Exhibit 10.1
PURCHASE AND SALE AGREEMENT AND
ESCROW INSTRUCTIONS
between
The parties designated on Schedule
A
as Seller
and
INNKEEPERS USA LIMITED PARTNERSHIP,
a Virginia limited partnership
as Purchaser
July 21, 2006
Hilton Ontario Airport
Hilton Suites Anaheim
Residence Inn by Marriott - Garden
Grove
Residence Inn by Marriott –
Mission Valley
PURCHASE AND SALE AGREEMENT AND
ESCROW INSTRUCTIONS
This PURCHASE AND SALE AGREEMENT AND
ESCROW INSTRUCTIONS (“ Agreement ”) is dated
this 21st day of July, 2006 (“ Effective Date
”), and is made by and between each of the parties named on
Schedule A hereto (each, individually, “ Seller
” and, collectively, “ Sellers ”), and
INNKEEPERS USA LIMITED PARTNERSHIP, a Virginia limited partnership
(“ Purchaser ”).
RECITALS
A. Sellers are the owners of all of
the Properties, with the specific owner of each Property as set
forth on Schedule A .
B. Purchaser desires to purchase all
of the Properties and to acquire all of Sellers’ respective
right, title and interest in and to the Properties, on the terms
and conditions set forth in this Agreement.
C. Sellers desire to sell to
Purchaser all of the Properties and to convey to Purchaser all of
their respective right, title and interest in the Properties, on
the terms and conditions set forth in this Agreement.
D. All capitalized terms used in
this Agreement and not otherwise defined shall have the meanings
ascribed to such terms in Article I.
AGREEMENT
NOW, THEREFORE, for valuable
consideration, including the promises, covenants, representations
and warranties hereinafter set forth, the receipt and adequacy of
which are hereby acknowledged, the parties, intending to be legally
and equitably bound, agree as follows.
I.
DEFINITIONS
As used in this Agreement, the
following terms have the meanings ascribed to them in this Article
I:
“ Alcoholic Beverages
.” With respect to each Property, all unopened wine, beer and
other alcoholic beverages located at the Real Property and held for
consumption and/or sale in the operation of the Hotel.
“ Assignment of
Contracts .” As set forth in Section 5.2(d)
hereof.
“ Assignment of
Intangibles .” As set forth in Section 5.2(c)
hereof.
“ Bill of Sale .”
As set forth in Section 5.2(b) hereof.
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“ Bookings .”
With respect to each Property, all contracts or reservations for
the use or occupancy of guest rooms, meeting rooms and/or banquet
facilities of the Hotel for periods on and after the Closing Date
which are made in Seller’s ordinary course of business for
the Hotel.
“ Casualty .” As
set forth in Section 12.13.1 hereof.
“ Casualty Notice
.” As set forth in Section 12.13.1 hereof.
“ Casualty Renovation
Cost .” As set forth in Section 12.13.1
hereof.
“ Close of Escrow
.” As set forth in Section 5.1 hereof.
“ Closing Date .”
As set forth in Section 5.1 hereof.
“ Contracts .”
With respect to each Property, all leases of furniture and
equipment, all space leases, and all contracts and agreements used
and/or executed in connection with the ownership and/or operation
of the Hotel and/or the Property, as described on Schedule
“C” attached hereto, together with (a) all
contracts, agreements and other obligations terminable on not more
than thirty (30) days prior notice without fee or penalty, (b) all
Bookings, gift certificates, and similar promotional arrangements
entered into by Seller, and (c) all contracts and agreements
entered into by Seller in the ordinary course of business after the
date hereof, but only to the extent expressly permitted, and
disclosed to Purchaser as required, by the terms of this Agreement,
but excluding, in each case, the Franchise Agreement, provided
Purchaser shall have the right to by notice delivered during the
Due Diligence Period to require that Seller terminate or give
notice of termination with respect to any or all Contracts that can
be terminated without penalty, or with penalty if Purchaser agrees
to assume the penalty.
“ Cooperating Party
.” As set forth in Section 12.5 hereof.
“ Cut-Qff Time .”
As set forth in Section 5.5.4 hereof.
“ Due Diligence
Materials .” As set forth in Section 4.3
hereof.
“ Due Diligence Period
.” As set forth in Section 4.3 hereof.
“ Earnest Money Deposit
.” As set forth in Section 2.2.1 hereof.
“ Environmental Damages
.” As set forth in Section 4.4.5(j) hereof.
“ Environmental
Requirements .” As set forth in Section 4.4.5(k)
hereof.
“ Escrow .” As
set forth in Section 3.1 hereof.
“ Escrow Holder
.” Chicago Title Insurance Company
“ Exchangor .” As
set forth in Section 12.15 hereof.
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“ Excluded Assets
.” With respect to each Property, the Proprietary Computer
Systems, the Excluded Documents, cash, cash equivalents, checks and
other funds, including, without limitation, till money, house
banks, Seller’s Accounts Receivable, notes, securities and
other evidence of indebtedness held at the Hotel as of the Cut-Off
Time, and balances on deposit to the credit of Seller with banking
institutions, all of which shall be retained by Seller.
“ Excluded Documents
.” With respect to each Property, all (a) Proprietary
Information, (b) internal memoranda, correspondence, analyses,
documents or reports prepared by or for Seller or any affiliate of
Seller in connection with the sale of the Property or otherwise,
including, without limitation, tax returns or financial statements
of Seller (exclusive of operating statements of the Hotel which
shall be available for review by Purchaser) for or in connection
with its ownership or operation of the Property (but excluding any
historical sales/customer data used in the ordinary course of
business which shall be provided to Purchaser), (c) communications
between Seller or any affiliate and its attorneys or other agents
or representatives, (d) employee personnel files of Seller and
the manager of the Hotel, (e) appraisals, assessments or other
valuations of the Property in the possession of Sellers, (f)
original bills, invoices, receipts and checks relating to expenses
incurred prior to the Cut-Off Time (provided that Purchaser shall
be entitled to copies of such items), and (g) any confidential
or proprietary information of any Seller in Seller’s
possession, in each case however embodied.
“ Existing Indebtedness
.” The debt relating to the HS Anaheim Property, as set forth
in Schedule “B” .
“ Food Inventory
.” With respect to each Property, all unopened food, food
stuffs, menu stock and non-alcoholic beverages located at the Real
Property and held for consumption and/or sale in the operation of
the Hotel.
“ Franchise Agreement
.” With respect to each Property, the franchise agreement to
be entered into by Purchaser with Franchisor at or prior to Closing
or, if an existing franchise agreement is being assumed by
Purchaser pursuant to the election of Franchisor, then the assumed
franchise agreement from and after Closing.
“ Franchisor .”
With respect to each Property, the franchisor having entered into
an existing franchise agreement or which will enter into a new
Franchise Agreement.
“ Good Funds .” A
deposit of cashier’s check, certified funds, or confirmed
wire transfer of funds.
“ Hazardous Materials
.” As set forth in Section 4.4.5(l) hereof.
“ Hotel .” With
respect to each Property, the hospitality business (including
restaurant and lounge services and businesses) operated and
conducted by Seller on the Real Property.
