EXHIBIT 10.18
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PURCHASE AND SALE AGREEMENT
Between
Olympic Hotel L.L.C., a Washington limited liability company
("Seller")
and
CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited
partnership
("Purchaser")
For the Purchase of the Olympia Holiday Inn Hotel at Olympia,
Washington, and associated Restaurants, Rental Space and Facilities
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered by
and between Olympic Hotel L.L.C., a Washington Limited Liability
Company ("Seller"), the sole manager of which is Xxxx X. Xxxxxxxxx
("Xxxxxxxxx") and Cavanaughs Hospitality Limited Partnership, a
Delaware Limited Partnership ("Purchaser") the sole general partner of
which is Cavanaughs Hospitality Corporation ("CHC"). Xxxxxxxxx has
disclosed to Purchaser that Xxxxxxxxx is a licensed real estate
broker. The Agreement is effective upon the date the last to sign
executes and delivers this document to the other party ("Effective
Date"), but is dated for reference purposes September 21, 1998.
RECITALS
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Seller is the owner of the real property and improvements legally
described in Exhibit A, which is attached to and incorporated in this
Agreement by this reference. In the event Exhibit A is incomplete or
inaccurate, the parties authorize the Title Company (defined below) to
correct this exhibit to include all contiguous real property owned by
Seller. The real property and improvements described in Exhibit A
have been operated under the names and consist of the hotel and
associated restaurants, bars, rental space and meeting facilities
located defined in Article I under "Hotel").
Seller desires to sell to Purchaser, and Purchaser desires to acquire
from Seller, the Hotel and all associated assets described in this
Agreement on the terms and conditions hereinafter set forth.
Now, therefore, in consideration of the foregoing premises and the
respective representations, warranties agreements and conditions
herein contained, and the deposit of Fifth Thousand Dollars ($50,000)
by Purchaser into the Escrow (defined below) (which, together with the
additional deposit described in Section 5 below and all interest
thereon, are collectively referred to as "Xxxxxxx Money" and shall be
applied to the purchase price or refunded as described below), the
parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
For the purposes of this Agreement, the following terms (in addition
to terms given defined meanings elsewhere in this Agreement) shall
have the meanings set forth below in this Article I.
"CAPITAL LEASES" are Equipment Leases which are the equivalent of
installment purchase agreements and which are not represented as
operating expenses on the books and records of the Hotel.
"CLOSING" and "CLOSING DATE" - shall have the meaning defined in
Section 9.1.
"CONSUMABLES" - shall mean all supplies, including but not limited to
food and beverage, whether in use, or held in stock for future use,
used in connection with the operation and maintenance of the Hotel,
subject to such depletion and including such resupplies as shall occur
and be made in the normal course of business, excluding, however, all
items of personal property which are owned by Space Lessees or guests
or which are not usable by Purchaser due to license or name
restrictions.
"CUT-OFF TIME" - shall have the meaning defined in Section 9.2.
"DUE DILIGENCE REQUEST LIST" shall have the meaning defined in Section
5.1.3.
"DUE DILIGENCE MATERIALS" - shall have the meaning defined in Section
5.1.4.
"EQUIPMENT LEASES" - shall mean, to the extent transferable, the
leases covering items of the type listed as Service Equipment which
are not owned by Seller but are leased by Seller, and which are
located in or upon the Hotel or are used or useable in connection
therewith.
"HOTEL" - shall mean the real property and improvements which have
been operated under the name Olympia Holiday Inn Hotel and consist of
a hotel and associated restaurants, bars, rental space and meeting
facilities located at 0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxx, Xx 00000
described in Exhibit A which is attached to and incorporated in this
Agreement by this reference.
"HOTEL CONTRACTS" - shall mean all service, maintenance, and other
contracts respecting the maintenance or operation of the Hotel.
"IMPROVEMENTS" - shall mean all buildings and improvements on the
Land.
"INSPECTION DOCUMENTS" and "INSPECTION PERIOD" - shall mean the
documents described in Sections 5.1.4 and 5.3.1 and the longest time
period for Purchaser's review and inspection described in Section 5.3.
"LAND" - shall mean the area described in Exhibit A to this Agreement.
"MISCELLANEOUS ASSETS" - shall mean all contract rights, leases,
concessions, permits, receipts, trademarks, logos, copyrights,
business records, and any items of intangible personal property
relating to the ownership or operation of the Hotel. In the event the
seller operates real property other than the Hotel, this definition
excludes assets not located in the same county as the Hotel and used
in the operation of property other than the Hotel.
"NAMES" - shall mean the name Olympia Hotel and such other names
commonly used in the operation of the Hotel including without
limitation the names now used with the restaurants, banquet rooms and
meeting rooms in the Improvements, and together in each case with the
good will appurtenant thereto. This definition excludes the name of
"Holiday Inn", the franchise under which the Hotel is currently being
operated or the names of any third party tenants of the Hotel.
"OPERATING EQUIPMENT" - shall mean all china, glassware, linen,
silverware and uniforms, and supplies of every kind and nature of all
operating departments, including, without limitation, cleaning
supplies, guest supplies, printing stationery, bar supplies, fuel,
laundry supplies and brochures and promotional material whether in
use, or held in stock for future use, in connection with the operation
of the Hotel, which are on hand on the date hereof, subject to such
depletion and including such resupplies as shall occur and be made in
the normal course of business.
"PERMITS" - shall mean, to the extent transferable, all licenses,
franchises and permits used in the operation of the Hotel, including
but not limited to liquor licenses, as heretofore operated.
"PERMITTED EXCEPTIONS" - shall have the meaning defined in Section
3.1.
"PROPERTY" - shall mean all of the real, personal and intangible
property referred to in Article II.
"SERVICE EQUIPMENT" - shall mean all fixtures, furnishings, fittings,
equipment, machinery, apparatus, vehicles, appliances and articles of
personal property of every kind whatsoever used or usable in
connection with any present or future operation of all or any part of
the Hotel, including without limitation all elevators, escalators,
boilers, furnaces, heating, ventilating and air-conditioning systems
and equipment, office furniture and equipment (including safes, cash
registers and accounting, duplicating and communication equipment) and
specialized hotel equipment (including equipment usable in the
operation of kitchens, laundries, meeting and banquet rooms, clubs,
rental spaces, dry-cleaning facilities, bars and cocktail lounges),
electrical equipment (including refrigerators, radios, television and
lighting equipment), fire prevention and extinguishing apparatus,
telephone system, pictures and ornaments, which are on hand as of the
date hereof, subject to such depletion and including such replacements
as shall occur or be made in the normal course of business; excluding,
however, all items of personal property which are owned by Space
Lessees or guests.
"SPACE LEASES" - shall mean all leases, subleases, licenses,
concessions and other occupancy agreements, written or oral, whether
or not of record, for use or occupancy of any portion of the Hotel;
and "Space Lessees" shall mean the tenants or occupants thereunder.
These terms do not include rental of hotel rooms.
ARTICLE II
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PURCHASE AND SALE
Upon the terms, conditions, representations and warranties herein set
forth, Seller hereby agrees to sell the following properties, rights
and interests (sometimes hereinafter referred to collectively as
"Property") to Purchaser, and Purchaser agrees to purchase the
Property from Seller:
2.1 HOTEL - the Hotel, Land and the Improvements;
2.2 ADDITIONAL PROPERTY - all of Seller's right, title and interest
in and to the Names, Hotel Contracts, Space Leases, Permits,
Equipment Leases, Service Equipment, Consumables, Operating
Equipment, and all other Miscellaneous Assets.
ARTICLE III
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TITLE AND EXCEPTIONS TO TITLE
3.1 TITLE: Seller shall sell and convey good and marketable title
to the Property (and good record title by full warranty deed to
so much thereof as shall constitute real property under the
laws of the state in which any of the Property is located) to
Purchaser subject only to the following matters ("Permitted
Exceptions"):
3.1.1 LIENS, ETC. All liens for real estate taxes, water
and sewer charges, provided they are not delinquent
and are prorated as of Closing.
3.1.2 LAWS, ETC. All present laws, ordinances, codes,
restrictions and regulations of all governmental
authorities relating to building and/or zoning.
3.1.3 SPACE LEASES. All terms and conditions of all Space
Leases delivered to Purchaser by Seller at the
beginning of the Inspection Period and for which
estoppel certificates are received from the tenants
prior to Closing affirming such Space Leases are in
full force and effect, without offsets and without any
claim of default.
3.1.4 APPROVED HOTEL CONTRACTS. All terms and conditions of
the Hotel Contracts approved by Purchaser for
assumption by Purchaser during the Inspection Period.
3.1.5 EASEMENTS. Utility easements of record approved by
Purchaser during the Inspection Period.
