EXHIBIT 10.1
------------
PURCHASE AND SALE AGREEMENT WITH JOINT ESCROW INSTRUCTIONS
between
VVH RESORTS, LTD.,
a Delaware limited partnership
as Seller
and
LHO MISSION BAY HOTEL, L.P.,
a California limited partnership
as Buyer
PURCHASE AND SALE AGREEMENT WITH JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT WITH JOINT ESCROW INSTRUCTIONS
("Agreement") dated as of the 1st day of June, 1998 is by and between VVH
RESORTS, LTD., a Delaware limited partnership ("Seller"), and LHO MISSION
BAY HOTEL, L.P., a California limited partnership ("Buyer"). Capitalized
terms used in the RECITALS below, not otherwise defined therein, shall have
the meanings ascribed to them in SECTION 1 of this Agreement.
R E C I T A L S
WHEREAS, this Agreement is made and entered into with reference to
the following facts:
WHEREAS, Seller is the lessee pursuant to the Ground Lease (as
defined below) of the Land which is improved with, among other things, the
hotel commonly known as The San Diego Princess Resort located at 0000 Xxxx
Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx, 00000.
WHEREAS, Buyer desires to purchase, and Seller desires to sell, the
Property on the terms and conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer and Seller agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
1.1 "Accounts Receivable" means all accounts receivable of
the Hotel and the Property, including the Tray Ledger, receivables from
Room Revenues, Other Revenues and Leases.
1.2 "Assignment of Capital Leases" means the Assignment of
Capital Leases assigning to Buyer all of Seller's right, title and interest
in and to those Capital Leases which by their terms are assignable or
assignable with the other party's consent. The Assignment of Capital
Leases shall be in the form of, and upon the terms contained in, EXHIBIT
"A".
1.3 "ASSIGNMENT OF GROUND LEASE" means the Assignment and
Assumption of Ground Lease assigning to Buyer all of Seller's right, title
and interest in, to and under the Ground Lease. The Assignment of Ground
Lease shall be in the form of, and upon the terms contained in,
EXHIBIT "B".
1.4 "ASSIGNMENT OF INTANGIBLE PROPERTY" means the Assignment
of Intangible Property assigning to Buyer all of Seller's right, title and
interest in and to the Intangible Property. The Assignment of Intangible
Property shall be in the form of, and upon the terms contained in,
EXHIBIT "C".
1.5 "ASSIGNMENT OF LEASES" means the Assignment of Leases,
assigning to Buyer all of Seller's right, title and interest in and to the
Leases. The Assignment of Leases shall be in the form of, and upon the
terms contained in, EXHIBIT "D".
1.6 "ASSIGNMENT OF SERVICE CONTRACTS" means the Assignment of
Service Contracts assigning to Buyer all of Seller's right, title and
interest in and to those Service Contracts which Buyer will assume pursuant
to SECTION 5.2.6 below. The Assignment of Service Contracts shall be in
the form of, and upon the terms contained in, EXHIBIT "E".
1.7 "ASSIGNMENT FEE" means the fee payable to the City upon
an assignment of the Ground Lease pursuant to Section 8.5 of the Ground
Lease.
1.8 "XXXX OF SALE" means the Xxxx of Sale conveying to Buyer
the Personal Property. The Xxxx of Sale shall be in the form of, and on
the terms contained in EXHIBIT "F ".
1.9 "BUYER INDEMNITEES" has the meaning ascribed to it in
SECTION 12 of this Agreement.
1.10 "CAPITAL LEASES" means the leases of equipment used in
the operation of the Hotel, which are set forth on EXHIBIT "G ".
1.11 "CITY" means the City of San Diego, a municipal
corporation.
1.12 "CLOSING" means the consummation of the conveyances of
the Property to Buyer.
1.13 "CLOSING CERTIFICATES" mean (a) as to Seller, a
certificate of Seller stating that the warranties and representations of
Seller contained in this Agreement are true and correct in all material
respects as of the Closing Date, except as set forth in such certificate,
and (b) as to Buyer, a certificate of Buyer stating that the warranties and
representations of Buyer contained in this Agreement are true and correct
in all material respects as of the Closing Date, except as set forth in
such certificate.
1.14 "CLOSING DATE" means May 28, 1998 unless otherwise
mutually agreed to in writing by Buyer and Seller or extended pursuant to
the terms of this Agreement, but in no event later than the Outside Closing
Date (as defined below).
1.15 "CODE" means the United States Internal Revenue Code of
1986, as amended.
1.16 "DEPOSIT" means a deposit by Buyer in cash or immediately
available funds in Escrow of an amount equal to Five Hundred Thousand and
No/100 Dollars ($500,000.00) to be delivered by Buyer to Escrow Holder
within two (2) business days after the date of this Agreement.
1.17 "EELGRASS MITIGATION PLAN" means the eelgrass mitigation
plan set forth in the Ground Lease.
1.18 "EMPLOYMENT CONTRACTS" means all employment contracts,
except for any management contracts, consulting agreements, union
contracts, labor agreements, collective bargaining agreements, pension
plans, profit sharing plans and employee benefit plans, together with all
supplements, amendments and modifications thereto, which affect the
Property, and which are set forth on EXHIBIT "H".
1.19 "ESCROW" means the escrow established with Escrow Holder
for the consummation of the purchase and sale of the Property in accordance
with this Agreement.
1.20 "ESCROW HOLDER" means Chicago Title Insurance Company.
1.21 "EXCLUDED PERSONAL PROPERTY" means (a) all personal
property depicting the name "Princess" or any logo or trademark, of the
"Princess Resort" and (b) the personal property described on EXHIBIT "I".
1.22 "GOVERNMENTAL REGULATIONS" means any local, state, and
federal laws, ordinances, rules, requirements, resolutions, policy
statements and regulations (including, without limitation, those relating
to land use, subdivision, zoning, environmental, labor relations,
notification of sale to employees, Hazardous Materials, occupational health
and safety, water, earthquake hazard reduction and building and fire codes)
bearing on the construction, development, alteration, rehabilitation,
maintenance, use, operation, or sale of the Property.
1.23 "GROUND LEASE" means the City of San Diego Percentage
Lease dated December 30, 1994 between the City, as lessor, and Seller, as
Lessee.
1.24 "GROUND LESSOR ESTOPPEL" means a written statement
executed by the City dated within thirty (30) days prior to the Closing in
substantially the form and content of EXHIBIT "J " attached hereto.
1.25 "HAZARDOUS MATERIALS" means any hazardous or toxic
substance, material or waste which is or becomes regulated by any local
governmental authority, any agency of the State of California or any agency
of the United States Government. The term "Hazardous Materials" includes,
without limitation, any material or substance which (a) contains petroleum
or any petroleum by-products, (b) contains asbestos, (c) contains urea
formaldehyde foam insulation, (d) is designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution Control Act (33
U.S.C. ' 1317), (e) is defined as a "hazardous waste" pursuant to Section
1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
' 6901 (42 U.S.C. ' 6903), or (f) is defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ' 9601 (42 U.S.C. ' 9601). Each
reference to a statute or law in this definition shall be deemed to include
any amendments thereto which are enacted from time to time.
1.26 "HOTEL" means the real property and the improvements
comprising The San Diego Princess Resort located on the Land.
1.27 "HOUSE FUNDS" means cash on hand at the Hotel as of the
Transfer Time. At Closing, Buyer shall pay to Seller an amount equal to
the aggregate amount of such House Funds in readily available funds in
addition to, and not as part of, the Purchase Price.
1.28 "INTANGIBLE PROPERTY" means all of Seller's right, title
and interest in and to any and all intangible personal property owned by
Seller and used in connection with the ownership, construction, development
(including, without limitation, the benefit of future development rights,
plans, models and specifications, which include plans for the Marina
Construction (as defined below) and the "Master Plan 2000"), use and/or
operation of the Property, including, without limitation, the toll-free
telephone numbers for the Property, the Licenses and Permits, the Records
and Plans, and the Warranties. Notwithstanding the foregoing, in no event
shall the Intangible Property include any trade names, trademarks, service
marks or logos including, without limitation, the name "Princess" or any
xxxx or trade name that includes the word "Princess" as an element, which
property shall remain the property of Seller.
1.29 "LAND" means the leasehold estate in real property
located in the City of San Diego, County of San Diego, State of California,
as legally described in EXHIBIT "K".
1.30 "LEASES" means all existing leases, rental and occupancy
agreements and lease commitments relating to the Real Property, which
Leases are set forth on Exhibit "L", together with any and all leases which
are entered into after the date of this Agreement in accordance with
Section 5.1 of this Agreement.
1.31 "LICENSES AND PERMITS" means all of Seller's right,
title, interests, privileges, benefits and remedies in, to and under all
authorizations, approvals, permits, licenses, agreements, variances,
tentative maps, final maps, plans and specifications and land use
entitlements held by Seller and/or relating to the construction,
reconstruction, occupancy, operation or use of any part of the Property
(other than the Liquor License), including, without limitation, the Marina
Permits.
1.32 "LIQUOR ACT" means the Alcoholic Beverage Control Act, as
the same may be amended from time to time.
1.33 "LIQUOR ESCROW AGREEMENT" means the Agreement for
Purchase and Sale of Liquor Inventory and Liquor License and Escrow
Instructions to be executed and delivered by the holder of the Liquor
Licenses and Buyer (or Buyer's designee) within five (5) business days
after the execution of this Agreement for the acquisition of the Liquor
Licenses and the Liquor Inventory by Buyer (or Buyer's designee) from the
holder thereof. The Liquor Escrow Agreement shall be in substantially the
form of, and upon the terms contained in, EXHIBIT "M".
1.34 "LIQUOR INVENTORY" means all wine, beer and other
alcoholic beverages on hand at the Hotel as of the Transfer Time.
1.35 "LIQUOR LICENSES" means collectively the On Site General
Liquor License Number 47-208932, 00-000000-0, and 00-000000-0, the Caterer
Permit No. 00-000000-0 and the Controlled Access Cabinet Permit No. 66-
208932-1.
1.36 "MARINA CONSTRUCTION" means the construction of the
marina as contemplated by the Ground Lease and in accordance with the plans
and specifications previously submitted to the City, as the same may be
amended prior to the Closing.
1.37 "MARINA PERMITS" means collectively (a) Permit No. 6-97-
64 to be issued by the California Coastal Commission upon the satisfaction
of all special conditions contained therein (the "Coastal Development
Permit") and (b) Permit No. 96-20054-DZ issued by the United States Army
Corps of Engineers (the "Army Corps Permit") relating to the Marina
Construction.
1.38 "OTHER REVENUES" means all revenues earned from the
operation of the Property, other than Room Revenues, including, without
limitation, revenues from the sale of food, the sale of alcoholic and non-
alcoholic beverages, rental of meeting and banquet rooms, telephone sales,
pay television sales, valet and parking services, gift shop revenue, golf
and tennis revenues, marina, boat and boat slip rental revenues, and other
similar revenues, together with any sales tax or other taxes thereon.
