<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29,1998
KSL RECREATION GROUP, INC.
(Exact name of Registrant as specified in its charter)
Commission File Number 333-31025
Delaware 33-0747103
-------- ----------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
56-140 PGA Boulevard
La Quinta, California 92253
--------------------- -----
(Address of principal executive offices) (Zip Code)
760/564-1088
------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, address and fiscal year, if changed since last report)
Page 1 of 4 pages
Exhibit Index is on Page 3
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 29, 1998, KSL Recreation Group, Inc. (the "Company"), through
KSL Grand Wailea Resort, Inc., an indirect wholly-owned subsidiary of the
Company that was incorporated in Delaware on November 19, 1998 ("KSL
Resort"), acquired substantially all of the assets and certain liabilities of
the Grand Wailea Resort Hotel & Spa, a resort hotel and spa located in Maui,
Hawaii, pursuant to an agreement of purchase and sale between International
Hotel Acquisitions, L.L.C., a Delaware limited liability company, ("Seller")
and KSL Recreation Corporation, parent of the Company ("Parent") dated
November 5, 1998, as amended ("Agreement"). The Parent, by unanimous consent
of the Board of Directors, approved and assigned the Agreement and all
rights, title, interest and obligations thereunder to KSL Resort on December
10, 1998. There is no relationship between the Seller and the Company, or
with any associates or affiliates of the Company.
The Property is situated on approximately forty acres on the southwest
shore on the island of Maui and features 781 luxury hotel rooms and guest
suites, six restaurants, twenty-two banquet and meeting rooms totaling 81,000
square feet, expansive water feature and pool facilities, a wedding chapel,
and a complete 50,000 square foot European-style spa and fitness center. The
Grand Wailea Resort was opened in 1991 at an estimated development cost of
approximately $750 million.
The purchase price of the Property, including the real property,
improvements, personal property and certain liabilities, was approximately
$375 million (exclusive of closing costs), of which $100 million was paid in
cash and $275 million was paid through assumption of a loan from Norwest Bank
of Minnesota National Association ("the Loan"). The acquisition was
accounted for using the purchase method of accounting.
The Loan is due and payable on November 11, 2002 and bears interest at a
floating rate per annum equal to the sum of LIBOR plus 275 basis points. It
is secured by the assets owned by KSL Resort. It is not guaranteed by the
Company or any other subsidiary of the Company.
In connection with the transaction, the Company received an equity
contribution from the Parent of $110,000,000. Such amount was used to fund
the acquisition at closing ($100,000,000) and fund closing costs and provide
working capital ($10,000,000).
KSL Resort has been designated an "Unrestricted Subsidiary" as such term
is defined in (a) the Credit Agreement among the Company, various financial
institutions, Donaldson, Lufkin & Jenrette Securities Corporation, The Bank
of Nova Scotia and BancAmerica Securities, Inc. dated April 30, 1997 and (b)
the Indenture Agreement, dated April 30, 1997, relating to $125 million of
10 1/4% Senior Subordinated Notes of the Company due 2007.
The Company intends to continue to operate the Property as a resort hotel
and spa.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements.
As of the date of this Current Report on Form 8-K, it is impracticable for
the Company to provide the financial statements required by this Item 7(a).
In accordance with Item 7(a) of Form 8-K, such financial statements shall
be filed by amendment to this Form 8-K no later than sixty (60) days after
January 13, 1999.
(b) Pro Forma Financial Information.
As of the date of this Current Report on Form 8-K, it is impracticable for
the Company to provide the financial statements required by this Item 7(b).
In accordance with Item 7(b) of Form 8-K, such financial statements shall
be filed by amendment to this Form 8-K no later than sixty (60) days after
January 13, 1999.
(c) Exhibits
10.1 Agreement of Purchase and Sale and Joint Escrow Instructions between
International Hotel Acquisitions, LLC and KSL Recreation Corporation
dated November 5, 1998.
10.2 First Amendment to Agreement for Purchase and Sale and Joint Escrow
Instructions between International Hotel Acquisitions, LLC and KSL
Recreation Corporation dated November 12, 1998.
10.3 Assignment of Agreement of Purchase and Sale between KSL Recreation
Corporation and KSL Grand Wailea Resort, Inc., dated December 10,
1998.
10.4 Second Amendment to Agreement for Purchase and Sale and Joint Escrow
Instructions between International Hotel Acquisitions, LLC and KSL
Grand Wailea Resort, Inc., dated December 23, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KSL RECREATION GROUP, INC.
By: /s/ JOHN K. SAER, JR.
---------------------
John K. Saer, Jr.
Vice President, Chief Financial
Officer and Treasurer
Date: January 12, 1999
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AGREEMENT OF PURCHASE AND SALE AND
JOINT ESCROW INSTRUCTIONS
between
INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
("SELLER"),
and
KSL RECREATION CORPORATION,
a Delaware corporation
("BUYER").
November 5, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
1. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. AGREEMENT OF PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 14
3. PURCHASE PRICE AND DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Allocation of Price . . . . . . . . . . . . . . . . . . . . . . . . 16
4. TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Title Binder and Survey . . . . . . . . . . . . . . . . . . . . . . 16
5. DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Due Diligence Deliveries. . . . . . . . . . . . . . . . . . . . . . 17
5.2 Due Diligence Matters . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Buyer's Inspections and Interviews. . . . . . . . . . . . . . . . . 19
5.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Buyer's Right of Termination. . . . . . . . . . . . . . . . . . . . 20
5.6 FF&E Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Project Names.. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Seller's Representations Regarding the Hotel. . . . . . . . . . . . 21
6.1.1 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 21
6.1.2 Violation of Laws . . . . . . . . . . . . . . . . . . . . 21
6.1.3 Tax Protests and Appeals. . . . . . . . . . . . . . . . . 21
6.1.4 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1.5 Use Permits and Other Approvals . . . . . . . . . . . . . 22
6.1.6 Hazardous Substances. . . . . . . . . . . . . . . . . . . 22
6.1.7 Service Contracts . . . . . . . . . . . . . . . . . . . . 22
6.1.8 Due Diligence Materials . . . . . . . . . . . . . . . . . 22
6.1.9 SMA Permit. . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . 23
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6.1.12 Personal Property . . . . . . . . . . . . . . . . . . . . 23
6.1.13 Guest Membership Program. . . . . . . . . . . . . . . . . 23
6.2 Seller's Representations Regarding Seller . . . . . . . . . . . . . 23
6.2.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2.2 Consents. . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2.3 Lawsuits. . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2.4 Broker. . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2.5 Non-Foreign Status. . . . . . . . . . . . . . . . . . . . 24
6.2.6 Validity of Agreement . . . . . . . . . . . . . . . . . . 24
6.3 By Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3.2 Consents. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3.3 Lawsuits. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3.4 Broker. . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3.5 Validity of Agreement . . . . . . . . . . . . . . . . . . 25
6.3.6 Investigations; Purchase "As Is". . . . . . . . . . . . . 25
6.4 Waiver and Release. . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Survival and Limitations. . . . . . . . . . . . . . . . . . . . . . 28
6.6 Notice of Subsequent Event or Discovery . . . . . . . . . . . . . . 28
7. OPERATION OF THE HOTEL PENDING CLOSING AND OTHER AGREEMENTS . . . . . . . . 29
