ASSET PURCHASE AGREEMENT
by and among
SECURED DIVERSIFIED INVESTMENT, LTD.
and
SEASHORE DIVERSIFIED INVESTMENT COMPANY
Dated November 4, 2002
TABLE OF CONTENTS
1. DEFINITIONS AND USAGE
1.1 Definitions
1.2 Usage
2. SALE AND TRANSFER OF ASSETS; CLOSING
2.1 Assets to Be Sold
2.2 Excluded Assets
2.3 Consideration
2.4 Liabilities
2.5 Closing
2.6 Closing Obligations
2.7 Consents
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
3.1 Organization and Good Standing
3.2 Enforceability; Authority; No Conflict
3.3 Financial Statements
3.4 Books and Records
3.5 Sufficiency of Assets
3.6 Description of Real Property
3.7 Description of Leased Real Property
3.8 Description of Limited Liability Company and Limited Partnership
Interests
3.9 Title to Assets; Encumbrances
3.10 Condition of Facilities
3.11 No Undisclosed Liabilities Seller
3.12 No Undisclosed Liabilities Limited Liability Companies and Limited
Partnership
3.13 Taxes
3.14 No Material Adverse Change
3.15 Compliance with Legal Requirements; Governmental Authorizations
3.16 Legal Proceedings; Etc.
3.17 Absence of Certain Changes and Events
3.18 Agreements in Force and Effect
3.19 Insurance
3.20 Environmental Matters
3.21 Improper Payments
3.22 Relationships with Related Persons
3.23 Brokers or Finders
3.24 Securities Law Matters
3.25 Disclosure
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization and Good Standing
4.2 Authority; No Conflict
4.3 Legal Proceedings
4.4 Brokers or Finders
5.COVENANTS OF SELLER PRIOR TO CLOSING
5.1 Access and Investigation
5.2 Operation of the Business of Seller, the Limited Liability Companies
and the Limited
Partnership
5.3 Negative Covenant
5.4 Required Approvals
5.5 Notification
5.6 No Negotiation
5.7 Best Efforts
5.8 Current Evidence of Title
6. COVENANTS OF BUYER PRIOR TO CLOSING
6.1 Required Approvals
6.2 Best Efforts
7.CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
7.1 Accuracy of Representations
7.2 Seller's Performance
7.3 Consents
7.4 Additional Documents
7.5 No Proceedings
7.6 No Conflict
7.7 Title Insurance
7.8 Governmental Authorizations
7.9 Environmental Report
7.10 Ancillary Agreements
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
8.1 Accuracy of Representations
8.2 Buyer's Performance
8.3 Consents
8.4 Additional Documents
8.5 No Injunction
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9. TERMINATION
9.1 Termination Events
9.2 Effect of Termination
10. ADDITIONAL COVENANTS
10.1 Removing Excluded Assets
10.2 Reports and Returns
10.3 Assistance in Proceedings
10.4 Customer and Other Business Relationships
10.5 Retention of and Access to Records
10.6 Further Assurances
11. INDEMNIFICATION; REMEDIES
11.1 Survival
11.2 Indemnification and Reimbursement by Seller
11.3 Indemnification and Reimbursement by Seller--Environmental Matters
11.4 Indemnification and Reimbursement by Buyer
11.5 Limitations on Amount--Seller
11.6 Limitations on Amount--Buyer
11.7 Time Limitations
11.8 Third-Party Claims
11.9 Other Claims
11.10 Indemnification in Case of Strict Liability or Indemnitee Negligence
12. GENERAL PROVISIONS
12.1 Expenses
12.2 Public Announcements
12.3 Notices
12.4 Jurisdiction; Service of Process
12.5 Enforcement of Agreement
12.6 Waiver; Remedies Cumulative
12.7 Entire Agreement and Modification
12.8 Assignments, Successors and No Third-Party Rights
12.9 Severability
12.10 Construction
12.11 Time of Essence
12.12 Governing Law
12.13 Execution of Agreement
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is dated November ___,
2002, by and among Secured Diversified Investment, Ltd., a Nevada
corporation ("Buyer") and Seashore Diversified Investment Company, a
Maryland corporation ("Seller").
RECITALS
Seller desires to sell, and Buyer desires to purchase, the Assets of
Seller for the consideration and on the terms set forth in this Agreement.
The parties desire the transaction to qualify as a tax-free
reorganization under Section 368 (a)(1)(C) of the Internal Revenue Code of
1986, as amended.
The parties, intending to be legally bound, agree as follows:
1. Definitions and Usage
1.1 DEFINITIONS
For purposes of this Agreement, the following terms and variations
thereof have the meanings specified or referred to in this Section 1.1:
"Appurtenances"--all privileges, rights, easements, hereditaments and
appurtenances belonging to or for the benefit of the Land, including all
easements appurtenant to and for the benefit of any Land (a "Dominant
Parcel") for, and as the primary means of access between, the Dominant
Parcel and a public way, or for any other use upon which lawful use of the
Dominant Parcel for the purposes for which it is presently being used is
dependent, and all rights existing in and to any streets, alleys, passages
and other rights-of-way included thereon or adjacent thereto (before or
after vacation thereof) and vaults beneath any such streets.
"Assets"--as defined in Section 2.1.
"Assignment and Assumption Agreement"--as defined in Section 2.6(a)(ii).
"Assumed Liabilities"--as defined in Section 2.4(a) and (b).
"Balance Sheet"--as defined in Section 3.3.
"Best Efforts"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use
Best Efforts under this Agreement will not be thereby required to take
actions that would result in a material adverse change in the benefits to
such Person of this Agreement and the Contemplated Transactions or to
dispose of or make any change to its business, expend any material funds or
incur any other material burden.
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"Xxxx of Sale"--as defined in Section 2.6(a)(i).
"Breach"--any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any
covenant or obligation, in or of this Agreement or any other Contract, or
any event which with the passing of time or the giving of notice, or both,
would constitute such a breach, inaccuracy or failure.
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer Indemnified Persons"--as defined in Section 11.2.
"Closing"--as defined in Section 2.5.
"Closing Date"--the date on which the Closing actually takes place.
"Code"--the Internal Revenue Code of 1986.
"Consent"--any approval, consent, ratification, waiver or other
authorization.
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement.
"Contract"--any agreement, contract, Lease, consensual obligation, promise
or undertaking (whether written or oral and whether express or implied),
whether or not legally binding.
"Damages"--as defined in Section 11.2.
"Disclosure Letter" -- the disclosure letter delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement.
"Effective Time"--The time at which the Closing is consummated.
"Encumbrance"--any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right
of first option, right of first refusal or similar restriction, including
any restriction on use, voting (in the case of any security or equity
interest), transfer, receipt of income or exercise of any other attribute
of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and
animal life and any other environmental medium or natural resource.
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"Environmental, Health and Safety Liabilities"--any cost, damages, expense,
liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law, including those
consisting of or relating to:
(a) any environmental, health or safety matter or condition
(including on-site or off-site contamination, occupational safety and
health and regulation of any chemical substance or product);
(b) any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand or response,
remedial or inspection cost or expense arising under any Environmental Law
or Occupational Safety and Health Law;
(c) financial responsibility under any Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
cleanup, removal, containment or other remediation or response actions
("Cleanup") required by any Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by
any Governmental Body or any other Person) and for any natural resource
damages; or
(d) any other compliance, corrective or remedial measure required under
any Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial" and "response action" include the types of
activities covered by the United States Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA).
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees or the public of
intended or actual Releases of pollutants or hazardous substances or
materials, violations of discharge limits or other prohibitions and the
commencement of activities, such as resource extraction or construction,
that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the Release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the Release or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged and used so
that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil or other potentially harmful
substances;
(g) cleaning up pollutants that have been Released, preventing the Threat
of Release or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment or permitting self-
appointed representatives of the public interest to recover for injuries
done to public assets.
"Exchange Act"--the Securities Exchange Act of 1934.
"Excluded Assets"--as defined in Section 2.2.
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"Facilities"--any real property, leasehold or other interest in real
property currently owned or operated by Seller, including the Tangible
Personal Property used or operated by Seller at the respective locations of
the Real Property specified in Section 3.6. Notwithstanding the foregoing,
for purposes of the definitions of "Hazardous Activity" and "Remedial
Action" and Sections 3.20 and 11.3, "Facilities" shall mean any real
property, leasehold or other interest in real property currently or
formerly owned or operated by Seller, including the Tangible Personal
Property used or operated by Seller at the respective locations of the Real
Property specified in Section 3.6.
"GAAP"--generally accepted accounting principles for financial reporting in
the United States, applied on a basis consistent with the basis on which
the Balance Sheet and the other financial statements referred to in Section
3.3 were prepared.
"Governing Documents"--with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws;
(b) if a limited liability company, the articles of organization and the
operating agreement; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if another type
of Person, any other charter or similar document adopted or filed in
connection with the creation, formation or organization of the Person; (e)
all equityholders' agreements, voting agreements, voting trust agreements,
joint venture agreements, registration rights agreements or other
agreements or documents relating to the organization, management or
operation of any Person or relating to the rights, duties and obligations
of the equityholders of any Person; and (f) any amendment or supplement to
any of the foregoing.
"Governmental Authorization"--any Consent, license, registration or permit
issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, borough, village, district or
other jurisdiction;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any agency, branch, department, board, commission, court, tribunal or other
entity exercising governmental or quasi-governmental powers);
(d) multinational organization or body;
(e) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power; or
(f) official of any of the foregoing.
"Ground Lease"--any long-term lease of land in which most of the rights and
benefits comprising ownership of the land and the improvements thereon or
to be constructed thereon, if any, are transferred to the tenant for the
term thereof.
"Ground Lease Property"--any land, improvements and appurtenances subject
to a Ground Lease in favor of Seller.
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"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release,
storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Material in, on,
under, about or from any of the Facilities or any part thereof into the
Environment and any other act, business, operation or thing that increases
the danger, or risk of danger, or poses an unreasonable risk of harm, to
persons or property on or off the Facilities.
"Hazardous Material"--any substance, material or waste which is or will
foreseeably be regulated by any Governmental Body, including any material,
substance or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "contaminant," "toxic waste" or "toxic substance" under
any provision of Environmental Law, and including petroleum, petroleum
products, asbestos, presumed asbestos-containing material or asbestos-
containing material, urea formaldehyde and polychlorinated biphenyls.
"Improvements"--all buildings, structures, fixtures and improvements
located on the Land or included in the Assets, including those under
construction.
"Indemnified Person"--as defined in Section 11.8.
"Indemnifying Person"--as defined in Section 11.8.
"Interim Balance Sheet"--as defined in Section 3.3.
"IRS"--the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have Knowledge of a particular
fact or other matter if:
(a) that individual is actually aware of that fact or matter; or
(b) a prudent individual could be expected to discover or otherwise become
aware of that fact or matter in the course of conducting a reasonably
comprehensive investigation regarding the accuracy of any representation or
warranty contained in this Agreement.
A Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor or
trustee of that Person (or in any similar capacity) has, or at any time
had, Knowledge of that fact or other matter (as set forth in (a) and (b)
above), and any such individual (and any individual party to this
Agreement) will be deemed to have conducted a reasonably comprehensive
investigation regarding the accuracy of the representations and warranties
made herein by that Person or individual.
"Land"--all parcels and tracts of land in which Seller has an ownership
interest.
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"Lease"--any Real Property Lease or any lease or rental agreement, license,
right to use or installment and conditional sale agreement to which Seller
is a party and any other Seller Contract pertaining to the leasing or use
of any Tangible Personal Property.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance,
principle of common law, code, regulation, statute or treaty.
