KAPALUA BAY HOTEL & VILLAS
PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
BETWEEN
YCP KAPALUA L.P.,
a Delaware limited partnership,
and
YCP KAPALUA OPERATOR, INC.,
a Delaware corporation,
collectively, AS SELLER
AND
MAUI LAND & PINEAPPLE COMPANY, INC.,
a Hawaii corporation,
AS PURCHASER
As of April 30, 2004
PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW
INSTRUCTIONS (this "Agreement") is made as of April 30, 2004
(the "Effective Date"), by and among YCP KAPALUA L.P., a
Delaware limited partnership ("Land Company"), and YCP
KAPALUA OPERATOR, INC., a Delaware corporation ("Operating
Company") (Land Company and Operating Company being referred
to herein collectively as "Seller"), and MAUI LAND &
PINEAPPLE COMPANY, INC., a Hawaii corporation ("Purchaser").
W I T N E S S E T H:
A. Seller is the owner of the Property (defined
below).
B. Seller desires to sell the Property and Purchaser
desires to purchase the Property, on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged,
Purchaser and Seller agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement of Purchase and Sale. Subject to the terms
and conditions hereinafter set forth, Seller agrees to sell
and convey and Purchaser agrees to purchase, all of Seller's
right, title and interest in and to the following:
(a) the leasehold interest in the land and any other
interest, if any, in the land situated in the Kapalua area
of Maui, Hawaii more particularly described on Exhibit A
attached hereto and made a part hereof, and the leasehold
interest in the land and any other interest, if any, in the
land described in the Restaurant Ground Lease (as defined
below), together with all and singular the rights and
appurtenances of Seller pertaining to such property,
including any right, title and interest of Seller in and to
adjacent streets, alleys or rights-of-way (the property
described in clause (a) of this Section 1.1 being herein
referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other
improvements on the Land, including specifically, without
limitation, that certain 196 room hotel commonly known as
"Kapalua Bay Hotel & Villas", which includes, without
limitation, the Bay Club Restaurant (collectively, the
"Hotel") (the property described in clause (b) of this
Section 1.1 being herein referred to collectively as the
"Improvements");
(c) all tangible personal property upon the Land, within
the Improvements or used in connection with the operation of
the Hotel, including specifically, without limitation,
appliances, furniture, furnishings, equipment, carpeting,
draperies and curtains, tools and supplies, decorations,
china, glassware, linens, silver, utensils, all vehicles (if
any), and other items of personal property (excluding cash
and deposit accounts used exclusively in connection with the
operation of the Land and the Improvements, and subject to
(i) depletion, resupply, substitution, replacement and
disposition in the ordinary course of business and (ii) the
provisions of Section 1.1(g) below and the provisions of
Section 4.4(b) with respect to unopened inventories (the
property described in clause (c) of this Section 1.1 (and
not excluded) being herein referred to collectively as the
"Personal Property");
(d) subject to Section 4.4(b) below, all contracts or
reservations for the use of guest rooms, ballroom and
banquet facilities or meeting rooms or other facilities of
the Hotel or located within the Improvements ("Bookings");
(e) all contracts and agreements (collectively, the
"Operating Agreements") relating to the ownership, use,
occupancy, service, supply, entitlement, construction,
development, management, upkeep, repair, maintenance or
operation of the Land, the Improvements or the Personal
Property or other property used in connection with the
operation of the Hotel, including specifically, without
limitation, (i) all rights of Seller under all equipment
leases, (ii) any rights and obligations of Seller under that
certain Kapalua Villas Management Agreement dated September
5, 1996 (the "Villas Management Agreement") executed by and
between Operating Company and Kapalua Land Company, Ltd., a
Hawaii corporation ("KLC"), and any rental agreements or
other management agreements for the residential condominium
"villas" located adjacent to the Hotel (collectively,
"Rental Agreements"), and (iii) rights to that certain
Supplemental Agreement dated on or about 1985 executed by
and among Purchaser, KLC and The KBH Company, a California
limited partnership ("KBH"), as amended by that certain
Amendment of Supplemental Agreement dated September 5, 1996
executed by Purchaser and Operating Company (as amended, the
"Supplemental Agreement"), and (iv) that certain Reciprocal
Use Agreement dated October 22, 1985, executed by and among
Purchaser and KBH, as amended by that certain Amendment to
Reciprocal Use Agreement dated September 5, 1996 executed by
Purchaser and Operating Company (as amended, the "Reciprocal
Use Agreement");
(f) (i) all existing warranties and guaranties (expressed
or implied) issued to Seller in connection with the Land,
the Hotel, the Improvements or the Personal Property;
(ii) all transferable names, marks, logos and designs, used
in the operation or ownership of the Land, the Hotel, the
Improvements or the Personal Property or any part thereof,
if any; (iii) all transferable licenses, franchises and
permits, documents and materials, business records, plans,
specifications, authorizations, approvals, entitlements,
related to the Property, including but not limited to those
owned by Seller and used in or relating to the ownership,
occupancy or operation of the Land, the Hotel, the
Improvements or the Personal Property or any part thereof,
including, without limitation, to the extent assignable (and
subject to any approval rights of the Maui Planning
Commission), that certain Special Management Area Use Permit
issued by the County of Maui Department of Planning and
dated as of October 9, 2002, and (iv) to the extent
assignable or transferable, all other intangible personal
property used solely in connection with the Property, but
specifically excluding those which are proprietary to
Manager (as defined below) except to the extent the
Management Agreement (as defined below) permits the same to
be used by or for the Property following the termination of
the Management Agreement without payment of any additional
compensation other than standard payments due under the
Management Agreement or to the extent Purchaser acquires any
such right directly from Manager, at no cost or liability to
Seller (the property described in this clause (f) of this
Section 1.1 being herein referred to collectively as the
"Intangibles");
(g) subject to Section 4.4(b) below, (i) all food and
beverages (subject to any legal restrictions pertaining to
the sale or transfer of alcoholic beverages);
(ii) engineering, maintenance and housekeeping supplies,
including soap and cleaning materials, fuel and materials;
stationery and printing items and supplies; and (iii) other
supplies of all kinds, whether used, unused or held in
reserve storage for future use in connection with the
maintenance and operation of the Land, the Improvements or
the Personal Property, together with any additions thereto
prior to Closing (defined below) and subject to depletion,
resupply, substitution, replacement and disposition in the
ordinary course of business (all of the foregoing being
referred to herein as the "Consumable Inventory" and, to the
extent contained in unopened boxes, bottles, jars or
containers as of the date of Closing, shall be collectively
referred to, together with unopened packages of china,
glass, silver and linens, as the "Unopened Inventory");
(h) all leases for the lease and occupancy of space at the
Hotel (collectively, the "Leases") listed and described on
Schedule 1.1(h) attached hereto and made a part hereof,
including any deposits relating to such Leases held by
Seller and not applied to the tenant's obligations as of the
date of Closing. For purposes of this Agreement, "Leases"
do not include Bookings;
(i) all accounts receivable of the Hotel and all related
operations (collectively, the "Receivables") (provided that
such receivables are to be purchased by Purchaser at Closing
for an amount equal to (A) 100% of the amount set forth as
the "guest ledger" on the Hotel's most current balance sheet
and (B) 98% of the amount set forth as the "city ledger" on
the Hotel's most current balance sheet, and are not included
in the Purchase Price); and
(j) subject to Section 4.4(b)(xvi) hereof, Seller's
interest in the funds contained in "house banks" for the
Hotel as of the Cut-Off Time (defined in Section 4.4(a)
below), whether held in the name of Seller, the Hotel or
Manager and owned by Seller (collectively, the "House Bank
Funds"). Purchaser expressly acknowledges and agrees that
the Property to be transferred to Purchaser pursuant to this
Agreement does not include any reserve or other accounts
created or maintained by Seller or Manager in connection
with the ownership or operation of the Hotel; provided that,
to extent that any such reserves exist under the Management
Agreement (defined below) or otherwise as of the Closing
Date (defined below) and are not returned and released to
Seller on such date, Seller's right to such unreturned
reserves shall be assigned to Purchaser at Closing and
Seller shall receive a credit to the Purchase Price in the
full amount of such reserves.
1.2 Property Defined.
(a) The Land and the Improvements are sometimes
collectively referred to herein as the "Real Property" and
the Real Property, the Personal Property, the Bookings, the
Operating Agreements, the Intangibles, the Consumable
Inventory, the Leases, the Receivables and the House Bank
Funds are hereinafter sometimes referred to collectively as
the "Property"; provided that, the Purchase Price does not
include, and shall be adjusted with respect to, the
Receivables, the House Bank Funds, the Unopened Inventory
and the other adjustment items described in Section 4.4
below.
(b) Notwithstanding anything to the contrary in Section
1.1, the following items are expressly excluded from the
Property:
(i) All cash on hand or on deposit, any operating account
or other account or reserve, except for security deposits
held by Seller as landlord with respect to any Lease and the
House Banks which are to be transferred at Closing subject
to the terms of this Agreement;
(ii) Any tangible or intangible property owned by Manager,
except to the extent the Management Agreement permits same
to be used by or for the Property following the termination
of the Management Agreement without payment of any
additional compensation other than standard payments due
under the Management Agreement or to the extent Purchaser
acquires any such right directly from Manager, at no cost or
liability to Seller, and Purchaser elects to obtain or
acquire same; and
(iii) Any fixtures, personal property or intellectual
property owned by (A) the supplier, vendor, licensor, lessor
or other party under any Operating Agreements, (B) the
tenant under any Lease, (C) any employees, (D) any guests or
customers of the Hotel, or (E) any other third party.
1.3 Permitted Exceptions. The Property shall be conveyed
subject to the matters which are, or are deemed to be,
Permitted Exceptions pursuant to Article II hereof
(collectively, the "Permitted Exceptions").
1.4 Purchase Price. Seller is to sell and Purchaser is to
purchase the Property for a total of FORTY-NINE MILLION
THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($49,300,000.00)
(the "Purchase Price").
1.5 Payment of Purchase Price.
(a) On or before 10:00 a.m. Hawaii time on the date that is
one (1) business day prior to the scheduled Closing Date
(but in no event later than 10:00 a.m. Hawaii time on the
date that is one (1) business day preceding the Outside
Closing Date (defined below), Purchaser shall deliver to
Escrow Agent (defined below) by wire transfer an amount
equal to the Purchase Price, as increased or decreased by
prorations and adjustments as herein provided, less the
Xxxxxxx Money (defined below) previously delivered to Escrow
Agent.
(b) The Purchase Price, as increased or decreased by
prorations and adjustments as herein provided, shall be
payable in full at Closing in cash by wire transfer of
immediately available federal funds to a bank account
designated by Seller in writing to Purchaser and Escrow
Agent prior to the Closing.
1.6 Xxxxxxx Money.
(a) Concurrently with Purchaser's execution and delivery of
this Agreement Purchaser shall deposit the sum of Five
Hundred Thousand and No/100 Dollars ($500,000.00) ("First
Deposit") in good funds, either by certified bank or
cashier's check or by federal wire transfer, with Title
Guaranty Escrow Services ("Escrow Agent") having its office
at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000,
Attention: Xxxxxxx Paulo. On or before the expiration of
the Inspection Period (as defined below), provided that
Purchaser has not terminated the Agreement, Purchaser shall
deposit with Escrow Agent the additional sum of One Million
Five Hundred Thousand and No/100 Dollars ($1,500,000.00)
("Second Deposit") in good funds, either by certified bank
or cashier's check or by federal wire transfer. The First
Deposit and the Second Deposit, together with all interest
earned on such sums, are herein referred to collectively as
the "Xxxxxxx Money".
(b) Escrow Agent shall hold the First Deposit and the
Second Deposit in an interest-bearing account in a
commercial bank or banks reasonably acceptable to Seller and
Purchaser at money market rates, or in such other
investments as shall be reasonably approved in writing by
Seller and Purchaser, in accordance with the terms and
conditions of this Agreement. All interest accruing on such
sums shall become a part of the Xxxxxxx Money and shall be
distributed as Xxxxxxx Money in accordance with the terms of
this Agreement. Notwithstanding any provision of this
Agreement to the contrary, in no event shall Seller have any
responsibility or liability to Purchaser in connection with
the accrual or payment of interest on any portion of the
Xxxxxxx Money. The Xxxxxxx Money shall be either, all as
expressly provided in this Agreement: (a) applied at the
Closing against the Purchase Price, (b) returned to
Purchaser pursuant hereto, or (c) paid to Seller pursuant
hereto. For purposes of reporting earned interest with
respect to the Xxxxxxx Money, Purchaser's Federal Tax
Identification Number is 00-0000000, and Seller's Federal
Tax Identification Number is 00-0000000.
(c) Time is of the essence for the delivery of Xxxxxxx
Money under this Agreement and the failure of Purchaser to
timely deliver any portion of the Xxxxxxx Money shall be a
material default, and shall entitle Seller, at Seller's sole
option, to terminate this Agreement immediately and to
pursue all remedies available to Seller under this Agreement
and applicable law.
1.7 Escrow Instructions. The terms and conditions set
forth in this Agreement shall constitute both an agreement
between Seller and Purchaser and escrow instructions for
Escrow Agent. Seller and Purchaser shall promptly execute
and deliver to Escrow Agent any separate or additional
escrow instructions requested by Escrow Agent which are
consistent with the terms of this Agreement. Any separate
or additional instructions shall not modify or amend this
Agreement unless expressly set forth by the mutual consent
of Seller and Purchaser.
1.8 Management Agreement.
(a) Purchaser acknowledges that the Hotel is being operated
and managed by Sheraton Hawaii Hotels Corporation, a Hawaii
corporation (the "Manager"), pursuant to that certain
Management Agreement dated as of January, 2000 by and
between Operating Company and Manager, as amended by that
certain First Amendment to Management Agreement dated
April 15,2002 executed by and between Operating Company and
Manager (collectively, as amended, the "Management
Agreement"). Subject to the provisions of this Section 1.8,
the Management Agreement shall be terminated by Seller
concurrently with the Closing.
(b) Notwithstanding the foregoing, Purchaser shall have the
right, to be commenced, if at all, promptly after execution
of this Agreement and pursued diligently by Purchaser, to
(i) request Manager's consent to an assignment of the
Management Agreement to Purchaser at Closing pursuant to
Section 9.2 of the Management Agreement and to Purchaser's
assumption of the Management Agreement at Closing, and/or
(ii) negotiate with Manager to obtain a short-term or long-
term extension to the Management Agreement (or replacement
to the Management Agreement) effective as of the Closing
Date. Seller shall use commercially reasonable efforts to
cooperate with Purchaser's attempts to negotiate and
implement such a consent or agreement, provided that such
cooperation shall be at no cost or expense to Seller and
provided further that Seller shall incur no additional
liability as a result thereof.
(c) Notwithstanding the provisions of paragraph (a) above,
Seller shall not terminate the Management Agreement if
Purchaser (i) determines in its sole discretion that it has
reached a satisfactory agreement with Manager regarding
Manager's continued operation of the Hotel following the
Closing Date, and (ii) provides Seller with written notice
of instruction not to terminate the Management Agreement on
or before the date two (2) business days prior to the
thirtieth (30th) day preceding the Outside Closing Date,
which notice shall include the unconditional written consent
of Manager to the assignment of the Management Agreement to
Purchaser.
(d) In no event shall Purchaser's negotiations with Manager
regarding an amendment to the Management Agreement or any
replacement hotel management agreement (i) constitute a
condition to Closing or otherwise affect Purchaser's
obligation to close the purchase of the Hotel, or (ii)
extend the Outside Closing Date.
(e) Time is of the essence with respect to the provisions
of this Section 1.8.
1.9 Collective Bargaining Agreement.
(a) Effective as of the date of the Closing, Purchaser
shall have elected (which election shall have been
communicated to Seller in writing on or before the
expiration of the Inspection Period) either to:
(i) pursuant to the Assignment of Contracts, assume and
agree to perform all obligations of the "Hotel" and
"Employer" under that certain Union-Management Operating
Agreement effective as of July 2, 2001, by and between
Operating Company and International Xxxxxxxxx and Warehouse
Union, Local 142 (the "Union") (the "Labor Agreement")
becoming due after the Closing Date; or
(ii) not assume the Labor Agreement and any obligations
thereunder and instead establish its own initial terms and
conditions of employment (provided that Purchaser shall be
required to comply with the rules and doctrines for
successor employers under applicable law to the extent
applicable in connection therewith); or
(iii) agree with the Union to a modified collective
bargaining agreement provided that the modified collective
bargaining agreement does not enlarge upon any of Seller's
obligations under the Labor Agreement or increase Seller's
liability.
