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EXHIBIT 10.14
CONTRIBUTION/PURCHASE AND SALE AGREEMENT
by and between
OLYMPUS MONTCLAIR-CHICAGO GENERAL PARTNERSHIP
an Illinois general partnership
as Seller,
and
APGM LIMITED PARTNERSHIP,
a Delaware limited partnership
as Buyer
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TABLE OF CONTENTS
ARTICLE PAGE
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1 DEFINITIONS ........................................................ 2
1.1 Definitions .................................................. 2
2 CONTRIBUTION/PURCHASE AND SALE; LEASE-BACK ......................... 11
2.1 Contribution/Purchase and Sale ............................... 11
2.2 Property Lease ............................................... 11
3 DEPOSIT AND PURCHASE PRICE ......................................... 12
3.1 Xxxxxxx Money Deposit in Escrow .............................. 12
3.2 Purchase Price and Handling of Xxxxxxx Money Deposit.......... 12
3.3 Closing Escrow ............................................... 13
4 TITLE, SURVEY AND SEARCHES ......................................... 13
4.1 Title ........................................................ 13
4.2 Survey ....................................................... 14
4.3 Searches ..................................................... 15
5 DUE DILIGENCE ...................................................... 16
5.1 Due Diligence Materials....................................... 16
5.2 Inspection ................................................... 17
5.3 Due Diligence Termination .................................... 18
6 REPRESENTATIONS AND WARRANTIES ..................................... 18
6.1 Representation and Warranties of Seller ...................... 18
6.2 Representations and Warranties of Buyer ...................... 24
6.3 Change In Circumstance ....................................... 25
6.4 Other Representations and Warranties ......................... 26
7 SELLER'S COVENANTS ................................................. 26
7.1 Covenants .................................................... 26
7.2 No Assumption of Seller's Obligations ........................ 28
8 CONDITIONS PRECEDENT ............................................... 29
8.1 Conditions Precedent to the Obligations of Buyer ............. 29
8.2 Conditions Precedent to the Obligations of Seller ............ 30
8.3 IPO Condition ................................................ 30
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ARTICLE PAGE
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9 DESTRUCTION, DAMAGE OR CONDEMNATION ............................... 31
9.1 Destruction or Damage ....................................... 31
9.2 Condemnation ................................................ 32
10 POSSESSION, PRORATIONS AND CLOSING COSTS .......................... 32
10.1 Possession .................................................. 32
10.2 Prorations .................................................. 33
10.3 Closing Costs ............................................... 33
11 CLOSING ........................................................... 34
11.1 Time and Place .............................................. 34
11.2 Seller's Deliveries ......................................... 34
11.3 Buyer's Deliveries .......................................... 36
11.4 Concurrent Deliveries ....................................... 36
11.5 Concurrent Transactions ..................................... 37
11.6 New York Style Closing ...................................... 37
11.7 Employees and Leasing Commissions ........................... 37
12 INDEMNIFICATION ................................................... 37
12.1 Seller's Indemnity .......................................... 37
12.2 Buyer's Indemnity ........................................... 38
12.3 Indemnification Procedures .................................. 39
13 DEFAULT ........................................................... 40
13.1 Buyer Default ............................................... 40
13.2 Seller Default .............................................. 41
14 INTENTIONALLY OMITTED ............................................. 42
15 NOTICES ........................................................... 42
15.1 Notices ..................................................... 42
16 ADDITIONAL COVENANTS .............................................. 44
16.1 Entire Agreement, Amendments and Waivers .................... 44
16.2 Further Assurances .......................................... 44
16.3 Survival and Benefit ........................................ 44
16.4 No Third Party Benefits ..................................... 44
16.5 Buyer's Investigation and Inspections ....................... 44
16.6 Interpretation .............................................. 44
16.7 Governing Law ............................................... 45
16.8 Attorneys' Fees ............................................. 45
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ARTICLE PAGE
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16.9 Assignment ................................................. 45
16.10 Xxxxxx Name ................................................ 45
16.11 [Intentionally Omitted] .................................... 45
16.12 Offer and Acceptance ....................................... 45
17 UNITS .............................................................. 46
17.1 Accredited Investors ....................................... 46
17.2 Required Information ....................................... 46
17.3 No Offering ................................................ 46
17.4 Federal Income Tax Consequences of Transaction ............. 46
17.5 Debt Subject to Amount ..................................... 47
LIST OF EXHIBITS
EXHIBIT A - Legal Description of the Land, the Indian Lakes Excluded
Property and the Nordic Hills Excluded Property
EXHIBIT B - Required Due Diligence Materials
EXHIBIT C - Contracts
EXHIBIT D-1 - List of Licenses and Permits
EXHIBIT D-2 - List of Operating Permits
EXHIBIT E - Unit Formula
EXHIBIT F - Intentionally Omitted
EXHIBIT G - List of Bookings
EXHIBIT H - Leases
EXHIBIT I - Commissions
EXHIBIT J - List of Reports, Assessments and Investigations
EXHIBIT K - Litigation
EXHIBIT L - List of Seller's Environmental Reports and Engineering Reports
EXHIBIT M - Intentionally Omitted
EXHIBIT N - Assignment of Licenses and Permits, Trade Names and Trademarks, and
Warranties
EXHIBIT O - Xxxx of Sale
EXHIBIT P - Property Lease
EXHIBIT Q - Trade Names and Trademarks
EXHIBIT R - List of Loan Documents
EXHIBIT S - Form of Deed
EXHIBIT T - List of Violations
EXHIBIT U - List of Equity Owners
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CONTRIBUTION/PURCHASE AND SALE AGREEMENT
THIS CONTRIBUTION/PURCHASE AND SALE AGREEMENT is made and entered into as
of May 14, 1998, by and between OLYMPUS MONTCLAIR-CHICAGO GENERAL PARTNERSHIP,
an Illinois general partnership ("SELLER"), and APGM LIMITED PARTNERSHIP, a
Delaware limited partnership ("BUYER").
R E C I T A L S:
A. Seller is the fee owner of the Land and the Improvements (as such terms
are hereinafter defined) comprising a resort, golf course and
convention/banquet facility commonly known as Indian Lakes Resort located in
Bloomingdale, Illinois [which excludes an approximately eleven (11) acre vacant
parcel owned by Seller, located adjacent to the Indian Lakes Resort and
generally described on Exhibit A attached hereto (the "INDIAN LAKES EXCLUDED
PROPERTY")]; and a resort, golf course and convention/banquet facility commonly
known as Nordic Hills Resort in Itasca, Illinois [which excludes two (2) vacant
parcels of approximately four (4) and five (5) acres and one (1) improved
parcel owned by Seller, each located adjacent to the Nordic Hills Resort and
each generally described on Exhibit A attached hereto (hereinafter collectively
called the "NORDIC HILLS EXCLUDED PROPERTY")]; and Seller has certain right,
title and interest in and to the Licenses and Permits, the Trade Names and
Trademarks, the Warranties and the FF&E (as such terms are hereinafter
defined).
B. Xxxxxx Xxxxxx Golf Management LLC ("XXXXXX LLC") and its principals are
in the process of sponsoring a real estate investment trust ("REIT"), the
shares of which will be offered to the public pursuant to an initial public
offering (the "IPO") of shares of common stock ("COMMON STOCK"). As part of
the IPO, it is contemplated that (i) the REIT will become the managing general
partner of Buyer, (ii) the limited partnership interests in Buyer shall be
divided into units ("UNITS"), each of which Units shall have substantially the
same economic attributes as a share of Common Stock in the REIT, and (iii) the
holders of Units will have the right to exchange Units for Common Stock (on a
one Unit for one share of Common Stock basis), subject to the restrictions and
limitations which will be established by an amended and restated partnership
agreement of Buyer and the organizational documents for the REIT which are in
effect as of the consummation of the date of the IPO.
C. In connection with the establishment of the REIT and the IPO, Seller
desires to sell, assign, transfer or otherwise convey and Buyer desires to
purchase and acquire, the Property (as hereinafter defined) upon and subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. When used herein, the following terms shall have the
respective meanings set forth opposite each such term:
ACT. As defined in Section 7.1(i).
AGREEMENT. This Contribution/Purchase and Sale Agreement, including
the Exhibits attached hereto which are by this reference incorporated
herein and made a part hereof.
ASSIGNMENT OF LICENSES AND PERMITS, TRADE NAMES AND TRADEMARKS, AND
WARRANTIES. As defined in Section 11.2(b).
BOOKINGS. Contracts for the use or occupancy of guest rooms, golf
facilities, or meeting and banquet facilities at either of the resorts,
or any combination thereof, as the case may be.
BREAK-UP FEE. As defined in Section 8.3.
BUYER INDEMNIFIED PARTIES. As defined in Section 12.1.
BUYER'S INDEMNITY. As defined in Section 5.2.
BUYER'S LOAN DOCUMENTS INDEMNITY. As defined in Section 12.2.
BUYER'S REPRESENTATIVES. As defined in Section 5.2.
CLOSING. The closing of the sale and purchase transaction
contemplated by this Agreement, as described in Article 11 of this
Agreement.
CLOSING DATE. The date of closing determined pursuant to Section
11.1 of this Agreement.
CODE. As defined in Section 17.4.
COMMON STOCK. As defined in the Recitals hereto.
CONSUMABLES. All operating supplies and inventories necessary for
the operation or maintenance of the Resort, including collateral services
and facilities, such as
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restaurants, bars, pools and meeting rooms, in accordance with the usual
and customary standards for the Resort and the resort hotel industry in
general, including all food and beverages (alcoholic, to the extent
transferable under applicable law, and non-alcoholic); chinaware;
glassware; linens; bedding; silverware; uniforms; towels; utensils;
tools; engineering, maintenance and housekeeping, cleaning and office
supplies, including soap, cleaning materials and matches; stationery
business forms, printed hotel and/or golf forms, scorecards and printing;
and other supplies of all kinds, in each case whether partially used,
unused or held in reserve storage for future use in connection with the
maintenance and operation of the Improvements, which are on hand on the
date hereof, subject to such depletion and restocking as shall occur and
shall be made in the normal course of business of the Resort but in
accordance with present operating standards for the Resort, excluding,
however, all items of personal property owned by tenants, guests,
employees or persons (other than Seller or any affiliate of Seller)
furnishing food or services to the Improvements.
CONTINGENCY PERIOD. The period beginning on the Contract Date and
ending at 5:00 p.m., Pacific Time, on the sixtieth (60th) day following
the Contract Date.
CONTRACT DATE. The date Seller delivers to Buyer an original, fully
executed counterpart of this Agreement, which date shall be set forth in
the introductory paragraph of this Agreement.
CONTRACT LIABILITY LIMITATION. As defined in Section 12.3(c).
CONTRACTS. All written or oral: (i) insurance, management,
leasing, service, maintenance, operating, repair, collective bargaining,
employment, employee benefit, severance, franchise, licensing, supply,
purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments in any way relating
to the Property or any part thereof, together with all supplements,
amendments and modifications thereto; and (ii) equipment leases and all
rights and options of Seller thereunder, including rights to renew or
extend the term or purchase the leased equipment, entered into by Seller
or its affiliates, relating to equipment or property located in or upon
the Real Property or used in connection therewith, together with all
supplements, amendments and modifications thereto.
DAYS OR DAYS. As defined in Section 16.6.
DEBT SUBJECT TO AMOUNT. The amount (including principal, accrued
interest and other costs) which would be required to pay off the loan
evidenced and/or secured by the Loan Documents, in full, as of the
Closing Date, and to extinguish the lien of the Loan Documents.
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DEED(S). That or those certain recordable Special Warranty Deed(s)
to be delivered by Seller to Buyer at the closing conveying fee simple
title to the Land and the Improvements to Buyer subject only to the liens
created by the Loan Documents and the Permitted Title Exceptions, which
Deeds shall be in the form of Exhibit S attached hereto and made a part
hereof.
DEPARTMENT. As defined in Section 7.1(i).
DUE DILIGENCE APPROVAL DATE. The last day of the Contingency
Period.
DUE DILIGENCE MATERIALS. As defined in Section 5.1.
XXXXXXX MONEY DEPOSIT. The sum of Three Hundred Fifty Thousand and
no/100 Dollars ($350,000.00), half of which shall be deposited by Buyer
with Escrowee, as escrowee, within three (3) business days after the
Contract Date and the other half of which shall be deposited on or before
the Due Diligence Approval Date to the extent so required under Section
3.1 hereof. The Xxxxxxx Money Deposit shall be held as xxxxxxx money
pursuant to the terms of this Agreement.
ENVIRONMENTAL LAWS. All federal, state and local statutes,
regulations, ordinances and rules relating to (i) the emission,
discharge, release or threatened release of a Hazardous Material into the
air, surface water, groundwater or land; (ii) the manufacturing,
processing, use, generation, treatment, storage, disposal,
transportation, handling, removal, remediation or investigation of a
Hazardous Material; or (iii) the protection of human health, safety or
the indoor or outdoor environment, including without limitation, the
Clean Air Act, the Federal Water Pollution Control Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Occupational Safety and Health Act,
all amendments thereto, all regulations promulgated thereunder, and their
state or local statutory and regulatory counterparts.
EQUITY OWNERS. As defined in Section 17.1.
ESCROWEE. Chicago Title Insurance Company (national office located
at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx).
EXISTING ENVIRONMENTAL MATTERS. As defined in Section 7.1(j).
FF&E. All fixtures, furnishings, equipment, vehicles, machinery,
signage, appliances, window coverings, carpeting and other tangible
personal property of every kind and character (excluding, however, the
Consumables and the Inventory) owned by Seller and situated in or upon
the Real Property, and all replacements, additions or accessories thereto
between the Contract Date and the Closing Date, as well as all such
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items required to maintain the Resort in conformance with the Resort's
usual and customary standards.
HAZARDOUS MATERIAL. Any solid, liquid or gaseous substance,
chemical, compound, product, byproduct, waste or material that is or
becomes regulated, defined or designated by any applicable federal, state
or local governmental authority or by any Environmental Law as hazardous,
extremely hazardous, imminently hazardous, dangerous or toxic, or as a
pollutant or contaminant, and shall include, without limitation,
asbestos, polychlorinated biphenyls, and oil, petroleum, petroleum
products and petroleum byproducts.
IMPROVEMENTS. Any and all buildings and improvements located on the
Land, including the following:
INDIAN LAKES
314-room hotel, with two 18-hole golf courses, indoor and
outdoor swimming pools, clubhouse, three restaurants, three
lounges, health club, three tennis courts, game room, pro
shop and convention and banquet facilities.
NORDIC HILLS
228-room hotel, with 18-hole golf course, indoor and heated
outdoor swimming pools, two restaurants, three lounges, three
tennis courts, eight racquetball courts, six bowling lanes,
health club, weight room and convention and banquet
facilities.
