Exhibit 10.1
AGREEMENT OF PURCHASE AND SALE
This Agreement is made and entered into as of this 5th day of
March, 1998, by and between CLAREMONT HOTEL L.L.C., a Delaware limited
liability company and XXXXXX INVESTMENT CORP., an Oregon corporation
(Claremont Hotel L.L.C. and Xxxxxx Investment Corp. are hereinafter sometimes
collectively referred to as "Seller" and individually as "Claremont" and
"HIC", respectively), and KSL RECREATION GROUP, INC., a Delaware corporation
("Buyer").
RECITALS
A. Seller is the fee owner of certain real property located at 00
Xxxxxx Xxxx in Oakland, California (the "Real Property", as further defined
in Section 1.32 and more particularly described in EXHIBIT A), and is the
owner of certain improvements and personal property located on the Real
Property consisting of, among other things, a hotel presently known as the
Claremont Resort & Spa (the "Hotel", as further defined in Section 1.16).
The Real Property and the Hotel are collectively referred to herein as the
"Property" (which is inclusive of the "HIC Property", as defined below).
B. Buyer desires to purchase the Property from Seller and Seller
is willing to sell the Property to Buyer upon and subject to the terms and
conditions of this Agreement.
C. Buyer and Seller desire to enter into this Agreement for the
purpose of providing for the consummation of the acquisition of the Property
by Buyer upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "AGREEMENT" shall mean this Agreement of Purchase and Sale and
all future amendments and modifications hereto.
1.2 "ASSUMED CONTRACTS" means the Equipment Leases, Leases,
Service Contracts and Construction and Other Contracts listed on EXHIBITS B,
E, and G (exclusive, however, of any union, labor or collective bargaining
agreements and any hotel management or operating agreements).
1.3 "AUTHORITIES" shall mean any governmental body or agency
having jurisdiction over the Hotel and/or Seller, including, without
limitation, the City of Oakland, the County of Alameda and the State of
California.
1.4 "CLAREMONT PROPERTY" shall mean all of the Property other than
the HIC Property.
1.5 "CLOSING" shall mean the consummation of the sale of the
Property to Buyer, which Closing shall occur on the Closing Date.
1.6 "CLOSING DATE" shall mean the date identified in Section 9.2,
which shall be the date on which the Deed is recorded in the Official Records
of Alameda County, State of California.
1.7 "CONSTRUCTION AND OTHER CONTRACTS" means all construction
contracts and other contracts and agreements including, without limitation,
design and decorating contracts, space planning contracts, construction
contracts, subcontracts and purchase orders, applications for expenditures,
letters of intent, utility contracts and water and sewer service contracts,
agreements with consultants, bonds, reservation service listing agreements,
parking contracts, advertising contracts, media purchase contracts, sales and
promotional agreements and like contracts and agreements relating to the
Hotel, together with all supplements, amendments and modifications thereof.
The term Construction and Other Contracts shall not include any management or
operating agreement for the Hotel (it being understood and agreed that any
such management or operating agreement shall be terminated at Closing by
Seller at its full cost and expense).
1.8 "DEED" shall have the meaning set forth in Section 9.3(a)(i).
1.9 "DEPOSIT" shall have the meaning set forth in Section
2.2(b)(i).
1.10 "EQUIPMENT LEASES" shall mean all of the equipment leases,
oral or written, in effect as of the date hereof with respect to the Hotel,
which are described in EXHIBIT B.
1.11 "FF&E" shall mean all of the furniture, fixtures and equipment
owned by Seller and located in the Hotel as of the date hereof, which are
described in EXHIBITS C AND C-1, with such additions and deletions as may
hereafter occur or may have previously occurred in the ordinary course of
business; provided, however, that FF&E shall not include the Operating
Equipment and the Operating Supplies. Notwithstanding the foregoing, Seller
and Buyer acknowledge and agree that as of the date of this Agreement, the
parties have not finalized EXHIBIT C. During the Inspection Period, Buyer
shall hire, on behalf of Buyer and Seller, Deloitte & Touche LLP or its
designee, reasonably approved by Seller, to inventory the FF&E for the
benefit of Seller and Buyer ("FF&E Inventory"). Upon completion of the FF&E
Inventory, Seller agrees to reimburse Buyer for fifty percent (50%) of the
cost of physical inventory taking of the FF&E Inventory, up to a maximum of
Seven Thousand Five Hundred Dollars ($7,500.00). Seller shall prepare and
deliver EXHIBIT C-1 to Buyer prior to the expiration of the Inspection
Period. Seller and Buyer agree to use good faith efforts to approve the form
of EXHIBITS C AND C-1 and to amend this Agreement to attach EXHIBITS C AND
C-1 prior to the expiration of the Inspection Period.
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1.12 "FINANCIAL INFORMATION" shall mean year-end operating
statements for the Hotel for the years 1993, 1994, 1995, 1996 and 1997 and
monthly year-to-date statements for the current year.
1.13 "GOVERNMENTAL REGULATIONS" shall mean any laws, ordinances,
rules, requirements, resolutions, policy statements and regulations
(including, without limitation, those relating to land use, subdivision,
zoning, environmental, toxic or hazardous waste, occupational health and
safety, water, earthquake hazard, disabled persons and zoning and fire codes)
of the Authorities bearing on the construction, alterations, rehabilitation,
maintenance, use, operation or sale of the Hotel.
1.14 "HAZARDOUS MATERIAL" shall mean any radioactive, hazardous or
toxic substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
material or substance which is (i) defined as a "hazardous waste," "extremely
hazardous waste" or "restricted hazardous waste" or "hazardous substance"
under any state or federal law, (ii) asbestos, (iii) lead, and/or (iv)
petroleum.
1.15 "HIC PROPERTY" shall mean: (i) the portion of the Real
Property owned in fee by HIC and described in EXHIBIT A-2; (ii) the Liquor
Assets; and (iii) the portion of the Personal Property consisting of all
chinaware, glassware, silverware and linen.
1.16 "HOTEL" shall mean with respect to the Property: (i) all
buildings, structures, fixtures, landscaping and other improvements
constructed on or affixed to the Property; (ii) the Service Contracts, the
Leases, the Equipment Leases and the Intangibles, if and to the extent such
Service Contracts, Leases, Equipment Leases, and Intangibles are assignable
or the necessary approvals for the assignment thereof to Buyer can be
reasonably obtained in accordance with the terms and provisions contained in
this Agreement; (iii) the FF&E, the Operating Equipment, the Operating
Supplies and the Personal Property; (iv) all accounts receivable (subject to
proration and adjustment as provided in Sections 9.4 and 9.5), and all
reservation deposits and advance or prepaid payments or deposits relating to
the operation of the Hotel and to be credited to Buyer in accordance with
Section 9.4; (v) all books and records relating to the operation of the
Hotel, including, without limitation, applicable computer software owned by
or licensed to Seller (to the extent assignable or to the extent that the
necessary approvals for the assignment thereof to Buyer can be reasonably
obtained in accordance with the terms and conditions contained in this
Agreement); (vi) all permits, licenses, warranties and guarantees obtained by
Seller in connection with the ownership, construction or operation of the
Property (to the extent assignable or to the extent that the necessary
approvals for the assignment thereof to Buyer can be reasonably obtained in
accordance with the terms and conditions contained in this Agreement, but
excluding in any event the Liquor Licenses issued to or otherwise held by
HIC); and (vii) to the extent assignable, all Construction and Other
Contracts.
1.17 "INSPECTION PERIOD" shall mean the period commencing on the
date of this Agreement and expiring at 5:00 p.m. (San Francisco time) on
April 6, 1998.
1.18 "INTANGIBLES" shall mean any trademarks, service marks,
copyrights, trademark, service xxxx and copyright registrations, applications
for trademark and service xxxx
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registrations, business and trade names or logos, patent and patent
applications, which are owned by or licensed to Seller as of the date hereof
and used in connection with the operation of the Hotel, which are described
in EXHIBIT D.
1.19 "LEASES" shall mean all of the leases, licenses, concessions,
operating agreements and other similar occupancy agreements, oral or written,
in effect as of the date hereof with respect to the Property, which are
described in EXHIBIT E.
1.20 "LEGAL REQUIREMENTS" shall mean any of the following which are
applicable to the ownership and/or operation of the Property: all laws,
statutes, rules, regulations, ordinances, codes, orders, decrees or rulings
of any governmental or judicial authority, including, without limitation, all
zoning, land use, subdivision, redevelopment, environmental, health, energy,
building and construction laws and regulations affecting the use, occupancy
or operation of the Hotel; any permit or occupancy certificate issued
pursuant to any law, statute, rule, regulation, ordinance, code; and any
other order or decree by any public officer having jurisdiction over the
Property.
1.21 "LIQUOR ASSETS" shall mean the Liquor Licenses owned by HIC
and the inventory of alcoholic beverages owned by Claremont as of the Closing
Date which are saleable in connection with the operation of the Hotel or the
restaurants, bars, function rooms and guest rooms located therein.
1.22 "LIQUOR ESCROW" shall have the meaning set forth in Section
11.5(c).
1.23 "LIQUOR LICENSES" shall mean all of the licenses pursuant to
which the sale of alcoholic beverages is permitted in the Hotel or the
restaurants, bars, function rooms or guest rooms located therein, issued by
the Department of Alcoholic Beverage Control of the State of California,
which licenses are owned by HIC.
1.24 "OPERATING EQUIPMENT" shall mean all of the vehicles owned or
leased by Seller as of the date hereof and used in the operation or
maintenance of the Hotel, which are described in EXHIBIT F; provided,
however, that Operating Equipment shall not include FF&E and Operating
Supplies.
1.25 "OPERATING SUPPLIES" shall mean all items owned by Seller on
the Closing Date and used in the operation or maintenance of the Hotel and
which are consumable or, when once used, are disposed of, including, without
limitation, spa products, supplies for housekeeping, food and beverage
service, pool and recreation areas, engineering, accounting and office use,
together with paper supplies, inventories of food and beverages and
miscellaneous general supply items.
1.26 "PERSON" shall mean any natural person, corporation,
partnership, limited liability company, firm, association, government,
governmental agency or any other entity and whether acting in an individual,
fiduciary or other capacity.
1.27 "PERSONAL PROPERTY" shall mean all of the personal property
(tangible or intangible) owned by Seller as of the date hereof and used in
connection with the operation or maintenance of the Hotel, including, without
limitation, the FF&E described in EXHIBIT C; the
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chinaware, glassware, silverware and linens described in EXHIBIT C-1; all
books and records, computers, computer files and software related to Hotel
operations, accounting, bookings, inventory control and related matters; the
Operating Equipment described in EXHIBIT F; the Operating Supplies; the
Intangibles described in EXHIBIT D; the artwork located or displayed on the
Property (provided, however, the artwork described on EXHIBIT F-1 is to be
acquired by Buyer on the terms of and subject to the special conditions set
forth in Section 11.6.); and provided that, the items described in EXHIBITS
F-2, F-3, and F-4 shall not be included in the purchase and sale transaction
contemplated hereby.
1.28 "PERMITTED EXCEPTIONS" shall have the meaning set forth in
Sections 3.1(a).
1.29 "PRELIMINARY TITLE REPORT" shall mean the preliminary title
report issued by the Title Company for the Property, dated November 5, 1997,
under the Title Company's order No. SP157372, which shall be updated upon
execution of this Agreement.
1.30 "PROPERTY" shall have the meaning set forth in Recital A.
1.31 "PURCHASE PRICE" shall have the meaning set forth in Section
2.2(a).
1.32 "REAL PROPERTY" shall mean the real property as more
particularly described in EXHIBIT A, including, without limitation, to the
extent owned by Seller, all minerals, oil, gas and other hydrocarbon
substances on and under the Real Property, as well as all development rights,
air rights, water, water rights and water stock relating to the Real Property
and any other easements, rights of way or appurtenances used in connection
with the beneficial use and enjoyment of the Real Property. The portion of
the Real Property described in EXHIBIT A-1 is owned in fee by Claremont, and
the portion of the Real Property described in EXHIBIT A-2 is owned in fee by
HIC.