3.1.6 APPROVED EQUIPMENT LEASES. The Equipment Leases
approved by Purchaser for assumption during the
Inspection Period.
3.1.7 TITLE COMMITMENT EXCEPTIONS. All defects in title
contained in the Title Commitment described in section
3.2 below accepted by Purchaser utilizing the
procedure described in section 3.2 below.
3.2 TITLE COMMITMENT EXCEPTIONS. Immediately upon execution of
this Agreement, Seller shall furnish Purchaser with commitment
for an ALTA Standard Form Owner's Policy of Title Insurance
insuring title in Purchaser to the Property in the amount of
the Purchase Price, together with legible copies of all
documents referred to therein ("Title Commitment") issued by
First American Title Insurance Company, National Accounts
Office, attn: Xxxxx Xxxxxxxxxx, (000-000-0000; Fax:
000-000-0000) 0000 Xxxxxx Xxx, Xxxxx 000 Xxxxxxx, XX 00000
("Title Company"). Purchaser shall give Seller written notice
within 10 days following delivery to Purchaser of the Title
Commitment and legible copies of all documents referred to
therein of Purchaser's objection to any title exception.
Seller shall, within 5 days following receipt of any such
objection, notify Purchaser whether Seller shall remove such
exception at or prior to Closing. Purchaser shall, within 5
days of Seller's responsive notice, provide Seller with written
notice of whether Purchaser will accept Seller's position or
terminate the transaction. Failure to provide notice within
the preceding time frames shall be treated as rejection of the
Title Commitment exceptions or rejection of the position stated
in the notice from Purchaser or Seller. The preceding
procedure shall not apply to monetary encumbrances totaling
less than the total Purchase Price, which shall be paid in full
at Closing by Seller. At the sole discretion of Purchaser, if
the Property shall, at the time of Closing, be subject to any
title exceptions which would be grounds for Purchaser to reject
title hereunder, Purchaser may, instead of exercising its other
rights under this Agreement, elect to waive such defect in
title and close and, in the case of any monetary encumbrance or
charge, offset the amount of the monetary encumbrance or charge
against any amounts payable to Seller.
ARTICLE IV
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PURCHASE PRICE
4.1 AMOUNT. The purchase price payable by Purchaser to Seller for
the Property shall be calculated by applying an 11.65 %
capitalization rate to the Property's earnings before interest,
federal income taxes, depreciation and amortization ("EBITDA")
for the annualized trailing eleven months ending September 30,
1998 calculated based upon generally accepted accounting
principles with a 3% management fee, 4% capital expenditure
allowance and Holiday Inn franchise expenses deducted to reach
the EBITDA line ("Purchase Price"). The trailing eleven months
ending September 30, 1998 will be annualized by counting the
month of September 1998 twice. Seller shall provide Purchaser,
as part of the Due Diligence Materials, with all currently
available information required to make the calculation of the
Purchase Price; and will supplement that information with all
financial information for the month of September required to
calculate the Purchase Price as that information becomes
available, with the last of the information to be provided not
later than October 15, 1998. Purchaser shall have the
Inspection Period within which to audit the financial
information and confirm the calculation of the Purchase Price.
4.2 METHOD OF PAYMENT. Purchaser shall pay the Purchase Price as
follows:
4.2.1 EQUIPMENT LEASES. Purchaser shall receive a credit
against the Purchase Price at Closing in the amount of
the unpaid balances of the Capital Leases. In the
event that Seller has not, at or prior to Closing,
purchased the equipment covered by any other Equipment
Leases, Purchaser shall receive a credit against the
Purchase Price at Closing in the amount required to
purchase the equipment covered by any other Equipment
Leases. Notwithstanding the foregoing, Seller will
not be required to payoff and Purchaser will either
assume or payoff (without a credit against the
Purchase Price) the leases on three signs, one each of
which is located at the main entry, the entry canopy
and the rear of the Hotel.
4.2.2 CASH AT CLOSING. Unless Seller elects to exercise the
right described in section 4.2.3 below, the balance of
the Purchase Price shall be payable all cash at
Closing (against which shall be credited the Xxxxxxx
Money deposited with Escrow by Purchaser in part
consideration for this Agreement).
4.2.3 OPTION TO RECEIVE PARTNERSHIP UNITS. Seller shall
have the right to elect to receive up to Two Million
Dollars ($2,000,000) of the Purchase Price in the form
of units of limited partnership interest in Purchaser
("Unit(s)") in lieu of cash. Seller's right described
in the preceding sentence is contingent upon the
following occurring on or before November 1, 1998:
x) Seller irrevocably electing, by written notice to
Purchaser, the dollar value if any which Seller
will receive in Units in lieu of cash; and
y) Purchaser and Seller agreeing in writing on the
form and timing of all documents to be executed to
accomplish the transfer of Units to Seller in lieu
of cash.
Failure to accomplish both of the preceding
preconditions shall result in the Purchase Price being
paid in cash. In order to facilitate accomplishing
both preconditions, Purchaser shall provide Seller,
within five business days of the Effective Date of
this Agreement, the form of the following documents:
a) Agreement of Limited Partnership of Purchaser, as
currently amended (Seller understands that seller has
no right to amend the Limited Partnership Agreement),
b) Contribution Agreement, c) Amendment to Limited
Partnership Agreement adding Seller as a Limited
Partner, d) Registration Rights Agreement, and e)
Reimbursement Agreement (if Seller wishes to utilize
such agreement). The value of each Unit for purposes
of determining the number of Units to be transferred
shall be calculated at Closing based upon the average
of the daily market price of the common stock of CHC
(trading symbol CVH) on the New York Stock Exchange
for the ten (10) consecutive trading days immediately
preceding Closing. The market price for each such
trading day shall be the closing price, regular way,
on such day, or if no such sale takes place on such
day, the average of the closing bid and asked prices
on such day. Seller is not entering into this
Agreement based on any representation or warranty by
Purchaser or CHC as to the future market price of CHC
stock or any tax or other perceived advantage of
receiving Units in lieu of cash.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF SELLER; INSPECTION PERIOD
5.1 REPRESENTATIONS AND WARRANTIES Subject only to the exceptions
and qualifications set forth in this Agreement, Seller
represents and warrants to Purchaser that the following
statements are true:
5.1.1 ORGANIZATION AND STANDING To the best of Seller's
knowledge, and with the sole exceptions of those items
for which Seller provides written notice to Purchaser
at the initial delivery of Due Diligence Materials,
Seller has all requisite power and authority to own,
lease and/or operate the Property and to carry on the
businesses as now being conducted, is in compliance in
all respects with all laws, regulations and
requirements applicable to the operation of the
Property, and has no knowledge of any claim of
violation of any such laws, regulations and
requirements.
5.1.2 AUTHORITY. This Agreement constitutes a valid and
legally binding obligation of Seller. Neither the
execution and delivery of this Agreement nor the
consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller with any
of the provisions hereof will, as of Closing, conflict
with or result in a breach of or default under any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, or other
instrument or obligation to which Seller or any entity
controlled by Seller is a party or by which they or
any of their properties or assets may be bound or
violate any order, injunction, decree, statute, rule
or regulation applicable to either of them or any of
their assets or properties. Seller is solely
responsible for and shall hold Purchaser harmless from
any "breakage" fee or damages resulting from
termination of any existing franchise agreement.
5.1.3 FINANCIAL STATEMENTS. Immediately upon execution of
this Agreement Seller, using the procedure described
in section 5.3.1, Seller shall furnish Purchaser with
copies of the financial information requested in the
Cavanaughs Due Diligence Request List, which is
attached to and incorporated in this Agreement by this
reference as Exhibit C ("Due Diligence Request List")
(or make the materials available at the Hotel if so
indicated on the Due Diligence Request List). To the
best of Seller's knowledge and belief, the financial
information provided by Seller fairly present in all
material respects the consolidated financial condition
and results of operations of Hotel utilizing generally
accepted accounting procedures. Seller shall deliver
to Purchaser's accounting firm, at the time of any
audit of the last complete calendar year financial
statements of the Property performed following Closing
at Purchaser's expense, the representation letter in
the form attached to this Agreement as Exhibit B.
5.1.4 ACCURATE INFORMATION. Immediately upon execution of
this Agreement, Seller will furnish to Purchaser
(utilizing the procedure described in section, 5.3.1)
with true and correct copies (including all amendments
thereto and modifications thereof) of the documents
described in the Due Diligence Request List (which
information shall be updated throughout the Inspection
Period and immediately prior to Closing in the format
normally produced by Seller) which are within the
possession or control of or accessible to Seller and
which are discoverable by the Seller after diligent
search ("Due Diligence Materials"). Seller warrants,
to the best of its knowledge, that the information
provided to Purchaser in response to the Due Diligence
Request List is accurate and complete and that there
are, to the best of Seller's knowledge, no agreements
with any entity, individual person or group which are
material to the operation of the business of the Hotel
heretofore conducted or to the value of the Property
except as provided to Purchaser pursuant to this
paragraph.
