EXHIBIT 1.3
EXECUTION COPY
PURCHASE AGREEMENT
AMONG
PACIFIC GATEWAY PROPERTIES HOTELS, INC.
AS SELLER
AND
XXXXXX HOTEL INVESTMENTS L.P.
AS PURCHASER
11
DEFINITIONS
The following capitalized terms used in this Agreement are defined in
the sections indicated below:
ADA Section 3.6
Accountants Section 12.7
Apportionment Date Section 12.1
Asset Management Agreement Section 5.2(b)
Asset Management Effective Date Section 5.2(b)
Closing Section 5.1
Closing Date Section 5.1
Contract Date Section 2.3
Contracts Section 3.10
Current Ledger Section 12.3
Cure Notice Section 3.18(b)
Deed Section 8.1
Deposit Section 2.3
Encumbrances Section 6.2
Escrow Agent Section 2.1
Escrow Instructions Section 2.3
Existing License Agreement Section 3.16
Feasibility Period Section 6.8(b)
FF&E Section 1.2
Fixed Asset Supplies Section 1.2
Front Desk Closing Hour Section 12.3
Hotel Section 1.1
HSR Approval Section 6.4
Inventories Section 1.2
Land Section 1.1
Letter of Credit Section 2.3
Manager Section 5.2(b)
Net Operating Income Section 5.2(c)
Permits Section 3.17
Permitted Exceptions Section 6.2(b)
Personal Property Section 1.2
Property Section 1.2
Purchase Price Section 2.1
Purchaser Introduction
Radisson Section 1.2
Restaurant Lease Section 3.12
Seller Introduction
Seller's Extension Section 5.2(a)
Termination Notice Section 6.8(b)
12
1031 Exchange Section 5.2 (e)
Title Commitment Section 6.2
Uniform System of Accounts Section 1.2
WARN Act Section 7.5
13
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (THIS "AGREEMENT") is executed as of the
18th day of October, 1995 by and between PACIFIC GATEWAY PROPERTIES HOTELS,
INC., a California corporation (THE "SELLER"), and XXXXXX HOTEL INVESTMENTS
L.P., a Delaware limited partnership (TOGETHER WITH ANY PERMITTED ASSIGNEE,
THE "PURCHASER").
ARTICLE I
SALE
Subject to the terms and conditions set forth in this Agreement,
Seller agrees to sell and convey to Purchaser, and Purchaser agrees to buy
from Seller:
1.1 HOTEL. All that certain parcel of land situated at 6555 East
Speedway, Tucson, Pima County, Arizona, as described on EXHIBIT A attached
hereto, including all right, title and interest of Seller, if any, in and to
the land lying in the bed of any street or highway in front of or adjoining
each such parcel to the center line thereof, all right, title and interest of
Seller, if any, in all water and mineral rights, development rights and all
easements, rights and other interests appurtenant thereto (THE "LAND"),
together with all buildings and other improvements that are located thereon,
including, without limitation, all elevators, escalators, furnaces, heating,
ventilating and air-conditioning systems and equipment, fixtures, electrical
equipment, fire prevention and extinguishing apparatus located therein
(COLLECTIVELY THE "HOTEL").
1.2 PERSONAL PROPERTY. The following personalty: (a) all
furniture, furnishings, fixtures, vehicles, rugs, mats, carpeting,
appliances, devices, engines, telephone and other communications equipment,
televisions and other video equipment, plumbing fixtures and other equipment
located in or related to the Property (THE "FF&E"); (b) all items included
within the definition of "Property and Equipment" under the Uniform System of
Accounts for Hotels, Eighth Revised Edition, 1987, as published by the Hotel
Association of New York City, Inc. (THE "UNIFORM SYSTEM OF ACCOUNTS"),
including, without limitation, linen, china, glassware, tableware, uniforms
and similar items, whether in use or held in stock for future use, in
connection with the operation of the Property, subject to such depletion and
including such resupplies prior to the Closing Date as shall occur in the
ordinary course of business (THE "FIXED ASSET SUPPLIES"); (c) all
"Inventories" as defined in the Uniform System of Accounts, such as
provisions in storerooms, merchandise intended for sale or resale, fuel,
mechanical supplies, stationery; guest supplies, maintenance and housekeeping
supplies and other expensed supplies and similar items, other than food and
beverage inventories, which are owned by the tenant under the Restaurant
Lease (THE "INVENTORIES"); (d) to the extent in the possession of Seller, its
agents or employees, all surveys, architectural, consulting and engineering
blueprints, plans and specifications (together with the architects'
certificates indicating that the Hotel has been completed in accordance
therewith), drawings and reports related to the Property, all books and
records (financial and otherwise), all telephone numbers, all non-proprietary
customer and guest
14
lists and information and any goodwill of Seller; and (e) any and all other
items of personalty located on, or used in connection with the operation of,
the Hotel, but excluding (i) accounts receivable for periods prior to and
including the Apportionment Date, (ii) property of guests, and (iii) items
owned by the tenants under the Leases (COLLECTIVELY, THE "PERSONAL PROPERTY"
AND TOGETHER WITH THE HOTEL, THE "PROPERTY").
ARTICLE II
PURCHASE PRICE
2.1 PURCHASE PRICE. In accordance with the terms of this
Agreement, Seller shall sell and Purchaser shall buy the Property for a total
purchase price of Twenty-One Million Three Hundred Seven Thousand Dollars
($21,307,000.00), subject to adjustment as described in Article XII below
(THE "PURCHASE PRICE"), payable to Seller on the Closing Date by wire
transfer to Chicago Title Insurance Company, 0000 Xxxx Xxxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxx (THE "TITLE COMPANY").
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Hotel and various items of Personal Property as set forth
on EXHIBIT B. Seller and the Purchaser agree to file federal, state and
local tax returns consistent with such allocations.
2.3 DEPOSIT. Within five (5) business days following the date
upon which this Agreement is executed fully by Purchaser and Seller, as
evidenced by the last date on the signature page hereof (THE "CONTRACT
DATE"), Purchaser shall deliver to the Title Company a deposit (THE
"DEPOSIT") in the amount of Four Hundred Thousand Dollars ($400,000.00)
comprised of (a) an irrevocable, commercial letter of credit in the amount of
Two Hundred Thousand Dollars ($200,000), in substantially the form of EXHIBIT
C attached hereto (THE "LETTER OF CREDIT") and (b) a demand promissory note
in the amount of Two Hundred Thousand Dollars ($200,000) in the form of
EXHIBIT Q attached hereto. The Letter of Credit shall provide for an
expiration date of no earlier than thirty (30) days following the Closing
Date (which expiration date shall be extended if the Closing Date is extended
pursuant to Section 5.2). The Title Company shall hold the Deposit in
accordance with the form of escrow instructions (THE "ESCROW INSTRUCTIONS")
attached hereto as EXHIBIT D.
15
ARTICLE III
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
In order to induce Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and
warrants to, and covenants with, Purchaser as follows:
3.1 GOOD STANDING. Seller is a corporation duly organized,
validly existing and in good standing under the laws of California, is
authorized to conduct the business in which it is now engaged, and is duly
qualified and in good standing in the State of Arizona.
3.2 TITLE. Seller has good (of record and in fact) and marketable
fee simple title to the Hotel and all appurtenances thereto, subject only to
the matters shown on the preliminary title report issued by the Title
Company. Notwithstanding any other provision of this Agreement, the
foregoing representation shall expire upon the end of the Feasibility Period.