1.39 "OUTSIDE CLOSING DATE" means Friday, June 5, 1998. In
the event the Closing does not occur for any reason prior to the Outside
Closing Date, then either party may terminate this Agreement upon written
notice to the other, and this Agreement shall thereupon terminate and be of
no further force or effect, and the parties shall have no further liability
or obligation thereunder, except for those provisions which survive the
termination of this Agreement; provided, however, that in the event the
Closing does not occur prior to the Outside Closing Date due to a breach of
this Agreement by Seller, then Seller shall not be entitled to terminate
this Agreement pursuant to this SECTION 1.39. In the event of a
termination of this Agreement by either party pursuant to this Section, the
other party shall provide written acknowledgment of such termination in
form and substance reasonably satisfactory to the party terminating the
Agreement. In the event the Seller terminates this Agreement pursuant to
this SECTION, and such termination is not due to a breach of this Agreement
by Buyer, then the Deposit shall be returned to Buyer within two (2)
business days after the date of such termination.
1.40 "PERMITTED EXCEPTIONS" means collectively (a) matters of
title respecting the Real Property approved or deemed approved by Buyer in
accordance with this Agreement; and (b) matters affecting the condition of
title to the Real Property created by or with the written consent of Buyer.
1.41 "PERSONAL PROPERTY" means all personal property of Seller
located on or in or used in connection with the Real Property (other than
(i) the Excluded Personal Property and (ii) the Liquor Licenses and the
Liquor Inventory, which shall be transferred pursuant to the Liquor Escrow
Agreement).
1.42 "PRO FORMA TITLE POLICY" means the pro forma owner's
policy of title insurance issued by the Title Company attached to this
Agreement as EXHIBIT "N".
1.43 "PROPERTY" means the Real Property, the Personal
Property, the Service Contracts, the Leases, and the Intangible Property
and the Liquor Inventory and the Liquor Licenses (which shall be
transferred in accordance with the terms and conditions of the Liquor
Escrow Agreement).
1.44 "PURCHASE PRICE" means the sum of Seventy-Three Million
Dollars ($73,000,000).
1.45 "REAL PROPERTY" means the Land, all rights, privileges
and easements appurtenant to the Land, and all improvements and fixtures
situated on the Land.
1.46 "RECORDS AND PLANS" means (a) all books and records
maintained by Seller in connection with the operation of the Property,
(b) "as-built" plans and specifications respecting the Real Property, and
(c) all structural reviews, architectural drawings, and engineering, soil,
seismic, geologic and architectural reports, studies and certificates and
other documents pertaining to the Real Property which are within the
possession of, under the control of, or reasonably available to, Seller.
1.47 "RENOVATION WORK means the renovation of the Hotel guest
rooms as contemplated by the Ground Lease and the Electrical Work.
1.48 "RESERVATION AGREEMENTS AND DEPOSITS" means all guest,
banquet room and meeting room and restaurant reservation agreements
executed by Seller and all deposits made thereunder for periods after the
Closing.
1.49 "ROOM REVENUES" means all revenues from the rental of
guest rooms of the Real Property (but excluding any items included in the
definition of Other Revenues), together with any sales or other taxes
thereon collected by Seller.
1.50 "SELLER INDEMNITEES" has the meaning ascribed to it in
Section 12 of this Agreement.
1.51 "SELLER'S PAYABLES" means the accounts payable with
respect to which Seller agrees to be fully responsible for the payment
after the Closing Date.
1.52 "SERVICE CONTRACTS" means the maintenance contracts,
warranties, guarantees, management contracts and bonds, and any other
similar obligations, commitments or arrangements, together with all supple-
ments, amendments and modifications thereto, relating to the construction,
development, marketing, operation, maintenance or enjoyment of the
Property, which are set forth on EXHIBIT "O" attached to this Agreement.
1.53 "SHORELINE RESTORATION WORK" means the improvements
specified by the "Shoreline Restoration and Stabilization Plan" as
described in Sections 6.5 and 10.7 of the Ground Lease.
1.54 "SURVEY" means an ALTA "as built" survey of the Real
Property prepared by Southland Surveying of San Diego.
1.55 "TITLE COMPANY" means Chicago Title Insurance Company.
1.56 "TITLE POLICY" means the standard form of owner's title
policy issued by the Title Company (together with such re-insurance
carriers as Buyer may require) for property located in the State of
California to be issued for the benefit of Buyer, which Title Policy shall
be (a) without charges in excess of regular premiums, (b) in the same form
as the Pro Forma Title Policy, and (c) shall show only those matters as set
forth on the Pro Forma Title Policy and the Permitted Exceptions (defined
below).
1.57 "TRANSFER DOCUMENTS" means the Assignment of Ground
Lease, the Xxxx of Sale, the Assignment of Leases, the Assignment of
Capital Leases, the Assignment of Service Contracts, the Assignment of
Intangible Property and the Liquor Escrow Agreement.
1.58 "TRANSFER TIME" means 12:01 a.m. on the Closing Date in
the Pacific time zone.
1.59 "TRANSFEROR'S CERTIFICATE" means the certificate, to be
duly executed and delivered by Seller in accordance with SECTION 3.1 of
this Agreement, certifying that Seller is not a "foreign person" in
accordance with the provisions of Section 1445 of the Code and any similar
provisions of applicable state law. The Transferor's Certificate shall be
in the form of, and upon the terms contained in, EXHIBIT "P".
1.60 "TRAY LEDGER" means any accounts receivable of registered
guests who have not checked out and who are occupying rooms at the Real
Property as of the Transfer Time.
1.61 "WARRANTIES" means all third party warranties and
guarantees relating to the Property.
1.62 "WARN Act" means (a) the Worker Adjustment Retraining
Notification Act, 29 U.S.C. 2102, et seq. and/or (b) any other similar
state or local statute or ordinance.
2. PURCHASE PRICE. Seller agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, the Property in accordance with the terms,
and subject to the conditions, of this Agreement. The Purchase Price for
the Property will be paid as follows:
2.1 Deposit. Buyer shall deliver the Deposit in accordance
with SECTION 1.16. Escrow Holder shall invest the Deposit in an interest
bearing account with a responsible institutional lender approved by Buyer
and Seller, and the interest will become part of the Deposit. Buyer's tax
identification number is ________________ and Seller's tax identification
number is 00-0000000. Buyer's failure to deliver the Deposit in accordance
with SECTION 1.16 shall, at Seller's election, render this Agreement void.
2.2 BALANCE OF PURCHASE PRICE. On or before the Closing
Date, Buyer shall deposit, in cash or by wire transfer (a) into the Escrow
the Purchase Price less the Deposit and less the purchase price for the
Liquor Inventory and the Liquor Licenses as established pursuant to SECTION
2.3 below, as adjusted for prorations and adjustments in accordance with
SECTION 9 and Buyer's share of Escrow closing costs in accordance with
SECTION 10, and (b) into the escrow established under the Liquor Escrow
Agreement, the portion of the Purchase Price allocable to the Liquor
Licenses and the Liquor Inventory as provided in SECTION 2.3 below, as
adjusted for prorations and adjustments in accordance with the terms and
conditions of the Liquor Escrow Agreement.
3. ESCROW; CLOSING.
3.1 OPENING OF ESCROW. As soon as reasonably practicable
following the mutual execution and delivery of this Agreement, the parties
shall open the Escrow with Escrow Holder in order to consummate the
purchase and sale in accordance with the terms and provisions of this
Agreement by depositing a fully executed counterpart of this Agreement with
Escrow Holder. This Agreement shall constitute joint escrow instructions
to Escrow Holder; provided, however, that the parties shall execute such
additional instructions as may be reasonably requested by Escrow Holder not
inconsistent with the provisions of this Agreement. The Closing will take
place on the Closing Date at the offices of the Escrow Holder.
3.2 BY SELLER. At the Closing, Seller shall deliver or cause
to be delivered to Escrow Holder the following items, duly executed and,
where appropriate, acknowledged by Seller.
3.2.1 The Assignment of Ground Lease.
3.2.2 The Xxxx of Sale.
3.2.3 The Assignment of Capital Leases.
3.2.4 The Assignment of Intangible Property.
3.2.5 The Assignment of Leases.
3.2.6 The Assignment of Service Contracts.
3.2.7 The Transferor's Certificate.
3.2.8 The Seller's Closing Certificate.
3.2.9 The Liquor Lease Agreement, if applicable.
3.2.10 Such resolutions, authorizations,
certificates of good standing and/or other corporate and partnership
documents relating to Seller as are reasonably required by Buyer in
connection with the transactions contemplated under this Agreement.
3.3 BY BUYER. At the Closing, Buyer will deliver or cause to
be delivered to Escrow Holder the following items, duly executed and, where
appropriate, acknowledged by Buyer:
3.3.1 The net balance of the Purchase Price, to be paid
in accordance with SECTIONS 2.2 of this Agreement, after deducting the
Deposit and after taking into account the adjustments and cost allocations
in accordance with SECTIONS 9 and 10.
3.3.2 The Assignment of Capital Leases.
3.3.3 The Assignment of Intangible Property.
3.3.4 The Assignment of Leases.
3.3.5 The Assignment of Service Contracts.
3.3.6 The Buyer's Closing Certificate.
3.3.7 The "As Is" certificate described in SECTION 4.6
below.
3.3.8 The Liquor Lease Agreement, if applicable.
3.3.9 Such corporate resolutions, certificates of good
standing and/or other corporate and partnership documents relating to Buyer
as are reasonably required by Seller in connection with the transactions
contemplated under this Agreement.
3.4 BY BUYER AND SELLER. Buyer and Seller will each deposit
into the Escrow such other documents and instruments consistent with this
Agreement as are reasonably required to effectuate the transactions
contemplated under this Agreement.
3.5 CLOSE OF ESCROW. When (a) each party has deposited in
Escrow all of the funds and documents required to be deposited in Escrow by
it pursuant to this SECTION 3 or any other provision of this Agreement, and
(b) each of the parties has approved or waived each of the conditions in
its favor set forth in SECTION 7 of this Agreement, and (c) Escrow Holder
is otherwise in a position to close Escrow, Escrow Holder shall close
Escrow by:
3.5.1 RECORDATION. Recording in the Official Records of
the County of San Diego State of California the Assignment of Ground Lease,
the Ground Lessor Estoppel and any other documents deposited in Escrow
which are in recordable form;
3.5.2 FUNDS. Delivering to Seller the Purchase Price, as
adjusted for Seller's share of prorations and Closing costs;
3.5.3 DOCUMENTS TO SELLER. Delivering to Seller the
documents described in Section 3.3 above and any other documents (or copies
thereof) delivered into Escrow by Buyer; and
3.5.4 DOCUMENTS TO BUYER. Delivering to Buyer the
documents described in Section 3.2 above and any other documents (or copies
thereof) delivered into Escrow by Seller.
3.6 DELIVERIES OUTSIDE OF ESCROW. On the Closing, Seller
shall deliver to Buyer the following:
3.6.1 Revised and updated schedules and exhibits as
required pursuant to SECTION 7.1.4 below, prepared as of the Closing Date;
and
3.6.2 Possession of the Property, subject to the rights
of parties claiming under the Leases and the provisions of the Ground
Lease.