5.1.5 AGREEMENTS IN FORCE AND EFFECT. To the best of
Seller's knowledge, all documents identified in
Section 5.1.4 are valid and in full force and effect,
and to the best of Seller's knowledge no party has
breached any material condition or provision thereof
and is not in default in any material respect under
the terms thereof except as is disclosed in writing by
Seller to Purchaser at the time of the initial
delivery of the Due Diligence Materials.
5.1.6 ABSENCE OF ADVERSE FACTORS OR CHANGE. There has not
been, or Seller has not, as the case may be:
(i) any material adverse change in the condition
(financial or otherwise) assets, liabilities,
earnings or business of Seller within the past
12 months;
(ii) acquired knowledge of any event directly
relating to the physical condition of the Hotel
which threatens materially to disrupt, prevent
or impair the conduct of the business of the
Hotel; or
(iii) conducted the business of the Hotel otherwise
than in the ordinary course, except as
otherwise expressly provided in this Agreement.
Purchaser acknowledges that Seller has informed
Purchaser of the termination of the Holiday Inn
franchise for the Hotel on or before Closing.
5.1.7 GOVERNMENT REPORTS AND RETURNS. To the best of its
knowledge, Seller has filed in a timely manner, all
reports and returns relating to any of the Property
required to be filed by any applicable law or
governmental regulation, except such reports and
returns the late filing of which (or the failure to
file which) would not have a material and adverse
effect on the conduct of the business of the Hotel.
5.1.8 SELLER'S OBLIGATIONS PAYMENTS. All payments due and
payable under the Hotel Contracts, Equipment Leases,
wages and benefits of employees, Permits and Space
Leases and encumbrances on the Property ("Seller's
Obligations") have been paid to date, and Seller
covenants that Seller's Obligations will be paid
through the Closing.
5.1.9 NAMES. Seller represents and warrants that, to the
best of Seller's knowledge, there is no litigation,
claim or assertion, pending or threatened, which
challenges the validity of or Seller's title to or
right to use any Names.
5.1.10 ABSENCE OF LITIGATION AND LIENS. All Property to be
transferred to Purchaser hereunder will be free of all
liens and encumbrances, except the Permitted
Exceptions, on the Closing Date. There is and shall
at Closing be no pending litigation against the Seller
which involve a claim against the Property. To the
best of Seller's knowledge and belief there are no
assessments pending which would constitute a lien or
charge against the Property on the Closing Date, other
than non-delinquent real or personal property taxes.
5.1.11 HAZARDOUS SUBSTANCES AND CODE REQUIREMENTS. To
Seller's knowledge, and except as specifically
disclosed to Purchaser in writing at the time of
initial delivery of the Due Diligence Materials (which
writing shall in turn refer to any environmental
assessment known to Seller), the Property has never
been used for the production, storage, deposit, or
disposal of toxic, dangerous, or hazardous substances,
pollutants, or contaminants, including without
limitation, petroleum products or asbestos or PCB's or
any substance designated as hazardous by Federal or
State or local law or regulation ("Hazardous
Substances"), and no such Hazardous Substances have
ever been placed or located upon the Property, which,
if found upon the Property, would subject the owner
of, or any person holding a mortgage of or other
security interest in, the Property ,to any damage,
penalties, or liabilities under any applicable
Federal, State or local statutes, ordinances or
regulations. Seller warrants, except as disclosed as
described in the preceding sentence, that the Property
does not contain any Hazardous Substances as of
Closing ("Existing Hazardous Substances") placed upon
or released into the Property during the period of
Seller's ownership or control other than in full
compliance with all applicable laws, rules, and
regulations. Seller represents and warrants that as
of the date hereof, except as provided to Purchaser at
the time of initial delivery of the Due Diligence
Materials: (a) it has not received notification of any
kind from any regulatory agency stating that the
Property is or may be targeted for a federal or state
Hazardous Substances cleanup or may be contaminated
with any Hazardous Substances or is currently in
violation of any applicable zoning, building, safety
or accessibility law or regulation and (b) Seller has
no knowledge of any release of any Existing Hazardous
Substances or that the Property is currently in
violation of any applicable zoning, building, safety
or accessibility law or regulation. Seller shall
indemnify and hold Purchaser harmless from and against
any and all loss, damage, claims, penalties,
liabilities, suits, costs, and expense (including,
without limitation, cost of remedial actions or
cleanup), suffered or incurred by Purchaser arising
out of Existing Hazardous Substances released into the
Property during the period of Seller's ownership or
related to the breach of the foregoing representations
and warranties, which amounts Purchaser shall be
entitled to offset against any payments next falling
due under any amounts owing to Seller by Purchaser.
5.1.12 CONDITION OF PROPERTY. To the best of Seller's
knowledge, except to the extent disclosed by Seller to
Purchaser in writing at the initial delivery of the
Due Diligence Materials, the Hotel is constructed
substantially in accordance with the plans and permits
under which it was authorized and is free of any
material physical or mechanical defects; there is
legal access to the Land at all points being used for
such access at the time of this Agreement, and all
streets, roads, highways, and avenues adjoining any
part of the Land have been dedicated to the proper
municipal authority, and such municipal authority has
the responsibility to maintain the same and the same
are open for public use; Seller has all appropriate
licenses, permits, easements, and rights of way
necessary to ensure adequate vehicular and pedestrian
ingress and egress, and no additional easements are
required for access to the Improvements or in
connection with the location of any utilities with
respect to the current uses of the Improvements; there
are not presently pending any public improvement
assessment proceedings, condemnation, or zoning
actions against the Land, or any part thereof, nor is
Seller aware of any such proceedings or actions being
threatened; there are no encroachments, boundary
problems, prescriptive or adverse interests affecting
the Land or Improvements; and there are no fixtures,
facilities, utilities, heating, air conditioning,
plumbing, electrical, or other systems, equipment,
structures, or improvements of any kind whatsoever,
including without limitation driveways and parking
areas, which benefit the Property and which encroach
upon or are shared in common in any way whatsoever
with any other real property. Material defects shall
mean any defect that impairs the structural integrity
of the Improvements, the air, soil, or water quality,
or the availability of utility services relating to
the Improvements, or the use of the Improvements.
5.1.13 EMPLOYEE AGREEMENTS. There are no deferred
compensation or profit-sharing plans or arrangements
presently in force, or any other agreement with
employees which would affect the transfer of Property
contemplated by this Agreement or require Purchaser to
continue any employment or compensation arrangement
with any person. Purchaser acknowledges that Seller
has advised Purchaser that there are three labor
unions with which Seller is in varying stages of
negotiation for collective bargaining agreements for
four bargaining units at the Hotel. Seller will
deliver the prior collective bargaining agreements and
the current proposals for renegotiating those
agreements to Purchaser at the initial delivery of the
Due Diligence Materials. Seller will continue to
negotiate those agreements during the course of the
Inspection Period and will keep Purchaser fully
informed. Seller may complete such negotiations on
its own behalf up to the time at which Purchaser
waives its contingencies to purchase, at which xxxx
Xxxxxx will suspend such negotiations until Purchaser
completes Closing. After Closing, Purchaser shall
have no obligation under such collective bargaining
agreements other than to negotiate in good faith with
any bargaining unit for which Purchaser hires more
than one-half of the members of the bargaining unit.
Except as specified above, Seller has no commitment to
create any of the above-referenced plans nor will they
do so while this Agreement is in effect. As of the
Closing, Seller shall terminate all employees in the
operation of the Hotel. Purchaser represents to
Seller that Purchaser will offer employment to the
minimum percentage of the number of employees then
normally employed at the Hotel as of the date of
Closing as would be required to prevent this
transaction triggering the provisions of the WARN Act,
but is not otherwise required to, hire some or all
such employees in connection with Purchaser's
operation of the Hotel. Seller shall be responsible
for all salaries, taxes, benefits, and vacation
(including accrued but unused vacation) for all
employees up to the Closing date.
5.1.14. NON-FOREIGN STATUS. Seller is not a "foreign person"
(i.e., a nonresident alien individual or foreign
corporation) within the meaning of Section 897(a) of
the Code. At Closing, Seller will furnish Purchaser,
in accordance with Code Section 1445 and the
Regulations thereunder, with an affidavit stating,
under penalty of perjury, that Seller is not a
"foreign person," and stating Seller's taxpayer
identification number.
