Exhibit 10.14
HOTEL LEASE WITH PURCHASE OPTION
THIS LEASE, dated for reference purposes October 7, 1997, is between XXXXXX
XXXXXXX HOTEL ASSOCIATES LIMITED PARTNERSHIP ("Lessor") and CAVANAUGHS
HOSPITALITY CORPORATION (formerly known as Xxxxxxx and Xxxxxxxx Companies and
referred to specifically herein as "CHC") ("Lessee").
1. Property. Lessor hereby leases to Lessee, upon the terms and
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conditions herein set forth, the real property known as The Ridpath Hotel (the
"Hotel") situated at 000 X. Xxxxxxx, Xxxxxxx, Xxxxxxxxxx, legally described on
Exhibit I attached hereto (the "Property"). The term "Property" includes land,
building, improvements, and the personal property items described in Section 8
below. In the event Exhibit I is not attached in accurate or complete form to
this document at execution, the parties authorize the Title Company described
below to prepare and attach the correct Exhibit I.
2. Use of Property; Environmental Matters. The Property shall be used for
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operation as a hotel, guest services, restaurant, retail and banquet/meeting
facility and for no other purpose (collectively "Hotel Use") without the prior
consent of Lessor. Lessee shall not allow use of the Property in a manner which
would increase insurance premiums, or for any illegal purpose. Lessee shall
comply with all governmental rules, orders, regulations, or requirements
relating to the use and occupancy of the Property. Lessee shall not allow the
presence, use, storage or disposal of any hazardous or toxic waste or materials
on the Property at any time other than in full compliance with all applicable
laws, rules, and regulations. Hazardous and/or toxic waste or materials shall
include any substance, waste, or material which is designated as a Hazardous
Substance under the Comprehensive Environmental Response, Compensation and
Liability Act (42 USC Section 9601 et seq.), the Model Toxics Control Act,
revised Code of Washington Section 70.105D), or under any other applicable law.
Lessee agrees to defend, indemnify and hold Lessor harmless from and against any
liabilities, obligations, damages, costs, and expenses (including attorneys'
fees incurred prior to trial, at trial and upon appeal) incurred as a result of
any hazardous or toxic waste or material having been used, stored, or disposed
of on the Property or violations of applicable laws, rules and regulations
relating to the use of the Property after the Commencement Date and during the
term of this Lease. This indemnity shall survive termination of this Lease.
Lessor warrants that, to the best of the knowledge of Lessor, the Property does
not contain any hazardous or toxic waste or materials or asbestos containing
material as those terms are defined above as of the commencement of the term of
this Lease ("Existing Hazardous Substances") other than in full compliance with
all applicable laws, rules, and regulations, except as disclosed in that Phase I
Environmental Site Assessment dated November 10, 1994 by Professional Service
Industries, Inc. Lessor represents and warrants that as of the date hereof (a)
it has not received notification of any kind from any regulatory agency stating
that the Property is or may be targeted for a federal or state Hazardous
Substances cleanup or may be contaminated with any Existing Hazardous
Substances, as that term is defined above, or is currently in violation of any
applicable zoning, building, safety or accessibility law or regulation and (b)
*Lessor has no knowledge of any release of any Existing Hazardous Substances or
that the Property is currently in violation of any applicable
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Ridpath Lease-Option 10/7/97
* except as disclosed in the Phase I Environmental Site Assessment.
zoning, building, safety or accessibility law or regulation. Lessor shall
indemnify and hold Lessee harmless from and against any and all loss, damage,
claims, penalties, liabilities, suits, costs, and expense (including without
limitation, cost of remedial actions or cleanup), suffered or incurred by Lessee
arising out of or related to the breach of the foregoing representations and
warranties. In addition to any other remedy, in the event of a breach of the
foregoing representations and warranties, Lessee shall be entitled to offset the
cost of removal or abatement of Existing Hazardous Substances or of curing
violations of code or regulations relating to the condition or use of the
Property which exist as of the Commencement Date against the amount to be paid
at Closing in the event the Option or Put described in Section 30 below is
exercised.
3. Inspection and Inspection Waiver.
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3.1 Lessee's Inspection and Waiver. Lessee shall have thirty
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(30) days ("Inspection Period") after execution and delivery of this Lease by
all parties and delivery by Lessor to Lessee of the "Inspection Documents"
described below within which to inspect the Property and review all Inspection
Documents to determine whether the Property in its current status is suitable,
in the exercise of the sole business judgment discretion of Lessee, for the
purposes of Lessee. Immediately upon execution of this Lease, Lessor shall
provide Lessee with continuing access to the Property to complete such
inspections and reports as Lessee may elect, provided they shall be conducted
without disruption of the operation of the Hotel and at Lessee's sole expense;
and Lessor shall make available to Lessee in Spokane for copying or inspection
all books and records and documents relating to the operation of the Property or
encumbrances on the Property (including but not limited to all books and records
of operations for the past three full calendar years plus the current year to
date, union agreements or other contracts, leases or maintenance agreements,
notes and encumbrances and restrictions on the Property, and all documents
evidencing any item included within the term Property) and a preliminary
commitment for ALTA extended coverage Owner's Leasehold Title Insurance on the
Property from First American Title Company of Spokane ("Title Company") insuring
Lessee in the amount of the Option Price described below, together with legible
copies of all documents referred to therein ("Title Commitment") (all documents
described in this sentence being referred to herein as "Inspection Documents").
Lessor shall pay for the cost of any survey required for extended coverage title
insurance, if such survey does not already exist (if Title Company requires a
survey for the required title insurance and another title insurer of comparable
capability is willing to do so without a survey, Lessee agrees to substitute the
other title insurer as the Title Company), and Lessee shall pay for the
difference in premium between extended and standard coverage title insurance.
Lessee shall only use the Inspection Documents for the purpose of evaluating the
Property, as opposed to any competitive use, and shall restrict access to the
Inspection Documents to those persons required to evaluate the Property. The
manner of handling objections to title exceptions and existing agreements which
will survive the Commencement Date is described in Section 30.4 (b). This Lease
shall terminate and all responsibilities of the parties to one another shall
terminate unless, prior to the end of the Inspection Period, Lessee notifies
Lessor that Lessee has determined to its satisfaction the Property can be used
for these purposes to Lessee's satisfaction ("Inspection Waiver" or "Waiver
Notice"). Upon receipt of the Waiver Notice, Lessor shall provide to Lessee, at
Lessor's cost except as specified above, the title insurance described in the
Title Commitment by the Commencement Date described below.
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3.2 Lessor's Inspection and Waiver. Lessor shall have seven
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days from delivery to Lessor by Lessee of the current consolidated balance sheet
of CHC, which CHC warrants is true and accurate, within which to evaluate and
approve, in Lessor's sole discretion, the financial condition of CHC and to
terminate this Lease in the event of disapproval. In the event of such
termination, each party shall be released from all further obligations, except
those of confidentiality, arising out of this Lease. In the event Lessor fails
to notify Lessee of such termination within such seven day period, the right to
terminate this Lease under this subsection 3.2 is waived.
3.3 Joint Contingency of Lessor and Lessee. Lessor and Lessee
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agree to cooperate with one another in obtaining from the holders of existing
loans secured by the Property any approval of this Lease required by such loans
and the extension of such loans, on terms acceptable to both Lessor and Lessee,
through the end of the term of this Lease. In the event the parties and lenders
fail to agree upon the foregoing prior to the end of the Inspection Period, this
Lease shall terminate and each party shall be released from all further
obligations, except those of confidentiality, arising out of this Lease.
Appropriate subordination, attornment and none-disturbance agreements shall be
included in any agreements with the lenders. After waiver of this contingency
described in this subsection 3.3, neither party shall further encumber the
Property or modify the terms of the loans. Lessor may assign this Lease as
security for the loans approved under the terms of this Section 3.3.
4. Term. In the event of waiver of all contingencies described in
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Section 3 above, this Lease shall be for a term commencing seven (7) days after
the Waiver Notice, or such other period as Lessor and Lessee may agree upon in
order to accomplish an orderly transition of management of the Property
("Commencement Date") and terminating on November 1, 1999. Any holdover after
the expiration of the term shall be deemed to be subject to all of the terms and
conditions of this Lease.