4. REPRESENTATIONS AND WARRANTIES.
4.1 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller makes
the following representations and warranties to Buyer all of which are true
as of the date of this Agreement and will be true and correct in all
material respects as of the Closing.
4.1.1 ORGANIZATION. Seller is duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly qualified to do business in the State of California. The execution
and delivery of this Agreement and the other documents contemplated in this
Agreement by Seller, and the performance by Seller of the obligations under
this Agreement and the other documents contemplated in this Agreement
(i) are within the power of Seller; (ii) have been duly authorized by all
requisite partnership action and (iii) will not violate any provision of
law, any order of any court or agency of government, the charter documents
of Seller or any indenture, agreement or any other instrument to which
Seller is a party. This Agreement and each of the other documents
described in this Agreement when executed and delivered to Buyer, will
constitute legal, valid and binding obligations enforceable against Seller
in accordance with the terms of such documents.
4.1.2 PERSONAL PROPERTY OWNER. Seller is the sole owner
of all personal property situated on the Real Property (other than the
Excluded Personal Property, the personal property subject to the Capital
Leases, and the personal property owned by Hotel guests and tenants under
the Leases) free of any adverse claim of any kind whatsoever.
4.1.3 NO PRIOR TRANSFERS - PROPERTY. Seller has not
transferred, by sale, assignment or otherwise, to any person, partnership,
corporation or other entity, all or any portion of any right, title or
interest which it may have in and to the Property other than (a)
encumbrances which are to be removed at the Closing and (b) the Permitted
Exceptions.
4.1.4 AGREEMENTS.
4.1.4.1 Except as set forth on SCHEDULE
4.1.4.1, to Seller's knowledge, there are no contracts for deed, land
contracts or any oral or written agreements or other executory agreements
whatsoever for the assignment or transfer of any portion(s) of the Property
in effect or in existence with respect to the Property, except those set
forth on the Pro Forma Title Policy.
4.1.4.2 Except as set forth on SCHEDULE
4.1.4.2, to Seller's knowledge, the Leases are in full force and effect.
To Seller's knowledge, there are no defaults, or events which with the
passage of time or notice or both, could constitute a default by Seller or
by the tenant under any of the Leases.
4.1.4.3 Except as set forth on SCHEDULE
4.1.4.3, Seller has received no written notice from the City that Seller is
in default under the Ground Lease, and, to the best of Seller's knowledge,
there is no default or event which with the passage of time or notice or
both, could constitute a default by the City or Seller under the Ground
Lease.
4.1.4.4 Except as set forth on SCHEDULE
4.1.4.4, there are no management, service, maintenance, advance booking,
employment or brokerage agreements, with respect to the Real Property which
Seller has entered into which would be binding on Buyer following the
Closing, except for the Employment Contracts, the Leases, the Service
Contracts which Buyer will assume pursuant to SECTION 5.2.6 below, and the
Reservation Agreements and Deposits.
4.1.5 NO LITIGATION. Except as set forth on SCHEDULE
4.1.5,, (a) to Seller's knowledge, there is no actual suit, action or
legal, administrative, arbitration or other proceeding or governmental
investigation involving or affecting the Property, (b) Seller has not been
served with written notice of any such proceeding, and (c) to Seller's
knowledge, there are no judgments, decrees, or orders affecting the
Property.
4.1.6 NOTICE OF VIOLATIONS. Except as set forth on
SCHEDULE 4.1.6, Seller has not received any written notice of any
outstanding violations, past or present, of any Governmental Regulations.
4.1.7 COMPLIANCE WITH AGREEMENTS. To Seller's knowledge,
the execution and delivery of, and performance under, this Agreement has
not and will not constitute a breach or default under any other agreement,
law or court order under which Seller is a party or may be bound.
4.1.8 FINANCIAL POSITION. To Seller's knowledge, the
financial statements and all financial data delivered to Buyer by Seller
are true, correct and complete in all material respects as of the date
thereof. To Seller's knowledge, no material adverse change has occurred in
such financial position subsequent to the date such statements are
delivered to Buyer.
4.1.9 INSOLVENCY. There are no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings pending or, to Seller's
knowledge, threatened against Seller, nor are any such proceedings
contemplated by Seller.
4.1.10 EELGRASS MITIGATION PLAN. Seller has
undertaken the implementation of the Eelgrass Mitigation Plan by completing
the planting of the eelgrass and instituting the requisite monitoring
program. To the best of Seller's knowledge, Seller is in compliance with
the terms of the Eelgrass Plan. All work necessary to comply with the
Eelgrass Plan as of the Closing shall be fully paid for as of the Closing,
or Buyer shall receive a credit at Closing for such unpaid amount.
4.1.11 SHORELINE RESTORATION WORK. To the best of
Seller's knowledge, Seller has paid for its share of the Shoreline
Restoration Work in accordance with the terms of the Ground Lease. In the
event that, pursuant to the terms of the GROUND Lease, Seller is required
to pay additional monies for such work, Seller shall pay for the same.
4.1.12 MARINA PERMITS. To the best of Seller's
knowledge, the Army Corps Permit is in full force and effect and Seller has
satisfied all conditions to the issuance of the Coastal Development Permit
other than Special Condition No. 4 set forth therein.
4.2 SELLER'S KNOWLEDGE. The phrase "to Seller's
knowledge," as used in this Agreement, refers to the actual current
knowledge of Xxx X. Xxxxxx and Xxxxxx X. Xxxxxxx, without duty of inquiry
or investigation.
4.3 SELLER'S CLOSING CERTIFICATE. In the event that Seller's
Closing Certificate expressly states that any representation and warranty
made by Seller in SECTION 4.1 is not true and correct as of the date of
Closing, then such shall not be a default by Seller under this Agreement;
provided, however that such shall be treated as a failure of a condition in
favor of Buyer, and Buyer shall have, as Buyer's sole and exclusive remedy,
the right to terminate this Agreement upon written notice to Seller if such
condition is of such a nature that in Buyer's reasonable judgment such
failure of a condition would materially and adversely affect the
acquisition, financing or use of the Property for Buyer's intended purpose.
Upon such termination, Seller shall immediately return, or cause the Title
Company to return, to Buyer any and all documents and funds theretofore
deposited or paid by Buyer. Alternatively, notwithstanding such failure of
condition, Buyer may elect to waive one or more of the specific
representations and warranties which are set forth in Seller's Closing
Certificate as not being true and correct as of the Closing, and proceed
with the purchase of the Property without reduction in the Purchase Price.
4.4 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer makes the
following representations and warranties to Seller upon which warranties
and representations Seller has relied and will continue to rely, all of
which are true as of the date of this Agreement and will be true and
correct as of the Closing:
4.4.1 ORGANIZATION. Buyer is duly organized, validly
existing and in good standing under the laws of the State of California.
The execution and delivery of this Agreement and the other documents
contemplated in this Agreement by Buyer, and the performance by Buyer of
the obligations under this Agreement and the other documents contemplated
in this Agreement (i) are within the power of Buyer; (ii) have been duly
authorized by all requisite action on the part of Buyer and all of its
constituent corporate partners; and (iii) will not violate any provision of
law, any order of any court or agency of government, the charter documents
of Buyer or its general partners, or any indenture, agreement or any other
instrument to which Buyer is a party. This Agreement and each of the other
documents described in this Agreement when executed and delivered to Buyer,
will constitute legal, valid and binding obligations enforceable against
Buyer in accordance with the terms of such documents.
4.4.2 INSOLVENCY. There are no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings pending or threatened
against Buyer, nor are any such proceedings contemplated by Buyer.
4.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this SECTION 4 shall survive
the Closing for a period of twelve (12) months.
4.6 AS IS. BUYER ACKNOWLEDGES AND AGREES THAT (A) BUYER IS
EXPERIENCED IN THE ACQUISITION, DEVELOPMENT, OWNERSHIP AND OPERATION OF
PROPERTIES SIMILAR TO THE PROPERTY AND BUYER WAS GIVEN THE OPPORTUNITY TO
PERFORM, AND BUYER HAS PERFORMED AND COMPLETED, ALL INSPECTIONS AND
INVESTIGATIONS CONCERNING THE PROPERTY TO ITS SATISFACTION AND IS QUALIFIED
TO MAKE SUCH INSPECTIONS AND INVESTIGATIONS. BUYER ACKNOWLEDGES THAT IT IS
FULLY RELYING ON BUYER'S (OR BUYER'S REPRESENTATIVES') INSPECTIONS OF THE
PROPERTY AND NOT UPON ANY STATEMENTS (ORAL OR WRITTEN) WHICH MAY HAVE BEEN
MADE OR MAY BE MADE (OR PURPORTEDLY MADE) BY SELLER OR ANY OF ITS
REPRESENTATIVES, INCLUDING, WITHOUT LIMITATION, ANY STATEMENTS OR
INFORMATION CONTAINED IN THAT CERTAIN INFORMATION BOOK PREPARED BY HOTEL
PARTNERS INCORPORATED RELATING TO THE PROPERTY. BUYER ACKNOWLEDGES THAT
BUYER HAS (OR BUYER'S REPRESENTATIVES HAVE), OR PRIOR TO THE CLOSING DATE
WILL HAVE, THOROUGHLY INSPECTED AND EXAMINED THE PROPERTY TO THE EXTENT
DEEMED NECESSARY BY BUYER IN ORDER TO ENABLE BUYER TO EVALUATE THE
CONDITION OF THE PROPERTY AND ALL OTHER ASPECTS OF THE PROPERTY (INCLUDING,
BUT NOT LIMITED TO, THE ENVIRONMENTAL CONDITION OF THE PROPERTY), AND BUYER
ACKNOWLEDGES THAT BUYER IS RELYING SOLELY UPON ITS OWN (OR ITS
REPRESENTATIVES') INSPECTION, EXAMINATION AND EVALUATION OF THE PROPERTY.