1.33 "SERVICE CONTRACTS" shall mean all of the service, maintenance
and other similar contracts, oral or written, in effect as of the date hereof
with respect to the Property, which are described in Exhibit G.
1.34 "SURVEY" shall have the meaning set forth in Section 3.1(a).
1.35 "TITLE COMPANY" shall mean First American Title Guaranty
Company.
1.36 "TITLE POLICY" shall mean an ALTA Owner's Policy of Title
Insurance (1970 Form B), in the amount of the Purchase Price showing Buyer as
the fee owner of the Real Property, subject only to the Permitted Exceptions
and with such endorsements as Buyer may reasonably designate during the
Inspection Period.
ARTICLE II
PURCHASE AND SALE
2.1 SALE. Seller agrees to sell and assign (as applicable) to
Buyer, and Buyer agrees to purchase from Seller and accept the assignment
from Seller of, all of Seller's right, title
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and interest in and to the Property, subject to the terms, covenants and
conditions set forth herein.
2.2 PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") of the Hotel shall
be Eighty-Eight Million Dollars ($88,000,000.00). The Purchase Price shall
be subject to certain closing adjustments and prorations as provided in
Article IX. Seller and Buyer hereby agree that the Purchase Price shall be
allocated as set forth on SCHEDULE 1 attached hereto; provided, however,
Seller and Buyer acknowledge and agree that as of the date of this Agreement,
the parties have not finalized SCHEDULE 1. Seller and Buyer agree to use
good faith efforts to approve the form of SCHEDULE 1 and to amend this
Agreement to attach SCHEDULE 1 prior to the expiration of the Inspection
Period.
(b) The Purchase Price shall be paid as follows:
(i) Upon the execution of this Agreement by both Buyer and
Seller, Buyer shall deposit in escrow with Title Company a cash payment in an
amount equal to Four Million, Four Hundred Thousand Dollars ($4,400,000.00)
(the "Deposit"). The Deposit shall be held in an interest bearing account
approved by Seller and Buyer, and all interest thereon shall be deemed a part
of the Deposit.
(ii) In the event the sale of the Property as contemplated
hereunder is consummated, the Deposit shall be paid to Seller and credited
against the Purchase Price. In the event this Agreement is terminated by
Buyer in accordance with Buyer's right to do so under the terms and
provisions hereof or because of a default hereunder by Seller, the Deposit
shall be promptly returned to Buyer. IN THE EVENT THAT BUYER SHOULD
OTHERWISE FAIL TO CONSUMMATE THE PURCHASE OF THE PROPERTY FOR ANY REASON,
EXCEPT SELLER'S DEFAULT OR THE TERMINATION OF THIS AGREEMENT BY SELLER OR
BUYER PURSUANT TO A RIGHT TO DO SO UNDER THE TERMS AND PROVISIONS HEREOF,
THEN THE DEPOSIT SHALL BE PROMPTLY PAID BY TITLE COMPANY TO SELLER AS
LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN
THE EVENT OF A FAILURE BY BUYER TO CONSUMMATE THIS SALE AS SPECIFIED ABOVE,
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER
NEGOTIATION AND CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE DATE OF
THIS AGREEMENT, THE PARTIES HAVE AGREED UPON THE AMOUNT OF THE DEPOSIT, AS A
REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT AND
AS SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT
OF A DEFAULT HEREUNDER BY BUYER; PROVIDED, HOWEVER, THAT THE DEPOSIT SHALL IN
NO EVENT LIMIT BUYER'S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 11.1 AND
12.8, FOR WHICH THERE SHALL BE NO MANDATORY LIMITATIONS. IN PLACING THEIR
INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE
STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL
WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS
LIQUIDATED DAMAGES PROVISION.
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INITIALS: SELLER ________ SELLER ________ BUYER _______
In the event that Seller should fail to consummate this Agreement
for any reason, except Buyer's default or a termination of this Agreement by
Buyer or Seller pursuant to a right to do so under the terms and provisions
hereof, Buyer, as its sole and exclusive remedy, may elect any one of the
following remedies: (A) to terminate this Agreement by written notice to
Seller and receive a prompt return of the Deposit, and Seller shall pay to
Buyer any out-of-pocket title, escrow, legal and inspection fees, costs and
expenses actually incurred by Buyer in connection with the performance of its
due diligence review of the Property and the negotiation and performance of
this Agreement, up to a maximum of Seventy-Five Thousand Dollars ($75,000);
or (B) to xxx for specific performance, without the right to seek damages.
(iii) The Purchase Price, less any portion of the Deposit
that may have been applied to the Purchase Price, shall be paid to Seller in
immediately available funds at the Closing, subject to any closing
adjustments and prorations as set forth in this Agreement.
ARTICLE III
BUYER'S INSPECTION PERIOD
3.1 BUYER'S INSPECTION PERIOD. Buyer's obligation to purchase the
Property is conditioned upon Buyer's review and approval (at Buyer's sole
cost and expense) during the Inspection Period of the following:
(a) The Preliminary Title Report and copies of all exceptions to
title described therein; and a boundary survey of the Property prepared by
Xxxxx & Xxxxxx, dated December 15, 1982, and an updated boundary survey
prepared by Xxxxx & Xxxxxx which will reflect the easements of record and the
improvements, if any, within the vicinity of the boundaries of such easements
(together, the "Survey"). If any exceptions appear in the Preliminary Title
Report, other than the standard printed exceptions set forth in the ALTA
Owner's Policy 1970 form B of title insurance, or on the Survey that affect
the Property and are unacceptable to Buyer, Buyer shall, on or before ten
(10) days after Seller delivers the updated Survey to Buyer, notify Seller in
writing of such fact and the reasons therefor ("Buyer's Title Objections").
Upon the expiration of said ten (10) day period, Buyer shall be deemed to
have accepted all exceptions to title and all other matters shown on the
Preliminary Title Report and Survey (except for the Buyer's Title Objections
if the same are timely raised) and such exceptions shall be included in the
term "Permitted Exceptions" as used herein. Within five (5) days after
receiving Buyer's Title Objections, Seller shall notify Buyer whether it is
willing to eliminate or modify Buyer's Title Objections to the reasonable
satisfaction of Buyer. Notwithstanding anything to the contrary herein,
Seller shall have no obligation to bring any action or proceeding or
otherwise incur any expense whatsoever to eliminate or modify any of Buyer's
Title Objections unless it notifies Buyer that it is willing to eliminate or
modify Buyer's Title Objections. In the event Seller notifies Buyer that it
is unwilling to so eliminate or modify Buyer's Title Objections (or fails to
provide notice in the five (5) day period which failure shall be deemed
notice, at the end of such period, of Seller's unwillingness) or having
notified Buyer of its willingness, is unable to eliminate or modify Buyer's
Title Objections to the reasonable satisfaction of Buyer prior to the Closing
Date, Buyer (A) may (as its sole and exclusive remedy) terminate this
Agreement by
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notice in writing to Seller by the earlier to occur of (i) the Closing Date
or (ii) five (5) days following notice (or deemed notice) from Seller that it
is unwilling or unable to eliminate or modify Buyer's Title Objections, or
(B) may accept such title as Seller can deliver, without any reduction in the
Purchase Price, in which event such uncured Buyer's Title Objections shall be
included in the term "Permitted Exceptions" as used herein. If Buyer does
not elect to terminate within the period described in the immediately
preceding sentence, Buyer shall be deemed to have accepted all exceptions to
title and all other matters shown on the Preliminary Title Report and Survey
(except for any Buyer's Title Objections which are timely raised by Buyer and
which Seller has agreed to eliminate or modify and has in fact been able to
eliminate or modify) and such exceptions shall be included in the term
"Permitted Exceptions" as used herein. In the event of the termination of
this Agreement pursuant to this Section 3.1(a), Buyer shall pay all of the
title and escrow charges, if any, the Deposit shall be promptly returned to
Buyer, and neither party shall have any further rights or obligations
hereunder (except pursuant to the indemnity contained in Section 11.1).
The term "Permitted Exceptions" as used in this Agreement shall
include: (i) any easement, right of way, encroachment, conflict,
discrepancy, overlapping or improvements, protrusion, lien, encumbrance,
restriction, condition, covenant or other matter with respect to the Property
that is reflected on the Survey or the Preliminary Title Report and which
Buyer accepts or to which Buyer fails to timely object pursuant to the
provisions of this Section 3.1(a), (ii) non-delinquent liens for real estate
taxes and assessments; (iii) the rights and interests of parties claiming
under the Leases; (iv) any exceptions to title which would be revealed or
disclosed by the public records or by a physical inspection and/or accurate
survey of the Property; and (v) all zoning ordinances and regulations and any
other laws, ordinances or environmental regulations restricting or regulating
the use, occupancy or enjoyment of the Property). The foregoing enumeration
of Permitted Exceptions shall in no event diminish or otherwise affect
Buyer's right to terminate this Agreement for any reason during the
Inspection Period pursuant to Section 3.2.
Notwithstanding the foregoing, Buyer, at its sole cost and expense,
shall use best efforts to obtain prior to the Closing a revised Survey that
will meet the Title Company's minimum requirements for issuance of the Title
Policy with a deletion of the general survey exception (the "Expanded
Survey"). Seller shall reasonably cooperate with Buyer to obtain the
Expanded Survey. Buyer shall have until the later of the end of the
Inspection Period or two (2) business days following completion of such
Expanded Survey to notify Seller in writing ("Expanded Survey Objection
Notice") of any survey matter which (i) is either not depicted on the prior
Survey or contradicts the prior Survey, AND (ii) would materially and
adversely affect Buyer's use and operation of the Property (the "Expanded
Survey Objections"). Seller shall have two (2) business days after receipt
of such Expanded Survey Objection Notice to give Buyer: (a) written notice
that Seller shall use all reasonable efforts to remove all the Expanded
Survey Objections from title on or before the Closing Date; or (b) written
notice that Seller elects not to cause the Expanded Survey Objections to be
removed. If Seller gives Buyer notice under clause (b), Buyer shall have two
(2) business days to elect to proceed with the purchase or terminate this
Agreement. If Buyer shall fail to give Seller written notice of its election
within said two (2) business days, Buyer shall be deemed to have elected to
waive its right to terminate this Agreement pursuant to the provisions of
this Paragraph. In the event Buyer elects to terminate this Agreement in
accordance with the terms and conditions of this Paragraph, Buyer shall pay
all of the title and escrow charges, if any, the Deposit shall be promptly
returned to
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Buyer, and neither party shall have any further rights or obligations
hereunder, except pursuant to the indemnity contained in Section 11.1 hereof.
In the event that Buyer does not obtain an Expanded Survey on or
before the Closing Date, Buyer shall have the right to elect to extend the
Closing Date to April 27, 1998, in order to obtain the Expanded Survey.
Notwithstanding anything to the contrary contained herein, in the event that
Buyer either does not obtain the Expanded Survey or have sufficient time to
review and approve the Expanded Survey pursuant to the timeframes set forth
above prior to April 27, 1998, Buyer shall either elect to proceed with the
purchase or terminate this Agreement on April 27, 1998.
(b) The Service Contracts, the Leases, the Equipment Leases, the
Intangibles and the Construction and Other Contracts.
(c) The FF&E, the Operating Equipment, the Operating Supplies, and
all other Personal Property.
(d) The Legal Requirements and the Property's compliance
therewith, and all governmental permits, approvals and certificates relating
to the Property, or the construction, operation, use or occupancy of any part
thereof, including, without limitation, all building permits, certificates of
occupancy and all other permits.