Seller warrants that it has good title to the Personal Property, which shall
be subject only to the Permitted Exceptions on the Closing Date.
3.3 DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all requisite corporate actions of
Seller (none of which actions have been modified or rescinded, and all of
which actions are in full force and effect). This Agreement constitutes a
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.
3.4 NO VIOLATIONS OR DEFAULTS. Seller has no actual knowledge and
has received no notice that it is in violation or default under any agreement
with any third party, or under any judgment, order, decree, rule or
regulation of any court, arbitrator, administrative agency or other
governmental authority to which it may be subject, which violation or default
will, in any one case or in the aggregate, adversely affect the ownership or
operation of the Property or Seller's ability to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not, to the best of Seller's actual knowledge, (a) violate any law or any
order of any court or governmental authority with proper jurisdiction; (b)
result in a breach or default under any Contract, or other binding commitment
of Seller or any provision of the organizational documents of Seller; (c)
require any consent, or approval or vote of any court or governmental
authority or of any third person or entity that, as of the Closing Date, has
not been given or taken, and does not remain effective; or (d) result in any
Encumbrance, other than a Permitted Exception, against the Property.
3.5 LITIGATION. There are no actions, suits, arbitrations,
governmental investigations or other proceedings pending or, to the actual
knowledge of Seller, threatened against Seller or affecting the Property
before any court or governmental authority, an adverse determination of which
might adversely affect (a) the financial condition or operations of Seller or
the Property, (b) Seller's ability to enter into or perform this Agreement or
(c) Seller's title to the Property.
16
3.6 COMPLIANCE WITH LAWS. Except with respect to compliance with
the Americans with Disabilities Act ("ADA"), Seller has no actual knowledge
that, and has received no notice alleging that, Seller or the Property are
not in substantial compliance with all laws, rules, regulations, health and
sanitation codes, zoning ordinances and approvals, environmental assessment
and impact requirements and with the terms of all Permits applicable to the
Property. Seller has not received any notices alleging that the Property is
not in compliance with ADA other than certain information contained in that
certain Accessibility Agreement completed on March 12 and 19, 1992 by
Universal Access.
3.7 TAX RETURNS. All tax returns required of Seller for the
Property have been filed or, if not now due, will be duly filed by Seller in
a timely manner and in good faith. All taxes shown on the returns as being
due have been, or will, prior to the due date therefore, be paid.
3.8 CONDEMNATION ACTIONS. Seller has no actual knowledge and has
received no notice of any pending or threatened condemnation actions or
special assessments of any nature with respect to the Property or any part
thereof.
3.9 HAZARDOUS MATERIALS. (a) "HAZARDOUS MATERIALS" means any of
the following located on or under, emanating from or affecting the Property:
asbestos-containing materials, polychlorinated biphenyls (PCBs), flammable
materials, explosives, radioactive materials, petroleum products and any
materials, wastes, substances, or chemicals that are deemed hazardous, toxic,
a pollutant or a contaminant under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601,
ET SEQ.), the Hazardous Materials Transportation Act as amended (49 U.S.C.
Section 1801, ET SEQ.), the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. Section 6901, ET SEQ.), in the regulations adopted or
publications promulgated pursuant thereto, or in any other applicable
federal, state or local laws, ordinances, rules or regulations in effect on
the Closing Date relating to protection of public health, safety or the
environment.
(b) To Seller's actual knowledge, neither Seller not any of its
employees, agents or contractors have used, stored, disposed of or released
(or permitted to be used, stored, disposed of or released) Hazardous
Materials in any manner which would result in any claims, demands, penalties,
fines, liabilities, losses, damages costs or expenses against Purchaser.
Except as shown on EXHIBIT E attached hereto, neither Seller nor any of its
affiliates has any actual knowledge of the presence of any Hazardous
Materials located on or under, emanating from or affecting the Property,
except for such Hazardous Materials as are used in the ordinary course of
business of the Property in accordance with applicable legal standards.
3.10 CONTRACTS. To the best of Seller s actual knowledge, all
written or oral service, maintenance, licensing, concession and other
contracts or agreements related to the maintenance, ownership, use,
possession or operation of the Property (THE "CONTRACTS"), other than the
Existing License Agreement, are listed on EXHIBIT F attached hereto. To the
best of Seller's actual knowledge, Seller has provided to Purchaser true and
complete copies of all Contracts. To the best of Seller's actual knowledge,
all Contracts are in full force and effect, and there are no
17
material defaults or events that with notice or lapse of time or both would
constitute material defaults by Seller under any Contract nor, to the best of
Seller's knowledge, by any other party thereto.
3.11 EQUIPMENT LEASES. There are no written or oral leases of
personal property located at, or used in the operation of, the Property which
will survive the Closing Date. Any such agreements shall either expire, or
be terminated at Seller's cost prior to Closing.
3.12 LEASES. Seller had delivered to Purchaser a true and complete
copy of that certain Hotel Restaurant Lease dated February 6, 1995 by and
between Seller and Xxxxxxx'x Restaurants, Inc., together with all amendments
thereto (THE "RESTAURANT LEASE") (and a copy of that certain Lease dated
March 21, 1986 by and between Radisson Suite Hotel Tucson and Xxxxxx-Xxxxx
Enterprises , as assigned to R&R Gift Village, the current tenant pursuant to
an Assumption and Substitution Agreement dated January 1, 1987 (INDIVIDUALLY,
THE "GIFT SHOP LEASE" AND TOGETHER WITH THE RESTAURANT LEASE, THE "LEASES").
To the best of Seller's actual knowledge, the Leases are in full force and
effect and there are no defaults or events that, with notice or lapse of time
or both, would constitute a default thereunder. Except for obligations that
will be satisfied by Seller, at its sole expense, on or before the Closing
Date, the Landlord is not required by the Leases to perform any improvements,
pay any tenant allowances or similar concessions, grant any rent abatement or
pay any brokerage or finder's fees.
3.13 EMPLOYEES. (a) No employment contracts or collective
bargaining agreements exist with respect to the Property that will subject
Purchaser to a liability therefor. Seller has no actual knowledge of any
strike, work stoppage or other labor dispute relating to the operation on the
Property or threatened by any union and has no actual knowledge of any
application pending or threatened for certification of a collective
bargaining agent.
(b) Except as indicated in EXHIBIT G attached hereto, to the best
of Seller s actual knowledge, there are not (i) any unfair labor practice
charges or grievances pending or in process by or on behalf of any employee
now or previously employed in the operation of the Property, (ii) complaints
received by Seller, or with respect to unresolved complaints, on file with
any applicable governmental agencies alleging employment discrimination,
(iii) workers' compensation claims pending or in process and alleged to have
resulted from or be related in any way to any incident at the Property or to
employment in connection with the Property, or (iv) any arrearage in the
payment of any wages, benefits or payroll taxes.
3.14 FINANCIAL INFORMATION. Seller has previously delivered to
Purchaser its balance sheet and related statements as of December 31, 1994
and a current balance sheet and related statements for the period ending
September 30, 1995, 1995. To the best of Seller's actual knowledge, all such
information has been prepared in accordance with generally accepted
accounting principles applied consistently with past practice and is
certified to the best knowledge of the Vice President and Chief Financial
Officer of Seller and the Hotel's Controller. The balance sheet and related
statements as of December 31, 1994 have been reviewed by Xxxxxx Xxxxxxxx
L.L.P.