5. Rental. Lessee agrees to pay monthly rent ("Rental") in the amount
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of the monthly principal and interest debt service (exclusive of any balloon
payments of principal in excess of normal monthly payments) of notes secured by
the Property as approved under the terms of Section 3.3 above, prorated for any
partial month. The identity of the notes and payment amounts comprising the
Rental shall be approved by Lessee in writing during the Inspection Period.
Lessee will be responsible for paying any use tax on personal property which it
purchases in connection with the operation of the Property or on Rental required
to be allocated to personal property. The parties allocate none of the Rental to
the existing personal property.
Lessee assumes no liability to the lenders for interest and principal
payments of the debt service for the debt now encumbering the Property and,
during the course of this Lease, Lessor shall hold harmless and indemnify Lessee
from any claim by any secured creditor of Lessor. Rental shall be paid by direct
payment to the holders of the notes secured by the Property, with proof of
payment supplied to Lessor, at Lessor's address set forth in Section 23 hereof
or at such other place as Lessor may designate in writing. Lessor shall not
further encumber the Property during this Lease. Lessor may assign this Lease as
security for the loans approved under the terms of Section 3.3 above.
6. Costs of Management, Operation and Maintenance. The Rental is net to
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Lessor throughout the term of this Lease. Lessor is not obligated to pay any
costs of operation, maintenance
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Ridpath Lease-Option 10/7/97
or capital improvements. Lessee is to pay all Operating Expenses. The term
"Operating Expenses" means all costs of management, operation, and maintenance
of the Property as a Hotel utilizing the Cavanaughs Hotel name or such other
franchise as may be utilized by Lessee from time to time, including without
limitation, the following: employment taxes, unemployment insurance, wages,
salaries, fringe benefits, and other direct and indirect costs of employees;
janitorial, cleaning, landscaping, guard, security and other services; gas;
electrical, water, waste disposal, and other utilities; heating, ventilation and
air-conditioning; window washing; materials and supplies; painting, repairs, and
other maintenance; parking lot resurfacing and restriping, as well as cleaning,
sweeping, and ice and snow removal; maintenance, repair, replacement, and
service of equipment, including without limitation the HVAC systems, alarm
systems, and other equipment; reserves; costs of independent contractors;
management fees and expenses; insurance and insurance deductibles of any kind;
real and personal property taxes, assessments; utility charges of any kind; the
cost of any repair, renovation, alteration, and improvement required to be made
under any governmental law, rule or regulation (excluding those in breach of any
warranty of Lessor contained in this Lease); supplying directional signs, other
markers, and car stops; and any other expense or charge which is a cost of
management, operation, and maintenance of the Property.
The term Operating Expenses does not include any cost or fee for
maintaining or terminating the WestCoast franchise/license, which shall be the
sole responsibility and expense of Lessor.
7. Operation of Hotel. Lessee shall operate, maintain and keep open at
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all times (except to the extent required by damage or condemnation) the Property
as a hotel in a manner at least equal to the quality of Lessor's prior operation
of the Hotel and in compliance with all loan documents secured by the Property
as follows:
a) Lessee agrees to provide monthly operating statements to Lessor and to
maintain the furnishings, fixtures, and inventory in the operation of the Hotel
at normal levels.
b) Lessee agrees to make, throughout the term of this Lease, such
replacements of furnishings, fixtures, and inventory as is reasonably necessary
to operate the Hotel in compliance with this Lease, or may upgrade furnishings,
fixtures and equipment, and such replacements shall be the property of the
Lessee, provided such items shall be left on the Property and become the
property of Lessor in the event of the termination of this Lease other than by
purchase under Section 30 below. In the ordinary course of such replacements,
Lessee may dispose of the replaced personal property. In the event of
replacement of the personal property, which involves wholesale replacement of
substantial amounts of the property, such as renovating rooms or replacing
television sets, at least thirty (30) days advance notice shall be given to
Lessor along with a brief description of the plan of action to accomplish
replacement, and the reasons therefor. All such replacement furnishings,
fixtures and inventory shall become the property of Lessor upon termination of
the Lease free and clear of any purchase money or other lien. Lessee shall be
entitled to any proceeds of salvage or disposition of the obsolete or removed
property. Lessor shall be entitled to updated inventory lists as prepared by
Lessee, and to have the right to conduct, at Lessor's own expense, audits of the
inventory, fixtures, furnishings, televisions and the like. No such equipment of
furnishings or fixtures shall have a brand name placed thereon of the hotel of
such a character as to make the property not readily useable by any successor
hotel operator or franchise.
c) In the event Lessor is of the belief that the Property is not being
adequately maintained or the inventory is inadequate, the parties shall consult
and attempt to reach a plan rapidly to resolve the
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Ridpath Lease-Option 10/7/97
issue. Should this fail, and only as to the matters contained in this paragraph
and paragraph 12, the parties agree to consult with each other to appoint an
independent party with expertise to arbitrate the controversy, each party to pay
one-half of the costs regardless of the outcome, and each to pay any of their
own attorneys fees. Procedures shall be informal and meant to accomplish the
goal of concluding the arbitration within thirty (30) days or as soon thereafter
as reasonably practical. The arbitrator may, in carrying out this intent,
establish reasonable rules and procedures to minimize fees and costs to each
party and to bring the matter to a rapid and fair conclusion. Should either
party fail to name or be unable to reach agreement on appointment of an
arbitrator, the presiding judge of the Superior Court for Spokane County shall
review the names and qualifications of three parties deemed independent by each
of Lessor and Lessee, and choose one without hearing, based solely upon the
description of such individual provided by the propounding party. If the
decision of the arbitrator requires an upgrade to the hotel, maintenance, or
personal property, the Lessor may declare this Lease in default if the order of
the arbitrator is not implemented by Lessee fully within sixty (60) days of the
decision, as to upgrade and replacement (or such time as such repairs or
maintenance reasonably requires, if longer). The decision of the arbitrator
shall be final and enforceable by any court of competent jurisdiction under
applicable statutes of the State of Washington. These arbitration provisions
apply exclusively and solely to those items in this paragraph and paragraph 12,
and do not extend to any other right or remedy of Lessor or Lessee hereunder or
under State law.
d) Lessor shall provide a written notice to all employees of the Hotel to
terminate all employees of the Hotel as of the Commencement Date. The notice
shall be made in form acceptable to Lessee. Lessee may, but shall not be
required to hire some or all such employees in connection with Lessee's
operation of the Hotel. Lessor shall be responsible for all salaries, taxes,
benefits, and vacation for such employees to the commencement date of the term
of this Lease. Lessee shall be responsible for the same for all employees of
Lessee in Lessee's operation of the Hotel beginning on the Commencement Date.
Lessor shall compensate any employee with accrued but unused vacation as of the
Commencement Date.
e) All expenses and income from the Hotel and all categories of Property
shall be prorated between Lessor and Lessee as of 12:01AM on the Commencement
Date, so that Lessor receives all income accrued through the day prior to and
pays all expenses accrued through the day prior to the Commencement Date and
Lessee receives and pays the corresponding items from the Commencement Date
forward. Income from overnight room rentals and events for the night of the
proration time, shall be shared equally between Lessor and Lessee (the night of
October 31/November 1 if November 1 were the Commencement Date). After the
Commencement Date, Lessor and Lessee shall make such payments to each other and
to third parties as are necessary to implement the proration provisions of this
subsection. Lessor shall retain all of its bank accounts, and the funds therein.
Lessee shall pay Lessor for and retain for Lessee all cash on hand as of close
of bars and restaurants on the Commencement Date, and Lessee shall open its own
bank accounts for the operation of the Hotel. From the Commencement Date
forward, all accounts received by Lessee from the operation of the Hotel
attributable to parties from whom funds are then still owed for services prior
to the Commencement Date, shall, to the extent collected, be allocated and paid
between Lessor and Lessee in proportion to the amounts owed by that customer for
the time periods before and after the Commencement Date as of the date of
collection. Lessor shall not make direct collections from such customers without
advising Lessee of the amounts so collected.
f) Lessor and Lessee shall execute and deliver on the Commencement Date
such assumptions
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and notices as are required to transfer to Lessee all categories of Property
during the term of the Lease.
g) Lessee has the right to perform alterations or remodeling of the
Property provided that such alterations or remodeling are paid for by Lessee and
do not decrease the value of the Property.