(b) If Purchaser fails to communicate its election in
writing to Seller prior to the expiration of the Inspection
Period, Purchaser shall be deemed to have irrevocably
selected the option under subsection (a)(i) above.
(c) Seller shall use commercially reasonable efforts to
cooperate with whatever election Purchaser makes under this
Section 1.9, at no cost or expense to Seller and provided
that Seller shall incur no additional liability as a result
thereof. In no event shall Purchaser's negotiations or the
reaching of an agreement with the Union with respect to the
Labor Agreement (i) constitute a condition to Closing or
otherwise affect Purchaser's obligation to close the
purchase of the Hotel, or (ii) extend the Outside Closing
Date.
(d) If Purchaser assumes the Labor Agreement, effective as
of the Closing Date, Purchaser covenants to comply at all
times with the obligations arising thereafter of the Hotel
owner or "Employer" under the Labor Agreement as the
successor-in-interest to Seller under such agreement. If
Purchaser elects not to assume the Labor Agreement and
instead enters into an agreement with the Union which
modifies the Labor Agreement, Purchaser shall notify Seller
and Seller agrees to reasonably cooperate with Purchaser in
implementing any changes agreed to with the Union provided
that such changes do not impose any new or additional costs
or liability on Seller.
(e) Seller shall deliver to Purchaser at Closing the
following information from the personnel records for any
Hotel employee offered employment by Purchaser at Closing
(to the extent each such item is available in Seller's
personnel records), subject to (i) any applicable legal
requirement (including, without limitation, any privacy or
consent rights of employees and any restrictions imposed by
the Health Insurance Portability and Accountability Act of
1996), and (ii) any rights of Manager under the Management
Agreement: (A) the employee's hire date and seniority date,
(B) the job positions held by the employee, the job
description for each job, the dates of each job change and
the wage rates paid for each job, (C) the type and dates of
all paid and unpaid leaves requested and granted to the
employee (provided that in no event shall any medical
information or indication of medical conditions be required
to be supplied to Purchaser), (D) all commendations and all
disciplinary actions issued to the employee including
counseling, warnings (including oral warnings noted in the
personnel files), suspensions, demotions, transfers and
terminations, (E) all agreements regarding the employee's
employment with the employee or with the Union including any
last chance agreements, (F) all performance reviews, (G) all
grievances and arbitration awards regarding the employee or
the interpretation and application of the Labor Agreement
generally, (H) all claims, charges or complaints filed by or
against the employee relating to the employee's employment
at the Hotel (provided that any such claims, charges or
complaints against any employee resulted in warnings or
disciplinary action), and (I) all current garnishment and
child support orders, tax liens or other court or government
agencies orders relating to the employee that requires any
continuing action by the Hotel.
(f) The provisions of this Section 1.9 shall survive
Closing.
1.10 Multiemployer Plan.
(a) Purchaser acknowledges and agrees that (i)
Purchaser shall be responsible for all amounts, if any,
as may be owed by or assessed against Seller (as
withdrawal liability or otherwise) in connection with
any actual or deemed withdrawal from the Hotel Industry
- ILWU Pension Plan (the "Multiemployer Plan") in
connection with the Closing and the sale of the Hotel
by Seller or Purchaser's failure to assume the Labor
Agreement in connection therewith, and (ii) the
Purchase Price agreed upon between Purchaser and Seller
has already been reduced to reflect an estimate (as of
the Effective Date) of any potential liability
Purchaser may have under this Section 1.10 for amounts
which might become due and payable in connection with
the Multiemployer Plan. Such amounts shall be paid
without regard to any right Seller may have to contest
any such withdrawal liability assessment. If Purchaser
so requests in writing, Seller will provide such
cooperation (at no expense to Seller) as Purchaser may
reasonably request to contest such withdrawal liability
assessment after payment thereof. Any such contest
shall be at Purchaser's sole expense. Purchaser shall
indemnify, defend, protect and hold harmless Seller for
any payments Seller is required to make on account of
any withdrawal under the Multiemployer Plan. Purchaser
agrees to provide Seller with a copy of any notice of
withdrawal liability it may receive with respect to the
Multiemployer Plan, together with all the pertinent
details with respect thereto.
(b) Purchaser shall have the right to mitigate the
requirement to make payments under Section 1.10(a)
above which may be owed by or assessed against Seller
as withdrawal liability by eliminating any actual or
deemed withdrawal from the Multiemployer Plan, if
Purchaser (i) assumes the Labor Agreement as provided
above, or (ii) enters into a new labor agreement with
the Union that contemplates contributions to the
Multiemployer Plan (as defined below) by Purchaser,
effective as of the date of the Closing, and takes
steps required by Section 4204 of ERISA and the
regulations and interpretations promulgated thereunder
(collectively, "Section 4204 of ERISA"), which shall
include contributing with respect to substantially the
same number of contribution base units for which Seller
had an obligation to contribute under the Labor
Agreement immediately prior to the date of the Closing,
and by complying with the following subsections (A)
through (D):
(A) During the period commencing on the first day
of the plan year following the Closing and ending
on the expiration of the fifth (5th) such plan
year (the "Contribution Period"), Purchaser shall
provide the Multiemployer Plan with either a bond
or an escrow in an amount and manner meeting the
requirements of Section 4204 of ERISA. Purchaser
shall promptly notify the Multiemployer Plan of
the transactions contemplated by this Agreement,
and, if applicable, satisfy each such plan that
this transaction complies with the terms of
Section 4204 of ERISA. Any proposed notice or
communication to the Multiemployer Plan pursuant
to this Section 1.10(b)(A) shall be provided to
Seller at least ten (10) days before such notice
is provided to the plan, and the form of such
notice and communication shall be subject to
Seller's written approval, which approval shall
not be unreasonably withheld. Any notice from the
Multiemployer Plan, including, but not limited to,
any notice of withdrawal liability, shall be
provided to Seller within three (3) business days
of the time it is provided to Purchaser.
(B) If Purchaser at any time during the
Contribution Period withdraws from the
Multiemployer Plan in a complete or partial
withdrawal with respect to any employees covered
by the Labor Agreement or any other collective
bargaining agreement, Purchaser shall cause any
resulting withdrawal liability to be timely paid,
and if Purchaser fails to pay such withdrawal
liability in a timely manner to the Multiemployer
Plan, Seller agrees it will be secondarily liable
for any withdrawal liability it would have had to
the Multiemployer Plan with respect to the
operations (but for Section 4204 of ERISA).
Purchaser shall indemnify, defend, protect and
hold harmless Seller for any withdrawal liability
payments Seller is required to make on account of
this subsection (B). Purchaser agrees to provide
Seller with a copy of any notice of withdrawal
liability it may receive with respect to the
Multiemployer Plan, together with all the
pertinent details with respect thereto.
(C) Purchaser shall notify Seller in the event
that Purchaser withdraws from the Multiemployer
Plan in a complete or partial withdrawal during
the Contribution Period, and upon reasonable
request of Seller, shall provide Seller with any
and all information relevant to the obligations of
Purchaser and Seller under this Section 1.10 that
is reasonably available to Purchaser. Purchaser
shall provide Seller with copies of all notices,
demands, and other correspondence between
Purchaser (or any party acting on behalf of
Purchaser or in connection with a partial or
complete withdrawal by Purchaser) and the
Multiemployer Plan relating to such withdrawal.
(D) If at any time after the Closing, a bond,
escrow or letter of credit is required for the
Multiemployer Plan pursuant to Section 4204(a)(3)
of ERISA, Purchaser shall, at its sole cost and
expense, post such bond, escrow or letter of
credit in an amount, for the period of time, and
in a form that complies with Section 4204(a)(3)
(or obtain a variance from such bonding, escrow or
letter of credit requirement from the Plan or the
Pension Benefit Guaranty Corporation) and furnish
proof of such compliance to Seller.
(c) The provisions of this Section 1.10 shall survive
Closing.
1.11 Assumed Liabilities. At Closing, to the extent either
(a) arising after the Closing or (b) Purchaser receives a
credit to the Purchase Price with respect to such
Liabilities (as defined below) at Closing, Purchaser shall
assume all liability, obligation, damage, loss, cost or
expense of any kind or nature whatsoever (collectively,
"Liabilities"), arising from, relating to, or in connection
with the Property or the Hotel. Notwithstanding the
foregoing, Purchaser shall not assume or be responsible for
any Liability to the extent such Liability is a breach of a
Seller covenant which survives Closing or any Seller
representation under Section 5.1 below. The parties' rights
and obligations under this Section 1.11 shall survive the
Closing.
1.12 Non Liability.
(a) Seller agrees that neither the partners, directors,
shareholders, affiliates, officers, employees, members,
managers nor agents of Purchaser have any personal
obligation hereunder, and that Seller shall not seek to
assert any claim or enforce any rights hereunder against
such partners, directors, officers, employees, members,
managers or agents of Purchaser.
(b) Purchaser agrees that neither the partners, directors,
shareholders, affiliates, officers, employees, members,
managers nor agents of Seller have any personal obligation
hereunder, and that Purchaser shall not seek to assert any
claim or enforce any rights hereunder against such partners,
directors, officers, employees, members, managers or agents
of Seller.
(c) This Section 1.12 shall survive Closing.
1.13 Indemnification.
(a) Seller hereby agrees to defend, indemnify and hold
Purchaser and all directors, officers, shareholders,
affiliates, members, managers, partners, employees and
agents of Purchaser (each, a "Purchaser Indemnified Party")
harmless from and against all losses, damages, costs and
expenses, including, without limitation, reasonable legal
fees and disbursements, incurred by a Purchaser Indemnified
Party arising out of (i) claims made by employees of the
Hotel, but only if such claims arise from acts or omissions
of parties other than a Purchaser Indemnified Party
occurring solely during Seller's ownership of the Hotel,
(ii) obligations of Seller under any contracts executed in
connection with the Hotel to the extent that such
obligations arise prior to the Closing Date, and (iii)
personal injury claims, but only if such claims arise from
acts or omissions occurring solely during Seller's ownership
of the Hotel. In no event shall such obligation to defend,
indemnify or hold harmless include any matters for which
Purchaser has assumed liability, received a credit against
the Purchase Price, or waived or relinquished rights or
released Seller pursuant to this Agreement, including,
without limitation, pursuant to Section 9.1 or Section 9.2
below.
(b) Purchaser hereby agrees to defend, indemnify and hold
Seller and all directors, officers, shareholders,
affiliates, members, managers, partners, employees and
agents of Seller (each, a "Seller Indemnified Party")
harmless from and against all losses, damages, costs and
expenses, including, without limitation, reasonable legal
fees and disbursements, incurred by a Seller Indemnified
Party arising out of (i) claims made by employees of the
Hotel, but only if such claims arise from acts or omissions
occurring solely on or after the Closing Date, (ii)
obligations of Purchaser under any contracts assumed by
Purchaser under this Agreement or other contracts executed
in connection with the Hotel to the extent that such
obligations arise on or after the Closing Date, and (iii)
personal injury claims, but only if such claims arise from
acts or omissions of parties other than a Purchaser
Indemnified Party occurring solely on or after the Closing
Date.
(c) This Section 1.13 shall survive Closing.
ARTICLE II
TITLE AND SURVEY
2.1 Title Examination; Commitment for Title Insurance.
Seller has obtained and delivered to Purchaser, a
preliminary title report (the "Title Report") covering the
Land and the Improvements from Island Title Corporation as
agent for Commonwealth Land Title Insurance Company (the
"Title Company"), and a copy of each document referenced in
the Title Report as an exception to title to the Real
Property. Purchaser shall deliver to Seller, within
five (5) days after receipt by Purchaser, a copy of any
updates (each a "Title Update") to the Title Report,
together with a written statement by Purchaser of all
objections to title disclosed by any such Title Update.
2.2 Survey. Seller has previously provided to Purchaser an
ALTA survey of the Land and Improvements prepared by
Xxxxxxxx-Xxx Land Surveyors, Inc. dated June 18, 2001
("Existing Survey"). Seller shall obtain and deliver to
Purchaser and the Title Company, at Purchaser's expense, an
update of the Existing Survey (collectively with the
Existing Survey, the "Survey").
2.3 Title Objections; Cure of Title Objections. Purchaser
shall have until the date (the "Title Exam Deadline"), which
is ten (10) days prior to the expiration of the Inspection
Period (as defined in Section 3.1 below) (and, with respect
to any Title Update, five (5) days after receipt of such
Title Update) to notify Seller, in writing, of such
objections as Purchaser may have to anything contained in
the Title Report or the Survey. Any item contained in the
Title Report, Title Update or any matter shown on the Survey
to which Purchaser does not object prior to the Title Exam
Deadline (or, with respect to any Title Update prior to the
end of the applicable 5-day period) shall be deemed a
Permitted Exception. In the event Purchaser shall notify
Seller, in writing, of objections to title or to matters
shown on the Survey prior to the Title Exam Deadline, Seller
shall have the right, but not the obligation, to cure such
objections. Within ten (10) days after receipt of
Purchaser's notice of objections, Seller shall notify
Purchaser in writing whether Seller elects to attempt to
cure any or all of such objections. If Seller elects to
attempt to cure, and provided that Purchaser shall not have
terminated this Agreement in accordance with Section 3.3
hereof, Seller shall have until the Outside Closing Date to
attempt to remove, satisfy or cure the same and for this
purpose Seller shall, at Seller's election, be entitled to a
reasonable adjournment of the Closing if additional time is
required, but in no event shall the adjournment exceed
sixty (60) days after the Outside Closing Date. If Seller
elects not to cure any objections specified in Purchaser's
notice, or if Seller is unable to effect a cure of those
objections which it elected to cure prior to the Closing (or
any date to which the Closing has been adjourned) and so
notifies Purchaser in writing, or if Seller fails to respond
to Purchaser's notice within said ten (10) day period,
Purchaser shall have the following options: (i) to accept a
conveyance of the Property subject to the Permitted
Exceptions, specifically including any matter objected to by
Purchaser which Seller is unwilling or unable to cure, and
without reduction of the Purchase Price; or (ii) to
terminate this Agreement by sending written notice thereof
to Seller, and upon delivery of such notice of termination,
this Agreement shall terminate and the Xxxxxxx Money shall
be returned to Purchaser, and thereafter neither party
hereto shall have any further rights, obligations or
liabilities hereunder except to the extent that any right,
obligation or liability set forth herein expressly survives
termination of this Agreement. If Seller notifies Purchaser
that Seller does not intend to attempt to cure any title
objection or fails to respond to Purchaser's notice within
said ten (10) day period; or if, having commenced attempts
to cure any objection, Seller later notifies Purchaser in
writing that Seller will be unable to effect a cure thereof;
Purchaser shall, within five (5) days after such notice has
been given, notify Seller in writing whether Purchaser shall
elect to accept the conveyance under clause (i) or to
terminate this Agreement under clause (ii). Purchaser's
failure to notify Seller of termination of this Agreement
within such 5-day period shall be deemed to be an
irrevocable election under clause (i) to accept conveyance
of the Property. Notwithstanding any provision of this
Agreement to the contrary, in no event shall Seller have any
obligation to cure any title matter objected to by
Purchaser, except that Seller shall be obligated to remove
any mortgage or other security instrument encumbering title
to the Real Property to which Seller is a party.
2.4 Conveyance of Title. At Closing, Seller shall convey
and transfer to Purchaser Seller's interest in and to the
Real Property subject to the Permitted Exceptions.
Notwithstanding anything contained herein to the contrary,
the Real Property shall be conveyed subject to the following
matters, all of which shall be deemed to be Permitted
Exceptions:
(a) the lien of all ad valorem real estate taxes and
assessments not yet due and payable as of the date of
Closing, subject to adjustment as herein provided;
(b) local, state and federal laws, ordinances or
governmental regulations, including but not limited to,
building and zoning laws, ordinances and regulations, now or
hereafter in effect relating to the Property;
(c) items appearing of record or shown on the Survey and,
in either case, not objected to by Purchaser or waived or
deemed waived by Purchaser in accordance with Section 2.3
hereof;
(d) the rights of Hotel guests which occupy the Hotel or
have a reservation for rooms, food and beverages, meetings
and other customary Hotel uses relating to periods
subsequent to the Closing Date;
(e) the rights of KLC under the Villas Management Agreement
and the rights of any other parties to the Rental
Agreements;
(f) to the extent that the Management Agreement is not
terminated as of Closing pursuant to Section 1.8 above, the
rights of Manager under the Management Agreement; and
(g) the rights of the tenants under the Leases.