(e) The Financial Information and the Hotel's current accounts
receivable, current inventories, current and future bookings of guestrooms
and deposits, and all other similar books and records relating to the
operation of the Property; and all matters with respect to the market
conditions relating to comparable hotels, which Buyer shall be responsible
for obtaining at Buyer's sole expense.
(f) The physical and environmental condition of the Property,
including, without limitation, environmental reports prepared for Seller and
listed on SCHEDULE 2 attached hereto (collectively, the "Environmental
Reports") and any other hazardous substances assessment of the Property to be
obtained by Buyer at Buyer's sole expense and prepared by an engineer or
environmental auditor selected or approved by Buyer, the interior, the
exterior, the structure, the mechanical, the electrical, HVAC, and plumbing
components, the roofs, the paving, the utilities, the Plans and
Specifications and all other functional aspects of the Property. On or
before three (3) days from the date of this Agreement, Seller shall deliver
to Buyer copies of the Environmental Reports, plans and specifications for
the buildings and improvements on the Property, engineering studies, and all
other similar reports or assessments relating to the physical and
environmental condition of the Property, including, without limitation, all
maintenance records (which shall be made available for Buyer's review at the
Property) and soils and/or environmental reports and studies, but with regard
to all of the foregoing only to the extent such items are in Seller's
possession or under Seller's control.
(g) Copies of the bills issued for the most recent tax year for
all real property taxes and personal property taxes affecting the Property.
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(h) Copies of the transferable membership documentation, the 1985
Membership Application and Rules and the 1995 Membership Application and
Rules relating to the pool and tennis club and access to members' files.
(i) Any other matters Buyer deems relevant to the Property.
Except as otherwise specifically provided herein in this Section
3.1, the information and/or items described in the foregoing subparagraphs
(b), (c), (e), (f), (g) and (h) of this Section 3.1 shall be delivered by
Seller to Buyer on or before three (3) days from the date of this Agreement.
To the extent Buyer identifies any information, documentation, or other items
which fall within Subparagraph (i) above and which are in the possession or
reasonable control of Seller, such information, documentation and/or items
shall be delivered by Seller to Buyer within three (3) business days after
Seller's receipt of such request.
3.2 BUYER'S NOTICE TO SELLER. Except for Buyer's review of the
Preliminary Title Report, the Survey and the Expanded Survey, which shall be
governed by the provisions of Sections 3.1(a), Buyer shall notify Seller in
writing on or before the expiration of the Inspection Period which (if any)
of the conditions for the Property set forth in Section 3.1 have not been
fulfilled to Buyer's satisfaction. If any of such conditions are not
fulfilled to Buyer's satisfaction, or if any other aspect of the Property is
not approved by Buyer, as determined by Buyer in its sole discretion, Buyer
shall have the right in its sole election, to be exercised by written notice
to Seller on or before the expiration of the Inspection Period, either (i) to
waive the condition or other item in question and proceed to Closing, or (ii)
to terminate this Agreement. Notwithstanding anything to the contrary
contained herein, the failure by Buyer to provide any such notices to Seller
regarding the waiver or satisfaction of any of the conditions set forth above
in Section 3.1 on or before the expiration of the Inspection Period shall be
deemed to be an election by Buyer to waive any such condition and to proceed
with the Closing. In the event the Buyer elects or is deemed to have elected
to have waived its right to terminate this Agreement during the Inspection
Period, the Deposit shall become nonrefundable to Buyer.
In the event Buyer elects to terminate this Agreement in accordance
with this Section 3.2, Buyer shall pay all of the title and escrow charges,
if any, the Deposit shall be promptly returned to Buyer, and neither party
shall have any further rights or obligations hereunder, except pursuant to
the indemnity contained in Section 11.1 hereof.
ARTICLE IV
CONDITIONS TO BUYER'S OBLIGATIONS
4.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer to
purchase the Property shall be subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, which are intended solely
for the benefit of Buyer:
(a) NO TERMINATION. Buyer shall not have exercised any
termination right provided in this Agreement.
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(b) DELIVERY OF DOCUMENTS. Seller, Claremont or HIC, as the case
may be, shall have delivered to Buyer or to the Title Company, as applicable,
all of the items listed in Section 9.3(a). Seller, Claremont or HIC, as the
case may be, shall have delivered such other documents not inconsistent with
the terms of this Agreement as are customary in order to carry out the
purchase and sale of the Property in accordance with the terms of this
Agreement.
(c) TITLE POLICY. The Title Company shall have issued or be
prepared to issue the Title Policy to Buyer at the Closing.
(d) TITLE TO PERSONAL PROPERTY. Buyer shall have received
evidence reasonably satisfactory to Buyer that the Personal Property shall be
conveyed to Buyer at the Closing, free of any liens, encumbrances or
interests of third parties or of Seller (except for equipment lessors of any
Operating Equipment being leased by Seller and except for any software
licensing restrictions disclosed to Buyer during the Inspection Period).
(e) REPRESENTATIONS. All of Seller's, Claremont's or HIC's
representations contained in or made pursuant to this Agreement shall have
been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date as if made on the
Closing Date.
(f) COMPLIANCE. Seller shall have performed, observed and
complied with all covenants, agreements and conditions to be performed by
Seller pursuant to this Agreement.
If any of the foregoing conditions set forth in this Section 4.1
are not satisfied in Buyer's sole discretion on or before the Closing Date,
then Buyer may terminate this Agreement by written notice to Seller. If
Buyer elects to terminate this Agreement, Buyer shall pay all of the title
and escrow charges, if any, the Deposit shall be promptly returned to Buyer,
and neither party shall have any further rights or obligations hereunder,
except pursuant to the indemnity contained in Section 11.1 hereof.
ARTICLE V
CONDITIONS TO SELLER'S OBLIGATIONS
5.1 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of Seller
to sell the Property to Buyer shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions, which are
intended solely for the benefit of Seller:
(a) DELIVERY OF DOCUMENTS. Buyer shall have delivered to Seller
or to the Title Company, as applicable, all of the items listed in Section
9.3(b). Buyer shall have delivered such other documents not inconsistent with
the terms of this Agreement as are customary in order to carry out the
purchase and sale of the Property in accordance with the terms of this
Agreement.
(b) REPRESENTATIONS. All of Buyer's representations contained in
or made pursuant to this Agreement shall have been true and correct in all
material respects when made
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and shall be true and correct in all material respects as of the Closing Date
as if made on the Closing Date.
(c) COMPLIANCE. Buyer shall have performed, observed and complied
with all covenants, agreements and conditions to be performed by Buyer
pursuant to this Agreement.
ARTICLE VI
SELLER'S REPRESENTATIONS
6.1 REPRESENTATIONS OF SELLER. Seller, Claremont or HIC, as the
case may be, hereby represent to Buyer, as of the date of this Agreement and
the Closing Date, that:
(a) (i) Claremont is duly organized and legally existing under the
laws of the State of Delaware and HIC is duly organized and legally existing
under the laws of the State of Oregon and each of said companies is qualified
to do business in the State of California, (ii) the execution and delivery by
each of Claremont and HIC of, and each of Claremont's and HIC's performance
under, this Agreement are within said companies' respective powers and have
been duly authorized by all requisite corporate action, and (iii) the persons
executing this Agreement on behalf of each of Claremont and HIC have the
authority to do so.
(b) The execution and performance of this Agreement by each of
Claremont and HIC will not violate any provision of any agreement or judicial
order to which either Claremont or HIC is a party or to which either is
subject.
(c) To Seller's knowledge, the lists of Equipment Leases, Leases,
and Service Contracts attached as EXHIBITS B, E, and G, respectively, are
true and correct in all material respects, Seller is not in material default
under any such Equipment Leases, Leases or Service Contracts, and, as of the
date hereof, there are not any other equipment leases, leases or service
contracts affecting the Property except as described in such Exhibits. To
Seller's knowledge, the copies of the Equipment Leases, Leases and Services
Contracts delivered by Seller to Buyer in connection with this Agreement are
or will be true, correct and complete copies of such documents.
(d) To Seller's knowledge, Seller has not received written notice
from any of the Authorities that the Property is presently the subject of any
condemnation, assessment or similar proceeding or charge.
(e) Seller is not a "foreign person" within the meaning of Section
1445 of the Internal Revenue Code of 1986 (i.e. Seller is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or foreign
estate as those terms are defined in said Section 1445 and the regulations
promulgated thereunder).
(f) To Seller's knowledge, Seller has not received written notice
from any of the Authorities that the Property is in violation of any law,
statute, ordinance, building or zoning regulation including, without
limitation, Governmental Regulations.
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(g) Except as set forth in SCHEDULE 3, there is no litigation that
has been instituted that would affect the Property and, to Seller's
knowledge, Seller has not received written notice of any proposed or
threatened litigation that would affect the Property.
(h) To Seller's knowledge, except as set forth in the Preliminary
Title Report, there are not any assessments for public improvements which
have been made against the Property, and Seller will inform Buyer of any such
assessments of which Seller has knowledge prior to the Closing Date.
(i) To Seller's knowledge, the Financial Information (i) has been
prepared in accordance with the books and records of Seller and in conformity
with generally accepted accounting principles, consistently applied, and (ii)
is true and correct in all material respects and accurately sets forth the
results of the operations of the Hotel in each of the periods covered thereby.
(j) To Claremont's knowledge with respect to the Claremont
Property, no Hazardous Material (including, without limitation,
asbestos-containing materials and PCBs) have been produced, disposed of or
stored in, on, under or about the Claremont Property, except as disclosed in
the Environmental Reports or as heretofore disclosed by Claremont. To HIC's
knowledge with respect to the HIC Property, no Hazardous Material (including,
without limitation, asbestos-containing materials and PCBs) have been
produced, disposed of or stored in, on, under or about the HIC Property,
except as disclosed in the Environmental Reports or as heretofore disclosed
by HIC.
(a) To Seller's knowledge, the list of pool and tennis club
members to be attached as SCHEDULE 7 shall be a complete and accurate list of
such members. Seller shall deliver SCHEDULE 7 to Buyer prior to expiration
of the Inspection period, and Seller and Buyer shall amend this Agreement to
attach SCHEDULE 7.
As used in this Section 6.1, the terms "to Seller's knowledge" or
"to Claremont's knowledge" or "to HIC's knowledge": (i) shall mean and apply
in the case of both Claremont and HIC to the actual knowledge only of Xxxxxx
X. Xxxxxxxxx, Xxxxx Xxxxxxx and Xxxxxx X. Xxxx and not to any other Person,
(ii) shall mean the actual knowledge (and not any implied, constructive or
imputed knowledge) of such individuals, it being understood and acknowledged
that (a) such individuals may not be involved in the day-to-day operations of
the Property and in many instances were not involved in the negotiation or
execution of the leases, management contracts, service contracts, or other
documents in question and (b) such individuals are not charged with knowledge
of all of the acts and/or omissions of the predecessors in title to the
Property or with knowledge of all of the acts and/or omissions of Seller's,
Claremont's or HIC's agents or employees, as the case may be, and (iii) shall
not apply to or be construed to apply to information or material which may be
in the possession of Seller, Claremont or HIC, as the case may be, generally
or incidentally, but which is not actually known to the aforesaid individuals
who are directly engaged in the sale and purchase transaction described
herein.
Notwithstanding anything to the contrary contained herein, Seller
shall have no liability whatsoever to Buyer with respect to any matter of
which Buyer obtains knowledge before Closing which makes any of Seller's
representations or warranties untrue, including without limitation, matters
discovered by Buyer or matters disclosed to Buyer by Seller or by any
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other person (any such matter is referred to herein as an "Exception Matter")
(provided that, Seller has not breached an express covenant set forth in this
Agreement). Seller shall promptly disclose to Buyer any Exception Matter
which Seller obtains knowledge of during the term of this Agreement. If (i)
Buyer obtains knowledge of any Exception Matter between the end of the
Inspection Period and the Closing, (ii) such knowledge could not reasonably
have been obtained by Buyer during the Inspection Period, (iii) the Exception
Matter would materially and adversely affect either Buyer's operation of the
Property or the value of the Property, and (iv) within five (5) business days
after Seller receives written notice from Buyer of its objection to the
Exception Matter, Seller has not notified Buyer that it is willing to cure
such Exception Matter to the reasonable satisfaction of Buyer, then Buyer may
terminate this Agreement and receive a prompt refund of the Deposit upon
written notice to Seller delivered within three (3) business days after
expiration of the five (5) day period referred to in clause (iv) above. Upon
any such termination of this Agreement, neither party shall have any further
rights or obligations hereunder except for the indemnity in Section 11.1.