18
3.15 PURCHASE ORDERS. To the best of Seller's actual knowledge,
except as set forth on EXHIBIT H attached hereto, there are no purchase
orders in excess of $10,000 for items to be used at, or in connection with,
the Property which are scheduled for delivery following the Closing Date.
3.16 MANAGEMENT AND FRANCHISE AGREEMENTS. There are no existing
management contracts or franchise agreements relating to the Property other
than the License Agreement, dated March 25, 1985, between Xxxxxxx Hospitality
Group, Inc. and Perini/Friend Associates as assigned to Seller and Radisson
Hotels, Inc. ("RADISSON"), together with all amendments thereto (THE
"EXISTING LICENSE AGREEMENT"), to be terminated concurrently with the
Closing, nor are there any outstanding or alleged claims, liabilities or
amounts due under any such contracts or agreements.
3.17 PERMITS. To the best of Seller's actual knowledge, all
licenses (including, without limitation, liquor licenses), certificates of
occupancy, permits and approvals issued by any governmental authority or any
third party in connection with the operation of the Property (THE "PERMITS")
are listed on EXHIBIT I attached hereto, and Seller has provided to Purchaser
true and complete copies of each Permit.
3.18 KNOWLEDGE; PURCHASER'S ACTIONS; CURE. (a) References in
Article III to the "knowledge of Seller", "best knowledge of Seller", or
"actual knowledge of Seller", or any similar phrase or notices received by
Seller shall refer only to matters within the actual knowledge of, and
notices brought to the attention of or addressed to, Xxxxx Xxxxx, Xxx Xxxxxx
or the general manager, controller or building engineer for the Property.
(b) The foregoing representations, warranties and covenants are
true, accurate and complete as of the Contract Date and shall be true,
accurate and complete as of the Closing Date. Notwithstanding the foregoing,
after the Asset Management Effective Date, if any action of Purchaser (or
Manager or their respective agents, contractors or employees) taken pursuant
to the Asset Management Agreement causes any of the representations,
warranties and covenants of Seller contained in Sections 3.4, 3.5, 3.6, 3.9,
3.10, 3.11, 3.12, 3.13,3.14, 3.15, 3.16 or 3.17 to become untrue, inaccurate
or incomplete, Purchaser shall not be entitled to claim either that (i)
Seller is in default under this Agreement or (ii) Purchaser is excused from
performing hereunder due to a failure of a condition precedent to Closing.
(c) After the Contract Date, if either Purchaser or Seller becomes
aware that any of the foregoing representations, warranties or covenants is
untrue, inaccurate or incomplete, then such party shall notify the other in
writing immediately (THE "CURE NOTICE"). Subject to Section 3.18(b), Seller
shall have until the earlier of (i) thirty (30) days after delivery of the
Cure Notice (or such longer period of time as may be necessary to effect
curative action, not to exceed sixty (60) total days, so long as Seller
promptly commences and diligently pursues curative action), or (ii) the
Closing Date to cure such failure.
19
ARTICLE IV
PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to, and covenants with, Seller as follows:
4.1 GOOD STANDING. Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of Delaware,
is authorized to conduct the business in which it is now engaged and is, or
as of the Closing Date shall be, qualified to do business in the State of
Arizona, if legally required. Purchaser's general partner is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, is authorized to conduct the business in which it is now engaged
and is, or as of the Closing Date shall be, qualified to do business in the
State of Arizona, if legally required.
4.2 DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all requisite partnership actions of
Purchaser (none of which actions have been modified or rescinded, and all of
which actions are in full force and effect). This Agreement constitutes a
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
4.3 NO VIOLATIONS OR DEFAULTS. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by Purchaser will not (a) violate any law or any order of
any court or governmental authority with proper jurisdiction; (b) result in a
breach or default under any contract or other binding commitment of Purchaser
or any provision of the organizational documents of Purchaser; or (c) require
any consent or approval or vote that has not been taken or given, or at the
time of the transaction involved, shall not have been taken or given.
4.4 LITIGATION. There are no actions, suits, arbitrations,
proceedings, governmental investigations or other proceedings that are
pending against Purchaser that adversely and materially affect its right to
enter into or perform this Agreement.
ARTICLE V
CLOSING
5.1 CLOSING. The consummation of the purchase and sale of the
Property as contemplated by this Agreement (THE "CLOSING") shall take place
at 10:00 a.m. on the date which is the later of (a) sixty (60) days following
the earlier of (i) Seller s delivery of any required WARN Act notice, or (ii)
the WARN Act Notice Date, or (b) ten (10) days following receipt of notice of
HSR Approval by Purchaser (THE "CLOSING DATE"), subject to extension as set
forth in Section 5.2., at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, or at such other location as may be
mutually agreed upon by Seller and
20
Purchaser. All of Seller's deliveries and the Purchase Price shall be
delivered in escrow to the Title Company. All transactions at the Closing
shall be interdependent and are to be considered simultaneous, so that none
are effective until all are effective.
5.2 SELLER'S EXTENSION. (a) Seller may extend the Closing Date
for a period of up to three hundred sixty (360) days from the end of the
Feasibility Period ("SELLER'S EXTENSION"), by giving written notice (THE
"EXTENSION NOTICE") to Purchaser on or before the end of the Feasibility
Period. Seller shall be entitled to give the Extension Notice for the sole
purpose of allowing Seller sufficient time to identify other property
necessary to effectuate a 1031 Exchange upon the sale of the Property. At
the end of Seller's Extension, Seller shall be obligated to close in
accordance with the terms of this Agreement irrespective of whether Seller
has arranged or can arrange a 1031 Exchange.
(b) In the event that Seller gives the Extension Notice, Purchaser
may elect within thirty (30) days of the Extension Notice to cause Seller to
enter into an Asset Management Agreement (the form of which shall be
negotiated in good faith by Purchaser and Seller within the first fifteen
(15) days following the Contract Date) (THE "ASSET MANAGEMENT AGREEMENT")
effective upon a date specified by Purchaser which shall be within fifteen
(15) days of such date (THE "ASSET MANAGEMENT EFFECTIVE DATE"). As more
specifically set forth in the Asset Management Agreement, the Asset
Management Agreement shall give Purchaser the right to direct the management
and operation of the Property during the period from the Asset Management
Effective Date until the Closing. During the pendency of the Asset
Management Agreement, Seller shall, at Purchaser s direction, engage
Doubletree Hotels Corporation or an affiliate thereof (THE "MANAGER") to
operate the Property, provided that such engagement shall not commence prior
to sixty (60) days following the earlier of (i) Seller's delivery of any
required WARN Act notice, or (ii) the WARN Act Notice Date. Prior to the
Asset Management Effective Date, Seller shall obtain all required consents
from Radisson for the Asset Management Agreement and the management of the
Property by Manager during Seller's Extension. If Purchaser directs Seller
to contract with Manager to operate the Property, all employees of Seller at
the Property shall become employees of the Manager pursuant to the terms and
conditions of the agreement between Seller and Manager.
