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EXHIBIT 10.1
GUS ENTERPRISES - VIII (SUNNYVALE)
HOTEL PURCHASE AGREEMENT
BY AND BETWEEN
GUS ENTERPRISES - VIII
and
RFS PARTNERSHIP, L.P.
DATED AS OF DECEMBER __, 1996
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TABLE OF CONTENTS
Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Deposits and Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Assumption of Liabilities; Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Special Representations Regarding Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Organization of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 List of Properties, Hotel Contracts and Personnel Data . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Status of Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Hotel Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Tenant Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Sufficiency of Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Real Property Reports; Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Employment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Organization of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 As-Is Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Release at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. Action Prior to the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Preserve Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Maintain Seller and Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Make No Material Change in the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6. Information and Records Concerning the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Buyer's Access to Information and Records Before Closing . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Access to Records After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7. Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Adjournment of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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7.4 Buyer's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Takeover of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 Form of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8. Adjustments and Prorations - Closing Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Adjustments and Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Closing Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9. Covenants and Conditions to Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Conditions to Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.4 Employee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.5 Damage or Destruction: Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.6 Miscellaneous Covenants and Provisions of the Parties . . . . . . . . . . . . . . . . . . . . . . . . 24
10. Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.2 Other Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.6 Readings, Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.7 Binding Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.9 Exhibits, Schedules and Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. Limitation on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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HOTEL PURCHASE AGREEMENT
This HOTEL PURCHASE AGREEMENT (this "AGREEMENT") is made as of December
__, 1996 between GUS ENTERPRISES - VIII, a California general partnership
("SELLER") and RFS PARTNERSHIP, L.P., a limited partnership ("BUYER").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, Seller and Buyer agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings given to them below.
"ASSIGNMENT AND ASSUMPTION" shall have the meaning given such term in
Section 7.3(b).
"ASSUMED LIABILITIES" shall have the meaning given such term in Section
2.4.
"AVERAGE PRICE" means the lesser of $16.25 or .9558 multiplied by the
average closing price of the common stock of RFS Hotel Investors, Inc. for the
ten trading days preceding the date on which notice is given under Section
2.3(c)(i).
"BOOKING" means a contract or reservation for the use of guest rooms,
banquet facilities or meeting rooms in the Hotel other than single or group
reservations of less than fifty (50) rooms on any single night.
"CLOSING" means the completion of the exchanges set forth in Section 7,
which exchanges may be effected by deliveries to and from the Escrow Agent
pursuant to the Escrow Agreement.
"CLOSING DATE" means the date on which the final deliveries to the
Escrow Agent are made as required under the Escrow Agreement.
"CLOSING STATEMENT" means the closing statement required pursuant to
Section 8.3.
"CONSUMABLES" means all food and beverages in closed boxes; engineering,
maintenance and housekeeping supplies, including soap and cleaning materials,
fuel, and materials in closed boxes; stationery and printing items and supplies
in closed boxes; and other supplies of all kinds in closed boxes, all of which
are unused or held in reserve storage for future use in connection with the
maintenance and operation of the Hotel. The term "Consumables" does not
include, however, Operating Equipment, Fixtures and Tangible Personal Property
or items of personal property owned by
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guests or employees or other persons furnishing food or services to the Hotel.
"CUTOFF TIME" means 12:01 a.m. on January 1, 1997.
"DEED" shall have the meaning given such term in Section 7.3(a).
"DEPOSIT" means the deposit made by Buyer pursuant to Section 2.3 as
such deposit may be increased pursuant to Section 7.2.
"EMPLOYMENT AGREEMENTS" means all union, benefit and collective
bargaining agreements affecting the Hotel or the Hotel Employees, including
pension, profit sharing, employee benefit and similar plans, if any, and all
written employment and consulting contracts with regard to any Hotel Employee.
"ESCROW AGENT" means the Title Company in its capacity as escrow agent
under the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement dated as of the date of
this Agreement and executed simultaneously with this Agreement by Escrow Agent,
Seller, Buyer, and each party named as a "Seller" or "Buyer" under any of the
Other Purchase Agreements.
"EXCLUDED PERMITS" means those Permits which, under applicable law, are
nontransferable and such other Permits to be designated as Excluded Permits in
Offering Book 2.
"FINANCIAL STATEMENTS" means the unaudited balance sheet ("statement of
costs") and profit and loss statements for the Hotel as of September 30, 1996,
together with supporting documentation, all of which are included in the
Offering Materials.
"FIXTURES AND TANGIBLE PERSONAL PROPERTY" means all fixtures, furniture,
furnishings, fittings, equipment, machinery, apparatus, appliances and other
articles of personal property now located on the Land or in the Hotel as of the
date of this Agreement and used or usable in connection with any present or
future occupation or operation of all or any part of the Hotel. The term
"Fixtures and Tangible Personal Property" does not include (i) Consumables,
(ii) Operating Equipment, (iii) equipment leased by Seller and the interest of
Seller in any equipment provided to the Hotel for use pursuant to Hotel
Contracts but not owned or leased by Seller, or (iv) property owned or leased
by Tenants and guests, employees or other persons furnishing goods or services
to the Hotel.
"GOVERNMENTAL AUTHORITY" means any governmental or quasi-governmental
agency, body or entity.
"GUEST LEDGER RECEIVABLES" means amounts, including, without limitation,
room charges and charges for food and beverages owing
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to restaurant lessees, accrued to the accounts of guests occupying rooms in the
Hotel as of the Cutoff Time.
"HOTEL" means the Sheraton Four Points Hotel Sunnyvale, located in
Sunnyvale, California.
"HOTEL CONTRACTS" means all written contracts or agreements, such as
franchise, maintenance, service, or utility contracts which relate to the
ownership, maintenance, construction or repair and/or operation of the Land and
Improvement and which are not cancelable on 90 days' or shorter notice, except
Bookings and Tenant Leases.
"HOTEL EMPLOYEES" means all employees of Seller, GUS Management Inc. or
Tamalpais Hotel Services who currently work at the Hotel as of the date of this
Agreement or who are engaged as replacements therefor prior to the Closing.
"IMPROVEMENTS" means the buildings, structures (surface and subsurface)
and other improvements (including fixtures other than those owned by Tenants
that constitute real property) located on the Land.
"INFORMATION" shall have the meaning given such term in Section 4.3.
"INSURED CLAIMS" shall have the meaning given such term in Section
3.3(b).
"INVESTOR QUESTIONNAIRE" shall mean a completed questionnaire in the
form attached as EXHIBIT F.
"LAND" means fee interest in the land related to the Hotel owned of
record or beneficially owned by Seller and more particularly described in
EXHIBIT A.
"LIQUOR LICENSE" means the Permit issued to the Tenant of the
restaurant, if any, by the Alcoholic Beverage Commission of the State of
California.
"LITIGATION" means action, suit, administration proceeding,
investigation, condemnation or governmental enforcement proceeding relating to
Seller, the Property or the operation of the Hotel.
"MISCELLANEOUS HOTEL ASSETS" means all contract rights, leases,
concessions, trademarks, servicemarks, logos, names of hotel restaurants and
other food and beverage outlets, technology and technical information,
copyrights, warranties, plans, drawings and other items of intangible personal
property relating to the ownership or operation of the Hotel and owned by
Seller, excluding, however, (i) receivables, other than Guest Ledger
Receivables, (ii) Hotel Contracts, (iii) Tenant Leases, (iv) Permits, (v) cash
or other funds, whether in petty cash or house banks, or on deposit in bank
accounts or in transit for deposit, (vi) refunds, rebates or
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other claims, or any interest thereon, for periods or events occurring prior to
the Cutoff Time, (vii) utility and similar deposits, (viii) insurance or other
prepaid items, or (ix) books and records, except to the extent that Seller
receives a credit on the Closing Statement for any such item.
"OFFERING BOOK" means any of the volumes of documents or other
information provided to Buyer in connection with its review of the Hotel, a
list of which volumes is attached to this Agreement as Schedule 2.4.
"OFFERING MATERIALS" means the information contained in each Offering
Book, as defined herein, and the Offering Schedules, as defined herein, or
otherwise disclosed to Buyer pursuant to this Agreement.
"OFFERING SCHEDULES" means each Schedule attached to this Agreement and
each supplemental or amended schedule or additional document provided to Buyer
during its review of the Hotel's operations prior to or on the Closing Date.
"OPERATING EQUIPMENT" means all china, glassware, linens and silverware
owned by Seller and used or held in reserve storage at the Hotel for future use
in connection with the operation of the Hotel, which are on hand on the date
hereof, subject to such depletion and restocking as shall be made in the normal
course of business. Operating Equipment shall not include items owned by
Tenants. To the extent that Seller has a contractual right to the reversion of
personal property upon the termination of a lease, such interest shall be
deemed a right under the lease and not part of "Operating Equipment."
"OTHER PURCHASE AGREEMENTS" means the three purchase agreements dated as
of the date hereof and executed simultaneously with this agreement by
affiliates of Buyer with with GUS Enterprises-X in regard to the Sheraton Four
Points Hotel Bakersfield, with GUS Enterprises-XI in regard to the Sheraton
Four Points Hotel Pleasanton, and with GUS Enterprises-XII in regard to the
Sheraton San Jose.
"OUTSIDE ACCOUNTANTS" shall have the meaning given such term in Section
8.3.
"PERMITS" means all licenses and permits granted by the Governmental
Authority and owned by Seller or used in or relating to the ownership,
occupancy or operation of the Hotel or any part thereof not subject to a Tenant
Lease. Permits shall not include the Liquor License, if any, as to which
Seller's rights are at most contractual rights to acquire at a future date from
a Tenant of the restaurant.
"PERMITTED EXCEPTIONS" means liens, encumbrances and other matters to
which Seller's title to the Real Property is subject and
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which are described or listed in the Title Report, but shall not include deeds
of trust and similar monetary liens.
"PERSONAL PROPERTY" means all Property other than Real Property.