7.1 Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 FF&E and Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.5 Hotel Management Agreement; TSA Leases. . . . . . . . . . . . . . . 31
7.6 Liquor License(s) and Inventory . . . . . . . . . . . . . . . . . . 31
7.7 Project Logo. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.8 Guest Membership Program. . . . . . . . . . . . . . . . . . . . . . 32
7.9 Lot 462 License Agreement . . . . . . . . . . . . . . . . . . . . . 33
7.10 First Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . 33
7.11 Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.12 Report of Bulk Sale . . . . . . . . . . . . . . . . . . . . . . . . 33
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7.13 Notice of Purchase. . . . . . . . . . . . . . . . . . . . . . . . . 33
7.14 Parking Parcels . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.15 Saflok Upgrade. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8. PRORATIONS, CREDITS AND OTHER ADJUSTMENTS . . . . . . . . . . . . . . . . . 34
8.1 Proration of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2 Proration of Expenses . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Credits to Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.4 Credits to Seller . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.5 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . 35
8.6 Accounts Payable. . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.7 Items Excluded from Prorations. . . . . . . . . . . . . . . . . . . 36
8.8 Basis of Prorations . . . . . . . . . . . . . . . . . . . . . . . . 37
8.9 Guests' Property. . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.10 Proration Procedures. . . . . . . . . . . . . . . . . . . . . . . . 37
8.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.12 Economic Closing Date . . . . . . . . . . . . . . . . . . . . . . . 41
9. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Buyer's Conditions Precedent. . . . . . . . . . . . . . . . . . . . 41
9.2 Seller's Conditions Precedent . . . . . . . . . . . . . . . . . . . 43
10. Condemnation; Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . 44
11. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.1 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . 45
11.3 Buyer's Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Seller's Closing Costs. . . . . . . . . . . . . . . . . . . . . . . 47
11.5 Buyer's Closing Costs . . . . . . . . . . . . . . . . . . . . . . . 47
11.6 Other Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7 Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7.1 Instructions. . . . . . . . . . . . . . . . . . . . . . . 47
11.7.2 Deposits into Escrow. . . . . . . . . . . . . . . . . . . 48
11.7.3 Close of Escrow . . . . . . . . . . . . . . . . . . . . . 48
11.7.4 Real Estate Reporting Person. . . . . . . . . . . . . . . 48
11.7.5 Procedure for Termination of Escrow . . . . . . . . . . . 48
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11.7.6 Maintenance of Confidentiality by Escrow Agent. . . . . . 49
11.7.7 Employer Identification Numbers . . . . . . . . . . . . . 49
12. LIQUIDATED DAMAGES AND LIMITATIONS OF REMEDIES FOR
BUYER'S BREACH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1 LIQUIDATED DAMAGES/DEPOSIT. . . . . . . . . . . . . . . . . . . . . 49
12.2 LIQUIDATED DAMAGES/RELEASED DEPOSIT . . . . . . . . . . . . . . . . 50
13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.1 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.4 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 54
13.5 Construction; Participation in Drafting . . . . . . . . . . . . . . 55
13.6 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . 55
13.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.8 Integration and Binding Effect. . . . . . . . . . . . . . . . . . . 55
13.9 Computation of Time . . . . . . . . . . . . . . . . . . . . . . . . 55
13.10 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.11 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 55
13.12 Enforcement Costs . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.13 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.15 No Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.16 No Recordation. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.17 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.18 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.19 Time Is of the Essence. . . . . . . . . . . . . . . . . . . . . . . 57
13.20 Shadow Management.. . . . . . . . . . . . . . . . . . . . . . . . . 57
13.21 General Indemnity Provisions. . . . . . . . . . . . . . . . . . . . 57
13.21.1 Claims Against Seller and Indemnification of Buyer. . . . 57
13.21.2 Defense of Claims Against Buyer . . . . . . . . . . . . . 57
13.21.3 Indemnification of Seller . . . . . . . . . . . . . . . . 58
13.21.4 Defense of Claims Against Seller. . . . . . . . . . . . . 58
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
Exhibit A Legal Description. . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B Form of Deed . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C Form of Bill of Sale and Assignment . . . . . . . . . . . . . C-1
Exhibit D Form of Assignment of Leases . . . . . . . . . . . . . . . . . D-1
Exhibit E Form of FIRPTA Certificate . . . . . . . . . . . . . . . . . . E-1
Exhibit F Form of Liquor License Agreement . . . . . . . . . . . . . . . F-1
Exhibit G Title Binder . . . . . . . . . . . . . . . . . . . . . . . . . G-1
Exhibit H Project Logo . . . . . . . . . . . . . . . . . . . . . . . . . H-1
Exhibit I Form of Employee Notice. . . . . . . . . . . . . . . . . . . . I-1
Exhibit J Form of Tenant Estoppel Certificate. . . . . . . . . . . . . . J-1
Exhibit K Form of Notice to Tenants. . . . . . . . . . . . . . . . . . . K-1
SCHEDULES
Schedule 1 Schedule of Service Contracts, Leases and Equipment Leases . . 1-1
Schedule 2 Schedule of Known Litigation . . . . . . . . . . . . . . . . . 2-1
Schedule 3 Schedule of Artwork. . . . . . . . . . . . . . . . . . . . . . 3-1
</TABLE>
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<PAGE>
AGREEMENT FOR PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS (this "AGREEMENT") is made as of November 5, 1998, between
INTERNATIONAL HOTEL ACQUISITIONS, LLC, a Delaware limited liability company
("SELLER") and KSL RECREATION CORPORATION, a Delaware corporation ("BUYER").
A. Seller is the owner of that certain real property
described on EXHIBIT A attached hereto, commonly known as the Grand Wailea
Resort Hotel & Spa.
B. Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Hotel, and the personal property and other rights
and interests related thereto which, together, comprise the Property (as
hereinafter defined), on the terms and subject to the conditions set forth in
this Agreement.
IN CONSIDERATION OF the foregoing Recitals and the mutual
covenants and conditions contained herein, the receipt and sufficiency of
which are hereby acknowledged, Buyer and Seller do hereby agree and covenant
with each other as follows:
1. GENERAL PROVISIONS.
1.1 DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings set forth below.
"ACCOUNTANT" means PricewaterhouseCoopers LLP, or if
PricewaterhouseCoopers LLP is unable to serve in such capacity, another
independent accounting firm selected by Seller and reasonably approved by
Buyer for the purpose described in SECTION 8.10. The Accountant shall be one
of the "big five" accounting firms or another accounting firm having
recognized expertise in matters of hotel accounting.
"ACCOUNTS PAYABLE" means all accrued amounts owed by Seller
(or by Hotel Manager as agent of Seller) as of the Proration Time and arising
out of the ownership or operation of the Hotel, including, without
limitation, the following: unpaid charges for utilities; amounts payable to
creditors from whom Inventory, FF&E, Consumables, Expendables and other items
have been purchased in connection with the ownership or operation of the
Hotel, including amounts then owing under open purchase orders; amounts
payable under the Service Contracts, the Equipment Leases, and otherwise with
respect to any Intangible Property, and with respect to maintenance, cleaning
and other services performed in connection with the operation of the Hotel;
provided, however, the term Accounts Payable does not include Booking
Deposits or Tenant Deposits or closing costs incurred by Seller or its agents
in connection with closing the transaction contemplated hereby.