(c) The Asset Management Agreement shall provide that all Net
Operating Income generated by the Property following the Asset Management
Effective Date shall be distributed as follows: (i) first, to Purchaser, a
fee for management of the Property in an amount equal to three percent (3%)
of gross receipts; (ii) next, until Net Operating Income equals $2,500,000,
85% to Seller and 15% to Purchaser; and (iii) thereafter, 50% to Seller and
50% to Purchaser. As used herein, "NET OPERATING INCOME" shall mean gross
receipts generated by operation of the Property less ordinary operating
expenses related thereto (but not including any debt service payments or FF&E
or similar reserves).
(d) Closing shall occur on the last day of Seller s Extension (as
identified in the Extension Notice), unless (i) Seller enters into a contract
for an exchange property which shall close earlier, where upon Closing shall
occur concurrently with closing under such contract so
21
long as Purchaser receives at least ninety (90) days prior notice thereof, or
(ii) Seller and Purchaser agree on a prior date.
(e) Purchaser acknowledges and agrees that Seller desires to sell
the Property and purchase certain other, as yet to be identified property,
pursuant to a transaction which will qualify for exchange treatment under
Section 1031 of the Internal Revenue Code of 1986, as amended (A "1031
EXCHANGE"). Purchaser agrees to cooperate with Seller in accomplishing the
1031 Exchange, which cooperation shall include, without limitation, execution
of documents and allowing for the assignment of this Agreement to an exchange
party, provided that Purchaser's obligations under this Agreement shall not
be increased as a result of such cooperation. Seller hereby agrees to
indemnify and hold Purchaser harmless from and against any and all claims,
liabilities, demands, costs, expenses or causes of action arising out of or
in any way connected with Seller's 1031 Exchange.
5.3 COSTS. Seller and Purchaser shall aggregate and split all
transfer and recording taxes and fees and any bulk sales taxes and other
personal property taxes associated with the Closing. Purchaser shall pay for
title insurance and the survey. Each party shall pay its own attorneys' fees
incurred in connection with this transaction.
ARTICLE VI
ACTIONS PENDING CLOSING; FEASIBILITY PERIOD
6.1 CONDUCT OF BUSINESS; MAINTENANCE AND OPERATION OF PROPERTY.
Between the Contract Date and the Closing Date, Seller shall carry on the
business of the Property as a full-service hotel in the ordinary course in a
manner consistent with prior practice. Seller shall cause the Property to be
maintained in its present order and condition, normal wear and tear excepted,
and shall cause the continuation of the normal operation thereof, including
the purchase and replacement of supplies and equipment, the maintenance of
its beneficial relations with guests, suppliers and others having business
dealings with the Seller and the continuation of the normal practice with
respect to maintenance and repairs so that the Property shall, except for
normal wear and tear, be in substantially the same condition on the Closing
Date as on the Contract Date. Seller shall notify Purchaser in writing of any
loss, breakage or damage to the Property occurring prior to the Closing Date,
if the cost of repair or replacement therefor are reasonably estimated to
exceed $5,000, and if such repair or replacement is not completed prior to
Closing (or if Seller's Extension is exercised, if not completed prior to the
originally scheduled Closing Date), Purchaser shall receive a credit against
the Purchase Price for the estimated remaining cost thereof. Seller shall
not remove or permit to be removed any Personal Property except as necessary
for repairs or replacements of worn out or obsolete items.
6.2 TITLE INSURANCE. (a) Seller shall cooperate with Purchaser in
obtaining a binding commitment for an owner's policy of title insurance to be
issued by the Title Company to Purchaser on American Land Title Association
Form B-1970 (THE "TITLE COMMITMENT"), committing to insure Purchaser's good
and marketable fee simple title to the Hotel. The title policy to be issued
pursuant to the Title Commitment (THE "TITLE POLICY") shall be in an amount
22
at least equal to the portion of the Purchase Price allocable to the value of
the Hotel, as shown in EXHIBIT B. The Title Policy shall show no liens,
mortgages, deeds of trust, security interests, pledges, charges, options,
encroachments, easements, covenants, leases, reservations or restrictions of
any kind (THE "ENCUMBRANCES") other than: (i) the lien of any mortgage or
deed of trust executed by Purchaser in favor of Purchaser's lender; (ii)
applicable zoning regulations and ordinances; (iii) liens for taxes,
assessments and governmental charges not yet due and payable; and (iv) the
Permitted Exceptions.
(b) Purchaser agrees to notify Seller (THE "TITLE OBJECTION
NOTICE") of any objections to exceptions appearing in the Title Commitment
within ten (10) days following receipt of both the Title Commitment and the
survey described in Section 6.3. Within five (5) days following Purchaser's
notice, Seller shall notify Purchaser either that it will eliminate all
exceptions to which Purchaser has objected prior to the Closing Date or
specifying exceptions which it will not eliminate. If Seller elects not to
remove all exceptions to title to which Purchaser has objected, Purchaser may
terminate this Agreement in its sole discretion and receive a return of the
Deposit. If Seller agrees to eliminate all exceptions to which Purchaser has
objected or if Purchaser subsequently elects to accept any such exceptions
and continue this Agreement, Purchaser and Seller shall initial a list of all
exceptions which Purchaser agrees to accept (THE "PERMITTED EXCEPTIONS"),
which list shall be attached hereto as EXHIBIT K.
(c) The title policy to be issued at Closing shall include such
additional endorsements as Purchaser reasonably may request in its Title
Objection Notice.
6.3 SURVEY. Seller shall cooperate with Purchaser in obtaining an
as-built survey of the Property, at Purchaser s cost, prepared in conformity
with current American Land Title Association/American Congress on Surveying
and Mapping standards for "Class-A" surveys and certified to Purchaser,
Purchaser's lender and the Title Company by a duly licensed land surveyor or
professional engineer. No easement or encroachment shown on the survey shall
render title to the Property unmarketable or impair the use of the Property
as a fully functioning full-service hotel.
6.4 HSR COMPLIANCE. Within ten (10) days following expiration of
the Feasibility Period (or in the event Seller's Extension is exercised, at
least forty-five (45) days prior to the end of such period), Seller and
Purchaser shall file all necessary applications for approval of the purchase
and sale of the Property required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 (THE "HSR APPROVAL") and thereafter shall use their
reasonable efforts to obtain HSR Approval from the Federal Trade Commission
and any other necessary governmental agencies if then legally required. The
filing fee associated with such application shall be split 50/50 between
Purchaser and Seller. If HSR Approval has not been obtained by Purchaser on
or before December 15, 1995, (or in the event Seller's Extension is
exercised, if such approval has not been obtained within sixty (60) days of
filing) Purchaser, at its option, may elect to terminate this Agreement by
written notice to Seller, whereupon this Agreement shall terminate, the
Deposit shall be returned immediately to Purchaser and neither party shall
have any further liability to the other.
23
6.5 CONTRACTS; LEASES. Between the Contract Date and the Asset
Management Effective Date, Seller shall not renew, extend or modify the
Leases or any Contract or enter into any new such agreements that would
extend past the Asset Management Effective Date, without the prior written
consent of Purchaser, which shall not be unreasonably withheld. In the event
that Seller desires to take any such action, Seller shall make a written
request to Purchaser describing the action to be taken and providing
Purchaser with any relevant documentation, including, without limitation,
relevant documentation relating to the other party to such Contract or Lease.
Purchaser shall respond to such request by Seller within five (5) business
days of the date of such request, provided that if Purchaser does not respond
within such five (5) business day period, Purchaser shall be deemed to have
approved such request. From and after the Asset Management Effective Date,
Seller shall not, except as directed by Purchaser under the Asset Management
Agreement, renew, extend or modify the Leases or any Contract or enter into
any new such Leases or Contracts regardless of duration, and the authority to
enter into any such Leases or Contracts shall be delegated to Purchaser under
the Asset Management Agreement.