"Liability"--with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or
unknown, absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint or
several, due or to become due, vested or unvested, executory, determined,
determinable or otherwise, and whether or not the same is required to be
accrued on the financial statements of such Person.
"LLCs" or "Limited Liability Companies" -- collectively refer to that
limited liability company known as Xxxxxxx Springs, LLC, and that limited
liability company known as Decatur Center, LLC, of which Seller owns 50% of
each.
"LP" or "Limited Partnership" - - refers to that limited partnership known
as Seascrest Hospitality, LP, of which Seller owns a 49% interest and is
the general partner.
"Material Consents"--as defined in Section 7.3.
"Occupational Safety and Health Law"--any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational
safety and health hazards, including the Occupational Safety and Health
Act, and any program, whether governmental or private (such as those
promulgated or sponsored by industry associations and insurance companies),
designed to provide safe and healthful working conditions.
"Order"--any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed
to have been taken in the Ordinary Course of Business only if that action:
(a) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person;
(b) does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons
exercising similar authority) and does not require any other separate or
special authorization of any nature; and
(c) is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary
course of the normal, day-to-day operations of other Persons that are in
the same line of business as such Person.
"Permitted Encumbrances"--as defined in Section 3.9.
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"Person"--an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private)
commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price"--as defined in Section 2.3.
"Real Property"--the Land and Improvements and all Appurtenances thereto
and any Ground Lease Property.
"Real Property Lease"--any Ground Lease or Space Lease.
"Record"--information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable
form.
"Related Person"-- With respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c) any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, member,
executor or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, member
executor or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
and
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "control" (including "controlling,"
"controlled by," and "under common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise, and shall be construed as such
term is used in the rules promulgated under the Securities Act; (b) the
"Family" of an individual includes (i) the individual, (ii) the
individual's spouse, (iii) any other natural person who is related to the
individual or the individual's spouse within the second degree and (iv) any
other natural person who resides with such individual; and (c) "Material
Interest" means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least ten percent (10%) of the outstanding voting
power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
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"Release"--any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the Environment or into or out of any
property.
"Remedial Action"--all actions, including any capital expenditures,
required or voluntarily undertaken (a) to clean up, remove, treat or in any
other way address any Hazardous Material or other substance; (b) to prevent
the Release or Threat of Release or to minimize the further Release of any
Hazardous Material or other substance so it does not migrate or endanger or
threaten to endanger public health or welfare or the Environment; (c) to
perform pre-remedial studies and investigations or post-remedial monitoring
and care; or (d) to bring all Facilities and the operations conducted
thereon into compliance with Environmental Laws and environmental
Governmental Authorizations.
"Representative"--with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant,
financial advisor, legal counsel or other representative of that Person.
"Retained Liabilities"--as defined in Section 2.4(c).
"Schedule" -- a schedule of the Disclosure Letter.
"SEC"--the United States Securities and Exchange Commission.
"Securities Act" -- the Securities Act of 1933.
"Seller"--as defined in the first paragraph of this Agreement.
"Seller Contract"--any Contract (a) under which Seller has or may acquire
any rights or benefits; (b) under which Seller has or may become subject to
any obligation or liability; or (c) by which Seller or any of the assets
owned or used by Seller is or may become bound.
"Space Lease"--any lease or rental agreement pertaining to the occupancy of
any improved space on any Land.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to
elect a majority of that corporation's or other Person's board of directors
or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of
a contingency that has not occurred), are held by the Owner or one or more
of its Subsidiaries.
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"Tangible Personal Property"--all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles and
other items of tangible personal property (other than Inventories) of every
kind owned or leased by Seller (wherever located and whether or not carried
on Seller's books), together with any express or implied warranty by the
manufacturers or sellers or lessors of any item or component part thereof
and all maintenance records and other documents relating thereto.
"Tax"--any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or
registration, capital stock, franchise, employees' income withholding,
foreign or domestic withholding, social security, unemployment, disability,
real property, personal property, sales, use, transfer, value added,
alternative, add-on minimum and other tax, fee, assessment, levy, tariff,
charge or duty of any kind whatsoever and any interest, penalty, addition
or additional amount thereon imposed, assessed or collected by or under the
authority of any Governmental Body or payable under any tax-sharing
agreement or any other Contract.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"Third Party"--a Person that is not a party to this Agreement.
"Third-Party Claim"--any claim against any Indemnified Person by a Third
Party, whether or not involving a Proceeding.
"Threat of Release"--a reasonable likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may
result from such Release.
1.2 USAGE
(a) Interpretation. In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are not
prohibited by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
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(iv) reference to any agreement, document or instrument means such
agreement, document or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof;
(v) reference to any Legal Requirement means such Legal Requirement
as amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of
any Legal Requirement means that provision of such Legal Requirement from
time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section or
other provision;
(vi) "hereunder," "hereof," "hereto," and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular Article, Section or other provision hereof;
(vii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(viii) "or" is used in the inclusive sense of "and/or";
(ix) with respect to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding"; and
(x) references to documents, instruments or agreements shall be
deemed to refer as well to all addenda, exhibits, schedules or amendments
thereto.
(b) Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with GAAP.
(c) Legal Representation of the Parties. This Agreement was negotiated by
the parties with the benefit of legal representation, and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any
construction or interpretation hereof.
2. Sale and Transfer of Assets; Closing
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, but effective as of the Effective Time, Seller
shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall
purchase and acquire from Seller certain Real Property identified herein as
the Katella Commercial Center and the T-Xxx Plaza, interests in the Limited
Liability Companies and a general partnership interest in the Limited
Partnership, as more fully described in the schedules set forth below in
this Section 2.1, and Schedules 3.6, 3.7 and 3.8 (collectively referred to
herein as the "Assets"), free and clear of any Encumbrances other than
Permitted Encumbrances, including property and assets, real, personal or
mixed, tangible and intangible, of every kind and description, wherever
located, associated with the Assets, including the following (but excluding
the Excluded Assets):
(a) all Real Property, including the Real Property described in
Schedules 3.6 and 3.7;
(b) all Real Property Leases described in Schedule 2.1(b);
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(c) all Tangible Personal Property, including those items described
in Schedule 2.1(c);
(d) interests in the Limited Liability Companies described in
Schedule 2.1(d);
(e) partnership interests in the Limited Partnership described in
Schedule 2.1(e);
(f) all Seller Contracts, including those listed in Schedule 3.18(a),
and all outstanding offers or solicitations made by or to Seller
to enter into any Contract;
(g) all Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent transferable to
Buyer, including those listed in Schedule 3.17(b);
(h) all data and Records related to the operations of Seller, the
LLCs and the LP including client and customer lists and Records, referral
sources, research and development reports and Records, financial and
accounting Records, advertising materials, promotional materials, studies,
reports, correspondence and other similar documents and other Records which
seller is required by law to retain in its possession;
(i) all insurance benefits, including rights and proceeds, arising
from or relating to the Assets or the Assumed Liabilities prior to the
Effective Time, unless expended in accordance with this Agreement; and
(j) all claims of Seller against third parties relating to the
Assets, whether xxxxxx or inchoate, known or unknown, contingent or
noncontingent, including all such claims listed in Schedule 2.1(j).
Notwithstanding the foregoing, the transfer of the Assets pursuant to this
Agreement shall not include the assumption of any Liability related to the
Assets unless Buyer expressly assumes that Liability pursuant to Section
2.4(a) and (b).
2.2 EXCLUDED ASSETS
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following assets of Seller (collectively,
the "Excluded Assets") are not part of the sale and purchase contemplated
hereunder, are excluded from the Assets and shall remain the property of
Seller after the Closing:
(a) all assets of Seller not associated with the Real Property,
Appurtencances, Facilities and Improvements identified herein as the
Katella Commercial Center and T-Xxx Plaza Real Property; and interests in
the Limited Liability Companies or interests in the Limited Partnership
as set forth in Section 2.1;
(b) all minute books
(c) all of the Seller Contracts listed in Schedule 2.2(c);
(d) all other Records that Seller is required by law to retain in its
possession;
(e) all currently existing claims for refund of Taxes and other
governmental charges of whatever nature;
(f) all rights of Seller under this Agreement, the Xxxx of Sale, the
Assignment and Assumption Agreement; and
the property and assets expressly designated in Schedule 2.2(g).
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2.3 CONSIDERATION
The consideration for the Assets (the "Purchase Price") will be (a)
3,630,000 restricted Common Shares of Buyer and (b) 7,370,000 restricted
Preferred Shares of Buyer to be issued as directed in Schedule 2.3.
2.4 LIABILITIES
(a) Assumed Liabilities Katella Commercial Center and T-Xxx Plaza
Real Property. On the Closing Date, but effective as of the Effective Time,
with respect to the Real Property, Buyer shall assume and agree to
discharge only the following Liabilities of Seller (the "Assumed
Liabilities"):
(i) any Liability arising after the Effective Time under the
Seller Contracts described in Schedule 3.18(a), (other than any
Liability arising under the Seller Contracts described on Schedule
2.4(a)(i) or arising out of or relating to a Breach that occurred
prior to the Effective Time);
(ii) any Liability of Seller arising after the Effective Time
under any Seller Contract included in the Assets that is entered into
by Seller after the date hereof in accordance with the provisions of
this Agreement (other than any Liability arising out of or relating to
a Breach that occurred prior to the Effective Time); and
(iii) any Liability of Seller described in Schedule 2.4(a)(iii).
(b) Assumed Liabilities LLC and LP interests. On the Closing Date,
but effective as of the Effective Time, with respect to the interest in the
LLCs and the LP, Buyer shall assume all liabilities and obligations
associated with the interests in the LLCs and the LP as of the the
Effective Time.
(c) Retained Liabilities. The Retained Liabilities shall remain the
sole responsibility of and shall be retained, paid, performed and
discharged solely by Seller. "Retained Liabilities" shall mean every
Liability of Seller other than the Assumed Liabilities, including:
(i) any Liability under any Contract assumed by Buyer pursuant
to Section 2.4(a) or (b) that arises after the Effective Time but that
arises out of or relates to any Breach that occurred prior to the
Effective Time;
(ii) any Liability for Taxes, including (A) any Taxes arising as
a result of Seller's operation of its business or ownership of the
Assets prior to the Effective Time, (B) any Taxes that will arise as a
result of the sale of the Assets pursuant to this Agreement and (C)
any deferred Taxes of any nature;
(iii) any Liability under any Contract not assumed by Buyer under
Section 2.4(a) or (b), including any Liability arising out of or
relating to Seller's credit facilities or any security interest
related thereto;
(iv) any Environmental, Health and Safety Liabilities arising out
of or relating to the operation of Seller's business or Seller's
leasing, ownership or operation of real property;
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(v) any Liability of Seller incurred as a member of the LLCs or
as a partner of the LP prior to the Effective Time;
(vii) any Liability to indemnify, reimburse or advance amounts to
any LLC member or limited partner, director, employee or agent of
Seller;
(viii) any Liability arising out of any Proceeding pending as of
the Effective Time;
(ix) any Liability arising out of any Proceeding commenced after
the Effective Time and arising out of or relating to any occurrence or
event happening prior to the Effective Time;
(x) any Liability arising out of or resulting from Seller's
compliance or noncompliance with any Legal Requirement or Order of any
Governmental Body;
(xi) any Liability of Seller under this Agreement or any other
document executed in connection with the Contemplated Transactions;
and
(xii) any Liability of Seller based upon Seller's acts or
omissions occurring after the Effective Time.
2.5 CLOSING
The purchase and sale provided for in this Agreement (the "Closing")
will take place at the Buyer's offices at 0000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 , commencing at 10:00 a.m. Pacific Standard
Time on November ___, 2002, unless Buyer and Seller otherwise agree.