2.5 Title Policy. At Closing, Purchaser and Seller request
that Title Company issue an ALTA owner's title insurance
policy ("Title Policy") to Purchaser in accordance with the
Title Report, insuring Purchaser's leasehold title to the
Real Property as of the Closing Date, subject to the
Permitted Exceptions.
2.6 Termination of Operating Agreements. Following
expiration of the Inspection Period, Seller will cancel, all
service contracts for the Property designated for
termination by Purchaser in a written notice given to Seller
prior to the end of the Inspection Period; provided,
however, that (a) Seller shall not incur any cost, expense
or liability arising from such termination, (b) termination
shall be effective upon the later of the Closing Date or any
later date required under the applicable contract, and (c)
any contracts which are not terminable or are not designated
by Purchaser for termination as set forth herein will be
assigned to Purchaser and all obligations of Seller
thereunder arising from and after the Closing Date shall be
assumed by Purchaser at Closing.
ARTICLE III
INSPECTION PERIOD
3.1 Right of Inspection. During the period beginning upon
the Effective Date and ending at 5:00 p.m. (local time at
the Property) sixty (60) days after the execution of this
Agreement (hereinafter referred to as the "Inspection
Period"), Purchaser shall, subject to the rights of the
Manager under the Management Agreement, guests of the Hotel
and the tenants under the Leases, have the right to make a
physical inspection of the Real Property and to examine at
such place or places at the Hotel or elsewhere as the same
may be located, any operating files maintained by or for the
benefit of Seller (or otherwise in Seller's control) in
connection with the operation, current maintenance and/or
management of the Property ("Property Information"),
including, without limitation, the Ground Leases (defined
below), the Villas Management Agreement, the Rental
Agreements, the Management Agreement, any Leases, the
Operating Agreements, the Labor Agreement and any other
collective bargaining or employment agreements, insurance
policies, bills, invoices, receipts and other general
records relating to the income and expenses of the Hotel,
correspondence, surveys, plans and specifications,
warranties for services and materials provided to the Hotel,
environmental audits and similar materials, and any other
items reasonably requested by Purchaser, but excluding
materials not directly related to the current maintenance
and/or management of the Hotel such as, without limitation,
Seller's internal memoranda, financial projections, budgets,
appraisals, accounting and tax records and similar
proprietary, elective or confidential information.
Purchaser shall keep all Property Information strictly
confidential, provided that Purchaser may deliver copies of
Property Information to its attorneys, accountants and other
advisors in connection with the acquisition of the Property
and to current and prospective lenders and partners provided
that such parties agree to maintain the confidentiality of
such Property Information. Purchaser understands and agrees
that any on-site inspections of the Property shall be
conducted upon at least twenty-four (24) hours' prior
written notice to Seller and, at the election of Seller, in
the presence of such persons designated by Seller as
Seller's representative and Manager, or their respective
representatives. Such physical inspection shall not disturb
Hotel guests nor unreasonably interfere with the use of the
Property by Seller or Manager, or damage the Property in any
respect. Any physical inspection shall be conducted in
accordance with standards customarily employed in the
industry and in compliance with all governmental laws, rules
and regulations and shall not be invasive in any respect
unless Purchaser obtains Seller's prior written consent,
which may be withheld in Seller's sole and absolute
discretion; provided that, Seller has generally approved
inspections of the Property of the type described on
Schedule 3.1 attached hereto subject to Seller's review and
approval of specific work plans for any such inspections,
which approval shall not unreasonably be withheld or
delayed. Following each entry by Purchaser with respect to
inspections and/or tests on the Real Property, Purchaser
shall restore the Property to a condition which is as near
to its original condition as existed prior to any such
inspections and/or tests. Seller shall cooperate with
Purchaser in its due diligence but shall not be obligated to
incur any liability or expense in connection therewith.
Purchaser shall not contact Manager, any of its employees,
or any other employees working at the Hotel, any guests of
the Property, any party to an Operating Agreement, or any
tenants under the Leases without in each instance notifying
Xxxx Xxxxxxx of Xxxxxx Xxxxxxx in advance (in writing or
verbally, but any verbal notice must be delivered personally
directly to Xx. Xxxxxxx rather than left on voicemail or
with another person unless Purchaser is unable to reach Xx.
Xxxxxxx using reasonable due diligence for a period of three
(3) consecutive business days) and Seller shall (a) be
copied on all communications with any such parties
concurrently with delivery of the applicable communication,
and (b) have the right to participate in any face-to-face,
telephonic or other meeting with any such parties.
Purchaser shall not disrupt Seller's or Manager's or any
tenant's or guest's activities on the Real Property.
Purchaser agrees to indemnify against, defend, protect and
hold Seller harmless from any claim for liabilities, costs,
expenses (including reasonable attorneys' fees actually
incurred) damages or injuries arising out of or resulting
from the inspection of the Property by Purchaser or its
agents, employees or contractors and notwithstanding
anything to the contrary in this Agreement, such obligation
to indemnify, defend, protect and hold harmless Seller shall
survive Closing or any termination of this Agreement. All
inspections shall occur at reasonable times agreed upon by
Seller and Purchaser; provided that, if Seller fails to
object or approve a proposed time for inspection within
three (3) business days after a request for such inspection
time (such request to be made in writing or verbally, but
any verbal notice must be delivered personally directly to
Xx. Xxxxxxx rather than left on voicemail or with another
person unless Purchaser is unable to reach Xx. Xxxxxxx using
reasonable due diligence for a period of three (3)
consecutive business days), then such request shall be
automatically deemed approved. Purchaser agrees (i) that
prior to entering the Property to conduct any inspection,
Purchaser shall obtain and maintain, or shall cause each of
its contractors and agents to maintain (and shall deliver
evidence satisfactory to Seller thereof), at no cost or
expense to Seller, general liability insurance from an
insurer reasonably acceptable to Seller in the amount of
Three Million Dollars ($3,000,000) (except for Group 70
International, who shall be required only to have general
liability insurance of Two Million Dollars ($2,000,000))
with combined single limit for personal injury or property
damage per occurrence, such policies to name Seller as an
additional insured party, which insurance shall provide
coverage against any claim for personal injury or property
damage caused by Purchaser or its agents, representatives or
consultants in connection with any such tests and
investigations, and (ii) to keep the Property free from all
liens and encumbrances. Provided Purchaser does not
exercise its termination right pursuant to Section 3.3, and
this Agreement is still in full force and effect, Purchaser
shall continue to have access to the Property following the
expiration of the Inspection Period in accordance with the
provisions of this Section 3.1, but in no event shall (A)
the Inspection Period be extended or (B) Purchaser have any
further right to terminate this Agreement after expiration
of the Inspection Period pursuant to Section 3.3 or
otherwise in connection with its continued diligence
activities regarding the Property.
3.2 Seller Due Diligence Materials. PURCHASER ACKNOWLEDGES
THAT (1) PURCHASER HAS RECEIVED AND IS FAMILIAR WITH ALL
ENVIRONMENTAL, ENGINEERING, SOILS AND OTHER REPORTS
REGARDING THE CONDITION OF THE PROPERTY LISTED ON SCHEDULE
3.2 ATTACHED HERETO (collectively, the "Reports"), AND
(2) ANY REPORTS DELIVERED OR TO BE DELIVERED BY SELLER OR
ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING MADE
AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND
WITHOUT ANY REPRESENTATION OR WARRANTY OF SELLER AS TO THEIR
ACCURACY OR COMPLETENESS AND THAT ANY RELIANCE BY PURCHASER
ON SUCH REPORTS IN CONNECTION WITH THE PURCHASE OF THE
PROPERTY IS UNDERTAKEN AT PURCHASER'S SOLE RISK. PURCHASER
HAS CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF
THE INSPECTION PERIOD, ITS OWN INVESTIGATION OF THE
CONDITION OF THE PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH
AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
3.3 Right of Termination. Seller agrees that in the event
Purchaser determines (such determination to be made in
Purchaser's sole discretion) that the Property is not
suitable for its purposes, Purchaser shall have the right to
terminate this Agreement by giving written notice thereof to
Seller prior to the expiration of the Inspection Period. If
Purchaser gives such notice of termination within the
Inspection Period, this Agreement shall terminate and the
Xxxxxxx Money shall be returned to Purchaser. Time is of
the essence with respect to the provisions of this Section
3.3. If Purchaser fails to give Seller a notice of
termination prior to the expiration of the Inspection
Period, Purchaser shall no longer have any right to
terminate this Agreement under this Section 3.3 and shall be
bound to proceed to Closing and consummate the transaction
contemplated hereby pursuant to the terms of this Agreement.
If Purchaser terminates this Agreement pursuant to this
Section 3.3 or if this Agreement terminates for any other
reason whatsoever, Purchaser shall promptly return all
Property Information to Seller without retaining any copies
thereof.
3.4 Coconut Grove Joint Venture. Lend Lease (US) Inc., a
Delaware corporation (as predecessor-in-interest to YCP Site
29, Inc., a Delaware corporation, and an affiliate of Seller
("YCP"), Purchaser and Kapalua Land Company, Ltd., a Hawaii
corporation, are parties to that certain unrecorded
Agreement dated July 12, 1996 (the "Preliminary Agreement").
Further, YCP and Purchaser are parties to that certain
Operating Agreement for Kapalua Coconut Grove LLC dated June
20, 1997 (the "LLC Agreement"), which established Kapalua
Coconut Grove LLC, a Hawaii limited liability company
("KCG"). During the Inspection Period, Purchaser agrees to,
and Seller and Purchaser agree to cause their respective
affiliates to, negotiate in good faith regarding the form of
a termination agreement that (a) terminates the Preliminary
Agreement, and (b) provides for orderly dissolution of KCG
including, without limitation, (1) the winding up of the
affairs of KCG including the liquidation of and allocation
of responsibility for any contingent liabilities and claims,
(2) the termination of the LLC Agreement, and (3) the
execution and filing of Articles of Termination (as provided
by 428-805, Hawaii Revised Statutes) dissolving KCG on a
date to be agreed upon by the parties. In the event that
the parties are able to reach such agreement, the agreed
upon form of termination agreement (the "JV Termination
Agreement") shall be executed by the parties and delivered
into escrow as provided below. Failure to reach such
agreement shall not affect the parties rights and
obligations under this Agreement and in no event shall such
negotiations or an agreement with respect to the Preliminary
Agreement and the LLC Agreement (i) constitute a condition
to Closing or otherwise affect the parties' obligation to
close the purchase and sale of the Property, or (ii) extend
the Outside Closing Date.
ARTICLE IV
CLOSING
4.1 Time and Place.
(a) Subject to the provisions of Section 4.6 and 4.7 below,
the consummation of the transaction contemplated hereby
("Closing"), as evidenced by the payment and release of the
Purchase Price to Seller, shall occur on or before the date
that is sixty (60) days after the expiration of the
Inspection Period ("Outside Closing Date") (with the actual
date of Closing being referred to herein as the "Closing
Date"), subject to extension pursuant to Section 4.1(b),
Section 4.8(b) and Section 4.9(c) below. The Closing shall
occur through an escrow administered by Escrow Agent with
the Purchase Price and all documents (unless otherwise
mutually agreed) to be deposited with the Escrow Agent as
escrowee. If requested by either party, a pre-closing shall
be held on two (2) business days prior to the scheduled
Closing Date at the offices of Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP, 000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 or, at Seller's option, two (2)
business days preceding the scheduled Closing Date at a
location in Hawaii selected by Seller. At Closing, Seller
and Purchaser shall perform the obligations set forth in,
respectively, Section 4.2 and Section 4.3, the performance
of which obligations shall be concurrent conditions.
(b) Hawaii Dislocated Workers Act Notice. The parties
understand that under the Hawaii Dislocated Workers' Act
(Hawaii Revised Statutes, Chapter 394B) relating to plant
closings and mass layoffs, the sale of the Hotel may result
in a termination of the employees' employment by Seller, and
that such Act may be interpreted to require notice to be
given to the employees at least sixty (60) days prior to the
change in ownership of the Hotel. The Outside Closing Date
shall be extended from time to time as necessary to comply
with amendments to the Hawaii Dislocated Workers' Act or
other laws and any such extension shall not be deemed a
breach of this Agreement by Seller or Purchaser. Seller
shall instruct the general manager of the Hotel to provide
such notice to employees to comply with such Act and/or the
federal WARN Act (collectively, the "Plant Closing Laws"),
and any extension of the Closing required by Seller to
provide for such notice(s) shall not be deemed a breach of
this Agreement by Seller.
4.2 Seller's Closing Obligations and Deliveries. At
Closing, Land Company or Operating Company, as applicable,
shall, through Escrow Agent (provided that such items shall
be delivered to Escrow Agent not later than two (2) business
days prior to the scheduled Closing Date or, if applicable,
at the pre-closing described in Section 4.1 above):
(a) Deliver to Purchaser a duly executed assignment of
ground lease (the "Hotel Ground Lease Assignment") in the
form attached hereto as Exhibit B-1 and made a part hereof
conveying Land Company's leasehold interest under that
certain Hotel Ground Lease dated as of October 22, 1985, by
and between Purchaser, as lessor, and KBH and KBH Operations
Limited Partnership, a Hawaii limited partnership (as
predecessor-in-interest to Seller), as tenant, as amended by
(w) that certain Lessor's Consent to Mortgages; Amendment of
Lease; and Estoppel Certificate, dated June 13, 1990, as
further amended by (x) that certain Second Amendment of
Lease dated October 14, 1991, as further amended by (y) that
certain Third Amendment of Hotel Ground Lease, dated as of
September 5, 1996, and as further amended by (z) that
certain Fourth Amendment of Hotel Ground Lease, dated as of
August 31, 1999 (collectively, as amended, the "Hotel Ground
Lease"), with a conveyance tax certificate attached thereto,
if applicable.
(b) Deliver to Purchaser a duly executed assignment of
ground lease (the "Restaurant Ground Lease Assignment") in
the form attached hereto as Exhibit B-2 and made a part
hereof conveying Operating Company's leasehold interest
under that certain Restaurant Lease dated October 22, 1985
between Purchaser and KBH (as predecessor-in-interest to
Seller), as amended by instruments dated (w) January
10,1989, (x) December 31, 1991, (y) February 18, 1993 and
(z) September 5, 1996 (the "Restaurant Ground Lease" and,
collectively with the Hotel Ground Lease, the "Ground
Leases"), with a conveyance tax certificate attached
thereto, if applicable.
(c) Execute and deliver to Purchaser at least
two (2) original counterparts of a xxxx of sale in the form
attached hereto as Exhibit C and made a part hereof
conveying the Personal Property and Consumable Inventory
without warranty of title or use and without warranty,
expressed or implied, as to merchantability and fitness for
any purpose;
(d) Execute and deliver to Purchaser at least two (2)
original counterparts of an assignment of Operating
Company's interest in the Operating Agreements including,
without limitation, the Villas Management Agreement, the
Rental Agreement and, to the extent that the Management
Agreement is not terminated as of Closing pursuant to
Section 1.8 above, the Management Agreement (provided,
however, that for purposes of this Section 4.2(d) only, the
term "Operating Agreements shall specifically exclude the
Supplemental Agreement, the Reciprocal Use Agreement and any
service contracts terminated by Seller effective as of the
Closing Date), if the Labor Agreement is to be assumed by
Purchaser as of Closing pursuant to Section 1.9 above, the
Labor Agreement, the Bookings and the other Intangibles
("Assignment of Contracts") in the form attached hereto as
Exhibit D-1 and made a part hereof;
(e) Execute and deliver to Purchaser at least two (2)
original counterparts of an assignment of Operating
Company's interest in the Supplemental Agreement
("Assignment of Supplemental Agreement") in the form
attached hereto as Exhibit D-2 and made a part hereof;
(f) Execute and deliver to Purchaser at least two (2)
original counterparts of an assignment of Operating
Company's interest in the Reciprocal Use Agreement
("Assignment of Reciprocal Use Agreement") in the form
attached hereto as Exhibit D-3 and made a part hereof;
(g) Execute and deliver to Purchaser at least two (2)
original counterparts of an assignment of Operating
Company's interest in any and all Leases in the form
attached hereto as Exhibit E and made a part hereof;
(h) Deliver to Purchaser a certificate, dated as of the
date of Closing and executed on behalf of Seller by a duly
authorized officer thereof, stating that the representations
and warranties of Seller contained in this Agreement are
true and correct in all material respects as of the date of
Closing (with appropriate modifications of those
representations and warranties made in Section 5.1 hereof to
reflect any changes therein including without limitation any
changes resulting from actions under Section 5.4 hereof) or
identifying any representation or warranty which is not, or
no longer is, true and correct and explaining the state of
facts giving rise to the change. In no event shall Seller
be liable to Purchaser for, or be deemed to be in default
hereunder by reason of, any breach of representation or
warranty which results from any change that (i) occurs
between the Effective Date and the date of Closing and
(ii) is expressly permitted under the terms of this
Agreement or is beyond the reasonable control of Seller to
prevent; provided, however, that the occurrence of a change
which is not permitted hereunder or is beyond the reasonable
control of Seller to prevent shall, if materially adverse to
Purchaser, constitute the non-fulfillment of the condition
set forth in Section 4.6(b). If, despite changes or other
matters described in such certificate, the Closing occurs,
Seller's representations and warranties set forth in this
Agreement shall be deemed to have been modified by all
statements made in such certificate;
(i) Deliver to Purchaser and the Title Company such
evidence as the Title Company may reasonably require as to
the authority of the person or persons executing documents
on behalf of Seller;
(j) Deliver to Purchaser an affidavit duly executed by
Seller stating (i) that Seller is not a "foreign person" as
defined in the Federal Foreign Investment in Real Property
Tax Act of 1980 and the 1984 Tax Reform Act, and (ii)
whether Seller is a resident person (for purposes of
withholding under the Hawaii Real Property Tax Act) as
defined in Section 235-68 of Hawaii Revised Statutes, in the
form attached hereto as Exhibit F and made a part hereof;
(k) If not already delivered to Purchaser, deliver to
Purchaser the Operating Agreements and the licenses and
permits, if any, in the possession of Seller or Seller's
agents, together with such leasing and property files and
records which are material in connection with the continued
operation, leasing and maintenance of the Property.