6.6 NO ACTION. Between the Contract Date and the Closing Date,
Seller shall not take or permit any action that would invalidate, void or
make untrue any representation or warranty provided under this Agreement.
Subject to Section 3.18, if Seller becomes aware of any event which occurs
prior to Closing which would cause any of Seller's representations or
warranties to become untrue, Seller shall notify Purchaser immediately in
writing of such occurrence.
6.7 COOPERATION. Seller shall cooperate with Purchaser in
securing the transfer or issuance of any permits or licenses, including,
without limitation, a liquor license, necessary to permit the lawful,
continuous operation of the Property by Purchaser immediately following the
Closing Date.
6.8 INSPECTION; FEASIBILITY PERIOD. (a) Purchaser shall have the
right, upon reasonable prior notice to Seller, at its own risk, cost and
expense and at any date or dates prior to Closing, to enter, or cause its
agents or representatives to enter, upon the Property for the purpose of
making surveys or other tests, test borings, inspections, investigations
and/or studies of the Property, provided that Purchaser provides Seller with
a certificate of insuring evidencing Purchaser's commercial general liability
insurance with combined single limit coverage of at least $2,000,000 and
naming Seller as an additional insured thereunder. In addition, Purchaser
may conduct such architectural, environmental, economic and other studies of
the Property as Purchaser may, in its sole discretion, deem desirable.
Purchaser shall not make any physical alterations to the Property (and
Purchaser hereby covenants to repair any damage or destruction to the
Property caused thereby), such entry shall not interfere with the guests or
management of the Property, and Purchaser shall indemnify and hold Seller
harmless from any cost, claim or expense in connection therewith, except that
Purchaser's obligations as set forth in this sentence shall not extend to
previously existing conditions that are discovered by Purchaser to be present
on, under or about the Property. Purchaser shall have complete access to all
documentation, agreements and other information in the possession of Seller
or Seller's agents related to the Property and shall have the right to make
copies thereof. If Purchaser elects to terminate this Agreement pursuant to
Section 6.8(b), Purchaser agrees to supply Seller with the results of any
24
tests, studies or inspections of the Property performed hereunder.
(b) If, during the period between the Contract Date and the date
which is sixty (60) thereafter (THE "FEASIBILITY PERIOD"), Purchaser gives
Seller written notification (THE "TERMINATION NOTICE") that Purchaser elects
not to consummate the purchase of the Property in accordance with the terms
of this Agreement, this Agreement shall terminate, the Deposit shall be
returned immediately to Purchaser and neither party shall have any further
liability to the other under this Agreement. The Purchaser shall have the
absolute right, in its sole discretion, to determine whether to give the
Termination Notice. If Purchaser elects not to give (or fails to give) the
Termination Notice prior to the expiration of the Feasibility Period, this
Agreement shall remain in full force and effect.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
It shall be an express precondition to Purchaser's obligation to
purchase the Property that each and every one of the following conditions
shall have been satisfied as of the Closing Date (or waived by Purchaser).
7.1 REPRESENTATIONS AND WARRANTIES. Subject to Section 3.18, each
of Seller's representations and warranties shall be true and accurate as if
made on and as of the Closing Date provided that if any such representations
and warranties other than through a breach or default of Seller, hereunder
Purchaser's options as described in Section 7.7 shall be limited to those
described in subsections (a), (b) and (c) thereof.
7.2 COVENANTS OF SELLER. All actions Seller covenants herein to
take, other than obligations specified herein to be performed following
Closing, shall have been completed.
7.3 PERMITS; NO IMPEDIMENTS. Provided Purchaser has pursued
diligently all necessary applications therefor, there shall be no impediments
which arise following the end of the Feasibility Period to the transfer or
reissuance to Purchaser of any Permits required for the ongoing uninterrupted
operation of the Property immediately following the Closing Date.
7.4 TERMINATION OF EXISTING LICENSE AGREEMENT. The Existing
License Agreement shall have been terminated, at Seller's sole cost. On the
Closing Date, there shall be no contract or agreement in effect between
Seller and any third party for management or franchising of the Property
after the Closing Date. There shall be no fees, payments, commissions or
other sums due and owing in connection with management or franchising of the
Property under the Existing License Agreement or any other agreement for the
period prior to the Closing Date.
7.5 TERMINATION OF EMPLOYEES. If necessary, Seller shall
terminate the employment of all individuals employed at or in connection with
the Property. Compliance with the provisions of the Worker Adjustment and
Retraining Notification Act ("WARN ACT") 29 U.S.C. 2101 ET SEQ. shall be and
remains Seller's sole responsibility. Seller agrees to indemnify and hold
25
Purchaser harmless from and against any and all liability, loss, cost, damage
and/or expense (including, without limitation, reasonable attorneys' fees and
expenses) arising from or relating to the WARN Act insofar as it relates to
the purchase and sale of the Property and the termination of Seller's
employees who provide services at the Property prior to the Closing Date (or
in the event Manager is engaged by Seller at Purchaser's direction, prior to
the start of such engagement). Seller shall notify Purchaser in writing
prior to the delivering of any WARN Act notice. Seller may, at its option,
deliver the WARN Act notice prior to the expiration of the Feasibility
Period, but shall be required to deliver such notice no later than five (5)
days following expiration of the Feasibility Period (THE "WARN ACT NOTICE
DATE") unless Purchaser terminates this Agreement pursuant to Section 6.8(b).
The indemnity set forth in this Section 7.5 shall survive the Closing and
shall not be limited by the claims period set forth in Section 13.1.
7.6 TITLE. Purchaser shall be able to obtain a policy of title
insurance in conformance with the Title Commitment, subject only to the
Permitted Exceptions.
7.7 FAILURE OF CONDITION. In the event of the failure of any
condition precedent set forth above, Purchaser, at its sole election, may (a)
terminate this Agreement (and receive a return of the Deposit); (b) waive the
condition and proceed to Closing; (c) extend the Closing Date for such
additional period of time, not to exceed thirty (30) days, as may be
reasonably required to allow Seller to remedy such failure; or (d) if such
failure arises from Seller's breach of this Agreement, avail itself of any
remedies provided in Section 9.2.
ARTICLE VIII
CLOSING DELIVERIES
8.1 DEED. Seller shall deliver a special warranty deed in
recordable form conveying Seller's fee simple interest in the Hotel (THE
"DEED"), dated as of the Closing Date, free of all Encumbrances other than
the Permitted Exceptions, conveying to Purchaser fee simple interest in the
Hotel as required hereunder.
8.2 XXXX OF SALE. Seller shall deliver a xxxx of sale, dated as
of the Closing Date, conveying to Purchaser the Personal Property, free of
all Encumbrances other than the Permitted Exceptions.
8.3 TAX CLEARANCES AND OTHER REPORTS. (a) Seller shall have
furnished Purchaser with evidence (including a certificate stating) that
Seller has filed all tax returns (other than income tax returns), reports and
filings required to be filed before the Closing Date with respect to the
Property and has paid all amounts shown due for all state, county and
municipal sales, purchase and use taxes, all state and federal unemployment
taxes and any and all taxes, assessments, charges and fees, the non-payment
of which may result in a lien on the Property or liability on the part of
Purchaser. Seller shall have paid when due any amounts required to satisfy
its tax obligations that arose before the Closing Date.