5.2 LIMITATION ON SELLER'S REPRESENTATIONS AND WARRANTIES.
Purchaser acknowledges that, except as expressly set forth in
this Agreement, neither Seller nor any agent or representative
of Seller has made, and Seller is not liable for or bound in
any manner by, any express or implied warranties, guaranties,
promises, statements, inducements, representations or
information pertaining to the Property or any part thereof the
physical condition, income, expenses or operation thereof, the
uses which can be made of the same or any other matter or thing
with respect thereto, including, without limitation, any
existing or prospective Space Leases. Without limiting the
foregoing, Purchaser acknowledges and agrees that, except as
expressly set forth in this Agreement, Seller is not liable for
or bound by (and Purchaser has not relied upon) any verbal or
written statements, representations, financial statements
pertaining to the operation of the Hotel or any other
information respecting the Property furnished by Seller or any
employee, agent, consultant or other person representing or
purportedly representing Seller; and that the Property is being
purchased "AS IS WHERE IS" with the exception of those
representations and warranties expressly set forth in this
Agreement and the transfer documents delivered at Closing. All
representations and warranties of Seller contained in this
Agreement shall survive closing and the delivery of the
transfer documents at Closing.
5.3 INSPECTION PERIOD.
5.3.1 PURCHASER'S INSPECTION AND WAIVER. Purchaser shall
have 40 days after the later of the Effective Date or
delivery by Seller to Purchaser of the last of the Due
Diligence Materials ("Inspection Period") within which
to inspect the Property and review the Due Diligence
Materials to determine whether the Property in its
current status is suitable, in the exercise of the
sole business judgment discretion of Purchaser, for
the purposes of Purchaser, which inspection may, at
Purchaser's discretion and cost, include environmental
assessments. Purchaser shall only use the Due
Diligence Materials for the purpose of evaluating the
Property, as opposed to any competitive use, and shall
restrict access to the Due Diligence Materials to
those persons required to evaluate the Property. This
Agreement shall terminate, the Xxxxxxx Money shall be
refunded to Purchaser, and all responsibilities of the
parties to one another shall terminate unless, prior
to the end of the Inspection Period, Purchaser
notifies Seller that Purchaser has determined to its
satisfaction the Property can be used for these
purposes to Purchaser's satisfaction ("Waiver
Notice").
The start date of the Inspection Period shall be
established as follows: Seller shall deliver (or make
available at the Hotel if so provided in the Due
Diligence Request List) all Due Diligence Materials to
Purchaser within five business days of the Effective
Date, or such earlier date as Seller can accomplish,
together with a listing of the materials furnished and
a written certification to Purchaser that such
delivery constitutes all of the Due Diligence
Materials except materials which, to the best of
Seller's knowledge, do not exist or cannot be obtained
by Seller. Purchaser will notify Seller within 48
hours of receipt of the materials, list and
certification described in the preceding sentence if
any of the materials listed are not in fact delivered.
Within 48 hours of the notice described in the
preceding sentence, if any is given, Seller shall
deliver a supplemental list and certification and
materials (if any) to Purchaser. The Inspection
Period will begin on the date of the initial delivery
of Due Diligence Materials unless additional materials
are in fact delivered at the time of the supplemental
certification, if any, in which event the Inspection
Period will begin on the delivery of the supplemental
materials. In the event Seller discovers additional
Due Diligence Materials after the certifications and
deliveries described in the preceding sentences,
Seller shall immediately deliver such materials
together with a supplemental certification.
Immediately upon execution of this Agreement, Seller
shall provide Purchaser with continuing access to the
Property and complementary guest rooms (on a space
available basis) for Purchaser's inspection personnel
to complete such inspections and reports as Purchaser
may elect, provided they shall be conducted without
disruption of the operation of the Hotel and at
Purchaser's sole expense and Purchaser shall indemnify
Seller against any physical damage to the Property or
claim resulting from negligent or unlawful actions by
Purchaser or Purchaser's agents arising out of
Purchaser's inspection activities. To facilitate this
inspection, Seller shall have its onsite staff
complete, to the best of their knowledge and ability,
and deliver to Purchaser within five business days of
the Effective Date, the Facility Inspection
Questionnaire which is attached to and incorporated in
this Agreement by this reference as Exhibit D.
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents to Seller that the following statements are true:
6.1 ORGANIZATION AND STANDING Purchaser is duly organized and in
good standing in the state of its formation. Purchaser, at
Closing, will be duly organized, validly existing and in good
standing under the laws of the State in which the Property is
located and will have all requisite power and authority to own,
lease and/or operate the Property after the Closing and to
carry on the businesses thereat as now being conducted.
6.2 AUTHORITY Purchaser has full power to carry out the
transactions provided for in this Agreement. The execution and
delivery of this Agreement by Purchaser and the consummation by
it of the transactions contemplated herein have been duly and
validly authorized by all necessary Corporate action on its
part, and this Agreement constitutes a valid and legally
binding obligation of Purchaser, enforceable against it in
accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy and similar laws
and by equitable principles generally. Neither the execution
and delivery of this Agreement nor the consummation by
Purchaser of the transactions contemplated hereby, nor
compliance by it with any of the provisions hereof will (i)
conflict with or result in a breach of or default under any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, or other instrument or
obligation to which it is a party or by which it or any of its
properties or assets may be bound, or (ii) violate any order,
writ, injunction, decree, statute, rule or regulation
applicable to it or any of its assets or properties.
ARTICLE VII
-----------
CONDUCT OF BUSINESS PRIOR TO CLOSING
Seller agrees that, between the date of this Agreement and the Closing
Date, Seller will operate the Hotel and the business of the Hotel in
substantially the same manner as conducted prior to the date hereof.
Purchaser correspondingly will use its best efforts to effect
continuity of operations between the date of this Agreement and the
Closing. Without limiting the generality of the foregoing, Seller
agrees that between the date of this Agreement and the Closing Date:
7.1 NOTICE OF CHANGE. Seller will notify Purchaser promptly if
Seller becomes aware of any transaction or occurrence prior to
the Closing which would make any of the representations and
warranties in Section 5 untrue in any material adverse respect
if such representations and warranties had been given as of the
date on which Seller becomes aware of any such transaction or
occurrence.
7.2 SPACE LEASES Seller will not, without the prior written
consent of Purchaser, which consent Purchaser agrees not
unreasonably to withhold or delay, modify or amend any Space
Lease or cancel or renew any existing Space Lease or enter into
any new Space Lease. If Purchaser fails to respond to a
request for the consent referred to in the preceding sentence
within five business(5) days after its receipt of such request,
it shall be deemed to have so consented. Subject to this
Section 7.2, Seller agrees to notify Purchaser of any
modification, amendment or cancellation of any existing Space
Lease and of Seller's entry into any new or renewal Space Lease
whether or not Purchaser's consent is required under the
provisions of this Section 7.2, and Seller agrees to furnish
Purchaser with a copy of any new or renewal Space Leases
entered into after the date of this Agreement.
7.3 HOTEL CONTRACT AND EQUIPMENT LEASES. Seller will not enter
into any new Hotel Contracts or Equipment Leases, or renew or
amend any existing Hotel Contracts or Equipment Leases at an
annual expenditure under any such new or renewal Hotel Contract
or Equipment Lease at a rate exceeding the rate currently
prevailing under the existing Hotel Contract or Equipment Lease
for the corresponding service or product without the written
consent of Purchaser which Purchaser may withhold at its
discretion. Seller agrees to notify Purchaser of any proposed
renewal, modification, amendment or cancellation of any
existing Hotel Contract or Equipment Lease and to furnish
Purchaser with a copy of any proposed, new or renewal Hotel
Contract or Equipment Lease prior to execution.
7.4 ENCUMBRANCES. Seller agrees that no borrowings or
hypothecation which would encumber the Property or any part
thereof after the Closing shall be made without the prior
written consent of Purchaser, which consent may be withheld at
Purchaser's absolute discretion.
7.5 BOOKING BUSINESS. Seller shall continue to accept booking
contracts and reservations for the Hotel's facilities in
accordance with past practices, at not less than standard rates
for the Hotel.
7.6 INSURANCE. Seller shall keep in full force and effect through
the Closing all the existing fire and extended coverage and
other insurance policies.
7.7 GOODWILL AND BUSINESS. Seller shall use its best efforts to
preserve intact the good will of the Hotel and the Names with
its existing clientele and to preserve its business
relationships with all wholesalers, suppliers, or other parties
with whom it has an existing business relationship.
7.8 MAINTENANCE AND REPAIR. Seller shall make, at its sole cost
and expense, whatever repairs and replacements may be necessary
to maintain and keep the Property in its present state of
repair (ordinary wear and tear and casualty excepted).