Subject to the provisions of Article 9, failure to consummate the purchase
and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.5 will not result in the
termination of this Agreement and will not relieve any party of any
obligation under this Agreement. In such a situation, the Closing will
occur as soon as practicable, subject to Article 9.
2.6 CLOSING OBLIGATIONS
In addition to any other documents to be delivered under other
provisions of this Agreement, at the Closing:
(a) Seller shall deliver to Buyer, together with funds sufficient to
pay all Taxes necessary for the transfer, filing or recording thereof:
(i) a xxxx of sale and assignment of contract rights for all of
the Assets that are Tangible Personal Property in the form of Schedule
2.6(a)(i) (the "Xxxx of Sale") executed by Seller;
(ii) an assignment of all of the Assets that are intangible
personal property in the form of Schedule 2.6(a)(ii), which assignment
shall also contain Buyer's undertaking and assumption of the Assumed
Liabilities (the "Assignment and Assumption Agreement") executed by
Seller;
(iii) for each interest in Real Property identified on Schedule
3.7(a), a recordable warranty deed, an Assignment and Assumption of
Lease in the form of Schedule 2.6(a)(iii) or such other appropriate
document or instrument of transfer, as the case may require, each in
form and substance satisfactory to Buyer and its counsel and executed
by Seller;
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(iv) such other deeds, bills of sale, assignments, certificates
of title, documents and other instruments of transfer and conveyance
as may reasonably be requested by Buyer, each in form and substance
satisfactory to Buyer and its legal counsel and executed by Seller;
(v) a certificate executed by Seller as to the accuracy of their
representations and warranties as of the date of this Agreement and
as of the Closing in accordance with Section 7.1 and as to their
compliance with and performance of their covenants and obligations to
be performed or complied with at or before the Closing in accordance
with Section 7.2; and
(vi) complete and accurate copies of the Governing Documents of
Seller, the LLCs and the LP, and all requisite resolutions, actions or
consents of Seller's board of directors and shareholders, members of
the LLCs and the limited partners, as required, approving the
execution and delivery of this Agreement and the consummation of the
Contemplated Transactions and accompanied by the requisite documents
for amending the relevant Governing Documents of Seller, the LLCs or
the LP required to effect such changes in form sufficient for filing
with the appropriate Governmental Body.
(b) Buyer shall deliver to Seller and Shareholders, as the case may
be:
(i) stock certificates evidencing 3,630,000 restricted Common
Shares and stock certificates evidencing 7,370,000 restricted
Preferred Shares of Buyer issued in the names and amounts set forth in
Schedule 2.3;
(ii) the Assignment and Assumption Agreement executed by Buyer;
(iii) a certificate executed by Buyer as to the accuracy of
its representations and warranties as of the date of this Agreement
and as of the Closing in accordance with Section 8.1 and as to its
compliance with and performance of its covenants and obligations to be
performed or complied with at or before the Closing in accordance with
Section 8.2; and
(iv) copies of all requisite resolutions or actions of Buyer's
board of directors approving the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions and
any other document relating to the Contemplated Transactions.
2.7 CONSENTS
(a) If there are any Material Consents that have not yet been
obtained (or otherwise are not in full force and effect) as of the Closing,
in the case of each Seller Contract as to which such Material Consents were
not obtained (or otherwise are not in full force and effect) (the
"Restricted Material Contracts"), or Material Consents required to transfer
interests in the LLCs or the LP, Buyer may waive the closing conditions as
to any such Material Consent and either:
(i) elect to have Seller continue its efforts to obtain the
Material Consents; or
(ii) elect to have Seller retain that Restricted Material
Contract and all Liabilities arising therefrom or relating thereto.
If Buyer elects to have Seller continue its efforts to obtain any
Material Consents and the Closing occurs, notwithstanding Sections 2.1 and
2.4, neither this Agreement nor the Assignment and Assumption Agreement nor
any other document related to the consummation of the Contemplated
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Transactions shall constitute a sale, assignment, assumption, transfer,
conveyance or delivery or an attempted sale, assignment, assumption,
transfer, conveyance or delivery of the Restricted Material Contracts, and
following the Closing, the parties shall use Best Efforts, and cooperate
with each other, to obtain the Material Consent relating to each Restricted
Material Contract as quickly as practicable. Pending the obtaining of such
Material Consents relating to any Restricted Material Contract, the parties
shall cooperate with each other in any reasonable and lawful arrangements
designed to provide to Buyer the benefits of use of the Restricted Material
Contract for its term (or any right or benefit arising thereunder,
including the enforcement for the benefit of Buyer of any and all rights of
Seller against a third party thereunder). Once a Material Consent for the
sale, assignment, assumption, transfer, conveyance and delivery of a
Restricted Material Contract is obtained, Seller shall promptly assign,
transfer, convey and deliver such Restricted Material Contract to Buyer,
and Buyer shall assume the obligations under such Restricted Material
Contract assigned to Buyer from and after the date of assignment to Buyer
pursuant to a special-purpose assignment and assumption agreement
substantially similar in terms to those of the Assignment and Assumption
Agreement (which special-purpose agreement the parties shall prepare,
execute and deliver in good faith at the time of such transfer, all at no
additional cost to Buyer).
(b) If there are any Consents not listed on Schedule 7.3 necessary
for the assignment and transfer of any Seller Contracts to Buyer (the
"Nonmaterial Consents") which have not yet been obtained (or otherwise are
not in full force and effect) as of the Closing, Buyer shall elect at the
Closing, in the case of each of the Seller Contracts as to which such
Nonmaterial Consents were not obtained (or otherwise are not in full force
and effect) (the "Restricted Nonmaterial Contracts"), whether to:
(i) accept the assignment of such Restricted Nonmaterial
Contract, in which case, as between Buyer and Seller, such Restricted
Nonmaterial Contract shall, to the maximum extent practicable and
notwithstanding the failure to obtain the applicable Nonmaterial
Consent, be transferred at the Closing pursuant to the Assignment and
Assumption Agreement as elsewhere provided under this Agreement; or
(ii) reject the assignment of such Restricted Nonmaterial
Contract, in which case, notwithstanding Sections 2.1 and 2.4, (A)
neither this Agreement nor the Assignment and Assumption Agreement nor
any other document related to the consummation of the Contemplated
Transactions shall constitute a sale, assignment, assumption,
conveyance or delivery or an attempted sale, assignment, assumption,
transfer, conveyance or delivery of such Restricted Nonmaterial
Contract, and (B) Seller shall retain such Restricted Nonmaterial
Contract and all Liabilities arising therefrom or relating thereto.
3. Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
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(a) Schedule 3.1(a) contains a complete and accurate list of
jurisdictions of organization of Seller, the LLCs and the LP and any other
jurisdictions in which they are qualified to do business as foreign
entities. Seller, the LLCs and the LP are duly organized, validly existing
and in good standing under the laws of their jurisdiction of organization,
with full power and authority to conduct their business as they are now
being conducted, to own or use the properties and assets that they purport
to own or use, and to perform all their obligations under the Seller
Contracts. Seller, the LLCs and the LP are duly qualified to do business
as foreign entities and are in good standing under the laws of each state
or other jurisdiction in which either the ownership or use of the
properties owned or used by them, or the nature of the activities conducted
by them, requires such qualification.
(b) Complete and accurate copies of the Governing Documents of
Seller, each Limited Liability Company and the LP, as currently in effect,
are attached to Schedule 3.1(b).
3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms.
Upon the execution and delivery by Seller of this Agreement, the Assignment
and Assumption Agreement and each other agreement to be executed or
delivered by Seller at the Closing (collectively, the "Seller's Closing
Documents"), each of Seller's Closing Documents will constitute the legal,
valid and binding obligation of Seller, enforceable against it in
accordance with its terms. Seller has the absolute and unrestricted right,
power and authority to execute and deliver this Agreement and the Seller's
Closing Documents to which it is a party and to perform its obligations
under this Agreement and the Seller's Closing Documents, and such action
has been duly authorized by all necessary action by Seller's shareholders
and board of directors.
(b) Except as set forth in Schedule 3.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance of any of
the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time):
(i) Breach (A) any provision of any of the Governing Documents
of Seller, or (B) any resolution adopted by the board of directors of
Seller;
(ii) Breach (A) any provision of any of the Governing Documents
of the LLCs or the LP or (B) any resolution adopted by the managing
members of the LLCs or the general partner of the LP;
(iii) Breach or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under any Legal Requirement or any
Order to which Seller, the LLCs, the LP, or any of the Assets, may be
subject;
(iv) contravene, conflict with or result in a violation or breach
of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by Seller or that
otherwise relates to the Assets or to the business of Seller;
(v) cause Buyer to become subject to, or to become liable for
the payment of, any Tax;
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(vi) Breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate
or modify, any Seller Contract;
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets; or .
(viii) results in the dissolution of either of the LLCs or
the LP.
(c) Except as set forth in Schedule 3.2(c), Seller, is not required
to give any notice to or obtain any Consent from any Person or Entity in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
3.3 FINANCIAL STATEMENTS
Seller has delivered to Buyer: (a) audited balance sheets of each
Limited Liability Company and the Limited Partnership as of each of their
last two most recent fiscal year ends or since inception, whichever is
shorter, (including the notes thereto, the "Balance Sheet"), and the
related audited statements of income, changes in member or limited partner
interest and cash flows for the fiscal year then ended, including in each
case the notes thereto, together with the report thereon of the independent
certified public accountants preparing the financial statements; and (c) an
unaudited balance sheet of each Limited Liability Company and Limited
Partnership as at September 30, 2002, (the "Interim Balance Sheet") and
the related unaudited statements of income, and cash flows for the nine (9)
months then ended, including in each case the notes thereto certified by
Seller's chief financial officer. Such financial statements fairly present
the financial condition and the results of operations, changes in member or
limited partner interest and cash flows of each Limited Liability Company
and the Limited Partnership as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with
GAAP. The financial statements referred to in this Section 3.3 reflect and
will reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements. The financial statements have been and will be
prepared from and are in accordance with the accounting Records of the LLCs
and the LP. Seller has also delivered to Buyer copies of all letters from
the auditors of the LLCs and the LP to their managing member or general
partner during the twenty-four (24) months preceding the execution of this
Agreement, together with copies of all responses thereto.
3.4 BOOKS AND RECORDS
The books of account and other financial Records of Seller, the LLCs
and the LP, all of which have been made available to Buyer, are complete
and correct and represent actual, bona fide transactions and have been
maintained in accordance with sound business practices and the requirements
of Section 13(b)(2) of the Exchange Act (regardless of whether the Seller
is subject to that Section or not), including the maintenance of an
adequate system of internal controls. The minute books of Seller, the LLCs
and the LP, all of which have been made available to Buyer, contain
accurate and complete Records of all meetings held, and actions taken by,
the shareholders, members, partners, the board of directors and committees
of the board of directors of Seller, the LLCs or the LP and no meeting of
any such interest holders, board of directors, committee, members or
partners has been held for which minutes have not been prepared or are not
contained in such minute books.
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3.5 SUFFICIENCY OF ASSETS
Except as set forth in Schedule 3.5, the Assets (a) constitute all of
the assets, tangible and intangible, of any nature whatsoever, necessary to
operate the businesses of the LLCs and the LP in the manner presently
operated by them and (b) include all of the operating assets of those
entities.
3.6 DESCRIPTION OF REAL PROPERTY
Schedule 3.6 contains a correct legal description, street address and
tax parcel identification number of all tracts, parcels and subdivided lots
which Seller is selling to Buyer, or which is owned by each LLC or the LP.
