1
EXHIBIT 10.3
TO: CONFEDERATION LIFE INSURANCE COMPANY
AND TO: PEAT MARWICK THORNE INC.
as receiver and manager of assets of
Third Generation Realty Limited,
Ardwold Realty Investments Limited
and 980879 Ontario Inc.,
comprising Bristol Place Hotel
BRISTOL PLACE HOTEL
AGREEMENT OF PURCHASE AND SALE
1. OFFER
WHC Development Corporation (the "Purchaser"), a Delaware corporation, hereby
offers to purchase, which offer shall be irrevocable and open to acceptance by
the Vendors only until 5:00 p.m. on June 21, 1996:
(a) from Confederation Life Insurance Company ("Confederation Life"),
Confederation Life's freehold interest (the "Freehold Interest") in the
land and premises described in Schedule "A" hereto (the "Real Property")
for the purchase price (subject to the last paragraph of paragraph 2) of
$2,500,000 Canadian dollars; and
(b) from Peat Marwick Thorne Inc. (the "Receiver"), in its capacity as
receiver and manager of the assets of Third Generation Realty Limited,
Ardwold Realty Investments Limited and 980879 Ontario Inc.
(collectively, the "Debtors") comprising the Bristol Place Hotel (the
"Hotel"):
(i) the Debtors' leasehold interest in the Real Property under or
pursuant to the lease dated December 1, 1971 granted by
Confederation Life to Third Generation Realty Limited, as the
same may have been amended from time to time (as so amended, the
"Lease"), including, without limitation, the Debtors' interest
in the hotel building and other fixed improvements situate on
the Real Property or forming a part thereof;
(ii) all furnishings, fixtures and equipment of the Debtors (the
"Equipment") which at the Time of Closing are located on the
Real Property;
(iii) all inventory of the Debtors (the "Inventory") located on the
Real Property at the Time of Closing (including without
limitation all alcoholic beverages to the extent permitted by
law at the Time of Closing);
(iv) all the Debtors' interests in and to the agreements listed in
Schedule "B" hereto (the "Agreements");
2
- 2 -
(v) the Debtors' interests, if any, in the name "Bristol Place
Hotel", the Hotel's logo and all other intellectual property
used in connection with the ownership and operation of Hotel;
(vi) $22,000 of cash situated at the Real Property at the Time of
Closing, but excluding all other cash situated at the Real
Property at or before the Time of Closing received by Vendors;
and
(vii) all other assets of the Debtors (excluding all assets excluded
by subparagraphs (i) to (vi) hereof and excluding all accounts
receivable) as at the Time of Closing used in connection with
the Hotel;
(hereinafter referred to collectively as the "Hotel Assets"), for the
purchase price (subject to the last paragraph of paragraph 2) of
$20,500,000 Canadian dollars pursuant to and in accordance with the
provisions of this agreement.
For the purposes of this agreement, the Freehold Interest and the Hotel Assets
are hereinafter collectively referred to as the "Purchased Assets". The Vendors
acknowledge that the Purchaser's obligation to buy hereunder is for all of the
Purchased Assets as a whole and under no circumstances shall this offer be
interpreted to be an offer to purchase certain Purchased Assets to the
exclusion of other Purchased Assets.
2. PURCHASE PRICE
Subject to the last paragraph of this paragraph 2, the Purchaser shall pay the
total purchase price for the Purchased Assets in the amount of $23,000,000
Canadian dollars (the "Purchase Price"), subject to the adjustments referred to
in paragraph 21, as follows:
(a) The Purchaser shall deliver to Colliers Macaulay Nicolls (Ontario) Inc.
(the "Agent") as agent of Confederation Life and the Receiver
(collectively, the "Vendors") in accordance with paragraph 2(f) below;
3
- 3 -
(i) a deposit in the amount of $30,000 Canadian dollars in respect
of the Freehold Interest; and
(ii) a deposit in the amount of $270,000 Canadian dollars in
respect of the Hotel Assets,
in each case to be held by the Agent in accordance with the provisions
of this agreement.
4
- 3 -
(b) Within three (3) business days following the Due Diligence Date (as
hereinafter defined), the Purchaser shall deliver to the Agent the
following additional deposits to be held in accordance with the terms of
this agreement:
(i) a deposit in the amount of $120,000 Canadian dollars in respect
to the Freehold Interest; and
(ii) a deposit in the amount of $1,080,000 Canadian dollars in
respect to the Hotel Assets,
in each case to be held by the Agent in accordance with the provisions
of this agreement.
(c) The Purchaser shall pay to the Vendors (or as they may direct) by
certified cheques or bank drafts at the Time of Closing the balance of
the Purchase Price, subject to the adjustments referred to in paragraph
21.
(d) The Purchaser and the Receiver shall use all reasonable efforts to
agree on the allocation of the Purchase Price among the Hotel Assets
prior to the Due Diligence Date, but failure to do so shall not affect
the liabilities and obligations of the parties hereto. The Purchaser
and the Vendors agree that the purchase price of $20,500,000 Canadian
dollars for the Hotel Assets shall be allocated, as to $19,000,000
Canadian dollars, to the Debtors' interest in the Real Property, and as
to $1,500,000 Canadian dollars, to the other Hotel Assets.
(e) The parties hereto agree that the Purchaser shall be entitled to a
credit against the Purchase Price for any obligations assumed by the
Purchaser at the Time of Closing as provided in this agreement or with
the Receiver's written approval which relate to periods preceding the
Time of Closing, but nothing in this subparagraph 2(e) shall require the
Purchaser to assume any obligations in respect to periods prior to the
Time of Closing.
(f) Purchaser shall wire the deposits set forth in subparagraph 2(a) to the
Agent on the
5
- 3 -
next business day after receipt of notification that Purchaser's offer has been
accepted and that this agreement has been executed by all appropriate parties.
Notwithstanding the foregoing, however, the Vendors and the Purchaser agree
that, except to the extent the Time of Closing is delayed by reason of default
by the Purchaser hereunder, (i) if the Time of Closing (as hereinafter defined)
occurs in October, 1996, the Purchase Price shall be reduced by the sum of
$100,000 Canadian dollars, (ii) if the Time of Closing occurs in November,
1996, the Purchase Price shall be reduced by the sum of $200,000 Canadian
dollars, (iii) if the Time of Closing occurs in December, 1996, the
6
- 4 -
Purchase Price shall be reduced by the sum of $300,000 Canadian dollars, (iv)
if the Time of Closing occurs in January, 1997, the Purchase Price shall be
reduced by the sum of $400,000 Canadian dollars and (v) if the Time of Closing
occurs after January, 1997, the Purchase Price shall be reduced by the sum of
$500,000 Canadian dollars. Ten per cent (10%) of the amount of any such
reduction shall be allocated to the Freeholder Interest and ninety per cent
(90%) of the amount of any such reduction shall be allocated to the Hotel
Assets.
3. DEPOSIT
The deposits shall be held by the Agent in trust in an interest bearing trust
account with a Canadian chartered bank pending the completion of other
termination of this agreement. At the Time of Closing, the deposits and all
interest accrued thereon (collectively, the "Deposits") shall be credited to
the Purchaser as an adjustment and paid to the Vendors. If the agreement is not
completed through no fault of the Purchaser, the Deposits shall be paid to the
Purchaser promptly without deduction. If this agreement is not completed by
reason of a default by the Purchaser of any of its obligations pursuant to this
agreement, the Vendors shall be entitled to terminate their obligations
under this agreement, Confederation Life shall be entitled to retain the
Deposits referred to in sub-paragraphs 2(a)(i) and 2(b)(i) and the Receiver
shall be entitled to retain the Deposits referred to in sub-paragraph 2(a)(ii)
and 2(b)(ii). The Vendors acknowledge that in the event they terminate this
agreement by reason of a default hereunder by the Purchaser, the Vendors' sole
and exclusive remedy shall be the forfeiture of the Deposits and in no event
shall the Vendors have any other right, remedy, claim, suit or cause of action
whether at law or equity against the Purchaser hereunder, but such limit of
liability does not apply to the Purchaser for the indemnity granted under
paragraph 9 hereof.
4. DUE DILIGENCE INVESTIGATION
The Purchaser shall be entitled to investigate the Purchased Assets to
determine whether to purchase the Purchased Assets. If the results of the
Purchaser's investigations are not satisfactory to the Purchaser in its sole
and absolute discretion, the Purchaser may deliver to the Vendors on or before
the fortieth (40th) day following the date of execution by both Vendors and
the communication of such execution by the Receiver to the Purchaser (the "Due
Diligence Date") a written notice terminating this agreement in which case the
Deposits shall be paid to the Purchaser and this agreement shall terminate. If
the Vendors do not receive such termination notice on or before the Due
Diligence Date, the Purchaser shall complete the purchase of the Purchased
Assets in accordance with this agreement.
7
- 5 -
5. TIME OF CLOSING
Subject to paragraph 39, the closing of the purchase and sale of the Purchased
Assets shall commence at 11:00 a.m. (Toronto time) (the "Time of Closing") on
the first business day (the "Closing Date") following the fifteenth (15th) day
after the date on which the court order referred to in paragraph 11 hereof has
been obtained and such closing shall occur at the offices of Fraser & Beatty,
39th Floor, 1 First Canadian Place, Toronto, Ontario.
6. LIMITED REPRESENTATIONS AND WARRANTIES BY THE VENDORS
The Purchaser hereby agrees that:
(a) The Purchaser is purchasing the Purchased Assets on an "as is, where is"
basis and, except as otherwise expressly provided herein, without any
representation or warranty by the Vendors of any kind whatsoever, and
any and all conditions and warranties, express or implied, pursuant to
the Sale of Goods Act do not apply hereto and are hereby waived by the
Purchaser. Without limitation to the foregoing, there is no condition
and there is no representation or warranty of any kind whatsoever with
respect to title, description, encumbrances, collectability, condition,
cost, size, merchantability, fitness for purpose, quantity, quality or
any other matter whatsoever.
(b) The Purchaser will rely on its own investigation with respect to the
Purchased Assets and acknowledges that any information relating to the
Purchased Assets (including without limitation any environmental report,
any survey or any information memorandum) given by the Vendors, the
Agent or any other person to the Purchaser was delivered to the
Purchaser solely for the Purchaser's convenience and there is no
representation or warranty of any kind whatsoever made by the Vendors,
the Agent or any other person with respect to the accuracy or
completeness of any such information.
(c) All transfers, bills of sale and assignments delivered by the Vendors or
either of the Vendors to the Purchaser at the Time of Closing shall
state that they are delivered to the Purchaser without any condition,
representation or warranty of any kind whatsoever by the Vendors.
Notwithstanding the foregoing, however, Confederation Life represents and
warrants to the Purchaser that the Superintendent of Financial Institutions
(the "Superintendent") has been appointed the provisional liquidator of
Confederation Life pursuant to the court order of the Ontario Court of Justice
(General Division), the Honourable Mr. Justice Houlden presiding, dated Monday,
August 15, 1994, that this appointment remains in effect, that the said order
is final and binding, has not been rescinded and is not subject to any appeal
or
8
- 6 -
right of appeal, and that Peat Marwick Thorne Inc. has been duly appointed as
the agent of the Superintendent and is fully empowered as such to enter into
this Agreement, perform its obligations hereunder and sell the Freehold
Interest on behalf of Confederation Life.
