Exhibit 10.3
MONDRIAN LOS ANGELES
BETWEEN
MONDRIAN HOLDINGS LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AS SELLER
AND
WOLVERINES OWNER LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AS PURCHASER
As of April 22, 2011
Table of Contents
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ARTICLE I PURCHASE AND SALE |
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1 |
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1.1 Agreement of Purchase and Sale |
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1.2 Property Defined |
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4 |
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1.3 Permitted Exceptions |
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5 |
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1.4 Purchase Price |
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5 |
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1.5 Payment of Purchase Price |
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5 |
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1.6 Xxxxxxx Money |
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5 |
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1.7 Management Agreement |
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6 |
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ARTICLE II TITLE AND SURVEY |
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6 |
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2.1 Title Report |
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6 |
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2.2 Survey |
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6 |
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2.3 Approval of Title |
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6 |
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2.4 Conveyance of Title |
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8 |
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2.5 Title Policy |
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8 |
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ARTICLE III INSPECTION |
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9 |
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3.1 Right of Inspection |
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9 |
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3.2 Seller Due Diligence Materials |
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10 |
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ARTICLE IV CLOSING |
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11 |
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4.1 Time and Place; Pre-Closing |
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11 |
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4.2 Seller’s Closing Obligations and Deliveries |
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12 |
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4.3 Purchaser’s Closing Obligations and Deliveries |
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14 |
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4.4 Prorations, Credits and Other Adjustments |
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14 |
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4.5 Closing Costs |
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21 |
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4.6 Conditions Precedent to Obligation of Purchaser |
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21 |
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4.7 Conditions Precedent to Obligation of Seller |
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22 |
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4.8 Failure or Waiver of Conditions Precedent |
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22 |
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ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS |
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24 |
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5.1 Representations and Warranties of Seller |
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24 |
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5.2 Knowledge Defined |
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26 |
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5.3 Covenants of Seller |
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26 |
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5.4 Representations and Warranties of Purchaser |
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27 |
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5.5 Covenants of Purchaser and/or of Seller |
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29 |
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5.6 Employees |
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30 |
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5.7 Independent Audit |
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32 |
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ARTICLE VI DEFAULT |
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6.1 Default by Purchaser |
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32 |
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6.2 Default by Seller |
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33 |
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6.3 Seller’s Right to Cure Defaults |
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33 |
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6.4 Purchaser’s Right to Cure Defaults |
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33 |
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ARTICLE VII SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY |
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34 |
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7.1 Survival |
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34 |
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7.2 Seller’s Indemnification |
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34 |
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7.3 Purchaser’s Indemnification |
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34 |
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7.4 Notice and Resolution of Claims |
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34 |
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7.5 Limitations on Liability |
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36 |
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7.6 Other Matters Regarding Indemnification |
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36 |
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ARTICLE VIII RISK OF LOSS |
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8.1 Minor Damage |
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8.2 Major Damage |
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8.3 Definition of “Major” Loss or Damage |
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38 |
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ARTICLE IX COMMISSIONS |
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38 |
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9.1 Brokerage Commissions |
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38 |
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ARTICLE X DISCLAIMERS AND WAIVERS |
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38 |
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10.1 No Reliance on Documents |
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38 |
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10.2 DISCLAIMERS |
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10.3 Repairs, Reserves, and Capital Expenditures |
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40 |
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10.4 Effect and Survival of Disclaimers |
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41 |
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ARTICLE XI MISCELLANEOUS |
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41 |
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11.1 Confidentiality |
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11.2 Public Disclosure |
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11.3 Assignment |
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42 |
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11.4 Notices |
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42 |
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11.5 Modifications |
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43 |
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11.6 Calculation of Time Periods; Time is of the Essence |
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11.7 Successors and Assigns |
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11.8 Entire Agreement |
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11.9 Further Assurances |
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11.10 Counterparts; Facsimile Signatures |
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11.11 Severability |
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11.12 Applicable Law |
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11.13 No Third Party Beneficiary |
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11.14 Exhibits and Schedules |
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11.15 Captions |
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11.16 Construction |
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45 |
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11.17 Termination of Agreement |
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45 |
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11.18 Attorneys Fees |
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11.19 No Waiver |
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46 |
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11.20 No Reservation of Property |
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11.21 No Recordation |
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ii
THIS
PURCHASE AND SALE AGREEMENT (this “
Agreement”) is made as of April 22, 2011 (the
“
Effective Date”), by and between Mondrian Holdings LLC, a Delaware limited liability
company (“
Seller”), and Wolverines Owner LLC, a Delaware limited liability company
(“
Purchaser”). Unless otherwise noted, all capitalized terms set forth in this Agreement
shall have the meanings ascribed to them in
Annex A attached hereto.
W I T N E S S E T H:
WHEREAS, Seller is the owner and holder of the fee simple estate in and to that certain plot,
piece and parcel of land located at 0000 Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxx of
Los Angeles and more particularly described in Schedule 1.1(a) attached hereto (the
“Land”), together with the 237 room hotel, restaurants, bars, spas, lounges, meeting rooms
and all other improvements and fixtures (collectively, the “Improvements”) located on the
Land (the Improvements and the Land are hereinafter sometimes collectively referred to as the
“Real Property”); and
WHEREAS, Seller operates on the Real Property the hotel known as “Mondrian” (the
“Hotel”);
WHEREAS, Seller desires to cause the sale, assignment and transfer of its interests in and to
the Property (as defined below) to Purchaser in accordance with the terms and provisions of this
Agreement, and Purchaser desires to purchase such interests from Seller and assume certain
liabilities related to the Property upon the terms more particularly set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, 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 the right, title
and interest of Seller or any affiliate of Seller (which shall not include 8440 LLC or Sunset
Restaurant LLC) in and to the following:
(a) The Land as described in Schedule 1.1(a) attached hereto.
(b) The Improvements.
(c) All tangible personal property owned by Seller or any affiliate of Seller and located on
the Real Property, used solely in connection with the operation of the Real Property (including
appliances, furniture, fixtures (other than those which constitute Improvements), furnishings,
equipment, machinery, building systems, security systems, key cards (together with all devices for
coding and monogramming such key cards), vehicles, appliances, carpeting, draperies and curtains,
tools and supplies, decorations, china, glassware, linens, silver, utensils, computers, computer
equipment and manuals, computer software and programs, uniforms, works of art, materials, supplies
and other similar items of personal property) and that are located at the Hotel as of the Closing
Date, but specifically excluding the personal property listed on Schedule 1.1(c) attached
hereto (the “Excluded Personal Property”). The tangible personal property described in
this Section 1.1(c), exclusive of the Excluded Personal Property, is hereinafter referred
to collectively as the “Personal Property”).
(d) All contracts or reservations for the use of spas, guest rooms, ballroom and banquet
facilities, conference facilities, meeting rooms or other facilities of the Hotel or located within
the Improvements, for the Closing Date and the period from and after the Closing Date
(collectively, the “Bookings”), and any deposits held by Seller in connection with the
Bookings and not previously applied as of the Closing Date.
(e) All contracts, agreements and warranties to which Seller is a party that are assignable
without the consent of the counterparty thereto or additional costs or liability to Seller, or with
respect to which Seller obtains consent to an assignment hereunder from the applicable
counterparty, relating to the upkeep, repair, maintenance or operation of the Real Property or
the Personal Property, including all deposits and credits thereunder (to the extent the obligation
to apply or return such deposits or credits is assumed by Purchaser) (collectively, the
“Service Contracts”), including the contracts and agreements: (i) listed on Schedules
1.1(e)-1(a) attached hereto (which sets forth the Service Contracts assignable without the
consent of the counterparty thereto or additional costs or liability to Seller) and 1.1(e)-1(b)
attached hereto (which sets forth the Service Contracts in effect as of the Effective Date that
are not assignable without the consent of the counterparty thereto or additional costs or liability
to Seller) (but specifically excluding (A) Bookings, (B) Space Leases, (C) insurance policies, (D)
the Management Agreement, and (E) any contract or agreement listed on such Schedule
1.1(e)-1 which (1) is terminated on or before Closing pursuant to the terms of this Agreement,
(2) expires pursuant to its terms on or before the Closing Date or (3) is terminated by the
applicable counterparty thereto on or before the Closing Date); (ii) providing for the lease of
equipment or other personal property listed on Schedule 1.1(e)-2(a) (which sets forth any
such leases assignable without the consent of the counterparty thereto or additional costs or
liability to Seller) and 1.1(e)-2(b) attached hereto (which sets forth any such leases in
effect as of the Effective Date that are not assignable without the consent of the counterparty
thereto or additional costs or liability to Seller) (collectively, the “Equipment Leases”,
but specifically excluding any contract or agreement listed on such Schedule 1.1(e)-2(a) or
Schedule 1.1(e)-2(b) which (A) is terminated on or before Closing pursuant to the terms of
this Agreement, (B) expires pursuant to its terms on or before the Closing Date or (C) is
terminated by the applicable counterparty thereto on or before the Closing Date); and (iii) entered
into after the Effective Date and which Seller is permitted to enter into under the terms of this
Agreement.
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(f) All names, marks, logos and designs, used in the operation or ownership of the Property or
any part thereof listed on Schedule 1.1(f), provided that Purchaser expressly acknowledges
and agrees that the following items are specifically excluded and shall not be transferred
hereunder: (i) all right, title or interest of any kind or nature whatsoever in and to, and
intellectual property in any way relating to, the Manager’s Materials or Manager’s Tradenames (it
being understood that certain rights with respect to certain of the foregoing items shall be
granted to Purchaser pursuant to the Management Agreement); (ii) all websites and domains used for
the Hotel, including access to the FTP files of the websites; and (iii) any information or reports
that relate solely to the period prior to the Closing (all such items not to be transferred
hereunder being collectively referred to as the “Retained IP”).
(g) To the extent the same are assignable as of the Closing Date without consent of a third
party or additional costs or liability to Seller and to the extent assumed by Purchaser, all
transferable licenses, franchises and permits owned by Seller and used in or relating to the
ownership, occupancy or operation of the Property or any part thereof as listed on Schedule
1.1(g), subject to Purchaser’s compliance with any limitations or restrictions on transfer or
assignment of any computer-related materials or software which are contained in any license or
similar agreement (collectively, the “Permits”), provided that the term Permits
specifically excludes any and all non-transferable permits and licenses held by Seller in
connection with the Property, including, without limitation, the liquor license and the permits and
approvals required for the preparation, sale and service of food and beverage (it being
acknowledged that the Existing Liquor License will be transferred pursuant to the Liquor Assets
Escrow Agreement) (collectively, such excluded Permits, the “Excluded Permits”).
(h) To the extent the same are assignable as of the Closing Date without consent of a third
party or additional costs or liability to Seller, all assignable telephone numbers, TWX numbers,
post office boxes, signage rights, utility and development rights and privileges, site plans,
surveys, environmental and other physical reports, plans and specifications pertaining to the Real
Property and the Personal Property (all of the property described in clauses (f), (g), and (h) of
this Section 1.1 that is not specifically deemed excluded being herein referred to
collectively as the “Intangibles”).
(i) All: (i) food and beverages (excluding alcoholic beverages) that are in the Hotel as of
the Closing Date; (ii) inventory held for sale by Seller to Hotel guests and others in the ordinary
course of business including all opened and unopened retail inventory in any area at the Hotel
conducting retail sales that is in the Hotel as of the Closing Date (collectively, “Retail
Inventory”); (iii) engineering, maintenance and housekeeping supplies (including soap and
cleaning materials, fuel and materials, stationery and printing items) that are in the Hotel as of
the Closing Date; and (iv) other supplies, whether used, unused or held in reserve storage for
future use in connection with the maintenance and operation of the Real Property or the Personal
Property that are in the Hotel as of the Closing Date (all of the foregoing being referred to
herein as the “Consumable Inventory” and, to the extent contained in unopened boxes,
bottles, jars or containers of any type as of the Closing Date, shall collectively be referred to,
together with unopened packages of china, glass, silver and linens (but excluding any bottles of
alcoholic beverages), as the “Unopened Inventory”).
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(j) To the extent the same are in effect on the Closing Date, all leases or licenses for the
lease and occupancy of space at the Hotel listed and described on Schedule 1.1(j) attached
hereto (collectively, the “Space Leases”), including any deposits relating to such Space
Leases held by Seller and not applied to the tenant’s obligations as of the Closing Date. For
purposes of this Agreement, the term “Space Leases” does not include Bookings.
(k) Subject to Section 4.4.9 hereof, Seller’s interest in the funds contained in
“house banks” for the Hotel as of the Cut-Off Time, whether held in the name of Seller, the Hotel
or Manager (defined below) 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
or on behalf of Seller or Manager in connection with the ownership or operation of the Hotel.
(l) Any deposits made by Seller with utility companies or governmental agencies or authorities
relating to the Real Property to the extent apportionment is made therefor pursuant to Section
4.4.
1.2 Property Defined.
(a) The Real Property, the Personal Property, the Permits, the Bookings, the Service
Contracts, the Intangibles, the Unopened Inventory, the Retail Inventory, the Consumable Inventory,
the Space Leases and the House Bank Funds are hereinafter sometimes referred to collectively as the
“Property”. The Purchase Price is generally subject to adjustment pursuant to
Section 4.4, and specifically does not include payment for, and shall be adjusted with
respect to (among other things), the House Bank Funds, and certain of the Unopened Inventory and
the Retail Inventory, as described in Section 4.4 below.
(b) Notwithstanding anything to the contrary in Section 1.1 or Section 1.2(a)
above, the following items are expressly excluded from the Property:
(i) All cash on hand or on deposit in any operating account or other account or reserve,
except for security deposits held by Seller as landlord with respect to any Space Lease as of the
Closing Date, security deposits held by Seller with respect to any Booking as of the Closing Date,
utility and governmental agency deposits, deposits held by Seller in connection with any Service
Contract to be assumed by Purchaser and the House Bank Funds, all of which are to be transferred at
Closing subject to the terms of this Agreement.
(ii) The Excluded Personal Property.
(iii) The Retained IP.
(iv) The Excluded Permits.
(v) All accounts receivable of the Hotel and all related operations (collectively, the
“Receivables”).
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(vi) Any tangible or intangible property (including, without limitations, fixtures, personal
property or intellectual property) owned by: (A) the supplier, vendor, licensor, lessor or other
party under any Service Contracts; (B) the tenants under any Space Leases; (C) Manager (but solely
with respect to the types of tangible and intangible property that Manager would retain upon
termination of the New Management Agreement); (D) any employees; (E) any guests or customers of
the Hotel; or (F) any other third party.
1.3 Permitted Exceptions. The Property shall be conveyed subject only to the matters which
are, or are deemed to be, Permitted Exceptions pursuant to Article II below.
1.4 Purchase Price. Seller is to sell and Purchaser is to purchase the Property for a total
of ONE HUNDRED THIRTY SEVEN MILLION AND NO/100 DOLLARS ($137,000,000.00) (the “Purchase
Price”).
1.5 Payment of Purchase Price.
(a) On the Closing Date, Purchaser shall deliver to Escrow Agent, by wire transfer of
immediately available federal funds to the bank account designated in the Escrow Agreement, an
amount equal to the Purchase Price, as increased or decreased by prorations and adjustments as
herein provided, less the Xxxxxxx Money previously delivered to Escrow Agent.
(b) The Purchase Price (including the Xxxxxxx Money previously delivered to Escrow Agent), 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.
(c) Seller and Purchaser agree that attached hereto as Schedule 1.5(c) is an
allocation of the Purchase Price among the Real Property and various items of personal
property (i.e., the Property other than the Real Property). Each party agrees to file federal,
state and local tax returns consistent with such allocations agreed upon between the parties.
1.6 Xxxxxxx Money.
(a) Within one (1) business day following the full execution and delivery of this Agreement by
Seller and Purchaser, Purchaser shall deposit with First American Title Insurance Company (“Escrow
Agent”) having its office at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxx Xxxxxx or
Xxxxxxx Xxxxxxx, the sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (together with accrued
interest thereon, the “Xxxxxxx Money”) by wire transfer of immediately available federal
funds to the bank account designated in the Escrow Agreement. The full amount of the Xxxxxxx Money
is deemed earned by Seller when the Additional Xxxxxxx Money is delivered pursuant hereto by
Purchaser and is non-refundable to Purchaser except in the event that this Agreement is timely
terminated as a result of Purchaser’s election to terminate in accordance with and pursuant to
Section 2.3(b), Section 4.8, Section 6.2 or Section 8.2 below, in
which case the Escrow Agent shall be obligated to refund the full amount of the Xxxxxxx Money to
Purchaser pursuant to the terms of the Escrow Agreement.
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(b) Escrow Agent shall hold the Xxxxxxx Money in a segregated, interest-bearing account in
accordance with the terms and conditions of the Deposit Escrow Instructions attached hereto as
Exhibit G (the “Escrow Agreement”). All interest accruing on such sums shall become
a part of the Xxxxxxx Money and shall be distributed or applied as Xxxxxxx Money in accordance with
the terms of the Escrow Agreement.
(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 same 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.
1.7
Management Agreement. Purchaser acknowledges that the Hotel is being operated
and managed by Morgans Hotel Group Management LLC, a Delaware limited liability company
(“Manager”) (formerly known as Xxx Xxxxxxxx Hotel Management LLC), pursuant to that certain
Property Management Agreement dated as of June 30, 1999, by and between Seller and Manager (the
“Management Agreement”). At Closing, the Management Agreement will be terminated effective
as of the Closing Date at Seller’s sole cost and expense and Purchaser and Manager will enter into
a hotel management agreement in the form agreed to by the parties prior to the Effective Date (the
“New Management Agreement”).
ARTICLE II
TITLE AND SURVEY
2.1 Title Report. Seller has obtained and delivered to Purchaser, a title report dated
March 14, 2011 (Title No. NCS — 48012 — NY) (the “Title Report”) covering the Real
Property from First American Title Insurance Company (the “Title Company”) and, has caused
the Title Company to deliver to Purchaser 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 issued by the Title Company, provided that if Purchaser shall receive a Title Update less
than five (5) days prior to the then scheduled Closing Date, then Purchaser shall deliver same to
Seller prior to the Closing.
2.2 Survey. Purchaser has obtained a survey of the Real Property prepared by Xxxxx X.
Xxxxx. P.L.S. with a visual examination update April 15, 2011 (Reference No. J.N. 113-11) (as so
updated, the “Survey”).
2.3 Approval of Title.
(a) Purchaser has approved all title exceptions and survey matters set forth on Schedule
2.4(a) attached hereto.
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(b) Purchaser shall have five (5) business days after receipt of a Title Update, if any, to
notify Seller, in writing, of such objections as Purchaser may have to anything contained in such
Title Update other than Permitted Exceptions (and if Purchaser receives a Title Update less than
(5) days prior to a scheduled Closing Date, then Purchaser shall deliver such written notice to
Seller prior to the Closing). In the event Purchaser shall notify Seller, in writing, of objections
to title or to matters shown on a Title Update, Seller shall have the right, but not the
obligation, to cure such objections. Within five (5) business 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 any or all of such
objections, Seller shall have the right to attempt to remove, satisfy or cure the same and for this
purpose Seller shall, at Seller’s election, be entitled to reasonable adjournments of the Closing
if additional time is required, but in no event shall the adjournments, in the aggregate, exceed
sixty (60) days after the Outside Closing Date. If Seller elects not to attempt to cure any
objections specified in Purchaser’s notice, or if Seller fails (despite using reasonable commercial
efforts) to effect a cure of those objections which it elected to attempt 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 five (5) business day period,
Purchaser shall have the following options: (i) to accept a conveyance of the Property subject to
the Permitted Exceptions and any matter objected to by Purchaser which Seller is unwilling or
unable to cure (each of which shall also be deemed to be Permitted Exceptions), 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: (A)
Seller notifies Purchaser that Seller does not intend to attempt to cure any title objection; (B)
Seller fails to respond to Purchaser’s notice within said five (5) business day period; or (C) if,
having commenced attempts to cure any objection, Seller later notifies Purchaser in writing that
Seller will not effect a cure thereof, then, in any such event, Purchaser shall, within five (5)
days after such notice has been given (or within five (5) days after Seller’s five (5) business day
period to respond to Purchaser’s objection notice has expired), notify Seller in writing whether
Purchaser shall elect to accept the conveyance under clause (i) of the immediately preceding
sentence or to terminate this Agreement under clause (ii) of the immediately preceding sentence.
Purchaser’s failure to notify Seller of termination of this Agreement within such five (5) business
day period shall be deemed to be an irrevocable election under clause (i) above to accept
conveyance of the Property without reduction of the Purchase Price.
(c) Unless expressly agreed to by Seller, Seller have no responsibility or obligation of any
kind or nature whatsoever (express or implied) to cure any title matter objected to by Purchaser.
