Nevada-Sparks-55 East Nugget Avenue Purchase and Sale Agreement For Hotel Properties [Best Western McCarran House] - Bountiful Investment Group Inc. and Eagle Rock Finance LC
PURCHASE AND SALE AGREEMENT
FOR HOTEL PROPERTIES
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into this
____ day of December into by and between Bountiful Investment Group, Inc., a
Nevada corporation ("BIG"), and Eagle Rock Finance, L.C., a Utah limited
liability company, a/k/a Eagle Rock, L.C. ("Purchaser") (collectively, the
"Parties").
Recitals
A. BIG owns and operates the Best Western McCarran House located at 55 East
Nugget Avenue in Sparks, Nevada (the "Best Western"), which is more particularly
described in Exhibit A, attached hereto. BIG owns 100% of the ownership
interests in Sparks Lodging Associates Corporation, a Nevada corporation
("SLAC") created to provide management services at the Best Western.
B. BIG owns and/or controls 100% of the ownership interests in Airport
Lodging Associates, L.C., a Utah limited liability company ("ALA") that owns and
operates the Ramada Ltd. & Suites located at 315 N. Admiral Byrd Road in Salt
Lake City, Utah (the "Ramada"), which property is more particularly described in
Exhibit A attached hereto.
C. BIG owns and/or controls 100% of the ownership interests in Red Rock
Lodging, L.C., the Utah limited liability company ("RRL") that owns and operates
the Four Points Hotel by Sheraton located at 1450 South Hilton Drive in St,
George, Utah (the "Sheraton"), which property is more particularly described in
Exhibit A attached hereto (The Best Western, the Ramada and the Sheraton are
referred to occasionally herein collectively as the "Hotels") (SLAC, ALA and RRL
are referred to occasionally herein collectively as the "Hotel Entities") (the
real properties, together with all goodwill, cash, accounts receivable,
appliances, furniture, equipment, fixtures, and all other items of personal
property located on or held or used in connection with the operations or the
Hotels, are collectively referred to herein as the "Hotel Properties").
D. Purchaser is engaged in a variety of business endeavors, including the
ownership and operation of hotel properties.
E. BIG desires to sell, and Purchaser desires to purchase, all of BIG's
right, title and interest in the Hotel Entities and in the Best Western (the
"Purchased Interests") on the terms and conditions set forth in this Agreement.
Agreements
In consideration of the foregoing recitals and the mutual covenants set
forth below, the Parties agree as follows:
1. Purchase and Sale.
1.1 Purchase Price. BIG shall sell, and Purchaser shall purchase, the
Purchased Interests for the agreed sum of Twelve Million Seven Hundred Thousand
and No/100ths Dollars ($12,700,000.00) (the "Purchase Price"), which shall be
payable as follows:
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1.1.1 Nonrefundable Cash Down Payment. The Parties acknowledge
that Purchaser already has delivered a check to Title West in the
amount of Fifty Thousand and No/l00ths Dollars ($50,000.00) pursuant
to a letter of intent signed by the Parties dated December 13, 1999,
which check constitutes a nonrefundable cash down payment on the
Purchased Interests. If the amount has not already been delivered to
BIG, that amount shall be delivered immediately, but in no event later
than Closing, as defined in Section 4.1 below.
1.1.2 Cash Payment at Closing. Purchaser shall pay the sum of
Three Hundred Sixty Thousand and No/100ths Dollars ($360,000.00) in
cash, at Closing, by certified or cashier's check, wire transfer or
other form of immediately available federal Funds.
1.1.3 Assumption of Existing Debt. Purchaser agrees to assume the
existing general liabilities plus the mortgage or trust (feed debt on
each of the Hotel Properties as of the Closing Date, but not to exceed
more than a collective total of Nine Million Eight Hundred Ninety
Thousand and No/100ths Dollars ($9,890,000.00). Purchaser acknowledges
that Zion's Management & Development Group, Inc., a Utah corporation
("Zions"), the entity that currently manages the Hotel Properties for
BIG, previously had an ownership interest in each of the Hotel
Properties and is listed as a borrower. Certain of Zion's owners have
personally guaranteed the loans on each of the Hotel Properties,
Purchaser has entered into an agreement with Zion's regarding the
ongoing management of the Hotel Properties and all issues arising from
or related to the debt to be assumed hereunder, Purchaser shall assume
all responsibility for such debt and for notifying the respective
lenders and obtaining their approval to Purchaser's assumption of such
debt promptly following the Closing Date, as defined in Section 4.1
below, BIG shall have no further obligation to Zions with respect to
such debt following Closing. Purchaser specifically does not agree to
assume any other debts or obligations of BIG or either Hotel Entity,
except as expressly provided herein.
1.1.4 Promissory Note. Purchaser shall execute and deliver to BIG
a promissory note in the amount of Two Million Three Hundred Ninety
Thousand and No/100ths Dollars ($2,390,000.00) (the "Note"), provided,
however, that the principal amount of the Note shall be reduced by any
amount by which the aggregate actual debt amount exceeds the fixed
amount set forth in Section 1.1.3 above. The Note shall be interest
free for the first 180 (lays following Closing. Thereafter, the Note
will bear interest at the Tate of seven percent (7%) per annum.
Purchaser shall pay BIG a principal reduction payment of Two Hundred
Thousand and No/100ths Dollars ($200,000.00) on or before the date
that is 180 days following Closing. Thereafter, Purchaser shall make
monthly interest only payments to BIG on or before the first day of
each month commencing on August 1, 2000, for a period of 30 months.