The Receiver represents and warrants to the Purchaser that it is the duly
appointed receiver and manager of the Hotel Assets pursuant to the order of the
Ontario Court of Justice (General Division), the Honourable Mr. Justice Winkler
presiding, dated July 25, 1995, that such order is final and binding, has not
been rescinded and is not subject to any appeal or right of appeal, and that
the Receiver has full power and authority to enter into this Agreement, perform
its obligations hereunder and sell the Hotel Assets to the Purchaser as herein
contemplated, subject to obtaining the court order referred to in paragraph 11
hereof.
7. DOCUMENT DISCLOSURE
The Vendors shall, within eight days after the execution of this agreement by
all parties hereto, deliver to the Purchaser copies of the following Agreements
and the Purchaser agrees to purchase the Purchased Assets subject to any such
Agreements:
(a) equipment leases referred to in section A of Schedule "B" (subject to
the provisions of such section) which, after the Time of Closing, will
continue to affect any Purchased Assets;
(b) maintenance, service or other similar contracts referred to in section B
of Schedule "B"; and
(c) sub-leases referred to in section C of Schedule "B" of part of the Real
Property granted by and any of the Debtors or the Receiver to
sub-tenants.
The Receiver shall also provide the Purchaser and its authorized
representatives at all reasonable times up to and including the Due Diligence
Date (and, provided that the Purchaser has not terminated this Agreement
pursuant to paragraph 4 hereof, thereafter until the Time of Closing) with
access to all other financial statements, financial information, accounting
records, operating records, contracts, agreements, plans, drawings,
specifications, surveys, reports, studies, analyses, audits, claims, demands,
statements of claim, court documentation and all other information and
documentation pertaining to the Hotel Assets or any of them or to the
ownership, use, management or operation of the Hotel or any part thereof which
are at the Hotel or otherwise in the possession of the Receiver or to which
access may be had by the Receiver, using reasonable efforts to do so (but not
including taking legal proceedings against any person), but not including
appraisals, cash-flow projections or similar documents or information prepared
in
9
- 7 -
connection with the offering of the Purchased Assets for sale. The Purchaser
may, at its option, make and take away copies of any such document or
information, provided that if the Purchaser terminates this agreement pursuant
to paragraph 4 hereof, or if this agreement is otherwise terminated other than
by reason of default by either Vendor, all such copies shall, if required by
the Receiver, forthwith be returned to the Receiver.
The Purchaser shall hold all such documents in escrow and, if the transaction
is not completed, the Purchaser shall return all such documents to the
Receiver. The Purchaser shall, at the Time of Closing, deliver to the Receiver,
in form and substance satisfactory to the Receiver, an agreement by the
Purchaser assuming all obligations arising after the Time of Closing pursuant
to or in respect of the Agreements and indemnifying the Receiver in respect of
all such obligations. Notwithstanding the foregoing, no obligations in respect
of periods prior to the Time of Closing shall be assumed by the Purchaser, the
Receiver hereby agreeing to be responsible for same.
8. CONFIDENTIALITY
The Purchaser agrees that the provisions of the confidentiality agreement
delivered by the Purchaser to the Vendors shall apply to the documents referred
to in paragraph 7, that such confidentiality agreement shall not merge with the
execution of this agreement, and that the Purchaser shall comply with each
provision of such confidentiality agreement.
9. PURCHASER MAY ENTER
After the acceptance of this Offer, the Purchaser may arrange with the Receiver
to enter on and inspect the Real Property from time to time at all reasonable
times during normal business hours, by such agents, consultants, or other
persons as it deems necessary, but subject to the rights of tenants, guests and
other occupants of the Real Property and in such manner so as not to interfere
with normal business operations. Purchaser shall be entitled to conduct such
environmental or structural tests as Purchaser may deem appropriate, including
testing of materials and obtaining samples of the Real Property and/or the Hotel
Assets. The Purchaser agrees to repair any damage to the Real Property and/or
the Hotel Assets arising from the acts or omissions of the Purchaser during the
course of any such inspections or tests. The Purchaser hereby further agrees to
indemnify and hold harmless the Vendors with respect to any loss or damage
(other than consequential economic loss) suffered by the Vendors (and either of
them) and any loss or damage suffered by any other person for which the Vendors
(and either of them) may be or may become liable which loss or damage arises
from the acts or omissions of Purchaser occasioned by any such inspection or
test and this indemnity shall survive the closing or any termination of this
agreement regardless of the reason for such termination. Despite the foregoing,
the Purchaser shall:
10
- 8 -
(a) provide the Receiver with at least forty-eight (48) hours'
prior written notice of any destructive testing (whether in respect of
environmental tests, structural tests or otherwise) and reasonable particulars
of the Purchaser's intentions with respect thereto;
(b) use only reputable contractors experienced in carrying out such
testing;
(c) permit the Receiver to have a representative present during any
such testing to monitor same; and
(d) generally co-operate with the Receiver and its representative
in the carrying out of such testing.
the Purchaser may arrange with the Receiver for access to any of the Debtors'
books of account, financial information and other information in the Receiver's
possession or control related to the Real Property, but not any financial
forecasts or projections, and the Receiver shall permit the Purchaser to make
copies thereof (which shall be held by the Purchaser on a confidential basis as
set out in paragraph 8 and returned to the Vendors if the transaction does not
close). The Vendors shall use their best efforts to ensure that the Purchaser
is given access to all such information requested by the Purchaser, except
financial forecasts or projections. The Purchaser shall be given ample
opportunity to meet with and interview all managerial employees of the Hotel
prior to the Due Diligence Date.
10. AUTHORIZATION
The Vendors shall, at the Purchaser's request, deliver to the Purchaser the
Vendors' written authorizations for the Purchaser to obtain from governments or
government agencies information concerning the Purchased Assets. The Purchaser
shall not initiate any inspection or audit by any government or government
agency.
11. COURT APPROVAL REQUIRED
The Vendors' obligations to complete this transaction shall be conditional on
the Receiver's obtaining the approval of the Ontario Court of Justice (General
Division) to this agreement and to the sale by the Receiver of the Hotel Assets
in accordance with the provisions of this agreement. The Receiver shall use all
reasonable and diligent efforts to obtain such approval and shall keep the
Purchaser fully apprised at all times as to the status and results of such
efforts, including notifying the Purchaser promptly when such approval has
been obtained. In the event the Receiver does not give written notice to the
Purchaser at or before 5:00 p.m. (Toronto time) on the thirtieth (30th) day
after the Due Diligence Date (as such period may be extended pursuant to the
last sentence of this paragraph 11) that this
11
- 9 -
condition has been satisfied, this condition shall be deemed not to have been
satisfied, this agreement shall terminate, the Deposits shall be paid to the
Purchaser without deduction and neither the Vendors nor the Purchaser shall
have any further obligations to complete the purchase and sale of the Purchased
Assets pursuant to this agreement. In the event the Receiver gives written
notice to the Purchaser at or before such time that this condition has been
satisfied, the Vendors shall complete this agreement in accordance with the
provisions of this agreement. Notwithstanding the foregoing, however, in the
event that the condition referred to in this paragraph 11 has not been
satisfied by the thirtieth (30th) day after the Due Diligence Date, either of
the Vendors or the Purchaser may, at their or its option, extend such date for
a further period of thirty (30) days, in which event the provisions of this
paragraph 11 shall continue to apply throughout such further thirty (30) days.
The obligation of the Purchaser to complete the purchase of the Purchased
Assets hereunder shall be conditional upon (i) an order giving such approval
having been obtained and being in full force and effect; and (ii) no person
having obtained a stay of such order or any injunction or other court order
prohibiting the completion of the transaction contemplated by this agreement.
12. INVESTMENT COMMITTEE APPROVAL
The obligation of the Purchaser to consummate the transactions contemplated
hereby are subject to the Purchaser having obtained the written approval of the
Investment Committee of Purchaser prior to the Due Diligence Date. If such
approval is not obtained by the Due Diligence Date, then the Purchaser may
terminate this agreement, in which case the Deposits shall be returned to the
Purchaser and the Purchaser shall have no further obligations under this
agreement.
13. REQUISITION DATE
The Purchaser shall be allowed until the Due Diligence Date to examine title to
the Real Property and to make such title inquiries as it deems appropriate at
the Purchaser's expense.
14. THE LEASE
Prior to the Time of Closing, Confederation Life, as landlord, and the Receiver
shall enter into an agreement amending the Lease, the effect of which is to make
the unexpired term of the Lease, including any renewals or extensions of the
term provided for in the Lease or in any separate option to lease or other
document entered into as part of the arrangement relating to the Lease, less
than fifty (50) years. This shall be effected, inter alia, by changing the
reference to "ninety-five (95) years" in paragraph 2 of the Lease to "sixty-five
(65) years", changing the reference to "2066" in said paragraph 2 to "2036",
deleting the references to "65th and 80th" in subparagraph 3(b) of the Lease and
deleting clauses (iii) and
12
- 10 -
(iv) from said subparagraph 3(b). As part of the closing registrations, the
Vendors shall register a notice of such amendment to the Lease title to the
Real Property.
15. TITLE
The Purchaser's obligation to complete the purchase shall be conditional on
applicable zoning by-laws being complied with, the present use of the Real
Property as a hotel being lawfully continued and the buildings on the Real
Property being insured against fire and on the title to the Real Property being
at the Time of Closing, upon the delivery by the Vendors to the Purchaser of
the vesting order referred to in paragraph 19, and the transfer of the Freehold
Interest, good and free from all encumbrances, except as set out in this
agreement and except for:
(a) the lease (subject to the provisions of paragraph 14 having been
complied with);
(b) the airport zoning regulations, agreements and other rights or matters
referred to in Schedule "C" hereto (the "Permitted Encumbrances"),
provided same are complied with;
(c) any registered restrictions or covenants that run with the Real
Property provided that they are complied with;
(d) any registered municipal agreements and registered agreements with
publicly regulated utilities provided they have been complied with,
or security has been posted to ensure compliance and completion, as
evidenced by a letter from the applicable municipality or regulated
utility; and
(e) any easements for the supply of utilities, telephone, cable or other
communication services to the Real Property or adjacent properties,
provided same are complied with.
If the Purchaser has delivered to the Receiver in writing prior to the Due
Diligence Date any valid objection to the title to the Real Property, or
noncompliance with zoning by-laws, or that the present use of the Real
Property may not be lawfully continued, or that buildings on the Real Property
cannot be insured, which the Vendors are unable or unwilling to remove or
correct prior to the Time of Closing and which the Purchaser will not waive,
this agreement shall terminate, the Deposits shall be paid to the Purchaser,
and the Vendors shall have no further obligation hereunder. Save as to any
valid objection made on or before the Due Diligence Date or any objection going
to the root of title to the Real Property, the foregoing condition shall be
deemed to have been satisfied, the Purchaser shall be conclusively deemed to
have accepted the title to the Real Property, and
13
- 11 -
the Purchaser shall complete the transaction. If, at any time prior to the Time
of Closing, the Real Property is affected by any work order or deficiency
notice, the Receiver shall, at its option, either remedy same at its own
expense prior to the Time of Closing (or within such reasonable period
thereafter as may be necessary to diligently complete such repair) or allow the
Purchaser an abatement in the Purchase Price equal to the reasonable costs of
remedying same and, in either case, the transaction of Purchase and Sale
contemplated herein shall be completed.