Improvements shall include any and all cart and walking paths, tees,
greens, holding ponds, water xxxxx, effluent systems, irrigation lines,
drainage facilities, pump stations, cart barns, entrance and interior
(directional) signage, parking lots, drives and roads, and pavilions
located on the Land and serving either the golf courses, the building(s)
and structures containing the hotel rooms, restaurant(s), bars and other
facilities, or both.
INDEMNIFICATION NOTICE. As defined in Section 12.3(a).
INDEMNITEE. As defined in Section 12.3(a).
INDEMNITOR. As defined in Section 12.3(a).
INDIAN LAKES EXCLUDED PROPERTY. As defined in the Recitals hereto.
INSPECTIONS. As defined in Section 5.2.
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IPO. As defined in the Recitals hereto.
IPO CONDITION. As defined in Section 8.3.
IPO PERIOD. As defined in Section 8.3.
INVENTORY. All inventory of goods and merchandise owned by Seller
and held for resale in connection with Seller's retail operations on the
Land including, without limitation, golf equipment and golf related goods
sold in the pro shops.
LAND. The land legally described on Exhibit A attached hereto and
incorporated herein by this reference, and generally described as
follows:
INDIAN LAKES
Approximately 271 acres of land located in Bloomingdale,
Illinois (which specifically excludes the Indian Lakes
Excluded Property).
NORDIC HILLS
Approximately 102 acres of land located in Itasca, Illinois
(which specifically excludes the Nordic Hills Excluded
Property).
LEASES. All leases and occupancy agreement for the use or occupancy
of any portion of the Real Property, excluding, however, the Bookings.
LEGAL REQUIREMENTS. All laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits,
licenses, authorizations, orders, directions and requirements of all
governments and governmental authorities having jurisdiction of the
Property (including, for purposes hereof, any local Board of Fire
Underwriters), and the operation thereof, and all deed restrictions or
other covenants, restrictions, or agreements, site plan approvals, zoning
or subdivision regulations and urban redevelopment plans governing or
regulating the use or operation of the Property.
LESSEE. Seller or such other affiliate of Seller as may be
designated by Seller in a written notice thereof delivered to Buyer no
later than thirty (30) days following the Contract Date, which lessee
shall, in any event, be subject to the reasonable approval of Buyer as
more particularly described in Section 2.2 hereof.
LESSEE PROPERTY. Collectively, the Inventory, the Consumables, the
Leases, the Contracts, the Bookings, and the Operating Permits.
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LICENSES AND PERMITS. All (i) licenses, permits, franchises,
certifications, authorizations, approvals, certificates of occupancy and
entitlements issued, approved or granted by any governmental authority or
body having jurisdiction over the Property and relating to the operation,
ownership or maintenance of the Property or any part thereof; (ii)
development rights in any way related to or used in connection with the
Property and its operations; and (iii) licenses, certifications,
authorizations, approvals, easements and rights of way required from
private parties to make use of utilities and to insure vehicular and
pedestrian ingress and egress to the Real Property; provided that the
term "Licenses and Permits" shall not include the Operating Permits as
defined below in this Section 1.1, except that the phrase "Licenses and
Permits" shall include, and the phrase "Operating Permits" shall not
include, those permits, licenses, etc. which would fall within the
definition of "Operating Permits" set forth below, but which may not
lawfully and effectively be held by Seller, as lessee under the Property
Lease, from and after the Closing Date.
LOAN DOCUMENTS. All loan agreements, notes, mortgages, deeds of
trust, assignments, guarantees, indemnities, and other instruments
evidencing, securing, guarantying or otherwise relating to any mortgage
or secured financing encumbering the Real Property or any portion
thereof.
MONETARY LIENS. As defined in Section 4.1.
NORDIC HILLS EXCLUDED PROPERTY. As defined in the Recitals hereto.
OFFEREES. As defined in Section 17.1.
OPERATING PERMITS. All licenses, authorizations or approvals
granted by any governmental authority or body having jurisdiction over
the Property and relating solely to the business operations currently
being conducted at the Property (e.g., liquor licenses, food and beverage
operating permits, gift shop operating permits, golf pro shop operating
permits, etc.).
XXXXXX IDENTIFICATION. As defined in Section 16.10.
XXXXXX LLC. As defined in Recital B hereof.
PERMITTED CHANGE. As defined in Section 6.3.
PERMITTED TITLE EXCEPTIONS. Those exceptions to title to the
Property approved or deemed approved by Buyer pursuant to Article 4
hereof.
PHASE I STUDY. As defined in Section 5.2.
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PROPERTY. Collectively, the Real Property, the Trade Names and
Trademarks, the Warranties, the Licenses and Permits, and the FF&E.
PROPERTY LEASE. As defined in Section 2.2.
PROSPECTUS. As defined in Section 17.2.
PURCHASE PRICE. Sixty-Two Million Five Hundred Thousand and no/100
Dollars ($62,500,000.00), less the Debt Subject to Amount, plus or minus
prorations as described in this Agreement, which shall be allocated as
follows:
INDIAN LAKES:
Golf Course $28,000,000.00
Personal Property $5,800,000.00
Hotel $6,100,000.00
NORDIC HILLS:
Golf Course $14,000,000.00
Personal Property $4,200,000.00
Hotel $4,400,000.00
Buyer and Seller agree that, for purposes of tax reporting, each party
shall utilize the amounts set forth in the above allocations.
REAL PROPERTY. The Land and the Improvements, together with all
improvements thereon or therein (including all replacements or additions
thereto between the Contract Date and the Closing Date); all systems,
facilities, fixtures, machinery, equipment and conduits to provide fire
protection, security, heat, exhaust, ventilation, air-conditioning,
electrical power, light, plumbing, refrigeration, gas, sewer and water to
the Land and Improvements (including all replacements or additions
thereto between the Contract Date and the Closing Date); all privileges,
rights (including water rights), easements, hereditaments and
appurtenances thereunto belonging; and all right, title and interest of
Seller in and to any streets, alleys, passages and other rights-of-way
included therein or adjacent thereto (before or after any vacation
thereof).
REIT. As defined in the Recitals hereto.
REQUIRED DUE DILIGENCE MATERIALS. The documents and other materials
listed on Exhibit B attached hereto and by this referenced incorporated
herein.
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RESORT. The Land, Improvements, Trade Names and Trademarks,
Warranties, Licenses and Permits and FF&E consisting of the properties
commonly known as Indian Lakes Resort and Nordic Hills Resort and the
operation thereof as hotel, golf course and convention/banquet
facilities.
SEARCH DEFECTS. As defined in Section 4.3.
SEARCHES. As defined in Section 4.3.
SECTION 9.02(d). As defined in Section 7.1(i).
SECTION 1445A. As defined in Section 11.2(j).
SECURITIES ACT. As defined in Section 17.2.
SELLER CAUSED MONETARY LIENS. As defined in Section 4.1.
SELLER INDEMNIFIED PARTIES. As defined in Section 5.2.
SELLER'S ENVIRONMENTAL REPORTS. As defined in Section 6.1(u).
SELLER'S RECEIVABLES. As defined in Section 10.2(b).
STRUCTURAL REPORT. As defined in Section 5.2.
SURVEY. A current as-built survey of the Land prepared by a
surveyor licensed by the state in which the subject land is located and
certified to Buyer, the Title Company and such other parties as Buyer
shall designate to be prepared in accordance with the current Minimum
Standard Detail Requirements for Land Title Surveys (excluding the
requirement for the placement of monuments) adopted by the American Land
Title Association and American Congress on Surveying and Mapping, setting
forth the legal description and street address of the Land and
Improvements and specifically showing thereon all buildings, and other
improvements (including fences, tees, greens, traps, cart and improved
walking paths, pumping facilities, holding ponds and golf course
facilities), the number of stories in such buildings, easements (visible
or recorded), building lines, curb cuts, party walls (if any), parking,
sewage, water, electricity, gas and other utility facilities (together
with recording information concerning the documents creating any such
easements and building lines), roads and means of physical and record
ingress and egress to and from the Real Property by public roads and the
gross area of the land included in the Land, and spotting improvements on
adjoining property which are within five (5) feet of the property lines
of the Land. The Survey shall specify and depict ponds, creeks, streams
and rivers and any areas of the Land which are located in a flood plain,
wetlands or other environmentally controlled, regulated or protected
area.
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SURVEY DEFECTS. As defined in Section 4.2.
TITLE COMMITMENT. A commitment for the Title Policy covering the
Land and Improvements issued by the Title Company in favor of Buyer, or
its nominee, in the full amount of the Purchase Price, showing Seller as
fee simple title holder of the Land and Improvements.
TITLE COMPANY. Chicago Title Insurance Company (national office,
located in Chicago, Illinois).
TITLE POLICY. An ALTA Owner's Title Insurance Policy covering the
Land and Improvements issued by the Title Company pursuant to the Title
Commitment, specifically containing "extended coverage" insuring over all
general exceptions raised in such form of title policy and containing the
following endorsements: zoning 3.1, owner's comprehensive, encroachment,
contiguity (if applicable), access, survey, tax parcel, subdivision
compliance, and creditor's rights.
TRADE NAMES AND TRADEMARKS. All of Seller's rights in and to the
trade names and trademarks set forth and described on Exhibit Q attached
hereto and incorporated herein by reference, and any and all derivatives
and forms thereof, together with all other service marks and logos,
whether or not registered; specifically excluding, however, the trade
names and trademarks relating to the name "Montclair Chop House".
UNINTENTIONAL LIEN AMOUNT LIMITATION. As defined in Section 4.1.
UNINTENTIONAL MONETARY LIENS. As defined in Section 4.1.
UNIT AMOUNT. As defined in Section 3.2.
UNITS. As defined in the Recitals hereto.
WARRANTIES. All guarantees and warranties in effect with respect to
the Property or any portion thereof, which, by their terms, shall survive
Closing, including, without limitation, all guarantees and warranties of
contractors, materialmen, manufacturers, mechanics or suppliers who have
been engaged by Seller or any of its agents to furnish labor, materials,
equipment or supplies to all or any portion of the Property.
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ARTICLE 2
CONTRIBUTION/PURCHASE AND SALE; LEASE-BACK
2.1 CONTRIBUTION/PURCHASE AND SALE. Subject to the conditions and on the
terms contained in this Agreement:
(a) Buyer agrees to acquire from Seller, and Seller agrees to sell,
assign, transfer or otherwise contribute to Buyer (i) the Land and
Improvements by the Deed, and (ii) all of Seller's right, title and
interest in the balance of the Real Property.
(b) Buyer agrees to acquire from Seller, and Seller agrees to sell,
assign, convey or otherwise contribute to Buyer all of Seller's right,
title and interest in and to the following items, free and clear of all
liens, claims, encumbrances and restrictions of every kind and
description, except for liens created by the Loan Documents and the
Permitted Title Exceptions: (i) the Licenses and Permits, (ii) the
Warranties and (iii) the Trade Names and Trademarks.
(c) Buyer agrees to acquire from Seller, and Seller agrees to sell,
convey, assign or otherwise contribute to Buyer, the FF&E (excluding
specifically, however, the Consumables and the Inventory, which are
hereby acknowledged not to be part of the Property being conveyed
hereunder), by good and sufficient xxxx of sale containing full
warranties of title free and clear of all liens, claims, encumbrances and
restrictions of every kind and description, except for the liens created
by the Loan Documents and the Permitted Title Exceptions.
(d) Nothing herein shall be deemed to be an agreement of Buyer to
engage, or otherwise be responsible for, any employees of Seller, (it
being understood that Buyer's acquisition of the Property hereunder shall
not be deemed an acquisition of any of Seller's business operations
currently being conducted at the Real Property, which business operations
shall continue to be conducted by the "lessee" pursuant to the terms of
the Property Lease described in Section 2.2 below). Moreover, except as
specifically provided herein to the contrary, Buyer shall not assume, or
become obligated with respect to, any liability or obligation of Seller.
As a further consequence of the foregoing, none of the Consumables or
Inventory is being sold or transferred to Buyer or being prorated between
Seller and Buyer, nor are any of the Contracts, Leases, Bookings or
Operating Permits being transferred to Buyer, but rather the "lessee"
under the Property Lease will continue to operate each Resort pursuant
thereto and shall, if the "Lessee" is Seller, retain its interest therein
or if the "Lessee" is a different entity, then such entity shall succeed
directly to Seller's interest therein or thereto.
2.2 PROPERTY LEASE. Notwithstanding anything herein to the contrary, it
is understood and agreed that Buyer (or any affiliate thereof taking title to
the Real Property at Closing), as
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lessor, and Seller, as lessee, shall be entering into one (1) lease for both
Resorts; such lease to be in substantially the form attached hereto as Exhibit
P (hereinafter referred to as the "PROPERTY LEASE") and to commence on the
Closing Date. In the event that Seller desires an entity other than Seller
itself to be the "Lessee" under the Property Lease, Seller shall deliver notice
thereof to Buyer, within thirty (30) days following the Contract Date,
identifying the proposed entity which it proposes to be the lessee under the
Property Lease, and Seller shall thereafter deliver to Buyer such other
information concerning such proposed lessee as Buyer may request. Buyer shall
have the right to approve the entity requested by Seller to be the lessee under
the Property Lease, which approval shall not be unreasonably withheld. Upon
such approval, the entity so requested shall be the "Lessee" under the Property
Lease being entered into at Closing and, at the Closing, Seller shall convey
all of its right, title and interest in and to the Lessee Property to said
approved entity by assignment or other conveyance documents acceptable to Buyer
and Buyer's counsel. If Buyer does not so approve the proposed entity as the
"lessee" under the Property Lease, Seller shall be the "lessee" thereunder.
Seller currently contemplates establishing a limited liability company, which
would be under common control with Seller or with one or both of its general
partners to be such "lessee" and if such is the case, Buyer hereby approves of
such entity being the "lessee".
ARTICLE 3
DEPOSIT AND PURCHASE PRICE
3.1 XXXXXXX MONEY DEPOSIT IN ESCROW. On or before the date which is three
(3) business days after the Contract Date, the parties shall establish a strict
joint order escrow with the Escrowee. Upon opening of said escrow, Buyer shall
cause one-half (1/2) of the Xxxxxxx Money Deposit to be deposited therein. In
the event this Agreement is in full force and effect as of the Due Diligence
Approval Date and has not otherwise been terminated by Buyer pursuant to
Article 4, Article 5 or Article 9 hereof, then, on or before the Due Diligence
Approval Date, Buyer shall cause the remaining balance of the Xxxxxxx Money
Deposit to be deposited in said strict joint order escrow. From and after the
Due Diligence Approval Date, the Xxxxxxx Money Deposit shall be non-refundable
except as otherwise provided herein. The Xxxxxxx Money Deposit (and interest
thereon net of any investment charges) shall be applied against the Purchase
Price at the Closing, as more specifically provided in Section 3.2 below.