ARTICLE VII
BUYER'S REPRESENTATIONS
7.1 REPRESENTATIONS OF BUYER. Buyer hereby represents to Seller,
as of the date of this Agreement and the Closing Date, that:
(a) (i) Buyer is duly organized and legally existing under the
laws of the State of Delaware, and is qualified to do business in the State
of California, (ii) the execution and delivery by Buyer of, and Buyer's
performance under, this Agreement are within Buyer's powers and have been
duly authorized by all requisite corporate, partnership, or limited liability
company action, and (iii) the person executing this Agreement on behalf of
Buyer has the authority to do so.
(b) The execution and performance of this Agreement by Buyer will
not violate any provision of any agreement or judicial order to which Buyer
is a party or to which Buyer is subject.
(c) There is no litigation pending against Buyer that would
adversely affect or interfere with Buyer's ability to perform its obligations
under this Agreement.
7.2 BUYER'S INDEPENDENT INVESTIGATION.
(a) Buyer acknowledges and agrees that it has been given, or will
be given before the end of the Investigation Period, a full opportunity to
inspect and investigate each and every aspect of the Property and to
interview management, the Director of Sales and Marketing, existing tenants
under the Leases, service providers and their representatives, either
independently or through agents of Buyer's choosing (and Seller acknowledges
and agrees that subject to the provisions of Section 11.1 hereof, Seller
shall provide Buyer with reasonable access to the Property (subject to the
rights of tenants under the Leases) to facilitate such inspection and
investigation), including, without limitation:
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(i) All matters relating to title, together with all
governmental and other legal requirements such as taxes, assessments, zoning,
use permit requirements and building codes (including, without limitation,
the Americans with Disabilities Act (the "ADA") and Title 24 of California's
Administrative Code).
(ii) The physical and environmental condition and all other
aspects of the Property, including, without limitation, the interior, the
exterior, the square footage within the improvements on the Real Property,
the structure, the mechanical, electrical, HVAC and plumbing components, the
roofs, the paving, the utilities, and all other physical and functional
aspects of the Property. Such examination of the physical condition of the
Property shall include an examination for the presence or absence of
hazardous or toxic materials, substances or wastes (collectively, "Hazardous
Materials").
(iii) Any easements and/or access rights affecting the
Property.
(iv) The Leases and all matters in connection therewith,
including, without limitation, the ability of the tenants to pay the rent.
(v) The Equipment Leases, Service Contracts, insurance
policies and any other documents or agreements of significance affecting the
Property.
(vi) All other matters that Buyer deems to be of significance
affecting the Property.
(b) BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS
SELLING AND BUYER IS PURCHASING THE PROPERTY ON AN "AS IS, WHERE IS, WITH ALL
FAULTS" BASIS AND THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, BUYER IS NOT
RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS
OR IMPLIED, FROM SELLER, ITS AGENTS OR BROKERS AS TO ANY MATTERS CONCERNING
THE PROPERTY, INCLUDING WITHOUT LIMITATION: (i) the quality, nature, adequacy
and physical condition and aspects of the Property, including, but not
limited to, the structural elements, foundation, roof, appurtenances, access,
landscaping, parking facilities and the electrical, mechanical, HVAC,
plumbing, sewage, and utility systems, facilities and appliances, (ii) the
quality, nature, adequacy, and physical condition of soils, geology and any
groundwater, (iii) the existence, quality, nature, adequacy and physical
condition of utilities serving the Property, (iv) the development potential
of the Property, and the Property's use, habitability, merchantability, or
fitness, or the suitability, value or adequacy of the Property for any
particular purpose, (v) the zoning or other legal status of the Property or
any other public or private restrictions on use of the Property, (vi) the
compliance of the Property or its operation with any applicable codes, laws,
regulations, statutes, ordinances, covenants, conditions and restrictions of
any governmental or quasi-governmental entity or of any other person or
entity (including, without limitation, the Americans with Disabilities Act
and Title 24 of California's Administrative Code), (vii) the presence of
Hazardous Materials on, under or about the Property or the adjoining or
neighboring property, (viii) the quality of any labor and materials used in
any improvements on the Real Property, (ix) the condition of title to the
Property, (x) the Leases, Equipment Leases, Service Contracts or any other
agreements affecting the Property and (xi) the operating performance and
15
economics of the Property (Buyer hereby expressly acknowledging that Seller
has not made and is not making any representations or guarantees of any kind
concerning the future operating performance and profitability of the Hotel
and that Buyer shall make its own investigation and arrive at its own
determination concerning the future performance and profitability of the
Hotel).
(c) Buyer further acknowledges, understands, and agrees as follows:
(i) The Property may require certain seismic, structural and
deferred maintenance work, the cost and expense of which could be up to Two
Million Dollars ($2,000,000.00) in the aggregate;
(ii) Pursuant to terms and conditions of Oakland City Counsel
Resolution No. 64496, dated April 7, 1987, and an agreement with pool and
tennis club members dated as of 1972, there may be a restriction on the
number of members which may be accepted into the pool and tennis club;
(iii) Buyer is not entering into this Agreement with the
expectation of acquiring future expansion rights for the Property; and
(iv) The artwork listed in EXHIBITS F-2 AND F-3 are excluded
from the sale contemplated hereunder.
Buyer acknowledges that it considered the implications of the
matters described in subparagraphs (i)-(iv) above prior to execution of this
Agreement. Moreover, Buyer expressly waives its right to terminate this
Agreement during the Inspection Period or otherwise, based on any of the
matters described in subparagraphs (i)-(iv) above.
ARTICLE VIII
RISK OF LOSS AND INSURANCE PROCEEDS
8.1 DAMAGE BY CASUALTY. Seller shall promptly notify Buyer if,
prior to the Closing, the Property or any portion thereof is damaged or
destroyed by casualty. If the cost to repair such damage or destruction to
the Property (as reasonably estimated by Seller) would exceed Five Million
Dollars ($5,000,000.00), Buyer may, at its option, terminate this Agreement
as to the Property by delivering notice of such termination to Seller not
later than ten (10) business days after the date Buyer first receives
notification from Seller of such damage or destruction. If Buyer first
receives such notification less than ten (10) business days prior to the
Closing Date, Buyer may, by notice delivered to Seller, delay the Closing
Date to a date not later than ten (10) business days after the date Buyer
first receives such notification, and Buyer may elect to terminate this
Agreement, as provided above, during such ten (10) business day period. In
the event Buyer exercises its election to terminate this Agreement by reason
of this Section 8.1, this Agreement shall terminate, Buyer and Seller shall
each pay one-half (1/2) of the title and escrow charges, if any, the Deposit
shall be promptly returned to Buyer and neither party shall have any further
rights or obligations hereunder, except pursuant to the indemnity contained
in Section 11.1. In the event Buyer does not elect to terminate this
Agreement by reason of this Section 8.1, or in the event that the cost to
repair such damage or destruction does not exceed
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Five Million Dollars ($5,000,000.00), then the Closing shall occur on the
Closing Date, Seller shall assign to Buyer any right to insurance proceeds by
reason of such casualty, the Purchase Price shall be reduced by the amount of
any deductible or co-insurance applicable to such casualty under Seller's
insurance policies, and to the extent, such damage or destruction, in whole
or in part, is not covered by Seller's insurance policies, the Purchase Price
shall be reduced by the amount of such loss. Provided, however, if the cost
to repair such damage or destruction exceeds Ten Million Dollars
($10,000,000.00), whether or not such damage or destruction is covered by
Seller's insurance, Seller shall have the right to terminate this Agreement
by delivering notice of such termination to Buyer. In the event Seller
exercises its election to terminate this Agreement by reason of this Section
8.1, this Agreement shall terminate, Buyer and Seller shall each pay one-half
(1/2) of the title and escrow charges, if any, the Deposit shall be promptly
returned to Buyer and neither party shall have any further rights or
obligations hereunder, except pursuant to the indemnity contained in Section
11.1.
8.2 CONDEMNATION. Seller shall promptly notify Buyer if, prior to
the Closing, the Property or any interest therein, is taken pursuant to the
power of eminent domain, or Seller becomes aware of any proceeding with
respect thereto which is instituted. In such event, and provided that such
taking would, in Buyer's reasonable business judgment, have a material
adverse effect on the continued use and operation of the Property as a hotel,
Buyer may, at its option, terminate this Agreement as to the Property by
delivering notice of such termination to Seller not later than ten (10)
business days after the date Buyer first receives notification from Seller of
such taking, institution of proceeding or threat. If Buyer first receives
such notification less than ten (10) business days prior to the Closing Date,
Buyer may, by notice delivered to Seller, delay the Closing Date to a date
not later than ten (10) business days after the date Buyer first receives
such notification. In the event Buyer exercises its election to terminate
this Agreement by reason of this Section 8.2, this Agreement will terminate,
Buyer and Seller shall each pay one-half (1/2) of the title and escrow
charges, if any, the Deposit shall be promptly returned to Buyer and neither
party shall have any further rights or obligations hereunder, except pursuant
to the indemnity contained in Section 11.1. In the event Buyer does not
elect to terminate this Agreement by reason of this Section 8.2, the Closing
shall occur on the Closing Date, the Purchase Price shall not be reduced, and
Seller shall assign to Buyer all of its rights to compensation from the
condemning authority.
ARTICLE IX
CLOSING AND PRORATIONS
9.1 ESCROW INSTRUCTIONS. Upon execution of this Agreement, Seller
shall deposit an executed counterpart of this Agreement with the Title
Company, and this instrument shall serve as the instructions to the Title
Company as the escrow holder for consummation of the purchase and sale
contemplated hereby. Seller and Buyer agree to execute such reasonable
additional and supplementary escrow instructions as may be appropriate to
enable the Title Company to comply with the terms of this Agreement;
provided, however, that in the event of any conflict between the provisions
of this Agreement and any supplementary escrow instructions, the terms of
this Agreement shall control.
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9.2 CLOSING. The Closing hereunder shall be held, and delivery of
all items to be made at the Closing under the terms of this Agreement shall
be made, at the offices of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, Old Federal
Reserve Bank Building, 400 Sansome Street, San Francisco, California, on or
before April 21, 1998, or such earlier date as Buyer and Seller may mutually
agree upon in writing (the "Closing Date"); provided, however, the Closing
Date may be extended to April 27, 1998, pursuant to the terms and conditions
of Section 3.1(a) above. Except as otherwise expressly provided herein, the
Closing Date may not be extended without the prior written approval of both
Seller and Buyer.