Notwithstanding the foregoing sentence, if any exceptions on the Title Report or any of the
objections set forth in a written notice from Purchaser consist of delinquent taxes, mortgages,
deeds of trust, security agreements, construction or mechanics’ liens, tax liens or other liens or
charges in a fixed sum (or capable of computation as a fixed sum) (collectively, “Monetary
Encumbrances”), then Seller shall be obligated to pay and discharge (or cause the Title Company
to insure over) such Monetary Encumbrances, provided that (1) Seller’s obligation to incur costs
and expenses in connection with paying and/or discharging all such Monetary Encumbrances is limited
to Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in the aggregate and (2) the
foregoing aggregate limitation of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) shall
not apply to any liens securing loans made to Seller and any other Monetary Encumbrances that were
caused, assumed, consented to or created by Seller.
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2.4 Conveyance of Title. Notwithstanding anything contained herein to the contrary, at
Closing, Seller shall convey and transfer to Purchaser its interest in the Real Property subject to
the following exceptions to title (the “Permitted Exceptions”):
(a) Those matters specifically set forth on Schedule 2.4(a) attached hereto and made a
part hereof.
(b) Any state of facts shown on the Survey.
(c) The lien of all ad valorem real estate taxes and assessments not yet due and payable as of
the Closing Date, subject to adjustment as herein provided.
(d) All laws, ordinances, rules and regulations of the United States, the State of California,
any city or other subdivision or any agency, department, commission, bureau or instrumentality of
any of the foregoing having jurisdiction over the Real Property or the Hotel, as the same may now
exist or may be hereafter modified, supplemented or promulgated (collectively, the “Legal
Requirements”).
(e) All presently existing and future liens of real estate taxes or assessments and water
rates, water meter charges, water frontage charges and sewer taxes, rents and charges, if any,
subject to apportionment as provided in this Agreement.
(f) Any matters over which the Title Company is willing to insure to the reasonable
satisfaction of Purchaser at no additional cost (or, if there is additional cost, if Seller will
pay the cost).
(g) Any matters against which the Title Company is willing to provide affirmative insurance to
the reasonable satisfaction of Purchaser at no additional cost (or, if there is additional cost, if
Seller will pay the cost).
(h) Any other matter affecting title to the Real Property that was not objected to by
Purchaser or was waived or deemed waived by Purchaser in accordance with Section 2.3
hereof.
(i) All violations of laws, rules, regulations, statutes, ordinances, orders or requirements
of law and/or conditions giving rise to the same;
(j) The rights of Hotel guests which occupy the Hotel or have any Booking or reservation for
rooms, food and beverages, meetings and other customary Hotel uses relating to periods subsequent
to the Closing Date; and
(k) The rights of the tenants under the Space Leases and any person claiming by, through or
under such tenants.
2.5 Title Policy. At Closing, Seller and Purchaser shall direct the Title Company to issue
an ALTA Owner’s Policy 2006 (“Title Policy”) insuring Purchaser’s interest in and to the
Real Property as of the Closing Date, subject to the Permitted Exceptions.
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ARTICLE III
INSPECTION
3.1 Right of Inspection.
(a) Purchaser shall, subject to the rights of guests of the Hotel and the tenants under the
Space Leases, have the right to make physical inspections 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 in connection with the leasing, operation, current
maintenance and/or management of the Property (“Property Information”), including, without
limitation, the Space Leases, the Service Contracts, 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, materials related to Hotel Employees (as defined
below), to the extent Seller is not prohibited by applicable contracts or law from disclosing such
materials, and any other documents relating to the Property in Seller’s or Manager’s possession or
control, but excluding materials not directly related to the maintenance and/or management of the
Property such as, without limitation, Seller’s financial projections, forecasts, budgets,
appraisals, company tax records, internal memoranda, correspondence and reports and similar
proprietary or confidential information; provided, however that it is anticipated and Purchaser and
Seller agree that Manager will provide Purchaser with Manager’s forecasts and budgets with respect
to the future operation of the Property.
(i) Subject to Section 11.2, 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 and that Purchaser is liable to Seller for any breach
by any such party of the confidentiality of such Property Information.
(b) Purchaser understands and agrees that any on-site inspections of the Property shall only
be conducted during business hours with not less than two (2) business days prior notice to Seller.
Seller may have its respective representatives attend any such inspections. Such physical
inspection shall not disturb Hotel guests or tenants under the Space Leases nor unreasonably
interfere with the use of the Property by Seller or Manager. Such physical inspection shall not be
invasive in any respect, and in any event shall be conducted in accordance with standards
customarily employed in the industry and in compliance with all governmental laws, rules and
regulations. Following each entry by Purchaser with respect to inspections and/or tests on the Real
Property, Purchaser shall repair any damage to the Property caused by Purchaser or any of its
agents, consultants or representatives in connection with Purchaser’s diligence activities at the
Property, and restore the Property to the original condition as existed prior to any such
inspections and/or tests, at Purchaser’s sole cost and expense.
(c) Seller shall reasonably cooperate with Purchaser in its due diligence but shall not be
obligated to incur any liability in connection therewith. Purchaser shall not disrupt Seller’s,
Manager’s or any tenant’s or guest’s activities on the Real Property and shall not contact
Manager’s on-site managers or on-site employees, or any other employees working at the Hotel, any
guests of the Property, any party to a Service Contract, any tenants under the Space Leases, any
lender providing financing secured by the Real Property or any governmental authority without in
each instance obtaining Seller’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.
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(d) Purchaser shall indemnify, defend, protect and hold Seller harmless from and against any
claim for liabilities, losses, costs, expenses (including reasonable attorneys’ fees actually
incurred), damages or injuries arising out of or resulting from or in connection with the
inspection of the Property by Purchaser or its agents, employees, representatives, consultants 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. Purchaser agrees (i) that prior to entering the Property to conduct any
inspection, Purchaser shall obtain and maintain, and shall cause each of its consultants,
contractors and agents to maintain (and shall deliver evidence thereof in the form of a policy
certificate satisfactory to Seller thereof), at no cost or expense to Seller, commercial general
liability insurance from an insurer reasonably acceptable to Seller in the amount of Two Million
Dollars ($2,000,000) with combined single limit for personal injury or property damage per
occurrence, such policies to name Seller and Manager as additional insured parties, which insurance
shall provide coverage against any claim for personal injury or property damage caused by Purchaser
or its agents, employees, representatives or consultants in connection with any such tests and
investigations, and (ii) to keep the Property free from all liens and encumbrances on account of
any inspections and/or tests made by or for the benefit of Purchaser. Purchaser’s insurance may
not be canceled or amended prior to Closing except upon not less than thirty (30) days’ prior
written notice to Seller. Purchaser’s obligations under this Section 3.1 shall survive a
termination of this Agreement.
3.2 Seller Due Diligence Materials. PURCHASER ACKNOWLEDGES THAT INFORMATION RELATED TO THE
PROPERTY CONTAINED IN THE SECURE WEBSITE (THE “E-ROOM”) TO WHICH PURCHASER HAS PREVIOUSLY
BEEN GRANTED ACCESS HAS BEEN MADE AVAILABLE TO PURCHASER IN THE E-ROOM BY SELLER. BY EXECUTING
THIS AGREEMENT, PURCHASER ACKNOWLEDGES ITS RECEIPT THEREOF OR THE AVAILABILITY THEREOF AND THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL, ENGINEERING, SOILS AND OTHER REPORTS REGARDING
THE CONDITION OF THE PROPERTY (COLLECTIVELY, THE “REPORTS”) LISTED ON SCHEDULE 3.2 ATTACHED HERETO,
AND (2) ANY REPORTS OR OTHER DOCUMENTS 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 OF FACTS OR
OPINIONS SET FORTH THEREIN EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THAT ANY RELIANCE BY
PURCHASER ON SUCH REPORTS OR OTHER DOCUMENTS IN CONNECTION WITH THE PURCHASE OF THE PROPERTY IS
UNDERTAKEN AT PURCHASER’S SOLE RISK. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR
OBLIGATION WHATSOEVER FOR ANY UNINTENTIONAL INACCURACY IN OR OMISSION FROM THE OFFERING MATERIALS
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PREPARED IN CONNECTION WITH THE SALE OF THE PROPERTY OR ANY REPORTS OR OTHER DOCUMENTS MADE
AVAILABLE TO PURCHASER OR ITS REPRESENTATIVES SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES
SET FORTH IN THIS AGREEMENT. PURCHASER HAS CONDUCTED ITS OWN INVESTIGATION OF THE CONDITION OF THE
PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE. For
purposes of this Agreement, the term “Seller Due Diligence Materials” shall mean the Reports, the
Property Information and all other documents and materials provided or otherwise made available by
Seller to Purchaser in the E-Room or pursuant to Section 3.1 and the other provisions of
this Agreement or otherwise, together with any copies or reproductions of such documents or
materials, or any summaries, abstracts, compilations, or other analyses made by Purchaser based on
the information in such documents or materials.
ARTICLE IV
CLOSING
4.1 Time and Place; Pre-Closing.
(a) Subject to the provisions of
Sections 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 and the release by Seller of the deed for recording, shall occur on
or before 4:00 p.m. (
New York time) on May 3, 2011, as such date may be adjourned from time to time
in accordance with this Agreement (“
Outside Closing Date”, with the actual date of Closing
being referred to herein as the “
Closing Date”). The Closing shall occur through an escrow
administered by Escrow Agent and the Purchase Price and all documents (unless otherwise mutually
agreed) shall be deposited with Escrow Agent as escrowee. 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) Notwithstanding anything herein to the contrary, the parties shall “pre-close” the sale of
the Property on the last business day immediately prior to the Closing Date (the “
Pre-Closing
Date”). The term “pre-close” shall mean that each of the parties shall deliver to Escrow Agent
no later than 4:00 p.m. (
New York time) on the Pre-Closing Date all of the documents and other
items (other than closing proceeds and other funds) required to be delivered by such party for
Closing, including all of the closing documents required pursuant to
Sections 4.2 and
4.3 hereof. With respect to the closing adjustments to be made between the parties pursuant
to
Section 4.4 hereof, the adjustments shall continue to be made effective as of the
Cut-Off Time, but on the closing statement executed by the parties on the Pre-Closing Date, the
parties shall in good faith estimate those adjustments which are not capable of being finalized
prior to the Cut-Off Time, and the parties shall reconcile said estimated adjustments pursuant to
Section 4.4.14 hereof.
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4.2 Seller’s Closing Obligations and Deliveries. At Closing, subject to Section 4.1
above, Seller shall through Escrow Agent make the following deliveries and take the following
actions:
(a) Execute and deliver to Purchaser one (1) original counterpart of a grant deed
(“Deed”), in the form attached hereto as Exhibit A and made part hereof, conveying
the Real Property subject only to the Permitted Exceptions.
(b) Execute and deliver to Purchaser two (2) original counterparts of a xxxx of sale in the
form attached hereto as Exhibit B and made a part hereof conveying all of Seller’s right
title and interest in and to the Personal Property, the Unopened Inventory, the Retail Inventory,
the Consumable Inventory without warranty of use and without warranty, expressed or implied, as to
merchantability and fitness for any purpose.
(c) Execute and deliver to Purchaser two (2) original counterparts of an assignment and
assumption of Seller’s interest in the Service Contracts (including the Equipment Leases), the
Bookings the Permits and the other Intangibles (in each case to the extent assignable)
(“Assignment of Contracts”) in the form attached hereto as Exhibit C and made a
part hereof.
(d) Execute and deliver to Purchaser two (2) original counterparts of an assignment and
assumption of Seller’s interest in the Space Leases (“Assignment of Space Leases”) in the
form attached hereto as Exhibit D and made a part hereof.
(e) Deliver to Purchaser a certificate, dated as of the Closing Date and executed on behalf of
Seller by a duly authorized officer thereof, stating that, to the best knowledge of such duly
authorized officer, the representations and warranties of Seller contained in this Agreement are
true and correct in all material respects as of the Closing Date (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 5.3
hereof) or identifying any representation or warranty which is not, or no longer is, true and
correct. Seller shall not 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 Closing Date and (ii) is permitted under the terms of this
Agreement or is beyond the reasonable control of Seller; provided, however, that if any of the
foregoing changes are not permitted under the terms of this Agreement but are materially adverse to
Purchaser, then any such changes constitute the non-fulfillment of the condition set forth in
Section 4.6(a) and Purchaser may elect to terminate this Agreement pursuant to Section
4.8.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.
(f) 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.
(g) Deliver to Purchaser an affidavit duly executed by Seller stating 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, in the form attached hereto as Exhibit E.
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(h) If not already delivered to Purchaser, deliver to Purchaser, originals, or, if
unavailable, copies of the Space Leases, the Service Contracts and the Permits, if any, in the
possession or control of Seller or Seller’s agents, together with such leasing and property files
and records which are (A) in the possession or control of Seller or Seller’s agents and (B)
material in connection with the continued operation, leasing and maintenance of the Property and
any keys to security deposit boxes. For a period of four (4) 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, Purchaser shall maintain the books and records for
the Property with respect to the period of Seller’s ownership (to the extent that such records were
provided to Purchaser and Seller did not retain copies thereof), at Purchaser’s expense, and allow
Seller and its agents or representatives reasonable 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 books and records at Seller’s cost and expense, which right
shall survive the Closing. The location of such items at the Hotel on the Closing Date shall
constitute delivery to Purchaser.
(i) Deliver to Escrow Agent an executed counterpart closing statement consistent with this
Agreement and in a customary form.
(j) Deliver a copy of the termination agreement executed by Seller and Manager, which has the
effect of terminating the Management Agreement effective as of the Closing Date.
(k) Deliver to Title Company a title affidavit generally in the form attached hereto as
Exhibit F (the “Title Affidavit”).
(l) Deliver to Purchaser the Intangibles in Seller’s possession or control. The location of
such items at the Hotel on the Closing Date shall constitute delivery to Purchaser.
(m) Deliver to Purchaser two (2) original counterpart copies of the New Management Agreement
executed by the Manager.
(n) Deliver to Purchaser a certificate or registration of title for any owned vehicle or other
Personal Property included in the Property which requires such certification or registration, duly
executed, conveying such vehicle or such other Personal Property to Purchaser.
(o) Deliver any real estate transfer tax declaration (including, without limitation, a
Preliminary Change of Ownership Report) and all other documents required under Applicable Law in
connection with the conveyance of the Real Property.
(p) Deliver to Purchaser (2) original executed counterpart copies of a Post-Closing F&B
Operations Agreement in the form agreed to by the parties prior to the Effective Date.
(q) Deliver to Escrow Agent two (2) original executed counterpart copies of an agreement
regarding post-closing capital projects in the form agreed to by the parties prior to the Effective
Date (the “Capital Repairs Escrow Agreement”).
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(r) Deliver to Purchaser two (2) original executed counterpart copies of the Liquor Assets
Escrow Agreement executed by Liquor Seller.
(s) Deliver such additional documents as shall be reasonably required to consummate the
transaction expressly contemplated by this Agreement.
4.3 Purchaser’s Closing Obligations and Deliveries. At Closing, Purchaser shall through
Escrow Agent make the following deliveries and take the following actions:
(a) Pay the Purchase Price, as increased or decreased by prorations and adjustments as herein
provided, to Seller in immediately available wire transferred funds pursuant to Section 1.5
above, it being agreed that at Closing the Xxxxxxx Money shall be applied towards payment of the
Purchase Price.
(b) Deliver a written direction to Escrow Agent to disburse the Xxxxxxx Money to Seller in
accordance with the Escrow Agreement.
(c) Deliver the same number of original executed counterparts of the instruments described in
clauses (b), (c), (d), (i), (p), and (q) of Section 4.2 above to Seller or Escrow Agent, as
applicable.
(d) Deliver to Seller a certificate, dated as of the Closing Date and executed on behalf of
Purchaser by a duly authorized officer thereof, stating that, to the best knowledge of such duly
authorized officer, the representations and warranties of Purchaser contained in this Agreement are
true and correct in all material respects as of the Closing Date.
(e) Deliver to Seller and Title Company such evidence as Title Company may reasonably require
as to the authority of the person or persons executing documents on behalf of Purchaser.
(f) Deliver to Seller, on behalf of Manager, two (2) original executed counterpart copies of
the New Management Agreement.
(g) Deliver to Seller two (2) original executed counterpart copies of the Liquor Assets Escrow
Agreement executed by Wolverines Lessee.
(h) Deliver such additional documents as shall be reasonably required to consummate the
transaction contemplated by this Agreement.
4.4 Prorations, Credits and Other Adjustments. At Closing, Purchaser and Seller shall
prorate all items of income and expense which are customarily prorated between a purchaser and
seller for hotel properties comparable to the Hotel, including, without limitation, the prorations
and other adjustments provided below, and the net amount consequently owing to Seller or Purchaser
shall be added to or subtracted from the proceeds of the Purchase Price payable to Seller at
Closing. Beginning as close to the anticipated Closing Date as practicable, Seller shall, in
consultation with Purchaser and with Purchaser’s reasonable cooperation, cause to be prepared a
prorations and credit statement (the “Preliminary Statement”) which shall reflect all of
the prorations, credits and other adjustments to the Purchase Price at Closing required under this
Section 4.4 or under any other provision of this Agreement. As soon as Purchaser and Seller
have agreed upon the Preliminary Statement, they shall jointly deliver a mutually signed copy
thereof to Escrow Agent. To the extent Purchaser and Seller are unable to agree by Closing on any
item on the Preliminary Statement, Seller’s estimation of such item shall be used and such item
shall be finally resolved on the Final Statement (defined below) pursuant to Section 4.4.14
below.
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4.4.1 Proration of Taxes.
(a) All real estate ad valorem taxes, general assessments and special assessments and all
personal property ad valorem taxes assessed against the Hotel (collectively, “Taxes”) with
respect to the tax year in which Closing occurs shall be prorated between Purchaser and Seller as
of the Closing Date. If the amount of any such Taxes is not ascertainable on the Closing Date, the
proration for such Taxes shall be based on the tax rates set forth in the most recent available
xxxx and the latest assessed valuation of the Property; provided, however, that after the Closing,
Seller and Purchaser shall re-prorate the Taxes in accordance with Section 4.4.14 below and
pay any deficiency in the original proration to the other party promptly upon receipt of the actual
xxxx for the relevant taxable period. Purchaser shall give Seller written notice of the actual
amounts of any such bills within three (3) days after receipt thereof. If, at the time of the
Closing, the Hotel is subject to a special assessment or assessments which are payable by Seller
and which are or may become payable in installments, then, for the purposes of this Agreement, all
of the installments of any such special assessment or assessments which are not delinquent on the
Closing Date and which may be paid thereafter shall be equitably apportioned between Seller and
Purchaser based upon their respective periods of ownership in relation to the benefits for which
such assessments were levied.
(b) Seller retains the right to commence, continue and settle any proceeding to contest any
Taxes for any taxable period which terminates prior to the date of the Closing, and shall be
entitled to any refunds or abatements of Taxes awarded in such proceedings.
(c) Seller shall have the right to commence, continue and settle any proceeding to contest any
Taxes for any taxable period which includes the Closing Date. Notwithstanding the foregoing, if
Purchaser desires to contest any Taxes for such taxable period and Seller has not commenced any
proceeding to contest any such Taxes for such taxable period, Purchaser shall provide written
notice requesting that Seller contest such Taxes. If Seller desires to contest such Taxes, Seller
shall provide written notice to Purchaser within fifteen (15) days after receipt of Purchaser’s
request confirming that Seller will contest such Taxes, in which case Seller shall proceed to
contest such Taxes, and Purchaser shall not have the right to contest such Taxes. If Seller fails
to provide such written notice confirming that Seller will contest such Taxes within such fifteen
(15) day period, Purchaser shall have the right to contest such Taxes. Any refunds or abatements
awarded in such proceedings shall be used first to reimburse the party contesting such Taxes for
the reasonable costs and expenses incurred by such party in contesting such Taxes, and the
remainder of such refunds or abatements shall be prorated between Seller and Purchaser as of the
Cut-Off Time, and the party receiving such refunds or abatements promptly shall pay such prorated
amount due to the other party.
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(d) Purchaser shall have the right to commence, continue and settle any proceedings to contest
Taxes for any taxable period which commences after the Closing Date, and shall be entitled to any
refunds or abatements of Taxes awarded in such proceedings.
(e) Seller and Purchaser shall use commercially reasonable efforts to cooperate with the party
contesting the Taxes (at no cost or expense to the party not contesting the Taxes other than any de
minimis cost or expense or any cost or expense which the requesting party agrees in writing to
reimburse) and to execute and deliver any documents and instruments reasonably requested by the
party contesting the Taxes in furtherance of the contest of such Taxes.