3.7 DESCRIPTION OF LEASED REAL PROPERTY
Schedule 3.7 contains a correct legal description, street address and
tax parcel identification number of all tracts, parcels and subdivided lots
in which Seller, the LLCs or the LP have a leasehold interest and an
accurate description (by location, name of lessor, date of Lease and term
expiry date) of all Real Property Leases which Seller is assigning to
Buyer.
3.8 DESCRIPTION OF LIMITED LIABILITY COMPANY AND LIMITED
PARTNERSHIP INTERSTS
Schedule 3.8 contains a description of all interests in the LLCs and
the LP that Seller is selling to Buyer.
3.9 TITLE TO ASSETS; ENCUMBRANCES
(a) Seller, the LLCs and the LP owns good and marketable title to the
respective estates in the Real Property, free and clear of any
Encumbrances, other than:
(i) liens for Taxes for the current tax year which are not yet
due and payable; and
(ii) those described in Schedule 3.9(a) ("Real Estate
Encumbrances").
True and complete copies of (A) all deeds, existing title insurance
policies and surveys of or pertaining to the Real Property and (B) all
instruments, agreements and other documents evidencing, creating or
constituting any Real Estate Encumbrances have been delivered to Buyer.
Seller warrants to Buyer that, at the time of Closing, the Real Estate
shall be free and clear of all Real Estate Encumbrances other than those
identified on Schedule 3.9(a) as acceptable to Buyer ("Permitted Real
Estate Encumbrances").
(b) Seller, the LLCs and the LP own good and transferable title to
all of the other Assets free and clear of any Encumbrances other than those
described in Schedule 3.9(b) ("Non-Real Estate Encumbrances"). Seller
warrants to Buyer that, at the time of Closing, all other Assets shall be
free and clear of all Non-Real Estate Encumbrances other than those
identified on Schedule 3.9(b) as acceptable to Buyer ("Permitted Non-Real
Estate Encumbrances" and, together with the Permitted Real Estate
Encumbrances, "Permitted Encumbrances").
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(c) Seller owns good and transferable title to a 50% membership
interest in Xxxxxxx Springs, LLC., a 50% membership interest in Decatur
Center, LLC., and a 49% interest and general partnership in Seascrest
Hospitality, LP., free and clear of any Encumbrances. Seller warrants to
Buyer that, at the time of Closing, all interests shall be free and clear
of all Encumbrances.
3.10 CONDITION OF FACILTIIES
(a) Use of the Real Property owned by Seller, the LLCs and the LP for
the various purposes for which it is presently being used is permitted as
of right under all applicable zoning legal requirements and is not subject
to "permitted nonconforming" use or structure classifications. All
Improvements are in compliance with all applicable Legal Requirements,
including those pertaining to zoning, building and the disabled, are in
good repair and in good condition, ordinary wear and tear excepted, and are
free from latent and patent defects. No part of any Improvement encroaches
on any real property not included in the Real Property, and there are no
buildings, structures, fixtures or other Improvements primarily situated on
adjoining property which encroach on any part of the Land. The Land for
each owned Facility abuts on and has direct vehicular access to a public
road or has access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such Land and comprising a part of the Real
Property, is supplied with public or quasi-public utilities and other
services appropriate for the operation of the Facilities located thereon
and is not located within any flood plain or area subject to wetlands
regulation or any similar restriction. There is no existing or proposed
plan to modify or realign any street or highway or any existing or proposed
eminent domain proceeding that would result in the taking of all or any
part of any Facility or that would prevent or hinder the continued use of
any Facility as heretofore used in the conduct of the business of Seller,
the LLCs or the LP.
(b) Each item of Tangible Personal Property is in good repair and
good operating condition, ordinary wear and tear excepted, is suitable for
immediate use in the Ordinary Course of Business and is free from latent
and patent defects. No item of Tangible Personal Property is in need of
repair or replacement other than as part of routine maintenance in the
Ordinary Course of Business. Except as disclosed in Schedule 3.10(b), all
Tangible Personal Property used in the business of Seller, the LLCs or the
LP is in their possession.
3.11 NO UNDISCLOSED LIABILITIES SELLER
Except as set forth in Schedule 3.11, with respect to the Katella
Commercial Center and the T-Xxx Plaza, Seller has no Liabilities.
3.12 NO UNDISCLOSED LIABILITIES LIMITED LIABILITY COMPANIES AND
LIMITED PARTNERSHIP
Except as set forth in Schedule 3.12, the LLCs and the LP have no
Liability except for Liabilities reflected or reserved against in the
Balance Sheets or the Interim Balance Sheets of the LLCs and the LP and
current liabilities incurred in the Ordinary Course of Business of the LLCs
and the LP since the date of the Interim Balance Sheet.
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3.13 TAXES
(a) Tax Returns. Accurate copies of all Federal and State tax
returns for Seller, the LLCs and the LP for the last fiscal year are
included at Schedule 3.13(a).
(b) Tax Matters. All taxes and other assessments and levies which
Seller, the LLCs and the LP are required by law to withhold or to collect
have been duly withheld and collected, and have been paid over to the
proper government authorities or are held by Seller, the LLCs or the LP in
separate bank accounts for such payment or are represented by depository
receipts, and all such withholdings and collections and all other payments
due in connection therewith (including, without limitation, employment
taxes, both the employee's and employer's share) have been paid over to the
government or placed in a separate and segregated bank account for such
purpose. There are no known deficiencies in income taxes for any periods
and further, the representations and warranties as to absence of
undisclosed liabilities contained in Schedule 3.13 includes any and all tax
liabilities of whatsoever kind or nature (including, without limitation,
all federal, state, local and foreign income, profit, franchise, sales,
use and property taxes) due or to become due, incurred in respect of or
measured by Seller, the LLCs or the LP income or business prior to the
Closing Date.
3.14 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any material
adverse change in the business, operations, prospects, assets, results of
operations or condition (financial or other) of the LLCs or the LP, and no
event has occurred or circumstance exists that may result in such a
material adverse change.
3.15 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
To the knowledge of Seller and except as set forth in Schedule 3.15,
neither Seller, the LLCs nor the LP are in violation of or in default with
respect to any applicable law or any applicable rule, regulation, order,
writ or decree of any court or any governmental commission, board, bureau,
agency, instrumentality, or delinquent with respect to any report required
to be filed with any governmental commission, board, bureau, agency or
instrumentality which violation or default could have a material adverse
effect upon the business, operations, Assets or financial condition of
Seller, the LLCs or the LP.
3.16 LEGAL PROCEEDINGS; ETC.
Except as set forth in Schedule 3.16, there are no civil, criminal,
administrative, arbitration or other such proceedings or investigations
pending or, to the knowledge of Seller, the LLCs or the LP, threatened, in
which, individually or in the aggregate, an adverse determination would
materially and adversely affect Seller, the LLCs, LP or the Assets.
Seller, the LLCs and the LP have substantially complied with, and are not
in default in any material respect under, any laws, ordinances,
requirements, regulations or orders applicable to their business or Assets.
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3.17 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Schedule 3.17, since the date of the Balance
Sheets of the LLCs and the LP, there have been no material adverse changes
in the condition (financial or otherwise), Assets or Liabilities of the
LLCs or the LP.
3.18 AGREEMENTS IN FORCE AND EFFECT
(a) Schedule 3.18(a) contains an accurate and complete list, and
Seller has delivered to Buyer accurate and complete copies, of:
(i) each Seller Contract that involves performance of services
or delivery of goods or materials by Seller, the LLCs or the LP of an
amount or value in excess of $1,000;
(ii) each Seller Contract that involves performance of services
or delivery of goods or materials to Seller, the LLCs or the LP of an
amount or value in excess of $1,000;
(iii) each Seller Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts
of Seller, the LLCs or the LP in excess of $1,000;
(iv) each Seller Contract affecting the ownership of, leasing of,
title to, use of or any leasehold or other interest in any real or
personal property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $1,000 and with a term of less than one year);
(v) each Seller Contract (however named) involving a sharing of
profits, losses, costs or liabilities by Seller, the LLCs or the LP
with any other Person;
(vi) each Seller Contract containing covenants that in any way
purport to restrict the business activity or limit the freedom of
Seller, the LLCs or the LP to engage in any line of business or to
compete with any Person;
(vii) each power of attorney of Seller, the LLCs or the LP that
is currently effective and outstanding;
(viii) each Seller Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by Seller, the LLCs or the LP to be responsible for
consequential damages;
(ix) each Seller Contract for capital expenditures in excess of
$1,000 dollars;
(x) each Seller Contract not denominated in U.S. dollars; and
(xi) each amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
Schedule 3.18(a) sets forth reasonably complete details concerning
such Contracts, including the parties to the Contracts, the amount of the
remaining commitment of Seller, the LLCs or the LP under the Contracts and
the location of the office where details relating to the Contracts are
located.
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(b) Except as set forth in Schedule 3.18(b):
(i) each Contract identified or required to be identified in
Schedule 3.18(a) and which is to be assigned to or assumed by Buyer
under this Agreement is in full force and effect and is valid and
enforceable in accordance with its terms;
(ii) each Contract identified or required to be identified in
Schedule 3.18(a) and which is being assigned to or assumed by Buyer is
assignable by Seller, the LLCs or the LP to Buyer without the consent
of any other Person; and
(iii) to the Knowledge of Seller, no Contract identified or
required to be identified in Schedule 3.18(a) and which is to be
assigned to or assumed by Buyer under this Agreement will upon
completion or performance thereof have a material adverse affect on
the Assets of Seller, or the business, assets or condition of the LLCs
or the LP or the business to be conducted by Buyer with the Assets.
(c) Except as set forth in Schedule 3.18(c):
(i) Seller, the LLCs and the LP are and have been, in compliance
with all applicable terms and requirements of each Seller Contract
which is being assumed by Buyer;
(ii) each other Person that has or had any obligation or
liability under any Seller Contract which is being assigned to Buyer
is and has been, in full compliance with all applicable terms and
requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with or
result in a Breach of, or give Seller, the LLCs, the LP or other
Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or payment under, or to
cancel, terminate or modify, any Seller Contract that is being
assigned to or assumed by Buyer;
(iv) no event has occurred or circumstance exists under or by
virtue of any Contract that (with or without notice or lapse of time)
would cause the creation of any Encumbrance affecting any of the
Assets; and
(v) Seller, the LLCs or the LP have not given to or received
from any other Person any notice or other communication (whether oral
or written) regarding any actual, alleged, possible or potential
violation or Breach of, or default under, any Contract which is being
assigned to or assumed by Buyer.
(d) There are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any material amounts paid or payable to
Seller, the LLCs or the LP under current or completed Contracts with any
Person having the contractual or statutory right to demand or require such
renegotiation and no such Person has made written demand for such
renegotiation.
3.19 INSURANCE
(a) Seller has delivered to Buyer:
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(i) accurate and complete copies of all policies of insurance
(and correspondence relating to coverage thereunder) to which Seller,
the LLCs or the LP is a party or under which Seller, the LLCs or the
LP is covered, a list of which is included in Schedule 3.19(a);
(ii) accurate and complete copies of all pending applications by
Seller, the LLCs or the LP for policies of insurance; and
(iii) any statement by the auditor of the financial
statements of the LLC or the LP or any consultant or risk management
advisor with regard to the adequacy of said coverage or of the
reserves for claims.
(b) Schedule 3.19(b) describes:
(i) any self-insurance arrangement by or affecting Seller, the
LLCs or the LP including any reserves established thereunder;
(ii) any Contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk to which Seller,
the LLCs or the LP is a party or which involves their business; and
(iii) all obligations of Seller, the LLCs or the LP to
provide insurance coverage to Third Parties (for example, under
Leases) and identifies the policy under which such coverage is
provided.