"PROPERTY" means (i) the Real Property, (ii) the Fixtures and Tangible
Personal Property, (iii) the Operating Equipment, (iv) the Consumables, (v) the
transferable right, title and interest, if any, of Seller in and to Hotel
Contracts and the Tenant Leases, (vi) the Permits (other than Excluded
Permits), (vii) the Bookings, and (viii) the Miscellaneous Hotel Assets.
"PURCHASE PRICE" shall have the meaning given such term in Section 2.2.
"REAL PROPERTY" means the Land and the Improvements.
"REDEMPTION AND REGISTRATION RIGHTS AGREEMENT" shall mean a duly
executed and delivered agreement in the form attached as EXHIBIT G.
"RETAINED LIABILITIES" shall have the meaning given such term in Section
2.4(b).
"RFS PARTNERSHIP AGREEMENT" shall mean the Third Amended and Restated
Agreement of Limited Partnership dated February 27, 1996 of RFS Partnership,
L.P., as that agreement may be modified by the Fourth Amended and Restated
Agreement of Limited Partnership to be delivered and executed pursuant to
Sections 7.3 and 7.4.
"SCHEDULED CLOSING DATE" means January 2, 1997, or such a later date as
determined pursuant to Section 7.1.
"SELLER'S ACCOUNTANTS" shall have the meaning given such term in Section
8.3.
"SELLER'S CONDITIONS" shall have the meaning given such term in Section
9.1.
"SELLER'S KNOWLEDGE," "KNOWN TO SELLER" and other like phrases shall
mean the current actual knowledge of the managing general partners of Seller
based upon such written certifications as Seller may require from Tamalpais
Hotel Services, Inc. as manager under that certain Hotel Management Agreement
dated April 1, 1996.
"TENANT LEASES" means the interest of Seller in and to all leases,
subleases and other occupancy agreements, whether or not of record, which
provide for the use or occupancy of space or facilities on or relating to the
Real Property and which are in force as of the date hereof. This term shall not
include agreements providing for the occupancy by guests of Hotel rooms or for
the occupancy or use of the banquet, meeting or convention
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facilities of the Hotel, which are Bookings, but shall include restaurant
leases.
"TENANT" means any person or entity entitled to occupy any portion of
the Real Property under a Tenant Lease.
"TITLE COMPANY" means First American Title Insurance Co., having an
office at 114 East Fifth Street, Santa Ana, California 92701, attention: Craig
DeRoy, General Counsel.
"TITLE POLICY" shall have the meaning given such term in Section 9.1.
"TITLE REPORT" means the report, report order no. 511554, Escrow Order
No. 766792, dated May 17, 1996, prepared by the Title Company describing the
title to the Land and the liens, encumbrances and other matters relating to the
Land, which report is included in Offering Book 7.
"UNITS" means those certain units of Class B limited partnership
interests in RFS Partnership, L.P. described in the RFS Partnership Agreement,
including a pro rata share in the profits, losses and capital accounts of RFS
Partnership, L.P.
2. AGREEMENTS.
2.1 SALE AND PURCHASE. Seller agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, the Property for the Purchase Price, on the
terms and subject to the conditions of this Agreement.
2.2 PURCHASE PRICE. The Purchase Price for the Property shall be
Twenty Four Million Seven Hundred Sixty Nine Thousand Two Hundred Forty Four
Dollars ($24,769,244).
2.3 DEPOSITS AND PAYMENT OF PURCHASE PRICE.
(A) Upon execution of this Agreement, Buyer shall deposit
the sum of One Million Four Hundred Thousand Dollars ($1,400,000) ("DEPOSIT")
in the escrow account at First American Title Insurance Company pursuant to the
terms of the Escrow Agreement. Such Deposit shall be held subject to the
provisions of the Escrow Agreement and Section 9.3 of this Agreement. If the
Closing does not occur by reason of the default hereunder by Buyer and Seller
is not in default hereunder, the parties shall proceed in accordance with
Section 9.3(a) unless otherwise required by the Escrow Agreement.
(B) Subject to Section 2.3(c) hereof and the terms of the
Escrow Agreement, Buyer shall pay the balance of the Purchase Price in the
amount of Twenty Three Million Three Hundred Sixty Nine Thousand Two Hundred
Forty Four Dollars ($23,369,244) in the form
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of immediately available funds at the Closing, plus or minus the adjustments
and prorations called for herein.
(C) Seller may elect to accept payment of all or part of
the Purchase Price by delivery to it of Units subject to the following: (i)
Seller shall notify Buyer of its election not later than December 18, 1996 or,
if the Closing is adjourned beyond January 2, 1997, ten (10) days prior to the
Closing Date; (ii) such notice shall specify a dollar amount to be paid in
Units and the person or persons to receive such Units; (iii) the number of
Units to be delivered for such amount shall be determined as set forth in
EXHIBIT E hereto; and (iv) in no event shall the total number of Units paid
under this Agreement and the Other Purchase Agreements exceed the maximum
number of units calculated pursuant to step #7 of EXHIBIT E, nor shall the
aggregate amount of the Purchase Prices under all such agreements paid in cash
be less than $45,250.000. In the event that Buyer is unable to deliver the
requested portion of the Purchase Price in Units, Buyer shall pay in cash to
Seller an amount equal to the number of Units requested but not delivered,
multiplied by the average closing price of the common stock of RFS Hotel
Investors, Inc. for the ten trading days preceding the date on which Seller
gave notice under Section 2.3(c), all as set forth on EXHIBIT E.
2.4 ASSUMPTION OF LIABILITIES; RETAINED LIABILITIES.
(A) Buyer shall assume at Closing and pay the following
obligations ("ASSUMED LIABILITIES"): (i) Seller's obligations and liabilities
with respect to the Property or operation of the Hotel which are disclosed to
Buyer in the Offering Materials; and (ii) any liabilities or obligations
relating to the Property or operation of the Hotel arising from acts,
omissions, occurrences or matters that take place after the Cutoff Time.
(B) Buyer shall have no liability or obligation for the
following ("RETAINED LIABILITIES"): (i) federal, state and local income,
franchise, sales, payroll or other taxes (other than real estate taxes, water
and sewer charges, and assessments which shall be prorated as of the Cutoff
Time) of Seller or for which Seller is liable, including any interest and/or
penalties thereon; (ii) any liability the existence of which would constitute a
breach of any of Seller's representations or warranties contained in Section 3;
and (iii) any liability or obligation of Seller related to the Litigation
disclosed in Offering Book 5 or if not in Offering Book 5 which arises from
acts, omissions, or occurrences that take place prior to the Cutoff Time,
except for Litigation relating to Tenant Leases and Hotel Contracts, if any,
assumed by Buyer.
2.5 SPECIAL REPRESENTATIONS REGARDING UNITS. Seller shall provide
Buyer an Investor Questionnaire in the form of that attached as EXHIBIT F for
each person designated to receive Units at Closing. Seller further acknowledges
and agrees and represents to Buyer as follows in regard to Units to be received
by it:
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(a) The Units are being acquired by Seller subject to the
terms and conditions as described and provided for in the RFS Partnership
Agreement, a copy of which has been obtained by or otherwise provided to
Seller.
(b) The Units and shares receivable upon the conversion of
the same are being and shall be received and held by the Seller for its own
account for investment purposes only, and not with a view to dividing
participation therein with any other person or with a current view to, or in
connection with, any offering or distribution thereof. Except as set forth in
the Redemption and Registration Rights Agreement, Seller has no present
intention of selling or otherwise disposing of the Units and does not presently
intend to sell or dispose of the Units or shares receivable upon the conversion
of the same upon the occurrence or non-occurrence of any predetermined future
event or upon the lapse of any particular period of time; provided however that
the Seller, in liquidation may distribute the Units to its constituent general
partner and limited partners in a one-time distribution provided that all such
constituents have made the representation herein contained and have properly
completed the Investor Questionnaire.
(c) The Units will have been obtained by Seller without the
service of any broker, dealer, investment banker or finder, and there is no
obligation to pay a commission, fee, bonus or remuneration of any type to any
broker, dealer, investment banker, finder or other person in connection
therewith, excepting only professional fees of attorneys and/or accountants,
and those of real estate agents or brokers.
(d) Buyer has furnished to Seller and to each partner
within Seller a private placement memorandum dated November 20, 1996 which has
been thoroughly reviewed by Seller. Seller has had the opportunity to ask of an
receive answers from officials of Buyer and RFS Hotel Investors, Inc. with
respect to the Units or the affairs of Buyer and RFS Hotel Investors, Inc. and
to obtain additional information necessary to verify the accuracy of any
representations of Buyer or RFS Hotel Investors, Inc. or the information
provided to Seller by Buyer or RFS Hotel Investors, Inc. Buyer or RFS Hotel
Investors, Inc. has responded to all inquiries of Seller and its partners and
provided all additional information requested in a manner satisfactory to
Seller.
(e) The Units are not registered under the Securities Act
of 1933, as amended (the "Securities Act"), and the Units cannot be sold unless
the offer and sale thereof is subsequently registered under the Securities Act
and the "Blue Sky" law of each state in which any thereof are offered for sale,
unless an exemption from registration is available. Consequently, Seller and
the partners within Seller may be required to bear the economic risk of
ownership of the Units for an indefinite period of time except as provided in
the Redemption and Registration Rights Agreement.
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(f) Each of Seller and the partners within Seller is an
"accredited investor" as that term is defined pursuant to Regulation D under
the Securities Act.
(g) The information as to Seller and each of Seller's
partners set forth on their respective Investor Questionnaires, is true and
correct in all material respects and each partner within Seller has completed
an Investor Questionnaire.
(h) Seller has received, has read and understands the
provisions of this Agreement and especially those relating to the exchange and
number of Units as consideration therefor.