“ HS Anaheim PIP
.” That certain Property Improvement Plan, dated
August 17, 2004 issued by the Franchisor for the HS Anaheim
Property with respect to that Property.
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“ HS Anaheim PIP Escrow
Agreement .” With respect to the Hilton Suites Anaheim
Property, an escrow agreement in the form of Exhibit L pursuant to
which Seller of the Hilton Suites Anaheim Property will deposit
funds for the completion of work necessary to comply with the HS
Anaheim PIP.
“ HS Anaheim Property
.” The Property branded as a Hilton Suites Hotel located in
Anaheim, California and owned by RLJ Anaheim Suites Hotel, L.P. and
RLJ Anaheim Suites Hotel Lessee, L.P.
“ Improvements .”
With respect to each Property, the buildings, structures, and other
permanent improvements located on the Land, including, without
limitation, electrical distribution systems, HVAC systems,
walkways, driveways, parking lots, recreational facilities,
plumbing, swimming pool, lighting, and mechanical equipment and
fixtures installed thereon, and all rights, benefits and privileges
appurtenant thereto.
“ Intangible Property
.” With respect to each Property, all (a) fictitious
business names and logos used by Seller in the operation of the
Hotel and which are identified exclusively with the Hotel, but
excluding the franchise proprietary names, (b) local telephone
and facsimile exchange numbers identified exclusively with the
Hotel, (c) - transferable certificates (including the Certificate
of Occupancy for the Real Property), licenses (including liquor
licenses, to the extent transferable), permits and warranties now
in effect with respect to the Property (specifically excluding,
however the franchise name for the Hotel) at no cost to Seller,
(d) internet sites and names associated with each hotel
(URLs), (e) plans, specifications and surveys and (f) all
other intangible property located at the Real Property and used by
Seller exclusively in connection with the ownership and operation
of the Hotel, but excluding the Excluded Assets.
“ Intermediary .”
As set forth in Section 12.15 hereof.
“ Inventory .”
With respect to each Property, all unopened operating inventories,
materials and supplies used in connection with the operation of the
Hotel and located thereat, including linens, bath towels, paper
goods and guest supplies, and all gift shop inventory owned by
Seller, but excluding the Alcoholic Beverages.
“ Land .” With
respect to each Property, the land, as more particularly described
on Exhibit “B” attached hereto and upon which
the Improvements are located, including all easements,
rights-of-way, strips, zones, licenses, transferable hereditaments,
privileges, tenements and appurtenants belonging to the Land
including any development rights, water rights and mineral rights,
and any right or interest in any open or proposed highways,
streets, roads, avenues, alleys, easements, strips, gores and
rights-of-way in, across, in front of, contiguous to, abutting or
adjoining the Land, and other rights and benefits running with the
Land and/or the owner of the Land.
“ Lender Approvals
.” As set forth in Section 2.5 hereof.
“ Liabilities .”
As set forth in Section 12.15 hereof.
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“ Liquor Licenses
.” With respect to each Property, the liquor licenses
relating to the operation of the restaurant and lounge businesses
at the Real Property, as described in Section 2.4
hereof.
“ Non-Foreign Affidavit
.” As set forth in Section 5.2(g) hereof.
“ Notice .” As
set forth in Article XI hereof.
“ Ontario PIP .”
That certain Property Improvement Plan, dated August 17, 2005
as revised on June 8, 2006 issued by the Franchisor for the
Ontario Hotel with respect to that Hotel, which is currently being
further updated by Franchisor.
“ Ontario PIP Escrow
Agreement .” With respect to the Ontario Property, an
escrow agreement in the form of Exhibit L pursuant to which Seller
of the Ontario Property will deposit funds for the completion of
work necessary to comply with the Ontario PIP.
“ Ontario Property
.” The Property located in Ontario, California and owned by
RLJ Ontario Hotel, L.P. and RLJ Ontario Hotel Lessee,
L.P.
“ Opening of Escrow
.” As set forth in Section 3.1 hereof.
“ Permits .” As
set forth in Section 4.4.5(a) hereof.
“ Permitted Exceptions
.” As set forth in Section 4.2 hereof.
“ Personal Property
.” With respect to each Property, all (a) keys and
combinations to all doors, cabinets, enclosures and other locks on
or about the Real Property, (b) furniture, equipment,
appliances, televisions, telephone systems, artwork, machinery,
tools, trade fixtures, linens, towels, utensils, china, glassware,
and theme park tickets and other personal property owned by Seller,
located on the Real Property, including those used in the operation
of any restaurants and other ancillary hotel operations, and which
are used exclusively in connection with the operation of the Hotel
and/or the Real Property, (c) copies of files maintained or
generated by Seller and/or Seller’s Hotel manager in the
course of, and related to, the operation of the Hotel (excluding
the Excluded Documents and other materials proprietary to Seller)
which are located on the Real Property, (d) the Restaurant
Equipment, (e) the Food Inventory, (f) any vehicles owned
by Seller and used in the operation of the Hotel, and (g) all
other personal property located at the Real Property with respect
to which Seller is the owner thereof and which is used by Seller
exclusively in connection with the ownership and operation of the
Hotel and/or the Real Property; but excluding, however,
(i) the Alcoholic Beverages, (ii) the Excluded Assets,
(iii) the personal property owned by any tenant or guest on
the Real Property, (iv) the Liquor Licenses, (v) all
refunds and claims for refunds for real property and personal
property taxes in connection with the Property for any period prior
to the Close of Escrow, and (vi) all tax and utilities and
other deposits.
“ Physical Condition
.” A structural or environmental defect or defects identified
by an independent and qualified structural or environmental
consultant (“ Consultant ”) in a property
condition assessment report or an environmental site assessment
report issued by such Consultant (either, an “ Inspection
Report ”).
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“ Property .”
With respect to each Seller, the Improvements, the Hotel, the
Personal Property, the Inventory, and the Intangible Property owned
by such Seller.
“ Proprietary Computer
Systems .” With respect to each Property, the computer
software, hardware, programs, processes and procedures set forth
for such Property on Schedule “C” attached
hereto.
“ Proprietary
Information .” As set forth in Section 12.18
hereof.
“ Purchase Price
.” As set forth in Section 2.2 hereof.
“ Real Property
.” With respect to each Property, the Land and the
Improvements.
“ Regulations .”
As set forth in Section 4.4.5(a) hereof.
“ Reports . As set
forth in Section 4.4.5(e) hereof.
“ Restaurant Equipment
.” With respect to each Property, all equipment, furniture,
fixtures, utensils, glassware, silverware and china used in
connection with the operation of all restaurants and lounges on the
Real Property.
“ Seller’s Accounts
Receivable .” With respect to each Property, all accounts
receivable and other sums owing Seller in connection with the
operation of the Hotel existing on and prior to the Close of
Escrow.
“ Survey .” As
set forth in Section 4.2 hereof.
“ Title Commitment
.” As set forth in Section 4.1 hereof.
“ Title Insurer
.” Chicago Title Insurance Company
700 South Flower
Street,
Los Angeles, CA
90017
“ Title Policy .”