AS A MATERIAL PART OF THE CONSIDERATION OF THIS CONTRACT AND THE PURCHASE,
BUYER HEREBY AGREES TO ACCEPT THE PROPERTY ON THE CLOSING DATE IN ITS "AS-
IS, WHERE IS" CONDITION, WITH ALL FAULTS, AND WITHOUT REPRESENTATIONS AND
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW,
EXCEPT ONLY THE TITLE WARRANTIES EXPRESSLY SET FORTH IN THE DEED DATED ON
THE CLOSING DATE. WITHOUT IN ANY WAY LIMITING THE GENERALITY OF THE
FOREGOING, IN CONNECTION WITH THE SALE OF THE PROPERTY TO BUYER, THE SALE
OF THE PROPERTY IS WITHOUT ANY WARRANTY, AND SELLER AND SELLER'S OFFICERS,
AGENTS, DIRECTORS, EMPLOYEES, ATTORNEYS, CONTRACTORS AND AFFILIATES
(COLLECTIVELY, "SELLER'S RELATED PARTIES") HAVE MADE NO, AND EXPRESSLY AND
SPECIFICALLY DISCLAIM, AND BUYER ACCEPTS THAT SELLER AND SELLER'S RELATED
PARTIES HAVE DISCLAIMED, ANY AND ALL REPRESENTATIONS, GUARANTIES OR
WARRANTIES, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW OR RELATING
TO THE PROPERTY, INCLUDING WITHOUT LIMITATION, OF OR RELATING TO: (I) THE
OWNERSHIP, USE, INCOME POTENTIAL, EXPENSES, OPERATION, CHARACTERISTICS OR
CONDITION OF THE PROPERTY OR ANY PORTION THEREOF, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF SUITABILITY, HABITABILITY, MERCHANTABILITY,
DESIGN OR FITNESS FOR ANY SPECIFIC PURPOSE OR A PARTICULAR PURPOSE, OR GOOD
AND WORKMANLIKE CONSTRUCTION; (II) THE NATURE, MANNER, OR CONDITION OF THE
PROPERTY, ON THE SURFACE OR SUBSURFACE THEREOF, WHETHER OR NOT OBVIOUS,
VISIBLE OR APPARENT; (III) THE ENVIRONMENTAL CONDITION OF THE PROPERTY AND
THE PRESENCE OR ABSENCE OF OR CONTAMINATION BY HAZARDOUS MATERIALS, OR THE
COMPLIANCE OF THE PROPERTY WITH ALL REGULATIONS OR LAWS PERTAINING TO
HEALTH OR THE ENVIRONMENT, INCLUDING, BUT NOT LIMITED TO, THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT, THE RESOURCE
CONSERVATION AND RECOVERY ACT, AND ALL SIMILAR LOCAL AND STATE LAWS, EACH
AS MAY BE AMENDED FROM TIME TO TIME, AND INCLUDING ANY AND ALL REGULATIONS,
RULES OR POLICIES PROMULGATED THEREUNDER ("ENVIRONMENTAL LAWS"); AND
(IV) THE SOIL CONDITIONS, DRAINAGE, FLOODING CHARACTERISTICS UTILITIES OR
OTHER CONDITIONS EXISTING IN, ON OR UNDER THE PROPERTY. BUYER HEREBY
EXPRESSLY ASSUMES ALL RISKS, LIABILITIES, CLAIMS, DAMAGES AND COSTS,
INCLUDING ANY LIABILITY WITH RESPECT TO ENVIRONMENTAL LAWS (AND AGREES THAT
SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT, CONSEQUENTIAL
OR OTHER DAMAGES) RESULTING OR ARISING FROM OR RELATED TO THE PROPERTY OR
THE ACQUISITION, DEVELOPMENT, OWNERSHIP, USE, CONDITION, LOCATION,
MAINTENANCE, REPAIR OR OPERATION THEREOF. IN CONSUMMATING THE PURCHASE OF
THE PROPERTY, BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR STATEMENTS
(ORAL OR WRITTEN) WHICH MAY HAVE BEEN MADE OR MAY BE MADE BY SELLER OR
SELLER'S RELATED PARTIES, AND IS RELYING SOLELY UPON BUYER'S OR ITS
REPRESENTATIVES' OWN PHYSICAL INSPECTION OF THE PROPERTY. BUYER
ACKNOWLEDGES THAT ANY CONDITION OF THE PROPERTY WHICH BUYER DISCOVERS OR
DESIRES TO CORRECT OR IMPROVE PRIOR TO OR AFTER THE CLOSING DATE SHALL BE
AT BUYER'S SOLE EXPENSE. BUYER EXPRESSLY WAIVES (TO THE EXTENT ALLOWED BY
APPLICABLE LAW) ANY CLAIMS UNDER FEDERAL, STATE OR OTHER LAW (INCLUDING,
BUT NOT LIMITED TO COMMON LAW, WHETHER SOUNDING IN CONTRACT OR TORT, AND
ANY AND ALL ENVIRONMENTAL LAWS) THAT BUYER MIGHT OTHERWISE HAVE AGAINST
SELLER RELATING TO THE ACQUISITION, DEVELOPMENT, USE, CHARACTERISTICS OR
CONDITION OF THE PROPERTY. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE
THE CLOSING AND AT CLOSING BUYER SHALL DELIVER TO SELLER A CERTIFICATE ("AS
IS CERTIFICATE") CONFIRMING THE PROVISIONS HEREOF.
4.7 GENERAL RELEASE. Except as otherwise expressly provided
in SECTIONS 4.1, 12.1 and 13, Buyer waives its right to recover from Seller
and its affiliates, partners, shareholders, officers, directors, employees,
agents, representatives and attorneys (collectively, "Released Parties")
any and all damages, losses, liabilities, costs or expenses whatsoever
(including attorneys' fees, court costs and litigation expenses) and claims
therefor, whether direct or indirect, known or unknown, foreseen or
unforeseen, which may arise on account of or in any way growing out of or
connected with the physical or environmental condition of the Property
(including the improvements thereon) or any law or regulation relating to
Hazardous Materials
BUYER EXPRESSLY WAIVES THE BENEFITS OF SECTION 1542 OF THE CALIFORNIA
CIVIL CODE, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED
THE SETTLEMENT WITH THE DEBTOR."
5. COVENANTS OF SELLER AND BUYER
5.1 SELLER'S COVENANTS. From the date of this Agreement
through and including the Closing Date, Seller covenants and agrees that:
5.1.1 FURTHER LIENS AND ENCUMBRANCES. Seller will not
voluntarily subject the Property to any additional liens, encumbrances,
covenants, conditions, easements, rights of way or similar matters after
the date of this Agreement that will not be released at Closing. Seller
will not hereafter materially change any of the terms, covenants or
conditions of any of such existing documents, or enter into any new
material agreements affecting the Property that cannot be terminated at
Closing without cost or penalty without the prior written consent of Buyer,
which consent shall not be unreasonably withheld.
5.1.2 LEASES; OTHER CONTRACTS. Seller will not hereafter
materially amend any of the Leases, the Service Contracts or existing
contracts or enter into new leases or contracts affecting the Property
except (a) in the ordinary course of business, (b) in connection with the
Marina Construction or the Renovation Work pursuant to the Ground Lease, or
(c) with the prior written consent of Buyer. Without the prior written
consent of Buyer, Seller shall not terminate any of the Leases or existing
material contracts relating to the Property.
5.1.2.1 CONTRACTS RELATING TO MARINA
CONSTRUCTION AND RENOVATION WORK. Notwithstanding the provisions of
SECTION 5.1.2 to the contrary, Seller shall not enter into any material
agreements in connection with the Marina Construction or the Renovation
Work without Buyer's prior written approval, which approval shall not be
unreasonably withheld. Buyer shall grant or deny its written approval
within three (3) days after Seller's written request therefor (which
request shall be accompanied by either a copy of the proposed agreement (if
available) or a description of the material terms thereof). Buyer's
failure to respond to Seller in writing within such three (3) day period
shall be conclusively deemed to be Buyer's approval of such request. For
purposes of this SECTION 5.1.2.1, a "material" agreement shall be any
agreement which involves the expenditure of more than $25,000 pursuant to
the terms thereof. Notwithstanding the provisions of this SECTION 5.1.2.1,
Buyer's consent shall not be required for those material agreements which
are necessitated due to an emergency condition at the Property. In the
event that an agreement to which Buyer's approval is required pursuant to
the provisions of this Section is necessary in order for Seller to avoid
being in default under the Ground Lease, and Seller informs Buyer of such
fact concurrently with Seller's request for Buyer's approval of the same,
then, if Buyer disapproves such agreement, Seller shall have the right to
terminate this Agreement upon written notice to Buyer, in which event this
Agreement shall terminate, the Deposit shall be refunded to Buyer, and all
rights and obligations of the parties existing hereunder shall terminate
and be of no further force or effect, except any rights and obligations
which survive the termination of this Agreement. Subject to Seller's
obligation to comply with Governmental Regulations and the Ground Lease,
Seller covenants and agrees that it shall take no action which would result
in the revocation or termination of the Marina Permits.
5.1.3 PROPERTY MANAGEMENT AND OPERATION. Subject to
Seller's right to remove the Excluded Property at Closing pursuant to
SECTION 5.2.2, Seller shall maintain the operation of the Property in a
manner and maintain inventory levels consistent with its historical
practice. Seller shall promptly notify Buyer in writing of any casualty or
condemnation of which Seller receives notice following the date of this
Agreement.
5.1.4 PREPAYMENTS. Seller shall not accept (a) any
prepaid rents, security deposits or other deposits under any of the Leases,
or (b) any deposits made with respect to reservations for guest rooms,
meeting rooms, restaurants and banquet facilities for dates after the
Closing Date, unless the same shall be credited to Buyer on the Closing
Date.
5.1.5 COOPERATION WITH REPRESENTATIVES. Subject to the
provisions of SECTION 8, Seller shall cooperate with Buyer and its
accountants, counsel and/or other representatives in providing information
and materials pertaining to the operation and marketing of the Property,
including access to the Property; provided, however, that Seller shall not
be obligated to provide any information or materials which is subject to
the attorney-client privilege or which is proprietary in nature. From and
after the execution and delivery of this Agreement, and subject to Section
8, Seller shall allow a representative or representatives of Buyer access
to the Property at reasonable times and upon the notice provided for in
SECTION 8.1.2, for the purpose of (a) monitoring the operation of the
Property and (b) performing such investigations and analyses of the
Property as Buyer may reasonably require.
5.1.6 LIQUOR LICENSES AND LIQUOR INVENTORY. At Closing,
and subject to approval by Department of Alcoholic Beverage Control, Seller
shall cause the holder of the Liquor Licenses to transfer the Liquor
Licenses and the Liquor Inventory to Buyer (or Buyer's designee) in
accordance with the terms and conditions of the Liquor Escrow Agreement.
Seller shall, at no cost or expense to Seller (except as provided in the
Liquor Escrow Agreement), cooperate with Buyer or Buyer's designee (and
shall cause the holder of the Liquor Licenses to cooperate with Buyer or
Buyer's designee) in effectuating a transfer of the Liquor Licenses.
If Buyer, after diligently pursuing the same, does not
obtain the Liquor Licenses by the Closing Date, Buyer shall, and Seller
shall cause the holder of the Liquor Licenses to cooperate in good faith to
enter into a short-term lease agreement (the "Liquor Lease Agreement")
pursuant to which such holder will continue to operate the liquor
facilities at the Hotel until a temporary liquor license is issued to
Buyer. Such agreement shall be upon terms and conditions mutually
satisfactory to Buyer and Seller and such holder.
5.1.7 ACCRUED VACATION, SICK LEAVE, ETC. At Closing,
Seller will (a) pay all accrued sick leave, vacation pay and pension or
retirement benefits as required under applicable law and any Employment
Contract including any collective bargaining agreement, and (b) fulfill any
and all bargaining obligations of Seller with any labor organizations.
5.1.8 SELLER'S PAYABLES. Seller shall pay, in the
ordinary course of business, Seller's Payables.