8. Property. Included within the Property leased to Lessee under this
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Lease and to be sold under the Option described below are all rights, personal
property, furnishings, fixtures, and inventory owned or leased by Lessor located
on the Property or used or capable of being used in connection with the
operation of the Hotel including but not limited to the following:
a) Equipment Leases, which shall mean the leases covering items of the
type listed as Service Equipment which are not owned by Lessor but are leased by
Lessor, and which are located in or upon the Premises and are used or useable in
connection therewith.
b) Hotel Contracts, which shall mean all service, maintenance, and other
contracts respecting the maintenance or operation of the Hotel, which shall be
transferred to Lessee to the extent transferable.
c) Improvements, which shall mean all buildings and improvements on the
land described in Exhibit I.
d) Miscellaneous Assets, which shall mean all xxxxx cash funds, all cash
in house banks as of the Commencement Date, and all contract rights, leases,
concessions, permits, receipts, trademarks, logos, copyrights, business records,
and any items of intangible personal property relating to the ownership or
operation of the Hotel except for the xxxx "WestCoast" Lessor shall provide to
Lessee complete copies and, to the extent allowed by law, full benefit of any
permits or other items which are not transferable.
e) Names, which shall mean the names other than WestCoast used in the
operation of the Hotel including without limitation the names now used with the
restaurants, banquet rooms and meeting rooms in the Improvements, and
specifically do include the xxxx "Ridpath" for hotel and restaurant use. Lessor
represents and warrants to the best of its knowledge it has the sole right to
use and transfer the Names and that it has no knowledge of any protest to its
right to use the Names or of any right of any other party to use of the Names;
however Lessor does not represent that it has protected or registered the use of
the Names under any federal or state procedure. Lessor will cooperate with
Lessee to accomplish transfer of any use rights to the Names.
f) Operating Equipment, which shall mean all china, glassware, linen,
silverware and uniforms, and supplies of every kind and nature of all operating
departments, including, without limitation, cleaning supplies, guest supplies,
printing stationery, bar supplies, fuel, laundry supplies and brochures and
promotional material whether in use, or held in stock for future use, in
connection with the operation of the Hotel, which are on hand on the date
hereof, subject to such depletion and including such resupplies as shall occur
and be made in the normal course of business.
g) Permits, which shall mean all licenses, franchises and permits used in
the operation of the Hotel as heretofore operated, which shall be transferred to
Lessee to the extent transferable, but excluding the WestCoast
license/franchise.
h) Service Equipment, which shall mean all fixtures, furnishings,
fittings, equipment, machinery, apparatus, vehicles, appliances and articles of
personal property of every kind whatsoever used or usable in connection with any
present or future operation of all or any part of the Hotel, including without
limitation all elevators, escalators, boilers, furnaces, heating, ventilating
and air-conditioning systems and equipment, office furniture and equipment
(including safes, cash registers
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Ridpath Lease-Option 10/7/97
and accounting, duplicating and communication equipment)and specialized hotel
equipment (including equipment usable in the operation of kitchens, laundries,
meeting and banquet rooms, clubs, rental spaces, dry-cleaning facilities, bars
and cocktail lounges), electrical equipment (including refrigerators, radios,
television and lighting equipment), fire prevention and extinguishing apparatus,
telephone system, pictures and ornaments, which are on hand as of the date
hereof, subject to such depletion and including such replacements as shall occur
or be made in the normal course of business; excluding, however, all items of
personal property which are owned by Space Lessees or guests.
i) Space Leases, which shall mean all leases, subleases, licenses,
franchises, concessions and other occupancy agreements, written or oral, whether
or not of record, for use or occupancy of any portion of the Property, and
"Space Lessees" shall mean the tenants or occupants thereunder. During the term
of this Lease and thereafter in the event of purchase, Lessee assumes the
obligations of Lessor under such Space Leases.
j) Reservations, for which Lessor shall provide Lessee, as an Inspection
Document, a list of all such reservations or bookings and Lessee will, with
regard only to those reservations so provided to Lessee during the Inspection
Period, assume and honor each of such reservations at its then applicable rates
and the income and expense generated thereby is solely the property and
obligation of Lessee., or terminate the obligation, and Lessee shall defend and
hold Lessor harmless from all loss, cost, expense or claims in that regard.
9. Quiet Enjoyment. Lessor covenants and agrees that so long as Lessee
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remains in full compliance with all of Lessee's obligations under this Lease,
Lessee shall lawfully and quietly hold, occupy, and enjoy the Property during
the term of this Lease, subject only to the other terms and provisions of this
Lease and subject to all matters of record revealed by the Title Commitment, the
terms of which shall not be modified without the approval of Lessee.
10. Acceptance of Property. By giving its Waiver Notice, Lessee
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acknowledges that the Property is in good and usuable condition. The Property
has been inspected by Lessee, and, except for the representations and warranties
made by Lessor in this Lease, is turned over as of the Commencement Date AS IS,
WHERE IS, AND WITH ALL FAULTS LATENT AND PATENT, WITH NO IMPLIED WARRANTIES,
INCLUDING THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND RISKS OF MECHANICAL FAILURES; BREAKDOWNS AND WEAR AND TEAR OF PROPERTY AND
EQUIPMENT ARE SOLELY AT LESSEE'S RISK.
11. Utilities and Other Services. By giving its Waiver Notice, Lessee has
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satisfied itself that all utilities and other services necessary for Lessee's
purposes are available to the Property. Deposits (if any) on utilities as of the
Commencement Date are the property of Lessor.
12. Repairs, and Maintenance by Lessee. Lessee shall be responsible for
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all maintenance of the Property during the term of this Lease. Lessee shall keep
the Property in a neat, clean, sanitary condition, and shall keep the Property
and all items used in connection with the operation of the Property in as good
condition as was done by Lessor. Lessee's maintenance obligations shall include
without limitation the structural and exterior components of the building,
plumbing, electrical system, roof, swimming pool, etc. Wear and tear is to be
offset by continuing improvements and additions to
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Ridpath Lease-Option 10/7/97
the property as reasonable and necessary to keep the Property in a first-class
hotel operation, to include appearance items, such as painting, landscaping,
carpeting and the like. The requirements of maintenance as set forth in this
paragraph 12 are subject to the arbitration provisions of section 7 c), in the
event Lessor believes the property is not being maintained according to these
standards.
13. Taxes. Lessee shall pay directly, to the taxing or assessing
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authority, before the same become delinquent, all taxes and special assessments
levied against the Property payable on or after the Commencement Date. Lessee
shall pay, before the same become delinquent, all taxes assessed against
Lessor's or Lessee's furniture, fixtures, equipment, and other property in the
Property. Lessee shall provide evidence of payment upon request of Lessor. Taxes
payable in the current year, assessments and insurance reserve accounts shall be
prorated as of the Commencement Date, and credited or debited to the parties as
appropriate. In the event the existing lenders of Lessor on the Property have
the right, and exercise the right, to have tax or insurance amounts paid monthly
into escrow, Lessee shall comply with the same. In the event Lessee desires to
contest the amount of any property taxes, Lessee may do so, at its own expense,
and for its own benefit, and Lessor shall cooperate with any reasonable attempt
to reduce property taxes, so long as those efforts do not result in a lien on
the Property or expense to Lessor.
14. Lessor's Access to Property. Lessor, provided Lessor notifies Lessee
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at least 24 hours in advance, may inspect the Property at all reasonable times
and enter the same for the purpose of determining whether the Lessee is
complying with its obligations under this Lease.
15. Insurance.
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15.1 Liability Insurance. Lessee shall, at Lessee's sole expense,
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maintain comprehensive general liability and property damage insurance insuring
against any and all claims for injury to or death of persons and loss of or
damage to property occurring upon, in, or outside of the Property. Such
insurance shall be of the type of coverage, and with the coverage limits, at
least as required by holder of any deed of trust and related loan documents
encumbering the Property and shall name Lessor as an insured.