Purchaser shall cooperate with Seller for a period of
seven (7) years after Closing in case of Seller's need in
response to any legal requirement, a tax audit, tax return
preparation or litigation threatened or brought against
Seller, by allowing Seller and its agents or representatives
access, upon reasonable advance notice (which notice shall
identify the nature of the information sought by Seller), at
all reasonable times to examine and make copies of any and
all instruments, files and records, which right shall
survive the Closing;
(l) Deliver to the Escrow Agent an executed closing
statement (the "Closing Statement") consistent with this
Agreement and in a customary form;
(m) Deliver two (2) original copies of the Designation
Agreement (defined below);
(n) Deliver a Tax Clearance Certificate and a Report of
Bulk Sale for Seller issued by the State of Hawaii
Department of Taxation;
(o) In the event that Seller and Purchaser have agreed upon
the JV Termination Agreement pursuant to Section 3.4 above,
execute (or cause its affiliate to execute) and deliver to
Escrow Agent two (2) original copies thereof;
(p) Deliver such additional documents as shall be
reasonably required to consummate the transaction expressly
contemplated by this Agreement; and
(q) Deliver possession of the Property to Purchaser free
and clear of the Management Agreement unless Purchaser has
timely made an election to continue the Management Agreement
in accordance with Section 1.8 above.
4.3 Purchaser's Closing Obligations and Deliveries. At
Closing, Purchaser shall, through Escrow Agent (provided
that such items shall be delivered to Escrow Agent not later
than two (2) business days prior to the scheduled Closing
Date or, if applicable, at the pre-closing described in
Section 4.1 above):
(a) Pay to Seller the full amount of the Purchase Price, as
increased or decreased by prorations and adjustments as
herein provided, in immediately available wire transferred
funds pursuant to Section 1.5 above, it being agreed that at
Closing the Xxxxxxx Money shall be delivered to Seller and
applied towards payment of the Purchase Price;
(b) Join Seller in execution of (or deliver original
executed counterparts of) the instruments described in
clauses (a), (b), (d), (e), (f), (g), (l), (m), (o) (if
applicable) and (p) of Section 4.2 above;
(c) Deliver to Seller a letter duly executed by Purchaser,
confirming that Purchaser is not acquiring the Property with
the assets of an employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), and, in the event Purchaser is unable or
unwilling to make such a representation, Purchaser shall be
deemed to be in default hereunder, and Seller shall have the
right to terminate this Agreement and to receive and retain
the Xxxxxxx Money;
(d) Deliver to Seller a certificate, dated as of the date
of Closing and executed on behalf of Purchaser by a duly
authorized officer thereof, stating that the representations
and warranties of Purchaser contained in this Agreement are
true and correct in all material respects as of the date of
Closing;
(e) Deliver to Seller such evidence as Title Company may
reasonably require as to the authority of the person or
persons executing documents on behalf of Purchaser;
(f) Execute and deliver to Escrow Agent two (2) original
copies of a release of all post-closing obligations of
Seller under the Hotel Ground Lease and the Restaurant
Ground Lease from and after the Closing Date in the form of
Exhibit I attached hereto; and
(g) Deliver such additional documents as shall be
reasonably required to consummate the transaction
contemplated by this Agreement.
4.4 Credits and Prorations.
(a) The following shall be apportioned with respect to the
Property, as set forth in greater detail in Section 4.4(b)
below, as of 12:01 a.m., on the Closing Date (the "Cut-Off
Time"), as if Purchaser were vested with title to the
Property during the entire day upon which Closing occurs:
(i) taxes (including personal property taxes on the
Personal Property) and assessments levied against the
Property;
(ii) payments under the Operating Agreements (including,
without limitation, the Rental Agreements);
(iii) water, gas, electricity and other utility charges
for which Seller is liable, if any, such charges to be
apportioned at Closing on the basis of (A) for metered
utilities, the most recent meter reading occurring prior to
Closing, and (B) for non-metered utilities, a per diem
apportionment based on the dates of service of such
utilities with respect to the Cut-Off Time (but in either
event subject to later readjustment as set forth below);
(iv) all Receivables including, without limitations,
receivables accrued in connection with hotel reservations,
the use of guest rooms, banquet and meeting room receivables
(including any cancellation fees due to Seller in connection
with any of the foregoing);
(v) All fixed monthly rent, additional rent, escalation
rent and other sums payable under any Lease or similar
agreement for use of space at the Hotel (collectively,
"Rent") in accordance with Section 4.4(b)(xii) below;
(vi) advance deposits;
(vii) operational and/or occupancy taxes;
(viii) if the Management Agreement is not terminated as
of Closing pursuant to Section 1.8 above, management fees
pursuant to the Management Agreement;
(ix) charges and fees paid or payable for licenses and
permits transferred by Seller to Purchaser;
(x) any other payables pertaining to the Property, subject
to later readjustment as set forth in Sections 4.4(d) and
(e) below; and
(xi) any other operating expenses or other items pertaining
to the Property which are customarily prorated between a
purchaser and a seller for comparable hotel properties
including, without limitation, any prepaid expenses.
(b) Notwithstanding anything contained in the foregoing
provisions:
(i) At Closing, Seller shall receive a credit for all
refundable cash or other deposits posted with utility
companies serving the Property or any governmental agencies
or authorities or posted pursuant to any Operating
Agreement, or, at Seller's option, Seller shall be entitled
to receive and retain such refundable cash and deposits.
(ii) Any taxes paid at or prior to Closing shall be prorated
based upon the amounts actually paid. If taxes and
assessments for the current year have not been paid before
Closing, Seller shall be charged at Closing an amount equal
to that portion of such taxes and assessments which relates
to the period before Closing and Purchaser shall pay the
taxes and assessments prior to their becoming delinquent.
Any such apportionment made with respect to a tax year for
which the tax rate or assessed valuation, or both, have not
yet been fixed shall be based upon the tax rate and/or
assessed valuation last fixed. To the extent that the
actual taxes and assessments for the current year differ
from the amount apportioned at Closing, the parties shall
make all necessary adjustments by appropriate payments
between themselves following Closing. All necessary
adjustments shall be made within fifteen (15) business days
after the tax xxxx for the current year is received. Seller
retains the right to commence, continue and settle any
proceeding to contest any taxes for any taxable period which
encompasses any period prior to the date of the Closing, and
shall be entitled to any refunds or abatements of Taxes
awarded in such proceedings.
(iii) Seller shall receive the entire advantage of any
discounts for the prepayment by it of any taxes, water rates
or sewer rents.
(iv) As to gas, electricity and other utility charges
referred to in Section 4.4(a)(iii) above, Seller may, on
notice to Purchaser, elect to pay one or more of all of said
items accrued to the date hereinabove fixed for
apportionment directly to the person or entity entitled
thereto, and to the extent Seller so elects, such item shall
not be apportioned hereunder, and Seller's obligation to pay
such item directly in such case shall survive the Closing.
(v) As of the date immediately prior to the date of
Closing, Seller and Purchaser shall jointly conduct or cause
the Manager to conduct an inventory of all Unopened
Inventory and shall deliver a written report thereon to
Seller and Purchaser. Such report shall reflect the value
of the Unopened Inventory at the acquisition cost thereof
and shall be certified by Manager to Seller and Purchaser as
accurately reflecting all Unopened Inventory at the Hotel
and the acquisition cost thereof. On account of Purchaser's
purchase of the Unopened Inventory, Seller shall receive a
credit at Closing in an amount equal to the total value of
the Unopened Inventory as reflected in such inventory to the
extent that such Unopened Inventory has been paid for by
Seller or will be paid for by Seller.
(vi) At Closing, Seller shall receive (or receive a credit
in an amount equal to) all revenue (after the settlement of
applicable commissions and/or costs) relating to vending
machines in the Hotel up until the Cut-Off Time.
(vii) Revenues from the Hotel guest rooms (other than
those set forth in clause (x) below) occupied on the evening
immediately preceding the date of Closing, including any
sales taxes, room taxes and other taxes charged to guests in
such rooms with respect to the evening immediately preceding
the date of Closing shall be divided equally between Seller
and Purchaser (where a complete meeting package ("CMP")
guest is staying on a CMP rate, the food and beverage
revenues shall be allocated based on whether the applicable
meal or service occurred before or after the Cut-Off Time);
provided, however, that to the extent that Manager records
in the ordinary course the times at which food and beverage
sales, telephone, facsimile or data communication, in-room
movie, laundry, and other services are ordered by guests,
then the same shall be allocated between Seller and
Purchaser based on when orders for the same were received,
with orders originating prior to the Cut-Off Time being
allocable to Seller, and orders originating after the Cut-
Off Time being allocable to Purchaser. All revenues from
restaurants and other service operations conducted at the
Property shall be allocated based on whether the same
accrued before or after the Cut-Off Time as described in the
preceding sentence, and Seller shall cause the Manager to
separately record sales occurring before and after the Cut-
Off Time at the Property. The foregoing amounts are
referred to collectively as "Guest Revenues".
Notwithstanding the foregoing, all revenues from any bars
and lounges at the Property shall be prorated based on the
actual closing time for such bar or lounge. For example, if
such bar or lounge closes at 2 a.m. on the Closing Date,
Seller shall retain the revenues from such services and
operations even though such revenues were generated two (2)
hours after the Cut-Off Time.
(viii) Revenues from conferences, receptions, meetings,
and other functions occurring in any conference, banquet or
meeting rooms in the Hotel, or in any adjacent facilities
owned or operated by Seller, including usage charges and
related taxes, food and beverage sales, valet parking
charges, equipment rentals, and telecommunications charges,
shall be allocated between Seller and Purchaser, based on
when the function therein commenced, with (i) one-day
functions commencing prior to the Cut-Off Time being
allocable to Seller, (ii) functions commencing after the Cut-
Off Time being allocable to Purchaser, and (ii) multi-day
functions being allocated between Seller and Purchaser
according to when the event commences and is scheduled to
end. The foregoing amounts are referred to collectively as
"Conference Revenues."
(ix) Purchaser shall receive a credit at Closing in an
amount equal to one hundred percent (100%) of all advance
deposits that shall have been received by or credited to
Seller prior to the Cut-Off Time on account of reservations
for use or occupancy of the Property after the Cut-Off Time.
(x) To the extent not actually collected by Seller or
Manager prior to the Cut-Off Time, all Guest Revenues and
Conference Revenues allocated to Seller hereunder and not
paid in cash prior to the Cut-Off Time including Seller's
city ledger, guest ledger and any other receivable ledgers
shall together constitute Receivables hereunder and shall be
purchased by Purchaser at Closing. On account of
Purchaser's purchase of the Receivables, Seller shall
receive a credit at Closing in an amount equal to (A) 100%
of the guest ledger amount, and (B) 98% of the city ledger
amount, of the Receivables as reflected in the books of the
Manager, as apportioned between Seller and Purchaser in
accordance with this Section 4.4. After Closing, Purchaser
shall have the exclusive right to collect all Receivables,
and Seller shall have no further rights or interests
therein. Purchaser shall have no right to any adjustment to
the prorations with respect to the Receivables on or after
Closing, for inability to collect outstanding Receivables or
otherwise.
(xi) Rent shall be prorated as of the Closing Date.
Percentage rent or overage rent (referred to herein as
"Percentage Rent") under the Leases shall be prorated
between Purchaser and Seller on a Lease by Lease basis with
Seller entitled to the portion of total Percentage Rent paid
under each Lease for the Lease Year (as defined below) in
which the Closing occurs (the "Subject Lease Year") which is
in the same ratio to total Percentage Rent paid with respect
to such Lease Year under the subject Lease as the ratio of
(A) the number of days of said Lease Year which Seller was
the landlord under the subject Lease to (B) the total number
of days in said Subject Lease Year. Purchaser shall be
entitled to the balance of Percentage Rent paid under each
Lease with respect to the Subject Lease Year. As used
herein, the term "Lease Year" means the twelve (12) month
period (or, as to tenants for which the Closing occurs
during a partial Lease Year, such applicable shorter period)
as to which annual Percentage Rent is owed under each Lease.
The foregoing proration shall be made as follows on a Lease
by Lease basis: (i) for each Lease, not later than thirty
(30) days after the date the last Percentage Rent payment
with respect to the Subject Lease Year is due, Purchaser
shall deliver to Seller a statement of all Percentage Rent
owed, collected or deemed collectable by Purchaser with
respect to such Lease along with a copy of the annual
reconciliation of Percentage Rent owed under the subject
Lease for the Subject Lease Year and the related sales
information backup; and, (ii) for each Lease, within fifteen
(15) days after the date the statement and reconciliation
described in clause (i) above is delivered to Seller,
Purchaser shall pay to Seller or Seller shall pay to
Purchaser, whichever is applicable, the positive difference
between (a) the total Percentage Rental collected by such
party with respect to the Subject Lease Year and (b) the
product of (x) the average daily Percentage Rental received
with respect to the Subject Lease Year after taking into
account the annual reconciliation and (y) the actual number
of days such party was the owner of the Property during the
Subject Lease Year (with Purchaser being deemed to be the
owner as of the Closing). If Percentage Rent is thereafter
collected by Purchaser from delinquent tenants, Purchaser
shall promptly pay to Seller a portion thereof which is
equal to the ratio of (aa) the number of days of the subject
Lease Year in which Seller was the landlord under the
subject Lease has to (bb) the total number of days in the
Lease Year. Seller shall have the right, upon reasonable
notice but no more often than twice in any twelve (12) month
period, to audit Purchaser's books and records to verify the
amount of Percentage Rent which has actually been collected
by Purchaser.
(xii) Purchaser shall be entitled to a credit for all
unapplied and refundable security and other deposits
retained by Seller as of the Closing Date with respect to
any Leases at the Hotel.
(xiii) Subject to the provisions of this Section
4.4(b)(xiii), Seller shall be responsible for all wages and
other amounts owed to Seller's employees at the Property
relating to the period prior to the Cut-Off Time and
Purchaser shall be responsible for all wages and other
amounts due to employees at the Property relating to the
period after the Cut-Off Time. The obligation to pay or
reimburse the Manager for the wages, salaries, and other
benefits of employment of employees of Seller, together with
applicable employment and withholding taxes of such
employees, shall be allocated between Purchaser and Seller
as follows:
(1) Hourly Employees: (A) wages of hourly
employees shall be allocated according
to hours worked during the current pay
period before and after the Cut-Off
Time; (B) employment and withholding
taxes for the current pay period for
such employees shall be allocated in the
same manner as wages; (C) accrued
vacation and sick leave and required
contributions to health, pension and
other benefit plans for such employees
shall be allocated on the basis used by
Manager under the Management Agreement
for allocating such costs to particular
accounting periods, with such costs
attributable to the accounting period in
which the date of Closing occurs to be
allocated on a per diem basis according
to the number of days in the current
period occurring before and after the
Cut-Off Time; (D) Purchaser shall be
responsible for all severance pay
(including separation pay, as such is
term used in the Labor Agreement) with
respect to discharged employees
(regardless of whether discharged by
Seller in connection with the sale of
the Hotel or after Closing by
Purchaser).