9.3 DEPOSIT AND DELIVERY OF DOCUMENTS.
(a) At or before the Closing, Seller shall deposit into escrow
with the Title Company or deliver to Buyer the following items relating to
the Property or to this transaction:
(i) grant deeds from each of Claremont and HIC conveying all
of their right, title and interest in and to the Real Property and all
buildings, structures, fixtures, landscaping and other improvements
constructed on or affixed to such Real Property, in the form of attached
EXHIBIT H (the "Deed"), duly executed and acknowledged by Claremont or HIC,
as the case may be, and subject only to the Permitted Exceptions applicable
to the Claremont Property or the HIC Property, as the case may be;
(ii) bills of sale from each of Claremont and HIC with respect
to the Personal Property owned by each, in the form of attached EXHIBIT I
(the "Bills of Sale"), duly executed by Claremont or HIC, as the case may be;
(iii) two (2) counterparts of an assignment of the Service
Contracts, Equipment Leases, Leases, Intangibles and warranties and
guaranties, to the extent such items are (A) owned by Claremont, (B)
assignable (and/or any necessary consents thereto have been obtained), and
(C) in effect as of the Closing, in the form of EXHIBIT J (the "Assignment of
Contracts"), duly executed by Claremont;
(iv) an affidavit that Seller is not a "foreign person," in
compliance with Section 1445 of the Internal Revenue Code, in the form of
EXHIBIT K (the "FIRPTA Affidavit"), duly executed by Seller;
(v) an estoppel certificate substantially in the form
attached as EXHIBIT L for each of the tenants, occupants or concessionaires
under the Leases;
(vi) resolutions of the members of Claremont and the board of
directors of HIC, certified as true and correct by the appropriate officer of
each of said companies, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein; and
(vii) two (2) counterparts of a preliminary schedule of
adjustments pursuant to Section 9.5 (the "Preliminary Schedule of
Adjustments"), duly executed by Seller;
(viii) any other agreements, documents and other items
expressly required to be delivered to Buyer by Seller pursuant to this
Agreement;
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(ix) such other instruments and documents as may be reasonably
be required by the Title Companies to eliminate exceptions for unfunded
mechanics' or materialmen's liens, for the occupancy of any party other than
tenants, licensees or other occupants under the Leases and transient lodging
guests. Seller shall deliver originals or certified copies of any
resolutions, trust indentures, agency agreements, powers of attorney,
consents and other documentation, and shall execute such affidavits and
indemnities, as may be required by the Title Companies, with respect to the
authority of Seller or of the person(s) signing on behalf of Seller;
(x) all master keys to all locks located at the Hotel;
(xi) a Certificate of Good Standing for each of HIC and
Claremont;
(xii) the original books and records of the Hotel
(excluding personnel files), to the extent in Seller's possession or
reasonable control, including, but not limited to, the Financial Information;
provided, however, Seller shall not deliver to Buyer the books and records
maintained in their corporate office in Portland, Oregon. Seller agrees to
retain such books and records for a period of six (6) years after the Closing
Date and shall make such books and records reasonably available to Buyer
during said six (6) year period; and Seller shall reasonably cooperate with
Buyer, at no cost or expense to Seller, to develop audited financial
statements; Buyer agrees to retain the books and records of the Hotel (which
were delivered to Buyer at Closing) for a period of six (6) years after the
Closing Date and make such books and records reasonably available to Seller
during such six (6) year period. The provisions of this Subparagraph (xii)
shall survive Closing;
(xiii) evidence of termination of the management contract,
if applicable, in form and substance reasonably satisfactory to Buyer; and
(xiv) a reaffirmation of Seller's representations and
warranties set forth in this Agreement subject to any Exception Matters and
updates to the exhibits and schedules attached hereto; provided, however, any
updates to Exhibits B, E, and/or G shall be an "Exception Matter(s)" pursuant
to the terms and conditions of Section 6.1 above.
(b) At or before the Closing, Buyer shall deposit into the Escrow
or deliver to Seller the following items relating to the Property or to this
transaction:
(i) funds necessary to close this transaction;
(ii) two (2) counterparts of the Assignment of Contracts, duly
executed by Buyer;
(iii) two (2) counterparts of the Preliminary Schedule of
Adjustments, duly executed by Buyer;
(iv) resolutions of the board of directors of Buyer, certified
as true and correct by the secretary or other appropriate officer of Buyer,
authorizing the execution and delivery of this Agreement and the consummation
of the transaction contemplated herein;
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(v) a reaffirmation of Buyer's representations and warranties
set forth in this Agreement;
(vi) a Certificate of Good Standing for Buyer; and
(vii) any other agreements, documents and other items
expressly required to be delivered to Seller by Buyer pursuant to this
Agreement.
(c) Buyer and Seller shall each deposit such other instruments as
are reasonably required by the Title Company or otherwise required to close
the escrow and consummate the purchase and sale of the Property in accordance
with the terms hereof.
9.4 PRORATIONS. At the Closing, the amount of the proceeds from
the Purchase Price shall be adjusted, upward or downward, as the case may be,
using generally accepted accounting principles and standard hotel accounting
procedures. The following adjustments shall be calculated as of 2:00 a.m. on
the Closing Date as follows, with Buyer being deemed to be the owner of the
Property as of 2:00 a.m. on the Closing Date and being entitled to receive
all income of the Property, and being obligated to pay all expenses of the
Property, on and after 2:00 a.m. on the Closing Date:
(a) The books of the Hotel shall be closed as of 2:00 a.m. on the
Closing Date, and all items relating to the balance sheet for the Property
and income and expense with respect to the ownership, operation and
management of the Property shall be allocated and/or prorated between Buyer
and Seller. Except as otherwise provided herein, all such allocations and/or
prorations shall be made in accordance with generally accepted accounting
principles, consistently applied, and standard hotel accounting procedures,
on the basis of a 365-day year; provided, however, if and to the extent that
there is a conflict between the generally accepted accounting principles and
standard hotel accounting procedures, the generally accepted accounting
principles, consistently applied, shall prevail. The items to be allocated
and/or prorated shall include, without limitation, the following:
(i) Real and personal property taxes on the basis of the
fiscal year for which assessed;
(ii) Water, sewer, electricity, steam, gas, fuel oil,
telephone, cable television and all other utility charges;
(iii) Payments payable under any Service Contracts or
Equipment Leases for services already performed as of the Closing Date; as
well as any payments under said agreements for services not yet rendered;
(iv) Rent and other payments owing under any Leases (provided
that the proration of any percentage rental subject to year-end adjustment
shall be calculated after the Closing Date, as provided in Section 9.4);
(v) Guest room revenue of the Hotel, whether in cash or in
accounts receivable, and vending machines, coin telephones or other
income-producing equipment (with Seller receiving an allocation for any of
same arising from occupancy for the night beginning on
20
the day preceding the Closing Date and ending on the Closing Date), as well
as any commissions or other similar amounts owing with respect to room
rental;
(vi) Income from any other operations at the Hotel other than
guest room revenues (with Seller receiving an allocation with regard to any
thereof which remain open beyond 2:00 a.m. on the Closing Date through the
time such operations first close on the Closing Date);
(vii) All other revenue, including, without limitation,
guest telephone charges, and room service;
(viii) All other amounts payable for periods prior to the
Closing Date shall be paid by Seller and for periods after the Closing Date
shall be paid by Buyer, including, without limitation, trade account payable
assumed by Buyer by virtue of Buyer's assumption of the Service Contracts and
Equipment Leases, but excluding amounts payable for capital improvements to
the Property made prior to the Closing Date, which shall be paid by Seller,
including the capital improvements set forth on SCHEDULE 5 attached hereto
("Seller's Capital Projects"). Seller agrees to diligently proceed with
Seller's Capital Projects through the Closing Date. At Closing, Seller shall
either agree directly to pay all costs and expenses associated with the
completion of Seller's Capital Projects or Buyer shall receive a credit
against the Purchase Price equal to said costs and expenses;
(ix) Annual permits and/or inspection fees (calculated on the
basis of the period covered) and other actual operation and maintenance
expenses of the Property; and.
(i) The trade outs listed on SCHEDULE 6.
(b) In addition to the allocations and prorations provided for in
9.4(a) above, the following amounts shall be credited to Seller or to Buyer,
as provided below:
(i) Utility deposits made by Seller, which are credited or
transferred to the account of Buyer by the holder thereof, shall be credited
to Seller at the Closing;
(ii) Prepaid deposits for room charges for the period from and
after the Closing shall be credited to Buyer at the Closing, net of any
commissions or other expenses incurred in booking such rooms and banquets
which were paid by Seller prior to the Closing Date;
(iii) Security Deposits and any other deposits thereunder
actually held by Seller shall be credited or transferred to Buyer at Closing;
(iv) Attached hereto as SCHEDULE 4 is a list of (a) purchased
gift certificates that have been issued by Claremont, and (b) complimentary
gift certificates issued by Claremont for promotional purposes, which
SCHEDULE Seller hereby represents to Buyer is true and complete. Buyer shall
assume the obligation for honoring all such purchased gift certificates and
complimentary gift certificates that are still in effect and have not yet
been redeemed or cancelled as of the Closing Date. Prior to Closing, Buyer
and Seller shall mutually agree upon an amount to be credited to Buyer at
Closing representing those gift certificate obligations that
21
Buyer is assuming pursuant to this subparagraph (iii), the amount of which
shall be based upon the historical rate of redemption of the Hotel during the
preceding three (3) calendar years and 1998, as applicable. Notwithstanding
the foregoing, Seller and Buyer acknowledge and agree that as of the date of
this Agreement, the parties have not finalized SCHEDULE 4. Seller and Buyer
agree to use good faith efforts to approve the form and content of SCHEDULE 4
and to amend this Agreement to attach SCHEDULE 4 prior to the expiration of
the Inspection Period.
(v) Cash on hand which remains at the Property as of 2:00
a.m. on the Closing Date shall be credited to Seller; and
(vi) All existing bank accounts of Seller shall be retained by
such Seller and closed out by such Seller in due course; and Buyer shall open
and fund its own bank accounts.
(c) At Closing, Seller shall provide Buyer with a list of all
accounts receivable as of the Closing Date. All such accounts receivable
shall be assigned to Buyer and Buyer shall forward to Seller or pay to Seller
on a weekly basis the amount of any payments received by Buyer on account of
such accounts receivable, said accounts receivable being subject to
reassignment to Seller as provided for in Section 9.5. Any payments received
by Buyer and not designated as payments for the accounts receivable payable
to Seller shall be applied first to any accounts receivable accruing after
the Closing Date, and then to accounts receivable accruing prior to the
Closing Date.
(d) Buyer and Seller shall each pay their own attorney's fees and
other fees and costs incurred in connection with the negotiation and
consummation of this Agreement and the transaction contemplated hereunder.
(e) Seller and Buyer shall each pay one-half (1/2) of: (i) the
premium for a standard CLTA Title Policy covering the Property; (ii) any real
property transfer taxes; (iii) any personal property sales taxes applicable
to the sale of the Personal Property; (iv) the escrow charges, if any, of the
Title Company; and (v) the fee for an update of the Survey. Buyer shall pay
the additional premium amount for the ALTA extended coverage increment to the
Title Policy and the entire cost of any endorsements to the Title Policy and
any coinsurance or reinsurance coverage required by the Buyer. Any other
customary closing costs shall be paid one-half (1/2) by each party.
(f) The provisions of this Section 9.4 shall survive the Closing.
9.5 PRORATION CALCULATION. The closing adjustments provided for
in Section 9.4 shall be initially prepared by Seller and reviewed by Buyer.
In the event of any dispute regarding such prorations, such dispute shall be
submitted to a nationally recognized accounting firm mutually acceptable to
Buyer and Seller and the decision of such firm shall be final and binding on
the parties. Each party shall bear one-half (1/2) of the costs and expenses
of such accountants. Buyer and Seller shall provide such accountants
reasonable access to the Property prior to and after the Closing Date for the
purpose of reviewing adjustments, if necessary. Buyer and Seller hereby
agree that if any of the aforesaid prorations cannot be calculated accurately
on the Closing Date, then the same shall be calculated within sixty (60) days
after the Closing Date
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and either party owing the other party a sum of money based on such
subsequent proration(s) shall promptly pay said sum to the other party.
Buyer and Seller further agree that if any accounts receivable arising prior
to the Closing Date that are assigned to Buyer pursuant to Section 9.4 are
not collected by Buyer within one hundred twenty (120) days from the Closing
Date despite Buyer's good faith efforts to collect such accounts receivable
during such one hundred twenty (120) day period, then Buyer shall have no
further obligation to collect or pay Seller for such uncollected accounts
receivable and such accounts receivable shall be reassigned to Seller,
together with all supporting documentation reasonably required by Seller to
pursue collection of such accounts; provided, that if following such
reassignment, Buyer shall receive payment with respect to any such reassigned
accounts receivable, Buyer shall promptly forward same to Seller.