(c) Except as set forth in Schedule 3.19(c):
(i) all policies of insurance to which Seller, the LLCs or the
LP are a party or that provide coverage to any of them:
(A) are valid, outstanding and enforceable;
(B) are issued by an insurer that is financially sound and
reputable;
(C) taken together, provide adequate insurance coverage for
the Assets and the operations of Seller, the LLCs and
the LP for all risks to which Seller, the LLCs or the
LP are normally exposed; and
(D) are sufficient for compliance with all Legal
Requirements and Seller Contracts;
(ii) Seller, the LLCs and the LP have not received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights or (B) any notice of cancellation or any other
indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or
able to perform its obligations thereunder;
(iii) Seller, the LLCs and the LP have paid all premiums due,
and have otherwise performed all their obligations, under each policy
of insurance to which they are a party or that provides coverage to
them; and
(iv) Seller, the LLCs and the LP have given notice to the insurer
of all claims that may be insured thereby.
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3.20 ENVIRONMENTAL MATTERS
Except as disclosed in Schedule 3.20:
(a) Seller, the LLCs and the LP are, and at all times have been, in
full compliance with, and have not been and are not in violation of or
liable under, any Environmental Law. Neither Seller, the LLCs nor the LP
has any basis to expect, nor has any of them or any other Person for whose
conduct they are or may be held to be responsible received, any actual or
threatened order, notice or other communication from (i) any Governmental
Body or private citizen acting in the public interest or (ii) the current
or prior owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual
or threatened obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to any Facility
or other property or asset (whether real, personal or mixed) in which
Seller, the LLCs or the LP have or had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used or processed by Seller,
the LLCs or the LP or any other Person for whose conduct they are or may be
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled or received.
(b) There are no pending or, to the Knowledge of Seller, the LLCs or
the LP, threatened claims, Encumbrances, or other restrictions of any
nature resulting from any Environmental, Health and Safety Liabilities or
arising under or pursuant to any Environmental Law with respect to or
affecting any Facility or any other property or asset (whether real,
personal or mixed) in which Seller, the LLCs or the LP have or had an
interest.
(c) Neither Seller, the LLCs nor the LP have any Knowledge of or any
basis to expect, nor has any of them, or any other Person for whose conduct
they are or may be held responsible, received, any citation, directive,
inquiry, notice, Order, summons, warning or other communication that
relates to Hazardous Activity, Hazardous Materials, or any alleged, actual,
or potential violation or failure to comply with any Environmental Law, or
of any alleged, actual, or potential obligation to undertake or bear the
cost of any Environmental, Health and Safety Liabilities with respect to
any Facility or property or asset (whether real, personal or mixed) in
which Seller, the LLCs or the LP have or had an interest, or with respect
to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used or processed by Seller,
the LLCs or the LP or any other Person for whose conduct they are or may be
held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled or received.
(d) Neither Seller, the LLCs, the LP nor any other Person for whose
conduct they are or may be held responsible has any Environmental, Health
and Safety Liabilities with respect to any Facility or, to the Knowledge of
Seller, the LLCs or the LP with respect to any other property or asset
(whether real, personal or mixed) in which they (or any predecessor) have
or had an interest or at any property geologically or hydrologically
adjoining any Facility or any such other property or asset.
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(e) There are no Hazardous Materials present on or in the Environment
at any Facility or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels,
aboveground or underground storage tanks, landfills, land deposits, dumps,
equipment (whether movable or fixed) or other containers, either temporary
or permanent, and deposited or located in land, water, sumps, or any other
part of the Facility or such adjoining property, or incorporated into any
structure therein or thereon. Neither Seller, the LLCs, the LP nor any
Person for whose conduct they are or may be held responsible, or to the
Knowledge of any of them, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to any Facility or any other
property or assets (whether real, personal or mixed) in which Seller, the
LLCs or the LP have or had an interest except in full compliance with all
applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Seller, the
LLCs or the LP Threat of Release, of any Hazardous Materials at or from any
Facility or at any other location where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by any Facility, or from any other property or asset
(whether real, personal or mixed) in which Seller, the LLCs or the LP have
or had an interest, or to their Knowledge any geologically or
hydrologically adjoining property, whether by Seller, the LLCs the LP or
any other Person.
(g) Seller has delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by Seller, the LLCs, the LP or any other Person pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance, by Seller, the LLCs, the LP or any
other Person for whose conduct they are or may be held responsible, with
Environmental Laws.
(h) The Facilities do not contain any wetlands, as defined in the Clean
Water Act and regulations promulgated thereunder, or similar Legal
Requirements, or other especially sensitive or protected areas or species
of flora or fauna.
3.21 IMPROPER PAYMENTS
Neither Seller, the LLCs, the LP nor any person acting on their behalf
has made any payment or otherwise transmitted anything of value, directly
or indirectly, to (a) any official or any government or agency or political
subdivision thereof for the purpose of influencing any decision affecting
the business or Assets of Seller, the LLCs or the LP or (b) any political
party or any candidate for elective political office nor has any fund or
other asset of Seller, the LLCs or the LP been maintained that was not
fully and accurately recorded on their books of account.
3.22 RELATIONSHIPS WITH RELATED PERSONS
Except as disclosed in Schedule 3.22, neither Seller, the LLCs, the LP
nor any Related Person of any of them have or have had, any interest in any
property (whether real, personal or mixed and whether tangible or
intangible) used in or pertaining to the business of Seller, the LLCs or
the LP. Neither Seller, the LLCs, the LP nor any Related Person of any of
them owns, or has owned, of record or as a beneficial owner, an equity
interest or any other financial or profit interest in any Person that has
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(a) had business dealings or a material financial interest in any
transaction with Seller, the LLCs or the LP, other than business dealings
or transactions disclosed in Schedule 3.22, each of which has been
conducted in the Ordinary Course of Business with Seller, the LLCs or the
LP at substantially prevailing market prices and on substantially
prevailing market terms or (b) engaged in competition with Seller, the LLCs
or the LP ("Competing Business") in any market presently served by Seller,
except for ownership of less than one percent (1%) of the outstanding
capital stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set forth
in Schedule 3.22, neither Seller, the LLCs, the LPs nor any Related Person
of any of them is a party to any Contract with, or has any claim or right
against, the other.
3.23 BROKERS OR FINDERS
Neither Seller, the LLCs, the LP nor any of their Representatives have
incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payments
in connection with the Contemplated Transactions.
3.24 SECURITIES LAW MATTERS
(a) Seller represents and warrants to Buyer that the shares of Buyer
being acquired pursuant to this Agreement are being acquired for Seller's
own account and for investment and not with a view to the public resale or
distribution of such shares within the meaning of Section 2(11) of the
Securities Act. Seller further acknowledges that the shares being issued
have not been registered under the Securities Act and are "restricted
securities" as that term is defined in Rule 144 promulgated under the
Securities Act and must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration
is available.
(b) Seller confirms that Buyer has made available to Seller and its
Representatives the opportunity to ask questions of the officers and
management of Buyer and to acquire such additional information about the
business and financial condition of Buyer as Seller has requested, and all
such information has been received.
(c) Seller represents and warrants to Buyer that it is and on the
Closing Date will be the record and beneficial owner and holder of the
interests in each LLC and the LP, and that each of those interests is free
and clear of all Encumbrances. There are no Contracts relating to the sale
or transfer of any of those interests. None of the outstanding membership
interests in the LLCs or the partnerships in the LP were issued in
violation of the Securities Act, or any other Legal Requirement.
3.25 DISCLOSURE
(a) No representation or warranty or other statement made by Seller,
the LLCs or the LP in this Agreement, the Disclosure Letter, any supplement
to the Disclosure Letter or otherwise in connection with the Contemplated
Transactions contains any untrue statement or omits to state a material
fact necessary to make any of them, in light of the circumstances in which
it was made, not misleading.
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(b) Neither Seller, the LLCs nor the LP have Knowledge of any fact
that has specific application to them (other than general economic or
industry conditions) and that may materially adversely affect the assets,
business, prospects, financial condition or results of operations of
Seller, the LLCs, the LP or the Assets that has not been set forth in this
Agreement or the Disclosure Letter.
4. Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, with full corporate power
and authority to conduct its business as it is now conducted.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Assignment and
Assumption Agreement and each other agreement to be executed or delivered
by Buyer at Closing (collectively, the "Buyer's Closing Documents"), each
of the Buyer's Closing Documents will constitute the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with
its respective terms. Buyer has the absolute and unrestricted right, power
and authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents, and such action has been duly authorized by all
necessary corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions by
Buyer will give any Person the right to prevent, delay or otherwise
interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Governing Documents;
(ii) any resolution adopted by the board of directors or the
shareholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may be
bound.
Prior to execution of this Agreement, Buyer will obtain any necessary
Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the
Contemplated Transactions.
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4.3 LEGAL PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer
and that challenges, or may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been
threatened.
4.4 BROKERS OR FINDERS
Neither Buyer nor any of its Representatives have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with the
Contemplated Transactions.
5. Covenants of Seller Prior to Closing
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, and upon
reasonable advance notice received from Buyer, Seller shall (a) afford
Buyer and its Representatives (collectively, "Buyer Group") full and free
access, during regular business hours, to the personnel, properties
(including subsurface testing), Contracts, Governmental Authorizations,
books and Records and other documents and data of Seller, the LLCs and the
LP, such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of Seller; (b) furnish Buyer
Group with copies of all such Contracts, Governmental Authorizations, books
and Records and other existing documents and data as Buyer may reasonably
request; (c) furnish Buyer Group with such additional financial, operating
and other relevant data and information as Buyer may reasonably request;
and (d) otherwise cooperate and assist, to the extent reasonably requested
by Buyer, with Buyer's investigation of the properties, Assets and
financial condition related to Seller, the LLCs and the LP. In addition,
Buyer shall have the right to have the Real Property and Tangible Personal
Property of the LLCs and the LP, as well as those of the Katella Commercial
Center and the T-Xxx Plaza inspected by Buyer Group, at Buyer's sole cost
and expense, for purposes of determining the physical condition and legal
characteristics of the aforementioned Real Property and Tangible Personal
Property. In the event subsurface or other destructive testing is
recommended by any of Buyer Group, Buyer shall be permitted to have the
same performed.
5.2 OPERATION OF THE BUSINESS OF SELLER, THE LIMITED LIABILITY
COMPANIES AND THE LIMITED PARTNERSHIP
Between the date of this Agreement and the Closing, Seller, the LLCs
and the LP shall:
(a) conduct their business only in the Ordinary Course of Business;
(b) except as otherwise directed by Buyer in writing, and without
making any commitment on Buyer's behalf, use their Best Efforts to preserve
intact their current business organization, keep available the services of
their managing members or general partner and agents and maintain their
relations and good will with tenants, landlords, creditors, employees,
agents and others having business relationships with it;
32
(c) confer with Buyer prior to implementing operational decisions of
a material nature;
(d) otherwise report periodically to Buyer concerning the status of
their business, operations and finances;
(e) make no material changes in management personnel without prior
consultation with Buyer;
(f) maintain the Assets in a state of repair and condition that
complies with Legal Requirements and is consistent with the requirements
and normal conduct of business;
(g) keep in full force and effect, without amendment, all material
rights relating to their businesses;
(h) comply with all Legal Requirements and contractual obligations
applicable to the operations of their businesses;
(i) continue in full force and effect the insurance coverage under
the policies set forth in Schedule 3.19 or substantially equivalent
policies;
(j) cooperate with Buyer and assist Buyer in identifying the
Governmental Authorizations required by Buyer to operate its business from
and after the Closing Date and either transferring existing Governmental
Authorizations of Seller, the LLCs or the LP to Buyer, where permissible,
or obtaining new Governmental Authorizations for Buyer;
(k) upon request from time to time, execute and deliver all
documents, make all truthful oaths, testify in any Proceedings and do all
other acts that may be reasonably necessary or desirable in the opinion of
Buyer to consummate the Contemplated Transactions, all without further
consideration; and
(l) maintain all books and Records of Seller, the LLCs and the LP
relating to their business in the Ordinary Course of Business.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted herein, between the date of
this Agreement and the Closing Date, Seller shall not, without the prior
written Consent of Buyer, (a) take any affirmative action, or fail to take
any reasonable action within its control, as a result of which any of the
changes or events listed in Sections 3.14 or 3.17 would be likely to occur;
(b) make any modification to any material Contract or Governmental
Authorization; or (c) enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to the
Assets, the business of Seller, the LLCs, the LP or the Assumed
Liabilities.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Seller,
the LLCs and the LP shall make all filings required by Legal Requirements
to be made by them in order to consummate the Contemplated Transactions.