(i) Seller will agree that any Units or Common Stock
issuable upon redemption of Units will not be sold except pursuant to (a) a
registration statement filed under the Securities Act of 1933, or (b) an
exemption from registration under the Securities Act, and otherwise in
compliance with any state or federal law.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. As an inducement to Buyer to
enter into this Agreement and to consummate the transactions contemplated
herein, Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION OF SELLER. Seller is a general partnership formed
under the laws of California, of which Gordon Gund and Hugh Scott are the
managing general partners.
3.2 AUTHORITY. The individual executing this Agreement is the duly
authorized signatory and representative of the Seller for purposes of executing
this Agreement on behalf of the Seller.
3.3 LIST OF PROPERTIES, HOTEL CONTRACTS AND PERSONNEL DATA. To
Seller's knowledge, the Schedules described in the following paragraphs (a)
through (i) list all items, if any, within the term or description of the
corresponding paragraph and no other items within such term or description
exist. True and complete copies of the documents referred to in paragraphs (a),
(c), (d), (e), (f), (g), (h) and (i) are included in the Offering Materials or
have been furnished to or made available to Buyer:
(a) TENANT LEASES. The Tenant Leases disclosed in Offering
Book 2.
(b) LITIGATION. As disclosed in Offering Book 5, a brief
description of pending or threatened Litigation, including matters with respect
to which Seller is or believes itself to be insured against the claim under
comprehensive liability policies of insurance ("INSURED CLAIMS"). The
description shall specify the damage or relief sought, the name of counsel for
Seller in charge of such matter and the current status of such action to the
extent of Seller's knowledge. Such Offering Book 5 shall be updated to the
extent of Seller's knowledge as of the Cut Off Time.
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(c) PERMITS. The Permits disclosed in Offering Book 2.
(d) HOTEL CONTRACTS. The Hotel Contracts disclosed in
Offering Book 2.
(e) BOOKINGS. All Bookings related to the Hotel which
pertain to any period after the Scheduled Closing Date and are disclosed on
Schedule 3.3A.
(f) HOTEL EMPLOYEES. The Hotel Employees disclosed in the
Offering Materials.
(g) EMPLOYMENT AGREEMENTS. All Employment Agreements
disclosed in the Offering Materials.
3.4 STATUS OF TITLE TO PROPERTY. Seller has provided a title report
as part of the Offering Materials. To Seller's knowledge, there have been no
material changes to title since the date of that report.
3.5 HOTEL CONTRACTS. Except as disclosed in Offering Book 2, Seller
has received no written notice of any default with respect to any Hotel
Contract and to Seller's knowledge, all the Hotel Contracts are in full force
and effect, neither Seller nor the other parties thereto are in default
thereunder, and no event has occurred which, merely by notice or the passage of
time or both, would constitute such a default by Seller or such other parties
to such Hotel Contracts.
3.6 PERMITS. To Seller's knowledge, the Permits are in full force
and effect except as set forth in the Offering Materials, all the requirements
and conditions of the Permits have been fully complied with, and no event has
occurred which, merely by notice or the passage of time or both, would render
Seller or operation of the Hotel not in compliance with such requirements and
conditions.
3.7 LITIGATION. Except as disclosed in Offering Book 5 and Insured
Claims, to Seller's knowledge there is no pending or threatened Litigation
which, if adversely determined, might (i) restrain the consummation of any of
the transactions herein described, (ii) have a material adverse effect on the
Property or any significant part thereof or operation of the Hotel following
the Closing or (iii) result in a lien or encumbrance on all or part of the
Property.
3.8 TENANT LEASES. Except as disclosed in Offering Book 2, to the
knowledge of Seller, the Tenant Leases are in full force and effect, all rent
due thereunder has been paid in full, no rent thereunder has been prepaid, and
neither Seller nor the Tenants are in default thereunder, and no event has
occurred which, merely by notice or the passage of time or both, would
constitute such a default by Seller or the Tenants.
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3.9 TAXES. To the knowledge of Seller, all business, occupation,
sales, use and other similar taxes imposed with respect to the Hotel, or the
operation thereof, which are due and payable by Seller have been paid in full
or are current and Seller has not received any written notice that any such tax
is overdue or has not been paid.
3.10 SUFFICIENCY OF INVENTORIES. To Seller's knowledge, the
quantities of Fixtures and Tangible Personal Property, Consumables and
Operating Equipment in the Hotel, including provisions for reserve, are
sufficient for the operation of the Hotel in accordance with the standard of
operation heretofore maintained by Seller.
3.11 FOREIGN PERSON. Seller is not a foreign person for purposes of
the withholding provisions of Section 1445 of the Internal Revenue Code of
1986.
3.12 FINANCIAL STATEMENTS. To Seller's knowledge, the Financial
Statements have been prepared by Tamalpais Hotel Services, Inc. to conform
substantially to the Uniform System of Accounts For Hotels. The Financial
Statements and other financial information have not been compiled, reviewed or
audited by outside accountants.
3.13 REAL PROPERTY REPORTS; DEFECTS. To Seller's knowledge, there are
no material structural or mechanical defects in the Real Property except as
disclosed to Buyer in the Offering Materials. The foregoing representation
shall not be applicable to any reports or studies or to any defects discovered
or otherwise known to Buyer prior to the Closing.
3.14 EMPLOYMENT CONTRACTS. To Seller's knowledge, there are no union
contracts, labor agreements or Employee Benefit Plans as defined in Section
3(3) of the Employee Retirement Income and Security Act of 1974, as amended
from time to time, or written employment contracts relating to the Hotel
Employees other than the Employment Agreements. Seller has not received or
given any written notice of default under the terms of any Employment
Agreements.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. As an inducement to Seller to
enter into this Agreement and to consummate the transactions contemplated
herein, Buyer hereby represents and warrants to Seller:
4.1 ORGANIZATION OF BUYER. Buyer is a limited partnership formed
under the laws of Tennessee and in good standing and duly qualified in each
jurisdiction in which qualification is required to conduct its business and to
perform the obligations of this Agreement.
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4.2 AUTHORITY. Buyer's execution, delivery and performance of this
Agreement has been duly authorized by all necessary actions of its partners. No
consents or actions of other persons are required for such actions.
4.3 AS-IS PURCHASE.
(a) Buyer acknowledges, represents and warrants that,
except as expressly provided in Section 3 above, (i) any information
("INFORMATION") supplied or made available by Seller, whether written or oral,
or in the form of maps, surveys, plats, soil reports, engineering studies,
environmental studies, inspection reports, plans, specifications, or any other
information whatsoever, without exception, pertaining to the Property, any and
all records, rent rolls, and other documents pertaining to the use and
occupancy of the Property, income thereof, the cost and expenses of maintenance
thereof, and any and all other matters concerning the condition, suitability,
integrity, marketability, compliance with law, or other attributes or aspects
of the Property, or a part thereof, is furnished to Buyer solely as a courtesy;
(ii) THE INFORMATION IS PROVIDED, AND THE PROPERTY IS PURCHASED, ON AN
AS-IS-WHERE-IS BASIS AND SELLER MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, OR
ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING, BUT IN NO WAY LIMITED TO,
ANY WARRANTY OF CONDITION, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE
AS TO THE INFORMATION OR THE PROPERTY; and (iii) no representations, whether
written or oral, have been made by Seller, or its agents or employees in order
to induce Buyer to enter into this Agreement. Without limiting the generality
of the foregoing, Buyer acknowledges, warrants and represents to Seller that
neither Seller nor its agents or employees have made any representations or
statements, whether written or oral, to Buyer concerning the investment
potential, operation or resale of the Property at any future date, at a profit
or otherwise, nor has Seller or its agents or employees rendered any advice or
expressed any opinion to Buyer regarding any tax consequences of ownership of
the Property.
(b) Buyer acknowledges, represents and warrants that as of
the Closing Date, Buyer will be familiar with the Property and will have made
such independent investigations as Buyer deems necessary or appropriate
concerning the Property. If Buyer elects to proceed with the purchase of the
Property, any objections which Buyer may have with respect to the Property
shall be waived by Buyer. Except as expressly provided in Section 3 above,
Seller makes no representations or warranties and specifically disclaims any
representation, warranty, or guaranty, oral or written, past, present or future
with respect to the physical condition or any other aspect of the Property,
including, without limitation, the structural integrity of the Improvements,
the manner, construction, condition, and state of repair or lack of repair of
any of the Improvements, the conformity of the Improvements to any plans or
specifications for the Property, including, but not limited to, any plans and
specifications that may have been or which may be
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provided to Buyer, the conformity of the Property to past, current or future
applicable zoning or building code requirements or the compliance with any
other laws, rules, ordinances, or regulations of any government or other body,
the financial earning capacity, the projected performance, or history or
expense history of the operation of the Property, the nature and extent of any
right-of-way, lease, possession, lien encumbrance, license, reservation,
condition, or otherwise, the existence of soil instability, past soil repairs,
soil additions or conditions of soil fill, susceptibility to landslides,
sufficiency of undershoring, sufficiency of drainage, whether the Property is
located wholly or partially in a flood plain or a flood hazard boundary or
similar area, the existence or non-existence of hazardous waste or other toxic
materials of any kind (including, without limitation, asbestos) or any other
matter affecting the stability or integrity of the Land and/or the
Improvements.
(c) Seller shall not be responsible for any negligent
misrepresentation or failure to investigate the Property on the part of Seller,
any real estate broker or sales agent, or any other agent or employee of Seller
or any third party.
(d) Except as expressly provided in Section 3, as part of
Buyer's agreement to purchase and accept the Property AS-IS-WHERE-IS, and not
as a limitation on such agreement, BUYER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES AND RELEASES ANY AND ALL ACTUAL OR POTENTIAL RIGHTS BUYER MIGHT HAVE
REGARDING ANY FORM OF WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE,
RELATING TO THE PROPERTY AND THE INFORMATION. SUCH WAIVER AND RELEASE IS
ABSOLUTE, UNCONDITIONAL, IRREVOCABLE, COMPLETE, TOTAL AND UNLIMITED IN ANY WAY.