9.6 SALE OF PERSONAL PROPERTY. On the Closing Date, Seller shall
cause the Personal Property to be transferred to Buyer free of any liens,
encumbrances or interests of third parties or of Seller (except for equipment
lessors of any Operating Equipment being leased by Seller and except for any
software licensing restrictions disclosed to Buyer during the Inspection
Period). The portion of the Purchase Price allocable to the Personal
Property shall be as mutually and reasonably determined by Seller and Buyer
on or prior to the expiration of the Inspection Period and set forth on
SCHEDULE 1. Seller shall pay on or prior to the Closing Date all sales and
use taxes arising from or attributable to the business and operations of the
Hotel as conducted by Seller prior to the Closing Date. Prior to the
expiration of the Inspection Period, Buyer and Seller agree to use good faith
efforts to negotiate an agreement (the "Sales Tax Agreement") which
memorializes and confirms the 50/50 split of any and all liability (including
the reasonable costs of any audit or other proceeding) relative to sales or
use taxes, if any, arising by reason of Seller's transfer of the Personal
Property. The Sales Tax Agreement shall address such matters as the joint
defense of any claim for such taxes and security for the performance of each
party's obligations thereunder. Notwithstanding the foregoing, the execution
and delivery of the Sales Tax Agreement shall not be a condition precedent to
either Buyer's or Seller's obligation to consummate the transaction
contemplated hereunder.
ARTICLE X
SELLER'S COVENANTS
10.1 MAINTENANCE OF THE PROPERTY. From the date hereof until the
Closing Date, Seller shall (a) maintain the Property in substantially the
same manner as prior to the date hereof pursuant to Seller's normal course of
business, subject to reasonable wear and tear and further subject to the
occurrence of any damage or destruction to the Property by casualty or other
causes or events beyond the control of Seller; provided, however, that
Seller's obligation under this Section 10.1 shall not include any obligation
to make capital expenditures or any other expenditures not incurred in
Seller's normal course of business; (b) continue to maintain its existing
insurance coverage on the Property (which insurance shall be terminated by
Seller at Closing); (c) not grant or permit any voluntary liens or
encumbrances affecting the Property; (d) not enter into any lease, amendment
of lease or other contract pertaining to the Property, except as provided in
Section 10.2; (e) maintain adequate, usual and customary levels/inventories
of Operating Equipment and Operating Supplies, FF&E, Liquor Inventory and
other Personal Property; (f) shall not remove any FF&E from the Property
(other than in the ordinary course of business in which case adequate
replacements shall have been made.); and (g) hire, discharge and set
compensation levels for Hotel employees in the ordinary course of
23
business and in accordance with Seller's current and customary practices
and policies.
10.2 BUYER'S APPROVAL OF NEW CONTRACTS AFFECTING THE PROPERTY.
Seller shall not, between the date of this Agreement and the Closing Date,
enter into any lease, amendment of lease, contract or agreement pertaining in
any material way to the Property, or modify in any material way any Assumed
Contracts pertaining in any material way to the Property, or waive any
material rights of Seller thereunder, without in each case obtaining Buyer's
prior written consent thereto, which consent shall not be unreasonably
withheld or delayed (excluding, however, any booking or room reservation
agreements or contracts which are on commercially reasonable terms with
unaffiliated third parties, and any other contracts or agreements with
unaffiliated third parties which are on commercially reasonable terms and
which will not survive the Closing or which may be canceled without penalty
on not more than thirty (30) days' notice). If Buyer fails to give notice of
its approval or disapproval of any such proposed action within five (5)
business days after Seller notifies Buyer of such decision to take such
action, Buyer shall be deemed to have given its approval thereto. For
purposes of this Section 10.2, notice shall be given by Seller to Buyer by
facsimile sent to Xxxx Xxxxxxx at (000) 000-0000, with a facsimile copy sent
to Xxxx X. Xxxx, Esq. and J. Xxxxxxx Xxxxxxxxx, Esq. at (000) 000-0000.
ARTICLE XI
SELLER'S AND BUYER'S COVENANTS
11.1 ACCESS. Between the execution of this Agreement and the
Closing Date, Seller shall give Buyer and its employees, representatives,
agents, third party consultants and advisors full access to the Property and
to all of Seller's books, contracts, files, commitments, permits, licenses
and any other records Buyer deems appropriate with respect thereto and to all
management and the Director of Sales and Marketing of the Property (and other
employees of the Property with Seller's consent; provided, however, after the
expiration of the Inspection Period, Seller's consent shall not be
unreasonably withheld), subject to reasonable security precautions and
reasonable limitations imposed by Seller as necessary to maintain
confidentiality with respect to such matters as Seller's files and records
relating to the marketing of the Property, internal economic analyses, and
matters covered by the attorney-client privilege. Upon execution of this
Agreement, Buyer shall have full authority to contact any Authorities that
may have information and/or documentation concerning the Property; provided,
however, any and all communications with employees and/or officials of the
City of Oakland and County of Alameda and with union representatives shall be
coordinated by, and at Seller's discretion, conducted with Xxxxx Xxxxxxx who
shall make himself reasonably available to Buyer for such purposes. Seller
will cause its accountants to furnish such additional financial and operating
data and other information, within the possession and control of such
accountants, as Buyer may from time to time reasonably request.
In connection with any entry by Buyer, or its agents, employees or
contractors onto the Property, Buyer shall give Seller reasonable advance
notice of such entry and shall conduct such entry and any inspections in
connection therewith so as to minimize, to the extent reasonably possible,
interference with Seller's business, the business of Seller's tenants, or
24
guests of the Hotel, and otherwise in a manner reasonably acceptable to
Seller. Without limiting the foregoing, prior to any entry to perform any
on-site inspections or testing, Buyer shall give Seller written notice
thereof, including the identity of the company or persons who will perform
such testing and the proposed scope of the testing. Seller shall approve or
disapprove (which approval may be withheld in Seller's reasonable discretion)
the proposed testing and the party performing the same within two (2)
business days after receipt of such notice. If Buyer or its agents, employees
or contractors take any sample from the Property in connection with any such
approved testing, Buyer shall provide to Seller a portion of such sample
being tested to allow Seller, if it so chooses, to perform its own testing.
Seller or its representative may be present to observe any testing or other
inspection performed on the Property. Buyer shall promptly deliver to Seller
copies of any reports relating to any testing or other inspections of the
Property performed by Buyer or its agents, employees or contractors for
Seller's information only; Seller acknowledges that such reports are
delivered without representations by Buyer. Buyer shall maintain, and shall
ensure that its contractors maintain, public liability and property damage
insurance in amounts and in form and substance reasonably adequate to insure
against all liability of Buyer and its agents, employees or contractors,
arising out of any entry or inspections of the Property pursuant to the
provisions hereof, and Buyer shall provide Seller with evidence of such
insurance coverage upon request by Seller. Buyer shall indemnify and hold
Seller harmless from and against any costs, damages, liabilities, losses,
expenses, liens or claims (including, without limitation, reasonable
attorney's fees) relating to personal injury or property damage arising out
of or relating to any entry on the Property by Buyer, its agents, employees
or contractors in the course of performing the inspections, testings or
inquiries provided for in this Agreement. The indemnification provisions of
this Section 11.1 shall survive the Closing or any termination of this
Agreement and shall be in addition to any liability under Section 2.2(b)(ii).
11.2 CONFIDENTIALITY; RETURN OF INFORMATION TO SELLER. Between the
execution of this Agreement and the Closing, neither party shall directly or
indirectly use or disclose any confidential information concerning the
Property, the other party, the other party's assets or the transactions
contemplated by this Agreement to any Person except that such matters may be
disclosed (a) to such party's directors, officers, partners, and employees;
(b) to such party's legal counsel, accountants, engineers, architects,
financial advisors, lenders and similar professionals and consultants to the
extent such party deems it reasonably necessary or appropriate in connection
with the evaluation of the transaction contemplated hereby; and (c) by Seller
to third parties having an ownership interest in or relationship with the
Hotel (such as existing mortgagees and equipment lessors) to whom disclosure
is necessary or desirable in order to facilitate the consummation of the
transactions contemplated hereby. For the purpose of this Section 11.2, the
term "confidential information" shall mean information which is or becomes
known to a party or its respective affiliates or to their employees, former
employees, consultants or others in a confidential relationship with such
party, including, without limitation, pursuant to the terms of this
Agreement, and which relates to the Property, the transactions contemplated
by this Agreement or the business of either party; provided, however, that
confidential information shall not include (i) information which is or
becomes generally available to the public other than through a violation of
law or obligation hereunder, (ii) information which, in the opinion of
counsel to either party, such party is required by law, court order,
governmental order or decree to disclose, except that the other party may at
its own expense appeal such court order, (iii) information which was
developed by such party on its own, independent from the proprietary
information made available to such party hereunder, and (iv) information
which was
25
subsequently made available to such party by a third party who was not
violating the law or any obligation hereunder in making such disclosure. In
the event the transaction contemplated by this Agreement fails to close for
any reason, Buyer shall promptly return to Seller all documents, instruments,
copies of materials and other written information furnished to Buyer pursuant
to the terms of this Agreement.
11.3 FURTHER ASSURANCES. Subject to the terms and conditions
hereof, each party agrees to use its best efforts to do, or cause to be done,
all things, not inconsistent with the terms of this Agreement, necessary,
proper, or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement as expeditiously as practicable,
including, without limitation, the performance of such further acts or the
execution and delivery of such additional instruments or documents, not
inconsistent with the terms of this Agreement, as any party may reasonably
request in order to carry out the purposes of this Agreement and the
transactions contemplated hereby, including, without limitation, in
connection with the transfer to Buyer of the Service Contracts, the Leases,
and the Equipment Leases.
11.4 EMPLOYEES. Buyer agrees to indemnify and hold Seller harmless
from and against any and all claims of the employees of Seller, employee
representatives, and applicable units of local government based on failure to
comply with the Worker Adjustment and Retraining Notification Act 29 U.S.C.
2101 ET SEQ. (the "WARN Act"), to the extent applicable. Unless otherwise
agreed between Seller and Buyer, Seller shall be responsible for any
liability for payment of all employees' wages, accrued vacation pay, sick
leave, bonuses, pension benefits and other benefits, including, without
limitation, any COBRA rights, earned by and due to or accrued to employees at
the Property as of the day prior to the Closing Date, together with FICA,
unemployment and other taxes and benefits due from any employer of such
employees, and including COBRA benefits that are due to employees of Seller
that Buyer does not hire upon the Closing Date.
(a) FUTURE EMPLOYMENT OF EMPLOYEES. At Closing, the employment by
Seller of all employees whose employment is at or for the Hotel, shall
terminate and such employees shall cease to participate in any employee
benefit plans maintained by or for the benefit of Seller. Seller shall retain
responsibility for the payment of any employee benefits or entitlements,
including severance pay, accrued vacation, sick or holiday pay, to all
terminated employees pursuant to any employee benefit plan, fund, program,
contract, policy or arrangement of Seller or applicable law or regulation as
a result of the consummation of the transactions contemplated hereby.
Subject to the WARN Act obligations described in the first paragraph of
Section 11.4, nothing in this Agreement, express or implied, shall confer
upon any employee of Seller, or any representative of any such employee, any
rights or remedies, including any right to employment, continued employment
for any period, or seniority rights, of any nature whatsoever.