5.1.9 OBTAINING GROUND LESSOR ESTOPPEL. Seller shall use
its reasonable efforts (at no cost or expense to Seller) to obtain the
Ground Lessor Estoppel.
5.1.10 ELECTRICAL WORK. Buyer acknowledges that
Seller is currently undertaking certain electrical distribution work (the
"Electrical Work"). To the extent that such Electrical Work is not
completed by Closing, the Buyer shall receive a credit at Closing
representing the cost of the uncompleted Electrical Work (the "Electrical
Work Credit"), which credit shall be in full satisfaction of Seller's
obligations to Buyer regarding the Electrical Work. It is agreed that the
current estimate of the amount needed to complete the Electrical Work as of
the date hereof is $ 108,000.
5.1.11 FINANCIAL AUDIT. For a period of sixty (60)
days after closing, upon Buyer's request, Seller shall, at no cost or
expense to Seller, make available to Buyer all financial information for
the Hotel for the three most recent fiscal years for the purpose of an
audit to be performed by KPMG Peat Marwick LLP ("KPMG") in accordance with
Rule 3.05 of Regulation S-X of the Securities and Exchange Commission Rules
and Regulations. Such financial information will be made available to
Buyer and KPMG at reasonable times and in a location mutually agreeable to
Buyer and Seller and will include, but not be limited to, the following
information pertaining to the Hotel: general ledgers, city ledgers, guest
ledgers, financial statements and management letters, policies and
procedures manuals, room contracts, labor contracts, loan agreements,
compensation agreements and any other agreements, invoices for all
expenditures made, sales and marketing plans, fixed assets registers,
budgets and variance explanations, personnel files, payroll registers, bank
statements, bank account reconciliations, check registers (including the
period following the most recent fiscal year) and descriptions of benefit
plans, related party transactions, insurance coverage, litigation, vacation
accruals and taxes paid. In addition, in conjunction with such audit,
Seller will provide to KPMG a letter substantially in the form of EXHIBIT
"Q" attached hereto.
5.2 BUYER'S COVENANTS. From the date of this Agreement
through and including the Closing Date (and, to the extent such covenants
cannot reasonably be performed prior to the Closing, after the Closing
Date), Buyer covenants and agrees that :
5.2.1 LIQUOR LICENSE. Buyer shall diligently pursue the
issuance at Closing of a temporary liquor license for the Hotel.
5.2.2 REMOVAL OF PROPERTY. Prior to Closing, Seller
shall have the right to remove from the Property (including, without
limitation, the gift shop) the Excluded Personal Property. As soon as
practicable after Closing (but in no event later than thirty (30) days)
Seller shall cover or remove all signs, labels and personal property that
contain the name "Princess" or any derivative thereof, and/or the Princess
xxxx, and Buyer shall cooperate with Seller (including, without limitation,
by providing Seller with reasonable access to the Property) in doing the
same. The provisions of this SECTION 5.2.2 shall survive the Closing.
5.2.3 INTENTIONALLY OMITTED
5.2.4 MARINA CONSTRUCTION, RENOVATION AND
ELECTRICAL WORK. At Closing, Buyer shall assume all obligations of Seller
relating to the Marina Construction, the Renovation Work and the Electrical
Work, including, without limitation, any construction, architects and/or
consulting contracts entered into by Seller relating thereto and all permit
fees and license obligations relating thereto.
5.2.5 ACCESS TO BOOKS AND RECORDS. From and after
the Closing, Buyer shall allow Seller reasonable access upon three (3) days
prior written notice to the books and records relating to Seller's
operation of the Hotel in order to allow Seller to prepare its final sales,
occupancy and employee withholding tax returns. In addition to the
foregoing, for a period of ninety (90) days after the Closing, Buyer shall
allow Seller's designated representative(s) to occupy without charge a
secure room or office at the Hotel (which room or office will contain a
desk or table and telephone) for the purpose of winding up the affairs of
Seller relating to Seller's operation of the Hotel.
5.2.6 ASSUMPTION OF SERVICE CONTRACTS. Within five
(5) days after the date of this Agreement, Buyer shall notify Seller in
writing of which Service Contracts, if any, it intends to assume at
Closing. Buyer's failure to so notify Seller shall be conclusively deemed
to be Buyer's election to assume all Service Contracts. Notwithstanding
the foregoing, Buyer shall assume all Service Contracts which (a) cannot be
terminated upon thirty days' or less notice or (b) cannot be terminated
without penalty. Seller shall cause all Service Contracts which Buyer has
elected not to assume in accordance with this Section (other than those
Service Contracts described in the immediately preceding sentence) to be
terminated as of the Closing; provided, however, that in the event such
Service Contracts cannot be terminated at Closing, then the amounts due
thereunder shall be prorated as of the Closing.
6. TITLE TO REAL PROPERTY. At Closing, title to the Real Property
will be conveyed to Buyer by Seller by the Assignment of Ground Lease,
subject only to the matters contained in the Pro Forma Title Policy and the
Permitted Exceptions.
7. CONDITIONS PRECEDENT/CONCURRENT TO CLOSING; CLOSING DATE.
7.1 BUYER'S CONDITIONS. Buyer shall not be required to close
the transaction provided for under this Agreement, unless and until Buyer
deems that each and every one of the following conditions has been
fulfilled:
7.1.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLER. Seller shall have duly and timely performed each and every
covenant to be performed by Seller under this Agreement prior to the
Closing Date and the representations and warranties set forth in this
Agreement shall be true and correct as of the Closing in all material
respects.
7.1.2 SELLER'S DELIVERIES. Seller shall have duly and
timely delivered to Buyer all of the items described in SECTION 3.2 of this
Agreement.
7.1.3 TITLE INSURANCE. The Title Company will have
issued or have unconditionally and irrevocably committed to issue the Title
Policy to Buyer, subject only to the Permitted Exceptions.
7.1.4 EXHIBITS AND SCHEDULES. On the Closing Date,
Seller shall have updated each of the Exhibits and Schedules attached
hereto, so that, the same are true and accurate as of the Closing Date, and
there shall have been no material adverse change in the information
contained in the Schedules delivered at Closing from those attached to this
Agreement which have not been approved (such approval not to be
unreasonably withheld) or deemed approved by Buyer.
7.1.5 APPROVAL OF CITY; GROUND LESSOR ESTOPPEL. The City
shall have (a) approved in writing the assignment of the Ground Lease to
Buyer, (b) executed and delivered to the Escrow Holder the Assignment of
Ground Lease and (c) executed and delivered to the Escrow Holder the Ground
Lessor Estoppel.
7.1.6 MANAGEMENT, LICENSE AND RESERVATION
AGREEMENTS. Seller shall have terminated (a) any and all management
agreements affecting the Property in effect prior to the Closing, (b) that
certain Agreement dated January 29, 1988 between Princess Cruises Resorts
and Hotels, Inc. ("Princess") and Parkway Investments/California, Inc., and
(c) that certain Memorandum Agreement dated January 29, 1988 between
Princess and San Diego Princess Management Corporation.
7.2 SELLER'S CONDITIONS. Seller shall not be required to close the
transaction provided for under this Agreement, unless and until Seller
deems that each and every one of the following conditions has been
fulfilled:
7.2.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER.
Buyer shall have duly and timely performed each and every covenant to be
performed by Buyer under this Agreement prior to the Closing Date and the
representations and warranties set forth in this Agreement shall be true
and correct as of the Closing in all respects.
7.2.2 APPROVAL OF CITY. The City shall have approved in
writing the assignment of the Ground Lease to Buyer and the release of
Seller from all further obligations and liabilities with respect thereto,
and shall have executed and delivered to the Escrow Holder the Assignment
of Ground Lease.
7.2.3 BUYER'S DELIVERIES. Buyer shall have duly and timely
delivered to Seller all of the items described in SECTION 3.3 of this
Agreement.
8. INTENTIONALLY OMITTED
9. PRORATIONS AND ADJUSTMENTS. The following prorations and
adjustments shall be made as of the Transfer Time:
9.1 INVENTORY. Buyer is acquiring all of the inventory as
of the Transfer Time, and there shall be no adjustment or proration
therefor.
9.2 ROOM REVENUES; OTHER REVENUES. Buyer shall be entitled
to all Other Revenues from and after the Transfer Time, and Seller shall
pay to Buyer on the Closing Date an amount equal to the sum of the
following items: (i) one-half (1/2) of the Room Revenues for the night
immediately preceding the Closing Date, (ii) the value of any complimentary
rooms (based upon the "rack" rate for each room), and any complimentary
food or beverages (based upon the advertised rate for each food and
beverage) provided by Seller to officers, directors or shareholder of the
partners of Seller for periods after the Transfer Time, (iii) all prepaid
deposits under the Reservation Agreements and Deposits made to Seller for
dates after the Transfer Time, (iv) the value of any gift certificates for
which Seller has been paid in cash and which have not been redeemed as of
the Closing, and (v) any other amounts received by Seller for the provision
of rooms, goods, facilities or services after the Transfer Time.
9.3 UTILITIES. Prior to the Closing Date, Seller shall
notify all utility companies servicing the Property of the anticipated
change in ownership of the Property and request that all xxxxxxxx after the
Transfer Time be made to Buyer at the Hotel address. Utility meters will
be read, to the extent that the utility company will do so, during the
daylight hours on the Closing Date, with charges to that time paid by
Seller and charges thereafter paid by Buyer. Charges for utilities which
are unmetered, or charges for the meters which have not been read on the
Closing Date, will be prorated between Buyer and Seller as of the Transfer
Time based upon utility xxxxxxxx for the prior month with an adjustment
between the parties being made after Closing, and payment for such shall be
made within seven (7) days from the date of any request for the same. All
utility deposits made by Seller shall be assigned to Buyer, and Seller
shall receive a credit at Closing for such amounts.
9.4 LEASES. Buyer shall have the right to collect any
delinquent rentals payable by tenants under the Leases. Delinquent rentals
shall be applied first to current rents due, and Buyer shall pay to Seller
any remaining amounts as and when received. Seller shall pay to Buyer on
the Closing Date the amount of any prepaid rents made to Seller with
respect to periods after the Closing Date, security deposits or other
deposits under any of the Leases.
9.5 GROUND LEASE RENTAL PAYMENTS. Rent and all other
payments due under the Ground Lease shall, to the extent possible, be
prorated as of the Closing Date. Seller shall receive a credit at Closing
equal to the amount of the security deposit, if any, paid by Seller under
the Ground Lease.
9.6 CAPITAL LEASES. Amounts due under all Capital Leases
shall be prorated as of the Closing Date.
9.7 RESERVATIONS. Buyer will honor, for its account, all
Reservation Agreements and Deposits for dates after the Closing Date that
are (a) made by Seller in accordance with the provisions of this Agreement
or (b) approved by Buyer. Buyer authorizes Seller to continue to accept
reservations for guest rooms, meeting rooms, restaurant and banquet
facilities for periods after the Closing Date provided the terms and
conditions of which are at current fair market value and are in the
ordinary course of Seller's business, and Buyer agrees to honor all such
reservations in accordance with their terms. Buyer further acknowledges
that it is Seller's practice to offer guest rooms at the Property to
employees of Seller at reduced room rates, and, provided the same are
booked in a manner that is consistent with Seller's practice, Buyer agrees
to honor all room reservations and rates which are booked and used by such
employees prior to May 31, 1998.