SUCH WAIVER AND RELEASE INCLUDES, BUT IS NOT LIMITED TO, A WAIVER AND RELEASE
OF EXPRESS WARRANTIES, IMPLIED WARRANTIES, WARRANTIES OF FITNESS FOR A
PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF HABITABILITY,
STRICT LIABILITY RIGHTS AND CLAIMS OF EVERY KIND AND TYPE, INCLUDING, BUT NOT
LIMITED, TO CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE,
PRODUCT LIABILITY CLAIMS, PRODUCT LIABILITY TYPE CLAIMS, ANY RIGHTS AND CLAIMS
RELATING TO OR ATTRIBUTABLE TO ENVIRONMENTAL CONDITIONS, ALL OTHER EXTANT OR
LATER CREATED OR CONCEIVED OF STRICT LIABILITY OR STRICT LIABILITY TYPE CLAIMS
AND RIGHTS.
4.4 RELEASE AT CLOSING. Buyer will deliver a release of claims
against Seller at Closing in confirmation of its as-is purchase of the Hotel.
5. ACTION PRIOR TO THE CLOSING DATE. The parties covenant to take the
following actions:
5.1 APPROVALS AND CONSENTS.
(a) The parties will use reasonable efforts to acquire all
necessary approvals of Governmental Authorities and all
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necessary consents of all third parties, including franchisors if any, to the
end of expediting consummation of the transactions contemplated herein.
(b) Buyer shall promptly prepare or cause to be prepared
and submit all filings and applications, and pay all fees and make all deposits
required to consummate the Closing, on or before the Scheduled Closing Date,
and diligently pursue the necessary procedures, in connection with the
transactions contemplated by this Agreement.
5.2 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
parties hereto shall refrain from taking any action which would render any
representation and warranty contained in Sections 3 and 4 of this Agreement
inaccurate as of the Closing Date. Seller promptly will notify Buyer of any
written notice received by Seller concerning any claim of default under any
Lease or Contract and any of Litigation that may be threatened, brought,
asserted or commenced against Seller (a) involving the transactions called for
by this Agreement or (b) which might have a material adverse effect on the
Property or operation of the Hotel.
5.3 MAINTAIN SELLER AND HOTEL. Seller shall fully perform all of
Seller's obligations under the Hotel Contracts, pay in full all business,
occupation, sales, use and other similar taxes imposed with respect to the
Property, the Hotel, or the operation thereof when such taxes become due and
payable, maintain the Property in accordance with past practices, continue to
meet the contractual obligations incurred in the ordinary course of business
and pay all of Seller's obligations as they mature in the ordinary course of
business, use reasonable efforts to maintain the present level of service at
the Hotel, including the present level of staffing, and use reasonable efforts
to preserve the good relations of the suppliers, customers and others related
to the Property with whom Seller has business relations. Seller shall maintain
an inventory of Consumables, Fixtures and Tangible Personal Property and
Operating Equipment reasonably sufficient for the operation of the Hotel in the
ordinary course of business and shall, generally in accordance with its past
practices, resupply, substitute or replace any of such items as may be depleted
in order that Buyer can continue to operate the Hotel generally in accordance
with past practices. Seller will continue to operate and maintain the Hotel in
accordance with present standards of operations. New Bookings shall be made
only in the ordinary course of business, and only upon terms and conditions
usual and customary in accordance with past business practices of Seller.
5.4 MAKE NO MATERIAL CHANGE IN THE PROPERTY. Prior to the Closing
Date, Seller shall not without the written consent of Buyer, which consent
shall not be unreasonably withheld or delayed; (a) make any material change in
the Property; (b) sell or otherwise dispose of any of the Real Property or
enter into any new Tenant Leases; (c) enter into any contract, license,
franchise or
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commitment relating to the Property other than in the ordinary course of
business; (d) significantly alter or revise the accounting principles,
procedures, methods or practices in place at the Hotel; (e) remove or permit to
be removed from the Hotel any machinery, equipment, fixtures, vehicles or other
similar personal property or parts thereof, except in the ordinary course of
business; (f) materially change its credit policies; (g) transfer or otherwise
dispose of any of the Property except Consumables in the ordinary course of
business; or (h) settle or compromise any Litigation relating to Tenant Leases.
6. INFORMATION AND RECORDS CONCERNING THE PROPERTY.
6.1 BUYER'S ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING. Seller
shall give Buyer, its employees, accountants and other representatives full
access throughout the period prior to the Closing Date upon reasonable notice
and during normal business hours to all of its properties, books, contracts,
commitments, customers and records, and furnish to Buyer during such period all
such information concerning the Property as Buyer may reasonably request. Buyer
intends to prepare an inventory of the Fixtures and Tangible Personal Property,
Consumables and Operating Equipment. Seller agrees to cause a representative
of Seller to cooperate with Buyer in the preparation of the inventory. Buyer
shall conduct its activities hereunder in a manner to minimize any disturbance
to Seller or its employees and Hotel guests.
6.2 ACCESS TO RECORDS AFTER CLOSING. Seller agrees to preserve at
Seller's business office until for six (6) years after Closing all records
pertaining to the operation of the Hotel in his hands which were not
transferred to Buyer hereunder and relating to the Property or to the
transactions contemplated herein. Similarly, Buyer and Seller agree to preserve
at the Hotel all employment records and sales records conveyed by each other
until February 1, 2003. Where there is a legitimate purpose not injurious to
the other party or if there is a tax audit, other governmental inquiry, or
litigation or prospective litigation to which Seller or Buyer is, or may
become, a party, making necessary Seller's access to such records of Buyer or
making necessary Buyer's access to such records of Seller, each party, as the
case may be, will allow representatives of the other party access to such
records during regular business hours at such party's place of business for the
sole purpose of obtaining information for use as aforesaid. Buyer and Seller
agree to indemnify, hold harmless and defend each other at all times from and
after the date of this Agreement, from and against any and all loss, damage,
claim, cost and expense and any other liability whatsoever, including, without
limitation, reasonable accountants' and attorneys' fees, charges and costs,
incurred by either by reason of the other's failure to save and provide access
to the records described above.
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7. CLOSING MATTERS.
7.1 CLOSING. A pre-closing of the transactions contemplated herein
shall take place at the offices of Jones, Day, Reavis & Pogue in Los Angeles,
on December 20, 1996 and one day prior to the Closing Date, if that date is
adjourned beyond January 2, 1997. As part of the Closing the actions specified
in Sections 7.3 and 7.4 below shall be taken, all of which will be deemed taken
simultaneously at the Closing and no one of which will be deemed completed
until all have been completed and the Closing shall have occurred.
7.2 ADJOURNMENT OF CLOSING. Notwithstanding anything to the contrary
in Section 7.1, the Scheduled Closing Date may be postponed by either party by
notice to the other party for a number of days set forth in the notice in order
to satisfy a condition to Closing or for any other reason, provided, however,
that the aggregate number of days of such adjournment by a party shall not
exceed ten (10) days from the original Scheduled Closing Date. In the event
that Buyer seeks to adjourn for a period or periods in aggregate exceeding such
ten (10) days, Buyer shall not be entitled to such longer adjournment unless it
deposits, as an addition to the Deposit, the total of One Million Four Hundred
Thousand Dollars ($1,400,000) plus an amount equal to interest on the full
Purchase Price at the rate of eight percent (8%) per annum for the period of
the adjournment, (except that Buyer shall not be obligated to make either such
payment if an extension is allowed to enable the Buyer to cure a title
objection or a survey objection). The amount equal to interest shall be deemed
an increase in, and not a credit against, the Purchase Price. In no event shall
Buyer be entitled to adjourn the Closing to a date later than thirty (30) days
after the original Scheduled Closing Date.
7.3 SELLER'S DELIVERIES. Subject to the terms of the Escrow
Agreement then in effect:
(a) At Closing Seller shall deliver a deed in the form of
EXHIBIT B assigning all of Seller's right, title and interest in and to the
Land and the Improvements to Buyer, subject only to the Permitted Exceptions
(the "DEED") and such other instruments, documents or certificates as may be
reasonably required by Title Company as a condition to the issuance of the
Title Policy consistent with the terms of this Agreement.
(b) Seller shall deliver to Buyer (i) a bill of sale in the
form of EXHIBIT C transferring and assigning to Buyer or, subject to Section
11.7, Buyer's designee each and every item of Personal Property to be
transferred hereunder; (ii) all Hotel Contracts, Tenant Leases, Bookings,
Permits (other than Excluded Permits), Transferrable Insurance Policies and
other Miscellaneous Hotel Assets, together with an assignment and assumption in
the form of EXHIBIT D conveying and transferring the same to Buyer (the
"ASSIGNMENT AND ASSUMPTION") together with an estoppel from each
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Tenant under the Tenant Leases. Except for the Assignment and Assumption which
will be delivered at Closing, delivery of any such documents shall be deemed
made by Seller to Buyer if Seller leaves such documents at the Hotel in their
customary place of storage or in the custody of Buyer's representatives.
(c) Seller shall deliver such consents, agreements,
certificates and other instruments executed by or on behalf of each person, if
any, identified pursuant to Section 2.3(c) as receiving Units, to the extent
that such documents are necessary to effectuate that delivery and to make each
recipient of Units obligated under, without limitation, a Fourth Amended and
Restated Agreement of Limited Partnership. Such agreement shall supersede the
Third Amended and Restated Agreement of Limited Partnership now constituting
the RFS Partnership Agreement and shall incorporate terms applicable to the
Units substantially identical to and not inconsistent with those of the
Redemption and Registration Rights Agreement. Such Fourth Amended and Restated
Agreement of Limited Partnership shall be prepared by Buyer and subject to the
prior review and reasonable approval of Seller.