16. LIQUOR LICENCES
The Purchaser shall, within a reasonable time after execution of this agreement
by all parties hereto, complete all applications and provide all information
necessary to obtain all necessary liquor licences at the Time of Closing. In
the event that the Purchaser has not obtained all such licences by the Time of
Closing, the Receiver shall permit the Purchaser to use its liquor licence for
the Hotel, to the extent that the Receiver and the Purchaser are lawfully
permitted to do so, on a temporary basis until such time as the Purchaser has
received its own licence and the Purchaser shall indemnify and save the
Receiver harmless from any cost or expense the Receiver shall incur by reason
of the Purchaser using its liquor licence on such basis, such indemnity to
survive the completion of the transaction contemplated by this agreement.
17. SPECIAL TERMINATION RIGHT
The Purchaser may, by written notice given to the Vendors at any time prior to
the Time of Closing, terminate this agreement in the event that three or more
human fatalities occur prior to the Time of Closing at the Hotel which are
caused by disease, an act of violence or another cause which is specifically
identified with any of the Purchased Assets, in which event the Deposits shall
forthwith be returned to the Purchaser and neither the Purchaser nor the
Vendors shall have any further liability or obligation to the other to complete
the purchase and sale of the Purchased Assets hereunder.
18. CLOSING
At the Time of Closing, the Vendors shall deliver to the Purchaser the
following with respect to the Purchased Assets:
(a) a transfer of the Freehold Interest by Confederation Life;
(b) a certified copy of an Order of the Ontario Court of Justice (General
Division) in form acceptable to Purchaser approving the sale of the
Hotel Assets pursuant to this agreement; and
14
- 12 -
(c) the vesting order referenced in paragraph 19 herein, which order shall
be in form acceptable in all respects to the Purchaser, acting
reasonably.
19. VESTING ORDER
At or about the Time of Closing, the Receiver shall apply to the Ontario Court
of Justice (General Division) for a vesting order containing a registrable
legal description of the Real Property which vests the Hotel Assets in the
Purchaser free and clear of any and all mortgages, charges, liens, interests,
encumbrances and other adverse rights of third parties, in or affecting any of
the Hotel Assets, except those which, by the provisions of this agreement, the
Purchaser is required to assume or to which the Purchaser is required to take
subject. The Vendors shall not be obligated to obtain discharges of any
existing encumbrances of any of the Purchased Assets. The obligation of the
Purchaser to complete the purchase of the Purchased Assets hereunder shall be
conditional upon (i) such vesting order having been obtained and in full force
and effect; and (ii) no person having obtained a stay of such order, or any
injunction or other court order prohibiting the completion of the transaction
contemplated by this agreement.
20. EMPLOYEES
Subject to the Purchaser's rights under Section 4 hereof, the Purchaser agrees
to offer employment at the Time of Closing to all then existing employees of
the Hotel on the same financial terms and conditions and otherwise
substantially on the same terms and conditions as they are then employed,
except for such employees, to a maximum of seven (7), whom the Purchaser
designates, by notice in writing given to the Receiver not later than five (5)
days after the Due Diligence Date, as employees to whom it will not offer
employment. The Receiver shall terminate the employment of, pay and be
responsible for all moneys payable to such employees (not exceeding seven(7))
not offered employment with the Purchaser at the Time of Closing as required
under applicable law, including, without limitation, accrued wages and vacation
pay, termination pay and damages for wrongful dismissal.
21. ADJUSTMENTS, GOODS AND SERVICES TAX, GOVERNMENT APPROVALS
(a) The Receiver shall pay and be responsible for all charges, expenses,
costs, taxes, levies, liabilities and obligations relating to any of the
Purchased Assets, or the ownership and operation of the Hotel, to the
extent eligible in respect of any period preceding the Time of Closing
which:
15
- 13 -
(i) would or does, if not paid, result in any other person, other
than the Purchaser, having after the Time of Closing any charge,
lien or encumbrance on or interest in any of the Purchased
Assets, or disrupt or hinder after the Time of Closing the
continued supply of materials or services to the Real Property
pursuant to any Agreement assumed by the Purchaser hereunder;
and
(ii) are not expressly extinguished by the Vesting Order referred to
in paragraph 19 herein,
including, without limitation, realty taxes and charges for
hydro-electric power, water, sewers, gas and telephone service, and for
the purposes hereof, business taxes shall be deemed to be a charge, lien
or encumbrance to which clause (i) above applies.
(b) Adjustments shall be made as of the Time of Closing with respect to any
and all revenues, costs and expenses earned or owing, or paid or
payable, as the case may be, in respect of a period commencing before
the Time of Closing and concluding thereafter, including, without
limitation and without duplication;
(i) realty taxes, local improvement charges and other similar
levies;
(ii) the costs of water, sewage, hydro-electric power, gas and other
utilities, to the extent same cannot be determined as at the
Time of Closing from a meter or similar device definitively
showing the amount for which the Receiver is responsible up
until such time;
(iii) employee compensation, including, without limitation, wages,
salary, sick leave, bonuses, vacation pay and other benefits;
(iv) amounts received, paid or payable under any of the Agreements;
and
(v) deposits and prepaid expenses.
Fire and other insurance shall not be transferred. The day of closing,
subject to subparagraph 21(c), shall be for the Purchaser's account both
as to revenue and expense. In the event that final billings are not
available at the time of calculating the adjustments, the adjustments
shall be made on the basis of the most recent billings then available
and, upon final billings becoming available, the Purchaser and the
Vendors agree to readjust all such items, if necessary. This agreement
to readjust shall survive the completion of the transaction.
16
- 14 -
(c) Guest, convention, room, food, beverage and all other charges and
revenues from services rendered and the operation of all departments of
the Hotel shall be apportioned as of 6:00 a.m. on the Closing Date. The
Receiver shall be entitled to the room revenues for rooms occupied the
night preceding the Time of Closing. All prepaid rentals, room rental
deposits and all other deposits for advance registrations or
reservations for periods after 6:00 a.m. on the Closing Date shall be
credited to Purchaser.
(d) No adjustment shall be made for any charges or revenues which remain
uncollected on the Closing Date and the Receiver shall retain all rights
to collect such items for its own account. Purchaser agrees to remit all
amounts collected on such accounts promptly to the Receiver. Collections
from obligors who owe accounts with respect to the Hotel for periods
before and after 6:00 a.m. on the Closing Date and who do not specify
against which account such amount shall be applied (i) if received
within thirty (30) days after the Closing Date, shall be applied to the
Receiver's pre-Closing Date receivables and (ii) if received after such
thirty (30) day period, shall be applied pro rata by Purchaser to
Purchaser's post-Closing Date receivables, based upon a fraction, the
denominator of which shall be all receivables owing by such obligor to
Purchaser and the Receiver with respect to the Hotel at the time such
collection is received, and the numerator of which shall be the
Purchaser's post-Closing Date receivables owing by such obligor with
respect to the Hotel, with the remainder to be paid to the Receiver. All
other payments received from such obligors shall be applied as specified
by the obligor. The Purchaser shall deliver to the Receiver the amount
to which the Receiver is entitled pursuant to the pro rata application
of the collections described in the preceding sentences, together with a
statement of such pro rata calculation and, upon the reasonable request
of the Receiver, the documents and invoices supporting such calculation.
The Receiver shall have reasonable access to the books and records of
the Purchaser in respect of the Hotel relating to the periods prior to
and after the Time of Closing to the extent necessary to verify
receivables owing to it and facilitate the collection thereof.
(e) The Receiver shall ensure that there remains from the Purchase Price,
unpaid by the Receiver and undistributed to any other person or persons,
for a period of at least ninety (90) days after the Closing Date, the
sum of $230,000, which funds shall remain available and be used for the
purpose of paying any amount that shall become payable to the Purchaser
as an adjustment or readjustment of any item referred to in this
paragraph 21 and for which the Purchaser shall make a written claim to
the Receiver during such ninety (90) day period. If, at the end of such
ninety (90) day period, the Purchaser has made any written claim under
this paragraph 21(e) which the Receiver disputes, the Receiver shall
continue to retain the said sum of $230,000.00, or so much thereof as
would be sufficient to satisfy
17
- 15 -
such claim, until such claim is settled or until a court of competent
jurisdiction has made an order either giving effect to such claim or
dismissing it.
(f) The Vendors shall be entitled to all refunds of municipal taxes and
business taxes attributable to the years prior to 1996 and to the period
of 1996 attributable to the period prior to the Time of Closing. The
Purchaser acknowledges that the assessments related to the Hotel and the
Real Property have been appealed and agrees to co-operate, both before
and after the Time of Closing, with each of the Vendors in respect of
such appeals.
22. GOODS AND SERVICES TAX AND RETAIL SALES TAX
(a) The Purchaser and the Vendors agree that the Purchase Price is
exclusive of any goods and services tax ("GST") exigible pursuant to the
Excise Tax Act (Canada) as amended from time to time and any provincial
sales tax exigible pursuant to the Retail Sales Tax Act (Ontario) as
amended from time to time. All taxes exigible pursuant to the Retail
Sales Tax Act (Ontario) and Land Transfer Tax Act (Ontario) or otherwise
in connection with the transaction of purchase and sale contemplated
herein shall be paid by the Purchaser at the Time of Closing and the
Purchaser shall, at the Time of Closing, deliver evidence satisfactory
to the Vendors of such payment.
(b) The Purchaser agrees that it will, at or prior to the Time of Closing,
provide the Vendors with its GST registration number and a copy of its
certificate of registration relating to the GST. If the Purchaser fails
to provide the foregoing documents, the Purchaser shall pay to the
Vendors at the Time of Closing, in addition to all other sums due
hereunder, an amount equal to the GST payable with respect to the within
transaction and the Vendors shall account for such amount in accordance
with the provisions of the Excise Tax Act. For greater certainty, the
Purchaser agrees that if it fails to provide the said documents, the
amount payable on account of GST shall form part of the adjustments at
the Time of Closing and the failure by the Purchaser to pay such amount
to the Vendors at the Time of Closing shall be a breach of this
agreement. The Purchaser further agrees to indemnify and save harmless
the Vendors from and against such GST together with any penalties and
interest thereon which may arise as a result of the failure by the
Purchaser to pay such GST as aforesaid. Provided that the Purchaser
complies with the foregoing, the Purchaser and the Vendors shall execute
an election under Subsection 167(1) of the Excise Tax Act (Canada) to
have Section 167(1.1) of the said Act apply in respect of the purchase
and sale of the Purchased Assets hereunder. The election shall be in the
prescribed form and shall be filed by the Purchaser within the time
limits applicable thereto.
18
- 16 -
23. COMPETITION ACT/INVESTMENT CANADA ACT
The Purchaser represents and warrants to the Vendors that this transaction of
purchase and sale does not require approval under the Competition Act or the
Investment Canada Act. This representation and warranty shall survive the
completion of this transaction.