9.8 ACCOUNTS PAYABLE AND EXPENSES. All accounts payable and
expenses related to operations of the Property which have accrued before
the Transfer Time shall be paid by Seller. All accounts payable and
expenses arising after the Transfer Time or which are incurred by or at the
direction of Buyer outside of this Agreement shall be paid by Buyer. In
addition, Seller shall be responsible for paying the Seller's Payables.
9.9 TAXES. Seller shall pay general real estate and ad
valorem personal property taxes and assessments for all periods prior to
the Transfer Time and all special taxes or assessments becoming a lien
against the Property and relating to the period prior to the Transfer Time,
and any such taxes for the period in which the Closing Dates falls shall be
prorated as of the Closing Date.
9.10 SERVICE CONTRACTS. All amounts due under Service
Contract which are not terminated as of the Closing shall be prorated as of
the Closing Date.
9.11 PRELIMINARY STATEMENT OF PRORATIONS AND ADJUSTMENTS.
Seller and Buyer shall cooperate with each other in examining the books and
records of the Hotel as necessary to make the adjustments and prorations
required under this SECTION 9, or under any other provision of this
Agreement. Based upon such examination, Buyer and Seller will jointly
prepare, no later than two (2) business days prior to the Closing, a
preliminary closing statement (the "Preliminary Statement"). The
Preliminary Statement shall contain the parties' best estimate of the
amounts of the items to be prorated and adjusted pursuant to this
Agreement, the allocation thereof between the parties and the basis for
such allocation. The amounts set forth on the Preliminary Statement shall
be adjusted as of the Transfer Time.
9.12 FINAL ADJUSTMENTS. If any supplemental billing is issued
or new information learned with respect to any of the foregoing prorations
or credits, the same shall be adjusted and prorated between Seller and
Buyer as soon as reasonably possible after the Closing. In any event, to
the fullest extent possible Seller and Buyer shall jointly prepare a final
schedule of adjustments (the "Final Statement") within sixty (60) days
after Closing and either party owing the other a sum of money shall pay
such sum within ten (10) days after such Final Statement is prepared.
Notwithstanding the foregoing, any real property, personal property or
other taxes assessed against any portion of the Property shall be subject
to a final adjustment between the parties on or before one hundred and
eighty (180) days after the Closing, and either party owing the other a sum
of money shall pay such sum within ten (10) days after such final
adjustment. If any dispute arises between Buyer and Seller in connection
with such Final Statement or final adjustment for taxes, the parties shall
diligently and in good faith attempt to resolve any such dispute. If such
dispute is not resolved within forty-five (45) days after the date such
dispute arose, then the parties shall submit such dispute to an independent
accountant reasonably acceptable to the parties, and the determination of
such independent accountant shall be conclusive. The fees and expenses of
such independent accountant shall be paid equally by Buyer and Seller. The
provisions of this SECTION 9.11 shall survive the Closing.
9.13 METHOD OF PRORATION. All prorations will be made as of
the Closing Date based on a 365-day year.
9.14 ACCRUED VACATION AND SICK PAY. Seller shall pay any
accrued vacation and sick pay owing to employees of the Hotel as of the
Closing Date.
9.15 ACCOUNTS RECEIVABLE. Buyer shall not acquire the
Accounts Receivable from Seller, and there shall be no adjustments or
prorations therefor; provided, however, that Buyer shall use reasonable
efforts (excluding litigation) to collect on behalf of Seller all Accounts
Receivable outstanding as of the Closing, and shall remit all amounts
collected therefor to Seller upon Buyer's receipt of same. Sellers shall
have the right, upon reasonable advance notice, to examine Buyer's books
and records after the Closing to verify the status if the collection of
such accounts. The provisions of this SECTION 9.12 shall survive the
Closing.
10. COSTS AND EXPENSES. The closing costs shall be allocated as
follows:
10.1 SELLER. Seller shall pay all premiums for the standard
coverage (e.g. CLTA Coverage) of the Title Policy (not to exceed $0.43 per
thousand dollars of insurance), Seller's share of prorations, all state and
county transfer taxes, all general excise and occupancy taxes, any other
tax or assessment imposed as a result of the transactions contemplated
under this Agreement (other than sales taxes on the transfer of the
Personal Property, which shall be the responsibility of Buyer), and any
document recording charges and notary fees, including, without limitation,
any recording fees and notary charges with respect to the Assignment of
Ground Lease.
10.2 BUYER. Buyer shall pay all premiums for the Title Policy
except for the CLTA portion of the Title Policy, the cost of the Survey,
and Buyer's share of prorations as provided in this Agreement. In
addition, Buyer shall pay, at Closing, all sales taxes due as a result of
the transfer of the Personal Property to Buyer. Further, Buyer shall pay
to Seller (i.e. Seller shall receive a credit at Closing) in an amount
equal to $16,500, which amount represents the cost of an appraisal of the
Property performed by Lipman, Stevens, Xxxxxxxx & Thene Incorporated in
connection with the City's approval of the Ground Lessor Estoppel.
10.3 LIQUOR LICENSE. Buyer shall pay all costs associated
with the transfer of the Liquor Licenses to Buyer, including, without
limitation, any escrow fees and charges
10.4 ASSIGNMENT FEE. Seller shall pay the Assignment Fee.
10.5 OTHER CLOSING COSTS. Except as provided in SECTIONS
8.1.2, 12, 14 AND 16.20, Buyer and Seller will each pay their own legal and
professional fees and fees of other consultants incurred by Buyer and
Seller, respectively. All other closing costs and expenses will be
allocated between Buyer and Seller in accordance with the customary
practice in the county in which the Property is located.
11. CLOSING AND POSSESSION.
11.1 DELIVERY OF POSSESSION. Simultaneously with the delivery
of the fully executed Transfer Documents, Seller shall deliver possession
and enjoyment of the Property to Buyer and Buyer shall thereupon have the
immediate right to possess, develop, use, sell, encumber and/or transfer
the Property, or any part thereof for its own account to the total
exclusion of Seller, and subject to the provisions of the Ground Lease, the
Leases and the Permitted Exceptions.
12. GENERAL INDEMNIFICATION.
12.1 BY SELLER. Subject to SECTION 4.6 and the procedures
set forth in SECTION 12.1.1 below, Seller will defend, indemnify and hold
the Buyer and each of its respective officers, directors, agents,
shareholders, representatives, employees, attorneys, affiliates,
beneficiaries, subsidiaries, successors and assigns (collectively, the
"Buyer Indemnitees") harmless from and against any and all claims, demands,
liabilities, liens, costs, expenses, penalties, damages and losses
(including, but not limited to, reasonable attorneys' fees and costs) which
accrue in or relate to the period prior to the Closing Date and which (a)
are based in tort, or (b) relate to the employment of a Hotel employee, or
(c) relate to the obligations of Seller as tenant under the Ground Lease.
12.1.1 GENERAL PROVISIONS RELATING TO SELLER'S INDEMNITY.
The following provisions shall be applicable to the indemnification
obligations of Seller set forth in SECTION 12.1.
12.1.1.1 NOTICE OF CLAIMS. Buyer shall deliver
notice (the "Indemnification Notice") to Seller of the assertion of any
claim, or the commencement of any suit, action or proceeding by any party
for which indemnification is sought hereunder as soon as reasonably
possible after Buyer receives notice thereof, but in no event later than
ten (10) days in the event Buyer is served with notice of any suit, action
or proceeding, and in no event later than thirty (30) days for all other
matters. In the Indemnification Notice, Buyer shall (a) specify with
reasonable particularity the basis for seeking indemnity and (b) provide
Seller with such information with respect to the claim, suit, action or
proceeding as may be known to Buyer at the time (and shall continue to
provide Seller with any additional information as and when the same becomes
known to Buyer). Buyer's failure to timely deliver the Indemnification
Notice (and to provide such additional information as provided herein)
pursuant to this Section shall relieve Seller of its indemnification
obligation with respect to such claims, suit, action or proceeding.
12.1.1.2 ASSUMPTION OF DEFENSE. Seller shall
have the right, in its sole and absolute discretion, to elect, upon written
given to Buyer within fifteen (15) days after Seller's receipt of the
Indemnification Notice, to investigate and/or defend such claim, suit,
action or proceeding with counsel selected by Seller; provided that Seller
shall thereafter consult with Buyer upon Buyer's reasonable request for
such consultation from time to time with respect to such claim, suit,
action or proceeding. If Seller assumes the defense, Buyer shall have the
right (but not the duty) to participate in the defense thereof and to
employ (at Buyer's sole cost and expense) counsel separate from the counsel
employed by Seller, but Seller shall nonetheless have control over the
defense. If Seller elects not to undertake the investigation and/or
defense of such claim, suit, action or proceeding, Buyer shall defend such
claim, suit, action or proceeding with counsel selected by Buyer and
reasonably approved by Seller. Buyer shall thereafter consult with Seller
and keep Seller informed with respect to such claim, suit, action or
proceeding. If Seller elects to cause Buyer to assume the defense, the
Seller shall have the right (but not the duty) to participate in the
defense thereof and to employ (at Seller's sole cost and expense) counsel
separate from the counsel employed by Buyer. Whether or not Seller elects
to defend any such claim, suit, action or proceeding, Buyer and Seller
shall cooperate in the defense thereof.
12.1.1.3 BUYER'S ACTIONS. Subject to Seller's
right to control the investigation and defense of any claim, suit, action
or proceeding pursuant to SECTION 12.1.1.2, Buyer shall take all
commercially reasonable actions necessary or advisable to mitigate the
amount of damages suffered by Buyer or any third party claiming against
Buyer in connection with such claim, suit, action or proceeding. Any
failure by Buyer to take such action, or any action which Buyer undertakes
pursuant to this Section but which Buyer performs in a negligent manner,
shall relieve Seller of its indemnification obligation with respect to such
claims, suit, action or proceeding.
12.1.1.4 SETTLEMENT OR COMPROMISE. Seller may
settle or compromise any claim, suit, action or proceeding without the
approval of Buyer, provided that the settlement or compromise includes a
release of Buyer from the claims asserted, and if Buyer fails to cooperate
in the consummation of such settlement or compromise, Seller shall be
relieved of its indemnification obligation with respect to the claims,
suit, action or proceeding proposed to be so settled or compromised. If
Buyer settles or compromises any claim, suit, action or proceeding for
which indemnification has been sought without the prior approval of Seller,
which approval may be granted or withheld in Seller's sole and absolute
discretion, then unless Seller has elected to provide the defense and has
failed to do so, Seller shall be relieved of its indemnification
obligations with respect to such claim, suit, action or proceeding.