7.4 BUYER'S DELIVERIES. Subject to the terms of the Escrow Agreement
then in effect, Buyer shall pay the balance of the Purchase Price, plus or
minus the adjustments and prorations called for in this Agreement, shall
deliver the Units, and shall deliver such other instruments, documents or
certificates as are required to be delivered by Buyer to Seller in accordance
with any of the other provisions of this Agreement. Buyer shall assume the
obligations under the Assignment and Assumption and shall deliver copies of
each of the documents to be delivered in regard to the Units under Section
7.3(c) countersigned, to the extent required for the effectiveness of the
documents, by it or by RFS Hotel Investors, Inc.
7.5 TAKEOVER OF EMPLOYEES. At Closing Seller shall terminate or
cause to be terminated all Hotel Employees. Buyer shall immediately hire a
number of Hotel Employees and employ them on such terms so that the WARN Act
and all similar laws and regulations requiring pre-transfer notices are
inapplicable to this transaction.
7.6 FORM OF DOCUMENTS. All documents required to be delivered at or
prior to the Closing in accordance with the provisions of this Agreement shall
be in the form of the Exhibits attached hereto or if not attached, in a form
reasonably acceptable to the receiving party.
8. ADJUSTMENTS AND PRORATIONS - CLOSING STATEMENT.
8.1 ADJUSTMENTS AND PRORATIONS. The following matters and items
pertaining to the Property shall be apportioned between the parties hereto or,
where applicable, credited in total to a particular party, as of the Cutoff
Time. Net credits in favor of
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Buyer shall be deducted from the balance of the Purchase Price at the Closing
and net credits in favor of Seller shall be paid in cash at the Closing. Unless
otherwise indicated below, Buyer shall receive a credit for any of the
following items to the extent the same are accrued but unpaid as of the Cutoff
Time (whether or not due, owing or delinquent as of the Cutoff Time), and
Seller shall receive a credit to the extent any of the following items shall
have been paid prior to the Closing Date to the extent the payment thereof
relates to any period of time after the Cutoff Time.
(a) GUEST LEDGER RECEIVABLES; FOOD AND BEVERAGE RECEIVABLES.
Guest Ledger Receivables shall be prorated between Buyer and Seller. Seller
shall receive a credit for all Guest Ledger Receivables for all room nights up
to but not including the room night during which the Cutoff Time occurs, and
Buyer shall be entitled to the amounts of Guest Ledger Receivables for the room
nights after the Cutoff Time. Seller and Buyer shall each receive a credit equal
to one-half of the amount of Guest Ledger Receivables for the full room night
during which the Cutoff Time occurs. All restaurant and bar facilities will be
closed as of the Cutoff Time and Seller shall receive the income from the same
until the Cutoff Time.
(b) TAXES AND ASSESSMENTS. All nondelinquent ad valorem
taxes, special or general assessments, real property taxes, hotel occupancy
tax, water and sewer rents, rates and charges, vault charges, and any municipal
permit fees. If the amount of any such item is not ascertainable on the Closing
Date, the credit therefor shall be based on the most recent available bill and
adjusted as necessary post-closing as contemplated in Section 8.3.
(c) UTILITY CONTRACTS. Telephone and telex contracts and
contracts for the supply of heat, steam, electric power, gas, lighting and any
other utility service, with Seller receiving a credit for all deposits, if any,
made by Seller as security under any such public service contracts if the same
are transferable and provided such deposits remain on deposit for the benefit
of Buyer. Where possible, cutoff readings will be secured for all utilities as
of the cutoff Time. To the extent they are not available, the cost of such
utilities shall be apportioned between the parties on the basis of the latest
actual (not estimated) bill for such service and adjusted as necessary
post-closing as contemplated in Section 8.3.
(d) HOTEL CONTRACTS AND TENANT LEASES. Any amounts prepaid
or payable under any Hotel Contracts or Tenant Leases. All amounts known to be
due under Hotel Contracts with reference to periods prior to the Closing Date
shall be paid by Seller or credited to Buyer as a reduction of the Purchase
Price. Rents (including percentage rents) and other payments due under Tenant
Leases shall be adjusted at Closing based on current information. Any
additional amounts not known and any final calculation of percentage rent not
available at the Closing will be part of the
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post-closing adjustments contemplated in Section 8.3. Any amounts due Seller on
account of reimbursement of tenant improvements cost shall be credited to
Seller and the right of reimbursement shall be assigned to Buyer.
(e) LICENSE FEES. Fees paid for Permits (except for
Excluded Permits) in the current period.
(f) OTHER HOTEL MATTERS.
(I) Buyer shall receive a credit for advance
payments, if any, under Bookings to the extent the Bookings
relate to a period after the Cutoff Time and have been incurred
in accordance with the terms hereof.
(II) Vending machine monies will be removed by
Seller as of the Cutoff Time for the benefit of Seller.
(g) PETTY CASH FUNDS AND HOUSE BANKS. Buyer shall purchase
and Seller shall sell to Buyer (or receive a credit therefor) all petty cash
funds and cash in house banks at 100% of face value at the Cutoff Time.
(h) SECURITY DEPOSITS. Buyer shall be entitled to a credit
for all security and other deposits held by Seller as of the Cutoff Time with
respect to Tenant Leases and Hotel Contracts.
(i) EMPLOYEE SALARIES. Salaries and benefits paid to the
Hotel Employees to the extent not settled by Seller upon their termination.
(j) CLOSING EXPENSES. Buyer shall pay all costs of title
insurance, escrow fees, transfer taxes (including both sales and real property
transfer taxes, if any) incidental to the Closing.
(k) OTHER. Such other items as are provided for in this
Agreement or as are normally prorated and adjusted in the sale of real property
in California or of a hotel.
8.2 RECEIVABLES. Seller shall receive a credit for the receivables
of the Hotel that are aged sixty (60) days or less as of the Cutoff Time, other
than Guest Ledger Receivables for which separate provision is made. Seller
shall retain and shall be entitled to collect receivables aged more than sixty
(60) days. In the event that Buyer is unable to collect receivables aged more
than thirty (30) days but less than or equal to sixty (60) days within thirty
(30) days after Closing, Buyer may at its option require Seller to repurchase
such uncollected receivables at face value for collection by Seller. Amounts
received by Buyer on account of receivables shall be applied first to the
oldest aged receivables due from the payee and thereafter to the receivables
next in age.
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8.3 CLOSING STATEMENT. Seller shall cause its accounting staff
("SELLER'S ACCOUNTANTS") to make such inventories, examinations and audits of
the Hotel, and of the books and records of the Hotel, as Seller's Accountants
may deem necessary to make the adjustments and prorations and allocations of
Purchase Price among the assets being transferred required under this Section 8
or under any other provisions of this Agreement or the Escrow Agreement. Buyer
or its designated representatives may be present at such inventories,
examinations and audits of the Hotel. Based upon such audits and inventories,
Seller's Accountants will prepare and deliver to the parties for review no
later than five (5) days prior to the Closing a closing statement (THE "CLOSING
STATEMENT"). The Closing Statement shall contain Seller's best estimate of the
amounts of the items requiring the prorations and adjustments in this
Agreement. The amounts set forth on the Closing Statement shall be the basis
upon which the prorations and adjustments provided for herein shall be made at
the Closing.
Seller's Accountants' allocation of Purchase Price shall be binding and
conclusive on the parties. In the event that such allocation results in
valuations unacceptable in regard to Buyer's status as a real estate investment
trust, Buyer may direct performance of a portion of the deliveries under this
Agreement to a designee pursuant to Section 11.7. The Closing Statement shall
otherwise be binding and conclusive on all parties hereto to the extent of the
items covered by the Closing Statement, unless within thirty (30) days after
receipt by Buyer of the Closing Statement, either Buyer or Seller notifies the
other that it disputes such Closing Statement, and specifies in reasonable
detail the items and reasons that it so disputes. The parties shall attempt to
resolve such dispute. If such dispute is not resolved within forty-five (45)
days after delivery of the original notice by Buyer or Seller, then the parties
shall submit such dispute to Pannell Kerr Foster, 425 California Street, Suite
1600, San Francisco, California 94104 ("OUTSIDE ACCOUNTANTS"), and the
determination of the Outside Accountants, which shall be made within a period
of fifteen (15) days after such submittal by the parties, shall be conclusive.
The fees and expenses of the Outside Accountants shall be paid equally by Buyer
and Seller.
Within ninety (90) days following the Closing Date, Seller's Accountants
shall deliver a final report to Buyer setting forth the final determination of
all items to be included on the Closing Statement. In the event that, at any
time within said 90-day period, either party discovers any items which should
have been included in the Closing Statement but were omitted therefrom, such
items shall be adjusted in the same manner as if their existence had been known
at the time of the preparation of the Closing Statement. The foregoing
limitation shall not apply to any item which, by its nature, cannot be finally
determined within the period specified. However, no further adjustments shall
be made beyond nine (9) months after the Closing Date.
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9. COVENANTS AND CONDITIONS TO OBLIGATIONS.
9.1 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of Seller to
close the transaction and deliver the documents and instruments required
hereunder shall be subject to satisfaction in full of the following conditions
("SELLER'S CONDITIONS") on or before the Closing Date:
(a) Buyer shall have performed on or before the Closing
Date the obligations required to be performed by it on or before such Closing
Date, including all of the obligations of the Escrow Agreement.
(b) Buyer shall have completed all the deliveries and
actions required to be made by Buyer under section 7.4 and elsewhere in this
Agreement.
(c) There shall be no material breach of any of Buyer's
representations, warranties and covenants set forth in this Agreement.
(d) There shall not then be any pending or, to the
knowledge of either Buyer or Seller, threatened Litigation which, if determined
adversely, would restrain the consummation of any of the transactions referred
to herein, or declare illegal, invalid or nonbinding any of the covenants or
obligations of the parties herein.
(e) Title Company shall be committed to issue to Buyer a
policy of title insurance insuring title in the amount of the Purchase Price
subject only to the Permitted Exceptions ("TITLE POLICY").