(b) Seller shall timely file all closing returns, notices and
reports of every kind required
26
to be filed before the Closing Date by federal, state, county or municipal
governments, or any of their subdivisions, with respect to the Property and
the sale thereof to Purchaser.
8.4 ASSIGNMENT OF PERMITS. Seller shall deliver an assignment of
all applicable Permits, in the form attached hereto as EXHIBIT L, if and to
the extent assignable to Purchaser.
8.5 ASSIGNMENT OF CONTRACTS. Seller shall deliver an assignment,
in the form attached hereto as EXHIBIT M, of all Contracts which Purchaser
has elected to assume, together with any and all required consents to such
assignment.
8.6 FIRPTA CERTIFICATE. Seller shall deliver a certificate, dated
as of the Closing Date, to establish that Seller is not a foreign person for
the purposes of the Foreign Investors in Real Property Tax Act.
8.7 ASSIGNMENT OF WARRANTIES. Seller shall deliver an assignment,
in the form attached hereto as EXHIBIT N, of any assignable warranties
(including any warranties with respect to FF&E), payment and performance
bonds and other assignable obligations of any contractor, architect,
engineer, designer, supplier or other party involved in the development or
supplying of the Property to Purchaser, and to the extent any such warranty,
bond or obligation is not assignable, Seller shall use its best efforts to
enforce the same on Purchaser's behalf.
8.8 ASSIGNMENT OF LEASES. Seller shall deliver an assignment, in
the form attached hereto as EXHIBIT O, of the Leases to Purchaser. Seller
shall also deliver to Purchaser estoppel certificates, in the form attached
hereto as EXHIBIT P, from the tenants under Leases.
8.9 ORIGINAL DOCUMENTS. Seller shall deliver the original
Permits, Contracts and Equipment Leases which are to be assigned to Purchaser.
8.10 OTHER DOCUMENTS. Seller shall deliver such other documents
and instruments as may be reasonably requested by Purchaser or the Title
Company to effectuate the transactions contemplated by this Agreement and to
induce the Title Company to insure title to the Hotel as described herein.
8.11 POSSESSION; KEYS. Seller shall deliver possession of the
Property to Purchaser, together with all keys, including, without limitation,
keys for all security systems, rooms and offices.
8.12 PURCHASE PRICE. Purchaser shall deliver the Purchase Price.
ARTICLE IX
DEFAULT
9.1 PURCHASER'S DEFAULT. If Purchaser fails to consummate the
purchase and sale contemplated herein after all conditions precedent to
Purchaser's obligation to do so have been
27
satisfied or waived by Purchaser, the Title Company shall pay the Deposit to
Seller in accordance with the Escrow Instructions, as full and complete
liquidated damages, and as the exclusive and sole right and remedy of Seller,
whereupon this Agreement shall terminate and neither party shall have any
further obligations or liabilities to the other party.
9.2 SELLER'S DEFAULT. Except as provided in Section 3.18, if
Seller breaches its representations, warranties, covenants and/or agreements
under this Agreement or has failed, refused or is unable to consummate the
purchase and sale contemplated herein by the Closing Date, the Title Company,
upon Purchaser's request, shall return the Deposit to Purchaser in accordance
with the Escrow Instructions. Purchaser, at its option, shall be entitled to
pursue Seller either (i) in an action for specific performance, or (ii) to
recover monetary damages, of any kind or nature, suffered by Purchaser, up to
Four Hundred Thousand Dollars ($400,000).
ARTICLE X
INDEMNIFICATION
10.1 AGREEMENT TO INDEMNIFY. Subject to any express provisions of
this Agreement to the contrary, (a) Seller shall hold harmless, indemnify and
defend Purchaser against any and all obligations, claims, losses, damages,
liabilities and expenses (including reasonable attorneys' fees and other
charges) arising out of (i) the inaccuracy of any representation or warranty
of Seller herein, (ii) the failure of Seller to perform any of its
obligations hereunder, (iii) events, contractual obligations, acts or
omissions of Seller that occurred in connection with the ownership or
operation of the Property prior to the Closing, or (iv) damage to property or
injury to or death of any person or any claims for any debts or obligations
occurring on or about or in connection with the Property or any portion
thereof or with respect to the Property's operations at any time or times
prior to the Closing, and (b) Purchaser shall hold harmless, indemnify and
defend Seller against any and all obligations, claims, losses, damages,
liabilities and expenses (including, without limitation, reasonable
attorneys' fees and other charges) arising out of (i) the inaccuracy of any
representation or warranty of Purchaser herein, (ii) the failure of Purchaser
to perform any of its obligations hereunder, (iii) events, contractual
obligations, acts or omissions of Purchaser or its agents that occur in
connection with the ownership or operation of the Property after the Closing,
or (iv) any damage to property or injury to or death of any person or any
claims for any debts or obligations occurring on or about the Property or any
portion thereof or with respect to the Property's operations at any time or
times after the Closing.
10.2 INDEMNIFICATION REGARDING ASSUMED OBLIGATIONS. Whenever it is
provided in this Agreement that an obligation of one party will be assumed by
the other party after the Closing, the party so assuming such liability also
shall be deemed to have agreed to indemnify, defend and hold harmless the
other party and its successors and assigns, from all claims, losses, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
other charges) arising from any failure of the assuming party to perform the
obligation so assumed after the Closing.
10.3 NOTICE AND COOPERATION ON INDEMNIFICATION. Whenever either
party shall learn
28
through the filing of a claim or the commencement of a proceeding or
otherwise of the existence of any liability for which the other party is or
may be responsible under this Agreement, the party learning of such liability
shall notify the other party promptly and furnish such copies of documents
(and make originals thereof available) and such other information as such
party may have that may be used or useful in the defense of such claims and
shall afford said other party full opportunity to defend the same in the name
of such party and generally shall cooperate with said other party in the
defense of any such claim.
ARTICLE XI
CASUALTY, CONDEMNATION OR LITIGATION
11.1 CONDEMNATION, CASUALTY OR LITIGATION. If, prior to Closing,
(i) condemnation proceedings are commenced against all or any material
portion of the Property, or (ii) the Property is damaged by fire or other
casualty to the extent that the cost of repairing such damage shall be Five
Hundred Thousand Dollars ($500,000.00) or more, or (iii) the Property becomes
subject to litigation which may deprive Purchaser of any material benefit to
which it would become entitled pursuant to this Agreement, Purchaser shall
have the right, upon notice in writing to the Seller delivered within fifteen
(15) days after actual notice of such condemnation, fire or other casualty or
litigation, to terminate this Agreement, whereupon the Deposit shall be
returned immediately to Purchaser, and neither party shall have any further
liability to the other hereunder. If Purchaser does not elect, or is not
entitled, to terminate this Agreement, the Purchase Price shall not be
reduced except as hereinafter set forth, but Purchaser shall be entitled to
an assignment of all of Seller's share of the proceeds of fire or other
casualty insurance and rent insurance proceeds (if any) payable with respect
to the period after Closing or of the condemnation award, as the case may be,
and Seller shall have no obligation to repair or restore the Property;
provided, however, that the Purchase Price shall be reduced by an amount
equal to the sum of (a) any uninsured or unreimbursed amount, (b) the
"deductible" applied by Seller's insurer with respect to such fire or
casualty and (c) the amount by which the proceeds of such insurance will be
reduced by reason of the application of any co-insurance clause in Seller's
insurance policy. If Purchaser proceeds to Closing hereunder, Seller shall
not compromise, settle or adjust any claims to such proceeds or awards,
without Purchaser's prior written consent.