24. RISK OF DAMAGE
Until completion of this transaction, all buildings and chattels on the Real
Property shall be and remain at the risk of the Vendors. In the event of damage
thereto prior to completion of the transaction which is estimated by the
Receiver, acting reasonably, to cost more than $500,000 to repair, the
Purchaser shall be entitled to terminate this agreement by delivery of written
notice of termination to the Vendors on or before the 15th day after the
occurrence of such damage, whereupon this agreement shall terminate and the
Purchaser shall be entitled to the Deposits. If the Purchaser does not give
such notice to the Vendors by such date, the Purchaser shall be entitled to any
insurance proceeds with respect to such damage and shall complete the
transaction. In the event of lesser damage, the Vendors shall, at their option,
either repair such damage prior to the Time of Closing (or within such
reasonable time period thereafter as may be necessary to diligently complete
such repair) or allow the Purchaser an abatement in the purchase price equal to
the reasonable cost of such repair and, in either case, the transaction of
purchase and sale contemplated herein shall be completed. If the Purchaser
completes the transaction after any damage referred to in this paragraph, the
Purchaser shall be entitled, at the Time of Closing, to an assignment by the
Receiver of any business interruption insurance available in respect of such
damage.
25. INTERIM OPERATION
The Receiver covenants and agrees that it will, up until the Time of Closing,
operate the Hotel business in a commercially reasonable manner consistent with
the operating standards of the Hotel in effect during the 40-day period
referred to in paragraph 4 hereof, including, without limitation, keeping
capital equipment and inventories at reasonable levels. The Receiver shall not
terminate or materially amend any of the Agreements prior to the Time of
Closing (other than the Leasetec lease and the Xerox Canada lease) without the
prior written consent of the Purchaser, which consent shall not be unreasonably
withheld. However, termination of any Agreement or a breach thereof by the
other contracting party thereto shall not affect any of the provisions of this
Agreement.
19
- 17 -
26. CONDEMNATION
If portions of the Real Property having a fair market value equal to or in
excess of five percent (5%) of the Purchase Price for the Real Property are
taken prior to the Time of Closing by a governmental or quasi-governmental body
or agency in the exercise of the power of eminent domain, and such loss
permanently and materially impairs the current use of the Real Property then
either party, upon notice to the other, may terminate this Agreement, in which
event the Deposits will be returned to Purchaser and all condemnation awards
and proceeds shall be paid to Vendors and neither party hereto shall thereafter
have any further rights against, or obligations or liabilities to, any other by
reason of this agreement except for Purchaser's obligations and liabilities
pursuant to Section 8 and 9 hereof. If this agreement is not so terminated and
the closing hereunder is completed, all condemnation awards and proceeds shall
be paid to Purchaser. If the governmental authority exercising its power of
eminent domain has not determined the value of that portion of the Real
Property and the improvements to be taken, then the estimated value of such
portion shall be determined among the parties hereto.
27. NOTICE
Any tender or delivery of documents and any notice required or permitted to be
given hereunder shall be in writing and in each case may be sufficiently given
by personal delivery, by courier or by facsimile transmission, to the Purchaser
at the following address:
WHC DEVELOPMENT CORPORATION
2001 Bryan Street
Suite 2300
Dallas, Texas 75201-3075
Attention: Mr. Steven Miller
Facsimile: (214) 978-4601
with a copy to:
LOCKE PURNELL RAIN HARRELL
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201-6776
Attention: Brian R. Forbes
Facsimile: (214) 740-8800
and to the Vendors at the following addresses:
CONFEDERATION LIFE INSURANCE COMPANY
77 King Street West
9th Floor
Toronto, Ontario
M5W 1P9
Attention: Mr. Don Russell
Facsimile: (416) 955-7148
20
- 18 -
PEAT MARWICK THORNE INC.
3300 Commerce Court West
Toronto, Ontario
M5L 1B2
Attention: Mr. Doug Mackay
Facsimile: (416) 777-3891
with copies to:
FRASER & BEATTY
39th Floor, P.O. Box 100
1 First Canadian Place
Toronto, Ontario
M5X 1B2
Attention: Mr. Ross Walker
Facsimile: (416) 863-4592
COLLIERS MACAULAY NICOLLS (ONTARIO) INC.
One Queen Street East
Suite 2200
Toronto, Ontario
M5C 2Z2
Attention: Mr. William Stone
Facsimile: (416) 777-2277
Any notice or other document delivered in person, by courier or by facsimile
transmission shall be deemed to have been given on the date of delivery or
transmission, as the case may be.
28. MISCELLANEOUS
(a) The solicitors acting for the Vendors or the Purchaser are hereby
authorized on behalf of their respective clients, to give or receive
any moneys, notices, approvals, waivers or other documentation in
connection with the transaction contemplated herein, or to agree in
writing to any variation of the provisions thereof.
(b) It shall be sufficient that a negotiable cheque certified by one of the
five largest Canadian chartered banks be tendered instead of cash.
(c) The Purchaser shall, subject to the following sequence, be credited
towards the Purchase Price with the amount, if any, which it shall be
necessary for the Purchase to pay to the Receiver General for Canada in
order to satisfy the Purchaser's liability in respect of tax payable by
the Vendors under the non-residency provisions of the Income Tax Act by
reason of this sale. The Purchaser shall not claim such credit if the
Vendors deliver to the Purchaser on completion the prescribed
certificate or a statutory declaration or statutory declarations that
none of the Debtors is then a non-resident of Canada.
21
- 19 -
(d) The Purchaser and Vendors agree that this agreement may be evidenced by
facsimile transmission.
29. ENTIRE AGREEMENT
This agreement including any schedules attached hereto shall constitute the
entire agreement between the Purchaser and the Vendors. There is no
representation, warranty, collateral agreement or condition, whether direct or
collateral, or express or implied, which induced any party hereto to enter into
this agreement or on which reliance is placed by any party, or which affects
this agreement or the Purchased Assets other than as expressed herein. All of
the Purchaser's indemnities herein contained shall survive the completion of
the transaction or the termination of this agreement.
30. ASSIGNMENT BY PURCHASER
Purchaser shall have the right to assign this Agreement or any right or
interest in this agreement to an affiliate of Purchaser but no such assignment
shall affect the Purchaser's obligations to the Vendors hereunder.
31. TIME OF THE ESSENCE
Time shall, in all respects, be of the essence of this agreement; provided
however that the time for doing or completing any matter provided for herein may
be extended or abridged by an agreement in writing signed by the Vendors and
Purchaser or by their respective solicitors who are expressly appointed in this
regard.
32. TENDER OF DOCUMENTS
Any tender of documents or money hereunder may be made on the Vendors or the
Purchaser or their respective solicitors at the Time of Closing, or at such
other date expressly provided for herein.
33. GOVERNING LAW
This agreement shall be governed by and construed in accordance with the laws
of Ontario.
34. SUCCESSORS AND ASSIGNS
This agreement shall be binding on and enure to the benefit of the parties
hereto, their respective successors and permitted assigns, as the case may be.
22
- 20 -
35. FURTHER ASSURANCES
Each party agrees to make such further assurances as may be reasonably required
from time to time by any other parties to more fully implement the true intent
of this agreement.
36. FUTURE USE
The Vendors and the Purchaser agree that there is no condition, express or
implied, representation or warranty of any kind that the future intended use of
the Real Property by the Purchaser is or will be lawful.
37. BINDING AGREEMENT
Upon the Vendors' acceptance of this offer there shall be a binding agreement
of purchase and sale between the Purchaser and the Vendors.
38. NO REGISTRATION OF AGREEMENT
The Purchaser shall not register this agreement or any notice thereof against
title to the Real Property.
39. EXTENSION IF CHALLENGED
In the event that either or both of the court orders referred to in paragraphs
11 and 19 hereof are stayed prior to the Time of Closing, or a further court
order is made prior to the Time of Closing prohibiting the completion of the
transaction contemplated by this agreement, then the Vendors shall use all
reasonable and diligent efforts to have such stay lifted or such further order
stayed, but if, notwithstanding such reasonable and diligent efforts by the
Vendors, the Vendors have not had such stay lifted or further order stayed by
the Time of Closing as extended pursuant to this Section 39, either the
Purchaser or the Vendors may, at their option, on written notice to the other
party or its solicitors, terminate this agreement and the Deposits shall be
immediately remitted to the Purchaser. Despite the foregoing, in the event that
either or both the court orders referred to in paragraphs 11 and 19 hereof are
stayed prior to the Time of Closing, or a further court order is made prior to
the Time of Closing prohibiting the completion of the transaction contemplated
by this agreement, and such stay has not been lifted or such further order
stayed, then either party, at its option, may extend the Time of Closing for a
period or periods up to 120 days, in the aggregate.
23
- 21 -
40. PLANNING ACT
This agreement shall be effective to create an interest in the Real Property
only if the subdivision control provisions of the Planning Act, R.S.O. 1990, as
amended, are complied with on or before completion.
41. SEVERAL OBLIGATIONS AND LIABILITIES
The obligations and liabilities of the Vendors hereunder are several and
neither joint nor joint and several. Neither Vendor shall have any liability
for any default by the other Vendor.
42. NO PERSONAL LIABILITY
Peat Marwick Thorne Inc., as receiver and manager of the Hotel Assets, is
executing this agreement in a representative capacity and the Purchaser shall
have no recourse to Peat Marwick Thorne Inc. or any asset of Peat Marwick
Thorne Inc. for any matter hereunder pertaining to the Hotel Assets except for
recourse to the Hotel Assets. Peat Marwick Thorne Inc., as agent of the
Superintendent of Financial Institutions, the provisional liquidator of
Confederation Life, is executing this agreement in a representative capacity
and the Purchaser shall have no recourse to Peat Marwick Thorne Inc. or any
asset of Peat Marwick Thorne Inc. for any matter hereunder pertaining to the
Freehold Interest except for recourse to the Freehold Interest. Peat Marwick
Thorne Inc. shall not under any circumstances have any greater liability
hereunder than as set out in the immediately two preceding sentences.
43. VENDORS' AGENT
The Vendors confirm that the listing broker, Colliers Macaulay Nicolls
(Ontario) Inc., is acting on behalf of the Vendors and will be compensated by
the Vendors as outlined in their listing agreement dated as of February 5,
1996. The Purchaser shall have no liability for any compensation to such
broker.
44. CURRENCY
Any reference herein to dollars shall mean Canadian dollars.
24
- 22 -
DATED this 6th day of June, 1996.
WHC DEVELOPMENT CORPORATION,
a Delaware corporation
Per: /s/ ANNE RAYMOND
------------------------------------
Name: Anne Raymond
Title: Vice President
We accept the foregoing offer this 13th day of June, 1996.
CONFEDERATION LIFE INSURANCE
COMPANY, by its provisional liquidator,
the Superintendent of Financial
Institutions, by its agent,
Peat Marwick Thorne Inc.
Per: /s/ KERRYN M. DOWNEY
------------------------------------
Name: Kerryn M. Downey
Title: Senior Vice President
We accept the foregoing offer this 11th day of June, 1996.