"ACCOUNTS RECEIVABLE" means all accrued amounts owed to Seller
(or to Hotel Manager as agent of Seller) as of the Proration Time and arising
out of the ownership or operation of the Hotel, whether or not past due and
whether or not a bill or statement has been
1
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presented to the person or entity owing such amount, including the following:
lease rentals, percentage rentals, escalation rentals, operating cost
pass-throughs and all other sums and charges payable by Tenants; room, food
and beverage charges; telephone or telecopy charges; valet charges; charges
for other services or merchandise; charges for banquets, meeting rooms,
catering and the like; sales, use and occupancy taxes due from the consumers
of goods and services; and amounts owed from credit card companies pursuant
to signed credit card receipts, whether or not such credit card receipts have
been delivered by Seller to the credit card companies (net of chargebacks);
provided, however, the term Accounts Receivable does not include Excluded
Claims.
"ADA COMPLIANCE OBLIGATIONS" means the obligations to perform
certain improvements to the Hotel as required pursuant to that certain
Settlement Agreement, General Release and Waiver of Claims dated August 7,
1998 by and between IHA and Randall Martin.
"ADDITIONAL DEPOSIT" has the meaning given such term in
SECTION 3.1.2.
"AFFILIATE" means any Person controlling, controlled by or
under common control with another Person; control for the purposes hereof
meaning the possession of more than 10% of the economic or voting interest in
an entity or control in fact. "Controls" (which includes the correlative
meanings of "controlled by" and "under common control with") means effective
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person.
"APPROVAL DATE" means 5:00 p.m. Los Angeles time on the date
on which the Due Diligence Period expires.
"APPROVED DELIVERY METHOD" has the meaning given such term in
SECTION 8.11.1.
"ARTWORK" means the artwork which is described on SCHEDULE 3.
"ASSIGNMENT OF LEASES" means an Assignment and Assumption of
Lessor's Interest in Leases in the form attached hereto as EXHIBIT D.
"ASSUMED CONTRACTS" means the Service Contracts, Leases and
Equipment Leases, except to the extent that Buyer elects not to assume on or
before the Approval Date any Service Contract or Equipment Lease which is
terminable on thirty (30) days or fewer notice on or before the Closing Date.
"BEACH AND POOL COLLECTIVE BARGAINING AGREEMENT" means that
certain Agreement by and between Grand Wailea Resort Hotel & Spa and the
Union with respect to beach and pool attendants at the Hotel.
"BILL OF SALE AND ASSIGNMENT" means a Bill of Sale and
Assignment in the form attached hereto as EXHIBIT C.
"BOOKING" means a contract or other commitment for the future
use of guest rooms, banquet facilities, meeting rooms, chapel or other Hotel
facilities and off-site catering
2
<PAGE>
made in the Ordinary Course to unaffiliated third parties. Bookings include
any reservations made or other rights of members pursuant to and in
accordance with the Guest Membership Program.
"BOOKING DEPOSIT" means all room reservation deposits, public
function, banquet, food and beverage deposits, wedding and other deposits or
fees for Occupancy Commitments.
"BOOKS AND RECORDS" means the books, records, files (including
personnel files to the extent requested by Buyer) and all customer,
reservation, convention, sales, groups, catering, mailing or "frequent user"
lists, operating ledgers and all back-up files and records relating to the
operations of the Hotel (including historical operating records), maintained
at the Hotel or in Seller's possession, including (A) any computer drives,
disks, tapes and other data bases which contain the names and addresses of
past or prospective customers, and (B) all marketing information used for the
Hotel, including copies of all form letters which are used in connection with
any marketing programs as well as any other information relating to marketing
programs for the Hotel.
"BULK SALES CERTIFICATE" has the meaning given such term in
SECTION 7.12.
"BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banking institutions in the City of New York, City of Honolulu
or the City of Los Angeles are authorized or required by law or other
governmental action to be closed.
"BUYER ACCELERATION NOTICE" has the meaning given such term in
SECTION 8.11.1.
"BUYER EMPLOYEES" means the employees employed by Buyer, any
Affiliate of Buyer or any manager designated by Buyer to employ such
employees with respect to the Hotel from and after the Closing Date. Buyer
Employees shall only include those employees actually hired by Buyer, any
such Affiliate or any such manager.
"BUYER EMPLOYEE OBLIGATIONS" means all obligations and
liabilities, actual or contingent, with respect to Buyer Employees arising
from Buyer's employment relationship with such individuals from and after the
Closing Date, including any and all obligations or liabilities: (A) for
wages, salaries, accrued vacation, medical insurance, fringe benefits, and
payroll taxes; (B) for worker's compensation claims based on any real or
alleged occurrence; (C) for retirement benefits and employer contributions to
pension plans; (D) arising under any new collective bargaining agreements or
other agreements negotiated with any labor organizations; and (E) except to
the extent expressly allocated to Seller pursuant to SECTION 8, for claims or
penalties under applicable Laws governing employer/employee relations
(including the National Labor Relations Act and other labor relations laws,
wages, hours and employment standards Laws, fair employment practices and
anti-discrimination Laws, the WARN Act, the Employee Retirement Income
Security Act ("ERISA"), the Multi-Employer Pension Plan Amendments Act, the
Consolidated Omnibus Budget Reconciliation Act of 1985 and the DWA). Buyer
Employee Obligations do not include actual or contingent Severance
Obligations and shall in no event be deemed to include Hotel Employee
Obligations.
"BUYER PARTIES" has the meaning given such term in SECTION 7.5.
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"CAPITAL EXPENDITURE PLAN" means (i) the installation of the
Fidelio property management and back-office system pursuant to the Fidelio
Agreements and (ii) Seller's best efforts to cause the upgrading of the
Saflok door lock system to make it Year 2000 Compliant under the extended
maintenance contract for such system with Computer Security Systems.
"CASH BANKS" means with respect to the Hotel, cash on hand in
house banks and petty cash at the Hotel as of Closing, which amount Seller
covenants will not be less than $180,000. Amounts on deposit with a
financial institution in Seller's name (or Hotel Manager's name for the
account of Seller) including, without limitation, all amounts in tax and
insurance escrows, working capital reserves, FF&E reserves, bank accounts and
cash management accounts relating to the Hotel or the First Mortgage Loan,
shall not be considered cash on hand, and such amounts shall remain the
property of Seller.
"CLAIMS" means any and all claims, demands, obligations,
liabilities, indebtedness, breaches of contract, breaches of duty or any
relationship, acts, omissions, misfeasance, malfeasance, cause or causes of
action, debt, sums of money, accounts, compensations, contracts,
controversies, promises, damages, costs, losses and expenses, including
reasonable attorneys' fees and costs.
"CLOSING" means the recordation of the Deed in the Official
Records.