(2) Salaried Employees: the salaries,
employment and withholding taxes,
accrued vacation, sick leave, and other
employment benefits for salaried
employees shall be allocated on the
basis used by the Manager under the
Management Agreement for allocating such
costs to particular accounting periods,
with such costs during the accounting
period in which the date of Closing
occurs to be allocated on a per diem
basis according to the number of days in
the current period occurring before and
after the Cut-Off Time. Purchaser shall
be responsible for all severance pay
(including separation pay, as such term
is used in the Labor Agreement) with
respect to discharged employees
(regardless of whether discharged by
Seller in connection with the sale of
the Hotel or after Closing by
Purchaser).
(3) Purchaser acknowledges that the Purchase
Price has already been reduced by Seller
in consideration of Purchaser's
agreement to be responsible for all
severance obligations (including
separation pay obligations, as such term
is used in the Labor Agreement) due to
discharged employees. Accordingly,
Purchaser shall have no right to any
post-closing adjustment to the Purchase
Price or prorations made on or after
Closing with respect to severance pay or
separation pay coming due on or after
Closing, irrespective of whether such
severance obligations change or are
recalculated following the Closing.
Notwithstanding any provision of this Section 4.4 to
the contrary, to the extent required by the Labor Agreement
or applicable law, accrued wages, vacation pay, health and
welfare payments and other amounts accrued as of the Closing
Date and due to employees of the Hotel which are to be borne
by Seller under the express provisions of this Agreement,
shall be paid at closing by Seller and shall not be prorated
(in lieu of Purchaser receiving a credit therefor at
Closing). This provision is not intended to alter the
allocation of costs between Seller and Purchaser as provided
herein.
(xiv) If the Management Agreement is not terminated at
Closing pursuant to Section 1.8 above: (x) those fees and
other compensation payable to the Manager under the
Management Agreement which are earned prior to the Cut-Off
Time shall be the responsibility of Seller, and the fees and
other compensation payable to the Manager under the
Management Agreement which are earned after the Cut-Off Time
shall be the responsibility of Purchaser, (y) the amount
earned for such period shall be determined based on the
provisions of the Management Agreement in accordance with
the allocations of revenue and expense items under this
Agreement, and (z) on the Closing Date, the parties shall
estimate, and Purchaser shall receive a credit for, Seller's
share of accrued but unpaid management fees due under the
Management Agreement and reimbursable expenses as of the
Closing Date.
(xv) The parties acknowledge that certain taxes accrue and
are payable to the various local governments by any business
entity operating a hotel and its related facilities.
Included in those taxes may be business and occupation
taxes, retail sales taxes, gross receipts taxes, and other
special lodging or hotel taxes. For purposes of this
Agreement, all of such taxes (expressly excluding taxes and
assessments covered elsewhere in this Section 4.4 or in
Section 4.5 or corporate franchise taxes, and federal, state
and local income taxes) shall be allocated between Seller
and Purchaser such that those attributable to the period
prior to the Cut-Off Time shall be allocable to Seller and
those attributable to the period after the Cut-Off Time
shall be allocable to Purchaser (with the attribution of
such taxes hereunder to be done in a manner consistent with
the attribution under this Agreement of the applicable
revenues on which such taxes may be based). Seller shall be
solely responsible for payment of such taxes with respect to
the period prior to the Cut-Off Time, and Purchaser shall be
solely responsible for payment of such taxes with respect to
the period after the Cut-Off Time; provided, that, the
parties may make an estimate of the amount of Seller's share
of such taxes accrued but not paid up to the Cut-Off Time
and credit the amount so estimated to Purchaser at Closing,
and in such case, to the extent of such credit, Purchaser
shall be responsible for the payment of such taxes when due
after the date of Closing and Seller shall not be liable for
the amount of such taxes so credited to Purchaser; and
provided further, that to the extent reasonably possible,
the parties shall ascertain the amounts of such taxes
allocable to Seller within the 90-day period following the
date of Closing (concurrently with their determination of
the amounts of the revenues allocable to Seller pursuant to
Section 4.4(b)(xi) hereof), and if the parties shall agree
on the amount thereof, Purchaser may deduct Seller's share
of such taxes from the amounts of revenues payable to Seller
(and Seller shall not be further liable for the taxes so
deducted) and, if the amount due Purchaser exceeds the
revenues payable to Seller, Seller shall promptly pay any
excess to Purchaser. If the parties are unable to agree on
such amounts, the dispute thereon shall be resolved by the
Outside Accountant as provided in Section 4.4(e) below.
(xvi) Seller shall receive a credit at Closing in an
amount equal to the balance of the House Bank Funds as of
the Cut-Off Time.
(xvii) Purchaser shall (A) honor all outstanding
unexpired gift certificates, coupons, vouchers or other
writings issued by Seller that entitles the holder or bearer
thereof to a credit (whether in a specified dollar amount as
for a specified item, such as room night or meals) to be
applied against the usual charge for rooms, meals and/or
goods and services at the Hotel (collectively, "Vouchers")
and shall assume all liability, if any, for all outstanding
Vouchers as of the Closing Date regardless of any purported
expiration, (B) receive a credit against the Purchase Price
payable at Closing as set forth in Schedule 4.4(b)(xvii)
attached hereto and incorporated herein by this reference
(such Schedule 4.4(b)(xvii) to be updated at Closing), and
(C) indemnify, defend and hold Seller harmless from and
against all claims, liabilities, costs and expenses arising
out of the Vouchers from and after the Closing Date. The
provisions of this Section 4.4(b) (xvii) shall survive the
Closing without limit.
(c) Apportionment Credit. In the event the apportionments
to be made at the Closing result in a credit balance (i) to
Purchaser, such sum shall be paid (at Seller's option) at
the Closing by giving Purchaser a credit against the
Purchase Price in the amount of such credit balance, or
(ii) to Seller, Purchaser shall pay the amount thereof to
Escrow Agent concurrently with the balance of the Purchase
Price, to be delivered to Seller at Closing together with
the net proceeds of the Purchase Price by wire transfer of
immediately available funds to the account or accounts to be
designated by Seller for the payment of the balance. Except
as otherwise expressly provided herein, in any case in which
Purchaser receives a credit at Closing on account of any
obligation of Seller hereunder, Seller shall have no further
liability for such obligation to the extent of the credit so
given, and Purchaser shall pay and discharge the same.
(d) Closing Statement; Post-Closing Adjustments. The
accounting staff of Seller ("Seller's Accountants") and the
accounting staff of Purchaser ("Purchaser's Accountants")
shall jointly make such inventories, examinations and audits
of the Property, and of the books and records pertaining to
the Property, as Seller's Accountants and Purchaser's
Accountants may deem necessary to make the adjustments and
prorations required under this Section 4.4, or under any
other provisions of this Agreement. All such adjustments
and prorations shall be made in accordance with the
provisions of this Agreement and, to the extent not in
conflict with the express provisions of this Agreement,
otherwise in accordance with generally accepted accounting
principles ("GAAP"). Based upon the results thereof, Seller
will prepare and deliver to Purchaser for its review and
approval prior to Closing a statement of prorations (the
"Prorations Statement") which shall (i) contain the best
estimate of Seller's Accountants of the amounts of the items
requiring the prorations and adjustments in accordance with
this Agreement and (ii) following approval by Purchaser's
Accountants, be the basis upon which the prorations and
adjustments provided for herein shall be made at the
Closing. The Prorations Statement shall be binding and
conclusive on all parties hereto to the extent of the items
covered by the Prorations Statement, except (A) where this
Agreement expressly provides for further adjustment of such
amounts after Closing, and (B) as otherwise provided in
Section 4.4(e) below.
(e) Delayed Adjustment; Disputes. Except for prorations for
real estate taxes and other assessments, which shall be
adjusted within fifteen business (15) days of receipt of the
tax xxxx for the tax year in which the Closing occurs,
Purchaser and Seller shall make a one time post-Closing
adjustment of any item of income and expense (excluding
Percentage Rent which shall be adjusted as set forth above)
subject to adjustment as provided above which was either
incomplete or incorrect (whether as a result of an error in
calculation or a lack of complete and accurate information)
as of the Closing, and the party in whose favor the original
incorrect adjustment or error was made ("Adjusting Party")
shall promptly pay to the other party ("Requesting Party")
the sum necessary to correct such prior incorrect adjustment
or error. Notwithstanding any provision of this Agreement
to the contrary, all items required to be adjusted pursuant
to this Section 4.4 shall be adjusted within sixty (60) days
of Closing (except real estate taxes, which shall be re-
adjusted within the period set forth above), and such
adjustment shall be final and no further adjustment to the
prorations or the Purchase Price shall be made.
(f) Resolution of Disputes. Subject to Section 4.4.(e)
above, within ten (10) business days after receipt of
written notice of any such adjustment from the Requesting
Party to the Adjusting Party, the Adjusting Party shall
either (i) pay to the Requesting Party the amount of such
excess credit, or (ii) notify the Requesting Party in
writing that it disputes the adjustment being claimed. In
the case of a dispute, the parties shall attempt to resolve
such dispute, but if for any reason such dispute is not
resolved by the date that is ten (10) days after the
delivery of the original notice of the claimed adjustment by
Purchaser or Seller, but not to exceed sixty (60) days after
Closing, then the parties shall submit such dispute to
Deloitte & Touche, LLP ("Outside Accountants"), and the
determination of the Outside Accountants, which shall be
made within a period of fifteen (15) days after such
submittal by the parties, shall be conclusive. The fees and
expenses of the Outside Accountants shall be paid equally by
Purchaser and Seller. At such time as the amount of any
adjustment or dispute shall be determined (either by
agreement or by determination of the Outside Accountants),
any amount that shall be payable by the Requesting Party to
the Adjusting Party as a result of such adjustment or
determination shall be paid within ten (10) business days
after the date on which such agreement or determination
shall have been made.
(g) The provisions of this Section 4.4 shall survive
Closing.
4.5 Closing Costs. Seller shall pay (a) the fees of any
counsel representing it in connection with this transaction,
(b) the documentary transfer tax or conveyance tax payable
by reason of the transfer of the Real Property, (c) the fees
for recording the Hotel Ground Lease Assignment, the
Restaurant Ground Lease Assignment and any reconveyance or
release of any leasehold mortgage affecting the Property
that will be reconveyed or released at Closing, (d) sixty
percent (60%) of the CLTA portion of the Title Policy, (e)
any bulk sales tax, general excise tax or sales tax payable
on the sale of the Personal Property (or any part thereof),
and (f) one-half (1/2) of any escrow fee which may be charged
by the Escrow Agent. Purchaser shall pay (i) the fees of
any counsel representing Purchaser in connection with this
transaction, (ii) the premium for the Title Policy in excess
of the amount required to be paid by Seller as set forth
above, plus 100% of the cost of any endorsements to the
Title Policy, and the cost of any title insurance provided
to Purchaser's lender, (iii) the cost of the Survey, (iv)
any taxes other than those required to be paid by Seller as
set forth above (including any transfer tax or similar tax
imposed by the Association, if any), and (v) one-half (1/2) of
any escrow fees charged by the Escrow Agent. All other
costs and expenses incident to this transaction and the
closing thereof shall be paid in a manner consistent with
custom for similar transactions in Maui, Hawaii.
Notwithstanding the foregoing, in the event that this
Agreement is terminated as a result of a party's default,
such defaulting party shall pay all escrow and title
cancellation fees charged in connection with such
cancellation.
4.6 Conditions Precedent to Obligation of Purchaser. The
obligation of Purchaser to consummate the transaction
hereunder shall be subject to the fulfillment on or before
the date of Closing of all of the following conditions, any
or all of which may be waived by Purchaser in its sole
discretion:
(a) Seller shall have delivered to Purchaser or deposited
with Escrow Agent all of the items required to be delivered
to Purchaser or deposited with Escrow Agent pursuant to the
terms of this Agreement, including but not limited to, those
provided for in Section 4.2.
(b) All of the representations and warranties of Seller
contained in this Agreement shall be true and correct in all
material respects as of the date of Closing (with
appropriate modifications permitted under this Agreement or
not materially adverse to Purchaser).
(c) Seller shall have performed and observed, in all
material respects, all covenants and agreements of this
Agreement to be performed and observed by Seller as of the
date of Closing.
(d) Title Company (or another nationally recognized title
company licensed to do business in Hawaii) shall be
committed to issue the Title Policy in the amount of the
Purchase Price and showing title to the Real Property vested
in Purchaser subject only to the Permitted Exceptions (and
any items to be recorded at Closing).
(e) The Department of Liquor Control - County of Maui shall
be prepared to issue to Purchaser, upon receipt of evidence
of the transfer of the Hotel promptly following Closing, a
temporary liquor license that allows the service of alcohol
at the Hotel.
(f) Purchaser shall have received either (i) an executed
estoppel certificate from Manager in substantially the form
attached hereto as Exhibit H-1, (ii) an executed estoppel
certificate from Manager containing the Required Information
(as defined below) or (iii) an executed estoppel certificate
in the form attached hereto as Exhibit H-3.
4.7 Conditions Precedent to Obligation of Seller. The
obligation of Seller to consummate the transaction hereunder
shall be subject to the fulfillment on or before the date of
Closing of all of the following conditions, any or all of
which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as
adjusted pursuant to and payable in the manner provided for
in this Agreement.
(b) Purchaser shall have delivered to Seller all of the
items required to be delivered to Seller pursuant to the
terms of this Agreement, including but not limited to, those
provided for in Section 4.3.
(c) All of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all
material respects as of the date of Closing.
(d) Purchaser shall have performed and observed, in all
material respects, all covenants and agreements of this
Agreement to be performed and observed by Purchaser as of
the date of Closing.
(e) Purchaser shall have released Seller, in writing, in
the form attached hereto as Exhibit "I", from all of its
obligations under the Ground Leases arising on or after the
Closing Date.
4.8 Failure of Waiver of Conditions Precedent.
(a) Subject to the provisions of Section 4.8(b) below, in
the event any of the conditions set forth in Sections 4.6 or
4.7 are not fulfilled or waived on or before the Outside
Closing Date, the party benefited by such conditions may, by
written notice to the other party, terminate this Agreement,
whereupon all rights and obligations hereunder of each party
shall be at an end except those that expressly survive any
termination. Either party benefited by a condition set
forth in Sections 4.6 and 4.7 above may, at its election, at
any time or times on or before the date specified for the
satisfaction of the condition, waive in writing the benefit
of such condition. Purchaser's consent to the close of
escrow pursuant to this Agreement shall waive any remaining
unfulfilled conditions, and any liability on the part of
Seller for breaches of representations and warranties of
which Purchaser had knowledge as of the Closing.
(b) Notwithstanding the provisions of Section 4.8(a) above,
prior to Purchaser's termination of this Agreement as a
result of a failure of the condition precedent set forth in
Section 4.6(d) above, Purchaser shall give Seller, on or
before the Outside Closing Date then in effect, written
notice of any such failure and (i) Seller shall have a
thirty (30) day period within which to cure any such
failure, and (ii) the Outside Closing Date shall be extended
until the earlier of (A) the expiration of such thirty (30)
day period, or (B) Seller's cure of such failure.
4.9 Alcoholic Beverage License.
(a) Purchaser acknowledges that Operating Company is the
holder of the current alcoholic beverage license(s) for the
Hotel (collectively, the "Existing Liquor License").
Operating Company shall cooperate with Purchaser in
arranging for the transfer of the Existing Liquor License to
Purchaser, provided that such transfer and cooperation shall
(i) not create any potential liability for Seller and (ii)
be at no cost or expense to Seller; provided that in no
event shall Seller be required to transfer to Purchaser any
alcoholic beverage inventory which is located at or held for
use in the Hotel unless and until Purchaser has obtained a
valid and effective license entitling Purchaser to sell
alcoholic beverages at the Hotel.
(b) Within five (5) days following the Effective Date,
Purchaser shall file all necessary applications and
supporting materials with the Department of Liquor Control -
County of Maui as may be required to obtain a permanent or
temporary liquor license for the Hotel, and shall diligently
pursue in good faith the issuance of such liquor license by
the Outside Closing Date (including, without limitation,
promptly responding to all requests and questions from the
Department of Liquor Control - County of Maui).
Concurrently with submission of such applications and
materials, Purchaser shall provide Seller with a copy
thereof (provided that, unless a dispute arises between
Seller and Purchaser under this Agreement with respect to
Purchaser's efforts to obtain a liquor license, Purchaser
shall be entitled to redact any personal information on any
application submitted by an individual). Purchaser shall
also provide Seller with copies of any correspondence to and
from the Department of Liquor Control - County of Maui in
connection with the liquor license application. Time is of
the essence with respect to the provisions of this
Section.4.9(b).