PEAT MARWICK THORNE INC., in its
capacity as receiver and manager of
assets of the Debtors comprising
Bristol Place Hotel
Per: /s/ ROBERT A. CUMMING
------------------------------------
Name: Robert A. Cumming
Title: Senior Vice President
25
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT made as of the 6th day of August, 1996
among WHC DEVELOPMENT CORPORATION (the "Purchaser"), a Delaware Corporation,
CONFEDERATION LIFE INSURANCE COMPANY ("Confederation Life"), in liquidation,
and KPMG INC. (formerly PEAT MARWICK THORNE INC.) (the "Receiver"), as receiver
and manager of the assets of Third Generation Realty Limited, Ardwold Realty
Investments Limited and 980879 Ontario Inc. (the "Debtors") comprising the
Bristol Place Hotel, witnesses that:
WHEREAS:
(a) The Purchaser, Confederation Life and the Receiver are parties
to an agreement of purchase and sale (the "Agreement of Purchase
and Sale") consisting of an offer made by the Purchaser on June
6, 1996 and accepted by the Receiver and Confederation Life on
June 11 and 13, 1996 respectively pursuant to which the
Purchaser agreed to purchase the Freehold Interest from
Confederation Life and the Hotel Assets from the Receiver.
(b) Capitalized terms used herein, but not defined herein, are
intended to have the respective meanings ascribed thereto in the
Agreement of Purchase and Sale.
(c) The Purchaser's obligations under the Agreement of Purchase and
Sale were conditional on the Purchaser investigating the
Purchased Assets to determine on or before the fortieth day
following the date of execution of the Agreement of Purchase and
Sale whether to purchase the Purchased Assets.
(d) Pursuant to a letter dated July 19, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to July 31, 1996.
(e) Pursuant to a letter dated July 31, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, Diligence Date was
extended to August 1, 1996.
(f) Pursuant to a letter dated August 1, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian
26
- 2 -
counsel to the Purchaser, the Due Diligence Date was extended
to 12:00 noon (Toronto time) on August 2, 1996.
(g) Pursuant to a letter dated August 2, 1996 from Fraser &
Beatty, counsel to Confederation Life and the Receiver, to
Stikeman, Elliott, Canadian counsel to the Purchaser, the Due
Diligence Date was extended to 3:00 p.m. (Toronto time) on
August 2, 1996.
(h) Pursuant to a letter dated August 2, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 3:30 p.m. (Toronto time) on August 2, 1996.
(i) Pursuant to a letter dated August 2, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 11:00 a.m. (Toronto time) on August 6,
1996.
(j) Pursuant to a letter dated August 6, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 3:00 p.m. (Toronto time) on August 6, 1996.
(k) Pursuant to a letter dated August 6, 1996 from Fraser & Beatty,
counsel to Confederation Life and the Receiver, to Stikeman,
Elliott, Canadian counsel to the Purchaser, the Due Diligence
Date was extended to 6:00 p.m. (Toronto time) on August 6, 1996.
(l) The parties wish to amend and supplement the provisions of the
Agreement of Purchase and Sale on the terms and conditions set
out herein.
NOW THEREFORE in consideration of the sum of $10.00 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties agree as follows:
1. The Purchase Price for the Purchased Assets is hereby reduced to
$22,920,000 (Canadian Dollars) and the Purchase Price, as so reduced, is
hereby allocated among the following Purchased Assets as follows:
Freehold Interest $2,500,000
Debtors' Interest in
Real Property
27
- 3 -
and Hotel 18,920,000
Other Hotel Assets 1,500,000
The Purchaser intends to allocate $17,920,000 to the Debtors' interest
in the Hotel building and $1,000,000 to the Debtors' interest in the
Real Property.
2. The orders referred to in paragraphs 11 and 19 of the Agreement of
Purchase and Sale shall be in the forms attached hereto as Schedules
"A" and "B" respectively, subject only to such modifications thereto as
may be agreed to by the Purchaser and the Receiver, both acting
reasonably. The Purchaser shall not be entitled to object to any such
modification to the order attached hereto as Schedule "A" unless such
modification affects the substance of any of paragraphs 1 through 6
thereof inclusive.
3. (a) The Receiver covenants and agrees to use all reasonable and
diligent efforts (together with such assistance from the
Purchaser as the Receiver reasonably requires) to cause a
maximum of ten (10) of the Agreements listed in Schedule "B" to
the Agreement of Purchase and Sale to be amended, prior to the
Time of Closing, such that (i) they shall be terminable by the
Purchaser, after the Time of Closing, on not more than sixty
(60) days' prior written notice to the other party or parties
thereto and (ii) they shall expressly provide that the Purchaser
shall not be liable for the payment, performance or observance
of any obligation of the Receiver, any of the Debtors or any
other person arising in respect of any period preceding the Time
of Closing. The Purchaser shall advise the Receiver not later
than August 13, 1996 which of such Agreements it desires to have
so amended. The Receiver's efforts aforesaid shall not extend to
paying money to the other party or parties to any such
Agreement. At the Time of Closing, the Purchaser shall enter
into an agreement with the Receiver and the other party or
parties to each such Agreement assuming the Receiver's
obligations thereunder as and from the Time of Closing, provided
such Agreement has been amended as aforesaid.
(b) The Purchaser may also advise the Receiver, not later than
August 13, 1996 which of such Agreements (other than those
referred to in subparagraph 3(a)) it desires not to assume as
and from the Time of Closing and the Receiver may then, at its
option, terminate any such Agreement prior to the Time of
Closing.
(c) With respect to any Agreement which has not been so amended
prior to the business day immediately preceding the Time of
Closing, or to which
28
- 4 -
subparagraph 3(b) does not apply, at the option of the
Purchaser, either (i) the Purchaser shall assume the Receiver's
obligations under such Agreement as and from the Time of
Closing, notwithstanding that it has not been amended as
aforesaid, or (ii) the Receiver shall, on such day, provide
written notice to the other party or parties to such Agreement
that the Receiver terminates such Agreement effective on the
sixtieth (60th) day after the date of such notice and the
Purchaser shall then assume such Agreement as and from the Time
of Closing until such effective date of termination.
(d) Except as provided in subparagraph 3(e), the costs, expenses and
liabilities, if any, of the Receiver having terminated any
Agreement pursuant to subparagraphs 3(b) or 3(c) shall be for
the account of the Purchaser and the Purchaser shall indemnify
and save the Receiver harmless thereagainst and therefrom. In
performing any such indemnification obligation, the Purchaser
shall be entitled, at its sole cost and expense (including the
costs of legal counsel retained by the Purchaser to defend the
Receiver with respect to such claim, any award of costs made
against the Receiver and the reasonable costs of the Receiver's
own time devoted to defending such claim), to defend any claim
made against the Receiver by the other party or parties to any
such Agreement in connection with such termination. The
Purchaser shall be entitled to determine, in its sole and
unfettered discretion, the amount, if any, to be paid in
settlement of any such claim, but otherwise, the Purchaser shall
consult with the Receiver with respect to the defence to be made
to any such claim and obtain the Receiver's approval thereof,
such approval not to be unreasonably withheld or delayed.
(e) However, the Purchaser shall not be liable for, nor shall its
indemnification extend to, any additional cost or obligation
under any such Agreement arising as a result of the actions or
conduct of the Receiver during the period of the Receiver's
tenure as receiver of the Hotel Assets the effect of which is or
was to modify the obligations owed to the other party or parties
to such Agreement from what they were immediately prior to the
Receiver's appointment.
4. The Receiver and the Purchaser agree that the Agreements listed in
Schedule "C" hereto shall not form part of the Hotel Assets and the
Purchaser shall not be required to assume them.
5. The Purchaser agrees to apply, or to cause an affiliate of the Purchaser
to apply, for a transfer of the Receiver's liquor licences for the Hotel
forthwith after
29
- 5 -
execution of this Supplemental Agreement and the Receiver will consent
to such transfer and agrees to co-operate with the Purchaser in
obtaining all necessary liquor licences and to do all acts and execute
all documents, at the Purchaser's expense, as are required by
governmental or public authorities in order to obtain a transfer of such
liquor licences as expeditiously as possible. In the event that the
Purchaser has not obtained such transfer by the Time of Closing, the
Receiver shall permit the Purchaser to use its liquor licences for the
Hotel for a period of up to ninety (90) days after the Time of Closing,
to the extent allowed by law. The Purchaser shall indemnify and save the
Receiver harmless from any cost, expense or liability whatsoever the
Receiver shall incur by reason of the Purchaser using the Receiver's
liquor licence on such basis, such indemnity to survive the completion
of the transaction contemplated by the Agreement of Purchase and Sale
and this Supplemental Agreement.
6. The Purchaser may register against title to the Real Property prior to
the Time of Closing, at its sole cost and expense, a reference plan
prepared by an Ontario Land Surveyor, showing the Real Property as a
part or parts thereon, provided that such reference plan is first
approved by the Receiver, such approval not to be unreasonably withheld
or delayed.
7. The Receiver covenants and agrees to carry out and complete, not later
than August 23, 1996, at its sole cost and expense, such work as is
necessary to comply with the work orders issued by the Fire Marshall's
Office requiring that certain meeting room doors on the second floor of
the Hotel be replaced in accordance with the Fire Code and the Hotel
Fire Safety Act, and to provide the Purchaser with written confirmation
from the Fire Marshall that such work has been carried out to the Fire
Marshall's satisfaction.
8. The Receiver covenants and agrees to carry out and complete, not later
than August 23, 1996, at its sole cost and expense, such work as is
necessary to comply with the work orders issued by the Ministry of
Consumer and Commercial Relations - Elevating Devices in respect of the
elevators in the Hotel, and to provide the Purchaser with written
confirmation from the Ministry that such work has been carried out to
the Ministry's satisfaction.
9. The Receiver agrees to provide a letter of confirmation to the
Purchaser at the Time of Closing indicating that the Receiver will hold
back from distribution for a period of ninety (90) days after the Time
of Closing the sum of Two Hundred and Thirty Thousand Dollars
($230,000), as required pursuant to subparagraph 21(e) of the Agreement
of Purchase and Sale.
30
- 6 -
10. The Receiver acknowledges that the Purchaser has advised it that there
is a deficiency of four parking spaces at the Hotel based on a municipal
by-law requirement of 309 spaces and the provision on the Real Property
of 305 spaces. The Purchaser will determine in consultation with the
Receiver, each acting in good faith and in a commercially reasonable
manner, the most economically efficient means of rectifying such
deficiency and, without limiting the generality of the foregoing, shall
consider (i) creating new parking spaces on the Real Property, (ii)
restriping existing parking spaces on the Real Property and (iii)
seeking the minor variance from the provisions of such municipal by-law
pursuant to the Planning Act (Ontario). Once the means of rectifying
such deficiency have been established, the Purchaser shall proceed to
implement same forthwith and the Receiver shall reimburse the Purchaser
for all reasonable out-of-pocket costs incurred by the Purchaser in so
doing, forthwith after demand therefor. The Receiver agrees that
reducing the number of rooms in the Hotel or reducing the maximum
capacity of any of the facilities at the Hotel is not a means of
rectifying such deficiency that the Purchaser is required to consider or
implement pursuant to this paragraph.