11.2 RISK OF LOSS. Subject to the provisions of this Article XI,
the risk of loss or damage to the Property shall remain with Seller until
recordation of the Deed.
ARTICLE XIII
APPORTIONMENTS
12.1 APPORTIONMENTS. The following apportionments shall be made
between the parties at the Closing as of the close of business on the day
immediately prior to the Closing Date (or, in the event Seller s Extension is
exercised, on the originally scheduled Closing Date) (THE "APPORTIONMENT
DATE").
(a) real estate taxes, personal property taxes, special
assessments and vault charges, if
29
any, on the basis of the fiscal period for which assessed;
(b) water and sewer service charges and charges for gas,
electricity, telephone and all other public utilities. If there are meters
measuring the consumption of water, gas or electric current, Seller, not more
than one day prior to the Apportionment Date, if possible, shall cause such
meters to be read, and shall pay all utility bills for which Seller is liable
upon receipt of statements therefor. Purchaser shall be responsible for
causing such utilities and services to be changed to its name and shall be
liable for and shall pay all utility bills for services rendered after the
Apportionment Date. All utility adjustments will be made by the parties
outside of Closing;
(c) amounts which have been paid or are payable under the
Restaurant Lease, Contracts, Equipment Leases and Permits assigned to and
assumed by Purchaser at Closing;
(d) prepaid advertising expenses;
(e) commissions of credit and referral organizations; and
(f) all other charges and fees customarily prorated and adjusted
in similar transactions.
12.2 DEPOSITS. All deposits (including any interest thereon due
the party making such deposit) from guests or others made as security or in
connection with future services to be rendered shall be credited to Purchaser
at the Closing. Purchaser shall assume responsibility for the amount so
credited and shall hold Seller harmless therefrom. Seller shall hold
Purchaser harmless from any liability for deposits not so credited.
12.3 ROOM REVENUE. All revenues received or to be received from
transient guests on account of room rents for the period ending on and
including the Apportionment Date shall belong to Seller, and for the period
beginning on the day immediately following the Apportionment Date such
revenues shall belong to Purchaser; provided, however, that revenues received
or "posted" in the normal course after the xxxx Xxxxxx normally closes its
front desk activity for the "night" audit for the Apportionment Date (THE
"FRONT DESK CLOSING HOUR") shall belong to Purchaser. The accounts
receivable of registered guests at the Property who have not checked out and
were occupying rooms as of 12:01 a.m. on the Apportionment Date are
collectively called the "CURRENT LEDGER", and Purchaser shall pay over to
Seller, as received by Purchaser, Seller's share of the proceeds of the
Current Ledger attributable to payments of each guest's account for the
period ending on and including the Apportionment Date, less applicable credit
card and travel agent commissions allocable to such share, which commissions
shall be paid by Purchaser out of such proceeds when and as collected. In
the event that an amount less than the total amount due from a guest is
collected and the guest continued in occupancy after the Apportionment Date,
such amount shall be applied first to any indebtedness owing by such person
to Purchaser and thereafter to such person's indebtedness to Seller.
12.4 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE. (a) All accounts
receivable (other than the Current Ledger) for the period ending on and
including the Apportionment Date shall belong
30
to Seller, but Seller shall not attempt to collect such accounts receivable
unless requested to do so by Purchaser. A list of all such accounts
receivable (other than the Current Ledger) shall be presented to and be
initialed by Purchaser and Seller at Closing. Following Closing, Purchaser
shall use good faith efforts toward the collection of such accounts
receivable, but Purchaser shall have no responsibility or liability with
regard to such accounts receivable nor be expected to incur any cost with
respect to such collections. Purchaser shall provide monthly collection
reports to Seller, and any accounts not collected by Purchaser within ninety
(90) days following the Closing Date may be pursued directly by Seller. With
regard to any collection made from any person or entity who is indebted to
the Property both with respect to accounts receivable for the period ending
on and including the Apportionment Date and to accounts receivable for the
period subsequent to the Apportionment Date, such collection shall be applied
first to the payment in full of any amounts due to the Purchaser on accounts
for the period subsequent to the Apportionment Date and then to amounts due
for the period ending on and including the Apportionment Date.
(b) Any indebtedness, accounts payable, liabilities or obligations
of any kind or nature related to Seller or the Property for the periods prior
to and including the Apportionment Date shall be retained and paid by Seller,
and Purchaser shall not be or become liable therefor, except as explicitly
assumed by Purchaser pursuant to this Agreement.
12.5 VENDING MACHINE REVENUE. Vending machine proceeds shall be
counted as close to the Front Desk Closing Hour as is possible and the net
amount thereof shall be credited to Seller at Closing.
12.6 GUESTS' PROPERTY. All baggage or other property of patrons of
the Property checked or left in care of Seller shall be listed in an
inventory to be prepared in duplicate and signed by Seller's and Purchaser's
representatives on the Closing Date. Purchaser shall be responsible from and
after the Closing Date and will indemnify and hold Seller harmless from and
against all claims for all baggage and property listed in such inventory.
Seller shall indemnify and hold harmless Purchaser from and against claims
for baggage and property not listed in such inventory but shown to have been
left in custody at the Property prior to the Closing Date. All baggage or
other property of guests retained by Seller as security for unpaid accounts
receivable may be left on the Property without any responsibility or
liability therefor on the part of Purchaser, for a period not to exceed one
(1) month from Closing Date, within which time such baggage or other property
shall be removed or otherwise disposed of by Seller.
12.7 ACCOUNTING. Except as otherwise expressly provided herein,
all apportionments and adjustments shall be made on an accrual basis in
accordance with generally accepted accounting principles. The computation of
the adjustments shall be prepared jointly by Seller and Purchaser, and, upon
the request of either Purchaser or Seller, shall be reviewed by
[Wolpoff and Co.], certified public accountants, or another similarly
reputable accounting firm (THE "ACCOUNTANTS") and reviewed by representatives
of both Purchaser and Seller. To the extent the exact amount of any
adjustment item provided for in this Article XII cannot be precisely
determined on the Closing Date, the Accountants shall estimate the amount
thereof, for purposes
31
of computing the net amount due Seller or Purchaser pursuant to this Article
XII and shall determine the exact amount thereof not later than thirty (30)
days after the Closing Date. The determinations made by the Accountants
shall be binding on both Seller and Purchaser. The fees and expenses of the
Accountants shall be borne one-half each by Seller and Purchaser.
12.8 EMPLOYEE COMPENSATION. Seller shall be solely responsible for
any liability for payment of all employees' wages, accrued vacation pay, sick
leave, bonuses, pension benefits and other benefits, including, without
limitation, any COBRA rights, earned by and due to or accrued to employees at
the Property through 12:01 a.m. on the Closing Date, together with FICA,
unemployment and other taxes and benefits due from any employer of such
employees. Seller shall indemnify and hold Purchaser harmless from and
against any and all liability, loss, cost, damage or expense related to any
of the foregoing items. Such indemnity shall survive Closing and shall not
be limited by the claims period set forth in Section 13.3.