Seller, the LLCs and the LP also shall cooperate with Buyer and its
Representatives with respect to all filings that Buyer elects to make or,
pursuant to Legal Requirements, shall be required to make in connection
with the Contemplated Transactions. Seller, the LLCs and the LP also shall
cooperate with Buyer and its Representatives in obtaining all Material
Consents.
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5.5 NOTIFICATION
Between the date of this Agreement and the Closing, Seller, the LLCs
or the LP shall promptly notify Buyer in writing if any of them becomes
aware of (a) any fact or condition that causes or constitutes a Breach of
any of Seller's representations and warranties made as of the date of this
Agreement or (b) the occurrence after the date of this Agreement of any
fact or condition that would or be reasonably likely to (except as
expressly contemplated by this Agreement) cause or constitute a Breach of
any such representation or warranty had that representation or warranty
been made as of the time of the occurrence of, or Seller's discovery of,
such fact or condition. During the same period, Seller, the LLCs and the
LP also shall promptly notify Buyer of the occurrence of any Breach of any
covenant of Seller, the LLCs or the LP in this Article 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Article 7 impossible or unlikely.
5.6 NO NEGOTIATION
Until such time as this Agreement shall be terminated pursuant to
Section 9.1, Seller shall not directly or indirectly solicit, initiate,
encourage or entertain any inquiries or proposals from, discuss or
negotiate with, provide any nonpublic information to or consider the merits
of any inquiries or proposals from any Person (other than Buyer) relating
to any business combination transaction involving Seller, including the
sale of Assets by Seller (other than in the Ordinary Course of Business).
Seller shall notify Buyer of any such inquiry or proposal within twenty-
four (24) hours of receipt or awareness of the same by Seller.
5.7 BEST EFFORTS
Seller shall use its Best Efforts to cause the conditions in Article 7
and Section 8.3 to be satisfied.
5.8 CURRENT EVIDENCE OF TITLE
(a) As soon as is reasonably possible, and in no event later than
______ (__) Business Days after the date of this Agreement, Seller shall
furnish to Buyer, at Seller's expense, for each parcel, tract or subdivided
land lot of Real Property or Ground Lease Property associated with the
Katella Commercial Center and the T-Xxx Plaza:
(i) from _____________________________ (the "Title Insurer"):
(A) title commitments issued by the Title Insurer to insure
title to all Land, Improvements, insurable Appurtenances, if any, and
Ground Lease Property in the amount of that portion of the Purchase
Price allocated to the Real Property, covering the Real Property,
naming Buyer as the proposed insured and having an effective date
after the date of this Agreement, wherein the Title Insurer shall
agree to issue an ALTA 1992 form owner's policy of title insurance
(each a "Title Commitment"); and
(B) complete and legible copies of all recorded documents listed
as Schedule B-1 matters to be terminated or satisfied in order to
issue the policy described in the Title Commitment or as special
Schedule B-2 exceptions thereunder (the "Recorded Documents"); and
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(ii) a survey of the Real Property made after the date of this
Agreement by a land surveyor licensed by the state in which the Facility is
located and bearing a certificate, signed and sealed by the surveyor,
certifying to Buyer and the Title Insurer that:
(A) such survey was made (1) in accordance with "Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys,"
jointly established and adopted by ALTA and ACSM in 1992, and includes
Items 1-4, 6, 7(a), 7(b)(1), 7(c), 8-11 and 13 of Table A thereof, and
(2) pursuant to the Accuracy Standards (as adopted by ALTA and ACSM
and in effect on the date of said certificate) of an "Urban" survey;
and
(B) such survey reflects the locations of all building lines,
easements and areas affected by any Recorded Documents affecting such
Real Property as disclosed in the Title Commitment (identified by
issuer, commitment number, and an effective date after the date
hereof) as well as any encroachments onto the Real Property or by the
Improvements onto any easement area or adjoining property (each a
"Survey"); and
(iii) complete and current searches in the name of Seller and
other appropriate parties of all Uniform Commercial Code Financing
Statements records maintained by the Secretary of State of the state in
which Seller is incorporated, the state in which Seller maintains its
principal place of business, each state in which a Facility is located,
each jurisdiction in which a filing would be required in order to perfect a
security interest in the Assets, the clerk or recorder of deeds (or other
governmental office where real property documents are filed for recording)
of each county in which any Facility is located and wherever else Seller or
Buyer, based upon its investigation, is aware that a Uniform Commercial
Code Financing Statement has been filed, together with such releases,
termination statements and other documents as may be necessary to provide
reasonable evidence that all items of Intangible Personal Property,
Tangible Personal Property and fixtures to be sold under this Agreement are
free and clear of Encumbrances, other than as permitted under this
Agreement.
(b) Each Title Commitment shall include the Title Insurer's
requirements for issuing its title policy, which requirements shall be met
by Seller on or before the Closing Date (including those requirements that
must be met by releasing or satisfying monetary Encumbrances, but excluding
Encumbrances that will remain after Closing and those requirements that are
to be met solely by Buyer).
(c) If any of the following shall occur (collectively, a "Title
Objection"):
(i) any Title Commitment or other evidence of title or search of
the appropriate real estate records discloses that any party other
than Seller has title to the insured estate covered by the Title
Commitment;
(ii) any title exception is disclosed in Schedule B to any Title
Commitment that is not one of the Permitted Real Estate Encumbrances
or one that Seller specifies when delivering the Title Commitment to
Buyer as one that Seller will cause to be deleted from the Title
Commitment concurrently with the Closing, including (A) any exceptions
that pertain to Encumbrances securing any loans that do not constitute
an Assumed Liability and (B) any exceptions that Buyer reasonably
believes could materially and adversely affect Buyer's use and
enjoyment of the Real Property described therein; or
35
(iii) any Survey discloses any matter that Buyer reasonably
believes could materially and adversely affect Buyer's use and
enjoyment of the Real Property described therein;
then Buyer shall notify Seller in writing ("Buyer's Notice") of such
matters within ten (10) business days after receiving all of the Title
Commitment, Survey and copies of Recorded Documents for the Facility
covered thereby.
(d) Seller shall use its Best Efforts to cure each Title Objection
and take all steps required by the Title Insurer to eliminate each Title
Objection as an exception to the Title Commitment. Any Title Objection
that the Title Company is willing to insure over on terms acceptable to
Seller and Buyer is herein referred to as an "Insured Exception." The
Insured Exceptions, together with any title exception or matters disclosed
by the Survey not objected to by Buyer in the manner aforesaid shall be
deemed to be acceptable to Buyer.
(e) Nothing herein waives Buyer's right to claim a breach of Section
3.9(a) or to claim a right to indemnification as provided in Section 11.2
if Buyer suffers Damages as a result of a misrepresentation with respect to
the condition of title to the Real Property.
6. Covenants of Buyer Prior to Closing
6.1 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Buyer
shall make, or cause to be made, all filings required by Legal Requirements
to be made by it to consummate the Contemplated Transactions. Buyer also
shall cooperate, and cause its Related Persons to cooperate, with Seller
(a) with respect to all filings Seller, the LLCs or the LP shall be
required by Legal Requirements to make and (b) in obtaining all Consents
identified in Schedule 3.2(c), provided, however, that Buyer shall not be
required to dispose of or make any change to its business, expend any
material funds or incur any other burden in order to comply with this
Section 6.1.
6.2 BEST EFFORTS
Buyer shall use its Best Efforts to cause the conditions in Article 8
and Section 7.3 to be satisfied.
7. Conditions Precedent to Buyer's Obligation to Close
Buyer's obligation to purchase the Assets and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):
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7.1 ACCURACY OF REPRESENTATIONS
(a) All of representations and warranties of Seller the LLCs and the
LP contained in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement, and
shall be accurate in all material respects as of the time of the Closing.
(b) Each of the representations and warranties in Sections 3.2(a) and
3.3, and each of the representations and warranties in this Agreement that
contains an express materiality qualification, shall have been accurate in
all respects as of the date of this Agreement, and shall be accurate in all
respects as of the time of the Closing.
7.2 SELLER'S PERFORMANCE
All of the covenants and obligations that Seller is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), shall have been duly performed and
complied with in all material respects.
7.3 CONSENTS
Each of the Consents identified in Schedule 7.3 (the "Material
Consents") shall have been obtained and shall be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Seller shall have caused the documents and instruments required by
Section 2.6(a) and the following documents to be delivered (or tendered
subject only to Closing) to Buyer:
(a) The articles of incorporation and all amendments thereto of the
Articles of Incorporation of Seller, the Articles of Organization and all
amendments thereto of the LLCs, and the Partnership Agreement of the LP.
(b) A statement from the holder of each note and mortgage listed on
Schedule 2.4(a)(iii), if any, dated the Closing Date, setting forth the
principal amount then outstanding on the indebtedness represented by such
note or secured by such mortgage, the interest rate thereon and a statement
to the effect that Seller, the LLCs or the LP as obligor under such note or
mortgage, is not in default under any of the provisions thereof;
(c) Releases of all Encumbrances on the Assets, other than Permitted
Encumbrances, including releases of each mortgage of record and
reconveyances of each deed of trust with respect to each parcel of real
property included in the Assets; and
(d) Such other documents as Buyer may reasonably request for the
purpose of:
(i) evidencing the accuracy of any of Seller's representations
and warranties;
(ii) evidencing the performance by Seller of, or the compliance
by Seller with, any covenant or obligation required to be
performed or complied with by Seller, the LLCs or the LP;
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(iii) evidencing the satisfaction of any condition referred
to in this Article 7; or
(iv) otherwise facilitating the consummation or performance of
any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there shall not have been commenced
or threatened against Buyer, or against any Related Person of Buyer, any
Proceeding (a) involving any challenge to, or seeking Damages or other
relief in connection with, any of the Contemplated Transactions or (b) that
may have the effect of preventing, delaying, making illegal, imposing
limitations or conditions on or otherwise interfering with any of the
Contemplated Transactions.
7.6 NO CONFLICT
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), contravene or conflict with or result in a
violation of or cause Buyer or any Related Person of Buyer to suffer any
adverse consequence under (a) any applicable Legal Requirement or Order or
(b) any Legal Requirement or Order that has been published, introduced or
otherwise proposed by or before any Governmental Body.
7.7 TITLE INSURANCE
Buyer shall have received unconditional and binding commitments to
issue policies of title insurance consistent with Section 5.8, dated the
Closing Date, in an aggregate amount equal to the amount of the Purchase
Price allocated to the Real Property, deleting all requirements listed in
ALTA Schedule B-1, amending the effective date to the date and time of
recordation of the deed transferring title to the Real Property to Buyer
with no exception for the gap between closing and recordation, deleting or
insuring over Title Objections as required pursuant to Section 5.8,
attaching all endorsements required by Buyer in order to ensure provision
of all coverage required pursuant to Section 5.8 and otherwise in form
satisfactory to Buyer insuring Buyer's interest in each parcel of Real
Property or interest therein to the extent required by Section 5.8.