4.4.2 General Proration of Expenses.
(a) The following items of expense with respect to any portion or aspect of the Hotel shall be
prorated between Seller and Purchaser as of the Closing Date:
(i) All charges and expenses under any Service Contracts.
(ii) All utility charges (but excluding any utility deposits). To the extent reasonably
practicable, though, in lieu of prorating the charges for any metered utility service, Purchaser
and Seller shall endeavor to have the utility read the meter as close as practicable to the Closing
Date, render a final xxxx to Seller based on such reading and Purchaser shall thereafter be
responsible for all subsequent bills relating to such service.
(iii) Prepaid expenses of the Hotel, excluding insurance but including without limitation, (A)
amounts incurred to pay for natural gas (if any) held in storage pending use at the Hotel and (B)
the expense of all transferable licenses and permits obtained in connection with the operation of
the Hotel.
(iv) All other Hotel operating expenses, other than employment expenses (which are covered by
Section 4.4.3 below).
4.4.3 Employment Expenses. All salaries, bonuses, other compensation and employment
benefits for unused vacation, holiday, sick leave and personal days if, and to the extent, that
amounts are accrued and vested and unused prior to the Closing Date, and contributions for
retirement and welfare benefits, together with F.I.C.A., unemployment and other payroll taxes and
benefits due with respect to the employment of the Employees shall be prorated between Seller and
Purchaser as of the Closing Date, with accrued vacation and other benefits due to Employees in
accordance with past practices. Purchaser shall pay the salaries and related benefits that are
payable to any Employees for work performed at the Hotel on the Closing Date, whether prior to or
following the time of Closing, regardless of whether such persons are employees of Seller, Manager
or Purchaser.
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4.4.4 Hotel Revenues.
(a) At Closing, Seller shall receive one-half (1/2) of all revenues from the Hotel guest rooms
and facilities occupied on the evening immediately preceding the Closing Date, including without
limitation any sales taxes, room taxes, occupancy taxes and other taxes charged to guests in such
rooms, all parking charges, sales from mini-bars, in-room food and beverage, telephone, facsimile
and data communications, in-room movie, laundry, and other service charges allocable to such rooms
with respect to the evening immediately preceding the Closing Date. All revenues from restaurants,
bars, lounges, vending machines and other service operations conducted at the Property shall be
allocated based on whether the same accrued before or after the Cut-Off Time, and Seller shall
cause the Manager to separately record sales occurring before and after the Cut-Off Time at the
Property. 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.
(b) 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 (iii) multi-day functions being allocated on a pro rata
basis between Seller and Purchaser according to when the event commences and is scheduled to end in
relation to the Cut-Off Time.
(c) Any operating revenues not otherwise provided for in this Section 4.4, shall be
prorated between Purchaser and Seller as of Closing.
4.4.5 Rent.
(a) Rent and other payments payable by tenants, licensees, concessionaires, and other persons
using or occupying the Real Property or any part thereof under a Space Lease or otherwise, if any,
for or in connection with such use or occupancy, including, without limitation, fixed monthly
rentals, additional rentals, percentage rentals, escalation rentals, retroactive rentals, operating
cost pass-throughs, common area maintenance charges, HVAC charges, payments of taxes and insurance
expenses, promotional/marketing charges, construction receivables and other sums and charges
payable by the tenants under the Space Leases (collectively, “Rent”) shall be prorated as
of the Closing Date such that Seller will be entitled to Rent attributable to periods prior to the
Closing Date and Purchaser will be entitled to Rent attributable to periods from and after the
Closing Date, all as more particularly set forth below:
(b) All Rent, other than Percentage Rent, owed under any Space Lease collected during the
calendar month for the month in which the Closing occurs, but prior to the Closing Date, shall be
applied in the following order of priority (after deduction of actual out-of-pocket costs of
collection paid by Seller to third parties): (i) first, to Rent due from such tenant for the month
in which the Closing occurs prorated between Seller and Purchaser as of the Closing Date, and (ii)
second, to the extent the applicable tenant shall be in arrears for any Rent due for periods of
time prior to the calendar month during which the Closing occurs (“Rent Arrears”), then
Rent collected from such tenant during the calendar month in which the Closing occurs shall be
applied to Rent Arrears due from such tenant for the months preceding the month during which the
Closing occurs.
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(c) All Rent, other than Percentage Rent, owed under any Space Lease collected after the
Closing Date shall be applied in the following order of priority (after deduction of actual
out-of-pocket costs of collection paid by Purchaser to third parties): (i) first, to Rent then due
from the applicable tenant to Purchaser; (ii) second, to Rent due from the applicable tenant for
the calendar month in which the Closing occurs, prorated between Seller and Purchaser as of the
Closing Date; and (iii) third, thereafter to the balance of Rent Arrears due then to Seller from
such tenant. Any sums owed to Seller or Purchaser, as the case may be, pursuant to the foregoing
shall be paid to the party entitled hereunder to receive such sum within fifteen (15) days
following receipt thereof by the other party. Purchaser shall deliver to Seller by the twentieth
(20th) day of the first full calendar month after the Closing and every month thereafter through
the twelfth (12th) month following the Closing, a statement of the collection status of each Rent
Arrear until the collection of all Rent Arrears. For one (1) year following the Closing, Seller
shall have the right, upon reasonable notice, but no more often than once in such twelve (12) month
period, to audit Purchaser’s books and records to verify the amount of Rent Arrears which has
actually been collected by Purchaser. Purchaser shall pursue all Rent Arrears in the ordinary
course of business and shall have the right to negotiate settlements with tenants who have Rent
Arrears as it may determine in good faith; provided that, at its sole cost and expense (A) Seller
shall have the unrestricted right to pursue collection from any tenant not in possession of its
space as of the Closing Date in Seller’s sole discretion including, without limitation, initiating
and prosecuting a lawsuit against the applicable tenant and (B) in the event that after Closing
Purchaser evicts or otherwise terminates the possession of any tenant with Rent Arrears, Seller
shall have the unrestricted right to pursue collection from such tenant in Seller’s sole discretion
including, without limitation, initiating and prosecuting a lawsuit against the applicable tenant.
(d) Percentage rent or overage rent (referred to herein as “Percentage Rent”) under
each Lease shall be prorated between Purchaser and Seller for the Lease Year (as defined below) in
which the Closing occurs in proportion to the relative periods of ownership of Seller and Purchaser
during such Lease Year, with an adjustment to be made post-Closing upon completion of each
applicable Lease Year to account for any Percentage Rent paid after Closing Date occurs. 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.
4.4.6 Hotel Payables. At Closing, Purchaser shall receive a proration credit equal to
the aggregate amount of all outstanding accounts payable for the Hotel with respect to purchases of
goods and services delivered prior to the Closing Date (“Hotel Payables”) as set forth in a
schedule attached to the Preliminary Statement. Purchaser shall: (a) assume the obligation to
satisfy all Hotel Payables for which Purchaser received such credit at Closing; (b) indemnify,
defend and hold Seller harmless against any claim for such Hotel Payables; and (c) assume all
obligations of Seller to pay for any (i) consumables or other items ordered by or for the benefit
of Seller in the ordinary course of business but which are not yet received as of the Closing Date
and (ii) items or services listed on a purchase order log prepared by Manager which are not yet
received as of the Closing Date, which list shall be updated by Manager immediately prior to
Closing. There shall not be any adjustment to the Purchase Price in connection with Purchaser’s
assumption of the liabilities described in clauses (i) and (ii) above.
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4.4.7 Credit for Certain Inventories. At Closing, Seller shall receive a credit (based
upon the original net invoice price paid) for (x) all unopened Liquor Inventory owned by 8440 LLC
as of the Closing (which Liquor Inventory is not being purchased by Purchaser hereunder but shall
be transferred in accordance with the Liquor Assets Escrow Agreement, subject to the post-Closing
food and beverage operations agreement referred to in Section 4.2(p)) and (y) all unopened
Retail Inventories at the Hotel as of the Closing Date, and Purchaser shall purchase all such
unopened Retail Inventories. The amount of such credit shall be based on the actual costs
(including without limitation sales tax) paid by Seller (or 8440, as applicable) for the actual
inventory of such unopened Liquor Inventory and Retail Inventories by Seller’s and Purchaser’s
representatives.
4.4.8 Credit for Reservation Deposits. Purchaser shall receive a proration credit
equal to the aggregate amount of advance deposits that shall have been received by Seller prior to
the Cut-Off Time on account of reservations for use or occupancy of the Property after the Cut-Off
Time.
4.4.9 Credit for Cash Banks. Seller shall receive a credit at Closing in an amount
equal to all House Bank Funds.
4.4.10 Space Lease Deposits. Purchaser shall receive a credit at Closing in an amount
equal to the aggregate amount of security and other deposits of tenants under the Space Leases
which have not been applied to the tenants’ obligations in accordance with the terms of such Space
Leases as of the Closing Date. All obligations with respect to such security deposits shall be
assumed by Purchaser and Purchaser shall indemnify, defend and hold Seller harmless with respect
thereto.
4.4.11 Regarding Hotel Prorations Generally. Unless this Section 4.4 expressly
provides otherwise: (a) all prorations hereunder with respect to the Hotel shall be made as of
12:00:01 a.m., local time at the Hotel (“Cut-Off Time”) on the Closing Date; (b) all
prorations shall be made on an actual daily basis; and (c) for purposes of such prorations, all
items of revenue and expense with respect to the Hotel’s operations shall be classified and
determined in accordance with the Uniform System of Accounts for the Lodging Industry, as
reasonably modified by Manager for use at the Hotel consistent with past practices within the
twelve (12) months preceding the Closing, and otherwise in accordance with generally accepted
accounting principles. 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, Purchaser
shall pay and discharge the same, and Purchaser shall indemnify, defend and hold Seller harmless
Seller with respect thereto.
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4.4.12 Vouchers. Purchaser shall: (a) honor all outstanding unexpired gift
certificates, coupons or other writings issued by Seller or its affiliates prior to the Closing
Date that entitles the holder or bearer thereof to a credit (whether in a specified dollar amount
or for a specified item, such as room night or meals) to be applied against the usual charge for
rooms, meals, 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; (b) receive a
credit against the Purchase Price payable at Closing in the amount set forth on the schedule
entitled “Vouchers and Barter” Agreements annexed to the Property Information Letter, with respect
to the Vouchers listed thereon, as updated as of the Closing Date; (c) be reimbursed by Manager for
any other Vouchers presented by holders thereof in accordance with the New Management Agreement;
and (d) indemnify, defend and hold Seller harmless from and against all claims, liabilities, costs
and expenses arising out of a violation of this Section 4.4.12 with respect to the Vouchers
from and after the Closing Date.
4.4.13 Utility and Other Deposits. 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 Service Contract, or, at Seller’s
option, Seller shall be entitled to receive and retain such refundable cash and deposits.
4.4.14 Final Statement; Post-Closing Adjustments. Except for prorations for real
estate taxes and other assessments, which shall be adjusted within fifteen (15) business days of
receipt of the tax xxxx for the tax year in which the Closing occurs, and prorations of Percentage
Rent in accordance with Section 4.4.5 hereof, Purchaser and Seller shall make a one-time
post-Closing adjustment of any item of income and expense 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. Purchaser will prepare and deliver to
Seller for its review and approval a statement of prorations (the “Final Statement”) within
ninety (90) days following the Closing Date, and the party in whose favor the original incorrect
adjustment or error was made (“Adjusting Party”) shall pay to the other party
(“Requesting Party”) the sum necessary to correct such prior incorrect adjustment or error
within ten (10) days after completion of the Final Statement. Notwithstanding any provision of
this Agreement to the contrary, all items required to be adjusted pursuant to this Section
4.4.14 shall be adjusted within one hundred twenty (120) 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.
4.4.15 Resolution of Disputes. In the case of a dispute with respect to any
post-closing adjustment, the parties shall attempt to resolve such dispute, but if for any reason
such dispute is not resolved by the date that is thirty (30) days after the delivery of the
original notice of the claimed adjustment by Purchaser or Seller, but not to exceed one hundred
fifty (150) days after Closing, then the parties shall, upon the written request of either party to
the other, submit such dispute to Ernst & Young (“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.
4.4.16 Survival. The provisions of this Section 4.4 shall survive Closing.
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4.5 Closing Costs.
(a) Seller Closing Costs(b) . At Closing, Seller shall pay: (a) the fees of any
counsel representing it in connection with this transaction; (b) 100% of the premium for the Title
Policy; (c) one-half of the escrow fees charged by Escrow Agent; (d) all recording and filing fees;
and (e) 100% of the city, county, and state documentary transfer tax imposed in connection with the
consummation of the transactions contemplated by this Agreement. The parties acknowledge and agree
that Seller may use the Purchase Price to pay Seller’s closing costs.
(c) Purchaser Closing Costs(d) . At Closing, Purchaser shall pay: (a) the fees of any
counsel representing Purchaser in connection with this transaction; (b) 100% of the (i) cost of any
endorsements or extended coverages to the Title Policy, and (ii) cost of any title insurance
provided to Purchaser’s lender; (c) the cost of any modifications or updates to the Survey,
including the update referred to in Section 2.2; (d) one-half of the escrow fees charged by
Escrow Agent; (e) the cost of any third party engineering and environmental reports and any updates
obtained by Purchaser to the property condition report and the Phase I environmental report; and
(f) all bulk sales taxes, sales tax on the sale of the Personal Property (or any part thereof) and
any other sales or use taxes.
(e) Other Costs(f) . 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 the
city where the Hotel is located. 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 Closing
Date of all of the following conditions, any or all of which may be waived by Purchaser in its sole
discretion:
(a) All of the representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the Closing Date (with appropriate modifications
permitted under this Agreement or not materially adverse to Purchaser).
(b) 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 Closing Date.
(c) 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
Section 4.2.
(d) Title Company shall have issued, or be irrevocably committed to issue subject to payment
of title premiums, the Title Policy.
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(e) Seller shall deliver an executed Tenant Estoppel for the Space Lease for Liquor Seller.
(f) The existing alcoholic beverage license for the Hotel (License No. 326147), which is owned
by 8440 LLC (the “Existing Liquor License”) shall be in full force and effect.
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 Closing Date of all
of the following conditions, any or all of which may be waived by Seller in writing in its sole
discretion:
(a) Purchaser shall have deposited with Escrow Agent the Purchase Price as adjusted pursuant
to and payable in the manner provided for in this Agreement and Seller shall have received such
Purchase Price from Escrow Agent.
(b) All of the representations and warranties of Purchaser contained in this Agreement shall
be true and correct in all material respects as of the Closing Date (with modifications which are
not materially adverse to Seller).
(c) 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 Closing Date.
(d) Purchaser shall have deposited with Escrow Agent all of the items required to be delivered
to Seller or deposited with Escrow Agent pursuant to the terms of Section 4.3.
4.8 Failure or Waiver of Conditions Precedent. If other than as a result of a default
by either party (in which case Article VI shall apply), 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 sole and
exclusive remedy available to the party benefited by such conditions shall be to terminate this
Agreement by written notice to the other party, whereupon the Xxxxxxx Money shall be refunded to
Purchaser (less Purchaser’s share of any escrow charges) and all rights and obligations hereunder
of each party shall be at an end except those that expressly survive any termination of this
Agreement. 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. The parties’ consummation of the Closing
pursuant to this Agreement shall waive any remaining unfulfilled conditions and any liability on
the part of the other party for breaches of representations and warranties of which such party had
actual knowledge as of the Closing.
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4.9 Alcoholic Beverage License.
(a) Purchaser and Seller recognize that the Existing Liquor License and all alcoholic
beverages on hand at the Hotel or the Property as of the Effective Date, whether issued to the food
and beverage department or held in reserve storage (the “Liquor Inventory” and, together
with the Existing Liquor License, the “Liquor Assets”) are currently owned by 8440 LLC, a
California limited liability company (the “Liquor Seller”). On or prior to Closing,
Wolverines Lessee LLC, a Delaware limited liability company (“Wolverines LLC”), and Liquor
Seller (collectively, the “Liquor Designee”) shall execute a separate escrow agreement
relating to the transfer of the Liquor Assets to Liquor Designee, as co-licensees, (the “Liquor
Assets Escrow Agreement”), in the form of Exhibit I attached hereto, and any other
documents required by the California Department of Alcoholic Beverage Control (the “ABC”)
and reasonably required by the Liquor Assets Escrow Agent (as defined below) to effectuate such
transfer, and the parties shall, at or prior to Closing, deliver a fully executed Liquor Assets
Escrow Agreement to Bay Commercial Bank, 0000 Xxxx Xxxxxx Xxxxxx Xxxxxxxxx—Xxxxx X, Xxxxxx Xxxxxx,
XX 00000, Attention Chloe Flowers (the “Liquor Assets Escrow Agent”) along with the Liquor
Assets Purchase Price.
(b) Simultaneously with the Closing, Purchaser shall deposit into the Liquor Assets Escrow, in
cash or other immediately available funds, an amount equal to Seventy-Five Thousand and 00/100
Dollars ($75,000.00) (the “Liquor Assets Purchase Price”), which amount shall be allocated
as set forth in the Liquor Assets Escrow Agreement. The amount deposited as the Liquor Assets
Purchase Price shall be a credit to Purchaser against the Purchase Price at Closing.
(c) The Liquor Assets Escrow Agreement shall close as promptly as possible after the Closing,
subject to Applicable Law. Upon the closing of the Liquor Assets Escrow Agreement, the Liquor
Assets Escrow Agent shall deliver to Liquor Seller the Liquor Assets Purchase Price (less any
amounts disbursed to third parties by the Liquor Assets Escrow Agent from the Liquor Assets Escrow
pursuant to the terms of the Liquor Assets Escrow Agreement).
(d) Promptly after the Liquor Assets Escrow Agreement and Liquor Assets Purchase Price has
been deposited with the Liquor Assets Escrow Agent, Purchaser shall, at its cost and expense,
submit an application to the ABC to transfer of the Existing Liquor License to the Liquor Designee,
as co-licensees. Liquor Seller shall use commercially reasonable efforts to cooperate with
Purchaser and Liquor Designee to cause the Existing Liquor License to be transferred or issued as
provided herein, which such cooperation shall include, without limitation, maintaining and renewing
the Existing Liquor License until such time as the Liquor Designee secures approval from the ABC
for the transfer of the Existing Liquor License (or receives an unappealable order denying the
transfer.
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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, subject to the qualifications
and exceptions set forth below:
(a) Organization and Authority. Seller has been duly organized and is validly existing
and in good standing under the laws of Delaware and is qualified to do business in the State of
California. 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) No Breach. The execution, delivery and performance of this Agreement by Seller and
the consummation of the transactions contemplated herein will not: (i) result in a breach or
acceleration of or constitute a default or event of termination under the provisions of any
agreement or instrument by which the Property is bound which would have a material adverse impact
on the ownership and operation of the Property by Purchaser; or (ii) constitute or result in the
violation or breach by Seller of any judgment, order, writ, injunction or decree issued against or
imposed upon Seller or result in the violation of any Applicable Law, rule or regulation of any
governmental authority which, with respect to any of the foregoing, would have a material adverse
impact on the ownership or operation of the Property by Purchaser.
(c) Litigation/Condemnation. Except as set forth on the schedule entitled “Litigation”
annexed to the Property Information Letter, neither Seller nor Manager has received written notice
and, to Seller’s knowledge, there has been no written threat, of any litigation which has been
filed against Seller that arises out of the ownership of the Property, or affecting the Property,
an adverse determination of which would reasonably be expected to materially and adversely affect
the Property or use thereof, or Seller’s ability to perform its obligations hereunder, nor has
Seller received written notice of any condemnation proceedings.
(d) Space Leases. The list of Space Leases attached hereto as Schedule 1.1(j)
lists all leases or licenses for the lease and occupancy of space at the Hotel, and Seller has made
available to Purchaser a true and correct copy of each such Space Lease. No written notice of
default has been delivered by Seller or Manager or received by Seller or Manager with respect to
any Space Leases that, to Seller’s knowledge, remains uncured, other than as set forth in
Schedule 5.1(d). Any and all brokerage, leasing and other commissions and tenant
improvement credits or contributions due under any such Space Leases have been performed in all
material respects and all amounts due from Seller under the Space Leases as of the Closing Date
have been (or will be) paid by the Closing Date.
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(e) Service Contracts and Equipment Leases. There are no Service Contracts, including
without limitation Equipment Leases, which will affect the Property in any material respect after
the Closing Date except as set forth on Schedule 1.1(e)-1(a), Schedule 1.1(e)-1(b),
Schedule 1.1(e)-2(a), Schedule 1.1(e)-2(b), or Service Contracts entered into
after the Effective Date which Seller is permitted to enter into under the terms of this Agreement.