15.2 Lessee's Property Insurance. Lessee shall, at Lessee's sole
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expense, maintain on all of Lessee's personal property, fixtures and leasehold
improvements on the Property, a policy of "all risk" special perils property
damage insurance in the amount of their replacement value.
15.3 Lessor's Property Insurance. Lessee shall, at Lessee's sole cost
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and expense maintain a policy of all risk special perils building and personal
property insurance with full replacement value coverage in the amount of the
Option Price. Such insurance shall comply with all requirements of the holder of
the encumbrances on the Property. All proceeds of any such insurance shall be
applied to the restoration of the Property.
15.4 Rental Insurance. Lessee shall acquire a policy of rental
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insurance for continuation from business interruption, with reasonable
deductibles.
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15.5 General Terms. Policies shall provide for at least thirty
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(30) days notice to Lessor prior to cancellation. Such insurance may be part of
blanket coverage and composed of primary and umbrella policies.
16. Assignment and Subletting. This Lease and the Option described below
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may be assigned or subleased to any entity of which CHC is the manager or
general Partner or controlling owner, provided that CHC remains responsible for
all obligations under this Lease, including the assignment which the parties
currently contemplate to Cavanaughs Hospitality, Ltd., a limited partnership of
which CHC will be the General Partner. Any other assignment or subletting
(except for normal retail leasing of portions of the Property, or any transfer
in the control of CHC from members of the Xxxxxxxx family (other than by a
public offering under the terms of which stock of CHC is listed on a public
exchange) without the prior consent of Lessor shall entitle Lessor to exercise
its right to Put the Property as described in Section 30.
17. Damage or Destruction. If the property is damaged or destroyed by fire
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or any other cause, all insurance proceeds shall be made available to Lessee for
restoration of the property (except as to the rights of the holder of any
encumbrance on the Property) and Lessee shall restore the Property as nearly as
practical to its condition immediately prior to such damage or destruction so
long as all insurance proceeds are made available to Lessee for that purpose.
Any restoration shall be promptly commenced and diligently prosecuted and rent
shall not xxxxx during such time. Lessor is not liable for any damages or
abatement of rent for any reason whatsoever dealing with damage or destruction
to the property, but shall cooperate in applying all proceeds of insurance to
the restoration of the Property.
18. Liens; Waste. Lessor and Lessee shall have no authority to allow any
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liens to be filed against the Property and shall not suffer or permit any lien
to be filed against the Property, nor waste to be committed thereon. If any such
lien is filed against the Property, the responsible party shall cause the same
to be discharged of record (by bond or payment) within 60 days after the date of
filing the same.
19. Indemnity by Parties. After the Commencement Date and during the term
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of this Lease, except as provided in the last sentence of this Section 19,
Lessee agrees that Lessor shall not be liable for any claims for death of or
injury to persons or damages to or destruction of property sustained by Lessee
or by any other person in or outside of the Property or any other loss, damage
or liability arising from the operation, management or maintenance of the
Property, including without limiting the generality of the foregoing, any claims
caused by or arising from the condition or maintenance of any part of the
Property. Lessee hereby waives all claims therefor and agrees to hold harmless,
defend, and indemnify Lessor against any such loss, damage, or liability or any
expense (including attorneys' fees at trial or at appeal) incurred by Lessor in
connection therewith. Lessee shall hold Lessor harmless from and against any and
all damages arising out of any damage to any persons or property occurring in,
on, or about the Property resulting from the negligent acts or omissions of
Lessee or its agents, servants, employees, or authorized representative. Lessor
shall hold harmless, defend, and indemnify Lessee from and against any and all
damages arising out of any damage to any persons or property occurring in, on,
or about the Property resulting from actions prior to the
________________________________________________________________________________
9
Xxxxxxx Lease-Option 10/7/97
Commencement Date or the negligent acts or omissions of Lessor or its agents,
servants, employees, or authorized representatives or which are the subject of
the specific representations and warranties of Lessor to Lessee contained in
this Lease.
20. Default; Remedies; Late Charges. Time is of the essence hereof. In the
-------------------------------
event Lessee fails to make any payment within the time period required by the
notes secured by the property as of the date of this Lease and does not cure
such default as provided in such loan documents, then Lessor may have its
default remedies, as further set forth below. If the default or violation
claimed does not involve the payment of money, then Lessee must cure the default
within thirty (30) days, or if the default is of such a nature that it cannot be
cured within thirty (30) days, but it can be cured, then Lessee must commence
the cure within the thirty (30) days and diligently continue the same until
complete, or Lessor may likewise have its default remedies. In the event of such
uncured default, or in the event of a default which cannot by its very nature be
cured, then Lessor may at its option, immediately declare Lessee's rights under
this Lease terminated, and reenter the Property using such force as may be
necessary, and repossess itself thereof, as of its former estate, and remove all
persons and property; or, in the alternative and in the sole event that the
default is material in nature and while such default continues, Lessor may elect
to exercise its rights to Put the Property as described in Section 30 below; and
in the event Lessor exercises its remedy to Put in the event of such a default,
Lessor shall be entitled only to enforce its Put and to recover its actual
expenditures on the Property or to service loans secured by the property. Lessor
shall have landlord's lien to the full extent allowed by law.
Lessee acknowledges that late payment by Lessee to Lessor of Rental will
result in late charges, which Lessee shall pay as Rental.
21. Trade Fixtures. Lessee may install on the Property such equipment as
--------------
is customarily used in the type of business conducted by Lessee on the Property.
Upon the expiration of this Lease, Lessee shall, at Lessee's expense, remove
from the Property all such equipment and all other property of Lessee and repair
any damage to the Property occasioned by the removal thereof. Any property left
in the Property after the expiration or sooner termination of this Lease shall
be deemed to have been abandoned by Lessee and become the property of Lessor to
dispose of as Lessor deems expedient without accounting to Lessee therefor. If
the Lease terminates other than at the end of its normal term, all property of
Lessee shall be deemed a portion of the Property and shall pass in title to
Lessor at that time. No item shall be a trade fixture unless Lessee shall before
its installation give notice to Lessor of its status as such and Lessor shall
consent to such treatment, which consent shall not be unreasonably withheld.
22. Condemnation. If all of the Property is taken by any public authority
------------
under the power of eminent domain, Lessee shall be deemed to have exercised its
Option and this Lease shall terminate as of the date possession is taken by said
public authority pursuant to such condemnation and all proceeds of such
condemnation shall be applied first to payment to Lessor as if the Property had
been purchased under the terms of the Option and the balance shall be the sole
property of Lessee. If part of the Property is so taken, and Lessee does not at
that time exercise its Option described in Section 30 below, the proceeds of
condemnation shall be applied to restoration of the remaining portion of the
________________________________________________________________________________
10
Xxxxxxx Lease-Option 10/7/97
Property and the Lease shall remain in effect. Lessee shall represent the
ownership interest of the Property in any condemnation process.
23. Notices. All notices, demands, and requests to be given by either
-------
party to the other shall be in writing. All notices, demands, and requests by
Lessor to Lessee shall be sent by United States registered or certified mail,
postage prepaid, (or by private overnight courier) addressed to Lessee at 000 X.
Xxxxx Xxxxx Xxxxx Xxxxx 000, Xxxxxxx, XX 00000 Attn. Chief Operating Officer.
All notices, demands, and requests by Lessee to the Lessor shall be sent by
United States registered or certified mail, postage prepaid, (or by private
overnight courier) addressed to Lessor at the street address of 0000 Xxxxxxx
Xxx, Xxxxxxx XX 00000 attn. Xxxxxx Xxxxxxxx, with a copy to Xxxx Xxxx at Xxxx
Xxxx, Ball, Xxxxx Law Firm, 000 XX Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, XX 00000,
or such other place as Lessor may from time to time designate by notice to
Lessee. Notices, demands, and requests served upon Lessor or Lessee as provided
in this section in the manner aforesaid shall be deemed sufficiently served or
given for all purposes hereunder at the time such notice, demand, or request
shall be so mailed or deposited.