7.8 GOVERNMENTAL AUTHORIZATIONS
Buyer shall have received such Governmental Authorizations as are
necessary or desirable to allow Buyer to operate the Assets from and after
the Closing.
7.9 ENVIRONMENTAL REPORT
Buyer shall have received an environmental site assessment report with
respect to the Facilities of Seller, the LLCs and the LP, which report
shall be acceptable in form and substance to Buyer in its sole discretion.
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7.10 ANCILLARY AGREEMENTS
The relevant Persons shall have entered into ancillary agreements in
form and substance as set forth in Schedule 7.10 hereto.
8. Conditions Precedent to Seller's Obligation to Close
Seller's obligation to sell the Assets and to take the other actions
required to be taken by it at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of
which may be waived by Seller in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material
respects as of the date of this Agreement and shall be accurate in all
material respects as of the time of the Closing as if then made.
8.2 BUYER'S PERFORMANCE
All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), shall have been performed and complied with in
all material respects.
8.3 CONSENTS
Each of the Consents identified in Schedule 8.3 shall have been
obtained and shall be in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyer shall have caused the documents and instruments required by
Section 2.6(b) and the following documents to be delivered (or tendered
subject only to Closing) to Seller:
(a) such documents as Seller may reasonably request for the purpose
of
(i) evidencing the accuracy of any representation or warranty of
Buyer,
(ii) evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed or
complied with by Buyer; or
(iii) evidencing the satisfaction of any condition referred
to in this Article 8.
8.5 NO INJUNCTION
There shall not be in effect any Legal Requirement or any injunction
or other Order that (a) prohibits the consummation of the Contemplated
Transactions and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
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9. Termination
9.1 TERMINATION EVENTS
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
(a) by Buyer if a material Breach of any provision of this Agreement
has been committed by Seller or Shareholders and such Breach has not been
waived by Buyer;
(b) by Seller if a material Breach of any provision of this Agreement
has been committed by Buyer and such Breach has not been waived by Seller;
(c) by Buyer if any condition in Article 7 has not been satisfied as
of the date specified for Closing in the first sentence of Section 2.5 or
if satisfaction of such a condition by such date is or becomes impossible
(other than through the failure of Buyer to comply with its obligations
under this Agreement), and Buyer has not waived such condition on or before
such date;
(d) by Seller if any condition in Article 8 has not been satisfied as
of the date specified for Closing in the first sentence of Section 2.5 or
if satisfaction of such a condition by such date is or becomes impossible
(other than through the failure of Seller or the Shareholders to comply
with their obligations under this Agreement), and Seller has not waived
such condition on or before such date; or
(e) by mutual consent of Buyer and Seller;
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the
exercise of such right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 9.1, all obligations of
the parties under this Agreement will terminate, except that the
obligations of the parties in this Section 9.2 and Article 12 (except for
those in Section 12.5) will survive, provided, however, that, if this
Agreement is terminated because of a Breach of this Agreement by the
nonterminating party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. Additional Covenants
10.1 REMOVING EXCLUDED ASSETS
On or before the Closing Date, Seller shall remove all Excluded Assets
from all Facilities and other Real Property to be occupied by Buyer. Such
removal shall be done in such manner as to avoid any damage to the
Facilities and other properties to be occupied by Buyer and any disruption
of the business operations to be conducted by Buyer after the Closing. Any
damage to the Assets or to the Facilities resulting from such removal shall
be paid by Seller at the Closing. Should Seller fail to remove the
Excluded Assets as required by this Section, Buyer shall have the right,
but not the obligation, (a) to remove the Excluded Assets at Seller's sole
cost and expense; (b) to store the Excluded Assets and to charge Seller all
storage costs associated therewith; (c) to treat the Excluded Assets as
unclaimed and to proceed to dispose of the same under the laws governing
unclaimed property; or (d) to exercise any other right or remedy conferred
by this Agreement or otherwise available at law or in equity. Seller shall
promptly reimburse Buyer for all costs and expenses incurred by Buyer in
connection with any Excluded Assets not removed by Seller on or before the
Closing Date.
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10.2 REPORTS AND RETURNS
Seller shall promptly after the Closing prepare and file all reports
and returns required by Legal Requirements relating to the business of the
Seller, LLCs and the LP as conducted using the Assets, to and including the
Effective Time.
10.3 ASSISTANCE IN PROCEEDINGS
Seller will cooperate with Buyer and its counsel in the contest or
defense of, and make available its personnel and provide any testimony and
access to its books and Records in connection with, any Proceeding
involving or relating to (a) any Contemplated Transaction or (b) any
action, activity, circumstance, condition, conduct, event, fact, failure to
act, incident, occurrence, plan, practice, situation, status or transaction
on or before the Closing Date involving Seller, the LLCs, the LP or their
businesses or the Assets.
10.4 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
After the Closing, Seller will cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business relationships
of Seller existing prior to the Closing and relating to the business to be
operated by Buyer after the Closing, including relationships with lessees,
lessors, regulatory authorities, customers, suppliers and others, and
Seller will satisfy the Retained Liabilities in a manner that is not
detrimental to any of such relationships. Seller will refer to Buyer all
inquiries relating to such business. Neither Seller nor any of its
officers, employees, agents or shareholders shall take any action that
would tend to diminish the value of the Assets after the Closing or that
would interfere with the business of Buyer to be engaged in after the
Closing, including disparaging the name or business of Buyer.
10.5 RETENTION OF AND ACCESS TO RECORDS
After the Closing Date, Buyer shall retain for a period consistent
with Buyer's record-retention policies and practices those Records of
Seller delivered to Buyer. Buyer also shall provide Seller, the LLCs, the
LP, and their Representatives reasonable access thereto, during normal
business hours and on at least three days' prior written notice, to enable
them to prepare financial statements or tax returns or deal with tax
audits. After the Closing Date, Seller shall provide Buyer and its
Representatives reasonable access to Records that are Excluded Assets,
during normal business hours and on at least three days' prior written
notice, for any reasonable business purpose specified by Buyer in such
notice.
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10.6 FURTHER ASSURANCES
Subject to the proviso in Section 6.1, the Parties shall cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to
each other such further information; (b) execute and deliver to each other
such other documents; and (c) do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the Contemplated Transactions.
11. Indemnification; Remedies
11.1 SURVIVAL
All representations, warranties, covenants and obligations in this
Agreement, the certificates delivered pursuant to Section 2.6 and any other
certificate or document delivered pursuant to this Agreement shall survive
the Closing and the consummation of the Contemplated Transactions, subject
to Section 11.7. The right to indemnification, reimbursement or other
remedy based upon such representations, warranties, covenants and
obligations shall not be affected by any investigation (including any
environmental investigation or assessment) conducted with respect to, or
any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with any
such representation, warranty, covenant or obligation. The waiver of any
condition based upon the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, reimbursement or other remedy based
upon such representations, warranties, covenants and obligations.
11.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER
Seller will indemnify and hold harmless Buyer, and its
Representatives, shareholders, attorneys, and Related Persons
(collectively, the "Buyer Indemnified Persons"), and will reimburse the
Buyer Indemnified Persons for any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable attorneys'
fees and expenses) or diminution of value, whether or not involving a
Third-Party Claim (collectively, "Damages"), arising from or in connection
with:
(a) any Breach of any representation or warranty made by Seller, the
LLCs of the LP in (i) this Agreement to the Disclosure Letter, (iv) the
certificates delivered pursuant to Section 2.6 (for this purpose, each such
certificate will be deemed to have stated that the representations and
warranties of Seller, the LLCs and the LP contained in this Agreement
fulfill the requirements of Section 7.1 as of the Closing Date, unless the
certificate expressly states that the matters disclosed in a supplement
have caused a condition specified in Section 7.1 not to be satisfied), (v)
any transfer instrument or (vi) any other certificate, document, writing or
instrument delivered by Seller or either Shareholder pursuant to this
Agreement;
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(b) any Breach of any covenant or obligation of Seller, the LLCs or
the LP in this Agreement or in any other certificate, document, writing or
instrument delivered by Seller pursuant to this Agreement;
(c) any Liability arising out of the ownership or operation of the
Assets prior to the Effective Time other than the Assumed Liabilities;
(d) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been
made, by any Person with Seller, the LLCs or the LP (or any Person acting
on their behalf) in connection with any of the Contemplated Transactions;
(e) any Liability arising out of the ownership or operation of the
Assets after the Effective Time other than the Retained Liabilities; or
(f) any Retained Liabilities.
11.3 INDEMNIFICATION AND REIMBURSEMENT BY SELLER
ENVIRONMENTAL MATTERS
In addition to the other indemnification provisions in this Article
11, Seller will indemnify and hold harmless Buyer and the other Buyer
Indemnified Persons, and will reimburse Buyer and the other Buyer
Indemnified Persons, for any Damages (including costs of cleanup,
containment or other remediation) arising from or in connection with:
(a) any Environmental, Health and Safety Liabilities arising out of
or relating to: (i) the ownership or operation by any Person at any time on
or prior to the Closing Date of any of the Facilities, Assets or the
business of Seller, the LLCs or the LP or (ii) any Hazardous Materials or
other contaminants that were present on the Facilities or Assets at any
time on or prior to the Closing Date; or
(b) any bodily injury (including illness, disability and death,
regardless of when any such bodily injury occurred, was incurred or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction and deprivation of the use of real property) or
other damage of or to any Person or any Assets in any way arising from or
allegedly arising from any Hazardous Activity conducted by any Person with
respect to the business of Seller, the LLCs, the LP or the Assets prior to
the Closing Date or from any Hazardous Material that was (i) present or
suspected to be present on or before the Closing Date on or at the
Facilities (or present or suspected to be present on any other property, if
such Hazardous Material emanated or allegedly emanated from any Facility
and was present or suspected to be present on any Facility, on or prior to
the Closing Date) or (ii) Released or allegedly Released by any Person on
or at any Facilities or Assets at any time on or prior to the Closing Date.
Buyer will be entitled to control any Remedial Action, any Proceeding
relating to an Environmental Claim and, except as provided in the following
sentence, any other Proceeding with respect to which indemnity may be
sought under this Section 11.3. The procedure described in Section 11.8
will apply to any claim solely for monetary damages relating to a matter
covered by this Section 11.3.
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11.4 INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer will indemnify and hold harmless Seller, and will reimburse
Seller, for any Damages arising from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in
this Agreement or in any certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting
on Buyer's behalf) in connection with any of the Contemplated Transactions;
or
(d) any Assumed Liabilities.
11.5 LIMITATIONS ON AMOUNT--SELLER
Seller shall have no liability (for indemnification or otherwise) with
respect to claims under Section 11.2(a) until the total of all Damages with
respect to such matters exceeds Five Thousand Dollars ($5,000) and then
only for the amount by which such Damages exceed Five Thousand Dollars
($5,000). However, this Section 11.5 will not apply to claims under
Section 11.2(b) through (f) or to matters arising in respect of Sections
3.9, 3.13, 3.20, 3.22, 3.23 or 3.24 or to any Breach of any of the
representations and warranties or Seller, the LLCs or the LP of which the
Seller had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by Seller of
any covenant or obligation, and Seller will be jointly and severally liable
for all Damages with respect to such Breaches.
11.6 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise) with
respect to claims under Section 11.4(a) until the total of all Damages
with respect to such matters exceeds Five Thousand Dollars ($5,000) and
then only for the amount by which such Damages exceed Five Thousand Dollars
($5,000). However, this Section 11.6 will not apply to claims under
Section 11.4(b) through (d) or matters arising in respect of Section 4.4 or
to any Breach of any of Buyer's representations and warranties of which
Buyer had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by Buyer of
any covenant or obligation, and Buyer will be liable for all Damages with
respect to such Breaches.