Escrowee shall be directed by the parties to invest the entire Xxxxxxx Money
Deposit in money market accounts designated by Buyer, with interest thereon
being applied on account of the Purchase Price at the Closing, or if the
Closing does not occur for any reason, then such interest shall be paid to the
party entitled to the Xxxxxxx Money Deposit hereunder. The parties shall
direct Escrowee to disburse the Xxxxxxx Money Deposit with interest earned
thereon, to the party entitled to the same as set forth in this Agreement, or
as otherwise provided in Section 3.3 below.
3.2 PURCHASE PRICE AND HANDLING OF XXXXXXX MONEY DEPOSIT. At the Closing,
upon the terms and conditions set forth in this Agreement, Buyer shall pay the
Purchase Price (i.e., after reduction thereto on account of the Debt Subject to
Amount), subject to adjustment for any
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prorations and for the Xxxxxxx Money Deposit as described in Section 3.1 above.
Subject to applicable securities laws and regulations pertaining to a
securities offering exempt from registration under federal and state securities
laws, and subject to the terms and conditions described in Article 17 hereof,
the amount of $4,933,920.00 of the net Purchase Price (i.e., net of the Debt
Subject to Amount and net of the Xxxxxxx Money Deposit being applied against
the Purchase Price at Closing) shall be payable in the form of Units (the "UNIT
AMOUNT"), the number of Units being determined in accordance with the formula
described in Exhibit E attached hereto. The balance of the Purchase Price
shall be paid either by cash, cashier's or certified check or wire transfer of
funds. The Xxxxxxx Money Deposit (and interest thereon net of any investment
charges) shall be (i) paid to Seller and applied against the Purchase Price at
the Closing, or (ii) disbursed in accordance with the terms of this Agreement
if the Closing does not occur as contemplated hereby.
3.3 CLOSING ESCROW. On or prior to the Closing Date, the parties shall
establish a deed and money escrow with the Escrowee through which the
transaction contemplated hereby shall be closed. Upon opening of said escrow,
the Xxxxxxx Money Deposit (plus interest thereon net of any investment charges)
shall be disbursed from the above-described strict joint order escrow with
Escrowee and deposited in the deed and money escrow. The escrow instructions
for the deed and money escrow shall be in the form customarily used by the
Escrowee with such special provisions added thereto as may be required to
conform to the provisions of this Agreement. Said escrow shall be auxiliary to
this Agreement and this Agreement shall not be merged into nor in any manner
superseded by said escrow. The escrow costs and fees for each of the escrow
accounts described in this Article 3 shall be equally divided between Buyer and
Seller.
ARTICLE 4
TITLE, SURVEY AND SEARCHES
4.1 TITLE. Following the Contract Date, Buyer shall order and obtain the
Title Commitment, together with a copy of each recorded document raised as an
exception therein. If the Title Commitment raises any exceptions to title to
which Buyer objects, in its sole and absolute discretion, Buyer shall give
Seller written notice of such objection within fifteen (15) days of Buyer's
receipt of the Survey, of the Title Commitment and of copies of all of said
documents of record, but in no event shall such notice of objection be given
later than forty-five (45) days after the Contract Date, and Seller shall
thereafter have ten (10) days within which to advise Buyer as to Seller's
intention with respect to said objections [that is, whether Seller will, at or
prior to Closing, with respect to each such unpermitted exception (a) cause it
to be removed from the Title Commitment, (b) cause it to be insured over by the
Title Company to the reasonable satisfaction of Buyer, or (c) take no action
with respect thereto]; provided, however, that Seller shall be obligated to
cause (A) all Monetary Liens (as defined below) which are the result of the
acts or omissions of Seller or of any party claiming by, through or under
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Seller (hereinafter called "SELLER CAUSED MONETARY LIENS") to be removed and
(B) all other Monetary Liens which are not Seller Caused Monetary Liens
("UNINTENTIONAL MONETARY LIENS") to be removed up to a maximum amount, when
aggregated with Search Defects constituting Unintentional Monetary Liens, of
One Million and no/100 Dollars ($1,000,000.00) (the "UNINTENTIONAL LIEN AMOUNT
LIMITATION"). Notwithstanding the foregoing, (A) any delinquent real property
taxes, deeds of trust or mortgages (other than those which are part of the Loan
Documents), unpaid obligations owing to any governmental agency which, with the
passage of time, could give rise to a lien, mechanic's liens, attachment liens,
execution liens, tax liens for delinquent taxes and judgment liens,
(collectively, "MONETARY LIENS"), disclosed on the Title Commitment shall be
automatically deemed unpermitted exceptions and objected to by Buyer without
any further action or notice thereof to Seller and (B) any liens created by the
Loan Documents shall be deemed accepted by Buyer for purposes of this
Agreement. If Seller fails within its aforesaid ten (10) day period to give
any notice or to commit to have all unpermitted exceptions (other than Monetary
Liens for which no response from Seller shall be required) removed from the
Title Commitment or insured over to the reasonable satisfaction of Buyer or if
the amount of Unintentional Monetary Liens exceeds the Unintentional Lien
Amount Limitation (and Seller in its response does not commit to remove or
insure over the same), Buyer may elect, by written notice thereof delivered to
Seller within five (5) days of the expiration of Seller's aforesaid ten (10)
day period, either (i) to terminate this Agreement, in which event the Xxxxxxx
Money Deposit and any interest thereon, shall be forthwith returned to Buyer,
all obligations of the parties hereunder shall terminate (other than Buyer's
Indemnity which shall survive such termination for the period specified in
Section 5.2 hereof), and this Agreement shall otherwise have no further force
and effect, or (ii) to accept title to the Property subject to such unpermitted
exceptions (other than Monetary Liens, except for those Unintentional Monetary
Liens in excess of the Unintentional Lien Amount Limitation which Seller does
not commit to satisfy) as Seller has advised, or is deemed to have advised,
Buyer that Seller will not take any action, all of which unpermitted exceptions
shall thereafter be deemed "Permitted Title Exceptions," but with the express
understanding that Seller will be obligated, on or prior to Closing, to remove
or insure over all other exceptions in accordance with Seller's response notice
and to satisfy all Seller Caused Monetary Liens and all Unintentional Monetary
Liens up to the Unintentional Lien Amount Limitation (or such higher amount as
Seller commits in its response notice to Buyer). Buyer's failure to make
either election within five (5) days of the expiration of Seller's aforesaid
ten (10) day period shall be deemed an election under clause (ii) above.
Notwithstanding anything herein to the contrary, Seller shall be obligated to
cause to be removed or insured over at Closing, or, if Seller fails to do so,
Buyer shall be entitled to reduce the amount of the Purchase Price due at
Closing by the amount of, all Seller Caused Monetary Liens arising after the
date of the Title Commitment and all Unintentional Monetary Liens arising after
the date of the Title Commitment to the extent that there is then any
"available" Unintentional Lien Amount Limitation.
4.2 SURVEY. No later than thirty (30) days following the Contract Date,
Buyer shall obtain the Survey and deliver a copy thereof to Seller within ten
(10) days of its receipt thereof. If the Survey discloses any encroachments
onto the Land from any adjacent property,
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encroachments by or from the Land onto any adjacent property, violations of or
encroachments upon any recorded building lines, restrictions or easements
affecting the Land, matters including possible rights of third parties, or any
other matter to which Buyer objects, in its sole and absolute discretion (all
of which are hereinafter collectively called "SURVEY DEFECTS"), Buyer shall
give Seller notice of such objection within fifteen (15) days of Buyer's
receipt of the Survey, of the Title Commitment and of copies of all said
documents of record, but in no event shall such notice of objection be given
later than forty-five (45) days after the Contract Date, and Seller shall
thereafter have ten (10) days within which to advise Buyer whether Seller will,
on or before the Closing, with respect to each such Survey Defect (a) cause it
to be removed from the Survey, (b) cause it to be insured over by the Title
Company to the reasonable satisfaction of Buyer, or (c) take no action with
respect thereto. If Seller fails within its aforesaid ten (10) day period to
give Buyer any notice or to agree to have all of the Survey Defects removed or
insured over, Buyer may elect, by written notice thereof delivered to Seller
within five (5) days of the expiration of Seller's aforesaid ten (10) day
period, either (i) to terminate this Agreement, in which event the Xxxxxxx
Money Deposit and any interest thereon shall forthwith be returned to Buyer,
all obligations of the parties hereunder shall terminate (other than Buyer's
Indemnity, which shall survive such termination for the period of time
specified in Section 5.2 hereof), and this Agreement shall otherwise have no
further force and effect, or (ii) to accept the Property subject to such Survey
Defects as Seller has advised or is deemed to have advised Buyer that it will
take no action, all of which un-addressed Survey Defects shall thereafter be
deemed Permitted Title Exceptions for purposes hereof, but with the express
understanding that Seller will be obligated, on or prior to the Closing, to
cure all other Survey Defects in accordance with Seller's response notice.
Buyer's failure to make such election within five (5) days of the expiration of
Seller's aforesaid ten (10) day period shall be deemed an election under clause
(ii) above.
4.3 SEARCHES. Following the Contract Date, Buyer may obtain, at Buyer's
sole expense, searches of the records of the county recorders, secretaries of
state and district courts of the jurisdictions in which the Land is located
(collectively, the "SEARCHES") confirming the absence of security interests,
judgments, tax liens for delinquent taxes and bankruptcy proceedings which
affect or could affect the Property or any interest therein to be transferred
to Buyer pursuant to this Agreement (except for the Permitted Title Exceptions
and for equipment leases listed on Exhibit C attached hereto). If any of said
Searches disclose the existence of any security interests, judgments, tax liens
for delinquent taxes or bankruptcy proceedings which, in Buyer's sole judgment,
affect or could affect Seller's interest in the Property (all of which are
hereinafter collectively called "SEARCH DEFECTS"), Buyer shall give Seller
notice thereof within fifteen (15) days of its receipt of the Searches but in
no event later than fifteen (15) days prior to the expiration of the
Contingency Period, and Seller shall thereafter have ten (10) days within which
to advise Buyer as to each such Search Defect whether Seller will (a) on or
prior to Closing, secure the release, satisfaction or termination (as
appropriate) of same or (b) take no action with respect thereto; provided,
however, that Seller shall be obligated to satisfy all Search Defects which
constitute Seller Caused Monetary Liens and Unintentional Monetary Liens, but
only to the extent that when aggregated with the
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Unintentional Monetary Liens under Section 4.1 above, the total is less than
the Unintentional Lien Amount Limitation. If Seller fails within its aforesaid
ten (10) day period to give Buyer any notice or advises Buyer that with respect
to any one or more of the Search Defects, Seller will not agree to secure, on
or before the Closing, such release, satisfaction or termination (as
appropriate) (other than those Search Defects which constitute Monetary Liens
and which Seller is obligated to satisfy pursuant to the preceding sentence),
Buyer may elect, by written notice thereof delivered to Seller within five (5)
days of the expiration of Seller's aforesaid ten (10) day period, either (i) to
terminate this Agreement, in which event the Xxxxxxx Money Deposit and any
interest thereon shall forthwith be returned to Buyer, all obligations of the
parties hereunder shall terminate (other than Buyer's Indemnity which shall
survive such termination for the period specified in Section 5.2 hereof), and
this Agreement shall have no further force and effect, or (ii) to accept title
to the Property subject to such uncured Search Defects as Seller has advised,
or is deemed to have advised, Buyer that it will take no action with respect
thereto, all of which Search Defects shall thereafter be deemed Permitted Title
Exceptions, but with the express understanding that Seller will be obligated,
at or prior to Closing, to cure all of the other Search Defects in accordance
with Seller's response notice and to satisfy all Monetary Liens which Seller is
obligated to satisfy pursuant to the preceding sentence. Buyer's failure to
make either such election within five (5) days of the expiration of Seller's
aforesaid ten (10) day period shall be deemed an election under clause (ii)
above. Said Searches may be updated, at Buyer's sole cost and expense, as of
the Closing Date confirming the absence of any new or additional Search Defects
and should any new or additional Search Defects arise, Seller shall be
obligated to remove at or prior to Closing all such new Search Defects which
constitute Seller Caused Monetary Liens and to the extent of any then available
Unintentional Lien Amount Limitation, all such new Search Defects which
constitute Unintentional Monetary Liens.
ARTICLE 5
DUE DILIGENCE
5.1 DUE DILIGENCE MATERIALS. Seller shall use commercially reasonable
good faith efforts to secure and furnish to Buyer or make available to Buyer at
a reasonably convenient location, no later than fifteen (15) days after the
Contract Date, to the extent not previously delivered to Buyer, the Required
Due Diligence Materials described in Exhibit B hereto and any other materials
as Buyer may reasonably require and Seller shall, within said fifteen (15) day
period, advise Buyer which Required Due Diligence Materials are not available
or do not exist (such Required Due Diligence Materials as are delivered or made
so available, together with any other items furnished to Buyer under this
Section 5.1, being collectively referred to herein as the "DUE DILIGENCE
MATERIALS"). Any delay in the delivery of any of the Due Diligence Materials
will not extend the Contingency Period.
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5.2 INSPECTION. For the period commencing with the Contract Date and
continuing through the Closing Date or earlier termination of this Agreement
and subject to the other provisions of this Article 5, Seller shall permit
Buyer and any of its officers, employees, agents, attorneys, accountants,
appraisers, architects, engineers, consultants, lenders or other
representatives as designated by Buyer (collectively, "BUYER'S
REPRESENTATIVES") reasonable access to Seller's books and records relating to
the ownership and operation of the Property and access to and entry upon the
Real Property, to examine, inspect, measure and test the Property and to
conduct such financial audits and verifications as they shall deem reasonably
necessary (herein collectively, the "INSPECTIONS"). Seller shall cooperate
with Buyer and Buyer's Representatives in conducting the foregoing activities.
Without limitation of the foregoing, it is acknowledged that Buyer and Buyer's
Representatives shall have the right to conduct financial audits with respect
to Seller's operations at the Property for Seller's most recent three (3) full
fiscal years (if applicable), as well as with regard to Seller's current fiscal
year operations and Seller shall give customary representations and warranties
to Buyer's accountants with respect to financial matters as may be reasonably
requested by said accountants. Seller hereby consents to Buyer or Buyer's
Representatives (i) conducting a Phase I environmental site assessment of the
Property (the "PHASE I STUDY"), and (ii) conducting or obtaining an engineer's
structural report respecting the Improvements (the "STRUCTURAL REPORT"). The
costs of conducting and obtaining the Phase I Study and the Structural Report
shall be the responsibility of Buyer. In the event any of Buyer's
Representatives recommends additional environmental review after conducting the
Phase I Study, Seller shall permit Buyer and Buyer's Representatives access to
and entry upon the Real Property for such additional review; provided, however,
that no invasive inspection shall be performed without Seller's prior written
consent, which consent may be withheld in Seller's sole and absolute
discretion. Buyer shall give not less than forty-eight (48) hours' prior
written or oral notice to Xxxxx Cyrus or Xxxxxx Xxxxxxx of Seller prior to any
entry upon the Land or Improvements for the purpose of conducting such
Inspections and such entry shall be scheduled and coordinated with Seller. At
Seller's election, a representative of Seller shall be present during any entry
by Buyer or Buyer's Representative upon the Property for conducting said
Inspections. Buyer shall not cause or permit any mechanic's liens,
materialmen's liens or other liens to be filed against the Property as a result
of the Inspections. Buyer shall repair and restore any damage to the Property
caused by entry upon the Land or Improvements by Buyer or the other Buyer's
Representatives, except to the extent Seller's negligence or willful acts
contributed to such damage. Prior to any entry upon the Land or Improvements
by Buyer or any of Buyer's Representatives, Buyer shall procure and maintain
commercial general liability insurance (and shall provide Seller with a
certificate evidencing the same) naming Seller and the manager at each Resort
as additional insureds, provide coverage on an occurrence basis, in amount
equal to $2,000,000.00 per occurrence and $3,000,000.00 in the aggregate.