12.2 BY BUYER. Buyer will defend, indemnify and hold Seller
and its officers, directors, agents, shareholders, representatives,
employees, attorneys, affiliates, beneficiaries, subsidiaries, successors
and assigns (collectively, the "Seller Indemnitees") harmless from and
against any and all claims, demands, liabilities, liens, costs, expenses,
penalties, damages and losses (including, but not limited to, attorneys'
fees and costs) of every kind and nature incurred or accrued from and after
the Closing Date with respect to the Property, whether arising from acts or
omissions of Buyer, its agents or employees or otherwise;
The indemnifications contained in this Section 12 shall survive the
Closing for a period of twelve (12) months.
13. REMEDIES:
13.1 BUYER'S REMEDIES GENERALLY. IN THE EVENT THAT SELLER
SHALL FAIL TO CONSUMMATE THIS AGREEMENT FOR ANY REASON OTHER THAN BUYER'S
DEFAULT OR A TERMINATION OF THIS AGREEMENT BY BUYER OR SELLER PURSUANT TO A
RIGHT TO DO SO UNDER THE PROVISIONS HEREOF, BUYER SHALL HAVE THE FOLLOWING
REMEDIES, WHICH SHALL BE BUYER'S SOLE AND EXCLUSIVE REMEDIES BASED UPON A
DEFAULT BY SELLER. SUCH REMEDIES SHALL NOT BE CUMULATIVE, MEANING BUYER
MAY EXERCISE ONE (1) BUT NOT BOTH OF SUCH REMEDIES. BUYER SHALL DELIVER TO
SELLER AND ESCROW HOLDER NOTICE OF ITS ELECTION OF REMEDIES WITHIN FIVE (5)
BUSINESS DAYS AFTER BUYER HAS NOTICE OF SELLER'S DEFAULT. THE SOLE
REMEDIES AVAILABLE TO BUYER ARE AS FOLLOWS:
13.1.1 BUYER MAY TERMINATE THIS AGREEMENT, IN WHICH
CASE SELLER SHALL IMMEDIATELY RETURN THE DEPOSIT, TOGETHER WITH ANY
INTEREST EARNED THEREON, TO BUYER, UPON EXECUTION OF CANCELLATION
INSTRUCTIONS BY BUYER, AND SELLER SHALL PAY ANY ESCROW CANCELLATION CHARGES
OR
13.1.2 BUYER MAY BRING AN ACTION FOR SPECIFIC
PERFORMANCE AGAINST SELLER TO COMPEL THE DELIVERY OF THE TRANSFER DOCUMENTS
TO BUYER (IN WHICH CASE BUYER SHALL BE DEEMED TO HAVE ACCEPTED THE TRANSFER
SUBJECT TO ALL MATTERS OF RECORD AFFECTING THE LAND), BUT ONLY UNDER THE
FOLLOWING CONDITIONS AND CIRCUMSTANCES:
13.1.2.1 BUYER SHALL HAVE FULLY PERFORMED ALL
OBLIGATIONS OF BUYER UNDER THIS AGREEMENT, EXCEPT THAT WITH RESPECT TO
DEPOSITING THE BALANCE OF THE PURCHASE PRICE, BUYER SHALL HAVE EVIDENCED TO
SELLER'S REASONABLE SATISFACTION THAT BUYER IS READY, WILLING AND ABLE TO
TIMELY DEPOSIT SAID FUNDS IN ESCROW AT THE TIME REQUIRED BY THIS AGREEMENT.
13.1.2.2 THE ACTION SHALL BE COMMENCED, AND
SERVICE OF PROCESS UPON SELLER MADE, NOT LATER THAN THIRTY (30) DAYS AFTER
BUYER HAS NOTICE OF SELLER'S DEFAULT; AND
13.1.2.3 ALL OF THE ISSUES IN SUCH ACTION,
WHETHER OF FACT OR LAW, SHALL BE HEARD BY A REFERENCE PROCEEDING PURSUANT
TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 638, ET. SEQ. WITHIN TEN
(10) DAYS FOLLOWING THE COMMENCEMENT OF ANY SUCH ACTION, THE PARTIES SHALL
MAKE APPLICATION TO THE COURT IN WHICH THE ACTION IS PENDING FOR THE
APPOINTMENT OF A RETIRED SUPERIOR COURT JUDGE OR COURT OF APPEAL JUSTICE
FROM THE THEN CURRENT LIST OF RETIRED JUDGES AVAILABLE TO SERVE AS REFEREES
IN THE COUNTY IN WHICH SUCH ACTION IS COMMENCED TO SERVE AS THE REFEREE.
THE REFEREE CHOSEN SHALL BE DEEMED QUALIFIED ONLY IF HE IS WILLING TO AGREE
TO HEAR THE SUBJECT ACTION WITHIN TWENTY (20) DAYS FOLLOWING THE DATE OF
APPLICATION TO THE COURT, TO HEAR THE SUBJECT ACTION ON CONSECUTIVE DAYS
AND TO RENDER A DECISION WITHIN A FURTHER FIFTEEN (15) DAY PERIOD. THE
PARTIES SHALL ADVANCE, IN EQUAL SHARES, THE FEES AND EXPENSES OF THE
REFEREE SELECTED PURSUANT TO TIES PROVISION, BUT THE LOSING PARTY IN ANY
SUCH ACTION SHALL REIMBURSE THE PREVAILING PARTY FOR ANY AND ALL FEES AND
EXPENSES PREVIOUSLY ADVANCED BY SUCH PREVAILING PARTY FOR THE REFEREE.
ALTERNATIVELY, BUYER MAY ELECT TO WAIVE SUCH BREACH, IN WHICH EVENT
THE PARTIES SHALL PROCEED TO CLOSING AS PROVIDED IN THIS AGREEMENT, WITHOUT
ANY ADJUSTMENT IN THE PURCHASE PRICE FOR SUCH BREACH.
13.2 BUYER'S REMEDIES FOR BREACH OF REPRESENTATIONS AND
WARRANTIES. Notwithstanding anything contained in SECTION 13.1 to the
contrary, if Buyer discovers after the Closing that one or more of the
representations and warranties of Seller contained in this Agreement was
not true and correct in all material respects as of the Closing, and such
inaccuracy was not known to or reasonably discoverable by Buyer prior to
Closing, Buyer may bring an action against Seller for damages proximately
caused by such inaccuracy; provided, however, that such action shall be
initiated, if at all, within one (1) year after the Closing Date.
Notwithstanding anything contained in this SECTION 13.2 to the contrary, in
no event shall Seller's liability under this Section exceed Three Million
Five Hundred Thousand Dollars ($3,500,000).
13.3 SELLER'S REMEDIES. IF BUYER SHOULD FAIL TO CONSUMMATE
THIS AGREEMENT AS A RESULT OF BUYER'S DEFAULT UNDER THE TERMS OF THIS
AGREEMENT, THEN SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY, MAY TERMINATE
THIS AGREEMENT BY NOTIFYING BUYER THEREOF AND RECEIVE OR RETAIN THE DEPOSIT
AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT SELLER WILL SUFFER DAMAGES
IN THE EVENT OF BUYER'S DEFAULT ON ITS OBLIGATIONS. ALTHOUGH THE AMOUNT OF
SUCH DAMAGES IS DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE
THAT THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S LOSS IN
THE EVENT OF BUYER'S DEFAULT. THUS, SELLER SHALL ACCEPT AND RETAIN THE
DEPOSIT AS LIQUIDATED DAMAGES BUT NOT AS A PENALTY. SUCH LIQUIDATED
DAMAGES SHALL CONSTITUTE SELLER'S SOLE AND EXCLUSIVE REMEDY.
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THE FOREGOING PROVISION AND BY THEIR SIGNATURES IMMEDIATELY
BELOW AGREE TO BE BOUND BY ITS TERMS.
"BUYER" "SELLER"
LHO MISSION BAY HOTEL, L.P., a VVH RESORTS, LTD., a Delaware
California limited partnership limited partnership
By: LASALLE HOTEL OPERATING By: SAN DIEGO PRINCESS
PARTNERSHIP, L.P., a Delaware MANAGEMENT OPERATION
limited partnership Its: Sole General Partner
Its: General Partner
By: LASALLE HOTEL By: /s/ Xxx X. Xxxxxx
PROPERTIES, a Maryland trust Name: Xxx X. Xxxxxx
Its: General Partner Its: President
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Its: Chief Operating Officer
By: ______________________
Name:______________________
Its: ______________________
14. HOTEL EMPLOYEES: On or before the Closing Date, Seller shall
terminate the services of the Hotel employees. Buyer shall rehire a
sufficient number of such employees upon such terms and conditions
(including, without limitation, pension benefits and COBRA plans) in order
that the actions of the parties pursuant to this Agreement will not trigger
the application of the WARN Act. Buyer further agrees that it shall not
terminate any such employees without cause for at least ninety (90) days
following the Closing. Buyer shall indemnify, defend and hold Seller and
the Seller Indemnitees harmless from and against any and all liability
incurred by Seller under the WARN Act. as a consequence of Buyer's breach
of its obligations under this Section 14. The provisions of this SECTION
14 shall survive the closing.
15. NOTICE. All notices, requests, demands or documents which are
required or permitted to be given or served hereunder shall be in writing
and (a) delivered personally, (b) delivered by a national overnight courier
(e.g., FedEx), or (c) transmitted by facsimile, addressed as follows:
To Seller at:
Parkway Investment
00 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP
2121 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
Hotel Partners, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
To Buyer at:
LHO MISSION BAY HOTEL, L.P
c/o LaSalle Hotel Operating Partnership, X.X.
XxXxxxx Partners Limited
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Wood LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X'Xxxx, Esq.
Facsimile: (000) 000-0000
Notice shall be deemed to have been delivered only upon actual delivery to
the intended addressee in the case of either personal, courier, or
facsimile delivery. The addresses for purposes of this paragraph may be
changed by giving written notice of such change in the manner provided
herein for giving notices. Unless and until such written notice is
delivered, the latest information stated by written notice, or provided
herein if no written notice of change has been delivered, shall be deemed
to continue in effect for all purposes hereunder.
16. MISCELLANEOUS:
16.1 SURVIVAL. The recitals set forth at the beginning of
this Agreement are deemed incorporated herein, and the parties to this
Agreement warrant and represent that they do not omit to state any material
fact necessary to make the statements or Exhibits, as the case may be,
materially misleading. The representations, warranties, covenants,
acknowledgments, agreements and indemnities contained in this Agreement and
the Exhibits, or in any of the documents or agreements executed and/or
delivered and/or exchanged pursuant to the terms of this Agreement, shall
survive the Closing Date for the periods provided in this Agreement (or, if
no period is provided, indefinitely) and shall not be deemed to have merged
or terminated upon the Closing Date.
16.2 PARTIES IN INTEREST. As and when used herein, the terms,
"Seller" and, subject to SECTION 16.14 below, "Buyer", mean and include,
and this Agreement their respective successor and assigns and shall be
binding upon and inure to the benefit of, the above-named Seller and Buyer
and their respective successors and permitted assigns.