As set forth in Section 4.2 hereof.
“ WARN Act .” As
set forth in Section 6.3 hereof.
II.
SALE AND PURCHASE OF
PROPERTY
2.1 Purchase of Property . As
of the Close of Escrow, and subject to the terms and conditions of
this Agreement, each Seller shall sell, assign, convey, transfer
and deliver to Purchaser, and Purchaser shall purchase and acquire
from each Seller, such Seller’s fee title in
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the Improvements, good and marketable title in
the Land and the Personal Property and the Inventory, and all of
such Seller’s right, title and interest in and to the
Contracts, and the Intangible Property, free and clear of all
monetary liens and encumbrances (other than the Contracts and the
Permitted Exceptions), at the purchase price provided in
Section 2.2 hereof.
2.2 Purchase Price and Terms of
Payment . The aggregate purchase price for the Properties
(“ Purchase Price ”) shall be Two Hundred
Fifteen Million Dollars ($215,000,000), allocated as indicated on
Schedule A-l, reduced by an amount equal to the purchase price for
the Liquor Licenses, and shall consist of and be payable as
follows:
2.2.1 Earnest Money Deposit .
Within three (3) business days following the Effective Date,
Purchaser shall deliver to Escrow Holder, in Good Funds, the sum of
One Million Dollars ($1,000,000) (together with all interest
accrued thereon, the “ Earnest Money Deposit ”).
The Earnest Money Deposit shall be fully refundable to Purchaser if
Purchaser elects to terminate this Agreement for any reason on or
before the 14 th day following the Effective Date
(“ General Review Period ”). If Purchaser has
not elected to terminate this Agreement and cancel the Escrow prior
to the end of the General Review Period, then Purchaser shall
increase the Earnest Money Deposit to Five Million Dollars
($5,000,000) (without regard to any interest earnings, provided
that any interest earned thereon shall become part of the Earnest
Money Deposit) by delivery to Escrow Holder of the additional sum
of Four Million Dollars ($4,000,000) in Good Funds. The Earnest
Money Deposit shall thereafter be refundable on or prior to the end
of the Due Diligence Period (as defined in Section 4.3.1 of
this Agreement) only as and to the extent provided in
Section 4.4 of this Agreement. Upon expiration of the Due
Diligence Period, the Earnest Money Deposit shall thereafter be
non-refundable to Purchaser, except (a) in the event of a
material default by Seller of its obligations under this Agreement
that is not cured within any applicable cure period provided in
this Agreement, (b) upon the failure of a condition precedent
to Purchaser’s obligations as set forth in this Agreement, or
(c) as otherwise specifically provided in this Agreement. The
Earnest Money Deposit shall be applied to the Purchaser Price on
the Closing Date.
2.2.2 Existing Indebtedness .
With respect to the HS Anaheim Property, Purchaser shall assume, at
its sole cost and expense, the Existing Indebtedness, if any, and
the principal balance thereof outstanding as of the Cut-Off Time
shall be credited to the Purchase Price. In connection therewith,
it shall be a condition of such assumption that Seller and any
guarantors be released from all liability and recourse under the
Existing Indebtedness for all periods after the Closing Date, and
Purchaser agrees to perform and satisfy all obligations required of
Purchaser by the holder of the Existing Indebtedness for such
assumption and release of Seller and guarantors thereunder,
provided (i) that Purchaser shall only be required to use
commercially reasonably efforts to obtain the lender’s
approval of such assumption and shall not be required to assume the
Existing Indebtedness on terms materially different than the
currently existing terms thereof and (ii) that Seller shall
cooperate as reasonably required to obtain Lender’s approval
and release.
2.2.3 Balance of Purchase
Price . Not later than 11:00 a.m. California time on the
business day immediately preceding the Closing Date, Purchaser
shall deposit with Escrow Holder, in Good Funds, the balance of the
Purchase Price, reduced or increased by such amounts
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required to take into account by such
prorations, credits, costs or other adjustments which are required
by this Agreement and which can be computed and determined as of
the time for the required deposit hereunder.
2.3 Assumption of the
Contracts . As additional consideration, Purchaser shall, on
and as of the Close of Escrow, at its sole cost and expense, assume
and agree to pay all sums and perform, fulfill and comply with all
other covenants and obligations which are to be paid, performed and
complied with by Sellers under the Contracts, that Purchaser is,
pursuant to the provisions of this Agreement, required to assume,
which first arise or accrue on and after the Closing
Date.
2.4 Liquor Licenses and Alcoholic
Beverages . The Liquor Licenses and the Alcoholic Beverages
located at the Hotels shall be conveyed to Purchaser (or its
designee) as permitted pursuant to California law. The purchase
price (the “ Liquor License Purchase Price ”)
for the Liquor Licenses shall be the amount of $25,000.00 for each
Hotel.
2.4.1 Purchaser shall, in accordance
with California law, use good faith efforts to cause, on or before
the Closing Date (a) the transfer of the Liquor Licenses to
Purchaser (or to another entity designated by Purchaser) and/or
(b) a temporary liquor license to issue for the Hotel
(effective as of the Closing Date). Seller and Purchaser shall
fully cooperate with each other in connection with said transfer of
the Liquor Licenses, including, without limitation, submitting all
necessary applications with the State of California Department of
Alcoholic Beverage Control and the opening, at Purchaser’s
expense, of a separate escrow for each Hotel (each an “
LLT Escrow ”) to effectuate such transfer.
Purchaser shall have sole responsibility for (a) ascertaining
all applicable laws, regulations, and procedures which govern the
transfer of liquor permits and inventories (the “ Liquor
Laws ”), (b) determining and notifying Seller which,
if any, of the Liquor Licenses or inventory of alcoholic beverages
in each Hotel as of the Closing which are used in the operation of
such Hotel (the “ Liquor Assets ”) Seller may
transfer to Purchaser pursuant to such Liquor Laws, and
(c) complying with, processing all applications under, and
satisfying all requirements of all Liquor Laws in connection with
the transfer to Purchaser of the Liquor Assets.
2.4.2 Seller will cooperate in all
reasonable respects (which shall include, without limitation,
supplying information known to Seller and execution of such
documents as may be legally required) with Purchaser in connection
with Purchaser’s application for transfer of the Liquor
License to Purchaser or issuance of new liquor licenses. If
Purchaser is unable to obtain the transfer of the Liquor License or
issuance of new liquor licenses (temporary or permanent) prior to
the Closing, provided that Purchaser has taken all commercially
reasonable measures to obtain cause such transfer or obtain such
new license, then, on the Closing Date, Seller shall cause the
current licensee of the applicable Hotel (“License
Holder”) enter into a lease, concession or management
agreement with Purchaser, to the extent legally permissible,
whereby License Holder shall, for a period not to exceed ninety
(90) days, operate the liquor concessions at the Hotel under
Seller’s or License Holder’s existing liquor license at
no cost or expense to Purchaser pending the transfer or issuance of
the Liquor License to Purchaser. Purchaser shall indemnify, defend
and hold the License Holder harmless from and against any and all
claims, liabilities, costs and expenses (including, without
limitation, reasonable attorneys’
8
fees and costs) arising in connection with such
operation, except to the extent of any negligence or willful
misconduct of License Holder or any of its agents or employees in
such respect, and provide insurance coverage naming License Holder
as an additional named insured.