Buyer shall indemnify, defend and hold harmless Seller and Seller's officers,
directors, shareholders, partners, tenants, agents and employees (collectively,
the "SELLER INDEMNIFIED PARTIES"), from and against any and all actions,
losses, costs, damages, claims, liabilities, and expenses (including court
costs and reasonable attorney's fees) brought, sought or incurred by or against
any of the Indemnified Parties resulting from, arising out of, or relating to,
entry upon the Land or Improvements by Buyer or any of the other Buyer's
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Representatives, except to the extent Seller's negligence or willful acts
contributed to same. The foregoing indemnification and repair and restoration
obligations (herein collectively referred to as "BUYER'S INDEMNITY") shall,
except to the extent covered by insurance, expressly survive the termination of
this Agreement for a period of one (1) year after the termination of this
Agreement and the indemnification obligation shall be subject to Buyer's
Contract Liability Limitation (as defined in Section 12.3(c) below).
5.3 DUE DILIGENCE TERMINATION. In addition to Buyer's right to approve
the Title Commitment, the Survey and the Searches, as described in Article 4
hereof, the obligation of Buyer to close the transaction contemplated hereby is
subject to Buyer's review of, approval of and satisfaction with, at its sole
cost and expense, on or before the Due Diligence Approval Date, the Due
Diligence Materials, the results of the Inspections and all other matters
respecting the Property. If Buyer, in its sole and absolute discretion, is not
satisfied with any of the foregoing, then Buyer shall have the right to
terminate this Agreement by delivery to Seller of written notice thereof
delivered at any time prior to 5:00 p.m., Pacific Time, on the Due Diligence
Approval Date, in which event the Xxxxxxx Money Deposit and all interest earned
thereon (net of investment charges) shall promptly be returned to Buyer, Buyer
shall reimburse Seller (or Seller shall reimburse Buyer, as the case may be, to
the end that Buyer bears one-half of the cost of the Survey), for one-half of
the cost of the Survey, this Agreement shall become null and void and neither
party shall have any further rights and obligations hereunder (subject,
however, to survival of Buyer's Indemnity for the period specified in Section
5.2). Buyer's failure to timely deliver its termination notice as provided in
this Section 5.3 shall be deemed a waiver of Buyer's contingencies as set forth
in this Article 5, whereupon the parties shall proceed to close the transaction
contemplated by this Agreement as provided herein.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATION AND WARRANTIES OF SELLER. To induce Buyer to execute,
deliver and perform this Agreement, Seller hereby represents and warrants to
Buyer on and as of the Contract Date and, by an update certificate to be
delivered at closing, on and as of the Closing Date, as follows:
(a) [Intentionally Omitted]
(b) [Intentionally Omitted]
(c) AUTHORITY. Seller is a duly organized and validly existing
general partnership, in good standing under the laws of the State of
Illinois. Seller has full capacity, right, power and authority to
execute, deliver and perform this Agreement and all documents to be
executed by Seller pursuant hereto, and all required action and
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approvals therefor have been duly taken and obtained. The individuals
signing this Agreement and all other documents executed or to be executed
pursuant hereto on behalf of Seller are and shall be duly authorized to
sign the same on Seller's behalf and to bind Seller thereto. This
Agreement and all documents to be executed pursuant hereto by Seller are
and shall be binding upon and enforceable against Seller in accordance
with their respective terms.
(d) CONTRACTS. To the best of Seller's knowledge, (i) attached as
Exhibit C to this Agreement and incorporated herein by this reference is
a complete schedule of all material Contracts (i.e., meaning Contracts
which have projected or actual payment obligations in excess of
$25,000.00 during any quarterly period or which are otherwise material to
the business operations currently being conducted at the Real Property)
and (ii) there are no defaults under any of the Contracts and all of the
Contracts are in good standing and in full force and effect. Seller (or
Seller's approved designated "lessee") shall retain all rights and
obligations under the Contracts following the Closing, as the continued
operator of the business being conducted at each Resort pursuant to the
Property Lease, and there are no Contracts which will be binding, or
impose any obligation, upon Buyer after Closing.
(e) LICENSES AND PERMITS. To the best of Seller's knowledge, (i)
attached as Exhibit D-1 to this Agreement and incorporated herein by this
reference is a complete list of all Licenses and Permits; (ii) Seller
currently possesses all Licenses and Permits necessary and required for
the current ownership, use and maintenance of the Real Property; (iii)
each of the Licenses and Permits is in full force and effect and in good
standing; (iv) Seller has not received written notice of any intention on
the part of the issuing authority to cancel, suspend or modify any of the
Licenses and Permits or to take any action or institute any proceedings
to effect such a cancellation, suspension or modification; and (v) no
notice to, filing or registration with, or License or Permit from, any
governmental or regulatory body or authority, or any other person or
entity is required to be made or obtained in connection with the
execution, delivery or performance of this Agreement by Seller.
(f) OPERATING PERMITS. To the best of Seller's knowledge, (i)
attached as Exhibit D-2 to this Agreement and incorporated herein by this
reference is a complete list of all Operating Permits; (ii) Seller
currently possesses all Operating Permits necessary and required for the
lawful operation of Seller's business at the Real Property; (iii) each of
the Operating Permits is in full force and effect and in good standing;
(iv) Seller has not received written notice of any intention on the part
of the issuing authority to cancel, suspend or modify any of the
Operating Permits or to take any action or institute any proceedings to
effect such a cancellation, suspension or modification; and (v) no notice
to, filing or registration with, or Operating Permit from, any
governmental or regulatory body or authority, or any other person or
entity is required to be made or
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obtained in connection with the execution, delivery or performance of
this Agreement by Seller.
(g) FF&E. Seller has title to all of the furniture, fixtures and
equipment located on the Property and used by Seller in the operation of
the Resort free and clear of liens, security interests, encumbrances and
leases (other than for the Permitted Title Exceptions and the Loan
Documents), except that Seller does not have such title (i) to the
furniture, fixtures and equipment owned by tenants, licensees and
concessionaires, utility companies and guests and other customers or to
the office equipment and furniture located in the Montclair Hotel
Investors, Inc.'s office in the executive house located on the Indian
Lakes Resort; or (ii) to the furniture, fixtures and equipment listed on
Exhibit C, which is leased by Seller from third parties.
(h) BOOKINGS. To the best of Seller's knowledge, attached as
Exhibit G to this Agreement and incorporated herein by this reference is
a list of all material Bookings (Bookings where the amount due is at
least $20,000.00 for an individual Booking) for periods from and after
the day which is thirty (30) days after the date of this Agreement. This
representation and warranty shall not be deemed to be, in any manner, a
guarantee of any Bookings, or of the income potential represented
thereby.
(i) LEASES. Attached as Exhibit H to this Agreement and
incorporated herein by this reference is a complete list of all Leases.
Except as disclosed in Exhibit H, to the best of Seller's knowledge,
there is no default under any Lease and all of the Leases are in good
standing and in full force and effect. Seller owns all right, title and
interest of the lessor under each Lease.
(j) COMMISSIONS. To the best of Seller's knowledge, attached as
Exhibit I to this Agreement and incorporated herein by this reference is
a list of all outstanding commissions relating to the Leases.
(k) VIOLATIONS OF LAWS. Except as disclosed on Exhibit T, (i) to
the best of Seller's knowledge, the Improvements are presently used and
operated in compliance, in all material respects, with all Licenses and
Permits, all Legal Requirements and all covenants, easements and
restrictions affecting the Property and (ii) Seller has not received any
written notice from any governmental authority having jurisdiction of
violations of any Legal Requirements pertaining to the Property which
have not been heretofore entirely corrected.
(l) CONDITION OF PROPERTY. To the best of Seller's knowledge,
attached as Exhibit J to this Agreement is a list of all reports,
assessments and investigations of third parties commissioned by Seller or
within Seller's possession or control respecting the physical condition
of the Improvements and the condition of soils at the Land, and Seller
has delivered to Buyer (or will deliver to Buyer as part of the Required
Due Diligence
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Materials) complete copies thereof. To the best of Seller's knowledge
and except as disclosed in the reports, assessments, investigations and
other materials delivered by Seller to Buyer or disclosed in Buyer's own
investigations and reports, there are not any material and adverse latent
structural defects in the Improvements. For purposes of the foregoing,
latent structural defects are such matters which could not be discovered
by those inspections and investigations which would be undertaken prior
to closing by a reasonably prudent purchaser of real property similar to
the Property.
(m) LITIGATION. Except as set forth on Exhibit K to this Agreement
and incorporated herein by this reference, Seller has not been served
with any action, order, writ, injunction, judgment or decree outstanding,
causes of action or other litigation or proceeding pending nor, to the
best of Seller's knowledge, are any such matters threatened, with respect
to the ownership or operation of the Property or any part thereof
(including, without limitation, disputes with mortgagees, governmental
authorities, utilities, contractors, adjoining land owners or suppliers
of goods or services).
(n) CONDEMNATION. To the best of Seller's knowledge, Seller has not
received written notice from any governmental authority having
jurisdiction regarding any existing or pending (i) condemnation of any
part of the Real Property, (ii) widening, change of grade or limitation
on use of streets abutting the Real Property or (iii) change in the
zoning classification of the Real Property.
(o) ASSESSMENTS. To the best of Seller's knowledge, Seller has
received no written notice from any governmental authority having
jurisdiction (i) of any pending liens, special taxes or assessments to be
made against the Property by any governmental agency or authority or (ii)
of any planned change in the tax assessment or assessed valuation of the
Real Property.
(p) WATER. To the best of Seller's knowledge, the Real Property has
sufficient water and water rights provided by the municipalities in which
the Real Property is located as required or necessary to operate each
Resort, including without limitation, the subject golf courses, in the
manner in which they have historically been operated by Seller.
(q) UTILITIES. To the best of Seller's knowledge, all water, sewer,
gas, electric, telephone and drainage facilities and all other utilities
and public or quasi-public improvements upon or adjacent to the Real
Property required by law or for the normal operation of the Property are
installed, are connected under valid permits, are in good working order,
are adequate to service the Property and are fully paid for. Seller has
no knowledge of any fact or condition which would result in the permanent
termination or impairment in the transmitting of utility services to the
Property.
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(r) CONTRACTS FOR SALE. Seller has not entered into any other
contracts for sale of the Property or any portion thereof or interest
therein which have not been terminated, nor do there exist any rights of
first refusal, options to purchase or offers by Seller to sell the
Property or any portion thereof.
(s) NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement by Seller, or any related documents or
instruments, nor the consummation of the transactions contemplated
hereby, nor compliance by Seller with any of the provisions hereof, will
(a) result in a breach of or constitute a default under any agreement to
which Seller is bound, (b) violate or conflict with any provision of the
organizational documents of Seller, or (c) violate, conflict with, or
result in a breach of any provision of, or constitute a default under, or
result in the termination or acceleration under, or result in the
creation of any encumbrance upon the Property under, any contract,
commitment, license, permit, agreement or other instrument or obligation
to which Seller is a party or by which the Property is bound, or (d)
violate any order, judgment, injunction, award or decree of any court or
arbitration body, or any governmental, administrative or regulatory
authority, or any other body, by or to which Seller or the Property are
or may be bound or subject.
(t) LABOR MATTERS. Seller does not have any employees at the
Property.
(u) ENVIRONMENTAL MATERIALS. Attached as Exhibit L to this
Agreement and incorporated herein by this reference is a list of all
reports, assessments, investigations or audits commissioned from third
parties by Seller or within Seller's possession or control respecting the
environmental condition of, or environmental issues concerning, the Real
Property ("SELLER'S ENVIRONMENTAL REPORTS"). Seller has heretofore
delivered to Buyer, or shall hereafter deliver to Buyer as part of the
Required Due Diligence Materials to be furnished hereunder, true, correct
and complete copies of the Seller's Environmental Reports. Except as may
be disclosed in Seller's Environmental Reports, to the best of Seller's
knowledge, Seller has not caused or permitted any Hazardous Material to
be released or disposed of in violation of any applicable Environmental
Law in, on, under, to or from the Real Property, the discovery or
remediation of which release or disposal would have a material adverse
effect on the business conducted on the Property or which would expose
Buyer to a material liability following the Closing.
(v) BANKRUPTCY. No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or
other proceedings are pending or, to the best of Seller's knowledge,
threatened against Seller or any general partners of Seller, nor are any
of such proceedings contemplated by Seller or any general partners of
Seller.
(w) [Intentionally Omitted]
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(x) ENCUMBRANCES. The interest of Seller in the Licenses and
Permits, the Trade Names and Trademarks and the Warranties is or will as
of the Closing be free and clear of all encumbrances and has not been
assigned to any other person, except to the Lessee for use in the
operation of the Property pursuant to the Property Lease.
(y) [INTENTIONALLY OMITTED]
(z) [INTENTIONALLY OMITTED]
(aa) LIABILITIES. Except as disclosed in the Due Diligence
Materials delivered by Seller to Buyer, or as otherwise set forth in the
items listed in Exhibits to this Agreement or in the Title Commitment, to
the best of Seller's knowledge, there are no material obligations or
liabilities of Seller relating to the Property which shall be binding
upon Buyer or the Property after Closing.
(bb) OPERATING STATEMENTS. TO THE BEST OF SELLER'S KNOWLEDGE, THE
OPERATING STATEMENTS FOR THE PROPERTY FOR THE PERIODS AUGUST 23, 1995
THROUGH DECEMBER 31, 1995, THE 1996 AND 1997 CALENDAR YEARS AND JANUARY
1, 1998 THROUGH MARCH 31, 1998, DELIVERED BY SELLER TO BUYER FAIRLY
PRESENT THE FINANCIAL RESULTS OF OPERATION OF SELLER'S BUSINESS AT THE
PROPERTY FOR THE PERIODS THEREOF IN ALL MATERIAL RESPECTS.
(cc) BROKERS. Seller has not dealt with any broker or finder with
respect to the transactions contemplated by this Agreement.