11. The Purchaser may designate the seven employees referred to in paragraph
20 of the Agreement of Purchase and Sale at any time up to and including
August 16, 1996. In negotiating the costs of effecting the termination
of employment of such seven employees, the Receiver shall use its best
efforts to minimize same, having regard to its legal obligations owed to
such employees. When all such costs have been definitively settled, the
Receiver shall pay to the Purchaser the amount, if any, by which
$150,000 exceeds the aggregate costs incurred by the Receiver in
effecting such terminations of employment, such amount to be paid by the
Receiver from the $230,000 held back by the Receiver pursuant to
subparagraph 21(e) of the Agreement to Purchase and Sale, net of any
amount paid therefrom pursuant to paragraph 21 of the Agreement of
Purchase and Sale. The Receiver shall consult with the Purchaser prior
to settling such termination costs if the Receiver anticipates that the
aggregate costs of termination are likely to exceed $60,000.
12. The Purchaser hereby waives its right to terminate the Agreement of
Purchase and Sale pursuant to paragraph 4 thereof.
13. The following Schedules attached to this Supplemental Agreement are to
be read as and shall form part of this Supplement Agreement:
Schedule "A" - Form of Approval Order
Schedule "B" - Form of Vesting Order
Schedule "C" - Certain Contracts
31
- 7 -
14. This Supplemental Agreement shall be governed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable
therein and shall be treated in all respects as an Ontario contract.
15. Except to the extent varied hereby or inconsistent herewith, all the
terms and conditions of the Agreement of Purchase and Sale shall remain
the same and time shall be of the essence. In the event of any conflict
between the terms of the Agreement of Purchase and Sale and those of
this Supplemental Agreement, the terms of this Supplemental Agreement
shall govern.
16. This Supplemental Agreement shall be binding on and shall enure to the
benefit of the successors and assigns of each of the parties hereto.
17. This Supplemental Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which taken together shall be deemed to constitute one and the same
instrument. Counterparts may be executed either in original or faxed
form and the parties may adopt any signatures received by a receiving
fax machine as original signatures of the parties; provided, however,
that any party providing its signature in such manner shall promptly
forward to all other parties an original of the signed copy of this
Supplemental Agreement which was so faxed.
32
- 8 -
IN WITNESS WHEREOF the parties hereto have executed this Supplemental
Agreement by their duly authorized signing authorities.
WHC DEVELOPMENT CORPORATION
Per: [ILLEGIBLE]
--------------------------------
Name:
Title:
CONFEDERATION LIFE INSURANCE COMPANY,
by its provisional liquidator, the
Superintendent of Financial
Institutions, by its agent, KPMG Inc.
Per:
--------------------------------
Name:
Title:
KPMG INC., as Receiver and Manager of
assets of Third Generation Realty
Limited, Ardwold Realty Investments
Limited and 980879 Ontario Inc.,
comprising Bristol Place Hotel
Per:
--------------------------------
Name:
Title:
33
- 8 -
IN WITNESS WHEREOF the parties hereto have executed this Supplemental
Agreement by their duly authorized signing authorities.
WHC DEVELOPMENT CORPORATION
Per:
----------------------------------
Name:
Title:
CONFEDERATION LIFE INSURANCE
COMPANY, by its provisional liquidator,
the Superintendent of Financial
Institutions, by its agent, KPMG Inc.
Per: /s/ KERRYN M. DOWNEY
----------------------------------
Name: Kerryn M. Downey
Title: Senior Vice President
KPMG INC., as Receiver and Manager of
assets of Third Generation Realty
Limited, Ardwold Realty Investments
Limited and 980879 Ontario Inc.,
comprising Bristol Place Hotel
Per: /s/ ROBERT A. CUMMING
----------------------------------
Name: Robert A. Cumming
Title: Senior Vice President
34
ASSIGNMENT, ASSUMPTION AND AMENDMENT
OF MANAGEMENT AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT OF MANAGEMENT AGREEMENT
(this "Amendment") is made and entered into as of July 11, 1996, by and between
HOUSTON GREENSPOINT HOTEL ASSOCIATES, L.P. a Texas limited partnership, whose
address is 3500 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201
("HGRA"), CROW HOTEL LESSEE, INC., a Texas corporation, whose address is 3500
Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201 ("Crow"), and
WYNDHAM MANAGEMENT CORPORATION, a Delaware corporation, whose address is 2001
Bryan Tower, 2001 Bryan Street, Suite 2300, Dallas, Texas 75201 (the
"Manager").
RECITALS:
HGHA and Wyndham Hotel Company, a Texas corporation and a predecessor
in interest to Manager ("WHC"), entered into that certain Management Agreement
dated as of December 1, 1984 (the "Management Agreement"), pursuant to which
HGHA retained WHC to manage and operate that certain hotel situated on the Site
(as defined in the Management Agreement). Manager has succeeded to the rights,
obligations and interests of WHC in, to and under the Management Agreement.
HGHA desires to assign all of its right, title, interest and
obligations in, to and under the Management Agreement to Crow and Crow desires
to accept such assignment and assume such obligations. Manager is willing to
consent to such assignment, and Crow and Manager desire to amend the Management
Agreement in accordance with the terms set forth herein. For and in
consideration of the premises and of the mutual covenants and agreements set
forth herein, HGHA, Crow and Manager agree as follows:
1. Assignment and Assumption. HGHA hereby assigns to Crow all of
HGHA's interest in, and its rights and obligations under, the Management
Agreement, and Crow hereby accepts such assignment and assumes such
obligations. Manager hereby consents to such assignment and assumption.
References to the "Owner" in the Management Agreement hereafter shall mean
Crow.
2. Amendments to Management Agreement. The Management Agreement
is amended as follows:
2.1 Amendment of Definitions. Section 1.2 of the Management
Agreement is amended by deleting the defined terms "Group Services Assessment"
and "Owner Partnership Agreement" set forth therein, by amending the
definitions of "Executive Personnel" and "Mortgage" set forth therein to read
in their entirety as set
35
forth below and by adding thereto the other defined terms set forth below:
Executive Personnel shall mean all or any one of the
following: general manager, assistant general manager, director of
food and beverage, director of sales, director of marketing,
controller and any other key executive of the Project designated by
Manager.
Gross Room Revenues in respect of any period shall mean all
revenues derived during such period, as finally determined on an
accrual basis in accordance with the Uniform System of Accounts and
generally accepted accounting principles consistently applied, from
(i) rentals and charges for quest rooms and suites ("Rooms"); (ii) all
business interruption insurance awards in respect of the Rooms; and
(iii) Condemnation awards for temporary use of the Rooms.
Lease Agreement shall mean that certain Lease Agreement dated
July 11, 1996 by and between Crow Hotel Lessee, Inc. and Patriot
American Hospitality Partnership, L.P.
Lessor shall mean Patriot American Hospitality Partnership,
L.P.
Marketing Contribution shall have the meaning provided
therefor in Section 3.14.
Marketing Services shall have the meaning provided therefor in
Section 3.14.
Mortgage shall mean any mortgage or deed of trust created by
Owner and encumbering all or any portion of the Project, whether now
in existence or hereafter created.
In addition to the foregoing, clause (6) in the definition of Gross Revenues is
hereby amended to read in its entirety as follows:
(6) All sales and other receipts of tenants, licensees
and concessionaires (provided, however, that all rents, fees,
commissions and concessions charged to any such lessee, licensee or
concessionaire are included in Gross Revenues pursuant to clause (e)
above; and provided further, that sales and other receipts of the
party providing alcoholic beverage service at the Project shall be
included in Gross Revenues); and
2.2 Amendment of Section 2.1. Section 2.1 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 2.1 Term. The term (the "Term") of this Agreement
shall be that period commencing on the Effective
-2-
36
Date and continuing until the stated expiration date of the Lease
Agreement as in effect on the original execution date thereof (but
giving effect to any renewal options exercised thereunder), unless
this Agreement shall be sooner terminated or extended as herein
provided, in which case the word "Term" shall mean such lesser or
extended period of time.
2.3 Amendment of Section 3.3. Section 3.3 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 3.3 Personnel.
(a) Manager shall be responsible for and shall have the
sole and exclusive right to hire, promote, discharge, supervise,
train, transfer and determine the terms of employment of the Executive
Personnel and, through the Executive Personnel, all other
administrative, service and operating employees of the Project. All
such employees of the Project shall be employees of Manager or one of
Manager's Affiliates. In addition, Manager may, from time to time,
assign one or more of its employees to the staff of the Project on a
full-time, part-time or temporary basis. Notwithstanding the
provisions of this Section 3.3 (a) or any other provision of this
Agreement, the responsibility of Manager for acts or omissions of
Project employees shall not extend beyond responsibility for acts or
omissions of the Executive Personnel. Manager acknowledges,
however,that such Executive Personnel have the duties specified in the
first sentence of this Section 3.3(a) with respect to other Project
employees.
(b) Manager will negotiate, subject to Owner's right to
have a representative present at any time, with any labor union
lawfully entitled to represent employees of the Project. Manager shall
not enter into any collective bargaining agreements or labor contracts
with respect to employees of the Project without the prior written
consent of Owner, which consent shall not be unreasonably withheld or
delayed.
(c) Manager shall be entitled to withdraw from the
Operating Accounts all wages, salaries, fringe benefits and other
compensation paid or payable with respect to all Project employees and
Manager shall pay such compensation directly to such employees.
(d) Manager shall decide which, if any, of the Executive
Personnel shall reside at the Project. Manager shall be permitted to
provide free room and board to one member of the Executive Personnel
and his or her family. In addition, Manager shall be permitted to
provide free accommodations and amenities to Manager's employees and
representatives visiting the Project on a temporary basis in
connection with the
-3-
37
management and operation of the Project.
(e) Subject to reasonable availability, Manager shall, at
no cost to Manager, be responsible for arranging health insurance
coverage for employees of the Project. Subject to the prior agreement
of Owner and Manager and subject to reimbursement of Manager of all
applicable costs and expenses (including, but not limited to, those
associated with compliance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 and an exit premium in connection with the
termination of such coverage), Manager may permit the enrollment of
some or all of such employees under health insurance plans maintained
by Manager.
2.4 Amendment of Section 3.7. Section 3.7 of the Management
Agreement is hereby amended by deleting the parenthetical provision in the
third sentence thereof and by deleting the words "Except as provided in Section
6.4 of this Agreement," in the fourth sentence thereof.
2.5 Amendment of Section 3.14. Section 3.14 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 3.14 Marketing, National Sales Office and Centralized
Reservations Services.
(a) To the extent provided generally by Manager for the
benefit of the Hotel and other Wyndham hotels in the same division as
the Hotel, Manager will provide for the Project during the Term
marketing services (the "Marketing Services") consisting of chain-wide
and/or division level marketing programs, marketing collateral,
research services, advertising and public relations efforts.