"CLOSING DATE" means date upon which the Closing occurs, which
date shall be December 31, 1998 unless (i) Buyer delivers the Buyer
Acceleration Notice in accordance with SECTION 8.11.1, in which event the
Closing Date shall be the date which is forty-six (46) days after delivery of
the Employee Notices, or (ii) Seller delivers the Seller Acceleration Notice
in accordance with SECTION 8.11.1, in which event the Closing Date shall be
December 29, 1998; provided, however, if Seller and Buyer have not satisfied
all of the conditions to Closing set forth in SECTION 9.1 by such date,
either Seller or Buyer shall have the right, but not the obligation, in each
such party's sole discretion, to extend the Closing Date until December 31,
1998, by giving written notice of such extension to the other party hereto at
least two (2) Business Days prior to the expiration of the then applicable
Closing Date.
"CLOSING DOCUMENTS" means the Deed, Assignment of Leases, Bill
of Sale and Assignment, FIRPTA Certificate, and all the other documents to be
delivered hereunder at, or for purposes of effecting, Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSUMABLES" means merchandise, unopened and sealed food and
beverages held for sale in connection with the operation of the Hotel on the
Closing Date, including (i) food inventories, (ii) beverage inventories other
than the Liquor Inventory, and (iii) items owned by Seller (or held in the
name of Hotel Manager or its Affiliates for the account of Seller) and held
for resale in the various restaurants (other than Kincha), shops and stores
at the Hotel.
"COLLECTIVE BARGAINING AGREEMENTS" means, collectively, the
Local 142 Collective Bargaining Agreement and the Beach and Pool Collective
Bargaining Agreement.
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"DEED" means a deed in the form attached hereto as EXHIBIT B,
conveying the Hotel to Buyer subject to the Permitted Exceptions.
"DELINQUENT PREMIUMS" has the meaning given such term in
SECTION 8.11.5.
"DEPOSIT" has the meaning given such term in SECTION 3.1.2.
"DISAPPROVED MATTER" has the meaning given such term in
SECTION 4.1.2.
"DUE DILIGENCE MATTERS" has the meaning given such term in
SECTION 5.2.
"DUE DILIGENCE PERIOD" means the period which commenced on
October 16, 1998 and expires at 5:00 p.m. Los Angeles time on November 14,
1998.
"DWA" means the Hawaii Dislocated Workers Act and all
regulations pertaining thereto.
"DWA ALLOWANCE" means the dislocated workers' allowance
provided to employees under Section 12-506-8 of the regulations to the DWA.
"DWA PENALTIES" means the penalties, if any, imposed under the
DWA, for the failure to provide each employee, the director of labor and
industrial relations for the State of Hawaii, the Union and local
Governmental Authorities timely and adequate written notification of a
closing, partial closing or relocation in accordance with the terms of the
DWA arising from the transaction contemplated by this Agreement.
"ECONOMIC CLOSING DATE" has the meaning given such term in
SECTION 8.12.
"EFFECTIVE DATE" means the date of this Agreement.
"EMPLOYEE NOTICE" means the notice to Hotel Employees and
applicable Governmental Authorities in the form attached hereto as EXHIBIT I,
which notices will be delivered pursuant to the Approved Delivery Method.
"ENVIRONMENTAL LAWS" means all federal, state and local laws
and ordinances governing the use, storage, transportation or disposal of
Hazardous Substances in effect as of the date of this Agreement and
applicable to the Property.
"EQUIPMENT LEASES" means all leases, rental or other
agreements entered into by Seller for the use of any of the FF&E, together
with all supplements and amendments and modifications thereto set forth on
Schedule 1.
"ESCROW" means Escrow No. REQ 014854 established with Title
Company.
"ESCROW AGENT" means the Title Company, acting through its
office in New York, New York, whenever acting in the capacity of an escrow
holder pursuant hereto.
"EXCLUDED CLAIMS" means (i) any claims now or hereafter filed
by Seller for refund or rebate with respect to the ownership, use or
operation of the Property for periods prior
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to the Closing Date (including claims for the refund or rebate of real
property taxes and assessments for periods prior to the Closing Date), and
(ii) choses in action, claims and rights that Seller may have with respect to
the period prior to the Closing Date for matters such as monetary claims or
claims for indemnification, defense or reimbursement against Hotel Manager or
under the Service Contracts, claims under any insurance policy maintained
with respect to the Property (except claims under such insurance policies
assigned to Buyer pursuant to SECTION 10), and claims against former tenants
or former occupants of space in the Hotel for unpaid rent or other charges
with respect to the period prior to the Closing Date; provided, however, the
term Excluded Claims does not include Accounts Receivable, Claims under the
Warranties and Guaranties or the Lot 462 license agreement (if any) . The
Excluded Claims are being retained by Seller.
"EXCLUDED PROPERTY" means (i) cash (other than in cash in Cash
Banks) and bank accounts (and amounts deposited therein) of Seller, (ii)
insurance policies for the Hotel (except to the extent Seller and Buyer
otherwise agree that such insurance policies will be included in the Property
prior to Closing), (iii) Accounts Receivable of Seller accruing before the
Closing Date (except to the extent Seller receives a credit for specified
Accounts Receivable as part of the Closing prorations, in which event such
Accounts Receivables will be assigned to Buyer at Closing for collection
purposes pursuant to SECTION 8.5), (iv) the TSA Personalty, (v) any contracts
that are not Assumed Contracts, (vi) rights of Seller under the agreements
between Seller and GWC and GWC's Affiliates in connection with Seller's
acquisition of the Property, unless specifically assigned to Buyer which
agreements shall be disclosed to Buyer prior to the expiration of the Due
Diligence Period (or November 10, 1998, if Seller delivers the Seller
Acceleration Notice), except to the extent such agreements are Protected
Materials.
"EXPENDABLES" means blankets, linens, tableware, china,
glassware, uniforms and other goods of an expendable nature owned or leased
by Seller on the Closing Date in connection with the ownership, operation or
maintenance of the Hotel including stocks of operating supplies not in use,
engineering supplies, guest supplies, housekeeping supplies, office supplies
and promotional materials; PROVIDED, HOWEVER, the term Expendables does not
include Consumables, FF&E or Liquor Inventory.
"FIDELIO AGREEMENTS" means collectively, (i) the GTE Leasing
Corporation Flex Lease Agreement dated September 8, 1998, between Seller and
GTE Leasing Corporation, (ii) the GTE Leasing Corporation Flex Lease
Agreement dated September 8, 1998, between Seller and Pacific Computer
Associates, (iii) the Intellectual Property License and Support Agreement
dated September 18, 1998 between Seller and MICROS Systems, Inc., and (iv)
the Hardware Sales Agreement between Seller and MICROS Systems, Inc.
"FF&E" means all furniture, furnishings, fixtures, machinery,
artwork and equipment installed or used in the Hotel, including, such
furniture and furnishings in guest rooms, public areas and non-public areas
(such as kitchen, laundry and cleaning facilities, rooms for the use of
employees, storage areas, front desk and administrative offices), floor and
window coverings, decorative light fixtures and equipment shown on the FF&E
Inventory and later acquired or replaced pursuant to Section 7; PROVIDED,
HOWEVER, the term FF&E does not include Expendables, Artwork, Inventory or
Liquor Inventory, equipment leased under the Equipment Leases, and TSA
Personalty.
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"FF&E INVENTORY" has the meaning given such term in SECTION
5.6.
"FIRPTA CERTIFICATE" means with respect to Seller, a federal
Nonforeign Certification in the form attached hereto as EXHIBIT E-1 and a
Hawaii nonforeign certification in the form attached hereto as EXHIBIT E-2.