24. Performance of Covenants. If Lessee shall fail to make any payment or
------------------------
perform any of Lessee's obligations under this Lease after notice required for a
default, Lessor may, without further notice to or demand upon Lessee and without
waiting or releasing Lessee from any obligations of Lessee under this Lease,
make any such payment or perform any such obligation on Lessee's behalf in such
manner and to such extent as Lessor deems desirable. All sums unpaid by Lessee,
and all sums so paid by Lessor and all necessary costs and expenses in
connection with the performance of any such obligation by lessor, together with
interest thereon at the rate of twelve percent (12%) per annum (or at the
maximum rate permitted by law, whichever is less) from the date of the making of
such expenditure by Lessor, shall be deemed additional rental hereunder and
shall be payable to Lessor on demand.
25. Waiver of Subrogation. Lessor and Lessee shall make all reasonable
---------------------
efforts to each procure an appropriate clause in, or an endorsement on, any
policy of insurance required by this Lease pursuant to which the insurance
companies waive subrogation or consent to a waiver of right of recovery, and
such party hereby agrees that it shall not make any claim against or seek to
recover from the other for any loss or damage to its property, or the property
of the other, resulting from fire or other hazards covered by such insurance,
notwithstanding other provisions of this Lease; provided, however, that the
release, discharge, exoneration, and covenant not to xxx herein contained shall
be limited by the terms and provisions of the waiver of subrogation clauses or
endorsement consenting to a waiver of right of recovery, and shall be
coextensive therewith.
26. Surrender of Property. Lessee, at the expiration or sooner termination
---------------------
of this Lease, shall quit and surrender the Property in good, neat, clean, and
sanitary condition, in accordance with the standards of maintenance and
replacement contained in this Lease.
27. Memorandum of Lease and Option. This Lease may not be recorded. A
------------------------------
Memorandum of this Lease will be recorded which only identifies the parties and
the term and the existence of the Option to sell and purchase.
________________________________________________________________________________
11
Xxxxxxx Lease-Option 10/7/97
28. Miscellaneous
-------------
28.1 Remedies and Non-waiver. Each party shall have all remedies at
-----------------------
law or at equity, including specific performance and or damages in the event the
other fails to perform its obligations under the terms of this Lease or the
Option/Put described below, with the exception that in the event Lessor
exercises its remedy to Put in the event of a default under this Lease, it
shall be entitled only to enforce its Put and to recover its actual expenditures
on the Property or to service loans secured by the Property pursuant to Section
24 above. No failure of Lessor to insist upon the strict performance of any
provision of this Lease shall be construed as depriving Lessor of the right to
insist on strict performance of such provision or any other provision in the
future. No waiver by Lessor of any provision of this Lease shall be deemed to
have been made unless expressed in writing and signed by Lessor. No acceptance
of rent or of any other payment by Lessor from Lessee after any default by
Lessee shall constitute a waiver of any such default or any other default.
Consent by Lessor in any one instance shall not dispense with necessity of
consent by Lessor in any other instance.
28.2 Attorneys' Fees. If an action is commenced to enforce any of the
---------------
provisions of this Lease, the prevailing party shall, in addition to its other
remedies, be entitled to recover its reasonable attorneys' fees incurred prior
to trial, at trial, and upon appeal.
28.3 Captions and Construction. The captions in this Lease are for the
-------------------------
convenience of the reader and are not to be considered in the interpretation of
its terms.
28.4 Partial Invalidity. If any term or provision of this Lease or the
------------------
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Lease, or the application of such term
or provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced as written to the fullest
extent permitted by law.
28.5 Governing Law. This Lease shall be governed by the laws of the
-------------
State of Washington; Venue is Spokane County for any arbitration and King County
for other actions.
28.6 Right to Certificates. Each party, within fifteen (15) days after
---------------------
notice from the other party, shall execute and deliver to the other party, in
appropriate form, a certificate stating that this Lease is unmodified and in
full force and effect, or in full force and effect as modified and stating the
modifications. The certificate shall also state the amount of Rental, the dates
to which Rental has been paid in advance and such other matters as may
reasonably be requested. Failure to deliver the certificate within such fifteen
(15) day period shall be conclusive upon the party failing to deliver the
certificate for the benefit of the party requesting the certificate and any
successor to the party requesting the certificate, and this Lease is in full
force an effect and has not been modified except as may be represented by the
party requesting the certificate. The certificate shall be kept confidential and
not recorded.
28.7 Entire Agreement. This document contains the entire and
----------------
integrated
________________________________________________________________________________
12
Xxxxxxx Lease-Option 10/7/97
agreement of the parties as to the lease of the Property and may not be modified
except in writing signed and acknowledged by both parties.
28.8 Interpretation. This Lease has been submitted to the scrutiny
--------------
of all parties hereto and their counsel if desired, and shall be given a fair
and reasonable interpretation in accordance with the words hereof, without
consideration or weight being given to its having been drafted by any party
hereto or its counsel.
28.9 Number; Gender, Permissive Versus Mandatory Usage. Where the
-------------------------------------------------
context permits, references to the singular shall include the plural and vice
versa, and to the neuter gender shall include the feminine and masculine. Use of
the word "may" shall denote an option or privilege and shall impose no
obligation upon the party which may exercise such option or privilege; use of
the word "shall" shall denote a duty or an obligation.
28.10 Time. Time is of the essence of this Lease.
----
28.11 Binding Effect; Counterpart Originals; Facsimile. This
------------------------------------------------
Agreement shall be binding upon the parties hereto and upon their respective
executors, administrators, legal representatives, successors, and assigns;
subject, however, to the restrictions on transfer in Section 16 above. Each
party to this Agreement may execute separate originals of this Agreement with
the same effect as if both signed the same original. A facsimile transmission of
the executed original shall be treated as an original signed document. The
parties shall cooperate to assemble and deliver to one another duplicate signed
originals as soon as is practical following such facsimile transmission.
28.12 Confidentiality. Each party shall hold all matter relating to
---------------
this Lease strictly confidential until the Commencement Date, except as is
required for each party to implement the terms of this Lease. Any public
announcement or press release shall be made in timing and form agreed upon by
the parties.
28.13 Commissions. Lessee represents and warrants that it has not
-----------
engaged any real estate broker or contacted the Lessee as a result of
solicitation by any real estate agent. Lessee shall not be responsible for
payment of any commission to any entity or person arising out of this
transaction.
29. Early Presence on Property. The parties agree to cooperate in all
--------------------------
ways practical in the transition process. In order to effect a smooth transition
of the operation of the Hotel, Lessee will be present upon the Property on the
two days prior to the Commencement Date, but such presence shall not otherwise
affect the dates specified in this Lease. Lessor and Lessee shall jointly work
on the transition of operations on those two days, and lessor's employees shall
work with Lessee on those dates, even though the employees will not be formally
working as Lessee's employees.
30. Option and Put to Purchase
--------------------------
________________________________________________________________________________
13
Xxxxxxx Lease-Option 10/7/97
30.1 Grant of Option. In consideration for Lessee entering into the
---------------
Lease, Lessor hereby grants to Lessee the option to purchase the Property on the
terms and conditions described in this Section (the "Option") and Lessee hereby
grants to Lessor the right to require Lessee to purchase the Property on the
terms and conditions described in this Section (the "Put").
30.2 Exercise of Option by Lessee and Put by Lessor. So long as the
----------------------------------------------
Lease has not been earlier terminated, and all payments required under the Lease
are then current, the Option may be exercised by Lessee giving Lessor written
notice of exercise of the Option (the "Option Notice"). Upon delivery of the
Option Notice, Lessor shall be bound to sell, and Lessee shall be bound to buy,
the Property, on the terms and conditions hereinafter set forth herein. In the
event CHC consummates the initial public offering of the common stock of CHC, or
in the event that CHC has not given the Option Notice by six months prior to the
end of the Lease term, or in the event Lessee remains in default under
circumstances which the terms of this Lease specify allow Lessor to exercise its
Put, Lessor shall have the right, on or before 90 days prior to the expiration
of the term of the Lease, to give Lessee written notice ("Put Notice") that
Lessor is requiring Lessee to purchase the property at the Option Price. *
30.3 Purchase Price and Payment
--------------------------
a) Option Price. The Option Price shall be based upon the date of
------------
Closing (provided that a delay in Closing due to a failure of performance by
Lessor shall not result in an increase in the Option Price) as follows: i) If
Closing occurs on or prior to March 31, 1998, the Option Price is $11,500,000;
ii) If Closing occurs after March 31, 1998 and prior to April 1, 1999, the
Option Price is $12,000,000; iii) If Closing occurs after March 31, 1999, the
Option Price is $12,500,000.
b) Payment. The Option Price shall be paid at Closing by payment in full
-------
(or assumption by Lessee and release of Lessor) of all encumbrances against the
Property and the balance ("Equity") shall be paid to Lessor as follows:
i) In the event CHC is then a publicly traded company, which has
conveyed its interest as Lessee/Option Holder under this Lease/Option to a
limited partnership ("CH Ltd.") of which CHC is General Partner, then
Lessor shall receive one-half (or more, at Lessor's option) of the Equity
by transfer to Lessor of units of limited partnership interest in CH Ltd.