No Service Contracts, including without limitation Equipment Leases, have been amended except as
set forth in said Schedules or as otherwise permitted pursuant to this Agreement. As of the
Effective Date and the Closing Date, no written notice of material default has been delivered by
Seller or Manager or, to Seller’s knowledge, received by Seller or Manager with respect to any
Service Contracts or Equipment Leases that, to Seller’s knowledge, remain uncured. The copies of
Service Contracts and Equipment Leases made available to Purchaser by Seller are true and complete
in all material respects.
(f) Personal Property. Seller owns the Personal Property, other than any leased
Personal Property under the Equipment Leases, free of all liens and encumbrances.
(g) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Seller is
required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.
(h) No Violations. Except for violations shown in or disclosed by the Title Report or
any Title Update and any violations disclosed on the schedule entitled “Violations of Law” annexed
to the Property Information Letter, Seller has not received any written notice of, nor does Seller
have any knowledge of, any violation in any material respect of Applicable Law that remains
uncured.
(i) Liquor Licenses. Neither Seller nor Manager has received any written notice from
any Governmental Authority or other Person of any violation, suspension, revocation or non renewal
of the liquor licenses held by Seller or any of its affiliates in effect with respect to the Hotel
that has not been cured or dismissed.
(j) Hotel Operating Statements. To Seller’s knowledge, the operating statements of
the Hotel provided to Purchaser: fairly present in all material respects the financial condition of
the Hotel as of the date thereof and the results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the periods covered thereby.
(k) Patriot Act Compliance. Neither Seller nor any individual or entity having an
interest in Seller or controlled by Seller: (i) is a person or entity listed on the Specially
Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control,
Department of the Treasury (“OFAC”) pursuant to Executive Order No. 13224, 66 Fed. Reg.
49079 (September 25, 2001) (the “Order”) and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant
to any other applicable orders (such lists are collectively referred to as the “Lists”);
(ii) is a person or entity who has been determined by competent authority to be subject to the
prohibitions contained in the Order; or (iii) is owned or controlled by, or acts for or on behalf
of, any person or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Order.
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(l) Employees.
(i) There are no employees of the Hotel other than those employees who are employed by Manager
with respect to the Hotel.
(ii) Neither the Seller nor the Manager is a party to any collective bargaining agreement or
other agreement with any labor union with respect to the Property or the Hotel or any employees at
the Hotel.
(iii) Neither the Seller nor the Manager is a party to any written employment agreement with
any employee at the Hotel that contains a fixed term or provides for severance other than in
accordance with the generally applicable severance policy of Manager or Seller.
* * *
Notwithstanding the foregoing, if Purchaser has actual knowledge of a breach of any
representation or warranty made by Seller in this Agreement prior to Closing and Purchaser
nevertheless proceeds to close the purchase of the Property, such representation or warranty by
Seller shall be deemed to be qualified or modified to reflect Purchaser’s knowledge of such breach
and Seller shall have no liability whatsoever respecting the same.
5.2 Knowledge Defined. For purposes of this Agreement, “knowledge” means (a) with
respect to Seller, the actual knowledge of Xxxxxxx Xxxxxxxxx or Xxxxxxx Xxxxx (provided that, in no
event shall such person have any personal liability arising under this Agreement), without any duty
of inquiry or investigation (other than to make reasonable inquiries of the general manager of the
Hotel), and expressly excluding the knowledge of any other shareholder, partner, member, trustee,
beneficiary, director, officer, employee, agent or representative of Seller or any of its
affiliates, and (b) with respect to Purchaser: (i) the actual knowledge of Xxxxxx Xxxxxx and Xxx
Xxxxx (provided that, in no event shall such person(s) have any personal liability arising under
this Agreement); (ii) any matter disclosed in this Agreement or in any exhibits or schedules to
this Agreement; (iii) any matter disclosed in any of the Seller Due Diligence Materials or any
other documents or other written materials delivered by Seller or its agents to Purchaser prior to
Closing; (iv) any matter disclosed by Purchaser’s inspections or investigations of the Property;
and (v) any matter disclosed by a Tenant Estoppel (defined below).
5.3 Covenants of Seller.
(a) Seller hereby covenants as follows:
(i) From the Effective Date hereof until the Closing or earlier termination of this Agreement,
Seller shall cause Manager to operate and maintain the Hotel in the ordinary course and in a manner
generally consistent with the manner in which Manager has operated and maintained the Hotel during
the twenty-four (24) month period prior to the date hereof, in good condition consistent with past
practice, reasonable wear and tear excepted and so as (i) to maintain levels of Retail Inventory
and Consumable Inventory consistent with past practice (ii) maintain all existing insurance
coverages for the Hotel, (iii) perform maintenance and repairs for the Property and Hotel in the
ordinary course of business and consistent with past practices, and (iv) maintain all Permits and
the Existing Liquor License in full force and effect, subject in all events to force majeure and
other circumstances or events outside of control of Seller.
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(ii) From and after the Effective Date until the Closing, Seller shall not sell, assign or
enter into any agreement to sell or transfer the Hotel or any portion thereof, except for the
provision of hotel rooms and facilities in the ordinary course.
(iii) From and after the Effective Date until the Closing, Seller shall not (i) enter into any
new, written management agreement or Service Contracts, Space Lease or other agreement or
encumbrance with respect to the Property (other than agreements with potential guests or groups
entered into in the ordinary course of business consistent with past practice), nor shall Seller
enter into any written agreements modifying the Service Contracts, Permitted Exceptions or Space
Leases unless: (A) any such agreement or modification will not bind Purchaser or the Property after
the Closing Date; (B) any such agreement or modification is subject to termination on not more than
thirty (30) days’ notice without penalty; or (C) Seller has obtained Purchaser’s prior written
consent to such agreement or modification which consent shall not unreasonably be withheld or
delayed or (ii) grant its consent to any action described in clause (i) above by Manager;
provided that Seller shall be permitted to enter into a new lease with Liquor Seller on the
same terms as the existing Space Lease with Liquor Seller except for the term thereof which shall
extend to February 28, 2019. Contracts and agreements entered into after the Effective Date in
accordance with this Section 5.3(a)(iii) shall constitute, as applicable, “Service
Contracts” or “Space Leases” and be scheduled on, and assigned pursuant to, the Assignment of
Contracts or the Assignment of Space Leases.
(b) Following the Effective Date and prior to Closing, Seller shall obtain from 8440 LLC, in
its capacity as tenant under the Space Lease for certain restaurant, bar, and similar areas in the
Hotel, an estoppel in the form required under the applicable Lease (or, if neither a form nor the
contents of any estoppel is specified, in substantially the form of Exhibit H attached
hereto) (such estoppel being referred to herein as a “Tenant Estoppel”), which Tenant
Estoppel shall be delivered to Purchaser at the Closing pursuant to Section 4.6(e).
5.4 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 the Employee Retirement Income Security Act of 1974 (as
amended, “ERISA”).
(b) Organization and Authority. Purchaser has been duly organized and is validly
existing and in good standing under the laws of the State of Delaware. 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.
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(c) No Breach. The execution, delivery and performance of this Agreement by Purchaser
and the consummation of the transaction contemplated herein will not: (i) result in a breach or
acceleration of or constitute a default under any agreement or instrument by which Purchaser is
bound or affected which would have a material adverse impact on the ability of Purchaser to timely
close the acquisition of the Property pursuant to the terms of this Agreement; or (ii) constitute
or result in the violation or breach by Purchaser of any judgment, order, writ, injunction or
decree issued against or imposed upon Purchaser or result in the violation of any Applicable Law,
rule or regulation of any governmental authority which, with respect to any of the foregoing, would
have a material adverse impact on the ability of Purchaser to timely complete the acquisition of
the Property pursuant to this Agreement.
(d) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Purchaser is
required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.
(e) 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.
(f) Patriot Act Compliance. Neither Purchaser nor any individual or entity having an
interest in Purchaser or controlled by Purchaser (i) is in violation of any applicable anti-money
laundering or anti-bribery laws and regulations, (ii) is a person or entity listed on the Lists;
(iii) is a person or entity who has been determined by competent authority to be subject to the
prohibitions contained in the Order; or (iv) is owned or controlled by, or acts for or on behalf
of, any person or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Order.
(g) Tax Identification Number. Purchaser’s valid tax identification number is
00-0000000.
(h) Bankruptcy. No petition in bankruptcy (voluntary or otherwise), assignment for the
benefit of creditors, or petition seeking reorganization or arrangement or other action under
federal or state bankruptcy laws is pending against or contemplated by Purchaser or its general
partner(s) or controlling shareholders or members.
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5.5 Covenants of Purchaser and/or of Seller.
(a) Purchaser may at its election (but subject to the limitations of Section 3.1
above), inspect the Property for the presence of Hazardous Substances, and, at Seller’s request,
shall furnish to Seller without representation or warranty copies of any reports received by
Purchaser in connection with any such inspection. Purchaser shall also furnish to Seller without
representation or warranty copies of any other reports received by Purchaser relating to any other
physical 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, 42 U.S.C. §12101, et seq., if
applicable).
(b) Purchaser hereby assumes full responsibility for its inspections of the Property regarding
Hazardous Substances and irrevocably waives any claim against Seller and releases Seller from all
liability arising from the presence of Hazardous Substances on the Property.
(c) Not later than three (3) days prior to the Closing, Seller shall send, or cause the
Manager to send, written notice to guests or other persons who have safe deposit boxes at the Hotel
advising of the sale of the Hotel and requesting verification or removal of the contents within two
(2) days. The safe deposit boxes of guests or other persons not responding to said written notice
shall be opened only in the presence of the Manager or representatives of both Seller and
Purchaser. The contents of all boxes opened as aforesaid shall be listed at the time such boxes
are opened and each such list shall be signed by or on behalf of the Manager or by or on behalf of
Seller and Purchaser, and Purchaser shall not be liable or responsible for any items claimed to
have been in said boxes unless such items are included in such list. Seller agrees to indemnify,
defend and hold Purchaser harmless from and against any liability or responsibility for any items
claimed to have been in said boxes but not included on such list and Purchaser agrees to indemnify,
defend and hold Seller harmless from and against any liability or responsibility for items claimed
to have been in said boxes and included in such list and all claims, losses and liabilities with
respect thereto arising out of the acts or omissions of Purchaser after the Closing Date.
(d) 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 Cut-Off Time shall be inventoried and
tagged jointly by Seller and Purchaser. Purchaser hereby agrees to defend, indemnify and hold
harmless Seller against any claims, losses or liabilities in connection with such tagged 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 tagged baggage and property arising out of the acts or
omissions of Seller prior to the Closing Date.
(e) Purchaser shall honor (and shall cause its manager to honor) all reservations made in the
ordinary course of business at the Hotel (including honoring the rates at which such reservations
were made, including reservations made on a wholesale, reward points redemption, or other basis),
or for any related conference, banquet, or meeting space or any other facilities in connection with
the Hotel made by Seller on or prior to the Cut-Off Time for periods on or after the Closing Date.
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The provisions of this Section 5.5 shall survive Closing or any earlier termination of
this Agreement.
5.6 Employees.
(a) For purposes of this Agreement, “Employees” means, collectively, all individuals
employed at the Hotel by Manager as of the Closing Date, irrespective of whether such individuals
are active or on leaves of absence or otherwise inactive but still employed at the Hotel.
(b) Purchaser agrees that it will cause the Manager to continue to employ, following the
Closing, the Employees so that Seller shall not be required to give any layoff, closing or other
termination notices or otherwise incur any liability pursuant to the provisions of the Federal
Worker Adjustment and Retraining Notification Act. 29 U.S.C. 2101-2109 (the “Federal WARN
Act”) and the California Worker Adjustment and Retraining Notification Act (the “California
WARN Act”). Purchaser shall be required to assume and discharge all obligations and
liabilities of Seller or Manager with respect to costs of termination of any Employee incurred
after the Closing including, without limitation, any severance claim made after the Closing or
arising from the transactions contemplated by this Agreement.
(c) From and after the Closing, Purchaser (i) shall be solely responsible for complying or
causing compliance with all applicable provisions of federal, state and municipal laws and
regulations relating to Employees, including Purchaser’s covenants set forth in this Section
5.6, including without limitation compliance with any applicable provisions of the Federal WARN
Act or the California WARN Act, and (ii) hereby agrees to indemnify, defend, protect and hold
Seller, Manager, and their respective affiliates harmless from and against any and all claims,
liabilities, debts, costs, expenses, damages, attorneys’ fees and disbursements arising out of any
violation of the Federal WARN Act or the California WARN Act in connection with the transaction
contemplated by this Agreement. Seller agrees to indemnify, defend, protect and hold Purchaser and
its affiliates harmless from and against any and all claims, liabilities, debts, costs, expenses,
damages, attorneys’ fees and disbursements arising out of any violation of the Federal WARN Act or
the California WARN Act for any period prior to the Closing (excluding any matters arising from the
transaction contemplated by this Agreement).
(d) During the period prior to Closing, the parties agree to reasonably cooperate and also to
consult on a regular basis and coordinate their activities relating to employee matters so as to
facilitate a smooth transition of Hotel operations and the continued proper performance by the
Employees of their respective duties up to Closing.
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(e) Purchaser agrees to indemnify, defend and hold harmless Seller, Manager and their
respective officers, directors, members, owners and affiliates (together with Seller and Manager,
the “Seller-Related Parties”) from and against any claim, liability, or judgment asserted
against any of the Seller-Related Parties on account of or with respect to any of the following:
(i) any causes of action, damages, complaints, judgments, orders and/or claims, whatsoever, and all
costs and expenses (including, without limitation, reasonable attorneys’ fees and costs) incurred
in connection therewith, which may be asserted against any of the Seller-Related Parties on account
of any violation of the National Labor Relations Act, Title VII of the Civil Rights Act, the Fair
Labor Standards Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act,
the Family and Medical Leave Act, the Vocational Rehabilitation Act of 1973, the Federal WARN Act
and/or the California WARN Act, California Labor Law, California and City of West Hollywood Human
Rights Law, and/or any other applicable federal, state or city employment statutes, laws, rules and
regulations (collectively, “Employment Laws”) by Purchaser, or any designee or management
company engaged by Purchaser to employ Hotel personnel (other than Manager), except to the extent
such are based on the acts of any Seller Related Parties (other than those arising from the
transactions contemplated by this Agreement), and (ii) any claims or liabilities arising (A) under
ERISA and/or any other applicable federal or state law or regulation concerning employee benefit
plans with respect to the employment of employees by Purchaser or such designee or management
company from and after the Closing or from the transactions contemplated by the Agreement, to the
extent that any such claim or liability relates to any period of employment from and after the
Closing or arise from the transactions contemplated by this Agreement or (B) from or under any
employee benefit plan applicable to any Employee or any other employee hired by Purchaser or such
designee or management company to perform services at or for the Hotel, to the extent that any such
claim or liability relates to any period of employment from and after the Closing or arise from the
transactions contemplated by this Agreement. For the avoidance of doubt, nothing in this
Section 5.6(e) shall be deemed to require Purchaser to indemnify any Seller-Related Party
with respect to any claim, liability or judgment of the type described in clause (i) or (ii) of
Section 5.6(f).
(f) Seller agrees to indemnify, defend and hold harmless Purchaser, or any designee or
management company engaged by Purchaser to employ Hotel personnel and their respective officers,
directors, members, owners and affiliates (together with Purchaser, the “Purchaser-Related
Parties”) from and against any claim, liability, or judgment asserted against any of the
Purchaser-Related Parties other than those arising from the transactions contemplated by this
Agreement on account of or with respect to any of the following: (i) any causes of action, damages,
complaints, judgments, orders and/or claims, whatsoever, and all costs and expenses (including,
without limitation, reasonable attorneys’ fees and costs) incurred in connection therewith, which
may be asserted against any of the Purchaser-Related Parties on account of any violation of the
Employment Laws occurring up to and including the Closing by Seller-Related Parties, except to the
extent such are based on the acts of any Purchaser-Related Parties and (ii) any claims or
liabilities arising (A) under ERISA and/or any other applicable federal or state law or regulation
concerning employee benefit plans with respect to the employment of employees by Seller-Related
Parties up to and including the Closing, or (B) from or under any employee benefit plan applicable
to any Employee or any other employee hired by Purchaser or such designee or management company to
perform services at or for the Hotel, to the extent that any such claim or liability relates to any
period of employment up to and including the Closing. For the avoidance of doubt, nothing in this
Section 5.6(f) shall be deemed to require Seller to indemnify any Purchaser-Related Party
with respect to any claim, liability or judgment of the type described in clause (i) or (ii) of
Section 5.6(e).
(g) Purchaser’s and Seller’s obligations under this Section 5.6 shall survive Closing
without limitation.
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5.7 Independent Audit. From the Effective Date until two (2) years after the Closing or
earlier termination of this Agreement, Seller shall make the books and records for the years ending
December 31, 2010, 2009, and 2008 and interim periods as required by the rules and regulations of
the Securities and Exchange Commission (“SEC”) of the Property/Seller available to Purchaser and
Purchaser’s independent accountants for inspection, copying and audit by Purchaser’s designated
accountants at the expense of Purchaser. Seller and the Manager of the Property will provide the
Purchaser’s independent accountants with a management representation letter with respect to the
audited historical financial statements of the Property/Seller for the years ending December 31,
2010, 2009, and 2008 and any unaudited interim period required by the rules and regulations of the
SEC. Seller shall provide Purchaser with copies of, or access to, such factual information,
accounting records and financial information as may be reasonably requested by Purchaser or its
auditors, and in the possession or control of Seller, to enable Purchaser or its affiliates to file
reports or registration statements in compliance with the rules and regulations of the SEC. This
Section 5.7 shall survive the Closing for two (2) years.
ARTICLE VI
DEFAULT
6.1 Default by Purchaser. If prior to Closing, Purchaser defaults under this Agreement,
Seller shall be entitled, as its sole and exclusive remedy (without limiting Seller’s rights with
respect to any indemnification obligations of Purchaser under Section 11.1, ARTICLE
III and/or Section 11.18) 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, SUBJECT TO THE PRECEDING
SENTENCE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE XXXXXXX MONEY 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 YG Purchaser TCF
Nothing contained in this Section 6.1 shall limit or prevent Seller, after Closing has
occurred, from: (a) asserting any legal or equitable claims against Purchaser for Purchaser’s
obligation to pay attorneys’ fees and other amounts under Section 11.18; (b) enforcing any
indemnity obligation of Purchaser under this Agreement or preclude Seller from obtaining a damage
award in connection therewith; or (c) enforcing Purchaser’s other obligations and liabilities which
survive Closing.
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6.2 Default by Seller. In the event that Seller fails to consummate this Agreement for any
reason other than Purchaser’s default (in which event Section 6.1 applies), then Purchaser
shall be entitled, as its sole and exclusive remedy, to terminate this Agreement and receive the
return of the Xxxxxxx Money, in which event Seller shall be released from any and all liability
hereunder ; provided that if the termination resulted from an intentional or willful act of Seller,
then Seller shall pay Purchaser its Termination Costs (as hereinafter defined) upon Purchaser’s
written notice to Seller that the same have become due Purchaser expressly waives its rights to
seek monetary or other damages in the event of Seller’s default hereunder other than as expressly
provided in the preceding sentence. Notwithstanding the foregoing, if Purchaser is ready, willing
and able to close and Seller is obligated to close pursuant to the terms of this Agreement, then
Purchaser shall have the right for 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 sixty
(60) days following the date upon which Closing was to have occurred. Purchaser shall be deemed to
have elected to waive such right to seek specific performance if it fails to file suit within such
period. As material consideration to Seller’s entering into this Agreement with Purchaser,
Purchaser expressly waives any right under statutory or common law or otherwise to record or file a
lis pendens or a notice of pendency of action or similar notice against all of any portion of the
Property unless all conditions precedent to Seller’s obligation to proceed to Closing have been
satisfied and Seller defaults in its obligation to proceed to Closing. “Termination Costs”
shall mean those reasonable costs actually incurred by Purchaser in connection with its
investigation and efforts to purchase the Property, including, without limitation, actual
reasonable fees and costs of counsel and consultants, all of which Termination Costs shall be
evidenced by written documentation reasonably acceptable to Seller, but in no event shall the
Termination Costs payable by Seller to Purchaser in connection with this Section 6.2 exceed
$500,000.
6.3 Seller’s Right to Cure Defaults. Notwithstanding anything to the contrary in this
Agreement, Purchaser shall not have the right to exercise its remedies under Section 6.2
for a Seller default unless Purchaser has provided written notice to Seller specifying in
reasonable detail the nature of the Seller default, and Seller has not cured the same within ten
(10) business days after Seller’s receipt of such notice (the “Seller Cure Period”), in
which case the Outside Closing Date shall be extended until the date which is five (5) business
days after the expiration of the Seller Cure Period.