"FIRST MORTGAGE" has the meaning given such term in the
definition of Mortgages.
"FIRST MORTGAGE LOAN" means the loan secured by the First
Mortgage and all documents, instruments and agreement evidencing such loan,
including, without limitation the First Mortgage Note (which documents will
be delivered to Buyer within one (1) day after the Effective Date).
"FIRST MORTGAGE NOTE" means that certain Amended and Restated
Mortgage Note dated October 28, 1998 in the principal amount of $275,000,000
made by Seller in connection with the First Mortgage Loan.
"GOLF RIGHTS" means all rights of Seller to use one or more of
the golf courses which may be from time to time owned by Wailea Development
Company, Inc. ("WDC") or any successor(s) in interest arising under that
certain Land Sales Contract (Site A/B) dated as of May 2, 1986 (the "LAND
SALES CONTRACT") between WDC, as seller, and TSA International, Limited and
Kumagai Gumi Co., Ltd, collectively, as buyer, in accordance with the terms
of the Land Sales Contract, as assigned to Seller pursuant to a Bill of Sale
dated June 15, 1998 delivered by GWC, GWRHS and TSA Management to Seller.
"GOVERNMENTAL AUTHORITY" means all federal, state, county,
municipal, and local governments, administrative agencies, and
quasi-governmental authorities having jurisdiction over the Property (or any
portion thereof) or any party hereto.
"GRAND WAIKAPU" has the meaning given such term in SECTION 7.7.
"GUEST MEMBERSHIP PROGRAM" means the existing guest membership
program operated by GWRHS pursuant to the GWRHS Membership Program Documents.
"GWC" means Grand Wailea Company, a Hawaii limited partnership.
"GWRHS" means Grand Wailea Resort Hotel and Spa, Inc., a
Delaware corporation.
"GWRHS AGREEMENT" means the GWRHS Agreement dated as of June
15, 1998 by and between Seller and GWRHS, pursuant to which GWRHS has caused
50% of the interest earned on trust accounts, net of any general excise taxes
paid with respect to such interest, held in connection with the Guest
Membership Program to be paid to Seller and has agreed to transfer all right,
title and interest in the Guest Membership Program and all assets thereof to
the Person which purchases the Property from Seller.
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"GWRHS MEMBERSHIP PROGRAM DOCUMENTS" means the GWRHS Agreement
program materials for the Guest Membership Program and all agreements with
members of such program.
"HAZARDOUS SUBSTANCE" means substances defined as "wastes",
"hazardous wastes", "hazardous substances", "hazardous materials", "toxic
substances", "pollutants", "contaminants", or other similar designations in,
or which are otherwise specifically subject to regulation under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 ET SEQ.; the Toxic Substance Control Act, 15 U.S.C.
Section 2601 ET SEQ.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1802; the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 ET SEQ., or any asbestos-containing materials, PCBs or formaldehyde foam
insulation.
"HOTEL" means the Hotel Parcel and the Hotel Improvements.
"HOTEL EMPLOYEES" means all persons employed by GWC or Seller
at the Hotel at any time prior to the Closing.
"HOTEL EMPLOYEE OBLIGATIONS" means all obligations and
liabilities, actual or contingent, with respect to Hotel Employees (whether
employed by any of Seller, the Hotel Manager, any Affiliate of Seller or any
Affiliate of the Hotel Manager) arising from their employment relationship
with such individuals prior to the Closing, including any and all obligations
or liabilities: (A) for wages, salaries, accrued vacation, medical insurance,
fringe benefits, and payroll taxes; (B) for worker's compensation claims
based on any real or alleged occurrence; (C) for retirement benefits and
employer contributions to pension plans; (D) arising under the Collective
Bargaining Agreements or other agreements with unions representing Hotel
Employees; and (E) except to the extent expressly allocated to Buyer pursuant
to SECTION 8, for claims or penalties under applicable Laws governing
employer/employee relations (including the National Labor Relations Act and
other labor relations laws, wage, hours and employment standards Laws, fair
employment practices and anti-discrimination Laws, the WARN Act, the Employee
Retirement Income Security Act, the Multi-Employer Pension Plan Amendments
Act, the Consolidated Omnibus Budget Reconciliation Act of 1985 and the DWA).
Hotel Employee Obligations do not include actual or contingent Severance
Obligations.
"HOTEL IMPROVEMENTS" means all buildings, structures, fixtures
and improvements located on the Hotel Parcel, whether now existing or
hereafter constructed, installed or placed on the Hotel Parcel (including
curbs, landscaping and any underground utilities), and all apparatuses,
equipment, and appliances used in connection with the operation or occupancy
of the Hotel, such as heating and air conditioning systems and facilities
used to provide any utility services, refrigeration, ventilation, garbage
disposal, recreation or other services for the Hotel.
"HOTEL MANAGER" means GWC in its capacity as the manager of
the Hotel for Seller since June 15, 1998.
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"HOTEL MANAGEMENT AGREEMENT" means that certain Hotel
Operating Agreement dated as of June 15, 1998 between Seller and Hotel
Manager.
"HOTEL PARCEL" means that certain real property consisting of
approximately 36.6 acres of land located in Wailea, Maui, Hawaii and more
particularly described on EXHIBIT A attached hereto, together with all
rights, privileges and easements appurtenant to the Land, including all
minerals, oil, gas and other hydrocarbon substances on such land, all
development rights, parking rights, air rights, water, water rights and water
stock relating to the Land and any and all easements, ground leases, streets,
alleys and other public ways adjacent to the Land, and all rights-of-way and
other appurtenances used in connection with the beneficial use and enjoyment
of the Land. The Hotel Parcel shall include the Parking Parcels unless the
same are conveyed to the County of Maui prior to Closing pursuant to SECTION
7.14.
"INITIAL DEPOSIT" has the meaning given such term in SECTION
3.1.1.
"INTANGIBLE PROPERTY" means all choses in action, contract
rights (other than in any agreements between Seller and GWC disclosed to
Buyer during the Due Diligence Period, or November 10, 1998, if Seller
delivers the Seller Acceleration Notice), Bookings, concessions, trademarks,
service marks, logos, computer systems and programs, operating systems, trade
secrets, technology and technical information, copyrights, permits, plans,
drawings, and other items of intangible personal property relating to the
ownership, construction or operation of the Hotel, including (i) all benefits
under any deposits or completion bonds, guarantees related to the
construction of the Hotel, (ii) all rights to collect any past due rents
under the Leases and all security deposits by Tenants and concessionaires,
(iii) cash in Cash Banks on the Closing Date, (for which Buyer will pay
Seller dollar for dollar at Closing in addition to the Purchase Price), (iv)
utility deposits, (v) all other general intangibles and other intangible
property used in connection with the construction, use, occupancy,
development or marketing of the Property, (vi) all goodwill owned by Seller
in connection with the Hotel, together with telephone lists and customer
lists, (vii) the Golf Rights, (viii) the Books and Records, (ix) all computer
files and computer software related to Hotel accounting, bookings, inventory
control and related matters, (x) Project Names, (xi) if acquired by Buyer in
accordance with the terms of the GWRHS Agreement, the Guest Membership
Program and related data bases, (xii) to the extent assignable without
liability to Seller, Seller's state and federal unemployment insurance
number, rating and reserve accounts and FICA, FUTA and SUTA tax amounts (or,
if such items are held by Hotel Manager, Seller shall use its best efforts to
cause Hotel Manager to assign such items to Buyer), (xiii) Licenses and
Permits and (xiv) to the extent assignable, all warranties, guarantees and
indemnities from any contractors, subcontractors, manufacturers, suppliers or
materialmen in connection with any construction, repairs or alteration of the
Hotel and, to the extent assignable without the consent of GWC or its
Affiliates, any warranties, guarantees, and indemnities from GWC or its
Affiliates (collectively, "WARRANTIES AND GUARANTIES"). Intangible Property
does not include, however, (i) Service Contracts, (ii) Leases and (iii)
Equipment Leases.