("Units") on condition that such Units shall have the right to be
converted, at the option of Lessor at any time after six months from
Closing, into the number of shares of common stock of CHC which are equal
in value at Closing (based on the average price at which such common stock
is traded in the 10 trading days prior to Closing or the initial public
offering price if the initial public offering closes within 10 days of
Closing) to the dollar credit against the Equity; and the balance of the
Equity shall be paid in cash at Closing.
At such time as Lessor elects to convert the Units to stock as
described in the preceding sentence, Lessor and CHC shall enter into a
registration rights agreement which will:
a) grant to Lessor customary piggyback registration rights with
respect to the CHC common stock received which will provide that if, on or
after one year from the date of initial public offering of CHC common
stock, CHC files a registration statement with respect to an
________________________________________________________________________________
14
Xxxxxxx Lease-Option 10/7/97
* If Lessor gives a Put Notice following a default by Lessee, subsequent cure
of the default will not relieve Lessee of the obligation to purchase the
Property pursuant to the Put.
offering of its common stock for cash (other than on Form S-8, employee
benefit plans, Form S-8, Rule 145 or rights offerings), Lessor may, at its
expense, include its shares of CHC stock in such registration, subject to
customary underwriter cut-back provisions; and
b) grant to Lessor that, in the event that CHC does not file an
appropriate registration statement within one year of from the date of
Closing of the Property, Lessor shall have a customary (and one-time only)
demand registration right, subject to underwriter cut-back provisions.
Lessor further agrees that:
a) other holders of CHC common stock may be entitled to register
their shares on the same registration statement;
b) if Lessor registers its CHC common stock pursuant to the
registration rights agreement, it shall provide customary underwriting and
indemnification agreements to CHC and to the underwriters of the stock
offering;
c) CHC may, at its option and in lieu of registering Lessor's CHC
common stock pursuant to such registration rights agreement, repurchase
such shares at the then current market price;
d) Lessor is not entering into this Lease based on the expectation
that CHC will consummate a public offering of its common stock and that
there is no assurance that such a public offering will take place or, if it
does, that the price per share of common stock offered thereby would be
advantageous to Lessor; and
f) Lessor has no approval rights with regard to the structure of CH
Ltd.
ii) In the event CHC is not then a publicly traded company, the
Equity shall be paid;
a) If the Closing shall occur as a result of Lessor exercising its
Put: fifty percent (50%) cash down at Closing and the balance amortized
over 120 equal monthly payments at 9.5% interest per annum, due and payable
in full two years following Closing, secured by the Property; or
b) If the Closing shall occur as a result of Lessee exercising its
Option; all cash on Closing.
30.4 Conveyance and Title
--------------------
(a) Manner of Conveyance. In the event the Option Notice or Put
--------------------
Notice is given, title to the subject property shall be conveyed by Lessor to
Lessee at Closing by statutory warranty deed (the "Deed"), and Xxxx of Sale,
with no warranties, express or implied except as to title and those specifically
made by Lessor to Lessee contained in this Lease, free and clear of all liens,
encumbrances and defects ("Exceptions"), other than the Permitted Exceptions.
(b) Title Report; Objection to Exceptions. Lessor shall provide
-------------------------------------
Lessee with the Title Commitment and all agreements which will survive the
Commencement Date at the beginning of the Inspection Period. Lessee's Waiver
Notice is conditioned upon Lessor's removal at closing of all non-monetary
exceptions identified in the Title Commitment except those certain exceptions
which are approved by Lessee during the Inspection Period ("Permitted
Exceptions"). Lessee shall notify Lessor within 10 days of receipt of the Title
Commitment of any non-monetary
________________________________________________________________________________
15
Xxxxxxx Lease-Option 10/7/97
exceptions or agreements which it disapproves. Lessor shall have 10 days
following such notice of disapproval within which to notify Lessee which of the
disapproved items it will remove and, in the event all such disapproved items
will not be eliminated, Lessee shall have the right, prior to the end of the
Inspection Period, to either accept the items which will not be removed as a
Permitted Exception or acceptable agreement, or to terminate the Lease. The
Permitted Exceptions shall include those exceptions which have been created by
or arise through the occupancy and use of the Property by the Lessee. Lessee
will only assume at the Commencement Date such agreements as it approves during
the Inspection Period.
30.5 Closing Possession. Closing, defined as the consummation of the
------------------
purchase of the Property by Lessee from Lessor in accordance with the terms and
provisions of this Option, shall occur on a date ("Closing Date") specified by
Lessee in the Option Notice or Lessor in the Put Notice, which shall be ninety
(90) days from the date of the Option Notice or Put Notice unless otherwise
agreed upon by the parties. Lessee shall be entitled to possession of the
Property on the Closing Date free of the terms of the Lease.
30.6 Escrow. Upon delivery of the Option Notice by Lessor, the
------
parties will establish an escrow with the Title Company, or such other closing
agent ("Closing Agent") as Lessor and Lessee may designate. The parties shall
also execute satisfactory escrow instructions consistent with this Option as an
accommodation to assist the Closing Agent in carrying out the escrow and in
consummating this transaction. However, in the event that the parties fail to
execute said escrow instructions, the following terms of this Option shall be
deemed to be escrow instructions to the Closing Agent. The transaction shall be
consummated as follows:
(a) Performance By Lessor. Lessor shall deposit into escrow
---------------------
with the Closing Agent, on or before the Closing Date, the following:
(i) The fully executed and acknowledged Deed for the
Property, in a form sufficient for recording, conveying fee title to the
Property, including all improvements thereon, to Lessee, subject to no
exceptions other than the Permitted Exceptions, and an executed Xxxx of Sale to
the subject personal property.
(ii) A fully executed real estate excise tax affidavit.
(iii) An ALTA owner's extended policy of title insurance
(the "Title Policy") issued by the Title Company in the full amount of the real
property portion of the Purchase Price, insuring Lessee's title to the property.
Said Title Policy shall contain no exceptions other than the Permitted
Exceptions. Lessee shall pay the difference between the premium for extended
coverage and that for standard coverage.
(iv) At the Closing, Lessor will provide Lessee with an
affidavit that the Lessor is not a "foreign person," as defined and required in
The Foreign Investment in Real Property Tax Act ("FIRPTA"), IRC Section 145 and
all other documents reasonably required to consummate this transaction.
(v) All Closing Costs for which Lessor shall be
responsible will be deducted from the Option Price paid at Closing.
(vi) Lessor shall execute acknowledge and deliver to
Lessee a xxxx of sale and title registration transfer documents sufficient to
transfer clear title and interest in and to the
________________________________________________________________________________
16
Xxxxxxx Lease-Option 10/7/97
Service Equipment, any Hotel vehicles, consumables and Operating Equipment
subject to and in accordance with the provisions of this Agreement.
(vii) Lessor shall also execute, acknowledge and deliver to
Lessee an assignment of all security deposits then held by Lessor pursuant to
the terms of Space Leases.
(viii) Lessor shall, to the extent transferable, execute,
acknowledge and deliver to Lessee an assignment of all of Lessor's right, title
and interest under the Hotel Contracts, Transferable Permits, Names and the
Miscellaneous Assets to be sold pursuant to this Agreement and shall deliver
Lessor's original counterparts of all documents which are in writing together
with such correspondence and other records, if any, pertaining thereto which
Lessor has. The Hotel WestCoast Franchise Agreement and management contract
shall be terminated by Lessor as of the Closing Date.