The entire outstanding principal balance of the Note shall be due and
payable on or before January 1, 2003; provided, however that Purchaser
shall have the option, upon payment to BIG of the Sum of Five Thousand
and No/100ths Dollars ($5,000.00), to convert the Note into a note
that will bc amortized over 240 months at the rate of ton percent
(10%) per annum, which note also shall have a call that may be
exercised by BIG at any time after the first 36 months upon 60 days'
written notice from BIG of its intent to do so.
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1.1.5 Fairfield Inn Payment. In addition to the foregoing,
Purchaser also agrees to pay to BIG, at Closing, the sum of Three
Hundred Ninety Thousand and No/100ths Dollars ($390,000.00), in cash,
via certified or cashier's check, wire transfer, or other immediately
available federal funds. This cash payment will constitute payment in
full of a promissory note executed and delivered by Zions to BIG as
part of the payment for Zion's purchase of BIG's 49% ownership
interest in the entity that owns and operates the Fairfield Inn
located in Provo, Utah. Purchaser represents that Purchaser and Zion's
already have entered into an agreement pursuant to which Zion's agreed
to assign the 49% ownership interest acquired from BIG to Purchaser in
exchange for Purchaser's promise to pay the outstanding amount of
Zion's promissory note to BIG as set forth in this Section 1.1.5. BIG
shall have no further rights and interests in that entity or the
Fairfield Inn or any further obligations related thereto.
1.1.6 Allocation of Purchase Price. The Parties agree to allocate
the Purchase Price as specifically set forth below in this Section
1.1.6. The Parties further agree that they will prepare and file their
federal and any state or local income or other tax returns based on
such allocations, and that the they will prepare and file any other
notices or filings its may be required by any federal, state or local
agency based on such allocations.
Hotel Property Real Property All Other Property Total
Best Western $4,950,000.00 $950,000.00 $5,900,000.00
The Sheraton $3,550,000.00 $650,000.00 $4,200,000.00
The Ramada $2,200,000.00 $400,000.00 $2,600,000.00
2. Security Interest.
2.1 Grant of Security Interest; Perfection. As security for
Purchaser's obligations set forth in the Note, and all renewals, modifications
and extensions thereof, if any, BIG shall have, and Purchaser hereby grants, a
first-priority security interest in interests in the Hotel Entities acquired by
Purchaser hereunder, and a second priority security interest in the Best
Western, which shall be subordinate only to the existing debt on the Best
Western (collectively, the "Collateral"). Purchaser agrees to execute and
deliver such documents as BIG may request to formally document, perfect, and
maintain the security interests granted hereby, including, but not limited to
UCC-l Financing Statements, Pledge Agreements, Security Agreements, and a Deed
or Trust (collectively, the "Security Documents"). BIG may file or record in the
appropriate public offices any and all Such documents required or permitted by
law to be filed or recorded with respect to BIG's interest in the Collateral,
only if (a) BIG gives Purchaser not less than 20 days' prior notice of its
intent to take any such action, and (b) doing so does not in any way cause or
possibly cause a violation of or an acceleration of any financing or loan with
respect to any of the Hotel Properties, Purchaser agrees to pay before
delinquency any tax or other governmental charge which is or can become, through
assessment or distraint or otherwise, a lien on the Collateral, and to pay any
tax which may be levied on any obligation secured hereby.
2.2 Control of Collateral. Purchaser shall not voluntarily sell,
transfer, assign, pledge, or otherwise transfer any part of the Collateral or
collect any distributions from the Hotel Entities and/of the Best Western,
except with the prior written consent of BIG or as follows:
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2.2.1 Purchaser may sell the Collateral provided that the sales
price is sufficient to pay the principal amount of the Note described
in Section 1.1.4 above or the proportionate share thereof if only part
of the Collateral is sold, and the sales proceeds are used by
Purchaser to pay the proportionate share of the Note in accordance
with the allocations set forth in Section 1.1.6 above; provided, that
any such payments shall first be applied to the amount due and payable
on the date that is 180 days following tile Closing Date.
2.2.2 Purchaser is authorized to collect distributions from, the
Hotel Entities and/or the Best Western at all times during which
Purchaser is current in meeting its obligations under tile Note or
until such time as Purchaser's authority to do so is terminated
pursuant to this Agreement.
2.2.3 In the event of default by Purchaser in payment of tile
Note, BIG shall have the right to notify Purchaser to cease collecting
distributions from the Hotel Entities and/or the Best Western,
whereupon BIG may proceed to co-license such distributions and may
deduct therefrom the reasonable expenses of collection.
2.2.4 Any sum received by BIG from the Hotel Entities and/or the
Best Western shall be applied as BIG shall elect to the obligations
secured by this Agreement or as may be due under the Note and/or the
Security Documents.
2.3 Accounting and Inspection of Books. Purchaser agrees to maintain
full and accurate records, including books of account, covering the Collateral
and to permit BIG or its duly authorized representative to examine such of the
books and records as related to the Collateral at all reasonable times during
business hours with ten days advance notice from BIG.
2.4 Notice to the Hotel Entities and/or the Best Western. Upon
termination of Purchaser's authority to collect distributions from the Hotel
Entities and/or the Best Western, pursuant to this Agreement, BIG is authorized
to notify the Hotel Entities and/or the Best Western to effect direct collection
of any distributions from the Hotel Entities and/or the Best Western that are
attributable to the Collateral. At the request of BIG, Purchaser agrees to
execute an appropriate notice to the Hotel Entities and the Best Western of
BIG's right to collect such distributions therefrom as provided herein.