"INVENTORY" means the stock in trade of the Hotel, including
both Consumables and Expendables; PROVIDED, HOWEVER, the term Inventory does
not include FF&E or Liquor Inventory.
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"KINCHA PERSONALTY" means all tangible personal property
located in or used in connection with the operation of the Kincha restaurant
at the Hotel, including expendables, china, silverware, furniture, decorative
items, fixtures and equipment.
"KNOWN LITIGATION" means the litigation, insurance claims and
notices of legal violations with respect to the Hotel set forth on SCHEDULE 5
attached hereto, none of which shall be the responsibility of Buyer.
"LAWS" means any and all: (i) constitutions, statutes,
ordinances, rules, regulations, orders, rulings or decrees of any
Governmental Authority, including, without limitation, the SMA Permit
Conditions, and (ii) agreements with or covenants or commitments to any
Government Authority which are binding upon Seller or any of the elements of
the Property (including any requirements or conditions for the use or
enjoyment of any license, permit, approval, authorization or consent legally
required for the operation of the Hotel).
"LEASES" means all written leases, subleases, licenses and
concessions, (other than Bookings), entered into or assumed by Seller which
grant to any Person(s) the right to use or occupy any portion of the Hotel,
and all renewals, modifications, amendments, guaranties, and other agreements
affecting the same, all as set forth on SCHEDULE 1.
"LENDER" means Credit Suisse First Boston Mortgage Capital LLC
and its successors and assigns.
"LICENSES AND PERMITS" means all certificates of occupancy and
all zoning, land use, building, safety and health approvals, development
rights and all other permits needed for or used in connection with the
construction, use or operation of the Hotel (including, without limitation,
the SMA Permit and all applications for zone changes and variances in
connection with all or any part of the Hotel), but not including the Liquor
License.
"LIQUOR INVENTORY" means all unopened and sealed alcoholic
beverages on hand at the Hotel as of the Proration Time on the Closing Date.
"LIQUOR LICENSE" means License No. 155 issued by the MLC to
Liquor Licensee.
"LIQUOR LICENSE AGREEMENT" means the Liquor License Transfer
Agreement attached hereto as EXHIBIT F.
"LIQUOR LICENSEE" means the person(s) or legal entity(ies)
holding the Liquor License(s).
"LIQUOR OPERATIONS" means the sale and/or service of liquor,
wine, beer or other alcoholic beverages at the Hotel.
"LIQUOR PERSONALTY" means the fixtures, equipment, glassware
and other expendable items, and other personal property used in the sale of
alcoholic beverages at the Hotel.
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"LOCAL 142 COLLECTIVE BARGAINING AGREEMENT" means that certain
Agreement dated as of February 1, 1997 by and between the ILWU, Local 142,
AFL-CIO and Grand Wailea Resort, Hotel and Spa.
"LOT 462" means the parcel of land adjacent to the Hotel
Parcel consisting of approximately 10.740 acres, as described in Transfer
Certificate of Title No. 332.030 issued to TSA International, Limited.
"MLC" means the Maui County Liquor Commission.
"MORTGAGES" means (A) that certain Consolidation of Existing
Mortgages, Amendment to and Restatement of Consolidated Mortgages, along with
Assignment of Leases and Rents and Security Agreement recorded on June 15,
1998, in the Official Records as Land Court Document Number 2463685 in favor
of Lender, or (B) after the following are recorded collectively, the (i)
Amended and Restated Mortgage, Security Agreement, Assignment of Leases and
Fixture Filing in the principal amount of $275,000,000 in favor of Lender
(the "FIRST MORTGAGE"), (ii) Amended and Restated Mortgage, Security
Agreement, Assignment of Leases and Fixture Filing in the principal amount of
$25,000,000 in favor of Lender (the "SECOND MORTGAGE"), and (iii) Amended and
Restated Mortgage, Security Agreement, Assignment of Leases and Fixture
Filing in the principal amount of $57,000,000 in favor of Lender; each of (i)
- - (iii) to be recorded in the Official Records.
"NOTICE OF PURCHASE" has the meaning given such term in
SECTION 7.13.
"NOTICE TO PROCEED" has the meaning given such term in
SECTION 5.5.
"NOTICE TO TENANT" means the notice to Tenants of the Hotel in
the form attached hereto as EXHIBIT K.
"OCCUPANCY COMMITMENTS" means all commitments with respect to
occupancy of the Hotel, including Bookings, purchase orders, gift
certificates, donations, free rooms and trade outs made in the Ordinary
Course, a schedule of which will be delivered by Seller to Buyer prior to the
expiration of the Due Diligence Period (or November 10, 1998, if Seller
delivers the Seller Acceleration Notice) and an updated schedule of which
will be delivered by Seller to Buyer not less than five (5) Business Days
prior to the Closing Date (it being understood and agreed that any additions
to such schedule shall only be those Occupancy Commitments entered into in
accordance with SECTION 7.1.5).
"OFFICIAL RECORDS" means the records of the Assistant
Registrar of the Land Court of the State of Hawaii.
"ORDINARY COURSE" means the course of day-to-day operation of
the Hotel, in accordance with its current operating budget heretofore
delivered to Buyer and in a manner which does not materially vary from the
policies, practices and procedures which have characterized its operation
during Seller's period of ownership, including, without limitation,
implementation of the Capital Expenditure Plan.
"PARKING PARCELS" means Lot 463-C and Lot 463-D.
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"PERMITTED EXCEPTIONS" has the meaning given such term in
SECTION 4.1.1.
"PERSON" means any individual, partnership, joint venture,
corporation, limited liability company, firm, trustee, trust, business trust,
association or unincorporated organization, governmental authority,
municipality or other entity.
"PERSONAL PROPERTY" means all personal property which is
either located on the Hotel Parcel or in the Hotel Improvements or used in
connection with the use, operation or maintenance of the Hotel, including,
without limitation, Books and Records, Artwork, Plans and Specifications,
Leases, FF&E, Inventory, Kincha Personalty, Service Contracts and Licenses
and Permits.
"PLANS AND SPECIFICATIONS" means all plans and specifications
for the Hotel Improvements in the possession of Seller or located at the
Hotel, including "as built" plans and specifications, studies, surveys and
other similar materials in connection with the Hotel.
"PROJECT LOGO" means the logo depicted on EXHIBIT H attached
hereto.