6.4 Purchaser’s Right to Cure Defaults. Notwithstanding anything to the contrary
contained in this Agreement, with respect to any default under this Agreement by Purchaser other
than a default in Purchaser’s obligation to close the transaction contemplated hereunder on the
Closing Date, Seller shall not have the right to exercise its remedies under Section 6.1 for any
such Purchaser default unless Seller has provided written notice to Purchaser specifying in
reasonable detail the nature of the Purchaser default, and Purchaser has not cured the same within
10 days after Purchaser’s receipt of such notice. It is expressly understood and agreed that there
shall be no cure period afforded Purchaser and no need for Seller to provide any notice, written or
otherwise, with respect to a default by Purchaser in its obligation to close the transaction on the
Closing Date, and in the event of such a default, Seller shall have the immediate right to exercise
its remedies on account thereof provided in Section 6.1 above.
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ARTICLE VII
SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY
7.1 Survival. The representations and warranties of Seller set forth in Section 5.1
of this Agreement, as updated by the certificate of Seller to be delivered to Purchaser at Closing
in accordance with Section 4.2(e) hereof, and any other representations and warranties of
Seller contained herein or in any other instrument delivered to Purchaser in connection herewith
shall survive Closing for a period of six (6) months. The representations and warranties of
Purchaser set forth in Section 5.4, as updated by the certificate of Purchaser to be
delivered to Seller at Closing in accordance with Section 4.3(d) hereof, and any other
representations and warranties of Purchaser contained herein or in any other instrument delivered
to Seller in connection herewith shall survive the Closing for a period of nine (9) months from the
Closing Date.
7.2 Seller’s Indemnification. From and after the Closing, Seller shall, subject to the
provisions of this Section 7.2, defend, indemnify and save harmless Purchaser and its
Affiliates, and their respective employees, contractors, officers, directors, and agents
(collectively, “Purchaser Indemnitees”) from and against any and all losses, injuries,
claims, penalties, liabilities, fines, damages, costs or expenses (including, without limitation,
reasonable attorneys’ fee and costs) (collectively, “Losses”) arising out of, resulting
from or relating to:
(a) the inaccuracy of any representation or warranty of Seller;
(b) the failure by Seller to perform or fulfill any covenant or agreement of Seller
contained in this Agreement; or
(c) any injury to or death of any person or persons or damage to or destruction of any
property owned by a third-party, arising out of or in any manner directly or indirectly
connected with the Hotel and having accrued prior to the Closing Date (unless caused by a
Purchaser Indemnitee).
The provisions of this Section 7.2 shall survive the Closing without limitation.
7.3 Purchaser’s Indemnification. From and after the Closing, Purchaser shall, subject to
the provisions of this Section 7.3, defend, indemnify and save harmless Seller and its
Affiliates, and their respective employees, contractors, officers, directors, and agents
(collectively, “Seller Indemnitees”) from and against any and all Losses arising out of,
resulting from or relating to:
(a) the inaccuracy of any representation or warranty of Purchaser;
(b) the failure by Purchaser to perform or fulfill any covenant or agreement of
Purchaser contained in this Agreement; or
(c) any injury to or death of any person or persons or damage to or destruction of any
property owned by a third-party, arising out of or in any manner directly or indirectly
connected with the Hotel and having accrued after the Closing Date (unless caused by a
Seller Indemnitee).
The provisions of this Section 7.3 shall survive the Closing without limitation.
7.4 Notice and Resolution of Claims.
(a) Notice. Each Person entitled to indemnification pursuant to Section 7.2
or 7.3 (an “Indemnitee”) shall give written notice to the indemnifying party or
parties from whom indemnity is sought (the “Indemnifying Party”) promptly after obtaining
knowledge of any claim that it may have under Section 7.2 or 7.3, as applicable.
The notice shall set forth in reasonable detail the claim and the basis for indemnification.
Failure to give the notice in a timely manner shall not release the Indemnifying Party from its
obligations under Section 7.2 or 7.3, as applicable, except to the extent that the
failure materially prejudices the ability of the Indemnifying Party to contest that claim.
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(b) Defense of Third Party Claims. If a claim for indemnification pursuant to
Section 7.2 or 7.3 shall arise from any action made or brought by a third party
that would reasonably be expected to result in indemnifiable Losses (a “Third Party
Claim”), the Indemnifying Party may assume the defense of the Third Party Claim. If the
Indemnifying Party assumes the defense of the Third Party Claim, the defense shall be conducted by
counsel chosen by the Indemnifying Party, who shall be reasonably acceptable to Indemnitee,
provided that the Indemnitee shall retain the right to employ its own counsel and participate in
the defense of the Third Party Claim at its own expense (which shall not be recoverable from the
Indemnifying Party under this ARTICLE VII unless (i) the Indemnitee is advised by counsel
reasonably satisfactory to the Indemnifying Party that use of counsel of the Indemnifying Party’s
choice would be expected to give rise to a conflict of interest, (ii) the Indemnifying Party shall
not have employed counsel to represent the Indemnitee within a reasonable time after notice of the
assertion of any such claim or institution of any such action or proceeding, or (iii) the
Indemnifying Party shall authorize the Indemnitee in writing to employ separate counsel at the
expense of the Indemnifying Party, in each of which cases the reasonable expenses of counsel to the
Indemnitee shall be reimbursed by the Indemnifying Party). In no event shall the Indemnifying
Party be obligated to pay the fees and expenses of more than one counsel (other than local counsel)
for all Indemnitees with respect to any claim indemnified under this ARTICLE VII; provided
that an Indemnitee shall be entitled to employ separate counsel at the expense of the Indemnifying
Party if the Indemnitee is advised by counsel reasonably satisfactory to the Indemnifying Party
that use of such other counsel would give rise to a conflict of interest, in which case the
reasonable expenses of counsel to such Indemnitee shall be reimbursed by the Indemnifying Party.
Notwithstanding the foregoing provisions of this Section 7.4(b), (i) no Indemnifying Party
shall be entitled to settle any Third Party Claim for which indemnification is sought under
Section 7.2 or 7.3 without the Indemnitee’s prior written consent, which shall not
be unreasonably withheld, conditioned or delayed, unless it has assumed the defense of such Third
Party Claim and as part of the settlement the Indemnitee is released from all liability with
respect to the Third Party Claim and the settlement does not impose any equitable remedy on the
Indemnitee or require the Indemnitee to admit any fault, culpability or failure to act by or on
behalf of the Indemnitee, and (ii) no Indemnitee shall be entitled to settle any Third Party Claim
for which indemnification is sought under Section 7.2 or 7.3 without the
Indemnifying Party’s prior written consent, which shall not be unreasonably withheld, conditioned
or delayed, unless the Third Party claim is for money damages only and such settlement does not
include a statement as to, or an admission of fault, culpability or a failure to act by or on
behalf of the Indemnifying Party and as part of such settlement the Indemnifying Party is released
from all liability (for indemnification pursuant to this ARTICLE VII and otherwise) with
respect to such Third Party Claim. If the Indemnifying Party does not notify the Indemnitee within
twenty (20) Business Days after receipt of the Indemnitee’s notice of a Third Party Claim of
indemnity hereunder that it elects to assume the control of the defense of any Third Party Claim,
the Indemnitee shall have the right to contest the Third Party Claim but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement and the costs of such actions by the
Indemnitee shall be paid by the Indemnifying Party.
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7.5 Limitations on Liability.
(a) Deductible.
(i) Seller shall not have any obligation or liability to any Purchaser Indemnitee under
Section 7.2(a) unless and until the aggregate amount of Losses incurred or suffered
by the Purchaser Indemnitees arising out of the matters referred to in
Section 7.2(a) shall have exceeded $75,000, in which case Seller shall be obligated
and liable under Section 7.2(a) only with respect to such excess.
(ii) Purchaser shall not have any obligation or liability to any Seller Indemnitee
under Section 7.3(a) unless and until the aggregate amount of Losses suffered by the
Seller Indemnitees arising out of the matters referred to in Section 7.3(a) shall
have exceeded $75,000, in which case Purchaser shall be obligated and liable under
Section 7.3(a) only with respect to such excess.
(b) Limit of Liability. The aggregate liability of Seller or Purchaser, as
applicable—
(i) under Section 7.2(a) shall not exceed $3,000,000;
(ii) under Section 7.3(a) shall not exceed $3,000,000; and
(iii) under Section 7.2(b), 7.2(c), 7.3(b), or 7.3(c)
shall not be subject to any limits.
(c) Limit on Time for Assertion of Claims. Neither Seller nor Purchaser shall have
any obligation or liability pursuant to Section 7.2 or 7.3, respectively, for any
breach of any representation or warranty unless notice of a claim asserting such breach shall have
been given in accordance with Section 7.4 prior to the termination of the survival period
applicable to such representation or warranty as set forth in Section ARTICLE VII. Neither
Seller nor Purchaser shall have any obligation or liability pursuant to Section 7.2 or
7.3, respectively, for any breach of any covenant contained in this Agreement that occurred
prior to the Closing unless notice of a claim asserting such breach shall have been given in
accordance with Section 7.4 on or before the date six (6) months following the Closing
Date.
7.6 Other Matters Regarding Indemnification.
(a) In the event either Seller or Purchaser (the “Claiming Party”) has actual
knowledge on or before the Closing that any representation or warranty of the other is incorrect
(either through independent investigation or through information and materials provided to the
Claiming Party) or that a covenant of the other has been breached and the Claiming Party proceeds
to Closing, then the Claiming Party shall not be permitted to assert a claim for such matters
following the Closing Date.
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(b) The right to be indemnified for Losses, on the terms and subject to the limitations set
forth in this ARTICLE VII, shall be the exclusive remedy available to the Parties and the
Indemnitees for the matters set forth in Sections 7.2 and 7.3.
ARTICLE VIII
RISK OF LOSS
8.1 Minor Damage. In the event of loss or damage to the Real Property or any portion
thereof which is not “major” (as hereinafter defined), this Agreement shall remain in full force
and effect provided Seller shall, at Seller’s option, either (a) perform any necessary repairs (to
return the Real Property to substantially the condition in which it existed immediately prior to
such loss or damage), 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 (other than business interruption proceeds attributable
to the period prior to Closing and proceeds in respect of amounts expended by or on behalf of
Seller prior to Closing to restore the Property). In the event that Seller elects to perform
repairs upon the Real Property, Seller shall use commercially reasonable efforts to complete such
repairs promptly and the Outside Closing Date shall be extended a reasonable time, not to exceed
thirty (30) days, 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 with respect to such loss or damage and not paid
by Seller prior to Closing and Seller shall assign all of its rights to proceeds under the
applicable policy with respect to any claim for the applicable loss (other than business
interruption proceeds attributable to the period prior to Closing and proceeds in respect of
amounts expended by or on behalf of Seller prior to Closing to restore the Property). Upon Closing,
full risk of loss with respect to the Property shall pass to Purchaser.
8.2 Major Damage. In the event of a “major” loss or damage to the Real Property, Purchaser
may, upon notice in writing to Seller delivered within ten (10) days after Seller sends Purchaser
written notice of the occurrence of such major loss or damage, terminate this Agreement by written
notice to Seller, in which event the Xxxxxxx Money shall be returned to Purchaser and neither
Seller nor Purchaser shall have any further rights or obligations under this Agreement except any
obligations that expressly survive the termination of this Agreement. If Purchaser fails for any
reason to deliver written notice of termination to Seller within ten (10) days after Seller sends
Purchaser written notice of the occurrence of major loss or damage, then 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 (to return the Real Property to substantially the condition in
which it existed immediately prior to such loss or damage), 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 (other than
business interruption proceeds attributable to the period prior to Closing and proceeds in respect
of amounts expended by or on behalf of Seller prior to Closing to restore the Property). In the
event that Seller elects to perform repairs upon the Real Property, Seller shall use commercially
reasonable efforts to complete such repairs promptly and the Outside Closing Date 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 with respect to such loss or damage and not paid
by Seller prior to Closing and Seller shall assign all of its rights to proceeds under the
applicable policy with respect to any claim for the applicable loss (other than business
interruption proceeds attributable to the period prior to Closing and proceeds in respect of
amounts expended by or on behalf of Seller prior to Closing to restore the Property). Upon
Closing, full risk of loss with respect to the Property shall pass to Purchaser.
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8.3 Definition of “Major” Loss or Damage. For purposes of Sections 8.1 and
8.2, “major” loss or damage refers to the following (a) loss or damage to the Real 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 a licensed independent architect or registered professional engineer
with a minimum of ten (10) years experience related to commercial real estate construction selected
by Seller, equal to or greater than five percent (5%) of the Purchase Price or (b) any loss due to
a condemnation which permanently and materially adversely modifies or impairs the continued
operation of the Hotel in substantially the same manner as the Hotel is operated on the Effective
Date.
ARTICLE IX
COMMISSIONS
9.1 Brokerage Commissions. In the event the transaction contemplated by this Agreement is
consummated, but not otherwise, Seller agrees to pay to Xxxxxxx Sachs (“Broker”) at Closing
a brokerage commission pursuant to a separate written agreement between Seller and Broker and
Seller shall indemnify and hold Purchaser harmless with respect to any payments due and owing to
Broker in connection with this transaction under such agreement. Each party agrees that should
any claim be made for brokerage commissions or finder’s fees by any broker or finder other than the
Broker by, through or on account of any acts of said party or its representatives, said party will
indemnify, defend, protect 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
Section 9.1 shall survive Closing or earlier termination of this Agreement.
ARTICLE X
DISCLAIMERS AND WAIVERS
10.1 No Reliance on Documents. Except as expressly set forth in this Agreement, Seller
makes no representation or warranty as to the truth, accuracy or completeness of any materials,
data or information delivered by or on behalf of Seller or its brokers to Purchaser in connection
with the transaction contemplated hereby including, without limitation, the Reports, material
available in the E-Room, and other Seller Due Diligence Materials, provided, however, that Seller
shall not intentionally alter any material, data or information for the purpose of misleading
Purchaser. 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
38
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) except for matters expressly set forth in this Agreement,
neither Seller nor 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 or other materials provided to Purchaser in connection with this
Agreement.
10.2 DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT: 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, PROFITABILITY,
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”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN
THIS AGREEMENT. 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 AND ANY ACTUAL
OR PROPOSED BUDGETS FOR THE REAL 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. PURCHASER REPRESENTS TO SELLER THAT PURCHASER IS A SOPHISTICATED INSTITUTIONAL
INVESTOR WITH SUBSTANTIAL EXPERIENCE AND EXPERTISE WITH INVESTMENT PROPERTIES AND HAS CONDUCTED, OR
WILL CONDUCT PRIOR TO CLOSING, 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
39
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 AND THE DOCUMENTS DELIVERED AT CLOSING.
UPON CLOSING AND SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN
THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT 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 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 RELATING TO THE
CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL
OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT FOR FRAUD AND
OBLIGATIONS OF SELLER UNDER THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND DELIVERED BY SELLER AT
CLOSING. PURCHASER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES
OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING DATE, 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 Sections 5.5(a) and 5.5(b) 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 and the other parties referenced in this Section.
10.3 Repairs, Reserves, and Capital Expenditures. Purchaser acknowledges and agrees that
except as provided in Section 5.3 of this Agreement, (a) Seller shall have no obligation to
make any repairs, replacements, improvements or alterations to the Property or to expend any funds
therefor, including, without limitation, any reserves that may be held for such purpose, and (b)
Purchaser shall not be entitled to a credit to the Purchase Price at Closing in the event capital
expenditures actually made at the Hotel for any year are less than the budgeted amount as of the
date of the Closing.
40
10.4 Effect and Survival of Disclaimers. Seller and Purchaser acknowledge that the
compensation to be paid to Seller for the Property has been decreased to take into account that the
Property is being sold subject to the provisions of this Article X. Seller and Purchaser
agree that the provisions of this Article X shall survive Closing.
ARTICLE XI
MISCELLANEOUS
11.1 Confidentiality. Prior to the Closing, and subject to the provisions of Section
11.2, this Agreement, the terms hereof and the Property Information shall be treated as
“Evaluation Material” in accordance with that certain Confidentiality Agreement executed by
Purchaser in favor of Seller (the “Confidentiality Agreement”). From and after the
Closing, Seller and its affiliates shall hold in confidence, and shall not disclose to third
parties without the prior written consent of Purchaser, any non-public proprietary information
regarding the Hotel and the Property. The foregoing shall not be deemed to restrict the ability of
Seller and its affiliates to comply with their disclosure and reporting obligations under
applicable law.
11.2
Public Disclosure. Prior to the Closing, neither Purchaser nor Seller, nor any of
their respective affiliates, shall make any press release or other public statement, or file any
report with the Securities and Exchange Commission containing information, regarding the terms of
this Agreement that are not generally known to the public (the “
Confidential Information”)
without affording the other party a reasonable opportunity (not to exceed two business days) to
review and comment on the content of such release, report, or statement insofar as it applies to
this Agreement and the transaction contemplated hereby. For the avoidance of doubt, Purchaser or
Seller or their respective affiliates shall be permitted to make such disclosure and shall not be
required to obtain the consent of the other party prior to making such disclosure. Notwithstanding
the foregoing, Seller and Purchaser shall be permitted to (i) disclose any Confidential Information
to the extent required by court order or under Applicable Law (subject to providing the other party
the reasonably opportunity to review and comment on any such disclosure, as provided above, to the
extent consistent with Applicable Law) and (ii) disclose any Confidential Information to any Person
on a “need-to-know” basis, such as their respective members, trustees, directors, officers,
employees, attorneys, consultants, engineers, surveyors, lenders, investors, and such other Persons
whose assistance is required to consummate the transactions contemplated in this Agreement or to
whom notice of this transaction may be required pursuant to the Service Contracts or Applicable
Law, or with whom communication may be required to accomplish the assignment of the Permits, the
Service Contracts or the Space Leases; provided, however, that Purchaser or Seller (as applicable)
shall, to the extent consistent with Applicable Law, (a) advise such person of the confidential
nature of such Confidential Information, and (b) use commercially reasonable efforts to cause such
Person to maintain the confidentiality of such information. Purchaser and Seller shall mutually
agree on the content of the initial press release regarding the consummation of the transaction
contemplated by this Agreement following the Closing. Notwithstanding anything to the contrary
contained herein, the parties understand and agree that Pebblebrook Hotel Trust, Inc. and
Morgans
Hotel Group Co. each will file a report on Form 8-K with the Securities and Exchange Commission in
connection with the transaction contemplated by this agreement. The provisions of this
Section 11.2 shall survive the Closing.
41
11.3 Assignment. Purchaser may not assign or otherwise transfer this Agreement or any of
its rights or obligations under this Agreement without first obtaining Seller’s written approval
which may be given or withheld in Seller’s sole discretion; provided that Purchaser may assign all
or any portion of this Agreement to one or more entities that are wholly-owned, directly or
indirectly, by Pebblebrook Hotel, L.P. Any assignment by Purchaser of this Agreement shall not
relieve Purchaser of its obligations under this Agreement and any permitted assignee must expressly
assume the obligations of Purchaser in writing. 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.
11.4
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 or PDF transmission completed before 5:00 p.m. (
New York time) on a
business day 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 or PDF transmission, as of the date of the facsimile transmission or PDF transmission
provided that an original of such facsimile or PDF is also sent to the intended addressee by means
described in clauses (a), (b) or (c) above. Notices may be given by a party’s counsel on behalf of
such party as if such party had given such notice itself. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows:
If to Seller:
Mondrian Holdings LLC
c/o Morgans Group LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Executive Vice President & General Counsel
Facsimile No.: (000) 000-0000
Email: xxxxx.xxxxx@xxxxxxxxxxxxxxxxx.xxx
With a copy to:
Xxxxx Lovells US LLP
000 00xx Xxxxxx XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
Email: xxxxx.xxxxxxxxx@xxxxxxxxxxxx.xxx
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If to Purchaser:
Wolverines Owner LLC
c/o Pebblebrook Hotel Trust
0 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Facsimile no. (000) 000-0000
Email: xxxxxxx@xxxxxxxxxxxxxxxxx.xxx
With a copy to:
Hunton & Xxxxxxxx LLP
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esquire
Facsimile No.: (000) 000-0000
Email: xxxxxxx@xxxxxx.xxx
11.5 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.
11.6
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 Real 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 5:00 p.m.,
New York time. Time is of the essence with
respect to each and every term and provision of this Agreement.
11.7 Successors and Assigns. Subject to the limitations on assignment set forth in
Section 11.3 above, the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto.
11.8 Entire Agreement. This Agreement, including the Exhibits, the Schedules and the
Confidentiality Agreement 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.