(c) Notwithstanding anything herein to the contrary, if,
despite Purchaser's compliance with Section 4.9(b) above,
the Department of Liquor Control - County of Maui is not
prepared, as of the Outside Closing Date, to issue to
Purchaser or Purchaser's designee, promptly following
Closing upon receipt of evidence of the transfer of the
Hotel, either a temporary liquor license or a permanent
liquor license that allows the service of alcohol at the
Hotel, Purchaser shall have the one-time right, by providing
Seller and Escrow Agent with prior written notice delivered
not less than five (5) business days prior to the Outside
Closing Date, to extend the Outside Closing Date for up to
thirty (30) days following the original Outside Closing Date
by making an additional deposit of Five Million Dollars
($5,000,000.00) in cash (or a letter or credit in favor of
Seller in a form and issued by a bank reasonably acceptable
to Seller) (the "Extension Deposit") with Escrow Agent. The
Extension Deposit shall be deemed to be a part of the
Xxxxxxx Money for all purposes of this Agreement and shall
be applied against the Purchase Price at Closing.
(d) Purchaser shall keep Seller apprised of its progress in
obtaining a liquor license for the Hotel (temporary and/or
permanent).
4.10 Designation Agreement. On or before the Closing Date,
Seller and Purchaser shall each execute an original
counterpart of a Designation Agreement, substantially in the
form of Exhibit G attached hereto, which Designation
Agreement names the Title Company as the "Reporting Person"
under Section 6045(e) of the Internal Revenue Code (the
"Designation Agreement").
4.11 Disbursements and Other Actions by Escrow Agent. Upon
the Closing, Escrow Agent shall promptly undertake all of
the following in the following order and manner:
(a) Cause the Hotel Ground Lease Assignment, the
Restaurant Ground Lease Assignment, the Assignment of
Supplemental Agreement and the Assignment of Reciprocal Use
Agreement and any other documents which the parties hereto
may mutually direct to be recorded in the Bureau of
Conveyances of the State of Hawaii and/or the Land Court of
the State of Hawaii, as appropriate;
(b) Disburse to Seller from funds deposited by
Purchaser with Escrow Agent towards payment of all items
(including, without limitation, the Purchase Price)
chargeable to the account of Purchaser;
(c) Deliver to Seller a fully executed original of the
instruments described in clauses (a), (c), (d), (i), (j),
(k) and (o) of Section 4.2 above and clauses (c), (d), (f)
and (g) of Section 4.3 and a conformed copy of the documents
to be recorded that are listed in Section 4.11(a) above;
(d) Deliver to Purchaser a fully executed original of
the instruments described in clauses (a), (b), (c), (d),
(e), (g), (i), (j) (k) and (o) of Section 4.2 above and a
conformed copy of the documents to be recorded that are
listed in Section 4.11(a) above;
(e) Direct the Title Company to issue the Title Policy
to Purchaser; and
(f) File the Designation Agreement.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Seller. Seller
hereby makes the following representations and warranties to
Purchaser as of the Effective Date:
(a) Organization and Authority. Each of Land Company and
Operating Company has been duly organized and is validly
existing under the laws of Delaware. Seller has the full
right and authority to enter into this Agreement and to
transfer all of the Property to be conveyed by Seller
pursuant hereto and to consummate or cause to be consummated
the transactions contemplated herein to be made by Seller.
The person signing this Agreement on behalf of Seller is
authorized to do so.
(b) Pending Actions. There is no action, suit,
arbitration, unsatisfied order or judgment, government
investigation or proceeding pending against Seller which, if
adversely determined, could individually or in the aggregate
materially interfere with the consummation of the
transaction contemplated by this Agreement.
(c) Leases. Except as otherwise disclosed in the Reports,
the Property Information or the due diligence materials
provided to Purchaser, the list of Leases attached hereto as
Schedule 1.1(h) is accurate in all material respects and
lists all Leases currently affecting the Hotel, and Seller
has delivered (or otherwise made available to Purchaser) a
true and correct copy of such Leases. Except for the
Leases, to Seller's knowledge, there are no other leases or
occupancy agreements to which Seller is a party affecting
the Property.
(d) No Violations. To Seller's knowledge, Seller has not
received prior to the Effective Date any written
notification from any governmental or public authority (i)
that the Hotel is in violation of any applicable fire,
health, building, use, occupancy or zoning laws where such
violation remains outstanding and, if unaddressed, would
have a material adverse effect on the use of the Property as
currently owned and operated or (ii) that any work is
required to be done upon or in connection with the Property,
where such work remains outstanding and, if unaddressed,
would have a material adverse effect on the use of the
Property as currently owned and operated.
(e) Condemnation. To Seller's knowledge, no condemnation
proceedings relating to the Real Property are pending.
(f) Environmental Matters. Except as set forth in the
Reports, a copy of which have been delivered to Purchaser or
as otherwise disclosed to Purchaser, to Seller's knowledge,
Seller has received no written notification that any
governmental or quasi-governmental authority has determined
that there are any material violations of environmental
statutes, ordinances or regulations affecting the Property.
(g) Operating Agreements. Except as set forth in the due
diligence materials provided to Purchaser, to Seller's
knowledge, neither Seller nor any other party to any of the
Operating Agreements listed on Schedule 5.2(g) is in
material default under such agreements beyond any applicable
notice and cure period.
(h) Documents. To Seller's knowledge, all documents listed
on Schedule 5.2(g) attached hereto and delivered to
Purchaser by or on behalf of Seller are true and correct
copies of the originals in all material respects.
5.2 Knowledge Defined. For purposes of this Agreement,
"knowledge" means (a) with respect to Seller, the actual
knowledge of Xxxx Xxxxxxx, Xxxx Xxxxxx, Xx Xxxxxx and Xxxx
Xxxx (provided that, in no event shall any such person have
any personal liability arising under this Agreement),
without any duty of inquiry or investigation, and expressly
excluding the knowledge of any other shareholder, partner,
member, trustee, beneficiary, director, officer, manager,
employee, agent or representative of Seller or any of its
affiliates, and (b) with respect to Purchaser, (i) the
actual knowledge of Xxxxx Xxxx, Xxxx Xxxxx, Xxxx Xxxxxxxxx
and Xxxxxx Xxxxx (provided that, in no event shall any such
person have any personal liability arising under this
Agreement) and expressly excluding the knowledge of any
other shareholder, partner, member, trustee, beneficiary,
director, officer, manager, employee, agent or
representative of Purchaser or any of its Affiliates, (ii)
any matter disclosed in any exhibits or schedules to this
Agreement, (iii) any matter disclosed in any of the Reports,
the Property Information or the due diligence materials
provided to Purchaser or any other documents or materials
provided by Seller or its agents to Purchaser prior to
Closing, and (iv) any matter disclosed by Purchaser's
inspections or investigations of the Property. For the
purposes of this definition, the term "actual knowledge"
means, with respect to any person, the conscious awareness
of such person at the time in question, and expressly
excludes any constructive or implied knowledge of such
person.
5.3 Survival of Seller's Representations and Warranties.
The representations and warranties of Seller set forth in
Section 5.1 as updated by the certificate of Seller to be
delivered to Purchaser at Closing in accordance with Section
4.2(h) hereof, shall survive Closing for a period of one (1)
year. No claim for a breach of any representation or
warranty of Seller shall be actionable or payable unless
each of the following are satisfied: (a) the breach in
question results from or is based on a condition, state of
facts or other matter which were not known to Purchaser
prior to Closing, (b) the valid claims for all such
breaches, if any, collectively aggregate more than One
Hundred Thousand Dollars ($100,000), in which event the full
amount of such claims shall be actionable, and (c) written
notice containing a description of the specific nature of
such breach shall have been given by Purchaser to Seller
prior to the expiration of said one (1) year period and an
action shall have been commenced by Purchaser against Seller
within thirty (30) days after the termination of the
survival period provided for above in this Section 5.3
(except that if Purchaser is seeking recovery from any third
party as provided in the following sentence, Purchaser shall
only be required to provide written notice to Seller within
the one hundred eighty day period and shall not be required
to commence an action against Seller to preserve its
claims). Purchaser agrees to first seek recovery under any
insurance/title policies, the Leases and the Operating
Agreements (including, without limitation, the Management
Agreement) prior to seeking recovery from Seller, and Seller
shall not be liable to Purchaser if Purchaser's claim is
satisfied from such insurance policies or agreements. As
used herein, the term "Cap" shall mean the total aggregate
amount of One Million Five Hundred Thousand Dollars
($1,500,000). In no event shall (i) Seller's aggregate
liability to Purchaser for breach of any representation or
warranty of Seller in this Agreement (as modified by any
certificate to be delivered by Seller at Closing pursuant to
Section 4.2(h) hereof), or any other claim whatsoever by
Purchaser against Seller hereof exceed the amount of the
Cap, or (ii) Seller be liable for any consequential or
punitive damages.
5.4 Covenants of Seller. Seller hereby covenants with
Purchaser as follows:
(a) Seller hereby covenants and agrees that from and after
the Effective Date until the Closing or earlier termination
of this Agreement, Seller shall use reasonable efforts to
cause Manager (subject to the terms, conditions and
restraints in the Management Agreement) to operate and
maintain the Hotel in a manner generally consistent with the
manner in which Seller caused Manager to operate and
maintain the Hotel prior to the Effective Date. Purchaser
acknowledges that Seller's ability to control the operation
of the Hotel is limited by the terms of the Management
Agreement.
(b) From the Effective Date hereof until Closing or the
earlier termination of this Agreement, Seller use
commercially reasonable efforts to shall perform its
material obligations under the Management Agreement, the
Operating Agreements and other agreements that may affect
the Property.
(c) Seller shall, (1) promptly after the mutual execution
of this Agreement by Seller and Purchaser, deliver to
Manager an estoppel certificate in the form attached hereto
as Exhibit H-1 (the "Broad Form Estoppel") and, (2) within
thirty (30) days after the expiration of the Inspection
Period, deliver to each tenant of the Real Property under
the Leases, an estoppel certificate in the form attached to
or otherwise provided in the applicable lease or agreement
or, if no form is required, substantially the form of
Exhibit H-2 attached hereto (collectively, the "Estoppels"),
and shall request that Manager and the tenants complete and
sign the Estoppels and return them to Seller. Seller shall
deliver copies of the completed Estoppels to Purchaser as
Seller receives them (whether received before or after
Closing). Further:
(i) In the event that Manager executes the Broad Form
Estoppel or some other form of statement that contains, at a
minimum, the Required Information, and delivers the same to
Seller prior to the expiration of the Inspection Period,
Seller shall have no further obligation with respect to
delivery of an estoppel certificate from the Manager and the
condition set forth in Section 4.6(f) above shall be deemed
satisfied.
(ii) In the event that Manager does not execute the Broad
Form Estoppel (or some other form of statement that
contains, at a minimum, the Required Information) on or
before the expiration of the Inspection Period, Seller shall
deliver to Manager an estoppel certificate in the form
attached hereto as Exhibit H-3 and shall request that
Manager complete and sign the same.
(iii) In the event that (1) Manager does not provide the
Broad Form Estoppel but does provide on or before the
expiration of the Inspection Period some form of statement
that contains, at a minimum, the Required Information, and
(2) Purchaser elects not to assume the Management Agreement
at Closing pursuant to Section 1.8 above, Seller shall, for
the purpose of updating the statement as to the Required
Information, not more than forty-five (45) days prior to the
scheduled Closing Date, deliver to Manager an estoppel
certificate in the form attached hereto as Exhibit H-3 and
shall request that Manager complete and sign the same prior
to the Closing Date. Receipt of such updated statement as
to the Required Information shall not be a condition to
Purchaser's obligation to close.
(iv) As used herein, the "Required Information" shall mean,
collectively, a statement(s) from Manager: (1) that the
Management Agreement has not been modified and is in full
force and effect (or, if there have been modifications, that
the same is in full force and effect as modified and
specifying the modifications); and (2) whether, to the best
knowledge of the signatory of such statement, any default
exists, including any Event of Default (as defined in the
Management Agreement), and if so, specifying each default of
which the signatory may have knowledge.
(v) Notwithstanding any provision of this Agreement to the
contrary, Purchaser's receipt of the Estoppels is not a
condition to Purchaser's obligation to close and to acquire
the Property (except to the extent expressly provided in
Section 4.6(f) above) and the failure to obtain estoppel
certificates from all or any of such parties shall not (A)
constitute a default by Seller hereunder or (B) permit
Purchaser to terminate this Agreement or obtain the return
of the Xxxxxxx Money.
(d) During the period commencing on the expiration of the
Inspection Period and ending on the Closing Date, subject to
any express provision of this Agreement to the contrary,
Seller shall not, without Purchaser's prior written consent
(not to be unreasonably withheld or delayed), (1) personally
take the following actions, or, (2) where it has the right
to consent, and subject to any restraints arising under or
in connection with the Management Agreement, consent to
Manager taking the actions described below. Notwithstanding
any provision of this Section 5.4(d) to the contrary,
Purchaser acknowledges and agrees that all of Seller's
covenants herein are expressly made subject to the terms and
conditions of the Management Agreement and that Manager may
have the right to unilaterally take the following actions
without requesting Seller's consent pursuant to the terms of
the Management Agreement:
(i) Voluntarily grant, create or assume any mortgage, lien,
encumbrance, easement, covenant, condition, right-of-way or
restriction upon the Real Property (other than liens and
other claims which will be removed as of the Closing Date);
(ii) Enter into any new contract with a term which will
extend beyond the Closing Date (other than contracts for the
replacement or resupply of Consumable Inventory or tangible
Personal Property in the ordinary course of business in
accordance with past practice); amend, modify, supplement or
renew any other material Operating Agreement (other than in
the ordinary course of business) in effect as of the
Effective Date; or terminate any material Operating
Agreement in effect on the date hereof unless the other
party to such agreement is in default thereunder; or
(iii) Enter into any new lease or license with respect
to the Real Property; terminate any Lease (unless the tenant
thereunder has defaulted in the payment of rent for more
than thirty (30) days or otherwise materially defaulted
thereunder); enter into any modification of any of the terms
of any Lease which modification (A) decreases the rent or
any other payments thereunder in any material respect, (B)
shortens or extends the current term of such Lease, or (C)
substantially increases the obligations of the landlord or
substantially decreases the obligations of the tenant under
such Lease.
(e) Seller shall promptly advise Purchaser of any filed
litigation, arbitration proceedings or administrative
hearings concerning the Property of which Seller obtains
actual knowledge.
(f) Unless the Management Agreement is not being terminated
pursuant to Section 1.8 above, Seller shall deliver the
notice of termination required under Section 4.4 of the
Management Agreement not less than thirty (30) days prior to
the Closing.
(g) Seller shall have given the notices required under any
Plant Closing Laws as specified in Section 4.1(b) above.
Notwithstanding the election made by Purchaser under Section
1.9 above, Seller shall terminate all Hotel employees
effective as of the end of their workshift on the Closing
Date or midnight if their workshift extends past midnight.
For purposes of liability under any Plant Closing Laws, the
Closing Date is considered to be the "effective date of
sale".
(h) Beginning one (1) week prior to the Closing Date,
Seller shall use commercially reasonable efforts to cause
Manager to provide to Purchaser, at no cost or expense to
Purchaser, a meeting room suitable for Purchaser to conduct
interviews and evaluate employment applications of those
parties who may seek employment at the Property following
Closing and Seller shall instruct Manager to reasonably
cooperate with Purchaser's efforts to conduct such
interviews.
5.5 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller:
(a) ERISA. Purchaser is not acquiring the Property with
the assets of an employee benefit plan as defined in Section
3(3) of ERISA.
(b) Organization and Authority. Purchaser has been duly
organized and is validly existing under the laws of Hawaii.
Purchaser has the full right, power and authority to
purchase the Property as provided in this Agreement and to
carry out Purchaser's obligations hereunder, and all
requisite action necessary to authorize Purchaser to enter
into this Agreement and to carry out its obligations
hereunder have been, or by the Closing will have been,
taken. The person signing this Agreement on behalf of
Purchaser is authorized to do so, and this Agreement is
enforceable against Purchaser in accordance with its terms,
subject to bankruptcy, insolvency and similar laws.
(c) Pending Actions. There is no action, suit,
arbitration, unsatisfied order or judgment, government
investigation or proceeding pending against Purchaser which,
if adversely determined, could individually or in the
aggregate materially interfere with the consummation of the
transaction contemplated by this Agreement.