(dd) LOAN DOCUMENTS. Attached as Exhibit R to this Agreement and
incorporated herein by this reference is a complete list of all Loan
Documents and Seller has received no written notice from the lender(s)
thereunder asserting Seller's defaults under any of the Loan Documents.
The phrase "to Seller's knowledge," or "to the best of Seller's
knowledge," as used in this Agreement, refers to the actual current knowledge
of Xxxxx Cyrus and Xxxxxx Xxxxxxx, without duty of inquiry or investigation,
except as follows. Prior to the date of this Agreement, a copy of this Article
6 has been presented to the on-site general manager of each Resort for review
and comment on the accuracy thereof, and the information provided by such
general managers in their written response which shall reflect their actual
knowledge after due inquiry shall be deemed to be included in Seller's
knowledge and has been taken into account by Seller in making the warranties
and representations contained in this Article 6. The naming of the individuals
set forth in this Section shall in no way be deemed to impose any personal
liability upon such individuals. The representations and warranties of Seller
contained in this Section 6.1 are true, correct and complete and, except as set
forth in the update certificate, shall be deemed remade by Seller as of the
Closing with the same force and effect as if made at that time. The
representation and warranty of Seller set forth in Section 6.1(c), as well as
Buyer's right to enforce and/or seek damages for any breach of the same, shall
survive the Closing indefinitely.
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All other representations and warranties of Seller set forth in Section 6.1, as
well as Buyer's right to enforce and/or seek damages for any breach of the
same, shall survive the Closing for a period of one (1) year [(i.e., meaning
that Buyer must give a detailed notice to Seller of such claim on or before the
first to occur of (A) sixty (60) days after Buyer first becomes aware thereof
and (B) the four hundred twenty-fifth (425th) day following the Closing Date
(being one year plus sixty (60) days, all as more particularly described in
Section 12.3 below) and if Seller disputes or fails to satisfy its indemnity
obligation therefor, Buyer must commence, and serve Seller in, a legal action
on such claim no later than the five hundred forty-eighth (548th) day following
the Closing Date]. Seller's total liability under this Section 6.1 shall be
subject to Seller's Contract Liability Limitation (as defined in Section
12.3(c) below).
6.2 REPRESENTATIONS AND WARRANTIES OF BUYER. To induce Seller to execute,
deliver and perform this Agreement, Buyer hereby represents and warrants to
Seller on and as of the date hereof and on and as of the Closing Date as
follows:
(a) [INTENTIONALLY OMITTED]
(b) AUTHORITY. Buyer is a duly organized and validly existing
limited partnership in good standing under the laws of the State of
Delaware. Buyer has full capacity, right, power and authority to
execute, deliver and perform this Agreement and all documents to be
executed by Buyer pursuant hereto, and all required action and approvals
therefor have been duly taken and obtained. The individuals signing this
Agreement and all other documents executed or to be executed pursuant
hereto on behalf of Buyer are and shall be duly authorized to sign the
same on Buyer's behalf and to bind Buyer thereto. This Agreement and all
documents to be executed pursuant hereto by Buyer are and shall be
binding upon and enforceable against Buyer in accordance with their
respective terms.
(c) NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance by Buyer of this Agreement, or any related documents or
instruments, or the consummation of the transaction contemplated hereby,
nor compliance by Buyer of any of the provisions hereof, will: (a)
result in a breach of or constitute a default under any agreement to
which Buyer is bound; (b) violate or conflict with any provision of
Buyer's organization documents; (c) violate, conflict with or result in a
breach of any provision of, or constitute a default under, any contract
or agreement to which Buyer is a party or by or to which Buyer is or may
be bound or subject, or (d) violate any order, judgment, injunction,
award or decree of any court or arbitration body, or any governmental,
administrative or regulatory authority, or any other body, by or to which
Buyer is or may be bound or subject.
(d) APPROVALS. No approval or consent of any foreign or domestic
governmental, administrative or regulatory body or any other person or
entity is required
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for the execution, delivery or performance by Buyer of this Agreement, or
any related documents or instruments, to which Buyer is a party.
(e) BROKERS. Buyer has not dealt with any broker or finder with
respect to the transactions contemplated by this Agreement.
The representations and warranties of Buyer contained in this Section 6.2
are true, correct and complete and except as set forth in the update
certificate, shall be deemed remade by Buyer as of the Closing with the same
force and effect as if made at that time. The representation and warranty of
Buyer set forth in Section 6.2(b), as well as Seller's right to enforce and/or
seek damages for any breach of the same, shall survive the Closing
indefinitely. All other representations and warranties of Buyer set forth in
Section 6.2, as well as Seller's right to enforce and/or seek damages for any
breach of the same, shall survive the Closing for a period of one (1) year
[(i.e., meaning that Seller must give a detailed notice to Buyer of such claim
on or before the first to occur of (A) sixty (60) days after Seller first
becomes aware thereof and (B) the four hundred twenty fifth (425th) day
following the Closing Date (being one year plus sixty (60) days, all as more
particularly described in Section 12.3 below), and if Buyer disputes or fails
to satisfy its indemnity obligation therefor, Seller must commence, and serve
Buyer in, a legal action on such claim not later than the five hundred
forty-eighth (548th) day following the Closing Date]. Buyer's total liability
under this Section 6.2 shall be subject to Buyer's Contract Liability
Limitation (as defined in Section 12.3(c) below).
6.3 CHANGE IN CIRCUMSTANCE. Seller shall notify Buyer promptly if Seller
becomes aware of any transaction or occurrence prior to the Closing Date which
would make any of the representations or warranties of Seller contained in this
Agreement not true in any material respect, except that any transaction or
occurrence which Seller is permitted to take or takes with Buyer's consent
under Section 7.1 below (hereinafter called a "PERMITTED CHANGE") shall not
require notice to Buyer under this Section 6.3. Seller shall deliver to Buyer
at closing a certificate confirming that the representations and warranties
contained in this Agreement are true and correct as of the Closing Date or,
where applicable, describe any change in facts or circumstance other than
Permitted Changes that would make any of the representations or warranties
contained in this Agreement not true in any material respect. It shall be a
condition to Buyer's obligation to close that no such material change, which
would materially and adversely affect Buyer, has occurred on or prior to the
Closing Date; it being expressly understood and agreed that in no event shall
any Permitted Change be deemed to constitute a material or material and adverse
change under this Agreement. If any such material and adverse change has
occurred, whether brought to the attention of Buyer by Seller's closing
certificate or through Buyer's due diligence investigation of the Property or
otherwise, Buyer shall have the right, without limitation on other remedies
which may be available to Buyer hereunder, to terminate this Agreement by
written notice to Seller, in which event the Xxxxxxx Money Deposit and any
interest thereon shall be forthwith returned to Buyer; provided, however, that
if such material and adverse change is not the result of a wilful or
intentional act or omission of Seller, then Buyer's sole remedies shall be
either such termination or closing subject thereto, without
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any adjustment in the Purchase Price and without a right to damages as a
consequence of such non-wilful or unintentional act or omission of Seller.
6.4 OTHER REPRESENTATIONS AND WARRANTIES. Each party hereby acknowledges
and agrees that except for the representations and warranties expressly set
forth in this Agreement, neither the other party nor any employee, agent,
officer, director, attorney or affiliate of said other party has made any other
representation or warranty and no other representation or warranty is to be
implied or to be relied upon in connection with the transactions contemplated
by this Agreement (unless set forth in a separate instrument executed by the
party to be charged therewith).
BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, THE PROPERTY SHALL BE CONVEYED TO BUYER ON AN "AS-IS,
WHERE-IS" WITH ALL FAULTS BASIS WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, EITHER ORAL OR WRITTEN, MADE BY SELLER OR ANY
AGENT OR REPRESENTATIVE OF SELLER WITH RESPECT TO THE PROPERTY, INCLUDING
WITHOUT LIMITATION, WITH RESPECT TO THE PHYSICAL CONDITION OF THE PROPERTY OR
WITH RESPECT TO THE EXISTENCE OR ABSENCE OF HAZARDOUS MATERIALS IN, ON, UNDER,
ABOUT OR AFFECTING THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLER HAS NOT MADE AND DOES NOT HEREBY MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER AND HEREBY DISCLAIMS ANY IMPLIED WARRANTY REGARDING
THE FITNESS FOR A PARTICULAR PURPOSE, QUALITY OR MERCHANTABILITY OF THE
PROPERTY OR ANY PORTION THEREOF AND BUYER WILL BE RELYING UPON ITS OWN
INVESTIGATIONS IN ACQUIRING THE PROPERTY.
ARTICLE 7
SELLER'S COVENANTS
7.1 COVENANTS. Seller covenants and agrees to the following, which
covenants and agreements shall survive Closing, shall have been complied with
as of the Closing Date, and shall not be deemed merged in the conveyance
contemplated herein:
(a) NOTICES OF LITIGATION, CLAIMS, PROCEEDINGS AND OTHER MATTERS.
Subject to Seller's rights under Section 7.1(b) below, in the event that
Seller, prior to the Closing, should receive written notice of any lien,
claim, cause of action or other matter affecting the ownership, use,
occupancy or operation of the Property, Seller shall advise Buyer in
writing (providing Buyer with a copy thereof).
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(b) FURTHER LIENS AND ENCUMBRANCES. Except for liens, encumbrances,
covenants, conditions, rights of way and other similar matters of title
which can be removed by Seller prior to or at Closing and which Seller
does so remove prior to or at Closing, Seller will not voluntarily
subject the Property to any additional liens, encumbrances, covenants,
conditions, rights of way or other similar matters of title. Without the
prior written consent of Buyer which shall not be unreasonably withheld
or delayed, Seller will not hereafter materially change any of the terms,
covenants or conditions of any of the existing liens, encumbrances,
covenants, conditions, easements, rights of way or other similar
instruments affecting title or enter into any new material agreement
affecting title to the Property which, in either case, cannot be
terminated prior to or at Closing without cost or penalty.
(c) LEASES; CONTRACTS. Seller will not hereafter materially amend
any of the Leases or the Contracts or enter into new Leases or Contracts
affecting the Property, except (i) in the ordinary course of business or
(ii) with the prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed.
(d) PROPERTY MANAGEMENT AND OPERATION. Seller shall cause the
Property to be operated and maintained in a manner substantially
consistent with Seller's historical practices. Seller shall promptly
notify Buyer of any casualty to the Property costing in excess of
$50,000.00 to repair or reconstruct or of any condemnation of the
Property or any portion thereof of which Seller receives written notice
and in either event, occurring after the Contract Date.
(e) COOPERATION WITH BUYER'S REPRESENTATIVES. Subject to the
provisions of Article 5, Seller shall cooperate with Buyer and Buyer's
Representatives in providing information and materials pertaining to the
ownership, operation, or marketing of the Property, including access to
the Property; provided, however, that Seller shall not be obligated to
provide any information which is subject to the attorney-client privilege
or which is proprietary in nature and, in either event, is not directly
and materially related to the ownership, operation or marketing of the
Property.
(f) VIOLATION OF REPRESENTATIONS. From the Contract Date to the
Closing Date, with the exception of those matters which constitute
Permitted Changes hereunder, Seller shall not take any action or omit to
take any action which action or omission would have the effect of
violating any of the representations, warranties, or covenants of Seller
contained in this Agreement in any material respect.
(g) GOVERNMENTAL INQUIRIES. Seller hereby acknowledges and agrees
that from the Contract Date to the Closing Date or earlier termination of
this Agreement, Buyer may contact any and all federal, state and local
governmental entities, agencies and departments in order to inquire about
and investigate any and all matters relating to the Property.
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(h) INSURANCE. From the Contract Date to the Closing Date, Seller
shall maintain or cause to be maintained in full force and effect
liability, casualty and other insurance upon and in respect to the
Property as was being maintained by Seller as of the Contract Date.
(i) SECTION 9.02(d). At least ten (10) days prior to the Closing,
Seller shall cause to be delivered to Buyer a "clearance" statement from
the Illinois Department of Revenue (the "DEPARTMENT") which may be issued
at any time after May 7, 1998, or other evidence satisfactory to Buyer,
that the sale to Buyer hereunder is not subject to, and does not subject
Buyer to liability under, Section 9.02(d) ("SECTION 9.02(d)") of the
Illinois Income Tax Act (the "ACT"). If said clearance or other evidence
is not so delivered to Buyer, as aforesaid, then Seller shall, or Buyer
may, notify the Department of the intended sale and request the
Department to make a determination as to whether the Seller has an
assessed, but unpaid, amount of tax, penalties, or interest due under the
Act. Seller agrees that Buyer may, at the Closing, deduct and withhold
from the proceeds that are due Seller the amount necessary to comply with
the withholding requirements imposed by Section 9.02(d) based upon the
best information available at that time as to Seller's liability under
the Act. Buyer shall deposit the amount so withheld in escrow with the
closing escrowee pursuant to the terms and conditions acceptable to
Seller and Buyer, but in any event, complying with Section 9.02(d).
(j) ENVIRONMENTAL REMEDIATION. Seller shall (i) complete the
remediation contemplated by the reports listed at Items 10, 11 and 12 of
Exhibit L to the extent necessary so that no further remediation letters
are issued by the Illinois Environmental Protection Agency with respect
thereto and (ii) shall test and, to the extent necessary, remediate to a
residential standard the area surrounding the underground storage tank
disclosed in a letter from Xxxxxx Xxxxxxx to Xxxxxx Xxxxxxx dated May 6,
1998 (the foregoing are hereinafter collectively called the "EXISTING
ENVIRONMENTAL MATTERS"). Notwithstanding the introductory paragraph of
this Section 7.1, Seller shall not be in default nor shall Buyer not be
obligated to close if it is not reasonable or practicable to complete
remediation of the Existing Environmental Matters by the Closing Date,
but Seller's obligation to complete such remediation and Seller's
indemnity of Buyer with respect thereto shall survive the Closing without
a time or dollar limitation.