(b) HEALTH CARE CONTINUATION REQUIREMENTS. The parties
acknowledge that the transactions contemplated hereby will result in
obligations on the part of Seller and one or more of Seller's employee
benefit plans that is a welfare benefit plan (within the meaning of Section
3(1) of ERISA) to comply with the health care continuation requirements of
Part 6 of Title 1 of ERISA and Code Section 4980B, as applicable. Seller and
each such employee benefit plan that is such a welfare benefits plan shall
comply with the applicable requirements of such laws. Seller shall take all
actions to insure continuation of each such employee benefit plan that
26
is such a welfare benefit plan for a minimum period of one hundred twenty
(120) days from and after the Closing Date. The parties expressly agree that
Buyer and Buyer's benefit plans, if any, shall have no responsibility for
compliance with such health care continuation requirements (i) for qualified
beneficiaries who previously elected to receive continued coverage under
Seller's ERISA benefit plans or who between the date of this Agreement and
the Closing Date elect to receive continued coverage, or (ii) with respect to
those employees or former employees of Seller who may become eligible to
receive such continued coverage as a result of the transactions provided for
in this Agreement.
(c) EMPLOYEE BENEFIT PLANS. Except as specifically set forth in
this Agreement: (i) Buyer shall not be obligated to assume, continue or
maintain any of Seller's employee benefit plans; (ii) no assets or
liabilities of such employee benefit plans shall be transferred to, or
assumed by, the Buyer or the Buyer's benefit plans; and (iii) Seller shall be
responsible solely for funding and/or payment of any benefits under any such
employee benefit plans, including any termination benefits and other employee
entitlements accrued under such plans by or attributable to employees of
Seller prior to the Closing Date.
(d) INDEMNIFICATION OF BUYER. Seller agrees to pay and be liable
to Buyer, its affiliates and their respective directors, officers and
employees (herein individually a "Buyer Indemnified Party" and collectively,
"Buyer Indemnified Parties") and shall assume, indemnify, defend and hold
harmless the Buyer Indemnified Parties from and against and in respect of any
and all losses, damages, liabilities, taxes, sanctions that arise (A) under
Section 4980B of the Code and Part 6 of Title I of ERISA, interest and
penalties, costs and expenses (including, without limitation, disbursements
and reasonable legal fees incurred in connection therewith and in seeking
indemnification therefor, and any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceedings, claim, appeal,
demand, assessment or judgment) imposed upon, incurred by, or assessed
against any Buyer Indemnified Party arising by reason of or relating to any
failure to comply with the health care continuation coverage requirements of
Section 4980B of the Code and Part 6 of Title I or ERISA which failure
occurred or occurs (i) on or prior to the Closing Date with respect to any
current or former employee of Seller or any qualified beneficiary of such
employee (as defined in Section 4980B(g)(1) of the Code), or (ii) after the
Closing Date with respect to any current or former employee of Seller who
does not at any time become entitled to coverage under any group health plan,
within the meaning of Section 5000(b)(1) of the Code, of Buyer, or with
respect to any dependent of such employee and for any failure to comply with
the notice or other requirements of the Act, and/or (B) in connection with
any employee complaints and/or matters pending before any applicable
administrative agencies, including without limitation, the National Labor
Relations Board, EEOC, Department of Labor, Department of Fair Employment
Housing, and/or any applicable collective bargaining dispute resolution
forums prior to the Closing Date or relating to incidents arising prior to
the Closing Date.
(e) INDEMNIFICATION OF SELLER. Buyer agrees to pay and be liable
to Seller, its affiliates and their respective officers and employees (herein
individually a "Seller Indemnified Party" and collectively, "Seller
Indemnified Parties") and shall assume, indemnify, defend and hold harmless
Seller Indemnified Parties from and against and in respect of any and all
losses, damages, liabilities, taxes, sanctions that arise (A) under Section
4980B of the Code and Part 6 of Title I of ERISA, interest and penalties,
costs and expenses (including, without limitation,
27
disbursements and reasonable legal fees incurred in connection therewith and
in seeking indemnification therefor, and any amounts or expenses required to
be paid or incurred in connection with any actions, suit, proceedings, claim,
appeal, demand, assessment or judgment) imposed upon, incurred by, or
assessed against any Seller Indemnified Party arising by reason of or
relating to any failure to comply with the health care continuation coverage
requirements of Section 4980B of the Code and Part 6 of Title I of ERISA
which failure occurs with respect to any current or former employee of Seller
actually hired as an employee of Buyer or any qualified beneficiary of such
employee, as defined in Section 4980B(g)(1) of the Code, who after the
Closing Date becomes entitled to coverage under any group health plan, within
the meaning of Section 5000(b)(1) of the Code, of Buyer, and/or (B) in
connection with any employee complaints and/or matters before any applicable
administrative agencies, including without limitation, the National Labor
Relations Board, EEOC, Department of Labor, Department of Fair Employment
Housing, and/or any applicable collective bargaining dispute resolution
forums on and after the Closing Date or relating to incidents arising on and
after the Closing Date.
For purposes of this Agreement, references to the Code shall mean
the Internal Revenue Code of 1986 and references to the Code and ERISA shall
include references to any provision of such statutes as they may be amended
from time to time.
11.5 TRANSFER OF LIQUOR ASSETS.
(a) APPLICATION FOR TRANSFER. Buyer shall file with the
California Department of Alcoholic Beverage Control (the "Department") an
application for the transfer of the Liquor Licenses to Buyer or Buyer's
designee and shall prosecute such application with due diligence, including
supplying to the Department promptly all information required or reasonably
requested by the Department. Buyer shall pay all fees required by the
Department in connection with such application for the transfer of the Liquor
Licenses; provided, however, that Seller shall be liable for the payment of
any and all amounts required to be paid to the California State Board of
Equalization and/or the California Franchise Tax Board as a precondition to
the transfer of such Liquor Licenses to Buyer.
(b) APPLICATION FOR QUALIFICATION OF OPERATOR. Buyer shall file
with the Department an application for Qualification of Buyer or the operator
of the Hotel designated by Buyer authorizing Buyer or such operator to serve
alcoholic beverages at the Hotel and shall prosecute such application with
due diligence, including supplying to the Department promptly all information
required or reasonably requested by the Department. Buyer shall pay all fees
required by the Department in connection with such application for the
qualification of Buyer or such operator.
(c) LIQUOR ESCROW. Prior to applying to the Department pursuant
to Section 11.5(a), above, Buyer and HIC shall open an escrow (the "Liquor
Escrow") with the Bank of San Francisco, as escrow holder, in accordance with
the provisions of the Alcoholic Beverage Control Act and Title 4, California
Code of Regulations, to provide for the transfer of the Liquor Assets through
the Liquor Escrow, following approval by the Department of Buyer's
application for the transfer of the Liquor Licenses.
28
(d) SELLER'S COOPERATION. HIC and Claremont agree, both in
connection with the application for the transfer of the Liquor Licenses and
in connection with any application for a temporary permit as described in
Section 11.5(e) below, to reasonably cooperate with Buyer in supplying
information required or reasonably requested by the Department and executing
any necessary documents for filing with the Department or as otherwise
required to be executed or recorded by the Department.
(e) ALLOCATION OF PURCHASE PRICE TO LIQUOR ASSETS; CLOSING;
TEMPORARY PERMIT. Buyer and HIC currently agree to allocate One Hundred
Fifty Thousand Dollars ($150,000) of the Purchase Price to the Liquor Assets,
which amount shall be paid into the Liquor Escrow from the Purchase Price due
Seller at Closing; provided, however, the foregoing allocation may be
adjusted by Seller and Buyer during the Inspection Period in connection with
the allocation of Purchase Price to be specified on SCHEDULE 1. On or prior
to the Closing Date, HIC shall deposit into the Liquor Escrow a liquor escrow
xxxx of sale conveying the Liquor Assets to Buyer, which xxxx of sale shall
be delivered to Buyer upon close of the Liquor Escrow. Buyer shall act
diligently to obtain, prior to the Closing Date, the Department's approval of
the application for transfer of the Liquor Licenses and the application for
qualification of Buyer or the Buyer's operator, or, if such approvals have
not been obtained, a temporary liquor license permit from the Department;
provided, however, that such approvals or temporary permit are not conditions
precedent to the Closing and, if Buyer fails to obtain such approvals or such
temporary permit, Buyer shall waive the transfer of Liquor Assets as a
closing condition and shall proceed to Closing.
In the event Buyer obtains the temporary liquor license permit on
or before Closing, Buyer shall have the right, on and after the Closing Date,
to use the Liquor Assets pending the closing of the Liquor Escrow, and at the
Closing the portion of the Purchase Price allocated to the Liquor Assets
shall be transferred by the Title Company to the Liquor Escrow. Buyer and
HIC shall instruct the escrow holder under the Liquor Escrow to make payment
to creditors for any outstanding amounts owed by HIC for the Liquor Assets
and to invest all funds held in the Liquor Escrow as HIC shall direct and to
pay all interest earned thereon, together with any portion thereof not
required to satisfy the claims of creditors of the Hotel with respect to the
Liquor Assets whose claims accrued prior to the Closing Date, to HIC upon
close of the Liquor Escrow.
11.6 ARTWORK SUBJECT TO SPECIAL CONDITIONS. Buyer and Seller
acknowledge and agree that the Personal Property to be acquired by Buyer in
connection herewith includes, without limitation, the artwork located or
displayed on the Property, except as listed on EXHIBITS F-2 AND F-3 (the
"Acquired Artwork"). Notwithstanding the foregoing, Buyer hereby agrees that
in the event that any item of the Acquired Artwork listed on EXHIBIT F-1
attached hereto is to be sold by Buyer, HIC shall have a right of first
refusal to acquire said Acquired Artwork at the then appraised market value
or shall have the right to require Buyer to donate said Acquired Artwork to
the Portland Art Museum.
Buyer and Seller acknowledge and agree that the Personal Property
to be acquired by Buyer in connection herewith shall not include the artwork
listed on EXHIBITS F-2 AND F-3 ("Excluded Artwork"), which Excluded Artwork
is owned by Xxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxxxxx (the "Schnitzers").
Notwithstanding the foregoing, Seller on behalf of the Schnitzers
29
hereby agrees that (A) the Excluded Artwork listed on EXHIBIT F-2 attached
hereto ("Short Term Borrowed Artwork") may remain on display at the Hotel for
a period of up to one hundred eighty (180) days after the Closing Date,
subject to the following terms and conditions: (i) on or before the Closing
Date, Buyer shall provide written notice to Seller of its election to retain
the Short Term Borrowed Artwork pursuant to this Section 11.6; (ii) during
the Loan Period (as defined below), Buyer shall keep the Short Term Borrowed
Artwork secured and in good condition; (iii) during the Loan Period, Buyer
shall maintain personal property insurance to insure the Short Term Borrowed
Artwork in such amounts and in form and substance reasonably approved by
Seller, and said insurance shall name Seller as an additional insured; (iv)
Buyer shall provide Seller with evidence of such insurance on or before the
Closing Date; and (v) Buyer at its sole cost and expense shall return the
Short Term Borrowed Artwork to the Schnitzers upon the earlier of (a) one
hundred eighty (180) days after the Closing Date, or (b) such time as Buyer
elects not to display the Short Term Borrowed Artwork at the Hotel (the "Loan
Period") and (B) the Excluded Artwork listed on EXHIBIT F-3 ("Long Term
Borrowed Artwork") may remain at the Hotel indefinitely, subject to the
following conditions: (i) on or before the Closing Date, Buyer shall provide
written notice to Seller of its election to retain the Long Term Borrowed
Artwork pursuant to this Section 11.6; (ii) Buyer shall keep the Long Term
Borrowed Artwork secured and in good condition; (iii) Buyer shall maintain
personal property insurance to insure the Long Term Borrowed Artwork in such
amounts and in form and substance reasonably approved by Seller, and said
insurance shall name Seller as an additional insured; (iv) Buyer shall
provide Seller with evidence of such insurance on or before the Closing Date;
and (v) Buyer at its sole cost and expense shall return the Long Term
Borrowed Artwork to the Schnitzers at such time as Buyer elects not to
display the Long Term Borrowed Artwork at the Hotel (other than for routine
maintenance or construction purposes).