ARTICLE VIII
------------
ADDITIONAL AGREEMENTS
8.1 TITLE INSURANCE. Title exceptions will be handled as described
above.
8.2 ASSIGNMENTS OF SERVICE EQUIPMENT, PERMITS. Seller shall
execute all applications and instruments required in connection
with the transfer to Purchaser of all Service Equipment and all
transferable Permits in order to effect such transfer on the
Closing under this Agreement. All government charges incurred
in connection with said transfers shall be paid by Purchaser.
Seller will use its best efforts to keep all existing Permits
in force, and to renew any of the same which expire prior to
the Closing. In the event that any Permit is suspended or
revoked, Seller shall promptly notify Purchaser of that fact,
and Seller, at its sole cost and expense, shall use its best
efforts to have the Permit reinstated without limitation or
conditions.
8.3 APPLICATIONS FOR PERMITS. Seller agrees to cooperate with
Purchaser in any way reasonably requested, in Purchaser's
efforts to have issued to it, on the Closing Date, all non-
assignable Permits required for the operation of the Hotel.
8.4 RECORDS. Title to and possession of all records, documents and
papers of every kind and nature pertaining to the Property and
the operation of the Hotel relating to the period of time prior
to the Closing shall be transferred to Purchaser and included
in the Xxxx of Sale described below. Purchaser shall either
deliver copies to Seller or make access available to Seller to
the records which Seller may reasonably require for use in
connection with tax records or other reports following Closing.
8.5 COOPERATION. Seller and Purchaser will cooperate with each
other in every way and will exercise their best efforts in
carrying out the transactions contemplated herein, in obtaining
all required approvals, authorizations, and clearances, and in
delivering all documents, instruments, or copies thereof or
other information deemed necessary or useful by the other
party.
8.6 ITEMS NOT INCLUDED IN PURCHASE AND SALE. It is expressly
understood between the parties hereto that the following items
are not included in the "Property" under Article II hereof,
and, accordingly, are not included in this sale and purchase,
except to the extent specifically indicated below:
8.6.1 BANK ACCOUNTS. All cash on hand or on deposit in
banks or in transit for deposit for the account of
Seller.
8.6.2 OTHER EXCLUDED INTANGIBLES. All (i) prepaid insurance
premiums and other prepaid items, (ii) deposits with
utilities, insurance deposits and other similar
deposits (except that any deposit for rooms or use of
facilities or contracts for use of facilities or made
under terms of any Space Leases shall be transferred
to Purchaser subject to the rights of the depositor).
8.7 ACCOUNTS RECEIVABLE AND PAYABLE. The parties agree that the
operating revenues of the Hotel shall be prorated as of the
Cut-off Time. Accordingly, all Hotel accounts receivable,
including without limitation, all credit and charge card
receivables, ("Receivables") occurring prior to the Cut-off
Time shall be the property of Seller. All Receivables
occurring subsequent to the Cut-off Time shall be the property
of Purchaser. Except for obligations expressly approved by
Purchaser to be assumed by Purchaser during the Inspection
Period and except for the prorations at Closing described in
this Agreement, all accounts payable arising prior to Closing
are the sole responsibility of Seller. Purchaser assumes no
liability for collection of Receivables of Seller except to
report accurately and remit to Seller any payment of a
Receivable of Seller that comes to Purchaser.
8.8 COLLECTIONS OF ACCRUED RENT UNDER SPACE LEASES. If at the
Closing there are any past due rents owing to Seller under any
Space Leases, said amounts shall be considered a Receivable of
Seller.
8.9 CONSUMABLES. All Consumables which are useable by Purchaser
(excluding any Consumables prohibited for use by reason of the
termination of any franchise/license agreement) as of the Cut-
off Time shall be inventoried at the Cut-off Time by Purchaser
and Seller and are included in the purchase at no additional
cost. The amount of Consumables located in or issued to the
operating departments in the Hotel will be substantially at the
same levels as have heretofore been maintained in connection
with the operation of the Hotel, which shall be presumed to be
a 30 day supply for all Consumables except food and beverage
supplies, which shall be at the normal inventory levels the
Hotel has maintained for food and beverage supplies.
8.10 POST CLOSING ASSISTANCE AND ARRANGEMENTS.
8.10.1 SELLER'S ASSISTANCE AFTER CLOSING. For a period of
sixty (60) days following the Closing, Seller shall at
reasonable times and upon reasonable notice provide
Purchaser's representatives with such information and
assistance as shall be reasonably required in order
for them to familiarize themselves with the Hotel
operations.
8.10.2 DELIVERY OF DOCUMENTS AFTER CLOSING; INSTRUMENTS OF
FURTHER ASSURANCE. Following the Closing, Seller
agrees, on request of Purchaser, to execute and
deliver to Purchaser such further instruments in
writing as may be reasonably required to complete or
evidence the transaction provided for and Purchaser
shall, on request, execute and deliver like
instruments to Seller.
ARTICLE IX
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CLOSING
9.1 CLOSING. The Closing for the consummation of the transactions
contemplated by this Agreement ("Closing"), including the sale
and purchase of the Property, shall, unless another date and/or
place is agreed to in writing by the parties hereto, take place
at the Title Company ("Escrow"), on the date ("Closing Date")
which is on or before the Monday which is 15 days after the
Waiver Notice described in Section 5.3, or earlier at
Purchaser's election. All proceedings to take place at the
Closing shall take place simultaneously, and no delivery shall
be considered to have been made until all such proceedings have
been completed. Upon completion of the Closing, Purchaser
shall immediately be entitled to actual and be charged with
constructive possession of the Property, and all risk of loss
with regard thereto shall pass to Purchaser.
9.2 CUT-OFF TIME. The Cut-off Time shall be as of 11:59 p.m. on
the day preceding the Closing Date, except that Seller shall
receive the income and shall be charged for the expenses
attributable to the restaurants, bar facilities or room service
up to 2:00 a.m. on the Closing Date.
9.3 CLOSING STATEMENTS. At the Closing, Escrow shall deliver a
Preliminary Closing Statement setting forth in reasonable
detail prorations required under Article X based upon such
preliminary audits and inventories as they have made up to the
Closing Date. Within thirty (30) days following the Closing
Date, Escrow shall deliver a Final Closing Statement setting
forth the final determination of the adjustments and
prorations; PROVIDED, HOWEVER, that no adjustment shall be made
for any item included in the Preliminary Closing Statement if
the said item has been approved by Purchaser prior to the
Closing. A payment to cover any changes as a result of such
Final Closing Statement will be made by Seller or Purchaser, as
the case may be, within five (5) days after the receipt of such
Final Closing Statement.
In the event that, at any time within ninety (90) days after
the Closing, either party discovers any item which should have
been included in the Final Closing Statement but was not
included for any reason, then such item shall be adjusted in
accordance with this Agreement as if its existence had been
known at the time of the preparation of the Final Closing
Statement.
ARTICLE X
---------
CLOSING ADJUSTMENTS; OTHER CLOSING MATTERS
10.1 CLOSING ADJUSTMENTS. On the Closing Date the following items
shall be apportioned between Purchaser and Seller as of the
Cut-Off Time:
10.1.1 RENTS AND OTHER REVENUE. All Hotel revenues,
including percentage rents (if any) as and when
collected; PROVIDED, HOWEVER, that in connection with
the preparation of the Preliminary Closing Statement,
as provided in Section 9.3, any percentage rentals
under any Space Lease shall be estimated to the Cut-
off Time on the basis of sales, receipts or profits
for immediately preceding fiscal periods, and an
adjustment shall be made based upon actual figures, if
available, or again upon recently completed fiscal
periods for the purpose of making a final estimate of
the amounts of such percentage rentals in connection
with the preparation of the Final Closing Statement as
provided in Section 9.4. Guest room revenues for the
night immediately prior to the Closing Date shall be
divided equally between Seller and Purchaser by
dividing the statement presented to the guest into two
statements, one on behalf of Seller and one on behalf
of Purchaser;
10.1.2 TAXES, LEVIES, ETC. Real estate taxes and personal
property taxes, if any, levied or imposed upon the
Property on the basis of the fiscal year for which
assessed;
10.1.3 WATER CHARGES. Unmetered water charges on the basis
of the fiscal year;
10.1.4 UTILITIES. Charges and fees due under telephone
contracts and contracts for the supply of heat, water,
steam, electric power, gas and lighting or sewer; it
being further agreed that all deposits (including
interest actually accrued) made by Seller as security
under any such public service contracts (or any other
contracts being assumed by Purchaser hereunder) shall
be assigned to Purchaser and credited to Seller;
10.1.5 TENANT CHARGES. Charges due Seller for electric
power, steam or other utilities, submetering fees,
charges for chilled water and other charges for
services furnished to Space Lessees to the extent not
adjusted pursuant to Section 10.1.1;
10.1.6 HOTEL CONTRACTS AND EQUIPMENT LEASES. Charges and
receipts under all Hotel Contracts and Equipment
Leases;
10.1.7 PERMIT CHARGES AND FEES. Purchaser shall pay all
transfer or application fees for transferable Permits;
10.1.8 PAYMENTS TO OR FOR EMPLOYEES. Employees' wages
(including without limitation federal withholding and
employment taxes, and all state and local taxes, if
any, required to be collected by employers on
personnel working at the Hotel) vacation pay and other
amounts payable under any Seller's Obligations (in
accordance with the terms thereof) and payroll
expenses shall be paid by Seller.
