered; that the execution,
delivery and performance by Buyer of such documents do not conflict with or
result in violation of Buyer's organizational documents or any judgment, order
or decree of any court or arbiter to which Buyer is a party; such documents are
valid and binding obligations of Buyer, and are enforceable in accordance with
their terms.
11. DAMAGE. If, prior to the Closing Date, all or any part of the
Property is substantially damaged by fire casualty, the elements or any other
cause, Seller shall immediately give notice to Buyer of such fact and at Buyer's
option (to be exercised within thirty days after Seller's notice), this
Agreement shall terminate, in which event neither party will have any further
obligations under this Agreement and the Xxxxxxx Money, together with any
accrued interest, shall be refunded to Buyer. If Buyer fails to elect to
terminate despite such damage, or if the Property is damaged but not
substantially, Seller shall promptly commence to repair such damage or
destruction and return the property to its condition prior to such damage. If
such damage shall be completely repaired prior to the Closing Date then there
shall be no reduction in the Purchase Price and Seller shall retain the proceeds
of all insurance related to such damage. If such damage shall not be completely
repaired prior to the Closing Date but Seller is diligently proceeding to
repair, Buyer shall have the right to delay the Closing Date until repair is
completed, or escrow one hundred and ten (110%) percent of the estimated cost to
complete the repairs from the Seller's proceeds and close the transaction. If
Seller shall fail to diligently proceed to repair such damage then Buyer shall
have the right to require a closing to occur and the Purchase Price (and
specifically the cash portion payable at the Closing Date) shall be reduced by
the cost of such repair, or at Buyer's option, the Seller shall assign to Buyer
all right to receive the proceeds of all insurance related to such damage and
the Purchase Price shall remain the same. For purposes of this Section, the
words "substantially damaged" mean damage that would cost Fifty Thousand and
No/100 ($50,000.00) Dollars or more to repair.
12. CONDEMNATION. If, prior to the Closing Date, eminent domain
proceedings are commenced against all of any part of the Property, Seller shall
15
immediately give notice to Buyer of such fact and at Buyer's option (to be
exercised within thirty days after Seller's notice), this Agreement shall
terminate, in which event neither party will have further obligations under this
Agreement and the Xxxxxxx Money, together with any accrued interest, shall be
refunded to Buyer. If Buyer shall fail to give such notice then there shall be
no reduction in the Purchase Price, and Seller shall assign to Buyer at the
Closing Date all of Seller's right, title and interest in and to any award made
or to be made in the condemnation proceedings. Prior to the Closing Date, Seller
shall not designate counsel, appear in, or otherwise act with respect to the
condemnation proceedings without Buyer's prior written consent.
13. BROKER'S COMMISSION. Seller and Buyer represent and warrant to each
other that they have dealt with no brokers. Buyer and Seller both agree that
there are no finders fees or the like in connection with this transaction, and
agree to indemnify each other and to hold each other harmless against all
claims, damages, costs or expenses of or for any other such fees or commissions
resulting from their actions or agreements regarding the execution of
performance of this Agreement, and will pay all costs of defending any action or
lawsuit brought to recover any such fees or commissions incurred by the other
party, including reasonable attorneys' fees.
14. ASSIGNMENT. Neither party may assign its rights under this
Agreement without the prior written consent of the other party which said
consent from the seller shall not be unreasonably withheld, before or after the
Closing except that either party may assign its rights to an affiliated entity
or person under same common control with the assigning party. Any such
assignment will not relieve such assigning party of its obligations under this
Agreement.
15. SURVIVAL. All of the terms of this Agreement will survive and be
enforceable after the Closing.
16. NOTICES. Any notice required or permitted to be given by any party
upon the other is given in accordance with this Agreement if it is directed to
Seller by delivering it personally to an officer of Seller; or if it is directed
to Buyer, by delivering it personally to an officer of Buyer; or if mailed in a
sealed wrapper by United States registered or certified mail, return receipt
requested, postage prepaid; or if transmitted by facsimile, copy followed by
mailed notice as above required; or if deposited cost paid with a nationally
recognized, reputable overnight courier, properly addressed as follows:
If to Seller:
Attention: Xx. Xxxxx Xxxxxxxxx
Dynamic Homes, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
With a copy to:
16
Attention: Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxx
Lommen, Nelson, Xxxx & Xxxxxxxxx, P.A.
1800 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Buyer:
Grand Ely Lodge, LLC
c/o Madison Properties
0000 Xxxxx 0xx Xx., XX Xxx 000
Xxxxxxxx, Xxxxxxxxx 00000
With a copy to:
Larkin, Hoffman, Xxxx & Xxxxxxxx, Ltd
Attn: Xxxxx X. Xxxxxx, Esq.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Notices shall be deemed effective on the earlier of the date of receipt or the
date of deposit as aforesaid; provided, however, that if notice is given by
deposit, that the time for response to any notice by the other party shall
commence to run one business day after any such deposit. Any party may change
its address for the service of notice by giving written notice of such change to
the other party, in any manner above specified, 10 days prior to the effective
date of such change.
17. CAPTIONS. The paragraph headings or captions appearing in this
Agreement are for convenience only, are not a part of this Agreement and are not
to be considered in interpreting this Agreement.
18. ENTIRE AGREEMENT; MODIFICATION. This written Agreement constitutes
the complete agreement between the parties and supersedes any prior oral or
written agreements between the parties regarding the Property. There are no
verbal agreements that change this Agreement and no waiver of any of its terms
will be effective unless expressed in a writing executed by the parties.