(d) Patriot Act Compliance. Neither Purchaser nor any
individual or entity having an interest in Purchaser is a
person or entity described by Section 1 of the Executive
Order (No. 13,224) Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism, 66 Fed. Reg. 49,079 (September 24, 2001),
and does not engage in any dealings or transactions, and is
not otherwise associated, with any such persons or entities.
(e) Liquor License. Purchaser has no knowledge of any
reason that Purchaser, or its applicable designee, would not
be approved by the Department of Liquor Control - County of
Maui in a timely manner following its application for a
temporary liquor license (or a transfer of Operating
Company's liquor license) for the Hotel.
5.6 Survival of Purchaser's Representations and Warranties.
The representations and warranties of Purchaser set forth in
Section 5.5(a) shall survive Closing and shall be a
continuing representation and warranty without limitation.
All other representations and warranties of Purchaser shall
survive Closing for a period of one (1) year.
5.7 Covenants of Purchaser.
(a) In connection with its investigation of the Property
during the Inspection Period, Purchaser may at its election
(but subject to the limitations of Section 3.1 above)
inspect the Property for the presence of Hazardous
Substances (as defined below), and in such event shall
furnish to Seller copies of any reports received by
Purchaser in connection with any such inspection. Purchaser
hereby assumes full responsibility for such inspections and
irrevocably waives any claim against Seller and releases
Seller from all liability arising from the presence of
Hazardous Substances on the Property. Purchaser shall also
furnish to Seller copies of any other reports received by
Purchaser relating to any other inspections of the Property
conducted on Purchaser's behalf, if any (including,
specifically, without limitation, any reports analyzing
compliance of the Property with the provisions of the
Americans with Disabilities Act ("ADA"), 42 U.S.C. 12101,
et seq., if applicable). As used herein, "Hazardous
Substances" means all hazardous or toxic materials,
substances, pollutants, contaminants, or wastes currently
identified as a hazardous substance or waste in the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (commonly known as "CERCLA"), as
amended, the Superfund Amendments and Reauthorization Act
(commonly known as "XXXX"), the Resource Conservation and
Recovery Act (commonly known as "RCRA"), or any other
federal, state or local legislation or ordinances applicable
to the Property. This Section 5.7(a) shall survive Closing.
(b) All baggage or other property of guests of the Hotel
which has been checked with or left in the care of Seller
and remains in Seller's care as of the Cutoff Time shall be
inventoried and tagged jointly by Seller and Purchaser.
Purchaser hereby agrees to defend, indemnify and hold
harmless the Seller against any claims, losses or
liabilities in connection with such baggage and property
arising out of the acts or omissions of Purchaser from and
after the Closing Date. Seller hereby agrees to defend,
indemnify and hold harmless Purchaser against all claims,
losses and liabilities with respect to such baggage and
property arising out of the acts or omissions of the Seller
prior to the Closing Date. This Section 5.7(b) shall
survive Closing.
(c) As of the Closing Date, Seller shall deliver to
Purchaser a list of all guests of the Hotel maintaining
items in safe deposit boxes. Purchaser hereby agrees to
defend, indemnify and hold harmless the Seller against any
claims, losses or liabilities in connection with such safe
deposit boxes arising out of the acts or omissions of
Purchaser from and after the Closing Date. Seller hereby
agrees to defend, indemnify and hold harmless Purchaser
against all claims, losses and liabilities with respect to
such safe deposit boxes arising out of the acts or omissions
of the Seller prior to the Closing Date. This Section
5.7(c) shall survive Closing.
(d) Purchaser shall honor (and shall cause the Manager or
any successor manager to honor) all reservations at the
Hotel, or for any related conference, banquet, or meeting
space or any other facilities, made through or in connection
with the Hotel prior to the Cut-Off Time for periods on or
after the date of Closing. This Section 5.7(d) shall
survive Closing.
(e) The Hotel is presently a member of the Kapalua Resort
Association (the "Association"). Purchaser understands that
from and after the Closing Date, Purchaser, as owner of the
Hotel, shall become and remain a member of the Association
with all obligations of membership including the obligation
to make contributions to the Association. Purchaser shall
retain any votes as a member of the Association which are
attributable to the Land (as the owner of the Land) and
Purchaser (as the purchaser of the Hotel) shall receive and
be entitled to exercise all votes attributable to the Hotel,
if any.
(f) Purchaser acknowledges the existence of the Kapalua
Marketing Association, a non-profit Hawaii corporation
("KMA"). Purchaser understands that from and after the
Closing Date, Purchaser shall become and remain a member of
KMA with respect to the Hotel and make its contribution to
KMA.
(g) Purchaser and Seller agree that Seller's obligations as
"Lessee" and Purchaser's rights as "Lessor" under Section 7
of the Hotel Ground Lease with respect to a sale of the
Property by Seller are hereby modified and supplemented by
the following:
(i) As used herein, an "Eligible Termination Event" shall
mean any right of Purchaser to terminate this Agreement,
excluding only termination as a result of (A) a Seller
default (subject to Seller's cure rights as provided in
Section 6.3 below), (B) a failure of the condition precedent
for Purchaser's benefit set forth in Section 4.6(d) above
(following the expiration of the notice and cure period set
forth in Section 4.8(b) above), or (C) a failure of the
condition precedent for Purchaser's benefit set forth in
Section 4.6(e) above, provided that (1) such failure is
solely as a result of reasons not within Purchaser's
control, (2) Purchaser has fully and timely complied with
the requirements of Section 4.9 above, (3) Purchaser shall
have extended the Outside Closing Date as permitted by
Section 4.9(c) above and during such extension period
continued to diligently and in good faith pursue approval of
its liquor license application, and (4) such failure is not
the result of any of the officers or directors of Purchaser
(or any entity affiliated with Purchaser that is subject to
the review of the Department of Liquor Control - County of
Maui in connection with Purchaser's liquor license
application) being deemed not "fit and proper" under
applicable statutes governing issuance of liquor licenses by
the Department of Liquor Control - County of Maui, as a
result of their criminal history or otherwise.
(ii) Notwithstanding anything in this Agreement to the
contrary, concurrently with Purchaser's delivery of written
notice of termination in connection with any Eligible
Termination Event, Purchaser shall provide written notice to
Seller (A) of a lower purchase price at which Purchaser
would be willing to forego termination and proceed to close
the purchase the Property (the "Continuation Price"), or (B)
that Purchaser is unwilling to proceed to purchase the
Property at any price (the "Rejection Notice"). Seller
shall have the right, in its sole and absolute discretion to
reject or accept the Continuation Price as a substitute for
the Purchase Price by written notice delivered to Purchaser
within five (5) days following receipt of Purchaser's
Continuation Price notice (during which period the
effectiveness of Purchaser's termination shall be tolled)
and in the event Seller gives timely notice of acceptance of
the Continuation Price in writing Purchaser's notice of
termination shall be null and void and of no further force
or effect and the Closing shall occur as scheduled without
change to this Agreement or the obligations of the parties
other than the Purchase Price being reduced to the
Continuation Price.
(iii) In the event that Purchaser terminates the
Agreement in connection with any Eligible Termination Event,
and has provided Seller with a Continuation Price, then
Seller shall be free to sell the Hotel to any party at a
price that is equal to or greater than the Continuation
Price and on terms which are not materially more favorable
to the purchaser than the terms of this Agreement, without
being subject to the terms of Section 7 of Article XI of the
Hotel Ground Lease or any other constraints on a sale under
the terms of the Ground Leases. In the event that,
following a termination of this Agreement and the delivery
of a Continuation Price under this subsection (g)(ii) above,
Seller agrees to sell the Hotel at a price that is less than
the Continuation Price or on terms and conditions materially
more favorable to the purchaser than the terms of this
Agreement, the provisions of Section 7 of Article XI of the
Hotel Ground Lease shall govern such potential sale as
applicable.
(iv) In the event that (A) Purchaser terminates this
Agreement for any Eligible Termination Event, and has
provided Seller with a Rejection Notice or has failed to
provide either a Rejection Notice or a Continuation Price
concurrently with a termination notice, or (B) Seller
terminates this Agreement following a breach by Purchaser
(subject to Purchaser's cure rights as provided in Section
6.3 below), then in any such event, Seller shall be free to
sell the Hotel to any party on such terms and conditions as
Seller shall deem appropriate in its sole discretion,
without being subject to the terms of Section 7 of Article
XI of the Hotel Ground Lease or any other constraints on a
sale under the terms of the Ground Leases.
This Section 5.7(g) shall survive any termination of
this Agreement.
(h) Purchaser shall either: (1) rehire substantially all
of the active employees at the Hotel as of Closing upon or
immediately after Closing (but may terminate such employees
as it deems appropriate following Closing), or (2) indemnify
Seller against any claims, damages, costs and liabilities
caused by Purchaser's failure to so rehire substantially all
of the employees at the Hotel. This Section 5.7(h) shall
survive Closing.
ARTICLE VI
DEFAULT
6.1 Default by Purchaser. If Purchaser commits a material
default under this Agreement (including, without limitation,
a failure to purchase the Property, a failure to make the
closing deliveries required by Section 4.3 above or the
breach of a representation or warranty under this Agreement),
Seller shall be entitled, as its sole remedy (without limiting
Seller's rights under Section 10.16 below), to terminate
this Agreement and receive the Xxxxxxx Money as liquidated
damages for the breach of this Agreement, it being agreed
between the parties hereto that the actual damages to Seller
in the event of such breach are impractical to ascertain and
the amount of the Xxxxxxx Money is a reasonable estimate
thereof. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE DEPOSIT AND ANY INTEREST
THEREON HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE
PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S EXCLUSIVE REMEDY AGAINST PURCHASER, AT LAW OR IN
EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON
THE PART OF PURCHASER. THE PARTIES ACKNOWLEDGE THAT THE
PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER.
Initials: Seller Purchaser
Nothing contained in this Section 6.1 shall limit or prevent
Seller from (a) terminating this Agreement and asserting any
claims for damages for defaults by Purchaser under this
Agreement that are not "material" as set forth above, (b)
asserting any claims against Purchaser for attorneys' fees
and other amounts under Section 10.16 below, (c) enforcing
any indemnity obligation of Purchaser under this Agreement
or preclude Seller from obtaining a damage award in
connection therewith, or (d) enforcing Purchaser's other
obligations and liabilities which survive a termination of
this Agreement.
6.2 Default by Seller. In the event that Seller fails to
consummate this Agreement for any reason other than
Purchaser's default or the permitted termination of this
Agreement by Seller or Purchaser as herein expressly
provided, Purchaser shall be entitled, as its sole remedy,
either (a) to receive the return of the Xxxxxxx Money, which
return shall operate to terminate this Agreement and release
Seller from any and all liability hereunder, or (b) to
enforce specific performance of Seller's obligation to
execute the documents required to convey the Property to
Purchaser, it being understood and agreed that the remedy of
specific performance shall not be available to enforce any
other obligation of Seller hereunder. Purchaser expressly
waives its rights to seek damages in the event of Seller's
default hereunder. Purchaser shall be deemed to have
elected to terminate this Agreement and receive back the
Xxxxxxx Money if Purchaser fails to file suit for specific
performance against Seller in a court having jurisdiction in
the county and state in which the Property is located, on or
before thirty (30) days following the date upon which
Closing was to have occurred. Notwithstanding anything
herein to the contrary, in the event that Seller sells the
Hotel in violation of the provisions of Section 5.7(g)(ii)
above, the provisions of this Section 6.2 and Section 10.8
below shall not limit Purchaser's rights and remedies under
the Hotel Ground Lease in connection with a default by
Seller under Section 7 of Article XI of the Hotel Ground
Lease (as such Section 7 has been modified by Section 5.7(g)
of this Agreement).
6.3 Right to Cure Defaults. Notwithstanding anything to
the contrary in this Agreement, (i) Seller shall not have
the right to exercise its right to terminate this Agreement
under Section 6.1 for a Purchaser default, and (ii)
Purchaser shall not have the right to exercise its right to
terminate this Agreement under Section 6.2 for a Seller
default, unless the non-defaulting party has provided
written notice to the defaulting party specifying in
reasonable detail the nature of the default, and the
defaulting party fails to completely cure the default within
three (3) business days after delivery of such notice.
Notwithstanding the foregoing, neither Seller nor Purchaser
shall be entitled to the cure periods set forth in this
Section 6.3 in connection with a failure to deliver the
items required under, as to Seller, Section 4.2(a) - (p),
and as to Purchaser, Section 4.3(a) - (g).
ARTICLE VII
RISK OF LOSS
7.1 Minor Damage. In the event of loss or damage to the
Property or any portion thereof which is not "major" (as
hereinafter defined), this Agreement shall remain in full
force and effect provided Seller performs any necessary
repairs or, at Seller's option, assigns to Purchaser all of
Seller's right, title and interest to any claims and
proceeds Seller may have with respect to any casualty
insurance policies or condemnation awards relating to the
premises in question. In the event that Seller elects to
perform repairs upon the Property, Seller shall use
reasonable efforts to complete such repairs promptly and the
date of Closing shall be extended a reasonable time in order
to allow for the completion of such repairs. If Seller
elects to assign a casualty claim to Purchaser, the Purchase
Price shall be reduced by an amount equal to the deductible
amount under Seller's insurance policy. Upon Closing, full
risk of loss with respect to the Property shall pass to
Purchaser.
7.2 Major Damage. In the event of a "major" loss or
damage, Purchaser may terminate this Agreement by written
notice to Seller and Escrow Agent, in which event the
Xxxxxxx Money shall be returned to Purchaser. If Purchaser
fails to deliver notice of termination of this Agreement
within ten (10) days after Seller sends Purchaser written
notice of the occurrence of major loss or damage, Purchaser
shall be deemed to have elected to proceed with Closing, in
which event Seller shall, at Seller's option, either
(a) perform any necessary repairs, or (b) assign to
Purchaser all of Seller's right, title and interest to any
claims and proceeds Seller may have with respect to any
casualty insurance policies or condemnation awards relating
to the premises in question. In the event that Seller
elects to perform repairs upon the Property, Seller shall
use reasonable efforts to complete such repairs promptly and
the date of Closing shall be extended a reasonable time in
order to allow for the completion of such repairs. If
Seller elects to assign a casualty claim to Purchaser, the
Purchase Price shall be reduced by an amount equal to the
deductible amount under Seller's insurance policy. Upon
Closing, full risk of loss with respect to the Property
shall pass to Purchaser.
7.3 Definition of "Major" Loss or Damage. For purposes of
Sections 7.1 and 7.2, "major" loss or damage refers to the
following: (i) loss or damage to the Property or any
portion thereof such that the cost of repairing or restoring
the premises in question to a condition substantially
identical to that of the premises in question prior to the
event of damage would be, in the opinion of an architect
selected by Seller and reasonably approved by Purchaser,
equal to or greater than Three Million Dollars ($3,000,000),
and (ii) any loss due to a condemnation which permanently
and materially impairs the current use of the Property. If
Purchaser does not give notice to Seller of Purchaser's
reasons for disapproving an architect within
five (5) business days after receipt of notice of the
proposed architect, Purchaser shall be deemed to have
approved the architect selected by Seller.
ARTICLE VIII
COMMISSIONS
8.1 Brokerage Commissions. Each party agrees that should
any claim be made for brokerage commissions or finder's fees
by any broker or finder through or on account of any acts of
said party or its representatives, said party will indemnify
and hold the other party free and harmless from and against
any and all loss, liability, cost, damage and expense in
connection therewith. The provisions of this paragraph
shall survive Closing or earlier termination of this
Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
9.1 No Reliance on Documents. Seller makes no
representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered
by Seller to Purchaser in connection with the transaction
contemplated hereby including. Purchaser acknowledges and
agrees that all materials, data and information delivered by
Seller to Purchaser in connection with the transaction
contemplated hereby are provided to Purchaser as a
convenience only and that any reliance on or use of such
materials, data or information by Purchaser shall be at the
sole risk of Purchaser, except as otherwise expressly stated
herein. Without limiting the generality of the foregoing
provisions, Purchaser acknowledges and agrees that (a) any
environmental or other report with respect to the Property
which is delivered by Seller to Purchaser shall be for
general informational purposes only, (b) Purchaser shall not
have any right to rely on any such report delivered by
Seller to Purchaser, but rather will rely on its own
inspections and investigations of the Property and any
reports commissioned by Purchaser with respect thereto, and
(c) neither Seller, any affiliate of Seller nor the person
or entity which prepared any such report delivered by Seller
to Purchaser shall have any liability to Purchaser for any
inaccuracy in or omission from any such report.