2.5 Default. Occurrence of any of the following events shall
constitute a default by Purchaser under this Agreement.
2.5.1 Any failure to pay when due the full principal amount of
the Note, or other charge which is or may be secured hereby or by the
Security Documents.
2.5.2 The falsity of any representation of warranty made by
Purchaser herein or in the Security Documents.
2.5.3 If the Collateral should be seized of levied upon or under
any legal or governmental process against Purchaser or against the
Collateral.
2.5.4 If Purchaser becomes insolvent or is the subject of a
petition in bankruptcy, either voluntary or involuntary, or in any
other proceedings under the federal
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bankruptcy laws; or makes an assignment for the benefit of creditors;
or if Purchaser is named in or the Collateral is subjected to a suit
for the appointment of a receiver.
2.5.5 Dissolution or Liquidation of Purchaser.
Upon any such event of default, BIG may give written notice to Purchaser
thereof. If such default is not cured within thirty (30) days from receipt of
such notice by Purchaser, all obligations and indebtedness secured hereby shall,
at the option of BIG, become immediately due and payable, and BIG shall have the
right to pursue any remedies to which it may be entitled pursuant to the
Security Documents.
3. Condition of Title. Title to the Purchased Interests is to be free of
all encumbrances or defects other than the existing security interests granted
to the lenders, and such other circumstances as do not materially affect
Purchaser's ability to own and operate the Hotel Properties.
3.1 Title Insurance. BIG shall, at BIG's cost and expense, order and
deliver to Purchaser preliminary commitments for an Owners Standard Policies of
Title Insurance, in the amounts set forth in the allocations for real estate for
each of the respective Hotel Properties as set forth in Section 1.1.6 above to
be issued by First American Title in Reno, Nevada for the Best Western,
Sutherland Title in Salt Lake City, Utah for the Ramada property, and First
Title in St. George, Utah for the Sheraton property, respectively (collectively,
the "Title Companies") describing the state of title of the Hotel Properties
(the "Title Reports"). The Parties authorize the Escrow Agent to correct and/or
insert the legal descriptions to the Hotel Properties on Exhibit A attached
hereto at Closing, if necessary, based on the legal descriptions issued in the
Title Reports. The Title Reports shall contain no exceptions other than those
encumbrances of record which were of record when BIG and/or tile Hotel Entities
acquired the Hotel Properties and that do not materially affect the value of the
Hotel Properties or unduly interfere with Purchaser's ability to operate the
Hotel Properties as hotels. Encumbrances to be paid by BIG may be paid out of
the Purchase Price received at Closing. If title cannot be made so insurable
prior to the Closing Date, Purchaser may, at Purchaser's sole option, waive any
and all such remaining encumbrances and defects and elect to purchase the
Purchased Interests subject to such encumbrances and defects and pursuant to the
terms and conditions of this Agreement or may terminate this Agreement without
,any further liability or obligation to BIG hereunder, in which event Purchaser
shall receive full refund of the nonrefundable deposit, notwithstanding the
nonrefundable nature thereof.
4. Closing.
4.1 Closing Date. This sale shall be closed in the offices of Hill,
Johnson & Schmutz located at 3319 North University Avenue, Suite # 200, Provo,
Utah 84604 ("Escrow Agent") on or before 12:00 noon Mountain Standard Time on
December 31, 1999 (the "Closing Date"). Closing shall mean the consummation of
the transaction contemplated by this Agreement by the recording of all
instruments requiring recording, the rendering of all performances necessary to
the consummation of the purchase and sale contemplated hereby, and the delivery
of other documents and proceeds to the parties entitled thereto (the "Closing").
4.2 Closing Costs. At Closing, BIG shall pay (a) one-half (1/2) of the
escrow fee; (b) any real estate excise or transfer taxes; (c) any revenue or
documentary stamps; (d) the premium for the policy of title insurance described
in Section 3 above; (e) recording and
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miscellaneous charges customarily attributable to sellers in similar
transactions; and (f) all attorneys' fees then owed by BIG to its counsel,
whether incurred in negotiating this Agreement and in consummating the
transaction contemplated herein. At Closing, Purchaser shall pay (a) one-half
(1/2) of the escrow fee; (b) recording and miscellaneous charges customarily
attributable to purchasers in similar transactions; and (c) all attorneys' fees
incurred by Purchaser to its counsel in negotiating this Agreement and in
consummating the transaction contemplated herein.
4.3 Prorations for Rest Western. Taxes for the current year
constituting liens for Or against the Best Western, shall be prorated between
Purchaser and BIG as of the Closing Date.