(b) On or before the tenth (10th) day of each calendar
month during the Term, Owner shall pay or reimburse Manager, for the
provision of the Marketing Services, an amount to be provided for in
the Annual Budget (the "Marketing Contribution") that is not less than
one and one-half percent (1.5%) of Gross Room Revenues of the Project
(or such other amount as may be provided for in the Annual Budget) for
the period from the commencement of the then current Operating Year to
the end of the immediately preceding calendar month or the date of the
expiration or sooner termination of the Term, as the case may be, less
the aggregate amount of monthly payments theretofore paid in respect
of the Marketing Contribution for such Operating Year. Manager in its
discretion may collect less than the amount provided for in the
preceding sentence. The Marketing Contribution will be collected and
applied to pay actual costs incurred and allocated in respect of the
provision of the Marketing
-4-
38
Services. A marketing budget setting forth the estimated costs and
expenses of the Marketing Services for each Operating Year shall be
set forth in each Annual Budget delivered under this Agreement. The
Marketing Contribution shall not include, and Owner shall pay
separately, the costs of any local, regional or property-specific
advertising and the costs of any third party marketing partner
programs (such as frequent flyer and similar programs) in which the
Hotel participates that are direct-billed to participating hotels,
such as costs of airline mileage or other direct operating costs to
marketing partners.
(c) Manager will collect the Marketing Contribution
payable under this Agreement and shall expend the same at such time
and in such manner as it reasonably deems appropriate for the
provision of the Marketing Services. Prior to the expenditure thereof,
the collected Marketing Contributions may be held or maintained in one
or more accounts, any of which also may include funds other than
Marketing Contributions, but Manager in any event shall account to
Owner for the Marketing Contribution collected under this Agreement.
Manager will permit Owner access to Manager's records concerning the
holding and expenditure of such Marketing Contribution at any
reasonable time or times during Manager's regular business hours.
(d) Notwithstanding the foregoing provisions of this
Section 3.14, any service that otherwise would constitute a Marketing
Service covered by the Marketing Contribution hereunder instead may be
provided on a cost allocation basis administered in a reasonable and
non-discriminatory manner. In either case, the amount thereof shall be
provided for in the Annual Budget.
(e) Owner shall pay the Hotel's allocable share of the
cost of Manager's national sales office efforts, including group and
transient sales services. The Hotel's allocable share of Manager's
cost of providing group sales services generally will be computed
based on a calculation of the Gross Room Revenues produced by the
group sales efforts of the national sales offices for the Hotel in
relation to the Gross Room Revenues produced by the group sales
efforts of the national sales offices for all hotels for which such
services are provided. The Hotel's allocable share of Manager's cost
of providing transient sales services generally will be computed based
on the available rooms in the Hotel in relation to the total number of
available rooms in all hotels for which such services are provided;
provided, however, that with respect to any hotel which historically
derives more than 75% of its business from group sales, 40% of the
hotel's rooms shall be included in the calculation of the transient
sales allocation.
-5-
39
(f) Centralized reservation costs incurred in respect of
the Project shall be paid or reimbursed on the basis of an initial
link-up charge and subsequent charges based on the cost of handling
reservations made at the Project.
2.6 Addition of Section 3.15. Article III of the Management
Agreement is hereby amended by adding thereto a new Section 3.15, which shall
read in its entirety as follows:
Section 3.15 Purchasing and Technical Services Fees. To
the extent provided for in the Annual Budget or otherwise approved by
Owner, Manager or one of its Affiliates shall be entitled to the
payment of purchasing and technical services fees with respect to the
acquisition, or supervision of installation or construction, of
Capital Improvements, FF&E, Operating Equipment and Inventories at the
Project.
2.7 Amendment of Section 4.3. Section 4.3 of the Management
Agreement is hereby amended by deleting the words "except to the extent that
Manager is required to provide such funds under Section 6.4 of this Agreement"
in the second sentence of Section 4.3(b) and by deleting the words "except as
otherwise provided in Section 6.4 of this Agreement" in the second sentence of
Section 4.3(c).
2.8 Amendment of Section 5.1. Section 5.1 of the Management
Agreement is hereby amended by deleting the words "except as provided in
Section 6.4 of this Agreement" in the third sentence of Section 5.1(e).
2.9 Amendment of Section 6.4. Section 6.4 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 6.4 Subordination. All Management Fees and other
amounts payable to Manager hereunder shall be subordinate to the
payment by Owner to Lessor of Rent (as defined in the Lease Agreement)
and any other sums due under the Lease Agreement, on a month-to-month
basis, and shall at all times from and after the occurrence and during
the continuation of an Event of Default under the Lease Agreement be
subordinate to all payments of rent and other sums due by Owner to
Lessor under the Lease Agreement. Notwithstanding the foregoing, all
Management Fees and other sums paid to Manager for a month when full
Rent has been paid to Lessor shall be deemed to have been earned by
Manager and shall not be subject to disgorgement or reimbursement by
Manager to Owner or Lessor.
2.10 Amendment of Article VII. Article VII of the Management
Agreement is hereby amended to read in its entirety as follows:
-6-
40
ARTICLE VII
INSURANCE AND INDEMNITIES
Section 7.1 Insurance. Subject to reasonable
availability, Manager shall, at no cost to Manager, procure and
maintain with responsible and properly licensed companies reasonably
acceptable to Owner insurance in such amounts, written on such forms
and covering such risks as shall be required by the Lease Agreement or
any Mortgagee or as shall otherwise be reasonably required by Owner or
Manager, including but not limited to the insurance in respect of the
Project described in Exhibit B to this Agreement.
Section 7.2 Evidence of Insurance. Upon written request
of Owner, Manager agrees to deliver to Owner evidence reasonably
satisfactory to Owner that all insurance required to be maintained
under this Agreement is in full force and effect. In addition, prior
to the date on which any such insurance premiums must be paid to
prevent delinquency thereof, Manager will, upon request of Owner,
deliver to Owner a statement or statements showing the amount of the
premiums required to be paid, the name and mailing address of the
party to whom the same is payable and receipts reflecting that all
such amounts have been fully paid.
Section 7.3 Investigation of Claims and Reports. Manager
shall promptly investigate and, as soon as reasonably practicable,
make a full written report to Owner as to all material accidents,
claims for damage relating to the ownership, operation and maintenance
of the Project and the estimated cost of repair thereof, and shall
prepare at the expense of and for the approval of Owner, any and all
reports required by any insurance company in connection therewith. All
such reports shall be promptly filed with the applicable insurance
company. All policies of insurance required under this Agreement shall
provide for adjustment of losses of less than Fifty Thousand Dollars
($50,000) by Manager alone and of greater losses by Owner and Manager
jointly.
Section 7.4 Indemnities.
(a) Manager shall indemnify and hold harmless Owner and
its shareholders and Affiliates and their respective partners,
shareholders, directors, officers, employees and agents from and
against any and all liability, loss, damages, costs and expenses
("Liabilities") incurred by reason of the management and operation of
the Project by Manager during the Term insofar and only insofar as
such Liabilities are caused by the gross negligence, willful
misconduct or willful violation of Legal Requirements by Manager.
Project employees other than the Executive Personnel shall not be
deemed to be employees or
-7-
41
agents of, or otherwise acting on behalf of, Manager.
(b) Owner shall indemnify and hold harmless Manager and
its shareholders and Affiliates and their respective partners,
shareholders, directors, officers, employees and agents from and
against any and all Liabilities (INCLUDING THOSE CAUSED BY THE SIMPLE
NEGLIGENCE OF THE INDEMNITEE AND THOSE AS TO WHICH THE INDEMNITEE MAY
BE STRICTLY LIABLE) (i) arising out of or incurred in connection with
the construction, renovation, management or operation of the Project
or (ii) which may be asserted or arise as a direct or indirect result
of the presence on or under, or escape, seepage, leakage, spillage,
discharge, emission or release from the Project of any hazardous
materials or any hazardous materials contamination or arise out of or
result from the environmental condition of the Project or the
applicability of any Legal Requirements relating to hazardous
materials, except, in the case of both (i) and (ii) above, those
Liabilities caused by the gross negligence, willful misconduct or
willful violation of Legal Requirements by Manager during the Term.
OWNER ACKNOWLEDGES THAT THE FOREGOING INDEMNITY INCLUDES, BUT IS NOT
LIMITED TO, AN AGREEMENT BY OWNER TO INDEMNIFY THE INDEMNITEE AGAINST
LIABILITIES CAUSED BY THE SIMPLE NEGLIGENCE OF THE INDEMNITEE AND
THOSE AS TO WHICH THE INDEMNITEE MAY BE STRICTLY LIABLE.
(c) In case an action covered by this Section 7.4 is
brought against any indemnified party, the indemnifying party will be
entitled to assume the defense thereof, subject to the provisions
herein stated, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense
of the action with counsel reasonably satisfactory to the indemnified
party; provided that the fees and expenses of the indemnified party's
counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing
by the indemnifying party or (ii) such indemnified party shall have
been advised by counsel that there is a conflict of interest or issue
conflict involved in the representation by counsel employed by the
indemnifying party in the defense of such action on behalf of the
indemnified party or that there may be one or more legal defenses
available to such indemnified party which are not available to the
indemnifying party (in which case the indemnifying party shall not
have the right to assume
-8-
42
the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys for the indemnified party, which firm shall be designated in
writing by the indemnified party).
(d) The provisions of this Section shall survive any
termination or expiration of this Agreement, whether by lapse of time
or otherwise, and shall be binding upon the parties hereto and their
respective successors and assigns.
2.11 Amendment of Section 9.2. Section 9.2 of the Management
Agreement is hereby amended by deleting the parenthetical provision in the
second sentence of Section 9.2(a).
2.12 Amendment of Section 10.1. Section 10.1 of the Management
Agreement is hereby amended by replacing the words "group services" in the
sixth line thereof with the words "Marketing Services."
2.13 Amendment of Section 10.2. Section 10.2 of the Management
Agreement is hereby amended to read in its entirety as follows:
Section 10.2 Assignment by Owner. Except as otherwise
expressly provided for herein, Owner may not sell transfer or
otherwise convey all or any part of the Project or Owner's interest
therein or assign this Agreement or any interest herein without the
express prior written consent of Manager. Manager agrees that it will
not use its right to grant or withhold consent as a means to extract
economic concessions from Owner. Instead, Manager agrees to make its
decision based on its evaluation of whether the proposed transferee or
assignee has adequate net worth to timely discharge all of the
obligations of Owner under this Agreement and whether the persons
identified with the proposed transferee or assignee will be persons of
high character and with a favorable reputation for integrity, honesty
and veracity and whether a proposed transfer or assignment will
adversely affect the ownership, operation and management of the
Project subject to and in accordance with the provisions of this
Agreement. In addition, Manager may consider whether the proposed
transferee is, or is affiliated with, another hotel manager or
franchisor. Accordingly, Manager shall grant or withhold consent to
any proposed transfer or assignment on the basis of Manager's
evaluations and determinations of the factors enumerated in the
preceding sentences. Any transferee or assignee by reason of any such
transfer or assignment shall
-9-
43
assume and agree to perform all of Owner's duties, obligations and
liabilities herein contained pursuant to a written instrument in form
and substance satisfactory to Manager and reflecting any amendments to
this Agreement reasonably necessary in order to preserve and protect
Manager's rights hereunder in light of the change in ownership. The
sale or other disposition of fifty percent (50%) or more of the
beneficial interests in Owner (whether partnership interests, shares
of stock or other beneficial interests), whether in a single
transaction or in a series of transactions, shall be deemed to
constitute the sale or disposition of an interest in the Project for
purposes of this Article.