2.4.3 Upon the opening of each LLT
Escrow, Purchaser shall deposit the Liquor License Purchase Price,
together with amounts being paid for the alcoholic beverage
inventory, with the LLT Escrow, which shall serve as a credit to
the Purchase Price and shall be paid to Seller upon the closing of
the LLT Escrow. Seller and Purchaser acknowledge and agree that the
close of the LLT Escrows or the issuance of a temporary liquor
license for the Hotel pending the completion of the transfer of the
Liquor Licenses and the closing of the LLT Escrows are NOT a
condition to Closing. Purchaser and Seller agree that if this
Agreement is terminated prior to Closing (for whatever reason), or
if Purchaser is unable to cause the Liquor Licenses to be
transferred within six (6) months after the Closing Date,
Purchaser and Seller shall take all necessary actions to cancel the
LLT Escrows and any pending transfer of the Liquor Licenses and
shall cause the monies held in the LLT Escrows to be returned to
Purchaser less escrow costs incurred, if any. The transfer of the
Liquor Licenses in the LLT Escrows shall be made by bills of
sale.
2.5 Assumption of Existing
Indebtedness . On or before five (5) business days after
the date of this Agreement, Sellers will deliver a written request
to the holder of the Existing Indebtedness for its approval of the
sale of the Property to Purchaser, the assumption of the Existing
Indebtedness by Purchaser, the change in the management of the
Hotel, and the termination of the Franchise Agreement contemplated
hereby (collectively, the “ Lender Approvals ”).
Concurrently with such assumption request, and as soon as practical
after a request of the holder of the Existing Indebtedness, Sellers
and Purchaser, as applicable, will each promptly deliver to the
holder of the Existing Indebtedness, any documents concerning such
party, the Hotel or the foregoing described transactions as it may
reasonably request to evaluate whether it will give the Lender
Approvals. At or prior to the Closing Date, Purchaser shall execute
and deliver, or cause to be executed and delivered, any loan
assumption documents in form and content reasonably required by the
holder of the Existing Indebtedness and only if and to the extent
materially consistent with the terms of the Existing Indebtedness,
opinions of Purchaser’s counsel, and such other materials and
documents as may be required by the holder of the Existing
Indebtedness as conditions to the Lender Approvals or to affect the
assumption of the Existing Indebtedness. Sellers and Purchaser will
otherwise take any reasonable steps and shall cooperate to obtain
the Lender Approvals (but at no cost to Sellers) on or before the
Closing Date. Purchaser shall pay all costs associated with the
assumption due to the holder of the Existing
Indebtedness.
III.
ESCROW
3.1 Opening of Escrow.
Purchaser and Sellers shall promptly open an escrow (“
Escrow ”) with Escrow Holder by depositing with Escrow
Holder the Earnest Money Deposit and three (3) copies of this
Agreement duly executed (in counterparts or otherwise) by Sellers
and Purchaser. The time when Escrow Holder so receives the Earnest
Money Deposit and the
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copies of this Agreement, fully executed by the
parties and executes and delivers copies thereof to Sellers and
Purchaser, shall be deemed the “ Opening of Escrow
.” Purchaser and Sellers shall execute and deliver to Escrow
Holder, in a timely fashion, such instruments and funds as are
reasonably necessary to close the Escrow and consummate the sale
and purchase of the Property (or the exchange thereof, if
applicable) in accordance with the terms and provisions of this
Agreement.
3.2 Escrow Holder’s General
Provisions . In the event of any conflict between the
provisions of the typed portion of this Agreement and Escrow
Holder’s General Provisions (if any), the provisions of the
typed portion of this Agreement shall be controlling and the
General Provisions will be deemed amended accordingly.
3.3 Additional Escrow Holder
Requirements . If there are any requirements imposed by Escrow
Holder relating to the duties or obligations of Escrow Holder, or
if Escrow Holder requires any other additional instructions, the
parties agree to make such deletions, substitutions and additions
to this Agreement which do not cause more than a ministerial or
de minimis change to this Agreement or its intent. Any such
changes requested by Escrow Holder shall be subject to written
approval of the parties, which approval shall not be unreasonably
withheld or conditioned.
3.4 Deposit of Funds . Except
as otherwise provided in this Agreement, all funds deposited into
the Escrow by Purchaser shall be immediately deposited by Escrow
Holder into Treasury Bills or other short-term United States
Government obligations, in repurchase contracts for the same, or in
a federally insured money market account, subject to the control of
Escrow Holder in a bank or savings and loan association, or such
other institution approved by Purchaser; provided, however, that
such funds must be readily available as necessary to comply with
the terms of this Agreement and Escrow Holder’s escrow
instructions (including the return of the Earnest Money Deposit, or
any portion thereof then on deposit with Escrow Holder, to
Purchaser in accordance with this Agreement), and for the Escrow to
close within the time specified in Section 5.1 of this
Agreement. Except as may be otherwise specifically provided herein,
interest on amounts placed by Escrow Holder in any such investments
or interest bearing accounts shall accrue to the benefit of
Purchaser, and Purchaser shall promptly provide to Escrow Holder
Purchaser’s Tax Identification Number.
3.5 Release of Funds by Escrow
Holder . Escrow Holder’s obligation, if any, under this
Agreement to release the Earnest Money Deposit, and any other
funds, prior to the Close of Escrow is subject to such funds having
cleared through the bank, savings and loan, or other financial
institution on which such funds are drawn. Escrow Holder shall make
such payments only in strict accordance with the provisions of this
Agreement, and Purchaser and Sellers agree to save and hold Escrow
Holder harmless in disbursing and releasing the funds as specified
in this Agreement. Purchaser and Sellers represent to Escrow Holder
that the release instructions set forth in this Agreement are made
of their own free will, under no duress, and with full
understanding of the consequences thereof, not relying on any
information furnished or statements made by Escrow
Holder.
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IV.
CONDITION OF TITLE
4.1 Title Commitment . Within
five (5) days after the Opening of Escrow, Escrow Holder, at
Purchaser’s sole cost and expense, shall cause to be
furnished to Purchaser, with a copy to Sellers, a current
commitment for a C.L.T.A. Owner’s Policy of Title Insurance
(standard coverage) for each Property issued by Title Insurer
(“ Title Commitment ”) reflecting the status of
title to the Real Property, and all exceptions, including
easements, licenses, restrictions, rights-of-way, leases,
covenants, reservations and other conditions, if any, affecting the
Real Property, which would appear in a C.L.T.A. Owner’s
Policy of Title Insurance (standard coverage) if used, and
committing to issue the C.L.T.A. Owner’s Policy of Title
Insurance (standard coverage) to Purchaser for the Real Property
and the Improvements in the full amount of the Purchase Price.
Accompanying the Title Commitment, Escrow Holder shall cause to be
furnished to Purchaser, to the extent available, legible copies of
the documents affecting the Real Property referred to in the Title
Commitment.