(f) Buyer shall have produced evidence reasonably
satisfactory to Seller of compliance with Hart-Scott-Rodino Act requirements
or the non-applicability thereof to this transaction.
(g) Each entity named as Buyer under the Other Purchase
Agreement shall have satisfied all of its obligations, and all of Seller's
Conditions to Closing shall have been met, under each of the Other Purchase
Agreements.
Seller's Conditions are solely for the benefit of Seller and may be
waived only by Seller. Any such waiver or waivers shall be in writing and shall
be delivered to Buyer. Seller shall not act or fail to act for the purpose of
permitting or causing any of Seller's Conditions to fail. If any of Seller's
Conditions is not satisfied or has not been so waived by notice to Buyer prior
to the Scheduled Closing Date, Seller shall give written notice to Buyer
describing the condition or conditions that have not been satisfied or waived
and either Seller or Buyer by notice to the other party shall be entitled to
postpone the Scheduled Closing Date as provided in Section 7.1 for the purpose
of attempting to satisfy
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such condition or conditions. Nothing contained in this Agreement shall require
Buyer or Seller to postpone the Scheduled Closing Date or to bring any suit or
other proceeding or, except as otherwise expressly required by this Agreement,
to pay any substantial sum, to satisfy any conditions to Closing.
9.2 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to
make payment of the Purchase Price and other sums provided for herein and to
close the transactions contemplated hereby is subject to satisfaction in full
of each of the following conditions ("BUYER'S CONDITIONS") on or before the
Closing Date:
(a) The representations, warranties and agreements of
Seller contained in Section 3 shall be true and accurate in all material
respects on the Closing Date, as if made on such date. Notwithstanding the
limitations of the Seller's knowledge, the actual existence of the facts as
represented shall be a condition to Buyer's obligation to close the
transactions contemplated hereby.
(b) Seller shall have performed on or before the Closing
Date the obligations required to be performed by it on or before the Closing
Date, including the obligations of the Escrow Agreement.
(c) Seller shall have completed all the deliveries required
to be made by Seller under Section 7.3 and elsewhere in this Agreement.
(d) Title Company shall be committed to issue the Title
Policy to Buyer.
(e) Buyer shall have received an affidavit to the effect
that Seller is not a foreign person for purposes of the withholding provision
of Section 1445 of the Internal Revenue Code of 1986 or, to the extent such
withholding is required, instructions as to the required withholding.
Buyer's Conditions are solely for the benefit of Buyer and may be waived
only by Buyer. Any such waiver or waivers shall be in writing and shall be
delivered to Seller. Buyer shall not act or fail to act for the purpose of
permitting or causing any of Buyer's Conditions to fail. If any of Buyer's
Conditions is not satisfied or has not been so waived by Buyer prior to the
Scheduled Closing Date, Buyer shall give written notice to Seller describing
the condition which has not been satisfied or waived and either Buyer or Seller
by notice to the other party shall be entitled to postpone the Scheduled
Closing Date as provided in Section 7.1 for the purpose of attempting to obtain
satisfaction of such condition or conditions. Nothing contained in this
Agreement shall require Buyer or Seller to postpone the Scheduled Closing Date
or to bring any suit or other proceedings or, except as otherwise expressly
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required by this Agreement, to pay any substantial sum to satisfy any of
Buyer's Conditions.
9.3 REMEDIES.
(a) LIQUIDATED DAMAGES. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, IF THE SALE OF THE PROPERTY TO BUYER IS
NOT CONSUMMATED BY REASON OF BUYER'S DEFAULT OF ITS OBLIGATION TO PURCHASE THE
PROPERTY PURSUANT TO THE TERMS OF THIS AGREEMENT, SELLER SHALL BE ENTITLED TO
RECEIVE AND RETAIN THE DEPOSIT AS SELLER'S SOLE AND EXCLUSIVE REMEDY. THE
PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX THE
ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S FAILURE TO COMPLETE
THE PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT, AND THAT UNDER THE
CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES
PROVIDED FOR IN THIS SECTION REPRESENT A REASONABLE ESTIMATE OF THE DAMAGES
WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE, PROVIDED, HOWEVER, THAT
THIS PROVISION SHALL NOT WAIVE OR AFFECT SELLER'S RIGHTS AND BUYER'S
OBLIGATIONS UNDER SECTION 10.1(b). NOTWITHSTANDING THE FOREGOING, IF BUYER
INTERFERES WITH OR MAKES ANY ATTEMPT TO INTERFERE WITH SELLER RECOVERING THE
DEPOSIT HELD BY THE ESCROW HOLDER, INCLUDING, WITHOUT LIMITATION, GIVING ANY
NOTICE OF INSTRUCTIONS TO ESCROW HOLDER NOT TO DELIVER THE DEPOSIT TO SELLER,
SELLER SHALL HAVE THE ELECTION TO NULLIFY THE TERMS AND PROVISIONS OF THIS
SECTION 9.3(a) BY GIVING WRITTEN NOTICE TO BUYER, WHEREUPON THIS SECTION 9.3(a)
SHALL BE DEEMED NULL AND VOID, AND SELLER SHALL HAVE ALL RIGHTS AND REMEDIES
AGAINST BUYER PROVIDED AT LAW AND IN EQUITY, AND SELLER SHALL HAVE THE RIGHT TO
REQUIRE THAT BUYER SPECIFICALLY PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT.
THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT
WITH THE LIQUIDATED DAMAGE PROVISIONS CONTAINED IN THIS SECTION.
Seller's Initials Buyer's Initials
________________________ ________________________
(b) BUYER'S RIGHT TO RETURN OF DEPOSIT. Subject to the
terms of the Escrow Agreement, in the event the Closing fails to occur solely
because of Seller's failure to perform Seller's obligations or the failure of
any other condition precedent to Buyer's obligation to close, under this
Agreement, Buyer shall have the right to request return of the Deposit by
written notice sent to the counsel for Seller. Upon such request the counsel
for Seller shall confirm that Seller has received notice and, in the event that
Seller has not commenced action to restrain the return of the Deposit, the
counsel for Seller shall return to Buyer the Deposit, together with all
interest accrued thereon, and any documents and other monies deposited by
Buyer, and Buyer shall have the right to exercise any and all remedies which
Buyer may have
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against Seller, including without limitation, the right to require that Seller
specifically perform its obligations under this Agreement.
9.4 EMPLOYEE OBLIGATIONS. Buyer shall employ after the Cutoff Time
such of the Hotel Employees as required by Section 7.5 on substantially the
same terms and conditions as such Hotel Employees were employed prior to
Closing and assume all liabilities arising under the Employment Agreements
after the Cutoff Time. Nothing in this provision shall be construed to limit
Buyer's right to terminate, at Buyer's sole cost and expense, any Hotel
Employees subsequent to the Cutoff Time, subject to the requirements of
applicable law and Employment Agreements.
9.5 DAMAGE OR DESTRUCTION: CONDEMNATION. In the event of any
casualty loss, damage or destruction prior to the Closing, or any condemnation
of all or a part of the Real Property, resulting in a loss in either event of
more than 25% of the value of the Hotel. Buyer shall have the option of
proceeding to closing with an assignment at Closing of the condemnation or
insurance proceeds, or terminating this Agreement.
9.6 MISCELLANEOUS COVENANTS AND PROVISIONS OF THE PARTIES. In
addition to each of the terms, covenants and conditions herein set forth, the
parties hereby agree as follows:
(a) BROKERAGE. Seller will pay a brokerage commission to
Colliers International Hotel Realty upon and subject to the Closing of the sale
of the Property pursuant to the terms of a separate agreement between Seller
and such broker. Buyer and Seller hereby mutually represent and warrant to one
another that it has not dealt with any other broker or finder in connection
with the transactions contemplated hereby, and each hereby agrees to indemnify,
defend and hold harmless each other of and from any and all manner of claims,
liabilities, loss, damage, attorneys' fees and expenses incurred by the
indemnified party and arising out of, or resulting from, any claim by any such
broker or finder if such representation and warranty herein contained is untrue
or incorrect in any respect.
(b) GUEST BAGGAGE. Any baggage or other property of
departed guests held by Seller may be left at the Hotel for a period not to
exceed ninety (90) days following the Closing Date. After such period, all such
baggage or property will, at the option of Seller, be removed by Seller or
abandoned by Seller and Buyer shall dispose of such baggage in any manner
deemed appropriate by Buyer. Seller hereby indemnifies Buyer against all
claims, losses and liabilities in connection with the holding of such baggage
or other property for such period and the disposal of same by Seller. Buyer
hereby indemnifies Seller against all claims, losses and liabilities in
connection with Buyer's disposal of such baggage. All baggage of guests who are
still in the Hotel on the Closing Date which has been checked with or left in
the care of Seller
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shall be inventoried, sealed and tagged jointly by Seller and Buyer immediately
after the Closing. Buyer hereby indemnifies Seller against all claims, losses
or liabilities with respect to such baggage arising out of the acts or
omissions of Buyer after the Closing. Seller hereby indemnifies Buyer against
all claims, losses or liabilities with respect to such baggage arising out of
the acts or omissions of Seller prior to the Closing.
(c) SAFE DEPOSITS. Immediately after the Closing, Seller
shall send written notice to guests or tenants or other persons who have safe
deposit boxes, advising of the sale of the Hotel to Buyer, and requesting
verification or removal of the contents within five (5) days. The safe deposit
boxes of guests or tenants not responding to said written notice shall be
opened only in the presence of representatives of both Seller and Buyer. The
contents of all boxes opened as aforesaid shall be listed at the time such
boxes are opened, each such list shall be signed by or on behalf of Seller and
Buyer, and Buyer shall not be liable or responsible for any items claimed to
have been in said boxes unless such items are included in such list. Seller
agrees to indemnify and hold harmless Buyer from and against any liability or
responsibility for any items claimed to have been in said boxes but not
included on such list, and Buyer agrees to indemnify and hold Seller harmless
from and against any liability or responsibility for items claimed to have been
in said boxes and included on such list.