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11.7 TIME LIMITATIONS
(a) If the Closing occurs, Seller will have liability (for
indemnification or otherwise) with respect to any Breach of (i) a covenant
or obligation to be performed or complied with prior to the Closing Date
(other than those in Sections 2.1 and 2.4(c) and Article 10, as to which a
claim may be made at any time) or (ii) a representation or warranty (other
than those in Sections 3.9, 3.13, 3.20, 3.22, 3.23 and 3.24, as to which a
claim may be made at any time), only if on or before the expiration of the
applicable statute of limitations for the action, taking into account any
applicable tolling provisions, Buyer notifies Seller of a claim specifying
the factual basis of the claim in reasonable detail to the extent then
known by Buyer.
(b) If the Closing occurs, Buyer will have liability (for
indemnification or otherwise) with respect to any Breach of (i) a covenant
or obligation to be performed or complied with prior to the Closing Date or
(ii) a representation or warranty (other than that set forth in Section
4.4, as to which a claim may be made at any time), only if on or before the
expiration of the applicable statute of limitations for the action, taking
into account any applicable tolling provisions, Seller notifies Buyer of a
claim specifying the factual basis of the claim in reasonable detail to the
extent then known by Seller.
11.8 THIRD-PARTY CLAIMS
(a) Promptly after receipt by a Person entitled to indemnity under
Section 11.2, 11.3 (to the extent provided in the last sentence of Section
11.3) or 11.4 (an "Indemnified Person") of notice of the assertion of a
Third-Party Claim against it, such Indemnified Person shall give notice to
the Person obligated to indemnify under such Section (an "Indemnifying
Person") of the assertion of such Third-Party Claim, provided that the
failure to notify the Indemnifying Person will not relieve the Indemnifying
Person of any liability that it may have to any Indemnified Person, except
to the extent that the Indemnifying Person demonstrates that the defense of
such Third-Party Claim is prejudiced by the Indemnified Person's failure to
give such notice.
(b) If an Indemnified Person gives notice to the Indemnifying Person
pursuant to Section 11.8(a) of the assertion of a Third-Party Claim, the
Indemnifying Person shall be entitled to Participate in the defense of such
Third-Party Claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a Person against whom the Third-Party Claim is
made and the Indemnified Person determines in good faith that joint
representation would be inappropriate or (ii) the Indemnifying Person fails
to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such Third-Party Claim and provide indemnification with
respect to such Third-Party Claim), to assume the defense of such Third-
Party Claim with counsel satisfactory to the Indemnified Person. After
notice from the Indemnifying Person to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person shall not, so long as it diligently conducts such defense, be liable
to the Indemnified Person under this Article 11 for any fees of other
counsel or any other expenses with respect to the defense of such Third-
Party Claim, in each case subsequently incurred by the Indemnified Person
in connection with the defense of such Third-Party Claim, other than
reasonable costs of investigation. If the Indemnifying Person assumes the
defense of a Third-Party Claim, (i) such assumption will conclusively
establish for purposes of this Agreement that the claims made in that
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Third-Party Claim are within the scope of and subject to indemnification,
and (ii) no compromise or settlement of such Third-Party Claims may be
effected by the Indemnifying Person without the Indemnified Person's
Consent unless (A) there is no finding or admission of any violation of
Legal Requirement or any violation of the rights of any Person; (B) the
sole relief provided is monetary damages that are paid in full by the
Indemnifying Person; and (C) the Indemnified Person shall have no liability
with respect to any compromise or settlement of such Third-Party Claims
effected without its Consent. If notice is given to an Indemnifying Person
of the assertion of any Third-Party Claim and the Indemnifying Person does
not, within ten (10) days after the Indemnified Person's notice is given,
give notice to the Indemnified Person of its election to assume the defense
of such Third-Party Claim, the Indemnifying Person will be bound by any
determination made in such Third-Party Claim or any compromise or
settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Third-Party Claim may adversely affect it or its Related Persons other than
as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by notice
to the Indemnifying Person, assume the exclusive right to defend,
compromise or settle such Third-Party Claim, but the Indemnifying Person
will not be bound by any determination of any Third-Party Claim so defended
for the purposes of this Agreement or any compromise or settlement effected
without its Consent (which may not be unreasonably withheld).
(d) Notwithstanding the provisions of Section 13.4, Seller hereby
consents to the nonexclusive jurisdiction of any court in which a
Proceeding in respect of a Third-Party Claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified
Person may have under this Agreement with respect to such Proceeding or the
matters alleged therein and agree that process may be served on Seller with
respect to such a claim anywhere in the world.
(e) With respect to any Third-Party Claim subject to indemnification
under this Article 11: (i) both the Indemnified Person and the Indemnifying
Person, as the case may be, shall keep the other Person fully informed of
the status of such Third-Party Claim and any related Proceedings at all
stages thereof where such Person is not represented by its own counsel, and
(ii) the parties agree (each at its own expense) to render to each other
such assistance as they may reasonably require of each other and to
cooperate in good faith with each other in order to ensure the proper and
adequate defense of any Third-Party Claim.
(f) With respect to any Third-Party Claim subject to indemnification
under this Article 11, the Parties agree to cooperate in such a manner as
to preserve in full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product
privileges. In connection therewith, each party agrees that: (i) it will
use its Best Efforts, in respect of any Third-Party Claim in which it has
assumed or participated in the defense, to avoid production of Confidential
Information (consistent with applicable law and rules of procedure), and
(ii) all communications between any party hereto and counsel responsible
for or participating in the defense of any Third-Party Claim shall, to the
extent possible, be made so as to preserve any applicable attorney-client
or work-product privilege.
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11.9 OTHER CLAIMS
A claim for indemnification for any matter not involving a Third-Party
Claim may be asserted by notice to the party from whom indemnification is
sought and shall be paid promptly after such notice.
11.10 INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE
NEGLIGENCE
THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE 11 SHALL BE ENFORCEABLE
REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE
ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ENVIRONMENTAL LAW, FRAUDULENT
TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR SECURITIES OR OTHER
LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE
PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE,
CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING
INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE
PERSON SEEKING INDEMNIFICATION.
12. General Provisions
12.1 EXPENSES
Except as otherwise provided in this Agreement, each party to this
Agreement will bear its respective fees and expenses incurred in connection
with the preparation, negotiation, execution and performance of this
Agreement and the Contemplated Transactions, including all fees and expense
of its Representatives. Seller will pay all amounts payable to the Title
Insurer in respect of the Title Commitments, copies of exceptions and the
Title Policy, including premiums (including premiums for endorsements) and
search fees. If this Agreement is terminated, the obligation of each party
to pay its own fees and expenses will be subject to any rights of such
party arising from a Breach of this Agreement by another party.
12.2 PUBLIC ANNOUNCEMENTS
Any public announcement, press release or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Except
with the prior consent of Buyer or as permitted by this Agreement, neither
Seller, the LLCs, the LP nor any of their Representatives shall disclose to
any Person (a) any information about the Contemplated Transactions,
including the status of such discussions or negotiations, the execution of
any documents (including this Agreement) or any of the terms of the
Contemplated Transactions or the related documents (including this
Agreement). Seller and Buyer will consult with each other concerning the
means by which Persons having dealings with Seller will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for
any such communication.
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12.3 NOTICES
All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given
to a party when (a) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid); (b) sent
by facsimile or e-mail with confirmation of transmission by the
transmitting equipment; or (c) received or rejected by the addressee, if
sent by certified mail, return receipt requested, in each case to the
following addresses, facsimile numbers or e-mail addresses and marked to
the attention of the person (by name or title) designated below (or to such
other address, facsimile number, e-mail address or person as a party may
designate by notice to the other parties):
Seller: SDIC
__________________________
Attention: Xx. Xxxxx
__________________________
Fax no.: (000) 000-0000
__________________________
E-mail address: xxxxxxxxxx@xxx.xxx
__________________________
Buyer: SDI. Ltd.
__________________________
Attention: X. Xxxxxx
__________________________
Fax no.: (000) 000-0000
__________________________
E-mail address:
__________________________
12.4 JURISDICTION; SERVICE OF PROCESS
Any Proceeding arising out of or relating to this Agreement or any
Contemplated Transaction may be brought in the courts of the State of
California, or, if it has or can acquire jurisdiction, in the United States
District Court for the Central District of California, and each of the
parties irrevocably submits to the exclusive jurisdiction of each such
court in any such Proceeding, waives any objection it may now or hereafter
have to venue or to convenience of forum, agrees that all claims in respect
of the Proceeding shall be heard and determined only in any such court and
agrees not to bring any Proceeding arising out of or relating to this
Agreement or any Contemplated Transaction in any other court. The parties
agree that either or both of them may file a copy of this paragraph with
any court as written evidence of the knowing, voluntary and bargained
agreement between the parties irrevocably to waive any objections to venue
or to convenience of forum. Process in any Proceeding referred to in the
first sentence of this section may be served on any party anywhere in the
world.
12.5 ENFORCEMENT OF AGREEMENT
Seller acknowledges and agrees that Buyer would be irreparably damaged
if any of the provisions of this Agreement are not performed in accordance
with their specific terms and that any Breach of this Agreement by Seller,
the LLCs or then LP could not be adequately compensated in all cases by
monetary damages alone. Accordingly, in addition to any other right or
remedy to which Buyer may be entitled, at law or in equity, it shall be
entitled to enforce any provision of this Agreement by a decree of specific
performance and to temporary, preliminary and permanent injunctive relief
to prevent Breaches or threatened Breaches of any of the provisions of this
Agreement, without posting any bond or other undertaking.
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12.6 WAIVER; REMEDIES CUMULATIVE
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither any failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or
any of the documents referred to in this Agreement will operate as a waiver
of such right, power or privilege, and no single or partial exercise of any
such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power
or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or any of the documents
referred to in this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a
party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
12.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements, whether written or
oral, between the parties with respect to its subject matter (including any
letter of intent and any confidentiality agreement between Buyer and
Seller) and constitutes (along with the Exhibits and other documents
delivered pursuant to this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended, supplemented, or otherwise
modified except by a written agreement executed by the party to be charged
with the amendment.
12.8 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the
other parties, except that Buyer may assign any of its rights and delegate
any of its obligations under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding
in all respects upon and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement, except such
rights as shall inure to a successor or permitted assignee pursuant to this
Section 12.8.
12.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
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12.10 CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or
interpretation. All references to "Articles," "Sections," "Schedules" and
"Exhibits" refer to the corresponding Articles, Sections, Schedules and
Exhibits of this Agreement.
12.11 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
12.12 GOVERNING LAW
This Agreement will be governed by and construed under the laws of the
State of California without regard to conflicts-of-laws principles that
would require the application of any other law.
12.13 EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement. The exchange of copies of this Agreement and of signature pages
by facsimile transmission shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of the original
Agreement for all purposes. Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for all purposes.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"Buyer" "Seller"
Secured Diversified Investment, Ltd. Seashore Diversified Investment Company
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------------- -----------------------------
Xxxxxxxx X. Xxxxxx, President Xxxxxxxx Xxxxxx, Director
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"LP"
Seascrest Hospitality, L.P.
By: /s/ Xxxxxxxx Xxxxxx
_______________________________
Seashore Diversified Investment Company, General Partner
"LLCs"
Xxxxxxx Springs, LLC
By: /s/ Xxxxxxx Xxxxxx
_______________________________
Xxxxxxx Xxxxxx, Managing Member
Decatur Center, LLC
By: /s/ Xxxxxxx Xxxxxx
_______________________________
Xxxxxxx Xxxxxx, Managing Member
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