19. BINDING EFFECT. This Agreement binds and benefits the parties and
their successors and assigns.
20. CONTROLLING LAW. This Agreement has been made under the laws of the
State of Minnesota, and such laws will control its interpretation.
17
21. REMEDIES. If Buyer defaults under this Agreement, Seller shall have
the right to terminate this Agreement by giving written notice to Buyer. If
Buyer fails to cure such default within 30 days of the date of such notice, this
Agreement will terminate, and upon such termination Seller will retain the
Xxxxxxx Money as liquidated damages, time being of the essence of this
Agreement. The termination of this Agreement and retention of the Xxxxxxx Money
shall be Seller's sole remedy. If Seller defaults under this Agreement, Buyer
may terminate this Agreement and obtain a refund of the Xxxxxxx Money, or seek
and recover from Seller damages for nonperformance or specific performance of
this Agreement. Except as otherwise specified elsewhere herein, all rights,
powers or remedies afforded the parties hereunder or at law shall be cumulative
and the exercise of one shall not bar exercise of another.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Agreement.
23. FACSIMILE SIGNATURES. This Agreement may be executed with
signatures transmitted by facsimile and shall constitute a binding agreement
with such signatures. Nonetheless, any party providing facsimile signatures
shall provide the other party with the original signatures within five (5)
business days after providing the facsimile signature page(s).
SELLER:
SHAGAWA RESORT, INC.
By S/Xxxxx Xxxxxxxxx
-----------------
Its President
---------
BUYER:
GRAND ELY LODGE, LLC
By S/Xxxxxx Xxxxxxx
----------------
Its Chief Manager
-------------
18
EXHIBIT A
REAL ESTATE DESCRIPTION (PARA 1(A))
PARCEL 1: That part of Lot Four (4) of Section Twenty-seven (27) in Township
Sixty-three (63) North, Range Twelve (12) West of the Fourth Principal Meridian,
lying north of the center line of Pioneer Road, according to the United States
Government survey thereof, bounded as follows: Beginning at the Southwest corner
of said Lot 4 go northerly along the west boundary line thereof 700 feet; thence
easterly parallel to said south boundary line thereof 700 feet; thence southerly
parallel to said west boundary line 700 feet to said south boundary line; and
thence westerly along said south boundary line 700 feet to the point of
beginning. The center line of Pioneer Road is described as follows: Assuming the
West line of said Government Lot 4 to bear North 01 degrees, 08'38" West and
from the Southwest corner of said Government Lot 4, run North 01 degrees 08'38"
West along said West Line, a distance of 157.34 feet to the POINT OF BEGINNING
of said center line. Thence North 59 degrees, 07'45" East, a distance of 175.04
feet; thence along a tangential curve, concave to the Northwest, central angle
of 18 degrees, 48'02", radius of 640.27 feet, a distance of 210.09 feet; thence
North 40 degrees 19'43" East, a distance of 101.24 feet; thence along a
tangential curve concave to the Southeast, central angle of 35 degrees, 33'35",
radius of 447.65, a distance of 277.83 feet; thence North 75 degrees, 53'18"
East, a distance of 85.93 feet to the centerline of platted road as shown in the
plat of "North Xxxxxxxx Fourth Addition," located in said Section 27, and there
to terminate.
PARCEL II: Tract A: Lots One (1), Two (2), Three (3), Four (4) and Five (5),
Block One (1), NORTH XXXXXXXX FOURTH ADDITION.
PARCEL II: Tract B: That part of Government Lot One (1), Section Twenty-eight
(28), Township Sixty-three (63) North, Range Twelve (12) West, described as
follows: Beginning at a point on the East boundary line of said Lot 1, 700' from
the Southeast corner thereof, go Southerly along said boundary line to said
Southeast corner, thence Westerly along the Southerly boundary line of said Lot
1 500 fee and thence Northeasterly in a straight line to the point of beginning,
EXCEPT that part thereof which lies westerly of a line drawn parallel to and 300
feet Westerly of the East boundary line of said Lot 1, and EXCEPT that part
thereof which lies south and East of the centerline of Pioneer Road, and EXCEPT
that portion, if any, of said parcel platted as North Xxxxxxxx Second Addition.
EXCEPT minerals and mineral rights as previously reserved.
Roadway easement for Pioneer Road and all easements of record.
All in St. Louis County, Minnesota.
EXHIBIT B
Personal Property (Para l(b) and 9(c)
List available upon request.
EXHIBIT C
Contracts, Agreements and Leases
Copies of contracts, Agreements, and Leases are available from the Company upon
request.
EXHIBIT D
Permits
Copies of permits are available from the Company upon request.
EXHIBIT E
PURCHASE PRICE ALLOCATION
Land $ 170,000
Buildings 1,230,000
Personal Property/Furnishings 600,000
Goodwill 300,000
EXHIBIT F
Existing Encumbrances (Paras. 8(c))
1. Taxes and installments of special assessments not yet due and payable.
2. Utility, drainage and driveway easements not interfering with existing
or Buyer's proposed use or improvements.
3. Covenants and restrictions not containing a forfeiture provision and
not interfering with existing or Buyer's proposed use or improvements.
4. Tax Increment Financing Agreements.
5. Easements to the City of Xxx.
EXHIBIT G
MAJOR/STRUCTURAL REPAIRS
None