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11.9 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, (a) execute acknowledgments of receipt with respect to any
materials delivered by Seller to Purchaser with respect to the Property, and (b) obtain sellers’
permits for any sales activities conducted at the Property prior to Closing and/or obtain “sale for
resale certificates” for any Personal Property that may be sold after the Closing. The provisions
of this Section 11.9 shall survive Closing.
11.10 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, facsimile or PDF 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, facsimile or PDF document, are aware that the other party will rely on the
telecopied, facsimile or PDF signatures, and hereby waive any defenses to the enforcement of the
terms of this Agreement based on the form of signature.
11.11 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.
11.12
Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE OF
NEW YORK 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 OF
NEW YORK 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 OF
NEW YORK. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS
SECTION 11.12 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.
11.13 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.
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11.14 Exhibits and Schedules. The following schedules or exhibits attached hereto shall be
deemed to be an integral part of this Agreement:
Schedule 1.1(a) -Legal Description of Land
Schedule 1.1(c) -Excluded Personal Property
Schedule 1.1(e)-1(a) -Service Contracts (assignable without consent)
Schedule 1.1(e)-1(b) -Service Contracts (consent required for assignment)
Schedule 1.1(e)-2(a) -Equipment Leases (assignable without consent)
Schedule 1.1(e)-2(b) -Equipment Leases (consent required for assignment)
Schedule 1.1(f) -Intellectual Property
Schedule 1.1(g) -Transferable Permits
Schedule 1.1(j) -List of Space Leases
Schedule 1.5(c) -Allocations of Real and Personal Property
Schedule 2.4(a) -Permitted Exceptions
Schedule 3.2 -Reports
Schedule 5.1(d) -Space Leases
Exhibit A -Deed
Exhibit B -Xxxx of Sale
Exhibit C -Assignment of Contracts
Exhibit D -Assignment of Space Leases
Exhibit E -FIRPTA Certificate
Exhibit F -Title Affidavit
Exhibit G -Escrow Agreement
Exhibit H -Form of Tenant Estoppel
Exhibit I -Form of Liquor Assets Escrow Agreement
11.15 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.
11.16 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, schedules 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.
11.17 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.
11.18 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.
45
11.19 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.
11.20 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.
11.21 No Recordation. Purchaser shall not record this Agreement, nor any memorandum or
other notice of this Agreement, in any public records.
[SIGNATURE PAGE FOLLOWS]
46
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective
Date.
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SELLER:
Mondrian Holdings LLC
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By: |
Mondrian Senior Mezz LLC, its
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Managing Member |
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By: |
Morgans Group LLC, its
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Managing Member |
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By: |
Morgans Hotel Group Co., its
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Managing Member |
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By: |
/s/ Xxxx Xxxx
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Name: |
Xxxx Xxxx |
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Title: |
CDO & EVP |
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PURCHASER:
Wolverines Owner LLC, a Delaware
limited liability company
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By: |
/s/ Xxxxxx X. Xxxxxx
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Name: |
Xxxxxx X. Xxxxxx |
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Title: |
Vice President |
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47
Annex I
Definitions
(a) As used in this Agreement, the following terms have the meanings ascribed thereto below:
“Applicable Law” means all statutes, laws, common law, rules, regulations, ordinances,
codes or other legal requirements of any Governmental Authority, Board of Fire Underwriters and
similar quasi-governmental agencies or entities, and any judgment, injunction, order, directive,
decree or other judicial or regulatory requirement of any court or Governmental Authority of
competent jurisdiction affecting or relating to the Person or property in question.
“Consumable Supplies” shall mean office, cleaning, engineering, laundry and valet supplies,
food service supplies, decorations, menus, guest supplies (including stationery, soap, matches,
toilet and facial tissues) and such other supplies as are customarily consumed on a daily basis in
the operation of the Hotel.
“Environmental Laws” means Applicable Laws regulating or relating to any Hazardous
Substances including, without limitation, (i) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”), (ii) the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”), (iii) the Federal Water Pollution Control Act,
33 U.S.C. § 2601 et seq., (iv) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., (v) the
Clean Water Act, 33 U.S.C. § 1251 et seq., (vi) the Clean Air Act, 42 U.S.C. § 7401 et seq., (vii)
the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., (viii) the Safe Drinking
Water Act, 42 U.S.C. § 803 et seq., (ix) the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.,
(x) the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11001 et seq.,
(xi) the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it regulates
exposure to Hazardous Substances), and similar state and local Applicable Law, as amended from time
to time, and all regulations, rules and guidance issued pursuant thereto.
“Governmental Authority” means any federal, state or local government or other political
subdivision thereof, including, without limitation, any agency or entity exercising executive,
legislative, judicial, regulatory or administrative governmental powers or functions, in each case
to the extent the same has jurisdiction over the person or property in question.
“Guest Records” shall mean guest records, profiles, histories, contact information and
preferences gathered by Manager based on the guest’s stay or information provided by the guest
during, prior to or after such stay at the Hotel.
“Hazardous Substances” means any hazardous or toxic substances, materials or waste, whether
solid, semisolid, liquid or gaseous, including, without limitation, asbestos, polychlorinated
biphenyls, petroleum or petroleum by-products (excluding any substances of kinds and amounts
ordinarily used or stored in similar properties for purposes of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Laws), and any other material or
substance which is defined as a “hazardous substance”, “hazardous waste”, “toxic waste” or “toxic
substance” under any Environmental Laws.
Annex I- 1
“Operating Equipment” shall mean chinaware, glassware, linens, silverware, and other items
of a comparable nature, and all replacements, additions and substitutions therefor.
“Manager’s Materials” shall mean materials, files, lists, records, compilations and methods
of operation which constitute valuable proprietary information, trade secrets and Manager’s work
product, including, by way of example and not of limitation, Guest Records, marketing techniques,
customer and mailing lists and reservation systems.
“Manager’s Tradenames” shall mean the Primary Name, the marks “Morgans”, “A Morgans Hotel”,
“Mondrian”, “SkyBar”, “Asia de Cuba” and “ADCB” or any other tradenames, trademarks, service marks,
symbols, logos or designs owned or licensed by Manager or any of its affiliates including, without
limitation, the name of any restaurant, bar and/or lounge at any Morgans Hotel, and any words or
designs, marketing materials, concepts and trade dress (such as the menu and the items thereon)
related thereto.
“Primary Name” shall mean Mondrian.
“Property Information Letter” shall mean that certain letter from Seller to Purchaser dated
as of the Effective Date.
(b) The following terms are defined in the Section of this Agreement set forth after such term
below:
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ABC |
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Section 4.9(a) |
Adjusting Party |
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Section 4.4.14 |
Agreement |
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Introduction |
Assignment of Contracts |
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Section 4.2(c) |
Assignment of Space Leases |
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Section 4.2(d) |
Bookings |
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Section 1.1(d) |
Broker |
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Section 9.1 |
California WARN Act |
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Section 5.6(b) |
Claiming Party |
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Section 7.6(a) |
Closing |
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Section 4.1(a) |
Closing Date |
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Section 4.1(a) |
Confidentiality Agreement |
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Section 11.1 |
Consumable Inventory |
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Section 1.1(i) |
Cut-Off Time |
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Section 4.4.11 |
Deed |
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Section 4.2(a) |
Effective Date |
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Introduction |
Employees |
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Section 5.6(a) |
Employment Laws |
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Section 5.6(e) |
Annex I- 2
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Equipment Leases |
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Section 1.1(e) |
ERISA |
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Section 5.4(a) |
Escrow Agreement |
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Section 1.6(b) |
Excluded Permits |
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Section 1.1(g) |
Excluded Personal Property |
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Section 1.1(c) |
Existing Liquor License |
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Section 4.6(f) |
Federal WARN Act |
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Section 5.6(b) |
Final Statement |
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Section 4.4.14 |
Hotel |
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Recitals |
Hotel Payables |
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Section 4.4.6 |
House Bank Funds |
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Section 1.1(k) |
Improvements |
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Recitals |
Initial Xxxxxxx Money |
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Section 1.6(a) |
Intangibles |
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Section 1.1(h) |
Land |
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Recitals |
Lease Year |
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Section 4.4.5(d) |
Legal Requirements |
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Section 2.4(d) |
Liquor Assets |
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Section 4.9(a) |
Liquor Assets Escrow Agent |
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Section 4.9(a) |
Liquor Assets Escrow Agreement |
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Section 4.9(a) |
Liquor Assets Purchase Price |
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Section 4.9(b) |
Liquor Designee |
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Section 4.9(a) |
Liquor Inventory |
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Section 4.9(a) |
Liquor Seller |
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Section 4.9(a) |
Lists |
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Section 5.1(k) |
Losses |
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Section 7.2 |
Management Agreement |
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Section 1.7 |
Manager |
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Section 1.7 |
Monetary Encumbrances |
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Section 2.3(c) |
OFAC |
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Section 5.1(k) |
Order |
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Section 5.1(k) |
Outside Accountants |
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Section 4.4.15 |
Outside Closing Date |
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Section 4.1(a) |
Percentage Rent |
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Section 4.4.5(d) |
Permits |
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Section 1.1(g) |
Permitted Exceptions |
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Section 2.4 |
Personal Property |
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Section 1.1(c) |
Pre-Closing Date |
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Section 4.1(b) |
Preliminary Statement |
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Section 4.4 |
Property |
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Section 1.2(a) |
Property Information |
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Section 3.1(a) |
Purchase Price |
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Section 1.4 |
Purchaser |
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Introduction |
Purchaser Indemnitees |
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Section 7.2 |
Purchaser-Related Parties |
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Section 5.6(f) |
Annex I- 3
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Real Property |
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Recitals |
Receivables
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Section 1.2(b)(v) |
Rent |
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Section 4.4.5 |
Rent Arrears |
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Section 4.4.5(b) |
Requesting Party |
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Section 4.4.14 |
Retail Inventory |
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Section 1.1(i) |
Retained IP |
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Section 1.1(f) |
Seller |
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Introduction |
Seller Cure Period |
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Section 6.3 |
Seller Indemnitees |
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Section 7.3 |
Seller-Related Parties |
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Section 5.6(e) |
Service Contracts |
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Section 1.1(e) |
Space Leases |
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Section 1.1(j) |
Survey |
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Section 2.2 |
Taxes |
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Section 4.4.1(a) |
Tenant Estoppel |
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Section 5.3(b) |
Title Affidavit |
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Section 4.2(k) |
Title Company |
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Section 2.1 |
Title Policy |
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Section 2.5 |
Title Report |
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Section 2.1 |
Title Update |
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Section 2.1 |
Unopened Inventory |
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Section 1.1(i) |
Wolverines LLC |
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Section 4.9(a) |
Annex I- 4
Exhibit A
Deed
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RECORDING REQUESTED BY: |
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MAIL TAX STATEMENTS AND |
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WHEN RECORDED MAIL TO: |
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Order No.: |
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Escrow No.: |
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APN:
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SPACE ABOVE THIS LINE FOR RECORDER’S USE |
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THE UNDERSIGNED GRANTOR(S) DECLARE(S):
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DOCUMENTARY TRANSFER TAX IS $ |
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Computed on full value of property conveyed, or |
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Computed on full value less liens and encumbrances remaining at time
of sale. |
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Unincorporated area
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City of |
GRANT DEED
For valuable consideration, receipt of which is hereby acknowledged, Mondrian Holdings LLC, a
Delaware limited liability company hereby GRANTS to Wolverines Owner LLC, a Delaware limited
liability company, the real property situated in the County of Los Angeles, State of California,
more particularly described as follows:
Lot “A” of Tract No. 2527, in the city of West Hollywood, county of Los Angeles, state
of California, as per map recorded in Book 34 Page 14 of Maps, in the office of the
county recorder of said county.
EXCEPT therefrom that portion thereof lying Southerly of a line bearing North 89 degrees
54’ West from a point on the East line of said Lot, distant North 0 degrees 06’ East
thereon 320 feet from the Southeast corner of said Lot.
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Dated: |
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Mondrian Holdings LLC,
a Delaware limited liability company |
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By: |
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Name: |
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Title: |
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STATE OF CALIFORNIA
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COUNTY OF LOS ANGELES
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On
before me, (here insert name of the officer),
Notary Public, personally appeared , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
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Notary Public
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[Notary Seal] |
MAIL TAX STATEMENTS AS DIRECTED ABOVE
Exhibit A
Exhibit B
XXXX OF SALE
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, MONDRIAN
HOLDINGS LLC, a Delaware limited liability company (“
Seller”), in connection with the sale
of certain real property located in West Hollywood, California, which is more particularly
described in that certain
Purchase and Sale Agreement dated as of
, 2011
(“
Purchase Agreement”), between Seller and WOLVERINES OWNER LLC, a Delaware limited
liability company (“
Purchaser”), hereby grants, assigns, transfers, conveys and delivers to
Purchaser, without recourse and without any representation or warranty (including warranty of use
and warranty, express or implied, as to merchantability and fitness for any purpose) except as
expressly set forth in the Purchase Agreement, all of Seller’s right, title and interest in and to
the “Personal Property”, the “Unopened Inventory”, the “Retail Inventory” and the “Consumable
Inventory”, as such terms are defined in the Purchase Agreement and, in each case, solely to the
extent the “Personal Property”, the “Unopened Inventory”, the “Retail Inventory” and the
“Consumable Inventory” are included in the definition of “Property” in the Purchase Agreement.
This Xxxx of Sale shall be governed by the laws of the State of
New York.
[Signature on following page]
Exhibit B
IN WITNESS WHEREOF, Seller has executed this Xxxx of Sale as of , 2011.
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SELLER:
MONDRIAN HOLDINGS LLC,
a Delaware limited liability company |
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By: |
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Exhibit C
Assignment of Contracts
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,
PERMITS, BOOKINGS AND INTANGIBLES
THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, PERMITS, BOOKINGS AND INTANGIBLES (this
“Assignment”) is made as of , 2011, by MONDRIAN HOLDINGS LLC, a Delaware
limited liability company (“Seller”), in favor of WOLVERINES OWNER, LLC, a Delaware limited
liability company (“Purchaser”).
RECITALS
A. Seller is the owner of certain property commonly known as the “Mondrian” located at 0000
Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxxxxxx.
B. Seller and Purchaser have entered into that certain
Purchase and Sale Agreement dated as of
, 2011 (as may be amended, the “
Purchase Agreement”), pursuant to which Seller
has agreed to sell and Purchaser has agreed to purchase the real property described in Schedule
1.1(a) attached thereto and the improvements located thereon, on the terms and conditions stated in
the Purchase Agreement. All terms not otherwise defined herein shall have the meaning assigned to
them in the Purchase Agreement.
C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser all of
Seller’s right, title and interest to (a) the Service Contracts set forth on Annex 1
attached hereto (the “Assumed Service Contracts”) (b) the Permits, (c) the Bookings, and
(d) the Intangibles.
NOW, THEREFORE, Seller and Purchaser agree as follows:
1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty (except to the extent expressly provided in
the Purchase Agreement, as to which all of the limitations set forth in the Purchase Agreement
shall apply), all of Seller’s right, title and interest in and to (a) the Assumed Service
Contracts, (b) the Permits, (c) the Bookings and (d) the Intangibles.
2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and agrees
to be bound by all of the covenants, obligations, liabilities, and burdens of Seller that arise or
accrue from and after the date of this Assignment under or in connection with (a) the Assumed
Service Contracts, (b) the Permits, (c) the Bookings, and (d) the Intangibles. This Assignment is
made by Seller without recourse and without any express or implied representation or warranty
whatsoever (except to the extent expressly provided in the Purchase Agreement, as to which all of
the limitations set forth in the Purchase Agreement shall apply).
3. Successors. This Assignment shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and assigns.
4.
Governing Law. This Assignment shall be governed by the laws of the State of
New
York.
Exhibit C
5. Further Assurances. Seller and Purchaser agree to execute such other documents and
perform such other acts as may be reasonably necessary or proper and usual to effect this
Assignment.
6. Counterparts. This Assignment may be executed in counterparts, each of which shall
be deemed an original, and both of which together shall constitute one and the same instrument.
[signature page follows]
IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the date first
above written.
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SELLER:
MONDRIAN HOLDINGS LLC,
a Delaware limited liability company |
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By: |
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PURCHASER:
WOLVERINES OWNER LLC,
a Delaware limited liability company |
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By: |
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Annex 1
Assumed Service Contracts
[to be completed at Closing]
Exhibit D
Assignment of Space Leases
ASSIGNMENT AND ASSUMPTION OF SPACE LEASES
THIS ASSIGNMENT AND ASSUMPTION OF SPACE LEASES (this “Assignment”) is made as of
, 2011 (the “Effective Date”), by MONDRIAN HOLDINGS LLC, a Delaware limited
liability company (“Seller”) in favor of WOLVERINES OWNER LLC, a Delaware limited liability
company (“Purchaser”).
RECITALS
A. Seller is the owner of certain property commonly known as the “Mondrian” located at 0000
Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxxxxxx.
B. Seller and Purchaser have entered into that certain
Purchase and Sale Agreement dated as of
, 2011 (as may be amended, the “
Purchase Agreement”), pursuant to which Seller
has agreed to sell and Purchaser has agreed to purchase the real property described in Schedule
1.1(a) attached thereto and the improvements located thereon, on the terms and conditions stated in
the Purchase Agreement. All terms not otherwise defined herein shall have the meaning assigned to
them in the Purchase Agreement.
C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser all of
Seller’s right, title and interest to the Space Leases.
NOW, THEREFORE, Seller and Purchaser agree as follows:
1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty, all of Seller’s right, title and interest
in and to the Space Leases.
2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and agrees
to be bound by all of the covenants, obligations, liabilities, and burdens of Seller under the
Space Leases that arise or accrue from and after the date of this Assignment.
3. Successors. This Assignment shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and assigns.
4.
Governing Law. This Assignment shall be governed by the laws of the State of
New
York.
5. Attorneys’ Fees. If any action or proceeding is commenced by either party to
enforce their rights under this Assignment or to collect damages as a result of the breach of any
of the provisions of this Assignment, the prevailing party in such action or proceeding, including,
without limitation, 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 actually incurred, in addition to any other relief awarded by the court.
6. Counterparts. This Assignment may be executed in counterparts, each of which shall
be deemed an original, and both of which together shall constitute one and the same instrument.
[signature page follows]
Exhibit D
IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the date first
above written.
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SELLER:
MONDRIAN HOLDINGS LLC,
a Delaware limited liability company |
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By: |
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PURCHASER:
WOLVERINES OWNER LLC,
a Delaware limited liability company |
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By: |
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Exhibit E
FIRPTA CERTIFICATE
CERTIFICATION OF NON-FOREIGN STATUS
A. Federal FIRPTA Certificate
Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) provides
that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign
person. For U.S. tax purposes (including Code Section 1445), the owner of a disregarded entity
(which has legal title to a U.S. real property interest under local law) will be the transferor of
the property and not the disregarded entity. To inform the transferee that withholding of tax is
not required upon the disposition of a U.S. real property interest by (the
“Transferor”) the undersigned hereby certifies the following on behalf of the Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Code and the Income Tax Regulations promulgated
thereunder);
2. Transferor’s U.S. tax identification number is ; and
3. Transferor’s office address is .
Transferor understands that this certification may be disclosed to the Internal Revenue
Service by Transferee and that any false statement contained herein could be punished by fine,
imprisonment, or both.
Transferor understands that Transferee is relying on this certification in determining whether
withholding is required upon said transfer.
Exhibit E
Under penalty of perjury the undersigned declare that they have examined this certification and to
the best of their knowledge and belief it is true, correct and complete, and they further declare
that they have authority to sign this certification on behalf of Transferor.
Dated as of ___________, 2011
Exhibit F
Title Affidavit
OWNER’S AFFIDAVIT & GAP INDEMNITY
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STATE OF
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COUNTY OF
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MONDRIAN HOLDINGS LLC, a Delaware limited liability company
(“Owner”) the Owner of the premises described in Title Commitment No. NCS-480122-NY,
and in consideration of First American Title Insurance Company (the “Company”) issuing its policy
of title insurance insuring an interest in the real estate described herein, and being first duly
sworn on oath, states as follows:
1. That Owner is the owner of, or has an ownership interest in, the real estate referred to
herein (“Premises”), which is described as follows: (See Schedule A annexed hereto).
2. That Owner has owned real estate described herein, continuously for the last
_____
years.
3. That Owner’s possession of the real estate has been peaceable and undisturbed, and that
title to the real estate has never been disputed or questioned.
4. That no proceedings in bankruptcy or receivership have been instituted by or against the
Owner within the last ten (10) years, and that the Owner has never made an assignment for the
benefit of creditors.
5. That there is not any action or proceeding now pending in any State or Federal Court in the
United States, to which the Owner is a party; nor is there any State or Federal Court judgment,
State of Federal Tax Lien, or any other State or Federal lien of any kind or nature against the
Owner, which could constitute a lien or charge upon the real estate.