(ix) As to any nontransferable Permits, Lessor will, at
Lessee's cost and expense, execute and deliver to Lessee any documents
reasonably required to be signed by Lessor to effect the reissuance thereof in
the name of Lessee.
(x) To the extent transferable and not previously provided to
Lessee during the Inspection Period, Lessor shall use its best efforts to obtain
and deliver to Lessee certificates from the lessees under any Space Leases and
from parties to each of the material Hotel Contracts and stating that said
leases and/or contracts are in full force and effect in accordance with their
terms, that to the best of their knowledge there are no defaults thereunder, and
that, to the extent that the consent of such party is required for the
assignment thereof, such consent has been given.
(xi) To the extent transferable and not previously provided to
Lessee during the Inspection Period, Lessor shall deliver to Lessee all records
pertaining to the then registration of guests, advance bookings of banquets and
similar functions, advance room reservations, promotion records, due bills,
records of the purchasing and engineering departments of the Hotel and all other
records, instruments, documents and deposits for Hotel operation.
(xii) Lessor shall deliver to Lessee all other instruments and
documents to which Purchase may be entitled at the Closing under any of the
other provisions of this Agreement.
(b) Performance By Lessee. On or before the Closing Date, Lessee
---------------------
shall deposit in escrow with the Closing Agent, the following:
(i) Sufficient funds to consummate the purchase in accordance
with this Option, including the amount of the Option Price less any credit for
units of limited partnership to be transferred as described above, plus any
Closing Costs for which Lessee is responsible.
(ii) Such other documents as are reasonably required to
consummate this transaction.
(c) Closing expenses. At Closing Lessor shall pay the real estate
----------------
excise tax imposed by law upon this Lease or Option and all other transfer taxes
imposed by law; the premium for the Title Policy; and one-half of the escrow and
recording fees and costs. At Closing, Lessee shall pay one-half of the escrow
fees and costs, and sales and use taxes as appropriate on the personal property
being sold by Lessor. Allocation of the purchase price between real and
personal property shall be as mutually determined by the parties, or failing
agreement, by arbitration pursuant to Section 8 of the lease, and shall be based
only on the value at Closing of personal property owned by Lessor as of the
date of execution of this Option and still in existence as of the Closing.
________________________________________________________________________________
17
Xxxxxxx Lease-Option 10/7/97
(d) Closing Procedure. When all funds and documents have been
-----------------
deposited in escrow, the Closing Agent shall complete the transfer of the
Property as follow:
(i) Lessor shall receive the Purchase Price, less Closing Costs
for which Lessor is responsible.
(ii) After recording, Lessee shall receive the Deed to the
Property, Xxxx of Sale, all other documents described under Lessor's obligations
above, and the Title Policy.
(e) Prorations. Property taxes and water and similar items shall not
----------
be prorated between the parties as of the Closing Date, as Lessee was
responsible for the same under the lease.
30.7 Termination of Lease. Prior written termination of the Lease by reason
--------------------
of unremedied default shall terminate this Option and Put.
EXECUTED as of the date first above written.
Cavanaughs Hospitality Corporation Xxxxxx Xxxxxxx Hotel Associates
by Spokane Hotel, Inc., General Partners
By: /s/ Xxxxxx X. Xxxxxxxx by /s/ Xxxxxx Xxxxxxxx
--------------------------- ----------------------------
Xxxxxx X. Xxxxxxxx Xxxxxx Xxxxxxxx
its president its President
________________________________________________________________________________
18
Xxxxxxx Lease-Option 10/7/97
STATE OF WASHINGTON
)SS.
County of Spokane
I certify that I know or have satisfactory evidence Xxxxxx X. Xxxxxxxx is the
person who appeared before me, and said person acknowledged that (he/she) signed
this instrument, on oath stated that (he/she) was authorized to execute the
instrument and acknowledged it as the President of Cavanaughs Hospitality
Corporation, to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.
Dated: October 8, 1997.
/s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------------------
Type/Print Name of Notary: ________________________________________________
Notary Public in And For the State of Washington
residing at Spokane
My appointment expires: January 6, 1998
[SEAL APPEARS HERE]
STATE OF OREGON
)SS.
County of Multnomah
I certify that I know or have satisfactory evidence Xxxxxx Xxxxxxxx is the
person who appeared before me, and said person acknowledged that (he/she) signed
this instrument, on oath stated that (he/she) was authorized to execute the
instrument and acknowledged it as the President of Spokane Hotel Inc. in its
capacity as General Partner of Xxxxxx Xxxxxxx Hotel Associates Limited
Partnership, to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.
Dated: October 8, 1997.
________________________________________________
Type/Print Name of Notary: /s/ Xxxxxxxx Xxxxxxx
------------------------------------------------
Notary Public in And For the State of Oregon
residing at_________________________________
My appointment expires: May 18, 1998
[SEAL APPEARS HERE]
________________________________________________________________________________
19
Xxxxxxx Lease-Option 10/7/97
FIRST ADDENDUM TO
HOTEL LEASE WITH PURCHASE OPTION
THIS FIRST ADDENDUM, dated for reference purposes November 25, 1997, is to
that Hotel Lease with purchase Option dated October 7, 1997 ("Lease") between
XXXXXX XXXXXXX HOTEL ASSOCIATES LIMITED PARTNERSHIP ("Lessor") and CAVANAUGHS
HOSPITALITY CORPORATION. Except as otherwise specified in this Addendum, all
terms shall have the same meaning as defined in the Lease. For good and valuable
consideration, receipt of which is acknowledged, the Lease is amended as
follows:
A) Property: The Property is identified as being that described in
Exhibit 1, which is attached to and incorporated in this Addendum by this
reference.
B) Lessee: Cavanaughs Hospitality Corporation hereby assigns all rights
and obligations of Lessee under the Lease to Cavanaughs Hospitality Limited
Partnership ("Lessee"), the sole general partner of which is Cavanaughs
Hospitality Corporation from any of its obligations under the Lease.
C) Waiver of Contingencies: Subject to the terms of this Addendum, Lessor
and Lessee waive the contingencies described in Section 3.1, 3.2 and 3.3 of
the Lease. Lessee accepts the Property in its condition as of the date of this
Addendum. Lessee further agrees that Lessee will not assert any offset to which
it may be entitled against Lessor for any defect known to Lessee as of the date
of this Addendum.
D) Condition of Title: With the exclusion of the items specified in the
next sentence, Lessee accepts title subject to the exceptions set forth in First
American Title of Spokane Commitment Order No. 124974-CB. Lessor shall provide
the Title Company with all affidavits required to delete exception numbers 14,
17, 21, 23, 24, 25, and 26 which refer to leases and terms contained in leases
which Lessor warrants are no longer in effect. Lessors inability to cause the
deletion of the exceptions described in the preceding sentence, other than
exception number 14, shall not affect Lessee's and Lessor's obligation to
consummate the transactions described in the Lease. Removal of exception number
14 by the Commencement Date is a precondition to any further obligation of Lease
under the Lease unless waived by Lessee in writing.
E) Term: The term of the Lease shall be from January 1, 1998 ("Commencement
Date") to November 1, 1999.