4.4 Transfer and Closing Documents. At Closing, BIG shall transfer and
convey all of BIG's right, title and interest in the Hotel Entities to
Purchaser, and Purchaser shall assume all of tile mortgage or trust deed
obligations which encumber the Hotel Properties and become the owner of the
Hotel Entities, pursuant to an Assignment and Assumption Agreement substantially
in the form attached hereto as Exhibit B. At Closing, BIG also shall transfer
and convey all of its right, title and interest in all contracts, leases and
agreements used in the ownership and/or operation of the Best Western, and
Purchaser shall assume same, pursuant to an Assignment and Assumption Agreement
for the Best Western's Contracts, Leases and Agreements substantially in the
form attached hereto as Exhibit D. BIG shall execute and deliver (a) a statutory
Warranty Deed to McCarran Lodging, LLC, a Utah limited liability company formed
by Purchaser to hold and accept the Best Western, pursuant to which BIG
transfers and conveys all of its right, title and interest in and to the Best
Western to McCarran Lodging LLC, (b) statutory Quit Claim Deed,; for the real
properties of the Hotel Entities; (c) assignments of limited liability company
interests for the Hotel Entities (in the form attached hereto as Exhibit B) and
of contracts, leases and agreements for the Best Western (in the form attached
hereto as Exhibit D); and (d) a Bill of Sale for the personal Properties of the
Best Western (in the form attached hereto as Exhibit E). The Parties further
shall execute and deliver to the Escrow Agent or to the other, as the case may
be, such other documents as may be necessary to consummate the transaction
contemplated hereby.
5. Possession. BIG shall deliver possession of the Purchased Interests to
Purchaser on the Closing Date, provided, however, that Purchaser shall have the
right to enter upon the Hotel Properties for completion of any studies or tasks
that Purchaser may wish to perform prior to the Closing Date,
6. Purchaser's Representations and Warranties. Purchaser represents,
warrants, and agrees as of the date of this Agreement and as of Closing as
follows:
6.1 Authority. Purchaser is a limited liability company duly organized
and existing under the laws of the State of Utah and has the power and authority
to enter into this Agreement and all documents contemplated by this Agreement,
to consummate the transactions contemplated by this Agreement, and to perform
its obligations to be performed by it under this Agreement and under all
documents contemplated by this Agreement.
6.2 Approval; Enforceability. The execution, delivery, and performance
of this Agreement and all documents contemplated by this Agreement have been
duly authorized by all necessary company action. This Agreement and all
documents contemplated by this Agreement, when executed and delivered by
Purchaser, will be valid and enforceable obligations of Purchaser in accordance
with their respective terms.
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6.3 No Violation. Purchaser's execution and performance of this
Agreement and compliance with [lie provisions of this Agreement will not
constitute a violation by Purchaser of any provision of law, of its Articles of
Organization, any amendments thereto, or any indenture, mortgage, agreement, or
other instrument to which Purchaser is a party or by Purchaser is bound or
affected.
6.4 No Reliance. Purchaser has made its own inspection of the Best
Western and [lie Hotel Entities, and his own investigation and evaluation of the
Purchased Interests, In entering this Agreement, Purchaser is not relying on any
representations or statements made by BIG regarding the Purchased Interests
other than those expressly set forth herein. Purchaser has had an opportunity to
review financial records, and all other relevant documents and information
related to the Purchased Interests that would be material in determining whether
to purchase the Purchased Interests pursuant to this Agreement.
7. BIG's Representations and Warranties. BIG represents, warrants, and
agrees as of the date of this Agreement and as of Closing:
7.1 Authority. BIG is a corporation duly organized and existing under
the laws of the State of Nevada and has the power and authority to enter into
this Agreement and all documents contemplated by this Agreement, to consummate
the transactions contemplated by this Agreement, and to perform the obligations
to be performed by it under this Agreement and under all documents contemplated
by this Agreement.
7.2 Approval; Enforceability. The execution, delivery, and performance
of this Agreement and all documents contemplated by this Agreement have been
duly authorized by all necessary corporate action. This Agreement and all
documents contemplated by this Agreement, when executed and delivered by BIG,
will be valid and enforceable obligations of BIG in accordance with their
respective terms.
7.3 No Violation. BIG's execution and performance of this Agreement
and compliance with the provisions of this Agreement will not constitute a,
violation by BIG of any provision of law, BIG's Articles of Incorporation, BIG's
Bylaws, or any indenture, mortgage, agreement, or other instrument to which BIG
is a party or by which BIG is bound or affected.
7.4 The Hotel Properties. BIG represents and warrants to Purchaser as
follows: (a) BIG has good and marketable title to the Best Western and its Hotel
Properties, and the Hotel Entities, and each Hotel Entity owns its respective
Hotel Properties, free and clear of all liens and encumbrances other than those
allowed under Section 3 above and free and clear of all third party claims of
ownership (its to the Hotel Properties or the Hotel Entities), including without
limitation Zions Management & Development Company, Inc.; Glen A. Overton,
Investment Lodging Corporation; THH Ventures, L.C.; and East Bay Lodging
Associated, Ltd.; (b) there are no outstanding unrecorded leases, licenses,
permits, contracts or agreements to which BIG or either Hotel Entity is a party
affecting the Hotel Properties other than those disclosed herein or in Exhibit C
attached hereto, or those assigned hereunder; (c) BIG has disclosed all known
defects, faults or other material facts regarding the Hotel Properties; (d) the
Hotel Properties have been maintained in substantial compliance with all
federal, state and local environmental protection, similar laws, ordinances,
restrictions, and licenses; (e) except as has been previously disclosed to
Purchaser regarding the filling station located on the separate parcel next to
the Sheraton, which is to be
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acquired as part of the Hotel Properties, to the best of BIG's knowledge, no
hazardous substance (as that term is used in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ""9601 et seq.) is or has
been stored or disposed of on any of the Hotel Properties; (f) BIG has no notice
of any pending or threatened action, claim or proceeding under any condemnation
laws, under any bankruptcy laws, or under any environmental laws arising out of
the condition of the Hotel Properties or conditions thereon; and (g) from the
date of this Agreement until the Closing Date, BIG agrees not to make any
material adverse change to the Hotel Properties, or to enter any contracts or
undertake any obligations that would affect the Hotel Properties that would
remain unpaid or continue after the Closing Date.