6. That the charter of said corporation is in full force and effect an no proceeding is
pending for its dissolution or annulment. That all license, state franchise, and city corporation
taxes, if applicable, due and payable by said corporation have been paid in full.
7. That Owner has not contracted for, received any notice regarding, and does not know of any
improvement, alteration or change to be made in or about the real estate.
8. That there are not any delinquent real estate taxes or unpaid current real estate taxes;
nor any pending or levied assessments on the real estate, including but not limited to those for
trees, sidewalks, streets, sewers and water lines.
9. That the improvements on the real estate were completed more than five (5) years ago, and
that there has not been any new construction or major repair work performed on the real estate for
at least one hundred twenty-five (125) days. That the Owner has not contracted for any labor to be
supplied to the premises, or for any materials to be delivered thereto, that might become the
subject of a lien upon the premises and that have not been paid for.
(Continued)
Exhibit F
Owner’s Affidavit
Page Two
10. That there are not any unpaid bills or claims for labor, services, or materials, nor any
recorded or unrecorded mortgages, home improvement loans, chattel mortgages, conditional bills of
sale, retention of title agreements, security agreements, agreements not to sell or encumber,
financing statements, or personal property leases, which affect the real estate or which affect any
fixtures, appliances, or equipment now installed in or on the Premises.
11. No tenant or party has any rights to the Premises other than as to tenants, nor any option
or rights of first refusal to purchase the Premises. The only tenants occupying the Premises are
as set forth on Exhibit “A” annexed hereto.
12. None of the easements referred to in Schedule B interfere with the beneficial use of the
improvements erected on the Premises.
13. That the covenants and restrictions contained in the aforesaid title commitment have not
been violated by the erection of the improvements on the Premises and affiant knows of no facts
which would cause such violation, nor has Owner received any notices of any violations thereof.
14. That the Company has been requested to issue its policy or policies of title insurance
referenced above in favor of the Insured named therein;
AND WHEREAS, the Company is unwilling to issue said policy or policies until the closing
instrument(s) under which the insured acquires an interest in said real property is/are filed for
record in the appropriate recording office(s);
AND WHEREAS, the parties in the transaction have requested the Company to provide a so-called
“New York Style Closing” which provides for the unconditional delivery of the closing instrument(s)
between the parties and the passing of consideration therefore.
NOW THEREFORE it is agreed that in consideration of the Company issuing its policy or policies
without making exception therein of matters which may arise between the most recent effective date
of the title commitment (the last date upon which the search of title is effective) and the date
the documents creating the interest being insured have been filed for record and which matters may
constitute an encumbrance on or affect said title, the undersigned agrees to promptly defend,
remove, bond or otherwise dispose of any encumbrance, lien or objectionable matter to title
(collectively, “objection(s) to title”) which may arise or be filed, as the case may be, against
the captioned premises during the period of time between the most recent effective date of title
commitment and date of recording of all closing instruments, and to hold harmless and indemnify the
Company against all expenses, costs and reasonable attorneys fees which may arise out of its
failure to so remove, bond or otherwise dispose of any said objection(s) to title.
BY:
Sworn to before me this
day of
_____, 2011
(Notary Public)
Exhibit G
Escrow Agreement
DEPOSIT ESCROW INSTRUCTIONS
_________, 2011
First American Title Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Attention:
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Re:
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Deposit under that certain Purchase and Sale Agreement dated April _____, 2011
(the “ Agreement”), by and between Mondrian Holdings LLC, a Delaware limited liability
company (“ Seller”), and Wolverines Owner LLC, a Delaware limited liability company
(“ Purchaser”); Escrow No. 480122 (“ Escrow”). |
Gentlemen and Ladies:
Purchaser and Seller have entered into the Agreement pursuant to which Purchaser agrees to
purchase the Property (as defined in the Agreement). A copy of the Agreement has been delivered to
you concurrently herewith.
In accordance with Section 1.6 of the Agreement, within one (1) business day following the
execution of the Agreement, Purchaser will be delivering by wire transfer of immediately available
federal funds in the amount of Five Million and 00/100 Dollars ($5,000,000.00) (together with any
interest earned thereon, the “Xxxxxxx Money”), for deposit in the Escrow. You are to place the
Xxxxxxx Money in an interest bearing account (for this purpose, Purchaser’s Federal Employer I.D.
number is 00-0000000) and hold the Xxxxxxx Money in the Escrow and deliver it to Seller or
Purchaser in accordance with these instructions. An executed IRS Form W-9 for Purchaser has been
delivered to you to enable the Xxxxxxx Money to be invested.
In the event that (i) you receive written notice from Seller or Purchaser (the party that
delivers such written notice is referred to herein as the “Notice Party”), which notice shall be
delivered concurrently to the other party (the “Other Party”), stating that the Notice Party is
terminating the Agreement and is entitled to the Xxxxxxx Money under the terms of the Agreement,
and (ii) you have received written confirmation from the Other Party of its receipt of such written
notice from the Notice Party, you shall, on the tenth (10th) business day after the Other Party’s
receipt of such written notice from the Notice Party, deliver the Xxxxxxx Money (by delivering
cash, certified check or some other form of immediately available funds, to the Notice Party at the
address or pursuant to the wiring instructions provided in such written notice from the Notice
Party); provided that, if you receive written notice from the Other Party or the Other Party’s
counsel within nine (9) business days after the Other Party’s receipt of the such written notice
from the Notice Party that the Other Party disputes the Notice Party’s right to receive the Xxxxxxx
Money and directs you not to make the foregoing delivery, you shall not deliver the Xxxxxxx Money
to the Notice Party but shall instead retain it or, if appropriate, interplead the Xxxxxxx Money in
a court of competent jurisdiction in the State of New York. All notices delivered pursuant to these
instructions shall be made in accordance with the provisions of
Section 11.4 of the Agreement. Notices to Escrow Agent will be delivered to the attention of
Xxxxxx Xxxxxx, Esq. and Xxxxxxx Xxxxx, reference Title No 480122.
Exhibit G
You are not to disclose to any person (other than the parties hereto, their employees, agents
or independent contractors) any information about the Agreement or its existence or this letter of
instructions (except if requested by either party or as may be required by court in any litigation
or by law).
You are to maintain the Xxxxxxx Money in a federally-insured interest-bearing account at XX
Xxxxxx Xxxxx and all interest accruing thereon shall be paid to the party entitled to the Xxxxxxx
Money in accordance with this deposit escrow instruction letter. We understand that you shall not
be responsible for any penalties, loss of principal or interest, or the consequences of a delay in
withdrawal of the Deposit and interest accrued thereon, if any, which may be imposed as a result of
the making or the redeeming of the above investment, as the case may be. Seller and Purchaser also
agree that Escrow Agent shall not be liable for any loss or impairment of the Deposit while the
Deposit is in the course of collection or of the Escrow if such loss or impairment results from the
failure, insolvency or suspension of the financial institution in which the Deposit is deposited.
Nor shall you be required to institute legal proceedings of any kind pursuant to these
instructions, nor be required to defend any legal proceedings which may be instituted against you
with respect to the subject matter of these instructions unless you are requested to do so by
Purchaser or Seller and arrangements reasonably satisfactory to you have been made to indemnify you
against the cost and expense of such defense by the party making such request. If any dispute shall
arise with respect to these instructions, whether such dispute arises between the parties hereto or
between the parties hereto and other persons, you may interplead such disputants. You shall be
responsible only for the performance of such duties as are strictly set forth herein and in no
event shall you be liable for any act or failure to act under the provisions of this letter except
where such action or inaction is the result of your willful misconduct or gross negligence.
Seller and Purchaser each hereby agrees, jointly and severally, to indemnify you and hold you
harmless against any loss, liability or damage (including the cost of litigation and reasonable
counsel fees) incurred in connection with the performance of your duties hereunder except as a
result of your willful misconduct or gross negligence.
In the event of any dispute between Seller and Purchaser respecting these instructions, Seller
and Purchaser may elect to submit such dispute to any court of competent jurisdiction in the State
of New York in accordance with Section 11.12 of the Agreement. The prevailing party in any such
dispute shall be entitled to recover its legal fees and expenses incurred in connection with such
dispute.
Please indicate your agreement to comply with the foregoing instructions by executing at least
three (3) copies of this letter and returning, by overnight courier, one to Xxxxx Lovells US LLP,
as counsel for Seller, and one to Hunton & Xxxxxxxx LLP, as counsel for Purchaser.
Very truly yours,
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SELLER:
MONDRIAN HOLDINGS LLC,
a Delaware limited liability company |
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Mondrian Senior Mezz LLC, its Managing Member |
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Morgans Group LLC, its Managing Member |
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By:
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Morgans Hotel Group Co., its Managing Member |
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By: |
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Name: |
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Title: |
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PURCHASER:
WOLVERINES OWNER LLC
a Delaware limited liability company |
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By: |
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Name: |
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Title: |
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ACKNOWLEDGED AND AGREED:
First American Title Insurance Company
Date: , 2011
Exhibit H
Form of Tenant Estoppel
TENANT ESTOPPEL CERTIFICATE
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Property Address:
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0000 Xxxxxx Xxxxxxxxx |
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Xxxx Xxxxxxxxx, Xxxxxxxxxx |
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(the “Property”) |
Premises
at Property: (the “Premises”)
[Reference Guarantor if applicable]
The undersigned tenant (the “Tenant”) hereby certifies to you as follows:
(1) Tenant is a tenant at the Property under a lease (the “Lease”) dated for
the Premises.
(2) The Lease is in full force and effect, represents the entire agreement between the
landlord and Tenant as to Tenant’s interest in the Property and Premises, and has not been
canceled, modified, assigned, extended or amended except as follows: .
(3) The Lease has been guaranteed by (the “Guarantor”) and such guaranty is in
full force and effect [If no guarantor, then this section to be deleted].
(4) All base rent, rent escalations, additional rent, Tenant’s proportionate share of real
estate taxes, insurance and operating expenses, and other sums or charges due and payable under the
Lease by Tenant have been paid through ,
20_____. There is no prepaid rent, additional
rent, or other similar sums or charges, except for the current month, and the amount of security
deposit currently being held by the landlord under the Lease is $_____.
(5) Base rent is currently payable in the amount of $ per month, and Tenant is
currently making estimated payments for operating expenses and taxes in the amount of $
per month.
(6) The Lease commencement date occurred on and the Lease terminates on
. The Tenant has the following renewal option(s) .
(7) To Tenant’s knowledge: (a) the Lease is free from default and free from any event which
could become a default under the Lease; (b) Tenant has no claims or counterclaims against the
landlord; and (c) Tenant has no offsets or defenses against the payment of rent or other sums, or
the performance of any of Tenant’s other obligations under the Lease.
(8) The Tenant has received no notice of prior sale, transfer or assignment, hypothecation or
pledge of the Lease or of the rents payable thereunder, except .
Exhibit H
(9) The Tenant has full possession of the Premises, has not assigned the Lease or sublet the
Premises or any part thereof and does not hold the Premises under an assignment or sublease, except
pursuant to subleases consented to by the landlord and .
(10) The Tenant has no rights or options to purchase the Property or any part thereof of any
interest therein by right of first refusal, rights of first offer or option or other similar right
to purchase. Tenant has no right to lease other space in the Property except as set forth in the
Lease.
(11) The Tenant is not insolvent or bankrupt and is not contemplating seeking relief under
any insolvency or bankruptcy statutes. No actions, whether voluntary or otherwise, are pending
against Tenant [or Guarantor] under the bankruptcy laws of the United States or any state and there
are no claims or actions pending against Tenant [and/or Guarantor] which if decided against Tenant
[and/or Guarantor] would materially and adversely affect Tenant’s [or Guarantor’s] financial
condition or ability to perform Tenant’s [and/or Guarantor’s] obligations under, or in respect of,
the Lease.
(12) To the best of Tenant’s knowledge, both Tenant and the landlord have performed all of
their respective obligations under the Lease and Tenant has no knowledge of any event which with
the giving of notice, the passage of time or both would constitute a default by the landlord under
the Lease.
(13) The landlord has not agreed to grant Tenant any free rent or rent rebate or to make any
contribution to Tenant’s improvements.
(14) All base building and other tenant improvement work to be performed by the landlord
under the Lease has been substantially completed in accordance with the Lease, and all payments due
to Tenant, including without limitation, under the Lease as a landlord contribution towards
Tenant’s work has been paid in full, except as follows: . [To be deleted
if there is no contractual obligation to perform work and/or make any landlord contribution].
(15) This certificate has been duly authorized, executed and delivered by Tenant.
The undersigned has executed this Estoppel Certificate with the knowledge and understanding
that you, or one of your affiliates, is acquiring the Property in reliance on this Estoppel
Certificate and that the undersigned will be bound by this Estoppel Certificate. The statements
contained herein may be relied upon by you and your affiliates, the landlord, any purchaser of the
Property or the landlord’s interest therein, any lenders to the owners of the Property, any of the
owner’s constituent entities, and any mortgagee of the Property and their successors and assigns.
Dated this _____ day of ,
20_____.
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TENANT |
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By: |
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Title: |
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[GUARANTOR] |
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By: |
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Title: |
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Exhibit I
Form of Liquor Assets Escrow Agreement
LIQUOR ASSETS ESCROW AGREEMENT
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TO:
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Bay Commercial Bank |
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0000 Xxxx Xxxxxx Xxxxxx Xxxxxxxxx — Xxxxx X |
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Xxxxxx Xxxxxx, XX 00000, |
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Attn: Chloe Flowers, Senior Vice President |
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Tel: 000-000-0000 |
Date: May _____, 2011
Escrow Officer: C. Flowers
Escrow No. 210124
IT IS AGREED BETWEEN THE TRANSFEROR AND INTENDED TRANSFEREE THAT NONE OF THE SAID
CONSIDERATION WILL BE PAID FOR THE TRANSFER OF THE LICENSE(S) UNTIL SUCH TIME AS ESCROW AGENT HAS
BEEN ADVISED IN WRITING BY DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL (“ABC”) THAT THE
TRANSFER OF SAID LICENSE(S) HAS BEEN APPROVED.
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A.
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THE TRANSFEROR (SELLER):
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8440 LLC |
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WHOSE MAILING ADDRESS IS:
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c/o MORGANS HOTEL GROUP |
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000
00XX
XXXXXX,
00XX
XXXXX |
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XXX XXXX, XX 00000 |
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B.
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AND INTENDED TRANSFEREE:
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8440 LLC AND WOLVERINES LESSEE |
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LLC, AS CO-LICENSEES |
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WHOSE MAILING ADDRESS IS:
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c/o PEBBLEBROOK HOTEL TRUST |
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0 XXXXXXXX XXXXX XXXXXX, XXX 0000 |
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XXXXXXXX, XX 00000 |
Exhibit I
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Will complete all Department of ABC Requirements to cause license(s) to be transferred to Intended Transferee: |
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Kind of Licenses:
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TYPE 47 — ON-SALE GENERAL EATING PLACE |
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TYPE 47 — ON-SALE GENERAL EATING PLACE |
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TYPE 58 — CATERER PERMIT |
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TYPE 66 — CONTROLLED ACCESS CABINET PERMIT |
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TYPE 68 — PORTABLE BAR |
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LICENSE NO. 326147 |
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Now Located at
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0000 XXXXXX XXXXXXXXX |
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XXXX XXXXXXXXX, XX 00000 (the “Premises”) |
1. Pursuant to Section 24073 of the Business and Professions Code of the State of California,
Transferor or Intended Transferee shall cause Notice of Intended Transfer to be filed for record in
the Office of the Los Angeles County Recorder upon receipt of the total purchase price for the
transfer. Transferor and the Intended Transferee shall deliver to Escrow Agent a conformed copy
of said Notice, Intended Transferee shall deliver a copy of said Notice of Intended Transfer,
certified by the County Recorder, to the ABC.
2. Prior to the release of ABC Form 226 “Applicant’s Statement That Consideration Has Been
Deposited in Escrow”, Intended Transferee shall deliver to BAY COMMERCIAL BANK, Corporate Escrow
Services (hereinafter, Escrow Agent), the full amount of the purchase price in the form of CASH in
the amount of $75,000, of which $40,000 shall be allocated to the liquor licenses and $35,000 shall
be allocated to the liquor inventory, which amounts constitute a deferral of a portion of the
purchase price paid by Intended Transferee (or its affiliate) for the Premises.
3. License Renewal Fees which may become due prior to the transfer of the liquor license will
be payable by Transferee.
INITIALS (Transferor(s)
_____) INITIALS (Intended Transferee(s)
_____
This section must be initialed by Transferor and Intended Transferee
TRANSFEROR AND INTENDED TRANSFEREE HEREBY ACKNOWLEDGE THAT IN THE EVENT ESCROW AGENT IS
NOTIFIED BY THE ABC THAT A “TAX HOLD” HAS BEEN PLACED ON THE LIQUOR LICENSE OF THE TRANSFEROR BY
THE STATE BOARD OF EQUALIZATION, EMPLOYMENT DEVELOPMENT DEPARTMENT, FRANCHISE TAX BOARD, CITY
AND/OR COUNTY DELINQUENT BUSINESS TAXES AND/OR INTERNAL REVENUE SERVICE UNDER PROVISIONS OF
BUSINESS AND PROFESSIONS CODE 24049, AND, THAT TO THE BEST OF ESCROW AGENT’S KNOWLEDGE, AFTER
APPROPRIATE INQUIRY, NOTHING AT THE TIME OF SUCH NOTIFICATION IS PREVENTING THE TRANSFER OF THE
LIQUOR LICENSE EXCEPT THE “RELEASE OF SAID TAX HOLD”,
THEN ESCROW AGENT IS HEREBY AUTHORIZED AND INSTRUCTED TO PAY, WITHOUT FURTHER INSTRUCTION FROM
THE TRANSFEROR AND INTENDED TRANSFEREE, FROM THE FUNDS DEPOSITED INTO ESCROW BY INTENDED
TRANSFEREE, TO THE TAXING AGENCY HAVING PLACED SAID “TAX HOLD”, PER THEIR WRITTEN DEMAND DELIVERED
TO ESCROW AGENT. UPON TRANSFER OF THE LIQUOR LICENSE THE AMOUNT RELEASED WILL BE DEDUCTED FROM
SELLERS PROCEEDS.
FURTHER, TRANSFEROR AND INTENDED TRANSFEREE ACKNOWLEDGE AND UNDERSTAND THAT THE PAYMENT OF THE
DEMAND FROM SAID TAXING AUTHORITY MAY OR MAY NOT CONSTITUTE FULL OR FINAL PAYMENT THEREOF AND DOES
NOT RELIEVE THE TRANSFEROR OF ITS LIABILITY THERETO AND THAT THE TAXING AUTHORITY MAY STILL IMPOSE
SUCCESSOR LIABILITY UPON THE INTENDED TRANSFEREE.
TRANSFEROR AND INTENDED TRANSFEREE HOLD ESCROW AGENT HARMLESS AND WITHOUT LIABILITY FOR
FOLLOWING THESE INSTRUCTIONS AND THE EARLY RELEASE OF INTENDED TRANSFEREE’S FUNDS, AND INTENDED
TRANSFEREE IS TO LOOK TO TRANSFEROR FOR RESTITUTION IN THE EVENT INTENDED TRANSFEREE SHOULD NOT
ACQUIRE THE LIQUOR LICENSE IN QUESTION.
INITIALS (Transferor(s)
_____) INITIALS (Intended Transferee(s)
_____)
This section must be initialed by Transferor and Intended Transferee
D. |
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UPON APPROVAL OF THE TRANSFER OF THE LICENSE BY THE ABC ESCROW AGENT SHALL; |
1. Out of said purchase price, Escrow Agent is authorized to pay the claims of such of the
bona fide creditors of Transferor who shall file their claims with Escrow Agent not later than the
date on which written notice of transfer from the ABC is received.
2. All claims approved by Transferor shall be deemed to be bona fide and Escrow Agent may pay
such approved claims. Should any claims be filed, which Transferor refuses to approve, Escrow
Agent shall notify the claimant; and the pro rata amount thereof shall be retained by Escrow Agent
for a period of 25 days; and if not attached, shall be paid to Transferor in accordance with
Section 24074 of the Business and Professions Code of the State of California.
3. If such purchase price shall not be sufficient to pay said claims in full, Escrow Agent is
to distribute said consideration pursuant to the provisions of Section 24074.1 of the Business and
Professions Code of the State of California; provided, however, that prior to such distribution,
Escrow Agent shall deliver written notice of each creditor setting forth the distribution to be
made in accordance with this paragraph, which notice shall provide that such creditor may dispute
such distribution if it can show reasonable proof that such distribution would violate the
provisions of Section 24074.1 of the Business and Professions Code of the State of California.