4.2 Title to the Real
Property . Effective as of the Closing Date, but conditioned
upon the Close of Escrow, Title Insurer shall issue to Purchaser
for each Property Title Insurer’s C.L.T.A. Owner’s
Policy of Title Insurance (standard coverage) (“ Title
Policy ”), with the liability under the Title Policies to
be in an aggregate amount equal of the Purchase Price, insuring the
fee title in Real Property as vested in Purchaser subject only to
the following matters affecting title (“ Permitted
Exceptions ”).
(a) AH general and special property
taxes and assessments not yet delinquent, and all improvement and
assessment bonds;
(b) Supplemental taxes assessed as a
result of the sale of the Real Property and the Improvements by
Seller to Purchaser pursuant to the provisions of California
Revenue and Taxation Code Chapter 3.5 (commencing with
Section 75);
(c) Subject to the provisions of
Section 4.4 hereof, all liens, covenants, conditions,
restrictions, easements, rights of way, and all other exceptions to
title as referenced in the Title Commitment, except monetary liens
and encumbrances (except the Existing Indebtedness, but subject to
the provisions of this Section 4.2, and except as caused by
Purchaser) which Seller shall remove at or prior to the Close of
Escrow;
(d) All exceptions to title
disclosed by the Survey (and any updates thereto) of the Real
Property for the Title Policy (including, without limitation,
easements, encroachments and zoning) and not objected to by
Purchaser as provided in this Agreement;
(e) The Existing
Indebtedness;
11
(f) All security interests recorded
in connection with the Contracts, provided all indebtedness
accruing under such security interest up to the Closing Date shall
be paid in full by Seller;
(g) Rights of parties in possession
not shown by the public records, easements or claims of easements
not shown by the public records, but only with respect to those
which Purchaser has actual knowledge thereof;
(h) Governmental laws, codes,
ordinances and restrictions now or hereafter in effect so far as
these affect the Real Property or any part thereof, including,
without limitation, zoning ordinances (and amendments and additions
relating thereto) and the Americans with Disabilities Act of 1990,
as amended;
(i) Any exceptions created by
Purchaser or its agents, employees and/or contractors, including
without limitation, any exceptions arising by reason of the entry
on the Real Property by Purchaser or by its agents, employees
and/or contractors; and
(j) All preprinted exceptions and
exclusions contained in the Title Policy.
At Purchaser’s election, each
Title Policy shall be an A.L.T.A. Owner’s Policy of Title
Insurance (extended coverage); provided, however, that
Purchaser’s ability to obtain an A.L.T.A. Owner’s
Policy of Title Insurance (extended coverage) for each Property
shall not be a condition precedent to Purchaser’s obligations
hereunder and shall not extend the Closing Date or delay the Close
of Escrow. In addition, Purchaser shall have the right to obtain
from Title Insurer such endorsements to the Title Policies and/or
such additional liability protection as Purchaser may elect to
obtain; provided, however, that Purchaser’s ability to obtain
such title endorsements and/or such additional liability protection
shall not be a condition precedent to Purchaser’s obligations
hereunder and shall not extend or delay the Close of Escrow.
Purchaser shall be solely responsible for negotiating with Title
Insurer with respect to such A.L.T.A. Owner’s Policy of Title
Insurance (extended coverage) and/or with respect to such title
endorsements and/or such additional liability protection as may be
requested by Purchaser, if any. With respect to each Property,
Seller will deliver to Purchaser a copy of any survey of the Real
Property in its possession, without warranty, and Purchaser shall
be solely responsible for, and shall assume the risk of, obtaining
a survey (or updating Seller’s survey) of the Real Property
(“ Survey ”) acceptable to Title Insurer for
purposes of issuing the Title.Policy.
4.3 Inspection and Due Diligence
Review .
4.3.1 Purchaser shall have the
right, in its sole discretion, until 3:00 p.m. California time on
the 30 th day following the Effective Date, to
satisfy itself, in its sole and absolute discretion, as to the
condition and extent of the Property (“ Due Diligence
Period ”). Subject to the prior termination of this
Agreement, during the term of this Agreement, Sellers shall
cooperate and provide Purchaser with reasonable and continuing
access to the Real Property or any due diligence materials required
hereunder upon one (1) business day prior Notice to Sellers
for the purpose of Purchaser’s inspection and due diligence
review. In connection with such review, Seller shall deliver to
Purchaser or make available to Purchaser at
12
the respective Hotel during normal business
hours during the Due Diligence Period, all records, including
non-proprietary financial reports, the instruments evidencing the
Contracts pertaining to the Hotels and any other documents which
are in or under Sellers’ or Sellers’ property
manager’s control and relate to the operation of the Hotels
or any other matter affecting the Property (“ Due
Diligence Materials ”), except that Sellers shall have no
obligation to deliver or make available to Purchaser, and Purchaser
shall have no right to review, the Excluded Assets and the Excluded
Documents. Neither Purchaser nor any of its employees, agents or
representatives shall contact or otherwise discuss this transaction
and/or the operation of the Hotels with any on-site employees of
the Hotels; provided, however, that Purchaser may meet with any
Hotel’s General Manager (or other designee) upon not less
than one (1) business day’s Notice to Sellers but only
in the presence of Sellers’ representative (unless
waived).
4.3.2 Purchaser acknowledges that
prior to the date of this Agreement, Sellers have delivered to
Purchaser, or Sellers have provided Purchaser with access to,
certain Due Diligence Materials. Purchaser shall have until the
expiration of the Due Diligence Period to review and approve the
Due Diligence Materials.
4.3.3 During the Due Diligence
Period, Purchaser shall also have the opportunity to conduct a
Phase I environmental audit/study of all Real Property, provided
such Phase I environmental audit/study is not invasive or
intrusive. Any environmental audit/study, other than the Phase I,
proposed to be undertaken by Purchaser shall be subject to
Sellers’ written approval, which shall not be unreasonably
withheld, prior to the commencement thereof. As a condition to any
such consent, Purchaser shall, or shall cause the entity conducting
the Phase I environmental audit/study to, obtain and maintain such
public liability insurance in an amount of Two Million Dollars
($2,000,000) for each Property, naming as an additional insured the
Seller owning such Real Property. At any time after the end of the
General Review Period, but prior to 3:00 p.m. California time on
the last day of the Due Diligence Period, Purchaser shall have the
right in its sole discretion to terminate this Agreement only if it
is not satisfied with the result of any environmental audit/study
or of any structural study of any Hotel, provided that Purchaser
shall provide Seller with a copy of any such audit/study and shall
specify in writing the reason for its dissatisfaction.
4.3.4 Purchaser, at all times, will
conduct such due diligence in compliance with all applicable laws,
and in a manner so as to not cause damage, loss, cost or expense to
Sellers, any Property or the tenants or guests of any Property, and
without unreasonably interfering with or disturbing any employee,
tenant or guest at the Hotels. Other than required by applicable
law, subpoena or other court order, Purchaser shall not reveal to
any governmental agency or any other third party (other than
Purchaser’s employees, agents, attorneys, lenders and
advisors) not approved by Sellers the results of or any other
information acquired pursuant to its inspections. Purchaser will
promptly restore any damage to the Property caused by
Purchaser’s inspection to its condition immediately preceding
such inspections and examinations and will keep the Property free
and clear of any mechanic’s liens or materialmen’s
liens in connection with such inspections and
examinations.