(d) INSURANCE. Seller shall keep in full force all
insurance policies relating to the Property or operation of the Hotel until
11:59 p.m. of the Closing Date.
10. OTHER PROVISIONS.
10.1 INDEMNIFICATION.
(a) SELLER'S INDEMNIFICATION. Seller hereby agrees to
indemnify, hold harmless and defend Buyer from and against any and all loss,
damage, claim, cost and expense and any other liability whatsoever, including,
without limitation, reasonable accountants' and attorneys' fees, charges and
costs, incurred by Buyer by reason of (i) Seller's breach of any covenants of
Seller contained in this Agreement which survive the Closing, and (ii), without
limiting the generality of the foregoing, Seller's failure to duly perform and
discharge Retained Liabilities or perform the obligations of Seller under the
Assignment and Assumption, for one (1) year from and after the Closing. Except
for obligations surviving the Closing in accordance with their terms this
indemnity shall terminate and be of no force and effect as of one (1) year
after the Closing Date. The indemnification provided for in the Section 10.1(a)
shall from and after the Closing be the sole remedy for any matters referred to
herein.
(b) BUYER'S INDEMNIFICATION. Buyer hereby agrees to
indemnify, hold harmless and defend Seller from and against any and
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all loss, damage, claim, cost and expense and any other liability whatsoever,
including, without limitation, reasonable accountants' and attorneys' fees,
charges, and costs incurred by Seller by reason of (i) Buyer's breach of any
covenants of Buyer contained in this Agreement which survive the Closing and
(ii), without limiting the generality of the foregoing, Buyer's failure to duly
perform the obligations of Buyer under the Assignment and Assumption at all
times from and after the Closing.
(c) THIRD PARTY CLAIMS. If a claim by a third party is made
against either of the indemnified parties, and if either of the indemnified
parties intends to seek indemnity with respect thereto under this Section 10.1,
such indemnified party shall promptly notify Buyer or Seller, as the case may
be, of such claim. The indemnifying party shall have thirty (30) days after
receipt of the above-mentioned notice to undertake, conduct and control,
through counsel of its own choosing (subject to the consent of the indemnified
party, such consent not to be unreasonably withheld or delayed) and at its
expense, the settlement or defense therefor, and the indemnified party shall
cooperate with it in connection therewith; provided that: (i) the indemnifying
party shall not thereby permit to exist any lien, encumbrance or other adverse
charge upon any asset of any indemnified party (ii) the indemnifying party
shall permit the indemnified party to participate in such settlement or defense
through counsel chosen by the indemnified party, provided that the fees and
expenses of such counsel shall be borne by the indemnified party and (iii) the
indemnifying party shall agree promptly to reimburse the indemnified party for
the full amount of any loss resulting from such claim and all related expenses
incurred by the indemnified party within the limits of this Section 10.1. So
long as the indemnifying party is reasonably contesting any such claim in good
faith, the indemnified party shall not pay or settle any such claim.
Notwithstanding the foregoing, the indemnified party shall have the right to
pay or settle any such claim, provided that in such event they shall waive any
right to indemnity therefor by the indemnifying party. If the indemnifying
party does not notify the indemnified party within thirty days after receipt of
the indemnified party's notice of a claim of indemnity hereunder that it elects
to undertake the defense thereof, the indemnified party shall have the right to
contest, settle or compromise the claim in the exercise of its exclusive
discretion at the expense of the indemnifying party.
(d) SURVIVAL:
(I) The covenants and agreements of Seller contained
in Sections 6.2 and 8 shall survive for one (1) year after the
termination of the obligation as set forth in such sections. The
covenants and agreements of Seller contained in Section 9.6 shall
survive for one year after the Closing. Except as otherwise set
forth in this
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Section, no other covenants set forth in this Agreement shall
survive.
(II) The covenants and agreements of Buyer contained
in Sections 6.2, 8, 9.5, 9.6 and 9.7 and in this Section shall
survive the Closing.
(e) LIMITATION OF LIABILITY. Notwithstanding anything to
the contrary in this Agreement, Seller shall have no liability for any of
Seller's post-closing obligations, including the indemnification obligations
set forth in Section 10.1(c), unless the aggregate amount of the losses under
this Agreement exceeds Thirty Thousand Dollars ($30,000) in which event
liability shall extend only to amounts in excess of Thirty Thousand Dollars
($30,000), provided, however in no event shall such liability exceed One
Hundred Thousand Dollars ($100,000) in the aggregate for all such losses or
liabilities relating to this Agreement or the Hotel.
10.2 OTHER PURCHASE AGREEMENTS.
(a) SELLER'S OBLIGATION TO CLOSE. Seller's obligations
hereunder are subject to full performance of the obligations of the named
"Buyer" and satisfaction of "Seller's Conditions" under each of the Other
Purchase Agreements and the Escrow Agreement provided however that a
termination of any Other Purchase Agreement pursuant to Section 9.5 thereof
shall not be deemed a failure of performance or satisfaction thereunder. A
postponement of closing under Section 7.1 of any of the Other Purchase
Agreements shall be effective to postpone closing under this Agreement to the
same date as the postponed closing. Nothing contained in this Agreement or any
of the Other Purchase Agreements shall require any party to postpone the
Scheduled Closing Date or to bring any suit or other proceeding or, except as
otherwise expressly required by this Agreement or any of the Other Purchase
Agreements, to pay any substantial sum, to satisfy any conditions to closing
under any of the agreements.
(b) SELLER'S OPTION TO CLOSE. In the event that the named
"Buyer" or its affiliate or assignee elects not to purchase or defaults under
any of the Other Purchase Agreements or the Escrow Agreement, such election or
default shall not affect Seller's right to require a closing under this
Agreement. Seller may elect to waive such failure to purchase under any of the
Other Purchase Agreements and enforce Seller's right to a closing hereunder.
(c) SELLER'S LIABILITY. Notwithstanding Seller's right not
to close in the event of a failure to close under any of the other Purchase
Agreements, Seller's liability under this Agreement is its individual and
separate responsibility and is not several or joint with the liability of the
selling parties under the Other Purchase Agreements. In the event of any
default by a selling
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party under, or failure of a Buyer's condition under, any of the Other Purchase
Agreements, Seller under this Agreement shall have no responsibility or
liability therefore.
11. MISCELLANEOUS.
11.1 NOTICES. All notices, consents or waivers required or permitted
in this Agreement shall be in writing and be deemed to have been duly given (a)
when delivered to the recipient personally; (b) 72 hours after being mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the recipient as set forth below; or (c) upon electronically
verified transmission by telecopier, whichever is earlier. A party may change
its address for notice by such notice.
If to Seller: GUS Enterprises - VIII
c/o Gund Investment Corporation
14 Nassau Street
P.O. Box 449
Princeton, New Jersey 08542-0449
Fax: (609) 921-7697
Attention: David P. Prescott
With a copy to: Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Fax: (212) 755-7306
Attention: K.C. McDaniel
If to Buyer: RFS Hotel Investors, Inc.
889 Ridge Lake Boulevard, Suite 100
Memphis, Tennessee 38120
Fax: (901) 767-5156
Attention: Michael J. Pascal
With a copy to: Wyatt, Tarrant & Combs
6075 Poplar Avenue, Suite 650
Memphis, Tennessee 38119
Fax: (901) 537-1010
Attention: W. Joseph Aldridge
11.2 TIME. Time is of the essence of this Agreement with respect to
the Scheduled Closing Date subject to any provisions provided for herein for
extension thereof, and the notice periods set forth in Section 11.1, and for
the termination of post-closing claim periods.
11.3 ENTIRE AGREEMENT. This Agreement, including the Exhibits,
Offering Materials and other documents referred to herein, contains the entire
agreement between the parties pertaining to the subject matter hereof and fully
supersedes all prior agreements and understandings between the parties
pertaining to such subject matter. No change in or amendment to this Agreement
shall be valid
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unless set forth in writing and signed by all of the parties after the
execution of this Agreement.
11.4 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of California pertaining to contracts
made and to be performed solely in the State of California.
11.5 COUNTERPARTS. This Agreement may be executed in several
counterparts, and all such executed counterparts shall constitute the same
agreement. It shall be necessary to account for only one such counterpart in
proving this Agreement.
11.6 READINGS, GENDER AND NUMBER. The section headings used in this
Agreement are intended solely for convenience of reference and shall not
amplify, limit, modify or otherwise be used in the interpretation of any
provision of this Agreement. The masculine, feminine or neuter gender and the
singular or plural number shall be deemed to include the others whenever the
context so indicates or requires.
11.7 BINDING AGREEMENT; ASSIGNMENT. The provisions of this Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto. Neither Seller nor Buyer shall be permitted to
assign all of its rights or obligations under this Agreement without the prior
written consent of the other except as provided in this Section:
(A) BUYER'S RIGHT TO ASSIGN. Buyer may assign all or a part of
its rights and obligations under this Agreement without the prior written
consent of Seller to a wholly-owned subsidiary of or affiliated company wholly
under "common control" with Buyer or to an entity that is or will be lessee of
the Hotel or to an entity that will be a lessor of personal property to the
Hotel, provided, further, that such subsidiary, affiliated or other company is
duly organized, validly existing and in good standing under the law of the
state of its incorporation and at Closing is qualified to do business in the
State of California. For purposes hereof, "control" shall be deemed to mean
ownership of not less than fifty percent (50%) of all of the legal and
equitable interest in any other business entity. Such assignee shall become
Buyer under this Agreement and, upon the written assumption by the new Buyer of
all of the obligations of Buyer under this Agreement, the original Buyer shall
be released therefrom.