10.1.9 OTHER ADJUSTMENTS. Such other items as are provided
for in this Agreement including but without limitation
all cash in house banks, the deposits under the Space
Leases, and advance payments under booking
arrangements.
10.2 EXCISE TAXES. Seller agrees to pay at the Closing any
applicable real estate excise tax. Purchaser shall pay any
personal property transfer/sales taxes imposed by law on
Purchaser.
10.3 CLOSING COSTS AND TITLE INSURANCE. Purchaser and Seller shall
each pay one-half of the applicable escrow fees and recording
costs. Seller shall pay the costs of title insurance
attributable to an owner's standard ALTA coverage. Purchaser
may, at Purchaser's sole option, require extended form title
insurance and pay for the additional cost of such coverage
beyond that of standard form coverage and for any required
survey. Each party shall bear its own attorney's fees in
connection with this transaction.
ARTICLE XI
----------
DELIVERIES ON CLOSING
11.1 DELIVERIES BY SELLER. Seller shall make the following
deliveries to Purchaser at the Closing:
11.1.1 DEED. Seller shall execute, acknowledge and deliver
to Purchaser a warranty deed sufficient to convey to
Purchaser the fee simple title to the Land together
with the Improvements thereon, subject to and in
accordance with the provisions of this Agreement.
11.1.2 XXXX OF SALE AND REGISTRATIONS. Seller shall execute,
acknowledge and deliver to Purchaser a xxxx of sale
and title registration transfer documents (if any)
sufficient to transfer clear title and interest in and
to the Service Equipment, Consumables and Operating
Equipment subject to and in accordance with the
provisions of this Agreement and subject to Permitted
Exceptions.
11.1.3 ASSIGNMENTS OF SPACE AND EQUIPMENT LEASES. Seller
shall execute, acknowledge and deliver to Purchaser,
in counterparts, an assignment of all of Seller's
right, title and interest as lessor under all Space
Leases and as lessee and owner under the Equipment
Leases. Seller shall also execute, acknowledge and
deliver to Purchaser, in counterparts, an assignment
of all security deposits then held by Seller pursuant
to the terms of Space Leases. Purchaser will decide
and notify Seller prior to the end of the Inspection
Period whether the estoppel statements provided by
tenants under Space Leases are adequate for
Purchaser's purposes.
11.1.4 ASSIGNMENT OF HOTEL CONTRACTS, TRANSFERABLE PERMITS,
NAMES AND MISCELLANEOUS ASSETS. Seller shall execute,
acknowledge and deliver to Purchaser an assignment of
all of Seller's right, title and interest under the
Hotel Contracts accepted by Purchaser, transferable
Permits, Names (to extent transferable) and the
Miscellaneous Assets to be sold pursuant to this
Agreement and shall deliver Seller's original
counterparts of all documents which are in writing
together with such correspondence and other records,
if any, pertaining thereto which Seller has.
11.1.5 DOCUMENTATION REGARDING NON-TRANSFERABLE PERMITS. As
to any non-transferable Permits, Seller will, at
Purchaser's cost and expense, execute and deliver to
Purchaser any documents reasonably required to be
signed by Seller to effect the issuance of the permit
in the name of Purchaser.
11.1.6 CONSENTS/ESTOPPEL CERTIFICATES. Seller shall, during
the Inspection Period, obtain and deliver to Purchaser
certificates from the lessees under the Space Leases
and from parties to each of the material Hotel
Contracts stating that said leases and/or contracts
are in full force and effect in accordance with their
terms, that to the best of their knowledge there are
no defaults thereunder, and that, to the extent that
the consent of such party is required for the
assignment thereof, such consent has been given.
11.1.7 SELLER'S RECORDS. Seller shall deliver to Purchaser
all records pertaining to the then registration of
guests, advance bookings of banquets and similar
functions, advance room reservations, promotion
records, due bills, records of the purchasing and
engineering departments of the Hotel and all other
records, instruments, documents and deposits for Hotel
operation, except for such summaries or copies of such
records as Seller chooses to retain at its off-site
office.
11.1.8 EMPLOYMENT AGREEMENTS AND CONTRACTS. Seller and
Purchaser shall provide a written notice to all
employees of the Hotel to terminate all employees of
the Hotel as of the Cut-off Date. The notice shall be
made in form reasonably acceptable to Purchaser.
11.1.9 TITLE INSURANCE AND ADDITIONAL ITEMS. Seller shall
deliver to Purchaser all other instruments and
documents to which Purchaser may be entitled at the
Closing under any of the other provisions of this
Agreement, including the policy of Title Insurance.
11.2 DELIVERIES BY PURCHASER. Purchaser shall make the following
deliveries to Seller at the Closing.
11.2.1 PURCHASE PRICE. Purchaser will execute and deliver
such documents as are necessary to reflect that the
Property is taken subject to the items described in
Article IV, and shall make any other payments required
by it hereunder.
11.2.2 ASSUMPTION OF SELLER'S OBLIGATIONS. Purchaser shall
execute, acknowledge and return to Seller counterparts
of the assignments delivered pursuant to Section 11.1
to evidence its agreement to assume and perform all of
the Seller's obligations under the Space Leases, Hotel
Contracts, and transferable Permits from and after the
Closing Date and to indemnify Seller with regard
thereto.
11.2.3 ASSUMPTION OF BOOKINGS. Purchaser shall perform all
booking arrangements at the Hotel from and after the
Closing insofar as the same have been made by Seller
pursuant to Section 7.5.
11.2.5 ADDITIONAL ITEMS. Purchaser shall deliver to Seller
all instruments and documents to which Seller may be
entitled at the Closing under any of the other
provisions of this Agreement.
11.3 NOTICES
11.3.1 TENANTS UNDER LEASES. Seller and Purchaser shall
execute and deliver all notices to all Space Lessees
advising them of the sale of the Property, the
assignment to Purchaser of the Space Leases, and the
assumption by Purchaser of the lessor's obligations
under such Space Leases.
11.3.2 OTHER NOTICES. Upon request of either party, Seller
and Purchaser will execute and mail a notice addressed
to the other party under any Equipment Lease, Hotel
Contract, or to the governmental or other authority
issuing any Permit assigned to Purchaser, notifying
such person or authority of such assignment, and of
the assumption of Purchaser of Seller's obligations
thereunder.
ARTICLE XII
-----------
CONDITIONS TO CLOSING OBLIGATIONS
12.1 CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligation of
Seller to consummate the transactions contemplated by this
Agreement, including the sale of the Property, is expressly
conditioned upon the fulfillment by and as of the time of
Closing of each of the conditions listed below in this Section
12.1; PROVIDED, HOWEVER, that Seller, at its election, may
waive all or any of such conditions:
12.1.1 PERFORMANCE OF AGREEMENTS. Purchaser shall have
performed all of its agreements contained in this
Agreement required to be performed by it prior to the
Closing Date (including but without limitation the
adjustments and other closing matters provided for in
Articles IX and X).
12.1.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser contained in this
Agreement shall, except as contemplated or permitted
by this Agreement, be true (regardless of the
knowledge, or lack thereof, of Purchaser) on and as of
the Closing Date, as if made on and as of the Closing
Date, in all respects except for instances which are,
in the aggregate, not material.
12.1.3 TENDER. Purchaser shall have tendered to Seller the
delivery of the items contemplated in Section 11.2.
12.2 CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The obligation
of Purchaser to consummate the transactions contemplated by
this Agreement, including the sale and purchase of the
Property, is expressly conditioned upon the fulfillment by and
as of the time of the Closing of each of the conditions listed
below in this Section 12.2; PROVIDED, HOWEVER, that Purchaser,
at its election evidenced by written notice delivered to Seller
prior to or at the Closing, may waive any or all of such
conditions:
12.2.1 PERFORMANCE OF AGREEMENTS; ADVERSE CHANGES. Seller
shall have performed all of its agreements contained
in this Agreement required to be performed by it prior
to the Closing Date (including but without limitation
the adjustments and other closing matters provided for
in Articles IX and X), and there shall have been no
material permanent adverse change in the total
conditions (financial or otherwise), assets,
liabilities, earnings, or business of Seller or the
Hotel, as described in Section 5, taken as a whole,
since the date of this Agreement. Purchaser will
evaluate the impact of decreases in revenue and
reservations due to termination of the prior Holiday
Inn franchise as part of its due diligence, and will
not consider that event as an adverse change under
this section 12.2.1.