4.3.5 The cost of the inspections
and tests undertaken pursuant to this Section 4.3 shall be
borne solely by Purchaser. Purchaser shall indemnify, protect,
defend and
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hold Sellers, Sellers’ lenders, and their
affiliates, owners, agents and employees harmless from and against
any obligation, liability, claim (including any claim for damage to
property or injury to or death of any persons), lien or
encumbrance, loss, damage, cost or expense, including reasonable
attorneys’ fees, whether or not legal proceedings are
instituted, arising from the acts or omissions of Purchaser or its
agents, employees or contractors occurring in connection with, or
as a result of, such inspections, tests or examinations of any
Property.
4.3.6 Purchaser covenants and agrees
that, until the Close of Escrow, all such information and materials
disclosed and/or delivered to it by Sellers, or Sellers’
agents, employees and representatives, are confidential and
proprietary information, and that Purchaser shall hold the same in
strict confidence, and shall not disclose the same to anyone other
than its employees, potential lenders, and advisors on a
“need-to-know” basis subject to the confidentiality
restrictions set forth herein. Purchaser also agrees that, in the
event the transactions contemplated in this Agreement are not
consummated as provided herein, Purchaser shall return all such
information and documentation, and all copies thereof, to Sellers
promptly upon Sellers’ request.
4.3.7 Except as expressly provided
in this Agreement, Sellers make no representations or warranties as
to the truth, accuracy or completeness of any materials, data or
other information, if any, supplied to Purchaser in connection with
Purchaser’s inspection of the Property (e.g., that such
materials are complete, accurate or the final version thereof, or
that all such materials are in Sellers’ possession). It is
the parties’ express understanding and agreement that any
such materials are to be provided only for Purchaser’s
convenience in making its own examination and determination prior
to the expiration of the Due Diligence Period as to whether it
wishes to purchase the Properties, and, in doing so, Purchaser
shall rely exclusively on its own independent investigation and
evaluation of every aspect of each Property and not on any
materials supplied by Sellers. Purchaser expressly disclaims any
intent to rely on any such materials provided to it by Sellers in
connection with its inspection and agrees that it shall rely solely
on its own independently developed or verified
information.
4.3.8 The obligations of Purchaser
under this Section 4.3 (including its indemnification
obligations) shall survive the Close of Escrow or the termination
of this Agreement.
4.4 Notice of
Non-Satisfaction .
4.4.1 Within ten (10) business
days of receipt of the Title Commitment, Purchaser shall notify
Sellers, by Notice, of any objections to exceptions appearing in
the Title Commitment. Within five (5) business days following
Purchaser’s Notice, Sellers shall notify Purchaser, by
Notice, (i) that Sellers will, prior to the Closing Date,
eliminate the exceptions to which Purchaser objects, or
(ii) that Sellers decline to eliminate specified exceptions.
If Sellers elect not to take such actions as may be required by the
Title Insurer to remove all exceptions to title to which Purchaser
has objected, Purchaser may within three (3) days terminate
this Agreement in its sole discretion and receive a return of the
Earnest Money Deposit. If Sellers agree to take the actions
necessary to eliminate all exceptions to which Purchaser has
objected, then such exceptions shall not be Permitted Exceptions,
Sellers shall cause such exceptions to be
14
removed prior to or at Close of Escrow, and
Seller’s failure to do so shall be a default under this
Agreement. If Purchaser fails to provide Notice of cancellation
within the Due Diligence Period as provided for herein, Purchaser
shall be deemed to have approved the state of the Properties and
the condition of title, and shall be deemed to have waived its
rights to terminate this Agreement by reason of such title
objections and cancel the Escrow by reason of such title objections
under this Section 4.4.
4.4.2 In addition, during the
General Review Period, Purchaser may in its sole and absolute
discretion, for any reason or for no reason, terminate this
Agreement and cancel the Escrow, in which case the Earnest Money
Deposit shall be promptly refunded to Purchaser, and Purchaser
shall return to Sellers all copies (however embodied) of the
information and materials delivered to it by Sellers or
Sellers’ agents, and neither Sellers nor Purchaser shall have
any further obligations under this Agreement (except as otherwise
provided in this Agreement).
4.4.3 If Purchaser determines during
the Due Diligence Period that the Properties have one or more
Physical Conditions, Purchaser shall provide written notice to
Sellers (each such notification being a “Physical
Conditions Notice ”)and, together with the Physical
Conditions Notice, deliver to Sellers, prior to the expiration of
the Due Diligence Period, a copy of the Inspection Report
describing the nature of such Physical Conditions. The Physical
Conditions Notice shall describe (i) the Physical Condition
(together with the appropriate reference to the Inspection Report),
(ii) the Property affected by the Physical Conditions,
(iii) the estimated cost required to correct each such
Physical Condition (as reasonably determined by Purchaser’s
Consultant) and (iv) if applicable, the estimated diminution
in market value of the Property resulting from the Physical
Condition (as reasonably determined by Purchaser). If Purchaser
fails to provide Sellers with a Physical Conditions Notice,
together with the appropriate Inspection Report, during the Due
Diligence Period, Purchaser shall be deemed to have approved such
Property in its “as is, where is” condition as of the
expiration of the Due Diligence Period, in each case subject to
ordinary wear and tear and the representations, warranties, terms
and conditions of this Agreement.
4.4.4 Upon receipt of a Physical
Conditions Notice, together with the appropriate Inspection Report
from Purchaser, Sellers shall have the option, to be exercised by
written notice to Purchaser (“ Physical Conditions
Response ”) given within four (4) business days
following receipt by Sellers of the Physical Conditions Notice,
together with the Inspection Report: (i) to agree to cure the
Physical Conditions prior to Closing (“ Physical
Conditions Cure ”), (ii) to give Purchaser a credit
(“ Physical Conditions Credit ”) against the
Purchase Price at Closing in the amount required to cure the
Physical Conditions; as reasonably determined by Seller and set
forth in the Physical Conditions Response (but subject to
Purchaser’s reasonable review and reasonable approval only if
the amount proposed by Seller is less than 95% of the amount
proposed by Purchaser’s Consultant), or (iii) refuse to
cure any of the Physical Conditions (with the absence of a response
to be deemed an election to refuse to cure any of the Physical
Conditions).