7.2 NO ASSUMPTION OF SELLER'S OBLIGATIONS. Buyer shall not assume, or
become obligated with respect to, any obligation of Seller, including, but not
limited to, the following:
(a) Obligations of Seller now existing or which may arise prior to
the Closing Date with respect to any accounts payable or other payables,
except to the extent that Buyer receives a credit with respect thereto on
the Closing Statements;
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(b) Obligations prior to the Closing Date of any term, covenant or
provision of any employee benefit plan, employment contract, Booking,
Contract or Lease, except to the extent that Buyer receives a credit with
respect thereto on the Closing Statements;
(c) Obligations of Seller now existing or which may hereafter exist
by reason of or in connection with any alleged misfeasance or malfeasance
by Seller in the conduct of its business, or with respect to any tort
liability; and
(d) Obligations of employees with respect to any compensation (or
pursuant to any employment contract or employee benefit plan) except to
the extent that Buyer receives a credit with respect thereto on the
Closing Statements.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. Buyer's obligation
to acquire the Property pursuant to this Agreement shall be subject to the
satisfaction, prior to the Closing Date, of all of the following conditions
precedent, each of which is for the benefit of Buyer and may be waived by Buyer
in its sole discretion [provided that if Buyer terminates this Agreement
because the condition precedent set forth in clause (b) below is not satisfied,
then, in consideration of Seller having entered into this Agreement,
$100,000.00 of the Xxxxxxx Money Deposit shall be paid to Seller (and to the
extent necessary therefor, Buyer will give such written instructions to
Escrowee as will enable it to pay said $100,000.00 to Seller within three (3)
business days of Buyer's election to terminate under said clause (b) below,
failing which Seller shall be entitled to receive all interest accruing on the
entire Xxxxxxx Money Deposit from and after said three (3) business day
period), with the balance refunded to Buyer, whereas upon the failure of any
other conditions precedent set forth below which Buyer does not elect to waive,
but, rather, Buyer terminates this Agreement as a consequence thereof, then
without limitation of any of Buyer's other rights hereunder, all of the Xxxxxxx
Money Deposit shall be refunded to Buyer]:
(a) except for Permitted Changes, all representations and warranties
of Seller set forth in the Agreement shall be true and correct in all
material respects as of the Closing Date;
(b) there shall have been no material adverse change in the
condition, financial or otherwise, of the Property or the underlying
hotels, banquet/convention facilities or golf courses and related
operations since the Contract Date, excluding normal seasonal variations
in the operation or condition of the Property, an insured casualty
covered by Section 9.1 below, or a condemnation covered by Section 9.2
below;
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(c) Seller shall have performed, in all material respects, all of
its covenants and obligations under this Agreement;
(d) the Title Company shall be prepared to issue the Title Policy
(or a "marked-up" title commitment as described in Section 4.1 above);
(e) Seller shall have obtained those consents from, given those
notices to, and made those filings and registrations with, any
governmental body or authority, or any other person or entity, which are
required to be obtained, given or made in connection with the assignment
of the Operating Permits to Lessee, with respect to which the failure to
obtain, to give or to make would materially and adversely affect Lessee's
ability to conduct business at each Resort on substantially the same
basis as business is currently being conducted thereat;
(f) those Licenses and Permits and those Operating Permits shall
have been assigned or reissued to either Buyer or Lessee, as appropriate,
with respect to which the failure to assign or reissue would have a
material and adverse affect on Lessee's ability to conduct the business
at the Property as currently conducted; and
(g) Seller shall have timely executed and delivered to Escrowee all
of the items referred to in Section 11.2 hereof.
8.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. Seller's
obligation to sell, convey, assign, transfer and deliver the Property to Buyer
pursuant to this Agreement shall be subject to the satisfaction, prior to the
Closing Date, of all of the following conditions precedent, each of which is
for the benefit of Seller and may be waived by Seller in its sole discretion:
(a) all of the representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of
the Closing Date;
(b) Buyer shall have performed, in all material respects, all of its
covenants and obligations under this Agreement; and
(c) Buyer shall have timely executed and delivered to Escrowee all
of the items referred to in Section 11.3 hereof.
8.3 IPO CONDITION. The transaction contemplated by this Agreement is
subject to the consummation of the IPO (the "IPO CONDITION"). Buyer shall have
a period from the Contract Date until August 31, 1998 (the "IPO PERIOD") for
satisfaction of the IPO Condition. Further, Buyer shall have the right to
extend the IPO Period for up to two (2) additional 30-day extension periods, by
delivering to Seller, in each instance, an additional $50,000.00 extension fee,
which shall be made on up to two (2) occasions, each prior to the end of the
then current IPO Period, for each 30-day extension so elected by Buyer. The
aforesaid extension fee(s) shall
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be paid directly to Seller, shall be in addition to and not part of the
Purchase Price and shall, upon payment, become immediately non-refundable to
Buyer. Failure of Buyer to consummate the IPO within the IPO Period (as the
same may be extended as hereinabove provided) for any reason shall result in
the following: (a) this Agreement shall automatically terminate and become
null and void and of no further force or effect and neither party shall have
any further rights or obligations hereunder (except for such obligations which
are expressly provided to survive the termination hereof, including without
limitation, Buyer's indemnity obligations under Section 5.2 above); and (b)
Buyer shall pay to Seller an amount equal to Two Hundred Thousand and no/100
Dollars ($200,000.00), plus Seller's actual out-of-pocket substantiated
third-party costs, incurred in connection with the negotiation and drafting of
this Agreement and the transactions contemplated hereby, the sum of which shall
not exceed Three Hundred Fifty Thousand and no/100 Dollars ($350,000.00) (the
"BREAK-UP FEE"). Upon written demand from Seller, Escrowee shall pay the
Break-Up Fee from the Xxxxxxx Money Deposit and shall return the remaining
balance of the Xxxxxxx Money Deposit, if any, to Buyer. Buyer agrees to give
such written instructions to the Escrowee as will enable it to so pay out to
Seller the Break-Up Fee within three (3) business days from the date Seller
makes written demand therefor upon Buyer and Escrowee, which written demand is
accompanied by Seller's substantiation of its third party costs. Buyer's
failure to so instruct Escrowee within said three (3) business day period shall
entitle Seller to receive all interest accruing on the Xxxxxxx Money Deposit
from and after said three (3) business day period.
ARTICLE 9
DESTRUCTION, DAMAGE OR CONDEMNATION
9.1 DESTRUCTION OR DAMAGE. If, subsequent to the Contract Date and on or
before the Closing Date, all or any portion of the Property shall be destroyed
or damaged by one or more incidents of vandalism, fire, release of Hazardous
Materials or other casualty, whether or not covered by insurance, Seller shall
immediately give Buyer notice of such occurrence, and if either (a) the cost to
repair or reconstruct said portion of the Property exceeds ten percent (10%) of
the portion of the Purchase Price allocated to the Hotel on that portion of the
Property or (b) the casualty is not fully covered by insurance and Seller
advises Buyer, in its notice of such casualty to Buyer, that Seller will not
either repair and reconstruct fully or give Buyer a full credit at Closing for
the cost to complete any repair or reconstruction not completed as of the
Closing (less the amount of insurance proceeds available therefor), then Buyer,
within fifteen (15) days after receipt of such notice, may elect by written
notice to Seller either (i) to terminate this Agreement, in which event the
Xxxxxxx Money Deposit and any interest thereon net of any investment charges
shall be returned forthwith to Buyer, this Agreement shall be deemed null and
void and neither party shall have any further rights and obligations hereunder
(subject to Buyer's Indemnity which shall survive closing for the period
specified in Section 5.2), or (ii) to proceed to close the transaction
contemplated hereby as scheduled (except that if the Closing
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Date is less than fifteen (15) days following Buyer's receipt of such notice,
Closing shall be delayed until Buyer makes such election), with the right to
reduce the Purchase Price by the lesser of (A) the amount of the deficiency in
insurance proceeds and (B) Five Hundred Thousand and no/100 Dollars
($500,000.00) and Buyer shall have the right to participate in the adjustment
and settlement of any insurance claim relating to said damage, and Seller shall
assign and/or pay to Buyer at Closing all insurance proceeds (and other related
choses in action, if any) collected or claimed with respect to said loss or
damage (other than the proceeds of Seller's business interruption insurance),
less any third party documented costs spent by Seller prior to Closing with
respect to said casualty, but plus any deductible or self-insured amount.
Buyer's failure to give notice within the time period specified above shall be
deemed to be Buyer's election of option (i) above.
9.2 CONDEMNATION. If, subsequent to the Contract Date and on or before
the Closing Date, any proceeding which shall relate to the proposed taking of
any material portion of the Real Property by condemnation or eminent domain or
any action in the nature of eminent domain [materiality being defined as having
a value in excess of ten percent (10%) of the portion of the Purchase Price
allocated to that Resort or as being such that, in the reasonable business
judgment of Buyer, the subject Resort can no longer be operated in a fashion so
as to generate the same amount of revenues as it had generated in the past], or
the taking or closing of any right of access to the Real Property, is
instituted or commenced, Buyer shall have the right and option to terminate
this Agreement by giving Seller written notice to such effect within fifteen
(15) days after receipt of written notification of any such occurrence or
occurrences. Failure of Buyer to give such notice within such time shall be
conclusive evidence that Buyer has waived the option to terminate by reason of
the occurrence or occurrences of which it has received notice, the parties
shall proceed to close the transaction contemplated hereby and Buyer shall be
credited with or be assigned all Seller's right to any proceeds therefrom.
Seller agrees to furnish Buyer written notification with respect to any such
proceedings within forty-eight (48) hours of Seller's receipt of any such
notification or learning of the institution of such proceedings. Should Buyer
elect to so terminate this Agreement, the Xxxxxxx Money Deposit plus any
interest thereon shall be returned forthwith to Buyer, this Agreement shall be
deemed null and void and neither party shall have any further rights and
obligations hereunder (subject to Buyer's Indemnity which shall survive closing
for the period specified in Section 5.2). If the Closing Date is less than
fifteen (15) days following the last day on which Buyer is entitled to elect to
terminate this Agreement, then the Closing shall be delayed until Buyer makes
such election.
ARTICLE 10
POSSESSION, PRORATIONS AND CLOSING COSTS
10.1 POSSESSION. Sole and exclusive possession of the Property shall be
delivered to Buyer on the Closing Date, subject only to the rights of parties
under any Permitted Title
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Exceptions, and subject to the terms and conditions of the Property Lease being
entered into at Closing.
10.2 PRORATIONS. It is acknowledged that Seller (or its approved
designated entity), as lessee under the Property Lease, shall continue to
operate the Property from and after Closing and, pursuant to said Property
Lease, shall be entitled to all revenues generated from, and shall be obligated
to pay all taxes and expenses relating to, the Property from and after Closing
and during the entire term of the Property Lease (subject, however, to payment
of the various rentals otherwise described in said Property Lease). As a
result of the foregoing, there shall be no proration, at Closing of any
revenue, tax or expense items hereunder. However, for purposes of determining
"Additional Rent" due and owing under the Property Lease for the year in which
the Closing Date (i.e., the "Commencement Date" under the Property Lease)
occurs, the parties agree as follows:
(a) All revenue received by Seller that relates to time periods
after the Closing Date shall be deemed "Rooms Revenue," "Golf Course
Revenue" or "FB&M Revenue" (as the case may be) under the Property Lease,
attributable to periods following the Commencement Date of the term of
the Property Lease on an accrual basis in accordance with generally
accepted accounting principles.
(b) All of Seller's receivables, unreceived revenue and deferred
income relating to the operation of the Property prior to the Closing
Date and not otherwise provided for in this Section 10.2 or elsewhere in
this Agreement, as well as all refunds and rebates for real estate taxes
levied against the Property for time periods prior to the date of
Closing, shall remain the property of Seller ("SELLER'S RECEIVABLES"),
Buyer shall have no rights under this Agreement with respect thereto
regardless of when received, and Seller's Receivables shall not be deemed
"Rooms Revenue," "Golf Course Revenue" or "FB&M Revenue" under the
Property Lease attributable to any period falling within the term of the
Property Lease. To the extent Buyer should receive any refunds or
rebates relating to real estate or other ad valorem taxes levied against
the Property or any portion thereof for periods prior to the Closing
Date, Buyer shall cause said refunds and rebates to be paid over to
Seller. It is acknowledged that Seller (or its approved designated
entity), as lessee under the Property Lease, shall continue to attempt to
collect Seller's Receivables following the Closing Date.
10.3 CLOSING COSTS. Seller shall be responsible for all title charges and
premiums attributable to the Title Policy (and "xxxx-up") required to be
delivered by Seller hereunder (i.e., including any additional charges or
premiums for ALTA extended coverage, and the other endorsements described in
the definition of "Title Policy" under Section 1.1 hereof) up to a maximum of
Thirty Five Thousand and no/100 Dollars ($35,000.00), all charges and fees for
the Surveys up to a maximum of Twenty Two Thousand and no/100 Dollars
($22,000.00), all state, county, local and municipal transfer taxes, all state
deed fees, all recording fees, all documentary fees and taxes, one-half of all
escrow costs, and all other customary "seller"
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closing charges. Buyer shall be responsible for all costs incurred in
connection with any financing obtained by Buyer, all title and Survey costs in
excess of Seller's maximums set forth in the preceding sentence, and all other
customary "buyer" expenses, including, without limitation, all engineers',
accountants' and other professional fees associated with Buyer's pre-closing
Inspections and one-half of all escrow fees. Buyer and Seller shall each pay
the fees and expenses of their respective legal counsel incurred in connection
with the transaction contemplated hereby.
ARTICLE 11
CLOSING
11.1 TIME AND PLACE. The closing of the transaction contemplated hereby
("CLOSING") shall take place at the offices of Buyer's attorney on a date (the
"CLOSING DATE") to be specified by written notice from Buyer to Seller, such
date to be not earlier than ten (10) days after the date of such notice and not
later than ten (10) business days following the expiration of the IPO Period.
The Closing shall be effected pursuant to the escrow instructions described in
Section 3.3 above. Unless the parties otherwise agree, the Closing shall take
place concurrently with or following the consummation of the IPO, as more fully
described in Section 8.3 above and Article 17 below.