7.5 Limitation of Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
HEREIN, NEITHER BIG NOR ANY AGENT, REPRESENTATIVE, OR EMPLOYEE OF BIG HAS
HERETOFORE OR IS NOW MAKING ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER RELATED TO THE PHYSICAL CONDITION OF THE HOTEL PROPERTIES. PURCHASER
IS ACQUIRING THE HOTEL PROPERTIES "AS IS" AND "WITH ALL FAULTS," INCLUDING
WITHOUT LIMITATION THE STABILITY OF THE SOILS, SUITABILITY FOR ANY CONSTRUCTION
OR DEVELOPMENT, ENCROACHMENT OR BOUNDARY QUESTIONS, DRAINAGE, ZONING,
AVAILABILITY OF UTILITIES, ACCESS, AND SIMILAR MATTERS. PURCHASER IS CONDUCTING
ITS OWN INSPECTIONS AND "DUE DILIGENCE" WITH RESPECT TO ALL PHYSICAL AND OTHER
ASPECTS OF THE HOTEL PROPERTIES. BIG SHALL ALLOW PURCHASER REASONABLE ACCESS TO
BIG'S BOOKS, RECORDS, AND THE HOTEL PROPERTIES TO ENABLE PURCHASER TO COMPLETE
SUCH INSPECTIONS. PURCHASER SHALL BE RESPONSIBLE FOR ALL COSTS OF SUCH
INSPECTIONS AND STUDIES.
8. Conditions. Purchaser's obligation to purchase the Purchased Interests
is subject to the following conditions:
8.1 Good Standing with Franchisors. Each of the Hotel Properties shall
be in good standing with its respective franchisor (for purposes of this Section
8.1, "good standing" means that BIG has paid all fees required to be paid by the
Franchisor and has met all other obligations and has responded satisfactorily to
all notices and demands arising under any franchise agreement affecting any of
the Hotel Properties; provided, however, that Purchaser acknowledges and agrees
that the Best Western's franchisor has required renovations in the amount of
approximately ($800,000,00) to bring that property into good standing, which
amount Purchaser has agreed, and is prepared to pay. Purchaser acknowledges that
the franchiser has set a deadline of December 31, 1999 for completing the
renovations or making appropriate arrangements for doing so in a timeline
acceptable to (lie franchiser. If appropriate arrangements are not made by that
time, franchisor has threatened to remove the Best Western from franchisor's
reservation system. Purchaser assumes the responsibility of working with
franchisor to insure that such arrangements arc made and the renovations
completed, at Purchaser's sole cost and expense, so that the Best Western is not
removed from franchiser's reservation system. Any amounts owed to satisfy any
obligations necessary to bring the Hotel Properties in good standing, except for
the amounts necessary to complete the renovations required at the Best Western
as described above, shall be paid by Purchaser at or -is soon as reasonably
practicable after Closing, but shall reduce the principal amount of the Note,
and shall be taken first from the principal payment to be made by Purchaser to
BIG on or before the date that is 180 days following Closing.
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8.2 Engagement of Zions Management. Purchaser shall have entered into
an agreement with Zions, on terms and conditions acceptable to Purchaser,
pursuant to which Zions agrees to continue to manage the Hotel Properties,
8.3 Closing Before Year End. The transaction contemplated hereby shall
have closed before 11:59 p.m. on December 31, 1999.
8.4 Payment of Debt Service and Mortgage Payments. All mortgage
payments and other debt service installment payments for the Hotel Properties
(owing or accrued as of December 31, 1999) shall have been paid current through
December 31, 1999. Any such amounts owing may be withheld from the cash payments
to be made to BIG at Closing. If any such amounts are not withheld at Closing or
not paid by BIG immediately thereafter, the same shall be paid by Purchaser, and
shall reduce the principal amount of the Note, and shall be taken first from the
principal payment to be made by Purchaser to BIG on or before the date that is
180 days following Closing.
8.5 Taxes and Franchise Fees. All taxes, including without limitation,
payroll, property, use and sales taxes (owing or accrued as of December 31,
1999), shall be paid current through December 31, 1999. In addition, all fees,
payments, obligations, and performances (owing or accrued as of December 31,
1999) under any franchise agreement affecting any of the Hotel Properties shall
be current or fulfilled in full through December 31, 1999. Any amounts required
to bring such taxes, fees, payments, obligations and performances current shall
be paid by Purchaser at or as soon as reasonably practicable after Closing, but
shall reduce the principal amount, of the Note, and shall be taken first from
the principal payment to be made by Purchaser to BIG on or before the date that
is 180 days following Closing.
9. Damage, Destruction, and Condemnation. In the event of the partial or
total damage, destruction, or condemnation of the Hotel Properties prior to the
Closing Date, at Purchaser's option, Purchaser may consummate the purchase of
the Purchased Interests or terminate this Agreement by written notice to BIG.
Purchaser's election under this section shall be exercised by giving written
notice to BIG of its intent to do so. In the event Purchaser elects to terminate
this Agreement, Purchaser shall pay any title and escrow charges, and neither
party shall have any further rights or obligations under this Agreement.