(B) SELLER'S RIGHT TO ASSIGN. Seller may assign its rights
hereunder to a qualified intermediary for the purposes of accomplishing an
exchange of properties qualifying for like-kind exchange treatment under
Section 1031 of the Internal Revenue Code (the "Sec. 1031") as set forth below.
In the event Buyer is notified by Seller prior to the Closing Date of Seller's
desire to effectuate an exchange pursuant to Sec. 1031, Buyer shall cooperate
to allow Seller to defer recognition of gain attributable to the
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disposition of the Property for federal income tax purposes by utilizing a
"deferred exchange" for purposes of Treasury Regulations Section 1031(k)-1
through a "qualified intermediary" as described in Treasury Regulation Section
1.1031(k)-1(g)(4). If such election is made and Seller assigns its rights
under this Agreement to the qualified intermediary designated by Seller, such
qualified intermediary shall transfer the Property to Seller in return for the
Purchase Price and other consideration specified herein, all of which shall be
paid directly to the qualified intermediary by Buyer. The election provided
for in this Section 11.7 shall not modify or reduce the obligations of Seller
hereunder, or result in any additional expense to Buyer except to the extent
that expense is reimburseable by Seller. Notwithstanding such assignment,
Seller shall maintain, or shall cause such qualified intermediary to maintain,
a reserve sufficient to perform the obligations of Seller under Section
10.1(e).
11.8 SEVERABILITY. If any provision of this Agreement is determined
by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement shall nonetheless remain in full force and effect.
11.9 EXHIBITS, SCHEDULES AND BOOKS. References in this Agreement to
Exhibits mean the exhibits described in the List of Exhibits attached hereto,
all of which are incorporated by reference into this Agreement. References in
this Agreement to Schedules mean the schedules described in the List of
Schedules attached hereto or included in the Offering Schedules, all of which
are incorporated by reference into this Agreement. References in this Agreement
to Offering Books shall mean the documents and information comprising the books
described in the List of Offering Books attached hereto as Schedule 2.4, all of
which are incorporated by reference into this Agreement.
12. LIMITATION ON RECOURSE. The rights of Buyer hereunder shall be
enforceable solely against the Seller and the Property. In no event shall any
partner, officer, director, shareholder, agent, employee or representative of
Seller or of any affiliate of Seller (the "Exempted Parties") be named or
joined as a party in any enforcement action by Buyer or by an person claiming
by through or
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under Buyer. In no event shall enforcement be sought against the assets of the
Exempted Parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLER:
GUS ENTERPRISES - VIII, a __________
general partnership
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
BUYER:
RFS PARTNERSHIP, L.P.,
a limited partnership
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
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35
LIST OF EXHIBITS
TO
HOTEL PURCHASE AGREEMENT
Exhibit Description
- ------- -----------
A Legal Description of the Land (See Offering Book 7)
B Deed
C Bill of Sale
D Assignment and Assumption
E Calculation of Units/Cash Components of GUS Sales Price
F Investor Questionnaire
G Redemption and Registration Rights Agreement
36
LIST OF SCHEDULES
TO
HOTEL PURCHASE AGREEMENT
Schedule Description
- -------- -----------
2.4 Offering Books
3.3A Bookings
37
EXHIBIT "A"
DESCRIPTION OF THE PROPERTY
38
EXHIBIT "B"
Deed
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
- ------------------------
- ------------------------
- ------------------------
MAIL TAX STATEMENTS TO:
- ------------------------
- ------------------------
- ------------------------
================================================================================
Documentary Transfer Tax: See Separate Transfer
Tax Statement
GRANT DEED
The undersigned grantor declares:
FOR A VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged,______________________, a_________________, hereby GRANTS
to_____________________________, a_________________, all of its interest in and
to all of that certain real property located in the ________________, State of
California, as more particularly described in Exhibit "A" attached hereto and
incorporated herein by this reference.
Dated:____________, 199__
, a
-----------------------------------
-----------------------------------
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
39
STATE OF CALIFORNIA )
)
COUNTY OF ___________________ )
On ________, 199__, before me, the undersigned, a notary public, personally
appeared __________________________ and ______________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon which the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
________________________________________
Name of Notary Public
Notary Expiration Date: ________________ [SEAL]
40
Document No.________________ Date Recorded _________, 199__
STATEMENT OF TAX DUE AND REQUEST THAT TAX
DECLARATION NOT BE MADE A PART OF THE PERMANENT
RECORDIN THE OFFICE OF THE COUNTY RECORDER
(Pursuant to Section 11932 of the Revenue & Taxation Code)
To Registrar-Recorder County of_____________:
Request is hereby made in accordance with the provisions of the Documentary
Transfer Tax Act that the amount of tax due not be shown on the original
document which names:
_______________________________________, a
__________________________________________
(Grantor)
and
_______________________________________, a
__________________________________________
(Grantee)
The real property described in the accompanying document is located in
____________________________________________________COUNTY, CALIFORNIA.
The amount of tax due on the accompanying document is $_________________.
_______ Computed on full value of property conveyed; OR
_______ Computed on full value less liens and encumbrances remaining at time of
sale.
, a
--------------------------------
-----------------------------------
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
41
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
NOTE: After the permanent record is made, this form will be affixed to the
conveying document and returned with it.
42
EXHIBIT "C"
Bill of Sale
For good and valuable consideration, the receipt of which is
hereby acknowledged,_____________________________________ , a__________________
_______________________________________________________________________________
_____ ("Seller"), hereby conveys to __________________________________________,
a ("Buyer"), free and clear of any and all liens, claims, and encumbrances, all
of the personal property (the "Personal Property") owned by Seller utilized in
connection with the ownership, maintenance and operation of that certain
improved real property commonly known as _____________________________________,
____________________________________ , California and more particularly
described on Exhibit A hereto (the "Property"), including without limitation
that personal property more particularly described on Exhibit B hereto. This
conveyance is made concurrently with and as an incident to the conveyance of the
Property by Seller to Buyer, and is effective for all purposes as of the date of
such conveyance.
Dated:____________, 199__
, a
--------------------------------
-----------------------------------
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
43
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
44
EXHIBIT D
Assignment and Assumption
This Assignment and Assumption is made as of January __, 1997 by
and between GUS ENTERPRISES - ____, a California [limited] partnership
("SELLER") and RFS PARTNERSHIP, L.P., a limited partnership ("BUYER") pursuant
to Section 7.3(b) of that certain HOTEL PURCHASE AGREEMENT between them dated
as of December __, 1996. Terms used herein shall have the meanings assigned in
that Hotel Purchase Agreement. The parties agree as follows:
1. Seller hereby assigns all of its right, title and interest
arising from and after the date hereof in and to all Hotel Contracts, Tenant
Leases, Bookings, Permits (other than Excluded Permits), and other Miscellaneous
Hotel Assets existing in connection with the Hotel.
2. Buyer hereby assumes and agrees to perform all obligations of
Seller arising from and after the date hereof under the Hotel Contracts, Tenant
Leases, Bookings, Permits (other than Excluded Permits), and other Miscellaneous
Hotel Assets disclosed in the Offering Materials and the Schedules of the Hotel
Purchase Agreement. Buyer does not hereby assume, and shall have no obligation
to perform and disclosed obligations arising under Hotel Contracts, Tenant
Leases, Bookings, Permits (other than Excluded Permits), and other Miscellaneous
Hotel Assets not disclosed in the Offering Materials and the Schedules of the
Hotel Purchase Agreement.
3. The assignment made by this Assignment and Assumption is in
addition and supplemental to conveyances made by the Deed.
IN WITNESS OF their agreement the parties have executed this
Assignment and Assumption as of the date first written above.
___________________________
Seller
___________________________
Buyer
45
EXHIBIT E
Calculation of Units/Cash Components of GUS Sales Prices
The Hotel Purchase Agreements contain in Section 2.3(c) a formula to
determine the mix of cash and units, recognizing that the units bear a premium
to the cash. The following calculation will determine the mix of cash and
units. These steps need to be taken with respect to each property at first and
then as to the aggregate.
1. Begin with the cash purchase price for each property as set forth in
Section 2.2 of each of the agreements.
2. Subtract cash amount specified by the seller for such property.
3. The result is the amount, expressed in cash, to be converted into RFS
units according to the Hotel Purchase Agreement formula, the methodology
for which is set forth in steps #4 through #7.
4. To determine the number of units, first determine the Average Price.
(See Average Price definition in Hotel Purchase Agreement.)
5. Divide the amount from step #3 by the Average Price.
6. The result is the number of units to be received for each property. To
the extent there is a fractional unit, multiply the fraction by the
average ten-day closing price that was used to calculate the Average
Price, without regard to any discount, and add the amount to the cash
price specified in #2.
7. If the amount determined under step #4 is less than 14.34, then the
maximum number of units to be delivered shall be 3,016,666 multiplied by
the amount expressed in cash in step #3, divided by $45,250,000.
8. Once the mix of cash and units is determined for all of the properties,
add the number of units from all the properties. If the number of units
is more than the maximum number under step #7, reduce the number of units
to be delivered each property pro rata in the proportion its sale price
bears to the total sale price of properties taking units, until the
aggregate number of units does not exceed such maximum number. Multiply
the number of units due under step #6 in excess of such maximum number by
the average ten-day closing price that was used to calculate the Average
Price, without regard to any discount, and add to the cash purchase price
of the appropriate properties.
9. Total cash paid for all properties should not be less than $45,250,000.
46
SCHEDULE 2.4
LIST OF OFFERING BOOKS
TO
HOTEL PURCHASE AGREEMENT
Book Contents
- ---- --------
2 Licenses and Permits/Contracts
5 Portfolio Insurance and Pending Litigation
6 Portfolio - Employee Health Plans and Hourly Payroll Schedule
7 Portfolio -- Property Tax Statements/Sheraton Property
Inspections/Preliminary Title Reports/Marketing Plans/Purchase
and Sale Agreement/Letter of Intent/Sunnyvale Easement Notice
X Operational Financial Statement Package