12.2.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller contained in this Agreement
shall, except as contemplated or permitted by this
Agreement to be limited to the best of Seller's
knowledge, or as required or consented to by Purchaser
under Section 7.2, be true on and as of the Closing
Date, as if made on and as of the Closing Date, in all
respects except for instances which are, in the
aggregate, not material.
12.2.3 LITIGATION. There shall be no pending or threatened
litigation seeking to restrain, prevent, rescind, or
change the terms of the sale and purchase of the
Property from that which is set forth herein, or to
obtain damages in connection with said sale and
purchase which, in Purchaser's opinion, makes it
inadvisable to proceed with said sale and purchase, or
which, in Purchaser's opinion might materially and
adversely affect the total condition (financial or
otherwise), assets, liabilities, earnings or business
of the Hotel.
12.2.4 TENDER. Seller shall have tendered to Purchaser the
delivery of the items contemplated in Section 11.1.
ARTICLE XIII
------------
GENERAL PROVISIONS
13.1 FIRE OR OTHER CASUALTY OR CONDEMNATION.
13.1.1 NOTICE TO PURCHASER. Seller agrees to give Purchaser
prompt notice of any fire or other casualty occurring
at or to the Property between the date of this
Agreement and the Closing Date, or of any actual or
threatened condemnation of all or any part of the Land
of which Seller has knowledge.
13.1.2 MAJOR CASUALTY OR TAKING. If, prior to the Closing,
there shall occur (i) Damage to the Property caused by
fire or other casualty which would cost Five Hundred
Thousand Dollars ($500,000) or more to repair, or (ii)
a taking by condemnation of any part of the
Improvements or which materially interferes with the
operation or use of the Hotel, then, and in either
such event, Purchaser may terminate its obligations
under this Agreement by written notice given to Seller
within fifteen (15) days after Seller has given
Purchaser the notice referred to in Section 13.1.1, or
at the Closing, whichever is earlier, and receive the
return of the Xxxxxxx Money. If Purchaser does not so
elect to terminate its obligations under this
Agreement, then the Closing shall take place as herein
provided, and Seller shall assign to Purchaser at the
Closing in written form accepted by the insurance
carrier, all of Seller's interest in any insurance
proceeds (except use and occupancy insurance and
business interruption insurance for the period ending
with the Closing Date) or condemnation awards which
may be payable to Seller on account of any such fire,
casualty or condemnation awards which may be payable
to Seller on account of any such fire, casualty or
condemnation, or the amount thereof not expended for
or required to reimburse Seller for actual
expenditures on account of restoration and Purchaser
shall off-set against the Purchase Price at Closing
the amount of any portion of the damage not covered by
insurance or which is required to be paid by the
insured.
13.1.3 OTHER CASUALTY OR TAKING. If, prior to Closing, there
shall occur (i) damage to the Hotel caused by fire or
other casualty which would cost less than Five Hundred
Thousand Dollars ($500,000) to repair, or, (ii) a
taking by condemnation of any part of the Hotel which
does not include a material part of the Improvements
or does not materially interfere with the operation or
use of the Hotel, then, and in any such event, neither
party shall have the right to terminate its
obligations under this Agreement by reason thereof and
Seller shall assign to Purchaser at the Closing, by
written instrument accepted by the insurance carrier,
all of Seller's interest in any insurance proceeds
(except use and occupancy insurance and business
interruption insurance for the period ending with the
Closing Date) or condemnation awards which may be
payable to Seller on account of any such fire,
casualty or condemnation, or the amount thereof not
previously expended for or required to reimburse
Seller for actual expenditures on account of
restoration, and Purchaser shall off-set against the
Purchase Price at Closing the amount of any portion of
the damage not covered by insurance or which is
required to be paid by the insured.
13.1.4 DEFINITION OF MATERIAL TAKING. For purposes of this
Section 13.1, a taking of a material part of the
improvements shall mean any taking which leaves
remaining a balance of the Hotel which may not be
economically operated for the purpose for which the
Hotel was operated prior to such taking. Without
limiting the generality of the foregoing, a taking of
more than ten percent (10%) of the common areas of the
Improvements (including, without limitation, the
lobbies, ballrooms, bars, dining areas, corridors,
cellars, storage, parking or service equipment areas)
or more than ten percent (10%) of the guest areas of
the Improvements (including, without limitation, all
private rooms, bathrooms and the like) shall be deemed
to be material and materially to interfere with the
business and operation of the Hotel.
13.2 TERMINATION
13.2.1 BY SELLER. Seller may terminate this Agreement by
providing 15 days notice and opportunity to cure to
Purchaser at any time prior to the Closing Date if a
material default under or a material breach of this
Agreement or any representation or warranty set forth
in this Agreement or in any instrument delivered by
Purchaser pursuant hereto shall be made by Purchaser.
13.2.2 BY PURCHASER Purchaser may terminate this Agreement
by 15 days notice and opportunity to cure to Seller at
any time prior to the Closing Date if:
(A) A condition to the performance of Purchaser
hereunder shall not be satisfied on or before the
date specified for the satisfaction thereof; or
(B) A material default under or a material breach of
this Agreement or of any representation or
warranty set forth in this Agreement or in any
instrument delivered by Seller pursuant hereto
shall be made by Seller.
13.2.3 EFFECT OF TERMINATION. In the event of termination of
this Agreement under this Section 13.2, then:
(A) The Xxxxxxx Money deposit of Purchaser shall be
returned unless Purchaser is the party in default;
and
(B) In the event the Agreement is terminated and the
Closing is not consummated by reason of default of
a party hereunder, if Purchaser is the defaulting
party, Seller shall retain the Xxxxxxx Money as
its sole and exclusive remedy; and if Seller is
the defaulting party, Purchaser may bring an
action for specific performance, xxx for damages,
or pursue any other remedy it may have at law.
13.3 ASSUMPTION OF LIABILITIES.
13.3.1 LIMITATION ON ASSUMED LIABILITIES. Purchaser is not
assuming any liabilities of Seller except liabilities
that the terms of this Agreement expressly require
Purchaser to assume.
13.3.2 SPECIFIC EXCLUSION OF ASSUMED LIABILITIES. Without
limiting the generality of Section 13.3.1, Purchaser
is not assuming any liability of Seller in respect of
the following:
(A) Any of Seller's trade payables applicable to the
period prior to Closing;
(B) Any contingent liability of Seller whether for
taxes or otherwise;
(C) Any liability on account of any employment
agreement, welfare or other employee or fringe
benefit plan, or any other or similar plan or any
retirement, bonus, severance pay, insurance,
profit sharing or deferred compensation plan; or
(D) Any liability of Seller hereunder for fees,
expenses or taxes incurred in connection with the
sale and transfer of the Property.
13.3.3 EFFECTIVE DATE OF ASSUMPTION. Wherever it is provided
in this Agreement that Purchaser shall assume all
obligations of Seller, such assumption shall be
effective only from and after the Closing Date and no
such assumption shall require Purchaser to assume, nor
shall it assume, any liabilities or obligations of
Seller relating to or arising from Seller's
performance of, or failure to perform, any of the
terms of the assumed obligation prior to the Closing
Date (except as otherwise expressly provided in this
Agreement.)
13.4 SURVIVAL OF REPRESENTATIONS, ETC. Subject to the time
limitations described in section 5.2, the respective
representations, warranties, obligations, covenants and
agreements of Seller and Purchaser contained herein shall
survive Closing and the delivery of transfer documents.
13.5 INDEMNIFICATION.
13.5.1 AGREEMENT TO INDEMNIFY. Subject to the express
provisions of this Agreement to the contrary, the
Seller will indemnify Purchaser against any liability
for claims arising out of events, acts, or omissions
of Seller that occurred in connection with the
operation of the Hotel up to the Closing Date, and
Purchaser will indemnify the Seller against any
liability for claims arising out of events, acts or
omissions of Purchaser that occur in connection with
the operation of the Hotel on or after the Closing
Date.
13.5.2 INDEMNIFICATION REGARDING ASSUMED OBLIGATIONS.
Whenever it is provided in this Agreement that an
obligation of one party will be assumed by the other
party from and after the Closing Date, the party so
assuming such liability shall be deemed to have also
agreed to indemnify and hold harmless the other party,
its successors and assigns, from all claims, losses,
liabilities and expenses (including reasonable
attorneys' and accountants' fees) arising from any
failure of the assuming party to perform the
obligation so assumed from and after the Closing Date.