11.7 INDEMNIFICATION. Each party (each, an "Indemnifying Party")
hereby agrees to indemnify and defend the other party and its respective
officers, partners, directors, shareholders, affiliates and agents (the
"Indemnified Parties") and hold the Indemnified Parties harmless from and
against any and all losses, damages, liabilities, claims, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) paid
or incurred by the Indemnified Parties due to misrepresentations or breach of
warranty or breach of covenant made by the Indemnifying Party in this
Agreement or in any document, certificate, or exhibit given or delivered to
the other party hereto pursuant to or in connection with this Agreement, and
the indemnification provisions of this Section 11.7 shall survive the
Closing.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. Any notices required or permitted to be given
hereunder shall be given in writing and shall be delivered (a) in person, (b)
by certified mail, postage prepaid, return receipt requested, (c) by
Facsimile, or (d) by a commercial overnight courier that guarantees next day
delivery and provides a receipt, and such notices shall be addressed as
follows:
TO BUYER: KSL RECREATION GROUP, INC.
00-000 XXX Xxxxxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
30
ATTN: XXXX XXXX, XXXX XXXXXXX
Facsimile No: (000) 000-0000
cc: LEGAL DEPARTMENT
Facsimile No: (000) 000-0000
WITH A COPY TO: ALLEN, MATKINS, XXXX, XXXXXX
& XXXXXXX, LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ATTN: XXXXXXX X. XXXXXXXX
Facsimile No: (000) 000-0000
TO CLAREMONT: CLAREMONT HOTEL L.L.C.
c/o 0000 X.X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ATTN: XXXXXX X. XXXXXXXXX
Facsimile No: (000) 000-0000
TO HIC: XXXXXX INVESTMENT CORP.
0000 X.X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ATTN: XXXXXX X. XXXXXXXXX
Facsimile No: (000) 000-0000
WITH A COPY (IN THE CASE
OF ANY NOTICE GIVEN TO
BOTH CLAREMONT AND HIC
OR TO EITHER OF THEM) TO: Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, LLP
Old Federal Reserve Bank Building
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
ATTN: XXXX X. XXXXXX
Facsimile No: (000) 000-0000
or to such other address as either of the parties may from time to time
specify in writing to the other parties. Any notice shall be effective only
upon delivery, which for any notice given by facsimile shall mean notice
which has been received by the party to whom it is sent as evidenced by
confirmed answerback. The inability to deliver because of a changed address
of which no notice was given, or rejection or other refusal to accept any
notice, shall be deemed to be the receipt of the notice as of the date such
inability to deliver or rejection or refusal to accept. Any notice to be
given by any party hereto may be given by the counsel for such party.
12.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
12.3 INTERPRETATION OF AGREEMENT. The article, section and other
headings of this Agreement are for convenience of reference only and shall
not be construed to affect the
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meaning of any provision contained herein. All Exhibits and Schedules
described herein and attached hereto are fully incorporated into this
Agreement for all purposes by this reference. Where the context so requires,
the use of the singular shall include the plural and vice versa and the use
of the masculine shall include the feminine and the neuter. The parties
acknowledge that, with respect to the transactions contemplated by this
Agreement, (a) each party and its attorneys 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 amendments or
Exhibits thereto and (b) each party has relied solely on the advice of its
own accounting, tax, legal and other advisors. All dates and times referred
to in this Agreement shall be on Pacific Standard Time or Pacific Daylight
Savings Time (as applicable). In the event that the specified date by which
any notice is to be delivered hereunder falls on a Saturday, Sunday or a
legal holiday, then such date shall be deemed to be extended to the next
following business day.
12.4 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
and Schedules hereto, contains all representations, warranties and covenants
made by Buyer and Seller and constitutes the entire understanding between the
parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this
Agreement together with the Exhibits and Schedules hereto.
12.5 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place, or circumstance, except for any
item which constitutes a material element of the consideration between the
parties, shall be held by a court of competent jurisdiction to be invalid,
unenforceable, or void, the remainder of this Agreement and such provisions
as applied to other Persons, places, and circumstances shall remain in full
force and effect.
12.6 COUNTERPARTS. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
12.7 SUCCESSORS AND ASSIGNS. Buyer shall not have the right to
assign all or any part of its interest in this Agreement without obtaining
the prior written consent of Seller, which consent may be withheld in
Seller's sole and absolute discretion, except Buyer may assign this Agreement
or any portion thereof to any of its subsidiaries and affiliates upon notice
thereof to Seller (a "Permitted Assignment"). In no event shall Buyer be
released from any of its obligations or liabilities hereunder whether or not
Seller approves of any assignment of this Agreement or there is a Permitted
Assignment. Buyer hereby agrees that any assignment by Buyer in
contravention of this provision shall be void and shall not relieve Buyer of
its obligations and liabilities hereunder. Subject to the foregoing, this
Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns.
12.8 FINDERS AND BROKERS. Except as expressly provided to the
contrary in this Agreement, each party hereto shall pay its own expenses
(including, without limitation, attorneys' fees) incurred in connection with
this Agreement and the transactions contemplated hereby. The parties
represent and warrant to each other that no broker or finder was involved in
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arranging or bringing about this transaction and there are no claims or
rights for brokerage commissions or finders' fees in connection with the
transactions contemplated by this Agreement, except for Eastdil Realty
Company, Inc., whose commission shall be paid by Seller pursuant to a
separate agreement between Seller and Eastdil Realty Company, Inc. In the
event that any broker or finder brings a claim for a commission or finder's
fee based upon any contact, dealings or communication with Buyer or Seller,
the party through whom the broker or finder makes his claim shall defend the
other party from such claim, and shall indemnify the other party and hold the
other party harmless from any and all damages, liabilities, losses, costs and
expenses (including reasonable attorneys' fees and disbursements) paid or
incurred by the other party in defending against the claim. The provisions
of this Section 12.8 shall survive the Closing or any termination of this
Agreement and shall be in addition to any liability under Section 2.2(b)(ii).
12.9 ATTORNEYS' FEES. In the event either party hereto fails to
perform any of its obligations under this Agreement or in the event any
dispute arises between the parties hereto concerning the meaning or
interpretation of any provision of this Agreement, the defaulting party or
the party not prevailing in such dispute, as the case may be, shall pay any
and all costs and expenses incurred by the other party on account of such
default and/or in enforcing or establishing its rights hereunder, including,
without limitation, court costs and reasonable attorneys' fees and
disbursements.
12.10 WAIVER OF COMPLIANCE. Any failure of Seller, on the one
hand, or Buyer, on the other, to comply with any provision of this Agreement
may be expressly waived in writing by Buyer or Seller, respectively, but such
waiver or failure to insist upon strict compliance with such provision shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity. The waiver by any
party of the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
12.11 SURVIVAL OF REPRESENTATIONS. The representations of
Seller and Buyer contained in Sections 6.1 and 7.1 shall survive for a period
of twelve (12) months after the Closing. Any claim that either Buyer or
Seller may have at any time against the other party for a breach of any such
representation, whether known or unknown, which is not asserted by written
notice to such other party within such twelve (12) month period shall not be
valid or effective, and such other party shall have no liability with respect
thereto.
12.12 AMENDMENTS. This Agreement may not be amended or
modified except by a written instrument signed by both Buyer and Seller.
12.13 TIME OF THE ESSENCE. Time is of the essence in the
performance of Buyer's obligations under this Agreement.
12.14 SECTION 1031 EXCHANGE. It is presently contemplated that
HIC may desire to effectuate a tax-deferred exchange (also known as a "1031"
exchange) (an "Exchange") in
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connection with the sale of the portion of the Real Property that is
presently owned by HIC. Buyer hereby agrees to cooperate with HIC in
connection with such Exchange (including, without limitation, by executing
documents consenting to the assignment of this Agreement to an exchange
facilitator), provided that:
(i) All documents executed by Buyer in connection with the
Exchange shall be subject to the prior reasonable approval of Buyer and shall
recognize that that Buyer is acting solely as an accommodating party to such
Exchange, shall have no liability with respect thereto, and is making no
representation or warranty that the transaction qualifies as a tax-free
exchange under Section 1031 of the Internal Revenue Code or any applicable
state or local laws, and Buyer shall have no liability whatsoever if any such
transactions fails to so qualify.
(ii) Such Exchange shall not result in Buyer incurring any
additional costs, liabilities or delay.
(iii) In no event shall Buyer be obligated to acquire any
property or otherwise be obligated to take title, or appear in the records of
title, to any property in connection with such Exchange.
(iv) In no event shall HIC's consummation of such Exchange
constitute a condition precedent to Seller's obligations under this
Agreement, and HIC's failure or inability to consummate such Exchange for any
reason or for no reason at all shall not be deemed to excuse or release that
party from the Seller's obligations under this Agreement.
12.15 SHADOW MANAGEMENT. Upon the expiration of the Inspection
Period and provided that Buyer has not elected to terminate this Agreement,
as provided herein, Seller shall permit Buyer to establish and maintain a
shadow management operation with respect to the Hotel. Personnel from
Buyer's shadow management operation shall have reasonable access during
normal business hours to all books, records and other information in the
possession or control of records and other information in the possession or
control of Seller or its agents concerning the Hotel and shall have the right
(at Buyer's expense) to establish duplicate books and records (whether in
tangible or electronic form) in order to effect a smooth transition in the
ownership and management of the Hotel; provided, however, that Buyer and its
shadow management operation and employees shall not unreasonably interfere
with the normal management and operation of the Hotel, shall hold all
information acquired from such books and records confidential in accordance
with the provisions of this Agreement, shall repair any damage to the
physical condition of the Hotel caused by Buyer or its agents in any such
shadow management operation, and shall not be deemed to have assumed
management responsibilities prior to Closing by virtue of such shadow
management.
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12.16 BULK SALES COMPLIANCE. Seller shall and hereby agrees to
indemnify, hold harmless and defend Buyer for any loss, damage, liability,
claim or expense (including, without limitations, reasonable attorneys' fees
and expenses) on account of claims of Seller's creditors arising from
Seller's failure to comply with any applicable bulk sales laws, which
indemnity shall survive the Closing Date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
SELLER: CLAREMONT HOTEL L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
By: /s/
--------------------------------------
XXXXXX X. XXXX
Its: Senior Vice President
XXXXXX INVESTMENT CORP.,
AN OREGON CORPORATION
By: /s/
--------------------------------------
XXXXXXX X. XXXX
Its: Vice President and
General Counsel
BUYER: KSL RECREATION GROUP, INC.,
A DELAWARE CORPORATION
By: /s/
--------------------------------------
XXXX X. XXXX, XX.
Its: Vice President and
Chief Financial Officer
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LIST OF EXHIBITS AND SCHEDULES
A - Description of Real Property
A-1 - Description of Claremont Property
A-2 - Description of HIC Property
B - Equipment Leases
C - FF&E
C-1 - Chinaware, Glassware, Silverware and Linens
D - Intangibles
E - Leases
F - Operating Equipment
F-1 - Acquired Artwork Subject to Right of First Refusal
F-2 - Short Term Borrowed Artwork
F-3 - Long Term Borrowed Artwork
F-4 - Excluded Personal Property
G - Service Contracts
H - Deed
I - Xxxx of Sale -- Personal Property
J - Assignment of Service Contracts, Equipment Leases, Leases,
Intangibles and Warranties and Guaranties
K - FIRPTA Affidavit
L - Form of Estoppel Certificate
Schedule 1 - Allocation of Purchase Price
Schedule 2 - Environmental Reports
Schedule 3 - Pending Litigation
Schedule 4 - List of Purchased Gift Certificates and Complimentary
Gift Certificates
Schedule 5 - Capital Projects in Process
Schedule 6 - Trade Outs
Schedule 7 - List of Pool and Tennis Club Memberships