16.3 SECTION HEADINGS. The headings of sections are inserted
only for convenience and shall in no way define, describe or limit the
scope or intent of any provision of this Agreement.
16.4 NO ORAL MODIFICATIONS. This Agreement may not be amended
or modified except in writing executed by all parties hereto.
16.5 FULL INTEGRATION. Buyer and Seller each acknowledge
that, other than that certain letter understanding dated as of May 15, 1998
between Buyer and Seller, there are no other agreements or representations,
either oral or written, express or implied, that are not embodied in this
Agreement, and this Agreement, the Exhibits attached to this Agreement, and
the Transfer Documents, represent a complete integration of all the prior
and contemporaneous agreements and understandings and documents.
16.6 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors
and assigns, and no other party shall be a beneficiary hereunder.
16.7 BUYER'S ADVICE OF COUNSEL. Buyer acknowledges that
(a) Seller has not made any representation as to the Federal or State tax
implications relating to the transactions contemplated herein, (b) Buyer
has thoroughly read and reviewed the terms and provisions of this Agreement
and the Exhibits attached hereto and is familiar with the terms of this
Agreement, (c) the terms and provisions contained in this Agreement are
clearly understood by Buyer and have been fully and unconditionally
consented to by it, (d) Buyer has had full benefit and advice of counsel of
its own selection, in regard to understanding the terms, meaning and effect
of this Agreement, (e) the execution of this Agreement and of the Transfer
Documents is done freely, voluntarily, with full knowledge, and without
duress, (f) in executing this Agreement, Buyer is relying on no other
representations, either written or oral, express or implied, made to it by
any other party to this Agreement, and the consideration received by it
under this Agreement has been actual and adequate.
16.8 ATTORNEYS' FEES. If an action is commenced by a party
hereto resulting from a dispute with respect to the transactions
contemplated herein, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and costs from the other party in such action.
As used herein, the term "attorneys' fees" means attorneys' fees whether or
not litigation ensues and if litigation ensues whether incurred at trial,
on appeal, on discretionary review or otherwise.
16.9 GOVERNING LAW. This Agreement will be governed by,
interpreted under, and construed and enforced in accordance with the laws
of the State of California with venue in the city and County of San Diego,
California. Each of the parties hereto acknowledge and agree that the laws
of the State of California and the selection of venue in the city and
County of San Diego were freely chosen by Buyer and Seller.
16.10 CONFIDENTIALITY. Unless otherwise agreed to in writing
by Seller and Buyer:
16.10.1 Each party will use reasonable efforts to
keep confidential the specific economic terms of this Agreement.
16.10.2 Prior to the Closing, and except as required
by applicable securities laws, Buyer will not: disclose to any person
other than persons who agree to be bound by this confidentiality covenant,
and are acting as its advisors, lenders or proposed assignees, any
information concerning financial data pertaining to the Hotel which may be
delivered by Seller or its agents to Buyer, including but not limited to,
the Hotel's average daily rate, average occupancy rate, management and all
fees and expenses, provided this restriction shall not apply after the
Closing Date and does not apply to information which is or becomes
generally available to the public other than as a result of a disclosure by
the Buyer (or persons to whom it makes disclosure of such information), or
becomes available to the Buyer on a nonconfidential basis from a source
other than the Seller, and the source is not under an obligation of
confidentiality with respect to that information.
16.10.3 Neither Buyer nor Seller shall issue any
public announcement or press release without first giving the other party a
reasonable opportunity to comment on the timing and terms of the
announcement or release.
16.11 SEVERABILITY. The invalidity, illegality or
unenforceability of any provision of this Agreement shall not affect the
enforceability of any other provision of this Agreement, all of which shall
remain in full force and effect.
16.12 TIME OF THE ESSENCE. Time is of the essence of this
Agreement and of the obligations required hereunder.
16.13 NON-WAIVER. No delay or failure by any party to exercise
any right hereunder, and no partial or single exercise of any such right,
shall constitute a waiver of that or any other right, unless otherwise
expressly provided herein.
16.14 ASSIGNMENT. Buyer may not assign this Agreement without
the prior written consent of Seller, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, Buyer shall have the
one-time right to assign this Agreement to an entity which controls, or is
controlled by, or under common control with, Buyer provided that (a) such
assignment shall occur concurrently with the Closing, (b) such assignee
assumes each and all of the obligations of Buyer under this Agreement, and
(c) such assignee will have, at the time of Closing a net worth of at least
$10,000,000. Provided that the conditions of clauses (a) through (b) above
are satisfied, any assignment pursuant to this SECTION 16.14 shall relieve
Buyer of its obligations under this Agreement as of the date of such
Assignment. The provisions of this Section shall survive the Closing.
16.15 FACSIMILE. The parties hereto and their respective
successors and assigns are hereby authorized to rely upon the signatures of
each person and entity on this Agreement which are delivered by facsimile
as constituting a duly authorized, irrevocable, actual, current delivery of
this Agreement with original ink signatures of each person and entity.
16.16 FURTHER ASSURANCES. Buyer and Seller agree to execute
all documents and instruments reasonably required in order to consummate
the purchase and sale contemplated in this Agreement.
16.17 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart shall be deemed to be an
original, but all of which, when taken together, shall constitute one
Agreement.
16.18 1031 EXCHANGE. Buyer hereby agrees that, if requested
by Seller, and provided that Seller delivers written notice to Buyer at
least five (5) days prior to the Closing Date of its intention to
participate in a tax deferred exchange of the Property (the "1031
Exchange"), Buyer shall cooperate with Seller in effectuating the 1031
Exchange; provided, however, that notwithstanding such an assignment,
Seller's liability to Buyer for a breach of any of Seller's
representations, warranties and covenants, and Seller's indemnity
obligations to Buyer Indemnities shall remain unmodified and in full force
and effect as if Seller had not assigned its interest to a third party
accommodator.
16.19 ESCROW HOLDER. In performing its duties hereunder,
Escrow Holder shall not incur any liability to anyone for any damages,
losses or expenses, except for its negligence or intentional misconduct,
and it shall accordingly not incur any such liability with respect (a) to
any action taken or omitted in good faith upon advice of its counsel or
(b) to any action taken or omitted in reliance upon any instrument,
including any written notice or instruction provided for in this Agreement,
not only as to its due execution and the validity and effectiveness of its
provision, but also as to the truth and accuracy of any information
contained therein, that Escrow Holder shall in good faith believe to be
genuine, to have been signed or presented by a proper person,, and to
conform to the provisions of this Agreement. Seller and Buyer hereby agree
to indemnify and hold harmless Escrow Holder against any and all losses,
claims, damages, liabilities and expenses, including reasonable costs of
investigation and legal fees and disbursements, that may be imposed upon
Escrow Holder or incurred by Escrow Holder in connection with its
acceptance or performance of its duties hereunder, including any litigation
arising out of this Agreement or involving the subject matter hereof,
unless resulting from Escrow Holder's negligence or intentional misconduct.
If any dispute shall arise between Seller and Buyer sufficient in the
discretion of Escrow Holder to justify its doing so, upon five (5) days
prior written notice to Buyer and Seller, Escrow Holder shall be entitled
to tender into the registry or custody of the clerk of any state court of
general jurisdiction located in the county in which the Land is located or
the clerk for the United States District Court, having jurisdiction over
the county in which the Land is located, any or all money, property or
documents in its hands relating to this Agreement, together with such
pleadings as it shall deem appropriate, and thereupon be discharged from
all further duties and liabilities under this Agreement. Seller and Buyer
shall bear all costs and expenses of any such legal proceedings equally.
16.20 BROKERS. Other than Hotel Partners Incorporated (for
whose commission Seller agrees to be responsible pursuant to the terms and
conditions of the Exclusive Sales Listing Agreement dated May 22, 1997
between Seller and Hotel Partners Incorporated), Buyer and Seller each
represents and warrants to the other that it has dealt with no broker,
agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, and Buyer and
Seller shall indemnify, defend, protect and hold the other harmless from
and against any claims, losses, liabilities, demands, costs, expenses or
causes of action by any other broker, agent or other person claiming a
commission or other form of compensation by virtue of having dealt with
Seller or Buyer, respectively, with regard to this transaction. The
provisions of this Section shall survive the Closing or termination of this
Agreement.
Buyer and Seller have executed this Agreement as of the date written
above.
"BUYER" "SELLER"
LHO MISSION BAY HOTEL, L.P., a VVH RESORTS, LTD., a Delaware
California limited partnership limited partnership
By: LASALLE HOTEL OPERATING By: SAN DIEGO PRINCESS
PARTNERSHIP, L.P., a Delaware MANAGEMENT CORPORATION
limited partnership Its: Sole General Partner
Its: General Partner
By: LASALLE HOTEL PROPERTIES, By: /s/ XXX X. XXXXXX
a Maryland trust Name: Xxx X. Xxxxxx
Its: General Partner Its: President
By: /s/XXXXXXX X. XXXXXXXX
Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Operating Officer
By: ________________________
Name:______________________
Its: _______________________
Subject to the provisions of Section 13.2 of the Purchase Agreement,
and provided that Buyer has complied with the provisions of Section 12.1.1
of the Purchase Agreement, the undersigned guaranties the obligations of
Seller pursuant to Sections 4.1 and 12.1 of the Purchase Agreement.
Dated: May _____, 1998
PARKWAY INVESTMENTS/TEXAS, INC.,
a Delaware corporation
By: /s/XXX X. XXXXXX
Name: Xxx X. Homes
Its: President and CEO
Escrow Holder acknowledges that it has read this Agreement and agrees
to be bound by the provisions thereof.
DATED: May ____, 1998
"ESCROW HOLDER"
CHICAGO TITLE COMPANY
By: /s/ XXXXXX X. MOLNI
------------------------------
Name: Xxxxxx X. Molni
------------------------------
Its: Sr. Escrow Officer
------------------------------
LIST OF EXHIBITS
Exhibit "A" Assignment of Capital Leases
Exhibit "B" Assignment of Ground Lease
Exhibit "C" Assignment of Intangible Property
Exhibit "D" Assignment of Leases
Exhibit "E" Assignment of Service Contracts
Exhibit "F" Xxxx of Sale
Exhibit "G" Capital Leases
Exhibit "H" Employment Contracts
Exhibit "I" Excluded Personal Property
Exhibit "J" Ground Lessor Estoppel
Exhibit "K" Land
Exhibit "L" Leases
Exhibit "M" Liquor Escrow Agreement
Exhibit "N" Pro Forma Title Policy
Exhibit "O" Service Contracts
Exhibit "P" Transferor's Certificate
Exhibit "Q" Audit Representation Letter
LIST OF SCHEDULES
Schedule 4.1.4.1 Contracts for the Transfer of the Property
Schedule 4.1.4.2 Defaults Under Leases
Schedule 4.1.4.3 Agreement Binding on Buyer After Closing
Schedule 4.1.4.4 Defaults Under the Ground Lease
Schedule 4.1.5, Litigation
Schedule 4.1.6 Notice of Violations