F) Rental and Encumbrances: The identity and payment terms of the notes
comprising the Rental as follows; a) Washington Mutual Bank Loan having
principal balance of $4,820,705.24 with interest paid in November 1, 1997 and
payment terms modified as provided in Washington Mutual letter dated October 30,
1997; b) U.S. Bank Loan having principal
_______________________________________________________________________________
1
First Addendum to Xxxxxxx Lease-Option (11/25/97)
balance of $2,147,438 with interest paid to November 1, 1997 and payment terms
modified as described in U.S. Bank letter dated November 18, 1997; and c) Aspen
Path Loan currently encumbering the Property having an unpaid principal balance
of $125,000 with interest paid to November 1, 1997 shall be modified prior to
the Commencement Date to eliminate all payments through the term of the Lease by
providing that interest that shall accrue until payment in full on November 1,
1999, unless earlier prepaid. The payments of the monthly principal and interest
debt service (exclusive of any balloon payments of principal in excess of normal
monthly payments) on the notes described in a) and b) of the preceeding sentence
comprise the Rental. As of the date of Closing, the sum of the following shall
constitute the encumbrances to be paid or assumed by Lessee as described in
Section 30.3 b) in part payment of the Option Price: x) the then unpaid balance
of principal and interest on the notes described in a), b) and c) of the first
sentence of this Section F; plus y) the lesser of the then payoff figure which
the contract holder would accept in total satisfaction of the contract or the
then total unpaid payments and buyout amounts of the following contracts
described in Exhibit II to this Addendum; I) Xxxxxx Elevator Service Company
dated 11/3/95 (only the "Special Provision" described in Exhibit II.I); 2) GE
Capital Lease for Copier start dated 2/28/95; 3) T&W Lease for Voice Mail start
dated 10/2 4) T&W Lease for Compactor start dated 6/25/96; 5) T&W Lease for CLS
System start dated 4/20/95; 6) T&W Lease for Saflok System start dated 8/20/96;
7) Associates Leasing Lease for Radios start dated 10/1/96; 8) Associated
Leasing Lease for Paging System start dated 5/1/96 9) Fleet Lease for 1997 Ford
Van start dated 10/1/96; 10) Fleet Lease for 1995 Dodge Van start dated 11/1/94.
Lessor agrees to pay any loan fee imposed by U.S. Bank or Aspen Path for the
modification of the terms of payment of the U.S. Bank note or Aspen Path note.
Lessee agrees to pay the $6,500 loan fee imposed by Washington Mutual Bank for
the modification of the terms of payment of the Washington Mutual note. The
parties will equally divide any other reasonable costs for which U.S. Bank or
Washington Mutual Bank require reimbursement for the above described
modifications.
G) Contract Obligations: With the exceptions stated in the next sentence.
Lessee accepts all contracts which have been provided to Lessee in writing by
Lessor. Lessee does not accept, and Lessor shall hold Lessee harmless from all
obligations, including attorney fees or costs, arising from a) Any contracts or
collective bargaining agreements with or other obligations (including any
obligation to provide notice of or bargain with regard to termination or sale
imposed by contract or law) to employees or unions; b) Any contracts or licenses
pertaining to West Coast Hotels; c) Any listing contract for the sale of lease
of all or any portion of the Property. Lessee agrees, however, to bargain in
good faith with the Hotel Employees and Restaurant Employees and with the
Operating Engineers with regard to the terms of employment of employees of
Lessee at the Hotel in bargaining units represented by those unions.
H) Cooperation in Transition: Lessor and Lessee agree, in addition to
the other terms of the Lease to cooperate in the transition period between the
date of this Addendum and the Commencement Date by; a) Lessor providing Lessee
access, to the extent possible without disrupting Hotel operations, to Lessor's
employees for the purpose of conducting employment
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2
First Addendum to Xxxxxxx Lease-Option (11/25/97)
interviews; b) Lessor allowing Lessee, at Lessee's sole expense, to maintain an
on site representative(s) to begin sales efforts for post-Commencement Date
operations without disrupting Hotel operations; c) Lessor and Lessee, to the
extent a liquor license for the Hotel has not been issued in the name of
Lessee as of the Commencement Date, entering into a liquor operations management
agreement under the terms of which Lessee will operate under Lessor's existing
liquor license with the consent of the public authorities, with Lessee holding
Lessor harmless from all such operations and paying to Lessor the minimum
amount which the public authorities will allow for such operations; and d) Until
the Commencement Date, Lessor shall at all times maintain and operate the Hotel
in accordance with past practice.
Options Price: Section 30.3a) of the Lease is modified to read as follows:
"The Option Price shall be based upon the date of Closing (provided that a delay
in Closing due to a failure of performance by Lessor shall not result in an
increase in the Option Price) as follows: (i) if Closing occurs prior to July 1,
1998, the Option Price is $11,500,000; ii) if Closing occurs after June 30, 1998
and prior to April 1, 1999, the Option Price shall increase by $55, 555 per
month with no proration for any partial month (for example, if Closing occurs in
July 1998 the Option Price shall be $11,555,555; if Closing occurs in August
1998, the Option Price shall be $11,611,110, and so forth until April 1999);
iii) if Closing occurs after March 31, 1999, Option Price is $12,500,000.(TM)
Units: Section 30.3b) i) of the Lease is modified to provide: a) that
Lessor and the partners of Lessor shall have the right but not the obligation,
under an agreement reasonably satisfactory in form to Lessee, to guarantee debt
of Lessee at the time of acquisition of Units at closing but without any right
to control the terms or payment of existing or future debt of Lessee b) that
Lessor or the partners of Lessor are, for a period of one year from date of the
issuance of Units to Lessor or its partners, prohibited from converting Units to
shares of common stock of Cavanaughs Hospitality Corporation; c) that
conveyances to Lessee may be by deeds for undivided interests in the Property;
and d) that Lessee will reasonably cooperate with Lessor, without expense or
liability to Lessee, in structuring the Units by Lessor and Lessor's partners as
non-taxable transactions, however the non-taxable status of the transaction
described in the Lease is not a pre-condition to performance by Lessor or
Lessor's partners of Lessor's obligations under the Lease.
EXECUTED as of the date first above written.
Cavanaughs Hospitality Corporation Xxxxxx Xxxxxxx Hotel Associates
Limited Partnership
by Spokane Hotel, Inc., General
Partner
by /s/ Xxxxxx X. Xxxxxxxx by /s/ Xxxxxx Xxxxxxxx
-------------------------------- -------------------------------
Xxxxxx X. Xxxxxxxx Xxxxxx Xxxxxxxx
its President its President
________________________________________________________________________________
3
First Addendum to Xxxxxxx Lease-Option (11/25/97)
Cavanaughs Hospitality Limited Partnership
??? Cavanaughs Hospitality Corporation
??? partner
by /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
President
STATE OF WASHINGTON
)SS
County of Spokane
I certify that I know or have satisfactory evidence Xxxxxx X. Xxxxxxxx is the
person who appeared before me, and said person acknowledged that (he/she) signed
this instrument, on oath stated that (he/she) was authorized to execute the
instrument and acknowledged it as the President of Cavanaughs Hospitality
Corporation in its own capacity and in the capacity as the general partner of
Cavanaughs Hospitality Limited Partnership, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.
Dated: November 26, 1997.
/s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------------------
Type/Print Name of Notary: XXXXXXXX X. XXXXXXXXX
Notary Public in And For the State of Washington
residing at Spokane
My appointment expires: 01/06/98
[SEAL APPEARS HERE]
STATE OF OREGON
)SS.
County of Multnomah
I certify that I know or have satisfactory evidence Xxxxxx Xxxxxxxx is the
person who appeared before me, and said person acknowledged that (he/she) signed
this instrument, on oath stated that (he/she) was authorized to execute the
instrument and acknowledged it as the President of Spokane Hotel Inc. in its
capacity as General Partner of Xxxxxx Xxxxxxx Hotel Associates Limited
Partnership, to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.
Dated: November 25, 1997.
/s/ Xxxxxxxx Xxxxxxx
------------------------------------------------
Type/Print Name of Notary: Xxxxxxxx Xxxxxxx
Notary Public in And For the State of Oregon
residing at Gresham, Oregon
My appointment expires: May 18, 1998
[SEAL APPEARS HERE]
________________________________________________________________________________
4
First Addendum to Xxxxxxx Lease-Option (11/25/97)
PARCEL 1
--------
Xxxx 0, 0, 0, xxx 0, Xxxxx 9; and Xxxx 0, 0, 0 xxx 0, Xxxxx 00, XXXXXXXX
ADDITION, according to plat recorded in Volume "D" of Plats, Page 82, in the
City of Spokane, Spokane County, Washington.
TOGETHER WITH that portion of vacated alley lying South of and adjacent to said
Block 13, as set forth in Ordinance No. 29154, filed as Recording No.
8808230119.
PARCEL 2
--------
That portion of Lots 8, 9 and 10 and of the Easterly 15 feet of Xxx 00, Xxxxx
"X" of RAILWAY COMPANY'S SUBDIVISION OF ITS RIGHT OF WAY, lying Northerly of the
Northerly retaining wall supporting Railway Company's tracks, in the City of
Spokane, Spokane County, Washington.