11.2 SELLER'S DELIVERIES. On or before the Closing Date, Seller shall
deliver or cause to be delivered to Buyer or to Escrowee the following
documents, each of which shall be in form and substance reasonably acceptable
to Buyer and funds:
(a) The Deed(s);
(b) Two (2) counterpart originals of Seller's assignment of the
Licenses and Permits, Trade Names and Trademarks, and Warranties,
substantially in the form attached as Exhibit N hereto (the "ASSIGNMENT
OF LICENSES AND PERMITS, TRADE NAMES AND TRADEMARKS, AND WARRANTIES"),
executed by Seller;
(c) Seller's xxxx of sale assigning and conveying the FF&E,
substantially in the form attached as Exhibit O hereto;
(d) Two (2) counterpart originals of the Property Lease, executed by
Seller (or the approved Seller designated entity), as lessee;
(e) Originals of all Licenses and Permits and Warranties assigned to
Buyer (or in Buyer's sole discretion where originals are unavailable,
copies duly certified by Seller as being true, correct and complete
copies of the originals);
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(f) Copies of all Loan Documents, Contracts and Operating Permits,
duly certified by Seller as being true, correct and complete;
(g) Seller's certificate dated as of the Closing Date confirming
that the representations and warranties of Seller herein are true and
correct as of the Closing Date and, if applicable, describing any change
in facts or circumstances which would make any of such representations or
warranties untrue as of the Closing Date;
(h) Such evidence as may be reasonably satisfactory to Buyer
evidencing the due authorization, execution and delivery of this
Agreement and the other documents to be executed in connection herewith
by Seller;
(i) An ALTA Statement or other affidavit in form required by the
Title Company in order to issue the Title Policy required hereunder;
(j) An executed Affidavit in customary form, or a qualifying
statement from the U.S. Treasury Department that the transaction is
exempt from the withholding tax requirement imposed by Section 1445A of
the Internal Revenue Code and the rules and regulations promulgated
thereunder ("SECTION 1445A");
(k) The "clearance" statement from the Department relating to
Seller's liability under Section 9.02(d), as provided in Section 7.1(i)
above;
(l) a payoff letter from each lender under the Loan Documents
stating the amount necessary to satisfy, in full, the indebtedness
evidenced and/or secured by the respective Loan Documents as of the
Closing Date, together with full recordable releases of all liens created
by such Loan Documents effective as of the Closing Date (it being
understood and agreed, however, that the conveyance of the Real Property
contemplated hereby shall be subject to all such Loan Documents and the
indebtedness evidenced and/or secured thereby, and the Debt Subject to
Amount shall be paid from funds deposited by Buyer which are in addition
to the Purchase Price);
(m) Any required state, county and municipal transfer declarations;
(n) Such other documents, instruments, certifications and
confirmations as may be necessary or appropriate to comply with the
provisions of this Agreement or as may be reasonably required or
designated by Title Company to effect and consummate fully the
transactions contemplated hereby;
(o) Such funds as may be required, in addition to funds deposited by
Buyer, to discharge (i) all deeds of trusts, mortgages, mechanic's liens,
judgment liens, security interests or encumbrances against the property
securing any indebtedness or obligations
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(other than the Permitted Title Exceptions) and (ii) to pay any amounts
required to be paid by Seller in accordance with the provisions of
Article 10; and
(p) Such other documents and instruments as may be reasonably
requested by the underwriters or their counsel to comply with federal or
state securities law requirements with respect to the issuance of the
Units or Common Stock as of the IPO.
11.3 BUYER'S DELIVERIES. On or before the Closing Date, Buyer shall
deliver or cause to be delivered to Seller or to Escrowee the following
documents, each of which shall be in form and substance reasonably acceptable
to Seller and funds:
(a) Two (2) counterpart originals of the Assignment of Licenses and
Permits, Trade Names and Trademarks, and Warranties, executed by Buyer;
(b) Two (2) counterpart originals of the Property Lease, executed by
Buyer, as lessor;
(c) An ALTA statement or other affidavit in form required by the
Title Company in order to issue the Title Policy required hereunder;
(d) Buyer's certificate dated as of the Closing Date confirming that
the representations and warranties of Buyer herein are true and correct
as of the Closing Date and, if applicable, describing any change in facts
or circumstances which would make any of such representations or
warranties untrue as of the Closing Date;
(e) The balance of the Purchase Price plus funds sufficient to pay
the Debt Subject to Amount and subject to adjustment for any prorations;
(f) Any required state, county and municipal transfer declarations;
(g) Such other documents, instrument, certifications and
confirmations as may be necessary or appropriate to comply with the
provisions of this Agreement or as may be reasonably required and
designated by Title Company to fully effect and consummate the
transactions contemplated hereby; and
(h) Funds sufficient to pay all amounts required to be paid by Buyer
in accordance with the provisions of Article 10.
11.4 CONCURRENT DELIVERIES. Seller and Buyer shall jointly deposit in the
escrow or deliver to each other at or before Closing an agreed proration
statement duly executed by the respective parties.
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11.5 CONCURRENT TRANSACTIONS. All documents or other deliveries required
to be made by Buyer or Seller at Closing, and all transactions required to be
consummated concurrently with Closing, shall be deemed to have been delivered
and to have been consummated simultaneously with all other transactions and all
other deliveries, and no delivery shall be deemed to have been made, and no
transaction shall be deemed to have been consummated, until all deliveries
required by Buyer, or its nominee, and Seller shall have been made, and all
concurrent or other transactions shall have been consummated.
11.6 NEW YORK STYLE CLOSING. At the request of either party, the
transaction shall be closed by means of a so-called "New York Style Closing,"
with the concurrent delivery of the documents of title, transfer of interests,
delivery of the Title Policy (or "marked-up" title commitment as described
herein) and the payment of the Purchase Price. Seller shall provide any
undertaking to the Title Company necessary for the New York Style Closing to
occur.
11.7 EMPLOYEES AND LEASING COMMISSIONS. Seller agrees that any and all
obligations with respect to the employees of the Resorts shall, as between
Buyer and Seller, be the sole responsibility and expense of Seller. Seller
further agrees that Buyer shall have no responsibility for any unpaid leasing
fee or commission due any party in connection with any Contract or Lease and
that Seller will not look to Buyer for any payment for services, commissions or
fees in connection with the operation of the Property performed or incurred
prior to or after the Closing Date. Seller shall indemnify, defend and hold
Buyer harmless from and against any and all damages, liabilities, costs and
expenses (including attorneys' fees and other litigation expense) arising from
any claim by any person for any leasing fee or commission in connection with
any Contract or Lease arising prior to the Closing.
ARTICLE 12
INDEMNIFICATION
12.1 SELLER'S INDEMNITY. Seller hereby agrees to indemnify, defend and
hold harmless Buyer, and its partners, members, officers, shareholders,
directors, employees and agents (collectively, the "BUYER INDEMNIFIED PARTIES")
from and against any and all losses, liabilities, fines and penalties and
damages (including, without limitation, any damages or injury to persons,
property or the environment as provided hereunder), or actions or claims in
respect thereof (including, without limitation, amounts paid in settlement and
reasonable cost of investigation, reasonable attorneys' fees and other legal
expenses), resulting from third party claims (based upon the allegations set
forth in such claims and whether or not ultimately successful) to which Buyer,
and its partners, members, officers, shareholders, directors, employees and
agents may become subject or which Buyer, and its partners, members, officers,
shareholders, directors, employees and agents may suffer or incur, either
directly or indirectly, insofar as such losses, liabilities or damages (or
actions or claims in respect thereof) arise out of, are with respect to, or are
based upon:
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(i) Seller's breach of any representation or warranty set
forth in this Agreement as it relates to claims of third parties
made against Buyer;
(ii) Seller's default in the performance of any of Seller's
covenants set forth in this Agreement as it relates to claims of
third parties made against Buyer;
(iii) Seller's failure to satisfy and discharge any and all
obligations of Seller under any Contracts or Leases to which Seller
is bound, which obligations relate to any time period prior to the
Closing;
(iv) Seller's failure to satisfy and discharge fully any and
all obligations of Seller regarding any current or former employees
of Seller including, without limitation, any obligations of Seller
for the payment of wages, salaries, benefits and other
compensation;
(v) Any obligations, liabilities or charges of Seller not
expressly assumed by Buyer, including, without limitation, Seller's
obligations with respect to the Existing Environmental Matters; or
(vi) The operation and management of the Property (including
any liabilities incurred with respect thereto) at any time on or
prior to the Closing Date.
12.2 BUYER'S INDEMNITY. Buyer hereby agrees to indemnify, defend and hold
the Seller Indemnified Parties harmless from and against any and all losses,
liabilities, fines and penalties and damages (including, without limitation,
any damages or injury to persons, property or the environment as provided
hereunder), or actions or claims with respect thereto, except for liabilities
specifically assumed by Seller pursuant to the terms of this Agreement
(including, without limitation, amounts paid in settlement and reasonable costs
of investigation, reasonable attorneys' fees and other legal expenses)
resulting from third party claims (based upon the allegations set forth in such
claims whether or not ultimately successful) to which Seller may become subject
or which Seller may suffer or incur, either directly or indirectly, insofar as
such losses, liabilities or damages (or actions or claims in respect thereof)
arise out of, are with respect to, or are based upon:
(i) Buyer's breach of any representation or warranty set forth
in this Agreement or a breach of any covenant of Buyer contained
herein, as it relates in either case to claims of third parties
made against Seller;
(ii) any obligations, liabilities or charges of Seller that
are expressly assumed by Buyer and that are not the "lessee's"
obligation pursuant to the Property Lease; or
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(iii) any liability arising under the Loan Documents as a
result of any failure to make any payment due, or perform any
obligation thereunder arising, on or after the Closing Date
("BUYER'S LOAN DOCUMENTS INDEMNITY").
12.3 INDEMNIFICATION PROCEDURES. Any claim for indemnification made by
either party pursuant to the terms and provisions of this Agreement shall
follow the procedures set forth in, and be subject to the terms and provisions
of, this Section 12.3.
(a) NOTICE OF CLAIMS. The party claiming to be indemnified
(hereinafter in this Section 12.3 called the "INDEMNITEE") shall deliver
a detailed notice (the "INDEMNIFICATION NOTICE") to the other party
(hereinafter in this Section 12.3 called the "INDEMNITOR") of the
assertion of any claim or the commencement of any suit, action or
proceeding against the Indemnitee for which Indemnitee is entitled to be
indemnified hereunder as soon as reasonably possible after the Indemnitee
receives notice thereof, but in no event later than (A) with respect to
indemnification based upon a suit, action or proceeding, the first to
occur of (i) thirty (30) days after Indemnitee is first served with
notice of such suit, action or proceeding and (ii) the three hundred
ninety fifth (395th) day following the Closing Date and (B) with respect
to all other matters, the first to occur of (i) sixty (60) days after the
date Indemnitee first becomes aware thereof and (ii) the four hundred
twenty fifth (425th) day following the Closing Date. In the
Indemnification Notice, the Indemnitee shall (1) specify with reasonable
particularity the basis for seeking indemnification and (2) provide the
Indemnitor with such information with respect to the claim, suit, action
or proceeding as may be known to the Indemnitee at the time (and shall
continue to provide the Indemnitor with any additional information as and
when the same becomes known to the Indemnitee). The Indemnitee's failure
to deliver timely the Indemnification Notice pursuant to this Section
12.3 shall relieve the Indemnitor of its indemnification obligation with
respect to such claim, suit, action or proceeding.
(b) ASSUMPTION OF DEFENSE. Indemnitor shall have the right, in its
sole and absolute discretion, to elect, upon written notice given to the
Indemnitee within thirty (30) days after Indemnitor's receipt of the
Indemnification Notice, to investigate and/or defend such claim, suit,
action or proceeding with counsel selected by Indemnitor and reasonably
acceptable to Indemnitee and if the Indemnitor-designated counsel is
acceptable to Indemnitee, then Indemnitor shall thereafter consult with
Indemnitee and keep Indemnitee informed with respect to such claim, suit,
action or proceeding. If the Indemnitor-designated counsel is not
reasonably acceptable to Indemnitee, or if Indemnitor elects to undertake
the defense and thereafter fails to do so, then in either of such cases,
Indemnitee shall be entitled to designate its own counsel and the costs
and expenses of Indemnitee in defending the claim, suit, action or
proceeding shall be included in the obligation to be indemnified
hereunder. If Indemnitor assumes the defense and the
Indemnitor-designated counsel is reasonably acceptable to Indemnitee,
then Indemnitee shall have the right (but not the duty) to participate in
the defense
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thereof and to employ (at Indemnitee's sole cost and expense) counsel
separate from the Indemnitor-designated counsel, but Indemnitor shall
nevertheless have control of the defense. If Indemnitor elects not to
undertake the investigation or defense of such claim, suit, action or
proceeding, Indemnitee shall defend such claim, suit, action or
proceeding with counsel selected by Indemnitee and reasonably acceptable
to Indemnitor. If Indemnitor elects to cause Indemnitee to assume the
defense, Indemnitor shall have the right (but not the duty) to
participate in the defense thereof and to employ (at Indemnitor's sole
cost and expense) counsel separate from the counsel employed by
Indemnitee. Whether or not Indemnitor elects to defend any such claim,
suit, action or proceeding, Indemnitor and Indemnitee (i) shall cooperate
in the defense thereof; (ii) shall each take commercially reasonable
efforts to mitigate the damages and expenses to be indemnified hereunder;
and (iii) to the extent that both of Indemnitor and Indemnitee deem it
commercially reasonable, shall enter into any compromise or settlement of
any such claim, suit, action or proceeding which the party controlling
the defense thereof pursuant to the foregoing is able to negotiate.
Where, pursuant to the foregoing, either Indemnitor or Indemnitee elects
to use "additional" counsel at its sole cost and expense, said cost and
expense shall not, in any event, reduce that party's Indemnity Obligation
Limitation (as defined below) hereunder.
(c) CONTRACT LIABILITY LIMITATION. With the exception of (i) a
breach of a party's representation or warranty concerning brokerage with
respect to the transactions contemplated hereby; (ii) a breach resulting
from fraud or gross negligence; (iii) Seller's sale of the Property to a
third party in breach of this Agreement; (iv) Seller's obligations and
indemnity with respect to the Existing Environmental Matters; and (v)
Buyer's liability under Buyer's Loan Documents Indemnity, each party's
total aggregate maximum liability ("CONTRACT LIABILITY LIMITATION") for
all indemnification obligations and for all breaches of its
representations and warranties and for all other defaults under this
Agreement which are asserted after the Closing hereunder or under any of
the closing documents (other than the Property Lease) shall not exceed an
amount equal to the Unit Amount; provided, however, that the foregoing
limitation shall not apply to the extent the matter is covered by
insurance. In addition, notwithstanding anything in this Agreement to
the contrary, neither party shall be entitled to assert a claim for such
indemnification, breach or other default if such party's maximum exposure
therefor is less than Twenty Five Thousand and no/100 Dollars
($25,000.00).
ARTICLE 13
DEFAULT
13.1 BUYER DEFAULT. Notwithstanding anything to the contrary contained in
this Agreement, if (a) Buyer has not terminated this Agreement prior to the
expiration of the
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Contingency Period; (b) the sale of the Property to Buyer is not consummated
due to Buyer's failure to perform any act required of Buyer hereunder, and (c)
all of the conditions precedent to Buyer's obligation to close have been
satisfied or waived by Buyer, then Seller shall execute and deliver to Buyer
written notice of such breach, which notice shall set forth complete
information about the nature of the breach. Buyer shall have a period of three
(3) business days to cure such breach. If such breach remains uncured beyond
the three (3) business day period described above, then, as Seller's sole and
exclusive remedy, in lieu of all other legal or equitable remedies, Seller
shall not be obligated to sell and convey the Property to Buyer and Seller
shall be entitled to retain the Xxxxxxx Money Deposit and interest earned
thereon (net of investment charges) as Seller's liquidated damages. THE
PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO
ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S FAILURE
TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT, AND THAT
UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, THE
LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENT A REASONABLE ESTIMATE
OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE, PROVIDED,
HOWEVER, THAT THIS PROVISION SHALL NOT AFFECT SELLER'S RIGHTS AND BUYER'S
INDEMNITY OBLIGATIONS UNDER SECTION 5.2 OR SECTION 12.2 OF THIS AGREEMENT OR
SELLER'S RIGHTS UNDER SECTION 16.8 OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE
THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR
PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. EACH
PARTY HEREBY AGREES TO WAIVE ANY AND ALL RIGHTS WHATSOEVER TO CONTEST THE
VALIDITY OF THE LIQUIDATED DAMAGE PROVISIONS FOR ANY REASON WHATSOEVER,
INCLUDING, BUT NOT LIMITED TO, THAT SUCH PROVISION WAS UNREASONABLE UNDER
CIRCUMSTANCES EXISTING AT THE TIME THIS AGREEMENT WAS MADE.