"PROJECT NAMES" means (i) all names, trade names, trademarks,
and designs used in the operation or ownership of the Hotel or any part
thereof (except for names used by Tenants in the Hotel in the operation of
their space), including the names "Grand Wailea Hotel", "Grand Wailea Resort
Hotel & Spa" and "Grand Wailea" (but excluding the names "Napua Gallery" and
"Floral Gallery"), (ii) the names and designs used in connection with the
restaurants, cocktail lounges, banquet rooms, meeting rooms and other
facilities in or about the Hotel, (iii) the Project Logo and all other logos
at the Project, including the restaurants, cocktail lounges, banquet rooms,
meeting rooms and other facilities in or about the Hotel, (iv) Seller's
rights, if any, in any registration applications or pending registration
applications, and (v) the goodwill appurtenant to each of such names, logos
and designs.
"PROPERTY" means all of Seller's legal and equitable right,
title and interest in, control over, and ownership of the following: the
Hotel, Personal Property, Intangible Property and the Assumed Contracts.
Notwithstanding anything to the contrary in this Agreement, the Property
excludes the Excluded Property.
"PRORATION TIME" means 12:01 a.m., Hawaii time on the Closing
Date or, if Buyer so elects pursuant to SECTION 8.12, on the Economic Closing
Date.
"PROTECTED MATERIAL" has the meaning given such terms in
SECTION 5.1.
"PURCHASE PRICE" means Three Hundred Seventy-Five Million
Dollars ($375,000,000).
"RELEASED DEPOSIT" has the meaning given such term in
SECTION 3.1.1
"SELLER ACCELERATION NOTICE" has the meaning given such term
in SECTION 8.11.1.
"SELLER'S BROKER" means Secured Capital Corp., a California
corporation.
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"SELLER'S KNOWLEDGE" means and shall be strictly construed and
limited to the actual knowledge of Lance Graber, Keith Hansen and Bernard
Siegel, and does not imply either (A) any inspection, examination or other
inquiry undertaken by Seller or said individuals to determine the accuracy of
any representation, warranty or other statement made "to Seller's Knowledge"
in this Agreement or in any other document delivered by Seller prior to or at
Closing or (B) any personal liability on the part of any of said individual
or his employer other than Seller for any inaccuracy in such representations,
warranties or other statements. The phrase "Seller has not received any
written notice" with respect to an event or situation means that no written
notice with respect to such event or situation has been received by the
foregoing individual.
"SELLER PARTIES" has the meaning given such term in
SECTION 5.4.
"SERVICE CONTRACTS" means service or maintenance contracts and
agreements (other than Bookings) entered into or assumed by Seller (or
entered into or assumed by Hotel Manager as Seller's agent) respecting
ownership, maintenance or operation of the Hotel, together with all
supplements and amendments thereto, all as listed in Schedule 1; provided,
however, the term Service Contracts does not include the Hotel Management
Agreement or any other agreements with GWC and/or its Affiliates.
"SEVERANCE OBLIGATIONS" means all obligations and liabilities,
actual or contingent, claimed by any Hotel Employee pursuant to the
separation allowance set forth in Section 25 of the Local 142 Collective
Bargaining Agreement and any substantially similar provision under the Beach
and Pool Collective Bargaining Agreement.
"SMA PERMIT CONDITIONS" means the conditions to approval of
SMA Use Permit 87/SMA-35 issued with respect to the Hotel.
"SPA LICENSEE" has the meaning given such term in SECTION 7.7.
"SURVEY" means the survey prepared by Alden Kajioka dated
December 14, 1992 and revised September 30, 1997 and April 17, 1998, with an
update certificate delivered on or about May 15, 1998, heretofore delivered
by Seller to Buyer.
"TAXES" means all real estate taxes, general assessments,
special assessments, assessments under any applicable recorded covenants,
conditions and restrictions and all personal property taxes which are
assessed or assessable against any of the Property.
"TENANTS" means the tenants occupying premises at the Hotel
under a Lease.
"TERMINATION NOTICE" has the meaning given such term in
SECTION 9.1.
"TITLE BINDER" means Binder No. 129202 dated June 15, 1998
issued by Title Company and attached as EXHIBIT G hereto with respect to the
Hotel.
"TITLE COMPANY" means First American Title Insurance Company.
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"TITLE POLICY" means an extended ALTA (Form 1990 or its local
equivalent) owner's policy of title insurance for the amount of the Purchase
Price issued by Title Company pursuant to the Title Binder, together with any
endorsements attached to the Title Binder that Buyer elects to obtain and
such other endorsements as Buyer may reasonably request which is allocated to
the Hotel, insuring or committing to insure fee title to the Hotel in Buyer
and Title Company has agreed to issue prior to November 10, 1998 subject only
to Permitted Exceptions.
"TSA LEASES" means, collectively, the following leases of
space in the Hotel, by and between Seller and TSA Management each dated as of
June 15, 1998: (i) Lease (Kincha); (ii) Lease (Napua Gallery); (iii) Lease
(Napua Tower Suite); (iv) Lease (Floral Gallery); and (v) Lease (Office of
the Chairman).
"TSA MANAGEMENT" means TSA Management Company, Ltd.
"TSA PERSONALTY" means the items of tangible personal property
belonging to TSA Management or its Affiliates and located at the Hotel in the
Floral Gallery, Napua Gallery, "Office of the Chairman" and the two bedroom
suite number 8038 in Napua tower as of May 15, 1998, as shown on a schedule
to be provided by Seller to Buyer prior to the expiration of the Due
Diligence Period (or November 10, 1998, if Seller delivers the Seller
Acceleration Notice) and any other property of GWC or its Affiliates not
transferred to Seller upon Seller's acquisition of the Property and disclosed
to Buyer prior to the Approval Date (or November 10, 1998, if Seller delivers
the Seller Acceleration Notice).
"UNION" means ILWU, Local 142, AFL-CIO.
"UNCREDITED AP" has the meaning given such term in SECTION 8.6.
"WARN ACT" means the Worker Adjustment and Retraining
Notification Act of 1988.
"YEAR 2000 COMPLIANT" shall mean, in regards to the Saflok
door lock system, that all software, hardware, equipment, goods or systems
material to the physical operation of such system will properly perform
date-sensitive functions before, during and after the year 2000.
2. AGREEMENT OF PURCHASE AND SALE.
2.1 AGREEMENT. Subject to the terms and conditions set forth in
this Agreement, Seller agrees to sell, assign and convey to Buyer, and Buyer
agrees to purchase from Seller, all of Seller's right, title and interest in
and to the Property. Notwithstanding anything to the contrary in this
Agreement, the Property does not include the Excluded Property.
2.2 ASSUMED LIABILITIES. Except as otherwise expressly provided
herein and subject in all events to the accuracy of Seller's representations
and warranties, Buyer shall assume from and after Closing only the following
obligations and liabilities pertaining to the Property: (i) Seller's
obligations and liabilities under and with respect to the Assumed Contracts
and Permits and Licenses, (ii) Bookings and Occupancy Commitments with
respect to the period on or after the Closing, to the extent made in the
Ordinary Course and shown on the schedule submitted to
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Buyer prior to the expiration of the Due Diligence Period (or November 10,
1998, if Seller delivers the Seller Acceleration Notice) and otherwise in
accordance with SECTION 7.1.5, (iii) reservations made by members pursuant to
and in accordance with the prevailing terms of the Guest Membership Program,
(iv) utilities and other periodic obligations incurred in the Ordinary
Course, which obligations will be prorated as of Closing, and (v) obligations
with respect to the ADA Compliance Obligations. Notwithstanding anything to
the contrary herein, Buyer's assumption of the foregoing obligations shall be
only to the extent that such obligations and liabilities accrue for the
period commencing on or after Closing or Buyer receives cash or a credit at
Closing for such liabilities accruing prior to Closing, as applicable.