4.4.5 The provisions of
Section 4.4.4 notwithstanding, if, after Sellers have either
not responded to a Physical Condition Notice or have given a
Physical Conditions Response in which Sellers agree to either
(i) make the Physical Conditions Cure, or
(ii) give
15
Purchaser a Physical Conditions Credit in an
amount equal to the cost to cure the Physical Conditions, as
reasonably determined by Seller (but subject to Purchaser’s
reasonable review and reasonable approval of any such amount only
if the amount proposed by Seller is less than 95% of the amount
proposed by Purchaser’s Consultant) and set forth in the
Physical Conditions Response, additional Physical Conditions remain
uncured with respect to any Property, Purchaser shall have the
option either to (x) terminate this Agreement but only if the
remaining Physical Conditions involve a cost to bring any Property
into compliance with law and into a condition that is safe and
suitable for the operation of a Hotel use (“Remediation
Cost”) of (1) $1,000,000 or more with respect to a
single Property or (2) $2,500,000 or more in the aggregate
with respect to all Properties (the “ Threshold
Remediation Costs ”) or (y) consummate the
transactions contemplated hereby, notwithstanding such Physical
Conditions, without any abatement or reduction in the Purchase
Price, except to the extent of any Physical Conditions Credit or
Physical Conditions Cure otherwise agreed to by Seller as provided
above. Purchaser shall make such election by written notice to
Sellers before the expiration of the Due Diligence Period. A
failure by Purchaser to give notice of its election in accordance
with clause (x) of this Section shall be deemed an election by
Purchaser to proceed to Closing. Notwithstanding any provision
herein to the contrary, if Purchaser has elected to terminate this
Agreement pursuant to the provisions of this Section 4.4.5, Seller
shall have the right by notice given to Purchaser by not later than
two (2) business days following such election by Purchaser, to
agree to give Purchaser a credit at Closing in the amount by which
any Remediation Cost exceeds the Threshold Remediation Costs,
whereupon Purchaser’s termination notice shall be deemed
revoked, Purchaser shall proceed to Closing and at Closing Seller
shall provide Purchaser with a credit against the Purchase Price in
the amount of such excess Remediation Costs, including any Physical
Conditions Credit previously agreed to by Seller.
4.5 PIP Escrows . Certain
Property Improvement Plan (“PIP”) work required
pursuant to the respective existing Franchise Agreements for the
Ontario Property (the “ Ontario PIP Work ”) and
the HS Anaheim Property (the “ HS Anaheim PIP Work
”) has not yet been completed. To the extent that any of such
Ontario PIP Work or HS Anaheim PIP Work has not been completed by
the Closing Date, in lieu of Seller completing such Ontario PIP
Work, Seller shall elect, at Seller’s option, either to
(a) provide Purchaser with a credit against the Purchase Price
for the amount of such uncompleted Ontario PIP Work and/or HS
Anaheim PIP Work or (b) (i) assign all of the contracts
for the performance of the Ontario PIP Work to Purchaser, and
(ii) fund the Ontario PIP Work and/or HS Anaheim PIP Work by
depositing 105% of the amount remaining to be funded to complete
such Ontario PIP Work and/or HS Anaheim PIP Work (as reasonably
determined by Seller, based upon existing construction contracts,
purchase orders and other reasonable evidence of the cost of
completing such PIP Work, in an escrow (either the “
Ontario PIP Escrow ” or the “ HS Anaheim PIP
Escrow ”) created pursuant to the Ontario PIP Escrow
Agreement or the HS Anaheim PIP Escrow Agreement, respectively, and
Purchaser shall be entitled to draw upon the respective PIP Escrow
to complete the respective PIP Work; provided ,
however , that, after completion of such respective PIP
Work, any funds in the respective PIP Escrow which have not been
expended shall be promptly returned to Seller, Seller covenants
that any and all of the Anaheim PIP Work and/or Ontario PIP Work
completed by Seller shall be completed in accordance with all
specifications and requirements of the applicable PIP and otherwise
in a good and workmanlike manner. This covenant shall survive the
Closing.
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4.6 Condition of the Property
. SUBJECT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT AND EXCEPTING
ALL REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN
THIS AGREEMENT OR ANY DOCUMENT DELIVERED AT CLOSING:
(a) BY ENTERING INTO THIS AGREEMENT,
PURCHASER HAS AGREED TO, AND WILL, PERFORM (AND PURCHASER
REPRESENTS AND WARRANTS TO SELLERS THAT PURCHASER IS CAPABLE OF
PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT
INVESTIGATION, ANALYSIS AND EVALUATION OF THE LAND AND THE
PROPERTY. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD,
PURCHASER WILL HAVE DETERMINED, SUBJECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT, THAT THE LAND AND THE PROPERTY ARE ACCEPTABLE TO
PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD,
PURCHASER WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT
INSPECTION, INVESTIGATION, ANALYSIS AND EVALUATION OF ALL
INSTRUMENTS, RECORDS AND DOCUMENTS WHICH PURCHASER MAY DETERMINE TO
BE APPROPRIATE OR ADVISABLE TO REVIEW IN CONNECTION WITH
PURCHASER’S ACQUISITION OF THE PROPERTY AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AND PURCHASER WILL EITHER HAVE
DETERMINED, SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT,
THAT THE INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED
THEREBY ARE SATISFACTORY TO PURCHASER, OR TERMINATED THIS AGREEMENT
PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD.
(b) PURCHASER ACKNOWLEDGES THAT
SELLERS ARE NOT THE DEVELOPERS OR THE ORIGINAL OWNERS OF THE REAL
PROPERTY OR THE HOTELS. PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR
TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE
THOROUGHLY INSPECTED AND EXAMINED, AND, FAILING A TERMINATION OF
THIS AGREEMENT PURSUANT TO SECTION 4.4, UNCONDITIONALLY AND
IRREVOCABLY APPROVED, ALL ELEMENTS COMPRISING THE LAND AND THE
PROPERTY, AND ALL FACTORS RELATED TO THEIR USE AND OPERATION.
PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLERS FROM ANY
AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING
OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS
SECTION, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE
THE CLOSE OF ESCROW.
(c) PURCHASER ACKNOWLEDGES AND
AGREES THAT PURCHASER’S FAILURE TO TERMINATE THIS AGREEMENT
AND CANCEL THE ESCROW PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE
PERIOD
17
SHALL BE CONCLUSIVELY DEEMED
PURCHASER’S AFFIRMATION THAT IT HAS COMPLETED ITS
INVESTIGATIONS AND DUE DILIGENCE REVIEW OF THE LAND AND THE
PROPERTY AND HAS APPROVED THE CONDITION AND STATE
THEREOF.
(d) PURCHASER FURTHER ACKNOWLEDGES
THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE WITH REAL PROPERTY,
HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER WILL ACQUIRE THE
PROPERTY IN “ AS IS, WHERE IS, WITH ALL FAULTS ”
CONDITION, AND SOLELY IN RELIANCE ON PURCHASER’S OWN
INSPECTION AND EXAMINATION AND SELLERS’ REPRESENTATIONS AND
WARRANTIES CONTAINED HEREIN. PURCHASER WAIVES ANY OBLIGATION ON THE
PART OF SELLERS, OR ANY OTHER PERSON, TO DISCLOSE ANY DEFECTS OR
OTHER DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE
PROPERTY.