Purchaser shall receive full refund of the non-refundable deposit. If Purchaser
elects to proceed with the purchase of the Property hereunder, all insurance or
condemnation proceeds shall be paid over to Purchaser (or assigned, if not yet
collected). If the insurance or condemnation proceeds are not yet determined,
Purchaser shall receive a credit at Closing against the Purchase Price in the
amount of the loss of value of the damaged, destroyed, or condemned portion, as
agreed upon by Purchaser and BIG, and BIG shall retain all insurance or
condemnation proceeds. Except as otherwise elected by Purchaser hereunder, the
risk of loss prior to Closing rusts with BIG.
10. Remedies.
10.1 Failure to Close. If, without breach by BIG or Purchaser, the
conditions to Closing are not and cannot be eliminated, satisfied, or waived
within the time limits set forth herein, either party may either withdraw from
and terminate this Agreement or waive the condition or portion thereof which
cannot be satisfied mid proceed with Closing. If terminated, this Agreement
shall be deemed null and void, the non-refundable deposit shall be returned to
Purchaser, and the escrow to be established hereunder shall be cancelled.
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10.2 Seller's Breach. If BIG breaches this Agreement and fails to
close the sale contemplated hereby through no fault of Purchaser, Purchaser
shall be entitled, at Purchaser's election (a) to terminate its obligations to
perform further under this Agreement and recover any and all damages; (b) to
seek specific performance of this Agreement; and (c) to pursue any and all
remedies in addition to or by way of alternative to the foregoing available at
law or in equity. The non-refundable deposit shall be refunded to Purchaser
immediately upon demand,
10.3 Purchaser's Breach. If Purchaser breaches this Agreement and
fails to close the purchase contemplated hereby through no fault of BIG, BIG
shall be entitled to receive the nonrefundable deposit and retain it as
liquidated damages and not as a penalty as its sole and exclusive remedy for
such breach.
11. Indemnification.
11.1 Indemnification by Purchaser. Purchaser shall indemnify, defend,
and hold BIG harmless from any and all loss, liability, damage, and expense
whatsoever (including attorneys' fees, expenses of litigation, and costs of
appeal) arising (i) out of Purchaser's and/or each of the Hotel Entities
ownership or use of the Hotel Properties after the Closing Date; and/or (ii) as
a result of any material inaccuracy of any representation or material breach of
any warranty or covenant of Purchaser contained in this Agreement, any
certificate or other instrument furnished or to be furnished, and/or any other
agreement to be executed Pursuant to or in connection with this Agreement.
11.2 Indemnification by Seller. BIG shall indemnify, defend, and hold
Purchaser harmless from any and all loss, liability, damage, and expense
whatsoever (including attorneys' fees, expenses of litigation, anti costs of
appeal) arising (i) out of BIG's and/or each of the Hotel Entities ownership
interest in or use of the Hotel Properties prior to the Closing Date; (ii) out
of any breach of the specific warranties set forth in Section 7.4 above
(including without limitation the failure of BIG and/or the Hotel Entities to
have good and marketable title to all of the Hotel Proper-ties); (iii) out or
any failure of the conditions set forth in Sections 8.1, 8.4 and 8.5 above
(assuming Purchaser proceeds to Closing notwithstanding such failure), and/or
(iv) as a result of any material inaccuracy of any representation or material
breach of any other warranty or covenant of BIG contained in this Agreement, any
certificate or other instrument furnished or to be furnished, and/or any other
agreement to be executed pursuant to or in connection with this Agreement.
11.3 Procedures for Indemnification. The following procedures and
requirements shall apply with respect to any actual or potential claim, any
written demand, the commencement of any action, or the occurrence of any other
event which involves any matter or related series of matters (a "Claim") against
which either party is entitled to indemnification (the "Indemnified Party") from
the other party (the "Indemnifying Party") under Section 11.1 or 11.2 above.
11.3.1 Promptly after the Indemnified Party first receives
written documents pertaining to the Claim, or if such Claim does not
involve a third party Claim, promptly after the Indemnified Party first has
actual knowledge of such Claim, the Indemnified Party shall give notice to
the Indemnifying Party of such Claim in reasonable detail and stating the
amount involved, if known, together with copies of any such written
documents. The Indemnifying Party shall have 10 days from the personal
delivery or mailing of the Claim
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notice (the "Notice Period") to notify the Indemnified Party (i) whether or
not it disputes its liability to the Indemnified Party hereunder with
respect to such Claim, and (ii) notwithstanding any such dispute, whether
or not it desires, at its sole cost and expense, to defend the Indemnified
Party against such Claim.
11.3.2 If the Indemnifying Party disputes its liability with
respect to such, Claim or the amount thereof (whether or not the
Indemnifying Party desires to defend the Indemnified Party against such
Claim as provided below), such dispute shall be resolved in accordance with
Section 11.3.7 below. Pending the resolution of any dispute by the
Indemnifying Party of its liability with respect to any Claim, any such
third-party Claim shall not be settled without the prior written consent of
the Indemnified Party.