13.2 SELLER DEFAULT. Notwithstanding anything to the contrary contained
in this Agreement, if Seller fails to perform any act required of Seller
hereunder, or otherwise is in breach of any of its representations or
warranties hereunder, then Buyer shall execute and deliver to Seller written
notice of such default or breach, which notice shall set forth complete
information about the nature of the default or breach. Seller shall have a
period of three (3) business days to cure such default or breach. If such
default or breach remains uncured beyond the three (3) business day period
described above, then Buyer's sole and exclusive remedy, in lieu of any and all
other remedies at law or in equity, shall be either: (i) to cancel this
Agreement, in which event the Xxxxxxx Money Deposit and interest earned thereon
(net of investment charges) shall be returned to Buyer, or (ii) to enforce
specifically the provisions of this Agreement. Buyer shall exercise its
election pursuant to the foregoing sentence by serving written notice thereof
upon Seller and Escrowee within thirty (30) days of the date of Buyer's
aforesaid three (3) day notice of default and, to the extent necessary, Buyer
shall institute appropriate legal proceedings against Seller to enforce its
elected remedy within ninety (90) days of the date of Buyer's notice of
election of remedies; provided, however, that neither such
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election nor the institution of legal proceedings for specific performance
shall be deemed to preclude Buyer from exercising its right to dismiss its
action for specific performance, to terminate this Agreement (and receive a
return of the Xxxxxxx Money Deposit and interest earned thereon) and to proceed
against Seller for damages under this Section 13.2 should the remedy of
specific performance not be an available remedy. Notwithstanding the
foregoing, if Seller fails to close the sale of the Property as contemplated by
this Agreement, despite Buyer being ready, willing and able to close and having
performed its obligations under this Agreement, or if the nature of the breach
by Seller is such that specific performance is not an available remedy, then,
in addition to the remedy of termination of this Agreement and return of the
Xxxxxxx Money Deposit discussed above, Buyer shall be entitled, upon giving
Seller written notice of demand therefor within thirty (30) days of Buyer's
aforesaid three (3) day notice of default, to receive from Seller all costs,
expenses and damages incurred by Buyer, including, without limitation, all fees
and costs of attorneys, consultants and other third parties in connection with
the negotiation and execution of this Agreement and Buyer's due diligence
investigation of the Property; provided, however, that so long as Seller's
breach is not the sale of the Property to another party, Seller's total
liability for costs, expenses and damages hereunder shall not exceed an amount
equal to the Xxxxxxx Money Deposit. Should Seller fail to reimburse Buyer as
provided in the preceding sentence within sixty (60) days of Buyer's demand,
Buyer shall within thirty (30) days thereafter institute legal proceedings to
collect the same, the cost and expense of which shall not be subject to
Seller's liability limitation set forth in the preceding sentence or to
Seller's Contract Liability Limitation. Nothing herein shall be deemed to
limit, in any manner, Seller's indemnity obligations described in Section 12.1
hereof.
ARTICLE 14
INTENTIONALLY OMITTED
ARTICLE 15
NOTICES
15.1 NOTICES. Any notice, request, demand, instruction or other document
to be given or served hereunder or under any document or instrument executed
pursuant hereto shall be in writing and shall be delivered personally, or
transmitted by facsimile (provided that the original thereof together with the
facsimile confirmation sheet shall thereafter be promptly sent by regular
United States Mail), or sent by United States registered or certified mail,
return receipt requested, or sent by overnight express courier, postage
prepaid, and shall be addressed to the parties at their respective addresses
set forth below, and the same shall be effective (a) upon receipt if delivered
personally, (b) two (2) business days after deposit in the mails, if mailed as
aforesaid, (c) one (1) business day after deposit with an overnight express
courier, or
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(d) immediately upon being sent by facsimile transmission if received during
the recipient's normal business hours; otherwise, on the next business day
following receipt. A party may change its address for receipt of notices by
service of a notice of such change in accordance herewith.
If to Buyer: APGM Limited Partnership
c/oArnold Xxxxxx Golf Management, LLC
Xxxxxxxx 000, Xxxxxxxxxx Xxxxxx
Presidio Main Post, X.X. Xxx 00000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxx
Facsimile: 415/561-4680
with a copy to: Xxxxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Facsimile: 312/630-5342
If to Seller: Olympus Montclair-Chicago General
Partnership
c/o Olympus Real Estate Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx and Legal
Department
Facsimile: 214/749-7340
- and -
c/o Montclair Hotel Investors, inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Cyrus and Xxxxxx Xxxxxxx
Facsimile: 630/529-3248
with a copy to: Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP
2121 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: 310/203-0567
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ARTICLE 16
ADDITIONAL COVENANTS
16.1 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement, together
with the Property Lease, contains the entire agreement and understanding of the
parties with respect to the subject matter hereof, and the same may not be
amended, modified or discharged nor may any of its terms be waived except by an
instrument in writing signed by the party to be bound thereby.
16.2 FURTHER ASSURANCES. The parties each agree to do, execute,
acknowledge and deliver all such further acts, instruments and assurances and
to take all such further action before or after the Closing as shall be
necessary or desirable to carry out fully this Agreement and to consummate and
effect fully the transactions contemplated hereby.
16.3 SURVIVAL AND BENEFIT. All agreements, obligations and indemnities of
the parties shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Except as otherwise expressly set forth
herein, all representations, warranties and indemnities shall survive Closing
for a period of one (1) year; provided that any claims for indemnification made
pursuant to any closing document (e.g., the Assignment of Licenses and Permits
and Warranties) shall be governed by such document and not limited by the
foregoing survival period.
16.4 NO THIRD PARTY BENEFITS. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns, and no third party is intended to or shall have any rights hereunder.
16.5 BUYER'S INVESTIGATION AND INSPECTIONS. Any investigation or
inspection conducted by Buyer, or any agent or representative of Buyer,
pursuant to this Agreement, in order to verify independently Seller's
satisfaction of any conditions precedent to Buyer's obligations hereunder or to
determine whether Seller's warranties are true and accurate, shall not affect,
or constitute a waiver by Buyer of, any of Seller's obligations hereunder or
Buyer's reliance thereon.
16.6 INTERPRETATION. The headings and captions herein are inserted for
convenient reference only and the same shall not limit or construe the
paragraphs or Sections to which they apply or otherwise affect the
interpretation hereof. This Agreement and any document or instrument executed
pursuant hereto may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Whenever under the terms of this Agreement the time for
performance of a covenant or condition falls upon a Saturday, Sunday or
holiday, such time for performance shall
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be extended to the next business day. Otherwise all references herein to "DAYS"
shall mean calendar days.
16.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State where the Real Property is located.
16.8 ATTORNEYS' FEES. In any action or proceeding involving this
Agreement or the contents hereof, the prevailing party shall be entitled to
recover from the other party the prevailing party's reasonable costs and
expenses in such action or proceeding, including reasonable attorneys' fees.
16.9 ASSIGNMENT. Seller shall not have the right to assign this
Agreement, or any interest herein, to any other person or entity, without first
having obtained the prior written consent of Buyer (which consent may be
withheld in Buyer's sole and exclusive discretion). Buyer shall not have the
right to assign this Agreement, or any interest herein, to any other party
without first having obtained the prior written consent of Seller (which
consent may be withheld in Seller's sole and exclusive discretion).
16.10 XXXXXX NAME. For the purpose of this Agreement, the term "XXXXXX
IDENTIFICATION" shall mean the name "Xxxxxx Xxxxxx" and the name of Buyer,
Xxxxxx Xxxxxx Golf Management, LLC, or any part thereof, and shall include any
reference to Xxxxxx Xxxxxx and the likeness of Xxxxxx Xxxxxx. Seller agrees
that neither it, nor its affiliates, subsidiaries, assigns or successors, shall
in any manner use, print, copy, or market the Xxxxxx Identification including,
but not limited to, any marketing or sales collateral materials, any
advertising, or any communication to the public without the written consent of
Buyer (at its sole discretion); provided, however, that the foregoing shall not
be deemed to preclude any affiliate of Seller from using the Xxxxxx
Identification pursuant to a separate direct agreement between said affiliate
and the owner/licensor of the Xxxxxx Identification.
16.11 [INTENTIONALLY OMITTED]
16.12 OFFER AND ACCEPTANCE. Delivery by Buyer to Seller of a copy of this
Agreement executed by Buyer shall constitute an offer to purchase the Property
upon the terms and conditions herein set forth which shall be effective for a
period of seventy-two (72) hours following the time of such delivery. If
Seller fails to deliver a fully executed counterpart of this Agreement to Buyer
prior to expiration of such seventy-two (72) hour period, then at Buyer's sole
option, said offer may be revoked and rescinded in its entirety at any time
thereafter, and upon such revocation and rescission, said offer and this
Agreement shall have no further force or effect.
ARTICLE 17
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UNITS
17.1 ACCREDITED INVESTORS. Seller acknowledges that Buyer is paying a
portion of the Purchase Price by the issuance of Units in a sale exempt from
registration under the Securities Act (as defined in Section 17.2 below) and
that the issuance of said Units is based upon the representations and
warranties of Seller contained herein and the representations of each equity
owner of Seller (collectively the "EQUITY OWNERS"). The persons listed on
Exhibit U hereto constitute all of the Equity Owners of Seller (all of the
Equity Owners are referred to hereinafter as the "OFFEREES"). Seller
represents that each of the Offerees is an "Accredited Investor" (as such term
is defined herein in Rule 501(a) promulgated under the Securities Act).
Notwithstanding any provision of this Agreement or of the partnership agreement
of Buyer (as such partnership agreement may be amended from time to time) to
the contrary, Seller shall have the right to distribute Units to any Offeree
without the consent of Buyer, and upon the execution of an amended and restated
partnership agreement of Buyer by an Offeree, such Offeree shall become a
limited partner of the Buyer.
17.2 REQUIRED INFORMATION. Seller understands that in connection with the
IPO, Buyer will require certain information in order to comply with the
Securities Act of 1933, as amended, the regulations promulgated thereunder, and
any applicable states' securities laws governing the offering and sales of
securities (collectively, the "SECURITIES ACT"), and such information will be
used in the preparation of and/or included in a prospectus (the "PROSPECTUS")
to be distributed in connection with the sale of the Common Stock of the REIT.
Seller agrees to provide to Buyer, at Buyer's sole cost and expense (unless
otherwise specified in this Agreement), all information which Buyer, the
underwriters of the IPO and their respective attorneys or accountants deem
necessary or desirable to prepare the Prospectus. Seller agrees to review
carefully the portions of the Prospectus concerning the Property to verify that
such portions of the Prospectus do not contain any untrue statement of material
fact and do not omit to state a material fact necessary in order to make the
statements made in such portions of the Prospectus, in light of the
circumstances under which they were made, not misleading. If Seller finds any
portion of the Prospectus relating to the Property inaccurate, Seller shall
promptly notify Buyer in detail in writing as to the reasons it finds such
portions of the Prospectus inaccurate so that the Prospectus may be modified.
It is acknowledged that Seller has heretofore received a preliminary draft of
the Prospectus, and that Buyer intends to initiate a name change to become
"Presidio Golf Limited Partnership," being the operating partnership described
in such draft of Prospectus.
17.3 NO OFFERING. This Agreement is not intended to constitute an
offering of securities under the Securities Act (as defined in Section 17.2
above) or otherwise, and no securities have been offered to Seller by virtue
hereof.
17.4 FEDERAL INCOME TAX CONSEQUENCES OF TRANSACTION. Each of Buyer and
Seller hereby acknowledges and agrees that, notwithstanding anything contained
in this Agreement to
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the contrary, the transfer of the Property shall be treated for federal income
tax purposes (i) with respect to that portion of the Purchase Price paid in the
form of Units under Section 3.2 hereof, as a partial contribution of the
Property to Buyer under Section 721 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and (ii) with respect to that portion of the Purchase
Price paid in the form of cash or by cashier's or certified check or wire
transfer of funds as set forth in Section 3.2 hereof, as a sale of a portion of
the Property to Buyer. As a result, the transaction will be treated for
federal income tax purposes as a part contribution/part sale of the Property
under Code Section 707 and the Treasury Regulations promulgated thereunder.
17.5 DEBT SUBJECT TO AMOUNT. Notwithstanding anything herein to the
contrary, in the event that the entire Purchase Price is paid in the form of
cash or by cashier's or certified check or wire transfer of funds (i.e., as
opposed to Units), for any reason, then the Property shall be conveyed to Buyer
at Closing, free and clear of any liens created by the Loan Documents (all of
which liens shall thereafter be deemed unpermitted exceptions for all purposes
hereof), and the Purchase Price shall no longer be reduced or offset by the
Debt Subject to Amount as contemplated by this Agreement. In such event, at
either party's request, the parties shall enter into a supplement hereto,
confirming the terms of this Section 17.5 and modifying this Agreement, as
appropriate, to reflect the intent of this provision and the other provisions
hereof which may be contrary hereto.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
BUYER:
APGM LIMITED PARTNERSHIP, a Delaware limited partnership
By: XXXXXX MANAGEMENT, LLC, a Delaware limited liability
company, its general partner
By: XXXXXX XXXXXX GOLF MANAGEMENT, LLC, a Delaware
limited liability company, its managing member
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------------------
Its: President
-------------------------------------------
SELLER:
OLYMPUS/MONTCLAIR-CHICAGO GENERAL PARTNERSHIP, an Illinois
general partnership
By: OLYMPUS CHICAGO HOTELS, L.P., a Delaware limited
partnership, its managing general partner
By: OLY GP INVESTMENTS, L.P., a Texas limited
partnership, its general partner
By: OLYMPUS REAL ESTATE FUND GP PARTNERS, a Texas
general partnership, its general partner
By: HMTFD FUND I PARTNERS, L.P., a Texas
limited partnership, its managing partner
By: HMTF/OLYMPUS GP, INC., a Texas
corporation, its general partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------
Title: Vice President
-----------------------
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EXHIBIT E
UNIT FORMULA
Subject to Buyer and/or REIT making an appropriate securities law offering
and satisfaction of the terms of Section 8.3 and Article 17 of this Agreement,
that portion of the Purchase Price to be payable in Units ("NON-CASH
ACQUISITION PRICE") shall be payable by delivery of the number of Units equal
to the Non-Cash Acquisition Price divided by the mid-point between the high and
low anticipated initial public gross offering price for the Common Stock (as
set forth in the last preliminary prospectus included as part of the
registration statement filed with the U.S. Securities Exchange Commission with
respect to the IPO which is circulated to investors generally).
E-1