(e) IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT SELLERS MAKE NO REPRESENTATIONS, WARRANTIES OR
GUARANTIES OF ANY KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PHYSICAL CONDITION, PAST, PRESENT OR FUTURE
OPERATION AND/OR PERFORMANCE, OR VALUE, OF ANY PROPERTY. SELLERS
CONVEY THE PROPERTY TO PURCHASER “ AS IS AND WHERE IS,
WITH ALL FAULTS ,” AND PURCHASER ACKNOWLEDGES THAT
SELLERS MAKE NO REPRESENTATIONS, GUARANTIES OR WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE QUALITY, CHARACTER,
EXTENT, PERFORMANCE, CONDITION OR SUITABILITY OF THE PROPERTY FOR
ANY PURPOSE. PURCHASER ACKNOWLEDGES THAT PURCHASER SHALL BE SOLELY
RESPONSIBLE AND LIABLE FOR ASCERTAINING THE TRANSFERABILITY OF ALL
LICENSES, PERMITS AND OTHER GOVERNMENTAL CONSENTS FOR THE
OWNERSHIP, USE AND OPERATION OF THE PROPERTY, AND SHALL BE SOLELY
RESPONSIBLE FOR OBTAINING THE TRANSFERS THEREOF, PROVIDED SELLER
SHALL USE COMMERCIALLY REASONABLE EFFORTS (BUT AT NO COST TO
SELLER) TO COOPERATE WITH AND ASSIST PURCHASER IN OBTAINING THE
TRANSFER OF OR NEW LICENSES, PERMITS AND CONSENTS AS
NECESSARY.
(f) PURCHASER’S INSPECTION,
INVESTIGATION AND SURVEY OF THE LAND AND THE PROPERTY, DURING THE
DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR DISCLOSURE
REQUIRED BY SECTION 25359.7 OF THE CALIFORNIA HEALTH AND SAFETY
CODE, OR BY ANY OTHER PROVISION OF THE CALIFORNIA CIVIL CODE, OR
PURSUANT TO ANY OTHER APPLICABLE LAW, INCLUDING, WITHOUT
LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD, FIRE,
MOLD, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS, LANDSLIDE AND
LIQUEFACTION, OTHER GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY
ACCESS,
18
SOIL CONDITIONS AND OTHER CONDITIONS
WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND PURCHASER HEREBY
WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS
AND HEREBY ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH
DISCLOSURE REQUIREMENTS AND WILL CONDUCT ITS OWN DUE DILIGENCE WITH
RESPECT TO ALL MATTERS COVERED THEREBY, AND HEREBY RELEASES SELLERS
FROM LIABILITY IN CONNECTION WITH ANY SUCH MATTERS THAT ARE NOT THE
SUBJECT OF ANY OF SELLERS’ REPRESENTATIONS AND WARRANTIES.
PURCHASER SHALL BE DEEMED TO HAVE APPROVED ALL CONDITIONS
PERTAINING TO THE PROPERTY UNLESS IT CANCELS THE ESCROW IN
ACCORDANCE HEREWITH ON OR BEFORE THE END OF THE DUE DILIGENCE
PERIOD.
(g) PURCHASER ALSO ACKNOWLEDGES AND
AGREES THAT, ALTHOUGH SELLERS HAVE PROVIDED TO PURCHASER CERTAIN
REPORTS, STUDIES AND SURVEYS FOR OR REGARDING THE REAL PROPERTY
(“ REPORTS ”), SELLERS HAVE NOT VERIFIED THE
ACCURACY THEREOF AND MAKES NO REPRESENTATIONS OR WARRANTIES
REGARDING THE MATTERS SET FORTH THEREIN, IT BEING THE
RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH REPORTS.
PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLERS FROM ANY
AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING
OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS
PARAGRAPH, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE
THE CLOSE OF ESCROW.
(h) FURTHERMORE, PURCHASER
ACKNOWLEDGES THAT SELLERS HAVE NOT AND DO NOT MAKE ANY
REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE PRESENCE OR
INTEGRATION OF HAZARDOUS MATERIALS UPON OR WITHIN THE REAL
PROPERTY. IN THAT REGARD, PURCHASER WILL, PRIOR TO THE EXPIRATION
OF THE DUE DILIGENCE PERIOD, CONDUCT ITS OWN INVESTIGATION AND
OBTAIN ITS OWN ENVIRONMENTAL ASSESSMENT REPORT TO DETERMINE IF THE
REAL PROPERTY CONTAINS ANY HAZARDOUS MATERIALS OR TOXIC WASTE,
MATERIALS, DISCHARGE, DUMPING OR CONTAMINATION, WHETHER SOIL,
GROUNDWATER OR OTHERWISE, WHICH VIOLATES ANY FEDERAL, STATE, LOCAL
OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR REQUIRES
REPORTING TO ANY GOVERNMENTAL AUTHORITY.
(i) PURCHASER, FOR ITSELF AND ITS
OWNERS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER
DISCHARGES SELLERS, AND THEIR PAST, PRESENT AND FUTURE MEMBERS,
AFFILIATES, EMPLOYEES, AGENTS, ATTORNEYS, ASSIGNS, AND
SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND FUTURE CLAIMS,
DEMANDS, OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE
WHATSOEVER, WHETHER NOW
19
KNOWN OR UNKNOWN, DIRECT OR
INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR UNSUSPECTED, WHICH
ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE CONDITION
OF THE LAND OR THE PROPERTY, THE MATTERS ADDRESSED IN SUBSECTIONS
(a), (b), (c), (d) AND (e) OF THIS SECTION 4.4.56, AND
WITH RESPECT TO THE PRESENCE OF ANY HAZARDOUS MATERIALS, ANY
ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING,
WITHOUT LIMITATIONS, THE PHYSICAL, STRUCTURAL, GEOLOGICAL,
MECHANICAL AND ENVIRONMENTAL (SURFACE AND SUBSURFACE) CONDITION OF
THE REAL PROPERTY (INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW
OR REGULATION RELATING TO HAZARDOUS MATERIALS. WITHOUT LIMITING THE
FOREGOING, THIS RELEASE SPECIFICALLY APPLIES TO ALL LOSSES AND
CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND
AMENDMENTS AND REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS
9601 ET SEQ .), THE RESOURCES CONSERVATION AND
RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET SEQ
.), THE CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET
SEQ .), THE SAFE DRINKING WATER ACT, (14 U.S.C. SECTION
1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT, (49 U.S.C.
SECTIONS 1801 ET SEQ .), THE TOXIC SUBSTANCE CONTROL
ACT, (15 U.S.C. SECTIONS 2601-2629), THE CALIFORNIA HAZARDOUS WASTE
CONTROL LAW, (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS
25100-25600), THE PORTER-COLOGNE WATER QUALITY CONTROL ACT
(CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 13000 ET
SEQ .), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR
EFFECT, AS WELL AS ANY AND ALL COMMON LAW CLAIMS. IN ACCORDANCE
WITH THE FOREGOING, PURCHASER WAIVES ALL RIGHTS UNDER CALIFORNIA
CIVIL CODE SECTION 1542 (AND ALL SIMILAR STATUTES IN ALL OTHER
STATES) WHICH STATES IN FULL AS FOLLOWS:
“A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.”
BY INITIALING THIS AGREEMENT CLAUSE,
PURCHASER ACKNOWLEDGES THAT THIS SECTION HAS BEEN READ AND FULLY
UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK QUESTIONS
OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.