9.2 DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN SECTION
5.1 ABOVE, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT
MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR
IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO
HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT
PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING
HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS,
THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE
TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR
ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO
PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE
PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON
CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND
PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH
ALL FAULTS", SUBJECT ONLY TO SELLER'S REPRESENTATIONS AND
WARRANTIES AS EXPRESSLY SET FORTH IN SECTION 5.1 ABOVE AND
SELLER'S EXPRESS COVENANTS AND OBLIGATIONS CONTAINED HEREIN.
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.1 ABOVE AND
SELLER'S EXPRESS COVENANTS AND OBLIGATIONS CONTAINED HEREIN,
PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS
NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO
(INCLUDING SPECIFICALLY, WITHOUT LIMITATION, PROPERTY
INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE
PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS
SPECIFICALLY SET FORTH IN THIS AGREEMENT. AT CLOSING,
PURCHASER SHALL HAVE CONDUCTED SUCH INVESTIGATIONS OF THE
PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS
NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE
ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC
SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR
ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS
AGREEMENT. SUBJECT ONLY TO SELLER'S EXPRESS REPRESENTATIONS
AND WARRANTIES IN SECTION 5.1 ABOVE AND SELLER'S EXPRESS
COVENANTS AND OBLIGATIONS CONTAINED HEREIN, UPON CLOSING,
PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE
BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND SUBJECT
ONLY TO SELLER'S REPRESENTATIONS AND WARRANTIES AS EXPRESSLY
SET FORTH IN SECTION 5.1 ABOVE AND SELLER'S EXPRESS
COVENANTS AND OBLIGATIONS CONTAINED HEREIN, PURCHASER, UPON
CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND
RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND
ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND
EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY
AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND
SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND
AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY
LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL
CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING,
WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL
OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS
REGARDING THE PROPERTY. SUBJECT ONLY TO SELLER'S LIABILITY
FOR A BREACH OF ANY EXPRESS REPRESENTATIONS AND WARRANTIES
IN SECTION 5.1 ABOVE, PURCHASER AGREES THAT, AS BETWEEN
SELLER AND PURCHASER (BUT NOT AS AN INDEMNITY AGAINST THIRD
PARTY CLAIMS), SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF
HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON
THE PROPERTY BE REQUIRED AFTER THE DATE OF CLOSING, SUCH
CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY
OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF
PURCHASER.
The waivers and releases set forth in Section 5.7(a)
and in the immediately preceding paragraph include claims of
which Purchaser is presently unaware or which Purchaser does
not presently suspect to exist which, if known by Purchaser,
would materially affect Purchaser's waiver or release of
Seller.
Notwithstanding the foregoing, in no event shall the
provisions of this Section 9.2 limit the indemnification
obligations set forth in Section 1.13 above.
9.3 Repairs, Reserves, and Capital Expenditures. Purchaser
acknowledges that and agrees that (a) Seller shall have no
obligation to make any repairs, replacements, improvements
or alterations to the Property or to expend any funds
therefore, including, without limitation, any reserves that
may be held for such purpose, and (b) Purchaser shall not be
entitled to a credit to the Purchaser Price at Closing in
the event capital expenditures actually made at the Hotel
for 2004 are less than the budgeted amount as of the date of
the Closing.
9.4 Effect and Survival of Disclaimers. Seller and
Purchaser agree that the provisions of this Article IX shall
survive Closing.
ARTICLE X
MISCELLANEOUS
10.1 Confidentiality. Prior to Closing, except as may be
required by law (including any SEC requirements), (a) each
of Seller and Purchaser agrees to maintain the
confidentiality of the terms and provisions of this
Agreement and (b) Purchaser agrees to maintain the
confidentiality of all information respecting the Property
(including the terms and provisions of this Agreement)
received from Seller, Seller's employees or agents or from
Purchaser's inspections; provided, however, that Purchaser
shall be permitted to disclose such information to its
employees, consultants, attorneys and/or agents, partners,
lenders, and others retained in connection with this
transaction provided such third parties agree to similarly
maintain the confidentiality of such information. After the
Closing, neither Seller nor Purchaser shall make any general
public statements or news releases, or any statements that
may become public, regarding this transaction except with
the prior written consent of the other party, such consent
not to be unreasonably withheld or delayed. Purchaser's and
Seller's obligations under this Section shall survive
Closing or the earlier termination of this Agreement.
10.2 Intentionally Omitted.
10.3 Assignment. Except for an assignment to a partnership,
limited liability company or other entity which is directly
or indirectly controlled by Purchaser, Purchaser may not
assign its rights under this Agreement without first
obtaining Seller's written approval which may be given or
withheld in Seller's sole discretion. Any assignment by
Purchaser of all or part of this Agreement shall not relieve
Purchaser from liability for a breach of Purchaser's
obligations under this Agreement. Without limiting the
foregoing, in no event shall Purchaser assign this Agreement
to any assignee which, in the reasonable judgment of Seller,
will cause the transaction contemplated hereby or any party
thereto to violate the requirements of ERISA.
10.4 Notices. Any notice pursuant to this Agreement shall
be given in writing by (a) personal delivery, or
(b) reputable overnight delivery service with proof of
delivery, or (c) United States Mail, postage prepaid,
registered or certified mail, return receipt requested, or
(d) legible facsimile transmission sent to the intended
addressee at the address set forth below, or to such other
address or to the attention of such other person as the
addressee shall have designated by written notice sent in
accordance herewith, and shall be deemed to have been given
either at the time of personal delivery, or, in the case of
expedited delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided
herein, or, in the case of facsimile transmission, as of the
date of the facsimile transmission provided that an original
of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless
changed in accordance with the preceding sentence, the
addresses for notices given pursuant to this Agreement shall
be as follows:
If to Seller:
Yarmouth Capital Partners XX XX
c/x Xxxxxx Xxxxxxx
0000 Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xx Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx US RE Investing Division
000 Xxxxx XxXxxxx Xxxxxx
Xxx Xxxxxxxxx Xxxxx, Xxxxx 00
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
With a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Facsimile no. (000) 000-0000
If to Purchaser:
Maui Land & Pineapple Company, Inc.
X.X. Xxx 000
Xxxxxxx, Xxxx, Xxxxxx 00000
Attention: Xxxxx Xxxx
Facsimile no. (000) 000-0000
With a copy to:
Xxxx, Xxxxxx & Roeper
ICW Plaza at Torrey Reserve
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile no. (000) 000-0000
10.5 Modifications. This Agreement cannot be changed
orally, and no executory agreement shall be effective to
waive, change, modify or discharge it in whole or in part
unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
10.6 Calculation of Time Periods; Time is of the
Essence. Unless otherwise specified, in computing any
period of time described in this Agreement, the day of the
act or event after which the designated period of time
begins to run is not to be included and the last day of the
period so computed is to be included, unless such last day
is a Saturday, Sunday or legal holiday under the laws of the
State in which the Property is located, in which event the
period shall run until the end of the next day which is
neither a Saturday, Sunday or legal holiday. The final day
of any such period shall be deemed to end at 5 p.m., local
time where the Real Property is located. Time is of the
essence of this Agreement.
10.7 Successors and Assigns. The terms and provisions of
this Agreement are to apply to and bind the permitted
successors and assigns of the parties hereto.
10.8 Entire Agreement. This Agreement, including the
Exhibits, the Schedules and any confidentiality agreement
executed by Purchaser, the Hotel Ground Lease and the
Restaurant Ground Lease (each subject to limitations on
liability and releases set forth herein) contain the entire
agreement between the parties pertaining to the subject
matter hereof and fully supersedes all prior written or oral
agreements and understandings between the parties pertaining
to such subject matter.
10.9 Further Assurances. Each party agrees that it will
without further consideration execute and deliver such other
documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the
other party to consummate more effectively the purposes or
subject matter of this Agreement. Without limiting the
generality of the foregoing, Purchaser shall, if requested
by Seller, execute acknowledgments of receipt with respect
to any materials delivered by Seller to Purchaser with
respect to the Property. The provisions of this Section
10.9 shall survive Closing.
10.10 Counterparts; Facsimile Signatures. This
Agreement may be executed in counterparts, and all such
executed counterparts shall constitute the same agreement.
It shall be necessary to account for only one such
counterpart in proving this Agreement. In order to expedite
the transaction contemplated herein, telecopied or facsimile
signatures may be used in place of original signatures on
this Agreement. Seller and Purchaser intend to be bound by
the signatures on the telecopied document, are aware that
the other party will rely on the telecopied signatures, and
hereby waive any defenses to the enforcement of the terms of
this Agreement based on the form of signature.
10.11 Severability. If any provision of this Agreement
is determined by a court of competent jurisdiction to be
invalid or unenforceable, the remainder of this Agreement
shall nonetheless remain in full force and effect.
10.12 Applicable Law. THIS AGREEMENT IS PERFORMABLE IN
THE STATE IN WHICH THE LAND IS LOCATED AND SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE
LAWS OF SUCH STATE. SELLER AND PURCHASER HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT SITTING IN THE STATE IN WHICH THE LAND IS
LOCATED IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE
HEARD AND DETERMINED IN A STATE OR FEDERAL COURT SITTING IN
THE STATE IN WHICH THE LAND IS LOCATED. PURCHASER AND
SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 10.12 SHALL
SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT.
10.13 No Third Party Beneficiary. The provisions of
this Agreement and of the documents to be executed and
delivered at Closing are and will be for the benefit of
Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the
right to enforce the provisions of this Agreement or of the
documents to be executed and delivered at Closing.
10.14 Exhibits and Schedules. The following schedules
or exhibits attached hereto shall be deemed to be an
integral part of this Agreement:
Exhibit A - Legal Description of the
Leasehold Land (Hotel)
Exhibit B-1 - Hotel Ground Lease Assignment
Exhibit B-2 - Restaurant Ground Lease Assignment
Exhibit C - Xxxx of Sale
Exhibit D-1 - Assignment and Assumption of
Operating Agreements and Intangibles
Exhibit D-2 - Assignment and Assumption of
Supplemental Agreement
Exhibit D-3 - Assignment and Assumption of
Reciprocal Use Agreement
Exhibit E - Assignment and Assumption of Leases
Exhibit F - FIRPTA/HARPTA Certificate
Exhibit G - Designation Agreement
Exhibit H-1 - Broad Form Estoppel
Exhibit H-2 - Form of Tenant Estoppel
Exhibit H-3 - Alternate Form of Manager Estoppel
Exhibit I - Form of Release for Ground Leases
Schedule 1.1(h) - List of Leases
Schedule 3.1 - Potentially Invasive
Testing
Schedule 3.2 - Property Reports
Schedule 4.4(b)(xvii) - Gift Certificates/Vouchers
Schedule 5.2(g) - List of Specific Operating
Agreements
10.15 Captions. The section headings appearing in this
Agreement are for convenience of reference only and are not
intended, to any extent and for any purpose, to limit or
define the text of any section or any subsection hereof.
10.16 Construction. The parties acknowledge that the
parties and their counsel have reviewed and revised this
Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation
of this Agreement or any exhibits or amendments hereto.
Singular words shall connote the plural as well as the
singular, and plural words shall connote the singular as
well as the plural, and the masculine shall include the
feminine and the neuter, as the context may require.
10.17 Termination of Agreement. It is understood and
agreed that if either Purchaser or Seller terminates this
Agreement pursuant to a right of termination granted
hereunder, such termination shall operate to relieve Seller
and Purchaser from all obligations under this Agreement,
except for such obligations as are specifically stated
herein to survive the termination of this Agreement.
10.18 Attorneys Fees. If any action or proceeding is
commenced by either party to enforce their rights under this
Agreement or to collect damages as a result of the breach of
any of the provisions of this Agreement, the prevailing
party in such action or proceeding, including any
bankruptcy, insolvency or appellate proceedings, shall be
entitled to recover all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees
and court costs, in addition to any other relief awarded by
the court.
10.19 Waiver of Jury Trial. Seller and Purchaser, to
the extent they may legally do so, hereby expressly waive
any right to trial by jury of any claim, demand, action,
cause of action, or proceeding arising under or with respect
to this Agreement, or in any way connected with, or related
to, or incidental to, the dealings of the parties hereto
with respect to this Agreement or the transactions related
hereto or thereto, in each case whether now existing or
hereafter arising, and irrespective of whether sounding in
contract, tort, or otherwise. To the extent they may
legally do so, Seller and Purchaser hereby agree that any
such claim, demand, action, cause of action, or proceeding
shall be decided by a court trial without a jury and that
any party hereto may file an original counterpart or a copy
of this Section with any court as written evidence of the
consent of the other party or parties hereto to waiver of
its or their right to trial by jury.
10.20 No Waiver. Failure of either party at any time to
require performance of any provision of this Agreement shall
not limit the party's right to enforce the provision.
Waiver of any breach of any provision shall not be a waiver
of any succeeding breach of the provision or a waiver of the
provision itself or any other provision.
10.21 No Reservation of Property. The preparation
and/or delivery of unsigned drafts of this Agreement shall
not create any legally binding rights in the Property and/or
obligations of the parties, and Purchaser and Seller
acknowledge that this Agreement shall be of no effect until
it is duly executed by both Purchaser and Seller. Purchaser
understands and agrees that Seller shall have the right to
continue to market the Property and/or to negotiate with
other potential purchasers of the Property until the
expiration of the Inspection Period and the satisfaction or
waiver in writing of all conditions to the obligations of
Purchaser under this Agreement; provided, however, that in
the event that Seller enters into a contract for the sale of
the Property during such time period, the rights of the
purchaser thereunder shall be subject to Purchaser's rights
under this Agreement.
10.22 No Recordation. Purchaser shall not record this
Agreement, nor any memorandum or other notice of this
Agreement, in any public records.
10.23 Liability under Ground Lease Assignment. Purchaser
agrees that if Purchaser has any right or claim against
Seller pursuant to any warranty of title in the Hotel Ground
Lease Assignment or the Restaurant Ground lease Assignment
or in this Agreement with respect to warranties of title in
the Hotel Ground Lease Assignment or the Restaurant Ground
lease Assignment, if any, Purchaser shall exhaust all of its
rights and remedies against the Title Company pursuant to
the Title Policy prior to bringing any claim or action
against Seller in respect of such warranties of title. The
provisions of this Section 10.23 shall survive Closing.
10.24 Like-Kind Exchange. Notwithstanding anything to
the contrary in this Agreement, Purchaser acknowledges and
agrees that Seller shall have the right at Closing, in lieu
of receiving the Purchase Price for the sale of the
Property, to exchange the Property (the "Tax-Free Exchange")
in a transaction intended to qualify as a tax-free exchange
under Section 1031 of the Internal Revenue Code of 1986, as
amended from time to time, and any regulations, rulings and
guidance issued by the Internal Revenue Service
(collectively, the "Code"). If Seller elects to effect a
Tax-Free Exchange pursuant to this Section 10.24, Seller
shall provide written notice to Purchaser prior to Closing,
in which case Seller shall enter into an exchange agreement
and other exchange documents with a "qualified intermediary"
(as defined in Treas. Reg. 1.1031(k)-1(g)(4) of the Code)
(the "Exchange Party"), pursuant to which Seller shall
assign all of its right, title and interest under this
Agreement to the Exchange Party. Purchaser shall execute
and deliver such documents as may be required to complete
the transactions contemplated by the Tax-Free Exchange which
are in form and substance reasonably acceptable to
Purchaser, and otherwise cooperate with Seller in all
reasonable respects to effect the Tax-Free Exchange.
Purchaser agrees that if Seller elects to effect a Tax-Free
Exchange pursuant to this Section 10.24, at Closing,
Purchaser shall pay the Purchase Price to the Exchange Party
and direct Escrow Agent to disburse the Xxxxxxx Money to the
Exchange Party. Notwithstanding the foregoing in this
Section 10.24, the Tax-Free Exchange shall not diminish
Purchaser's rights, nor increase Purchaser's liabilities or
obligations, under this Agreement. Seller shall pay for all
fees, costs and expenses in connection with the Tax-Free
Exchange.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the Effective Date.
SELLER:
YCP KAPALUA L.P.,
a Delaware limited partnership
By: YCP Kapalua G.P. Inc.,
a Delaware corporation
Its General Partner
By: Illegible
Its: Vice President
YCP KAPALUA OPERATOR, INC.,
a Delaware corporation
By: /S/ XXXX X. XXXXXXX
Its: Vice President
PURCHASER:
MAUI LAND & PINEAPPLE COMPANY, INC.,
a Hawaii corporation
By: /S/ XXXXX X. XXXX
Name: Xxxxx X. Xxxx
Its: President
By: /S/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Its: Executive Vice President/Finance