4. Escrow Agent shall pay the balance remaining of such purchase price, after payment of
creditor claims and other expenses, to Transferor or as directed by Transferor.
GENERAL PROVISIONS
TAXES: Escrow Agent is not to be concerned as to any unpaid beverage, unemployment, social
security, personal property, sales tax, or any other tax or contribution, any federal liens, or any
unpaid salaries or wages, unless otherwise specifically instructed in this escrow. SHOULD ESCROW
AGENT BE DIRECTED AND INSTRUCTED IN THESE INSTRUCTIONS TO MAKE ANY SUCH PAYMENT, SAME MAY OR MAY
NOT CONSTITUTE FULL OR FINAL PAYMENT THEREOF.
OTHER AGREEMENTS: Unless otherwise provided herein, Escrow Agent is not to be concerned with
any conditional sales contract, lease contract or security agreement that may affect the herein
referred to personal property, and is not responsible for the delivery of any papers other than
described herein. Escrow Agent is not a party to, or bound by any agreement which may be deposited
under, evidenced by, or arise out of these instructions, other than these instructions.
AGENCY RESPONSIBILITY: Escrow Agent is to make no examination of the property nor of the
title thereto; Escrow Agent acts as a depositary only and is not responsible or liable in any
manner whatever for the sufficiency, correctness, genuineness or validity of any instrument
deposited with it hereunder, or with respect to form or execution of the same, or the identity,
authority, or right of any person executing or depositing the same.
DEFAULTS: Escrow Agent shall not be required to take or be bound by notice of any default of
any person, or to take any action with respect to such default involving any expense or liability,
unless notice in writing is given to the Escrow Agent at the office above named, of such default by
the undersigned or any of them, and unless it is indemnified in a manner satisfactory to it against
such expense or liability. These instructions shall not be subject to revision or modification
except upon receipt by Escrow Agent at the office above named of the written instructions of all of
the parties hereto or their successors in interest.
Notwithstanding anything herein to the contrary, in the event approval of the transfer of the
License by the ABC has not occurred by the date that is 180 days after the date of these
instructions, Intended Transferee shall be deemed in default hereunder and Escrow Agent shall
immediately disburse the purchase price to Transferor as Transferor’s sole and exclusive remedy for
such default, and upon such disbursement, this escrow shall be deemed cancelled.
THE PARTIES ACKNOWLEDGE AND AGREE THAT IF INTENDED TRANSFEREE IS DEEMED IN DEFAULT AS PROVIDED
HEREIN, THE DAMAGES THAT TRANSFEROR WOULD SUSTAIN AS A RESULT OF SUCH DEFAULT WOULD BE IMPRACTICAL
AND EXTREMELY DIFFICULT TO ASCERTAIN. ACCORDINGLY, THE PARTIES AGREE THAT TRANSFEROR SHALL RETAIN
THE PURCHASE PRICE AS FULL AND COMPLETE LIQUIDATED DAMAGES (AND NOT AS A PENALTY) AS TRANSFEROR’S
SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT. THE PARTIES ACKNOWLEDGE THAT THE RETENTION OF THE
PURCHASE PRICE AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
TRANSFEROR PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.
NOTICES: Escrow Agent shall be protected in acting upon any notice, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be signed by the proper party or
parties.
JUDGMENT: Escrow Agent shall not be liable for any error of judgment or for any act done or
step taken or omitted by it in good faith or for any mistake of fact or law, or for anything which
it may do or refrain from doing in connection herewith, except its own gross negligence or willful
misconduct, and Escrow Agent shall have no duties to anyone except those signing these
instructions.
COUNSEL: Escrow Agent may advise with legal counsel in the event of any dispute or questions
as to the construction of the foregoing instructions, or Escrow Agent’s duties thereunder, and
Escrow Agent shall incur no liability and shall be fully protected in acting in accordance with the
opinion and instructions of counsel.
DISAGREEMENTS: In the event of any disagreement between the undersigned or any of them,
and/or the person or persons named in the foregoing instructions, and/or any other person,
resulting in adverse claims and demands being made in connection with or for any papers, money or
property involved herein or affected hereby, Escrow Agent shall be entitled at its option to refuse
to comply with any such claim or demand, so long as such
disagreement shall continue, and in doing so doing Escrow Agent shall not be or become liable
for damages or interest to the undersigned or any of them or to any person named in the foregoing
instructions for its failure or refusal to comply with such conflicting or adverse demands, and
Escrow Agent shall be entitled to continue to refrain and refuse so to act until;
1. the rights of the adverse claimants have been finally adjudicated in a court assuming and
having jurisdiction of the parties and the money, papers, and property involved herein or affected
hereby; and/or
2. all differences shall have been adjusted by agreement and Escrow Agent shall have been
notified thereof in writing, signed by all of the persons interested.
In the event of such disagreement, Escrow Agent in its discretion, may file a suit in
interpleader for the purpose of having the respective rights of the claimants adjudicated, and
deposit with the court all documents and property held hereunder, and the undersigned agree to pay
all reasonable costs and counsel fees incurred by Escrow Agent in such action and said costs and
fees shall be included in the judgment in any such action.
FEES AND CHARGES: In the event that Escrow Agent performs any service not specifically
provided hereinabove, or that there is any assignment or attachment of any interest in the subject
matter of this escrow or modifications thereof, or that any controversy arises hereunder, or that
Escrow Agent is made a party to, or intervenes in, any litigation pertaining to this escrow or the
subject matter thereof, Escrow Agent shall be reasonably compensated therefor and reimbursed for
all costs and expenses occasioned thereby. Escrow Agent shall have a first lien on the property
and papers held by it hereunder for such compensation and expenses, and the parties hereto agree
jointly and severally to pay the same, and to indemnify Escrow Agent against any loss, liability or
expense incurred in any act or thing done hereunder.
For its ordinary services hereunder, the Escrow Agent shall be entitled to an initial fee of
$1,025.00 which is Non-refundable, payable concurrently with its acceptance hereof, by Intended
Transferee and to additional compensation, if applicable, paid by Transferor as follows:
Federal Express fees will be in addition to the escrow fee.
$15.00 for each claim in excess of three (3) paid through escrow
$50.00 for each disputed claim of Transferor
CANCELLATION: In the event this escrow is cancelled, Transferor or Intended Transferee will
nevertheless pay the escrow fees plus all costs and expenses of Escrow Agent. Notwithstanding
anything in these instructions to the contrary, Escrow Agent may, at his discretion, resign at any
time prior to receipt of written notice from the ABC that the license(s) has been transferred by
giving five (5) days written notice to the ABC and parties hereto, and shall be entitled to
reimbursement only for those costs and expenses incurred by Escrow Agent to the date of such
resignation. Upon cancellation by the parties or resignation of Escrow Agent, after deducting
Escrow Agent’s fees and/or costs or expenses, the balance of funds and documents shall be returned
to the parties who shall have deposited the same, except as otherwise provided in the “DEFAULTS”
section above.
SIGNATURES: These instructions may be executed in counterparts, each of which so executed
shall be deemed an original, irrespective of the date of its execution and delivery; and said
counterparts together shall constitute one and the same instrument.
Each of the undersigned states he has read the foregoing instructions, understands and agrees
to them.
DEPOSITS. All funds received in the escrow shall be deposited with other escrow funds in a
non-interest bearing general escrow account or accounts of COMMERCIAL BANK, unless otherwise
instructed verbally or in written form.
[Signatures follow]
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TRANSFEROR: |
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INTENDED TRANSFEREE: |
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8440 LLC |
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8440 LLC |
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By: |
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Mondrian Pledgor LLC |
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By: |
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Mondrian Pledgor LLC |
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By: |
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Mondrian Senior Mezz LLC, its Managing Member |
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By: |
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Mondrian Senior Mezz LLC, its Managing Member |
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By: |
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Morgans Group LLC, its Managing Member |
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By: |
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Morgans Group LLC, its Managing Member |
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By:
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Morgans Hotel Group Co., its Managing Member
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By:
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Morgans Hotel Group Co., its Managing Member |
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By:
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By: |
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Name:
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Name: |
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Title:
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Title: |
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WOLVERINES LESSEE LLC |
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By: |
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Name: |
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Title: |
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Signature Page to Mondrian Liquor Assets Escrow Agreement
Schedule 1.1(a)
Legal Description of Land
Lot “A” of Tract No. 2527, in the city of West Hollywood,
county of Los Angeles, state of California, as per map
recorded in Book 34 Page 14 of Maps, in the office of the
county recorder of said county.
EXCEPT therefrom that portion thereof lying Southerly of a
line bearing North 89 degrees 54’ West from a point on the
East line of said Lot, distant North 0 degrees 06’ East
thereon 320 feet from the Southeast corner of said Lot.
Schedule 1.1(c)
Excluded Personal Property
2. |
|
Four (4) ping pong tables |
3. |
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Six (6) portraits,
photographs of (on file) |
Schedule 1.1(e)-1
Service Contracts
Schedule 1.1(e)-1(a)
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1. |
|
Maintenance Agreement, dated as of August 1, 2008, between ACCO Engineered Systems and
Morgans Hotel Group |
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2. |
|
Standard Service Agreement, dated as of May 7, 1996, between American Waste Industries
and Mondrian Hotel |
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3. |
|
Consulting Agreement, effective as of July 20, 2010, between 8440 LLC and Spin Global
Management LLC, as terminated by notice, dated March 22, 2011 |
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4. |
|
Contract, dated as of March 30, 2000, between Pico Cleaners and Mondrian Holding LLC
and Xxx Xxxxxxxx Hotel, Xxx Xxxxxxxx Hotel Management LLC |
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5. |
|
Hotel Car Rental Agreement, dated as of November 11, 2009, between Midway Car Rental
and Mondrian Hotel |
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6. |
|
Agreement (Landscape Maintenance Specifications), dated as of November 1, 2005, between
Mondrian and Reliable Gardens Inc. |
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7. |
|
Limousine Agreement, dated as of May 5, 2007, between Mondrian Holdings, LLC and CLS
Los Angeles Transportation, LLC |
|
8. |
|
Non-Guaranteed Monthly Interior Plant Maintenance Agreement, agreed and accepted on May
28, 2008, between Inner Gardens, Inc. and Mondrian. |
|
9. |
|
Preventative Maintenance Agreement, dated as of July 21, 2009, between Advantage
Fitness Products and Mondrian Hotel |
|
10. |
|
Master Preventative Maintenance Service Agreement, dated as of June 5, 2009, between
Mondrian Hotel and Fujitec America, Inc. |
|
11. |
|
Routine Maintenance Agreement, dated as of March 21, 2008, between Mondrian and Western
State Design, Inc. |
|
12. |
|
Service Agreement, dated as of October 10, 2007, between Ontario Refrigeration Service,
Inc. and Mondrian Hotel |
|
13. |
|
Service Agreement, dated as of August 10, 2006, between, between Ontario Refrigeration
Service, Inc. and Mondrian Hotel |
|
14. |
|
Technical Support Agreement, executed as of July 26, 2002, between Minibar North
America, Inc. and Mondrian Hotel |
|
15. |
|
Music Service Agreement, dated as of May 1, 2002, between Mondrian Holdings and DMX
Music, Inc. |
|
16. |
|
Fire Alarm System Monitoring Proposal/Contract, dated as of February 15, 1990, between
Mondrian Hotel and Fire Call |
|
17. |
|
Music Services Agreement, dated as of December 31, 2008, between Morgans Hotel Group
LLC and Sauce Industries, LLC (d/b/a Xxxx V) |
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18. |
|
Master Agreement for the Supply of Equipment, Software, Maintenance Services and
Professional Services, dated as of November 16, 2000, between Mondrian Hotel and MAI
Systems Corporation |
|
19. |
|
Commercial Service Agreement, dated as of March 4, 2008, between Mondrian and Isotech
Pest Management |
|
20. |
|
Supplemental Law Enforcement Services Agreement at Special Events or Occurrences, dated
as of July 1, 2006, between County of Los Angeles and Mondrian Hotel |
|
21. |
|
Service Agreement, dated as of October 21, 2009, between Morgans Hotel Group-The
Mondrian Hotel and Merchants Building Maintenance, LLC |
|
22. |
|
Service Agreement, dated as of July 21, 2004, between PAETEC Communications, Inc. and
Mondrian Holdings LLC |
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23. |
|
Pay Phone Service Agreement , dated as of November 1, 2005, between Mondrian Holdings
and the Public Communications Division of SBC Communications Inc. |
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24. |
|
Contract, dated as of May 29, 2007, between Bevinco and Mondrian |
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25. |
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Master Services Agreement, dated as of March 15, 2011, between Mondrian West Hollywood
and TRAVELCLICK, Inc. |
|
26. |
|
LodgeNet Content and System Maintenance Agreement, dated as of November 6, 2009,
between Mondrian Holdings LLC and LodgeNet Interactive Corporation |
|
27. |
|
Computer Services Agreement, effective as of [December 14, 2010], between Mondrian Los
Angeles and Eleven Wireless Inc. |
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28. |
|
Customer Care Agreement, dated as of July 9, 2009, between Sunray Technology Ventures
Inc. and Mondrian Los Angeles |
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29. |
|
Letter Agreement from SPG Security/Specialized Protective Group to Mondrian Hotel
Director of Security, dated as of September 1, 2008 |
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30. |
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Service Agreement, dated as of _____, between Mondrian Hotel and Gemini Electronic
Security Inc. |
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31. |
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Consultant Services Agreement (Interior Design), dated as of January 17, 2007, between
Xxxxxxxx Xxxxxxx-Xxxxx, LLC and Mondrian Holdings LLC |
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32. |
|
Agreement, dated as of October 25, 1999, between Sectran Security, Incorporated and
Mondrian Hotel |
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33. |
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Invoice, dated March 12, 2011, by USA Mobility Wireless Inc. for Morgans Hotel Group |
|
34. |
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Consulting Agreement, dated as of March 14, 2006, between Mondrian Holdings LLC and
House & Xxxxxxxxx Architects, Inc. |
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35. |
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Contract, dated as of December 15, 2007, between Bevinco and SkyBar |
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36. |
|
LP — Gas Service Order Form, dated as of August 23, 2006, with Avcogas for SkyBar |
Warranties
|
37. |
|
From CDW Direct: Three (3) year warranty on six (6) laptops, Mfg# HPE-U441E, expires on
or about February 2014 |
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38. |
|
From DELL: “3 Year Basic Limited Warranty and 3 Year NBD Onsite Service”, Product Code
U3OS, expires on or about September 2012 |
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39. |
|
From Fujitec America, Inc.: One (1) year limited warranty against defects in material
and workmanship, expires on or about August 2011. |
|
40. |
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From Midwest Roofing Inc.: |
|
a. |
|
Ten (10) year warranty on materials (excluding skylight lens, A/C
ducts, conduits, gutters, drains, or other similar equipemtn), expires on or about
August 2019 |
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b. |
|
Seven (7) year warranty on labor, expires on or about August 2016 |
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41. |
|
Washex Machinery of California: One (1) year warranty on flatironer, expires on January
1, 2012 |
Schedule 1.1(e)-1(b)
|
1. |
|
Lease/Rental Agreement, dated as of March 10, 2010, between Public Storage and Mondrian
Hotel |
|
2. |
|
Lease/Rental Agreement, dated as of April 30, 2010, between Public Storage and Mondrian
Hotel |
|
3. |
|
Placement Agreement, dated as of January 3, 2007, between Mondrian Los Angeles and OSA
Financial, Inc. |
|
4. |
|
Hotel Parking Facility Management Agreement, dated as of April 30, 2003, between
Mondrian Holdings LLC, dba The Mondrian Hotel and Quality Parking Service, Inc., as amended
by Amendment to Hotel Parking Facility Management Agreement, dated as of December 4, 2008,
between Mondrian Holdings LLC, dba The Mondrian Hotel and Quality Parking Service, Inc. |
|
5. |
|
Customer Subscriber Agreement, dated as of October 7, 2010, between Mondrian Holdings,
LLC and Cogent Communications, Inc. |
|
6. |
|
Master Service Agreement, dated as of November 15, 2004, between Mondrian Holdings, LLC
and Shift4 Corporation |
|
7. |
|
SpaSoft Support Services Agreement, dated as of January 1, 2004, between
Xxxxxxxx-Xxxxxx Systems, Inc. and Mondrian Holdings LLC |
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8. |
|
Letter of Agreement, dated as of December 3, 2010, between Mondrian Holdings LLC and
Virgin Mobile Canada, a Division of Xxxx Mobility Inc. |
|
9. |
|
Equipment Maintenance Contract, dated as of February 28, 2003, between Design
Communications, Inc. and Mondrian Holdings, LLC |
|
10. |
|
Lodgenet Free-to-Guest License Agreement, dated as of August 13, 2009, Mondrian
Holdings LLC and LodgeNet Interactive Corporation |
|
11. |
|
Lodgenet Free-to-Guest License Agreement, dated as of November 6, 2009, Mondrian
Holdings LLC and LodgeNet Interactive Corporation |
|
12. |
|
Amendment to Lodgenet Free-to-Guest License Agreement, effective as of June 4, 2010,
between Mondrian Holdings LLC and LodgeNet Interactive Corporation |
Schedule 1.1(e)-2
Equipment Leases
Schedule 1.1(e)-2(a)
|
1. |
|
Certificate of Delivery, Installation and Training, dated as of February 20, 2008,
between Mondrian Hotel and Priority Mailing Systems, Inc. |
Schedule 1.1(e)-2(b)
|
1. |
|
Order Agreement, dated as of March 21, 2007, between Mondrian Hotel and Xxxxxx
Worldwide, Inc. |
Schedule 1.1(f)
Intellectual Property
None.
Schedule 1.1(g)
List of Transferable Permits
None.
Schedule 1.1(j)
List of Space Leases
1. |
|
Sublease (Food and Beverage Premises) Mondrian, dated as of November 13, 1996, between
Xxx Xxxxxxxx Hotels, Inc. and 8440 LLC |
2. |
|
License Agreement, dated as of March
_____, 2011, between Mondrian Holdings LLC and
Artspace Marketplace, Inc. |
3. |
|
Building Sign License Agreement, dated as of April 12, 2001, between Mondrian Holdings
LLC and Xxxxx Media Company, Inc., and expiration notice, dated April 4, 2011 |
4. |
|
Lease, dated as of February
_____, 2011, between Mondrian Holdings LLC and Branded Cities,
LLC (relating to signage) |
Schedule 1.5(c)
Allocations of Real and Personal Property
|
|
|
|
|
Land/Building: |
|
$ |
130,909,000 |
|
FF&E: |
|
$ |
6,091,000 |
|
Total: |
|
$ |
137,000,000 |
|
Schedule 2.4(a)
Permitted Exceptions
1. |
|
The lien of supplemental taxes, if any, assessed in connection with the change of
ownership pursuant to this Agreement pursuant to Chapter 3.5 commencing with Section 75 of
the California Revenue and Taxation Code. |
2. |
|
An easement for public road and incidental purposes in the document recorded November
8, 1962 as Instrument No. 5516, in Book D-1817 Page 222 of Official Records. |
By Resolution No. 96-1627, the City Council of the City of West Hollywood ordering the
vacation of a portion of Sunset Boulevard and Olive Drive at 0000 Xxxxxx Xxxxxxxxx, in the
city of West Hollywood, recorded September 12, 1996 as Instrument No. 96-1504898.
3. |
|
The terms and provisions contained in the document entitled “Acceptance Affidavit”
recorded May 7, 1996 as Instrument No. 96-713245 of Official Records. |
4. |
|
The terms and provisions contained in the document entitled “Acceptance Affidavit of
Resolution No. 01-2619R — A Resolution of the City Council of the City of West Hollywood
Approving the Appeal of Hillcrest Realty Services, and Approving Conditional Use Permit
2001-11 for a Tall Wall Sign at 0000 Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxxxxxx” recorded
January 18, 2002 as Instrument No. 00-0000000 of Official Records. |
5. |
|
A notice of assessment recorded November 5, 1996 as Instrument No.
96-1796913 of Official Records, executed by City Clerk of the City of West
Hollywood.
|
|
6. |
|
The terms and provisions contained in the document entitled “Acceptance Affidavit”
recorded July 18, 2006 as Instrument No. 00-0000000 of Official Records. |
Schedule 3.2
Reports
1. |
|
Phase I Environmental Site Assessment, dated August 14, 2006, prepared by IVI Due
Diligence Services, Inc. |
2. |
|
Property Condition Report for Mortgage Financing Purposes, dated August 11, 2006,
prepared by IVI Due Diligence Services, Inc. |
3. |
|
Letter regarding Probable Maximum Loss at Site, dated August 11, 2006, prepared by IVI
Due Diligence Services, Inc. |
Schedule 5.1(d)
Material Defaults under Space Leases
None.