13.5.3 NOTICE AND COOPERATION ON INDEMNIFICATION. Subject to
the time limitations contained in section 5.2,
whenever any party shall learn through the filing of a
claim or the commencement of a proceeding or otherwise
of the existence of any liability for which another
party is or may be responsible under this Agreement,
such party shall notify said other party promptly and
furnish such copies of documents (and make originals
thereof available) and such other information as such
party may have which may be used or useful in defense
of such claims and shall afford said other party full
opportunity to defend the same in the name of any
party and shall generally cooperate with said other
party in the defense of any such claim.
13.6 ASSIGNMENTS. Without the prior written consent of the other
party, neither party may assign its rights hereunder except
that Purchaser may assign its rights hereunder to any entity of
which Cavanaughs Hospitality Corporation is the parent, manager
or general partner, so long as Cavanaughs Hospitality
Corporation remains liable for and responsible for performance
of all obligations hereunder and payment of the Purchase Price.
Cavanaughs Hospitality Corporation shall be liable for all
obligations of Purchaser under this Agreement.
13.7 BROKERS. Seller shall pay all brokerage commissions or fees.
Seller shall pay a commission at closing to G&B Real Estate
Services (which is acting solely as Purchaser's Agent and
assumes no responsibility to Seller except as specifically set
forth in this Agreement) in the amount calculated by applying a
0.10 % capitalization rate to the Property's earnings before
interest, taxes, depreciation and amortization ("EBITDA") for
the trailing twelve months ending October 31, 1998 calculated
based upon generally accepted accounting principles with a 3%
management fee, 4% capital expenditure allowance and Holiday
Inn franchise expenses deducted to reach the EBITDA line.
Seller shall pay a commission to Xxxxx Xxxxxxx, Colliers
International, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000
(which is acting solely as Seller's Agent and assumes no
responsibility to Purchaser except as specifically set forth in
this Agreement. The parties represent and warrant to one
another that they have not dealt with any other brokers to whom
they are obligated to pay a fee in connection with the sale of
the Property.
13.8 EXPENSES, FEES AND DISBURSEMENTS OF COUNSEL. Except as
otherwise provided in this Agreement, each of the parties
hereto shall bear and pay their respective expenses, including
without limitation the fees and disbursements of their own
counsel, accountants and other advisors, in connection with the
negotiation and preparation of this Agreement and the Closing.
13.9 NOTICES. Except as otherwise provided in this Agreement,
notices, demands, requests, consents, approvals or other
communications (for the purpose of this Section 13.9
collectively called "Notices") required or permitted to be
given hereunder or which are given with respect to this
Agreement shall be in writing and shall be considered given
when sent by United States registered or certified mail,
postage prepaid, (or by private overnight courier) addressed to
Purchaser at 000 X. Xxxxx Xxxxx Xxxxx Xxxxx 000, Xxxxxxx, XX
00000 Attn. President and to Seller at Xxxxx Xxxxxxx, Colliers
International, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000,
or such other place as a party may from time to time designate
by notice, or when personally delivered.
13.10 COUNTERPARTS, FACSIMILES, CAPTIONS, ETC. This Agreement may be
executed in counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same
instrument. The facsimile transmittal of an executed document,
to be followed as soon as practical by delivery of the original
signed document, shall be considered delivery of an original
when transmitted to Seller at 000 000 0000 or to Purchaser at
000-000-0000. The captions are for convenience of reference
only, and shall not affect the meaning or construction to be
given any of the provisions hereof. All pronouns and any
variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the
parties may require.
13.11 GOVERNING LAW. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance
with, the laws of the State of Washington, except to the extent
required to enforce specific performance under the laws of a
state in which the Property is located. In addition to any
other remedy, the substantially prevailing party in any dispute
arising out of this Agreement shall be entitled to recover
their reasonable attorney fees and costs of litigation.
13.12 ENTIRE AGREEMENT; NO RECORDING. This Agreement contains the
entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior understandings
with respect thereto. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed by the
party to be charged by its agent duly authorized in writing or
as otherwise expressly permitted herein. Subject to Section
13.6, this Agreement shall be binding upon and inure to the
benefit of their successors and assigns. The parties do not
intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto. The parties each
agree that neither this Agreement nor any memorandum thereof
shall be recorded.
13.13 NO WAIVERS. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other
agreement or provision herein contained. No extension of time
for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations
or acts.
13.14. CONFIDENTIALITY Neither party will make any disclosure of this
Agreement or of the Due Diligence Materials except to the
extent required to comply with the obligations of the parties
under this Agreement or to comply with the obligations of that
party under applicable laws and regulations. In the event
Purchaser does not waive its contingencies to its obligations
to purchase, Purchaser shall return to Seller all Due Diligence
Materials which it obtains from Seller, and Seller may acquire
from Purchaser any third party reports on the Property ordered
by Purchaser during the Inspection Period by reimbursing
Purchaser for the cost of such report.
THE OFFER REPRESENTED BY THE FIRST PARTY EXECUTING AND DELIVERING THIS
AGREEMENT IS WITHDRAWN UNLESS THE OTHER PARTY EXECUTES THIS AGREEMENT
WITHOUT MODIFICATION AND DELIVERS IT TO THE ORIGINAL SIGNING PARTY ON
OR BEFORE 5:00 P.M. OF THE THIRD BUSINESS DAY FOLLOWING THE DATE OF
THE FIRST PARTY SIGNING.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by and through its managing partner and
attested to by its officers thereunto duly authorized, all on the date
first above written.
SELLER: PURCHASER:
OLYMPIC HOTEL L.L.C. CAVANAUGHS HOSPITALITY LIMITED
PARTNERSHIP
By Cavanaughs Hospitality
Corporation, Its General Partner
By By
------------------------------ -------------------------------
Xxxx X. Xxxxxxxxx, Its Manager Xxxxxxx X. Xxxxxxxx, Its Senior
Vice President
STATE OF WASHINGTON
) SS.
County of King
I certify that I know or have satisfactory evidence Xxxxxxx X Xxxxxxxx
is the person who appeared before me, and said person acknowledged
that he signed this instrument, on oath stated that he was authorized
to execute the instrument and acknowledged it as the Senior Vice
President of Cavanaughs Hospitality Corporation, the sole General
Partner of Cavanaughs Hospitality Limited Partnership, to be the free
and voluntary act of such party for the uses and purposes mentioned in
the instrument.
Dated: ____________, 1998.
__________________________________________
Type/Print Name of Notary:
_______________________________________
Notary Public in and For the State of Washington,
Residing at ______________________________.
My appointment expires: __________________.
STATE OF WASHINGTON
) SS.
County of KING
I certify that I know or have satisfactory evidence that Xxxx X.
Xxxxxxxxx is the person who appeared before me, and said person
acknowledged that (he/she) signed this instrument, on oath stated that
(he/she) was authorized to execute the instrument and acknowledged it
to be the free and voluntary act of such party as the Manager of
Olympic Hotel L.L.C., a Washington Limited Liability Company, for the
uses and purposes mentioned in the instrument.
Dated: September __, 1998.
___________________________________
Type/Print Name of Notary:
__________________________________________
Notary Public In And For the State of Washington
Residing at ______________________________.
My appointment expires:___________________
EXHIBIT A
(Legal Description)
PARCEL I:
Xxxx 00 xxx 00 xx xxx Xxxx xx Xxxxxxxxx Xxxx as recorded in Volume 16
of Plats page 61. EXCEPTING THEREFROM that part lying Westerly of a
line which begins at the Northeast corner of Parcel D of Short
Subdivision No. SS-5185 and runs thence South 0 degrees 04' 09" West,
136.50 feet and South 14 degrees 19' 09" West, 280 feet.
PARCEL II:
Xxxx 00 xxx 0 0X xx Xxxxxxxxx Xxxx as recorded in Volume 16 of Plats,
page 61.
PARCEL III:
Lot 14 of Evergreen Park as recorded in Volume 16 of Plats, page 61;
EXCEPTING THEREFROM that part described as beginning at a point on the
north line of said lot, 363.18 feet, S 89 degrees 55' 51" E, from the
Northwest corner thereof; thence continuing along said north line S 89
degrees 55' 51" E, 206.13 feet to the Southeast xxxxx of Lot 15 of
said plat; thence S 35 degrees 55' 39" W, 53.75 feet: thence N 75
degrees 55' 51" W, 180 feet to the point of beginning.
All situate in Xxxxxxxx County, State of Washington.