Notwithstanding the foregoing, Purchaser may elect, at its option,
to receive a credit against the Purchase Price for the amount of accrued
vacation pay and sick leave (THE "PTO CREDIT") for employees who will be
re-hired by Manager. Purchaser shall indemnify and hold Seller harmless from
and against any and all liability, loss, cost, damage or expense for claims
by such employees for vacation pay and sick leave to the extent of the PTO
Credit.
ARTICLE XIII
MISCELLANEOUS
13.1 SURVIVAL. The representations, warranties, covenants and
indemnities contained in this Agreement shall be effective as of the Closing
Date, and any liability with respect to breach thereof shall survive the
Closing. The obligations of Purchaser and Seller under this Agreement to the
extent not fully performed as of the Closing Date or to the extent so
indicated herein shall survive the Closing. Except as otherwise expressly
provided herein, all claims by either party hereto, whether for amounts due
or otherwise, under any provision of this Agreement, must be made in writing
to the other party within one (1) year following the Closing Date.
13.2 ASSIGNMENT. (a) Purchaser may assign this Agreement, without
the consent of Seller, to any entity in which Purchaser is the general
partner or which is otherwise controlled by, or under common control with,
Purchaser. Otherwise, neither party shall assign or transfer or permit the
assignment or transfer of its rights or obligations under this Agreement
without the prior written consent of the other, any such assignment or
transfer without such prior consent being hereby declared to be null and
void.
(b) In the event either party consents to an assignment of this
Agreement by the other for which consent is required, no further assignment
shall be made without another written consent from the consenting party,
unless the assignment may otherwise be made without consent under this
Agreement. An assignment by either Seller or Purchaser of its interest in
this Agreement shall not relieve Seller or Purchaser, as the case may be,
from its obligations, but this Agreement shall then inure to the benefit of,
and be binding on, the assignee's successors, heirs,
32
legal representatives and assigns.
13.3 CONSENTS. If, under this Agreement, the consent of a party is
required, the consent shall be in writing and shall be executed by a duly
authorized officer or agent.
13.4 APPLICABLE LAW. This Agreement shall be governed by the laws
of the State of Arizona, without resort to the choice of law rules thereof.
13.5 HEADINGS; EXHIBITS. The headings of articles and sections of
this Agreement are inserted only for convenience; they are not to be
construed as a limitation of the scope of the particular provision to which
they refer. All exhibits attached or to be attached to this Agreement are
incorporated herein by this reference. Except for Exhibit K (which shall be
completed in accordance with Section 6.2), if any Exhibits are not attached
hereto on the Contract Date, Seller shall deliver copies thereof (together
with copies of any documents referenced therein) to Purchaser for review
within ten (10) days hereafter, and Purchaser and Seller shall agree upon
such Exhibits within fifteen (15) days after the Contract Date.
13.6 NOTICES. Notices and other communications required by this
Agreement shall be in writing and delivered by hand against receipt or sent
by recognized overnight delivery service or by certified or registered mail,
postage prepaid, with return receipt requested. All notices shall be
addressed as follows:
If to Seller:
c/o Pacific Gateway Properties
One Xxxxxx Center
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxx and Xxxxxxx Xxxxxx
(000) 000-0000 [FAX]
c/o Eastdil Realty Co., LLC
00000 Xxxxx Xxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxx
(000) 000-0000 [FAX]
33
If to Purchaser:
Xxxxxx Hotel Investments L.P.
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
(000) 000-0000 [FAX]
with a copy to:
Xxxxx Xxxx Xxxx, Esquire
Xxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
(000) 000-0000 [FAX]
or to such other address as may be designated by a proper notice. Notices
shall be deemed to be effective upon receipt (or refusal thereof) if
personally delivered or sent by recognized overnight delivery service or
three (3) days following the date of mailing if sent by certified mail.
13.7 WAIVER. The failure of either party to insist on strict
performance of any of the provisions of this Agreement or to exercise any
right granted to it shall not be construed as a relinquishment or future
waiver; rather, the provision or right shall continue in full force. No
waiver of any provision or right shall be valid unless it is in writing and
signed by the party giving it.
13.8 PARTIAL INVALIDITY. If any part of this Agreement is declared
invalid by a court of competent jurisdiction, this Agreement shall be
construed as if such portion had never existed, unless this construction
would operate as an undue hardship on Seller or Purchaser or would constitute
a substantial deviation from the general intent of the parties as reflected
in this Agreement.
13.9 ENTIRE AGREEMENT. This Agreement, together with the other
writings signed by the parties and incorporated by reference and together
with any instruments to be executed and delivered under this Agreement,
constitutes the entire agreement between the parties with respect to the
purchase and sale of the Property and supersedes all prior oral and written
understandings. Amendments to this Agreement shall not be effective unless in
writing and signed by the parties hereto.
13.10 TIME IS OF THE ESSENCE. Time is of the essence with
respect to performance of all obligations under this Agreement.
34
13.11 WAIVER OF JURY TRIAL. Seller and Purchaser each hereby
waives any right to jury trial in the event any party files an action
relating to this Agreement or to the transactions or obligations contemplated
hereunder.
13.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts which, when taken together, shall constitute a single,
binding instrument.
13.13 BROKERAGE. Seller represents to Purchaser that it has
retained Eastdil Realty Co., Inc. as its broker for this transaction, and
that Seller shall bear full responsibility for paying Eastdil Realty Co.,
Inc. pursuant to the terms of separate agreement. Purchaser represents to
Seller that no broker or consultant acting on its behalf brought about this
transaction. Each of the parties hereto agrees to indemnify and hold the
other harmless from claims made by any broker (including Seller's
indemnification of Purchaser for any claims of Eastdil Realty Co., Inc.),
attorney or finder claiming through such party for a commission, fee or
compensation in connection with this Agreement or the sale of the Property
hereunder. The provisions of this Section 13.13 shall survive Closing.
13.14 PURCHASER'S LENDER. Seller acknowledges that Purchaser
may obtain or attempt to obtain mortgage financing for the transaction
outlined in this Agreement, and that Seller shall reasonably cooperate, at
Purchaser's expense, with Purchaser and any such lender to enable such
financing to occur as a part of the Closing.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
35
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement
to be executed as of the date indicated below.
SELLER
ATTEST: PACIFIC GATEWAY PROPERTIES
HOTELS, INC.
Name: Xxxxx X. Xxxxx
_____________________ Its: President
By: Xxxxx X. Xxxxx
Date:_______________
PURCHASER
XXXXXX HOTEL INVESTMENTS L.P.
By: LODGING OPPORTUNITIES
CORPORATION
WITNESS: Its: General Partner
By: Xxxxxxx X. Xxxxxxx
Xxxxx Xxxx Xxxx Name: Xxxxxxx X. Xxxxxxx
Its: Executive Vice President
Date: October 18, 1995
36
EXHIBITS
A Legal Description of Land
B Purchase Price Allocation
C Form of Letter of Credit
D Form of Escrow Instructions
E Environmental Matters
F List of Service Contracts
G Employee Claims
H Post-Closing Purchase Orders
I Permits
J [Intentionally Deleted]
K Permitted Exceptions
L Form of Assignment of Permits
M Form of Assignment of Contracts
N Form of Assignment of Warranties
O Form of Assignment of Lease
P Form of Tenant Estoppel
Q Form of Promissory Note
37