11.3.3 If the Indemnified Party desires to defend the Indemnified
Patty against the Claim, then the Indemnifying Party - upon first paying
into court or independent escrow a cash sum equal to fifty percent (50.0%)
of the amount in dispute during the Notice Period - shall have the right,
at its sole cost, expense and ultimate liability regardless of the outcome,
and through counsel of its choice, to litigate, defend, settle or otherwise
attempt to resolve such Claim. Notwithstanding the foregoing, the
Indemnified Party may nevertheless elect, at any time and at the
Indemnified Party's sole cost, expense and ultimate liability, regardless
or the outcome, and through counsel of its choice, to litigate, defend,
settle or otherwise attempt to resolve such Claim. If the Indemnified Party
so elects (for reasons other than the Indemnifying Party's failure or
refusal to provide a defense to such Claim), then the Indemnifying Party
shall have no obligation to indemnify the Indemnified Party with respect to
such Claim; provided, however, any such disposition will be without
prejudice to any other right the Indemnified Party may have to
indemnification under Section 11.1 or 11.2 above, regardless of the outcome
of such Claim. In any event, Purchaser and BIG shall fully cooperate with
each other and their respective counsel in connection with any such
litigation, defense, settlement or other attempted resolution.
11.3.4 If the Indemnifying Party elects not to defend the
Indemnified Party against such Claim, whether by not giving the Indemnified
Party timely notice as provided above or otherwise, then the amount of any
such Claim or, if the same be defended by the Indemnifying Party, then that
portion thereof as to which such defense is unsuccessful, in each case,
shall be conclusively deemed to be a liability of the Indemnifying Party
hereunder, unless the Indemnifying Party shall have disputed its liability
to the Indemnified Party hereunder as provided above, in which event such
dispute shall be resolved as provided in Section 11.3.7 below.
11.3.5 If an Indemnified Patty has a Claim against the
Indemnifying Party hereunder that does not involve a Claim being asserted
against or sought to be collected from it by a third party, the Indemnified
Party shall promptly send a notice with respect to Such Claim to the
Indemnifying Party. If the Indemnifying Party disputes its liability with
respect to such Claim, such dispute shall be resolved in accordance with
Section 11.3.7 below; provided, however, that if the Indemnifying Party
does not notify the Indemnified Party within the Notice Period that it
disputes such Claim, the amount of such Claim shall be conclusively deemed
a liability of the Indemnifying Party hereunder.
11.3.6 Upon tile determination of the liability for
indemnification as provided herein, the Indemnifying Party shall pay to the
Indemnified Party within 15 days
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after such determination the amount of any claim for indemnification made
hereunder. If the Indemnified Party is not paid in full and on time for any
such claim, it shall have the right, notwithstanding any other rights that
it may have against any other person or corporation, to setoff the unpaid
amount of any such Claim against any amounts owed by it under this
Agreement, any promissory note, or any other agreements entered into
pursuant to this Agreement. Where Purchaser is the Indemnified Party, the
amount of any such offset shall reduce the principal amount of the Note,
and shall be taken first from the principal payment to be made by Purchaser
to BIG on or before the date that is 180 days following Closing. Upon the
payment in full of any claim, either by setoff or otherwise, the entity
making payment shall be subrogated to the rights of the Indemnified Party
against any person, firm or corporation with respect to the subject matter
of such Claim.
11.3.7 All disputes under this Section l1.3 regarding liability
for indemnification shall be settled by arbitration in Provo, Utah, before
a single arbitrator pursuant to the rules of the American Arbitration
Association. Arbitration may be commenced at any time by any Party hereto
giving written notice to each other Party to a dispute that such dispute
has been referred to arbitration under this Section 11.3.7. The arbitrator
shall be selected by the joint agreement of BIG and Purchaser but, if they
do not agree within 20 days after the date of the notice referred to above,
the selection shall be made pursuant to the rules from the panels of
arbitrators maintained by such Association. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto;
provided, however that any such award shall be accompanied by a written
opinion of the arbitrator giving the reasons for the award. This provision
for arbitration shall be specifically enforceable by the Parties, and the
decision of the arbitrator in accordance herewith shall be final and
binding and there shall be no right to appeal therefrom. Each Parry shall
pay its own expenses of arbitration and the expenses of the arbitrator
shall be equally shared; provided, however, that if in the opinion of the
arbitrator any claim for indemnification or any defense or objection
thereto was unreasonable, the arbitrator may assess, as part of his award,
all or any part of the arbitration expenses of the other party (including
reasonable attorneys' fees and fees of the arbitrator) against the party
raising such unreasonable claim, defense or objection. Nothing contained in
this Section 11.3.7 shall prevent the Parties from settling any dispute by
mutual agreement at any time,
11.3.8 The indemnification rights of the Parties under this
Section 11.3 are independent of and in addition to such rights and remedies
as the parties may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or failure to fulfill any agreement
or covenant hereunder on the part of any party hereto including, without
limitation, the right to seek specific performance, rescission or
restitution, none of which rights or remedies shall be affected or
diminished hereby.
12. General Provision.
12.1 Survival of Representations. The representations, warranties,
indemnities, and agreements contained in this Agreement shall survive the
execution of this Agreement and the transfers Contemplated by this Agreement.
12.2 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties, and their respective Successors and
assigns, provided that no party
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<PAGE>
to this Agreement shall assign any of such party's rights or obligations under
this Agreement without the prior written consent of the other party hereto.
12.3 Entire Agreement. This instrument, together with its exhibits,
contains the entire agreement of the Parties and the other signatories hereto
with respect to the transactions contemplated by this Agreement, supersedes any
and all prior agreements or understandings, written or oral, between the
Parties, including the letter of intent, with respect to the subject matter
hereof, and may not be modified or amended in any way except in a written
instrument signed by the Parties.