2.14 Addition of Section 10.4. Article X of the Management
Agreement is hereby amended by adding thereto a new Section 10.4, which shall
read in its entirety as follows:
Section 10.4 Special Provisions Related to Termination of
Lease.
(a) Subject to Section 10.4(c) below, effective upon
any termination of the Lease Agreement other than pursuant to Section
36.1(c) thereof, this Agreement also shall terminate.
(b) Effective upon any termination of the Lease Agreement
pursuant to Section 36.1(c) thereof, Owner shall cause Lessor to
assume and agree to perform all of Owner's duties, obligations and
liabilities herein contained pursuant to a written instrument in form
and substance reasonably satisfactory to Manager. Notwithstanding the
provisions of Section 10.2 of this Agreement, Lessor thereafter may
transfer or convey the Project in connection with a bona fide, arm's
length sale of the Project. Lessor, as the Owner hereunder, and
Manager each shall have the right to terminate this Agreement in
connection with such a sale. Lessor shall give Manager written notice
of any such proposed sale not less than thirty (30) days prior to the
consummation thereof, which notice shall specify whether Lessor elects
to terminate this Agreement effective upon the consummation of such
sale. If Lessor does not elect to terminate this Agreement in
connection with such sale, Lessor shall promptly provide to Manager
such information regarding the proposed transferee as Manager may
reasonably request, and Manager shall have the right to terminate this
Agreement effective upon consummation of such sale, transfer or
conveyance, by giving written notice thereof to Lessor not more than
fifteen (15) days after Lessor's notice to Manager pursuant to the
preceding sentence. Not later than the effective date of any
termination of this Agreement pursuant to this Section 10.4(b), and
as a condition to the effectiveness of any such termination, Lessor
shall pay to Manager a termination fee in an amount equal to the
discounted present value (using a discount rate of fifteen
-10-
44
percent (15%) per annum) of seventy-five percent (75%) of the
Management Fees projected for the remaining term of this Agreement on
the basis of the average of the Management Fees for the last twelve
full calendar months immediately preceding the date of termination.
If neither Lessor nor Manager terminates this Agreement in connection
with any such sale, Lessor shall cause the transferee by reason of any
such sale to assume and agree to perform all of the duties,
obligations and liabilities of "Owner" herein contained and thereafter
arising pursuant to a written instrument in form and substance
reasonably satisfactory to Manager; provided, however, that the right
to sell the Project provided to Lessor under this Section 10.4(b)
shall not be assignable or transferable, and any subsequent
assignment, transfer or conveyance by any transferee from Lessor shall
be subject to the provisions of Section 10.2 hereof. Any notice of
termination given under this Section 10.4(b) shall be deemed
ineffective if the related sale is not consummated.
(c) In connection with any termination of the Lease
Agreement (other than pursuant to a sale of the Project as
contemplated by Section 10.4(b)), Lessor or its designee may, upon
at least thirty (30) days prior written notice to Manager, assume this
Agreement for a period commencing upon the effective date of such
termination and continuing for up to four (4) months thereafter.
During such period, Lessor shall pay to Manager, in addition to the
Management Fees otherwise payable hereunder, a Trade Name Fee in an
amount equal to that generally charged by Manager to other comparable
hotels that it operates as "Wyndham" hotels; provided, however, that
no such Trade Name Fee shall be payable if the Lease Agreement shall
have been terminated as a result of the occurrence of an Event of
Default by the Lessee thereunder.
2.15 Amendment of Article XI. The captions and text of Article XI
are deleted and replaced with the following: "[Reserved.]."
2.16 Amendment of Article XII. Article XII of the Management
Agreement is hereby amended by adding thereto new Sections 12.15 and 12.16,
which shall read in their entirety as follows:
Section 12.15 Amendment of Lease Agreement. Owner agrees
that it shall not amend the Lease Agreement without the prior written
consent of Manager, which shall not be unreasonably withheld.
Section 12.16 Obligation to Repay Advances by Manager.
Owner agrees that, to the extent that Manager has not been repaid for
any advances that it has made pursuant to the provisions of Section
6.4 as in effect prior to the amendment of this Agreement entered into
on July 11, 1996, Owner shall
-11-
45
repay such advances to Manager as soon as practicable out of Owner's
available cash.
2.17 Addition of Exhibit B. The Management Agreement is hereby
amended by adding as Exhibit B thereto the Exhibit B attached hereto.
3. Miscellaneous.
(a) Capitalized terms used in this Amendment that are not
defined herein shall have the meaning provided therefor in the Management
Agreement.
(b) The captions used for the Sections in this Amendment
are inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope or the intent of this Amendment or any
Section hereof.
(c) This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be construed as a single instrument.
(d) In the event any provision of this Amendment is
declared or adjudged to be unenforceable or unlawful by any Governmental
Authority, then such unenforceable or unlawful provision shall be excised
herefrom, and the remainder of this Amendment, together with all rights and
remedies granted thereby, shall continue and remain in full force and effect.
(e) The Management Agreement, as amended by this
Amendment, constitutes the entire agreement between the parties hereto with
respect to the matters covered hereby and thereby. All prior negotiations,
representations and agreements with respect thereto not incorporated in this
Amendment or the Management Agreement are hereby canceled. As modified hereby,
the Management Agreement shall continue in full force and effect and be binding
upon the parties hereto and their respective successors and permitted assigns.
References to the Management Agreement after the date hereof shall mean the
Management Agreement as amended pursuant to this Amendment.
(f) This Amendment shall be governed by and construed
under the law governing the Management Agreement.
-12-
46
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.
HOUSTON GREENSPOINT HOTEL ASSOCIATES,
L.P., a Texas limited partnership
("HGHA")
By: Greenspoint Associates, Ltd., a Texas
limited partnership, General Partner
By: New Greenspoint Hotel Corp., a
Texas corporation, its General
Partner
By: /s/ TIMOTHY J. HOGAN
-----------------------------
Name: Timothy J. Hogan
--------------------------
Title: Vice President
--------------------------
CROW HOTEL LESSEE, INC., a Texas
corporation
("Crow")
By: /s/ TIMOTHY J. HOGAN
-------------------------------------
Name: Timothy J. Hogan
------------------------------
Title: Vice President
------------------------------
WYNDHAM MANAGEMENT CORPORATION, a
Delaware corporation
("Manager")
By: /s/ A. RAYMOND
-------------------------------------
Name:
------------------------------
Title:
------------------------------
-13-
47
EXHIBIT B
INSURANCE
A. Pursuant to Section 7.1 of the Management Agreement
("Agreement") dated December 1, 1984, as amended, between Crow Hotel Lessee,
Inc. (the "Owner") and Wyndham Management Corporation (the "Manager"), subject
to reasonable availability, Manager shall procure and maintain insurance in
respect of the Project (as that term is defined in the Agreement), at Owner's
expense, as follows:
1. Property damage insurance in an amount not less than
that stipulated by Owner covering all real and personal property,
which insurance shall be written on an "all risks" and replacement
cost form;
2. Boiler and machinery coverage insuring against damage
to, and against loss or damage caused by an accident or occurrence
arising from or related to, boilers, heating apparatus, pressure
vessels and pipes, air conditioning apparatus and electrical
equipment, which insurance coverage shall be written on a standard,
broad form boiler and machinery policy (on a blanket or comprehensive
basis) and shall include "repair and replacement" coverage;
3. Commercial general liability insurance in an amount
not less than $1,000,000.00 per occurrence/$3,000,000.00 aggregate,
insuring against liability for bodily injury and property damage and,
including without limitation, the following coverage:
a) premises and operations liability;
b) independent contractors liability;
c) product/completed operations liability;
d) broad form property damage liability;
e) blanket contractual liability with respect to
all contracts, written and oral;
f) personal injury liability;
g) liquor liability;
h) incidental malpractice liability;
i) garagekeepers legal liability;
j) worldwide jurisdiction; and
48
k) watersports liability.
4. Comprehensive automobile liability insurance in an
amount not less than $1,000,000.00 per occurrence covering liability
for bodily injury and property damage arising out of the ownership,
maintenance or use of all private passenger and commercial vehicles
and other equipment required to be licensed for road use;
5. Innkeeper's legal liability insurance covering the
property of premises guests in an amount not less than $10,000.00 per
guest and $250,000.00 per occurrence;
6. Safe depository insurance in an amount not less than
$250,000.00 per occurrence;
7. Business interruption insurance written on an "all
risks" form either as endorsements to the policies satisfying (1) and
(2) above or on a separate policy, such insurance to include specific
coverage for Manager's Management Fee calculated based on the Gross
Revenues used as the basis for calculation of the business
interruption insurance award; and
8. Broad form umbrella/excess liability insurance, which
shall cover defense costs on a "first dollar" basis and shall provide
coverage not less than "following form" in respect of all underlying
coverages, in an amount not less than $140,000,000.00 covering against
excess liability over coverages provided by all primary general
liability, automobile liability and employers' liability insurance
policies.
B. In addition, Owner and Manager agree that, subject to
reasonable availability, Manager shall maintain the following insurance with
respect to Project employees, agents and servants, at Owner's expense:
1. Workers' compensation insurance complying with the
statutory workers' compensation law for the state in which the Project
is located;
2. Employer's liability insurance in an amount not less
than $500,000.00 covering against liability in respect of employees,
agents and servants not covered by workers' compensation insurance and
against occupational disease benefits; and
3. Employee fidelity insurance in an amount not less
than $1,000,000.00.
4. Employment practices insurance in an amount not
-B-2-
49
less than $1,000,000 per claim/aggregate.
Manager shall also maintain such other insurance as Manager shall deem
necessary for operation of the Project, with the prior approval of Owner.
C. All insurance procured and maintained pursuant to the
Agreement shall have such deductibles, limits and coverages, and shall
otherwise be in such form, as Manager shall from time to time specify. However,
Owner assumes all responsibility and risks with respect to the adequacy of
insurance in respect of the Hotel.
D. All insurance policies procured and maintained pursuant to the
Agreement shall have attached thereto an endorsement that such policy shall not
be canceled or materially changed without at least thirty (30) days prior
written notice to Owner and Manager.
E. All property damage insurance procured and maintained pursuant
to the Agreement, including, without limitation, insurance procured and
maintained pursuant to A(l), A(2) and A(7) above, shall name Owner and Manager
as insureds and shall provide for the payment of losses thereunder to Owner and
Manager as their respective interests shall appear thereon. All liability
insurance procured and maintained pursuant to the Agreement, including without
limitation, the policies procured and maintained pursuant to A(3), (4), (5),
(6) and (8), shall name Owner, Manager, their Affiliates and their and their
Affiliates' respective shareholders, partners, directors, officers, agents and
employees as insureds. All policies of Workers Compensation, Employers
Liability and Employment Practices insurance pursuant to B (1), (2) and (4)
shall include a waiver of subrogation in favor of Owner.
F. Any insurance procured and maintained pursuant to the
Agreement by either party may be effected under policies of blanket insurance
which may cover other properties managed or owned by such party.
-B-3-