12.4 Notices. All notices to be given under this Agreement shall be in
writing and shall be personally delivered or mailed by certified mail, return
receipt requested, postage prepaid, as follows:
If to BIG: Bountiful Investment Group, Inc,
14675 Interurban Avenue South
Seattle, WA 98169
Attention: Pam Andersen
With a copy to: Kirt W. Montague
Vance, Romcro & Montague, P.S.
155 - 108th Avenue N.E., Suite 202
Bellevue, Washington 98004
If to Purchaser: Eagle Rock Finance, L.C.
2500 North University Avenue, #200
Provo, Utah 84604
Attention: Eric K. Thompson
With a copy to: F. McKay Johnson
Hill Johnson & Schmutz
3319 North University Avenue, #200
Provo, UT 84803
or to such other address as either party shall specify by written notice so
given to the other party, Each notice personally delivered shall be deemed to
have been given as of the date so delivered. Each notice mailed shall be deemed
to have been given on the third day after the date deposited in the United
States mail. A copy of each notice given to either party pursuant to this
Section 11.5 shall be mailed simultaneously.
12.5 Waiver. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute a waiver of any other breach of the
same or any other term or condition of this Agreement.
12.6 Exhibits. Exhibits A, B, C, D and E attached to this Agreement
are by this reference fully incorporated in this Agreement and made a part
hereof.
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12.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Utah.
12.8 Attorney's Fees. In any proceeding brought to enforce this
Agreement or to determine the rights of the parties under this Agreement, the
prevailing party shall be entitled to collect, in addition to any judgment
awarded by a court, a reasonable sum as attorneys' fees, and all costs and
expenses incurred in connection with such a lawsuit, including attorneys' fees,
expenses of litigation, and costs of appeal. For purposes of this Agreement, the
prevailing party shall be that party in whose favor final judgment is rendered
or who substantially prevails, if both parties are awarded judgment. The term
"proceeding" shall mean and include arbitration, administrative, bankruptcy, and
judicial proceedings, including appeals.
12.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
12.10 Time of Essence. Time is of the essence of this Agreement.
12.11 Severability. The unenforceability, invalidity, illegality, or
termination of any provision of this Agreement shall not render any other
provision of this Agreement unenforceable, invalid, or illegal and shall not
terminate this Agreement or impair the rights or obligations of the parties
hereto provided the essential purposes of this Agreement are not thereby
thwarted.
12.12 Captions. Section or paragraph titles or other headings
contained in this Agreement are for convenience only and shall not be a part of
this Agreement, nor considered in its interpretation.
12.13 Brokerage Commission and Finder's Fee. The Parties each warrant
to the other that no person or entity can properly claim a right to a
commission, finder's fee, acquisition fee or other brokerage type compensation
based upon the acts or omissions of that party with respect to the transaction
contemplated by this Agreement.
12.14 Facsimile Transmission. Facsimile transmission of any signed
original document, and retransmission of any signed facsimile transmission,
shall be the same as transmission of an original. At the request of any party
hereto, or the Escrow Agent, the parties hereto will confirm signatures
transmitted by facsimile by signing an original document.
12.15 Further Access. The Parties hereto shall perform such further
acts as may be reasonably necessary to carry out the intent and provisions of
this Agreement.
12.16 Authority. Persons signing this Agreement on behalf of the
respective parties personally warrant and represent that they are authorized to
execute this instrument and bind the respective parties hereto.
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12.17 Good Faith. In addition to complying with any specific standards
of conduct set forth herein, each party hereto represents and warrants to the
other that such party has acted toward the other in good faith, and agrees to
continue to so act, in the negotiation, execution, delivery, performance, and
any termination of this Agreement.
EXECUTED as of the date and year first above written.
BOUNTIFUL INVESTMENT GROUP, INC., a Nevada corporation
By: /s/ [illegible]
-----------------------------
Its: Authorized Agent
---------------------------
EAGLE ROCK FINANCE, L.C., a Utah limited liability company
By: /s/ [illegible]
-----------------------------
Its: Manager
---------------------------
State of ___________ )
) ss.
County of ____________ )
I certify that I know or have satisfactory evidence that
__________________________, a representative of BOUNTIFUL INVESTMENT GROUP,
INC., personally appeared before me, and said person acknowledged that he or she
signed this Purchase and Sale Agreement, on oath stated that he or she was
authorized to execute this Purchase and Sale agreement and acknowledged it to be
the free and voluntary act of said corporation for the uses and purposes
mentioned herein.
SUBSCRIBED AND SWORN to before me this 30th day of December, 1999.
/s/ [illegible]
----------------------------------------
Printed/Typed Name: [illegible]
-----------
NOTARY PUBLIC in and for the State of
residing at
----------, ---------------
My commission expires
------------------
[Notary Stamp]
Purchase and Sale Agreement for Hotel Properties Page 15 of 16
<PAGE>
State of ___________ )
) ss.
County of ____________ )
I certify that I know or have satisfactory evidence that
__________________________ a representative of EAGLE ROCK FINANCE, L.C.,
personally appeared before me, and said person acknowledged that he or she
signed this Purchase and Sale Agreement, on oath stated that he or she was
authorized to execute this Purchase and Sale agreement and acknowledged it to be
the free and voluntary act of said corporation for the uses and purposes
mentioned herein.
SUBSCRIBED AND SWORN to before me this 31st day of December, 1999.
/s/ [illegible]
----------------------------------------
Printed/Typed Name: [illegible]
-----------
NOTARY PUBLIC in and for the State of
residing at
----------, ---------------
My commission expires
------------------
[Notary Stamp]
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