3. PURCHASE PRICE AND DEPOSIT.
3.1 PURCHASE PRICE. The Purchase Price will be paid to Seller by
Buyer as follows:
3.1.1 Within one (1) Business Day after the Effective Date,
Buyer shall deposit in Escrow an initial earnest money deposit in an
amount equal to two and one-half percent (2.5%) of the Purchase Price
(the "INITIAL DEPOSIT"). If Buyer delivers the Buyer Acceleration
Notice pursuant to SECTION 8.11.1, the applicable Released Deposit of
the Initial Deposit shall be immediately non-refundable except as set
forth below and shall be delivered directly to Seller by Escrow Agent
without further instructions from either party. If Seller delivers
the Seller Acceleration Notice and Buyer agrees to the release of the
applicable Released Deposit, the applicable Released Deposit of the
Initial Deposit shall be immediately non-refundable except as
expressly set forth below and shall be delivered directly to Seller by
Escrow Agent without further instructions from either party. Seller
shall be entitled to retain the Released Deposit (and all interest
accrued thereon) if the transaction contemplated hereby fails to close
for any reason other than the failure of any Buyer's Condition
Precedent (other than SECTION 9.1.1). As used in this Agreement, the
term "RELEASED DEPOSIT" means, as applicable, (i) the sum of Two
Million Dollars ($2,000,000) if Buyer delivers the Buyer Acceleration
Notice pursuant to SECTION 8.11.1, or (ii) the sum of One Million
Dollars ($1,000,000) if Seller delivers the Seller Acceleration Notice
pursuant to SECTION 8.11.1.
3.1.2 On or before 1:00 p.m. New York time on the first
Business Day following the Approval Date, Buyer shall deliver to
Escrow Agent an additional earnest money deposit in an amount equal to
two and one-half percent (2.5%) of the Purchase Price (the "ADDITIONAL
DEPOSIT"). As used in this Agreement, the term "DEPOSIT" means the
Initial Deposit and after delivery thereof by Buyer, the Additional
Deposit, together with all interest accrued thereon during the period
held in Escrow. Buyer acknowledges that from and after the delivery
of the Released Deposit to Seller, Seller has no obligation to invest
the Released Deposit for Buyer's account or to pay or credit Buyer for
any interest earned on the Released Deposit after delivery thereof to
Seller. Other than the Released Deposit, the Deposit paid by Buyer
pursuant to the terms hereof will be deposited with Escrow Agent, to
be held in Treasury Bills or other interest bearing obligations of the
United States Government, in repurchase contracts or in a federally
insured institutional savings account as Buyer may by written
instrument direct. If
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the purchase and sale of the Property is consummated as contemplated
hereunder, the Deposit will be paid to Seller and credited against the
Purchase Price. If the purchase and sale of the Property is not
consummated because of the failure of any Buyer's Condition Precedent,
the Deposit (including the Released Deposit) will be promptly refunded
to Buyer; provided, however that if the transaction fails to close due
to the failure of the Buyer's Condition Precedent set forth in SECTION
9.1.1, the Released Deposit, if applicable, will be retained by
Seller. If the purchase and sale of the Property is not consummated
solely because of a default under this Agreement on the part of Buyer,
the Deposit (including the Released Deposit) will be retained by
Seller pursuant to SECTION 12.1 below. If the purchase and sale of
the Property is not consummated solely due to Seller's default of its
obligation to sell the Property in accordance with the terms of this
Agreement, the Deposit will be promptly refunded to Buyer by Escrow
Agent and the Released Deposit and all interest earned thereon shall
be promptly refunded to Buyer by Seller.
3.1.3 Buyer shall assume the First Mortgage Loan, The
assignment and assumption documents shall be in form and substance
reasonably required by Lender with respect to the First Mortgage Loan
and shall be delivered by Buyer to Lender at Closing. (The forms of
such assignment and assumption documents will delivered to Buyer to
Seller as soon as reasonably practicable after the Effective Date but
not later than November 10, 1998.)
3.1.4 The cash balance of the Purchase Price over and above
the amounts paid by or credited to Buyer pursuant to SECTIONS 3.1.1
and 3.1.2 above and the aggregate outstanding indebtedness under the
First Mortgage as of the Closing Date will be paid to Seller by wire
transfer of immediately available funds at the Closing, net of all
credits, prorations and other adjustments as provided in SECTION 8.
3.2 ALLOCATION OF PRICE. Seller and Buyer shall (each acting
reasonably and in good faith), upon the request of the other party, endeavor
to agree upon an allocation of the Purchase Price among the classes required
under Section 1060 of the Code. Upon reaching such agreement, Buyer and
Seller shall execute a written acknowledgement of such allocation pursuant to
Section 1060 of the Code. Agreement on allocations of the Purchase Price,
though, is not a condition to Closing and, to the extent Buyer and Seller do
not agree upon such allocations as aforesaid, each of Buyer and Seller may
allocate the Purchase Price in its reasonable discretion exercised in good
faith. Buyer shall determine in its reasonable discretion the value of the
Hotel required in connection with the recordation of any conveyancing
documents with any Governmental Authority.
4. TITLE.
4.1 TITLE BINDER AND SURVEY.
4.1.1 Seller has delivered to Buyer both the Survey and the
Title Binder, together with copies of all recorded documents
referenced in the Title Binder and on the Survey. Buyer may, at
Buyer's sole cost and expense, elect to cause the Survey to be updated
or modified to fully conform with ALTA requirements, but such updates
or modifications will not affect the expiration of the Due Diligence
Period or be a condition precedent to Closing. The Confirmation of
Access Easement dated
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September 28, 1998 executed by Seller in favor of SCP (Maui 5), Inc.,
the Consent dated September 28, 1998 executed by Lender in favor of
SCP (Maui 5), Inc., all title exceptions (other than the Mortgages)
listed on the Title Binder and Survey, and all other title exceptions
approved or deemed approved by Buyer pursuant hereto shall constitute
"PERMITTED EXCEPTIONS"; provided, however, that the First Mortgage
shall be a Permitted Exception. The Hotel shall be purchased by Buyer
subject to the Permitted Exceptions.
4.1.2 If after the date hereof, any new title or survey
matters (i.e., matters not shown on the Title Binder or the Survey)
are disclosed by Title Company, and such new title or survey matter is
not acceptable to Buyer in its reasonable judgment, Buyer shall so
notify Seller in writing within five (5) Business Days after receiving
notice of such new matter, in which event such new matter will be
deemed to be a disapproved matter (a "DISAPPROVED MATTER"). If Buyer
fails to deliver such written notice within this five (5) Business Day
period, such new matter shall be deemed to be approved by Buyer and
will be a Permitted Exception. If Buyer notifies Seller that such new
matter is a Disapproved Matter, Seller shall notify Buyer in writing,
within five (5) Business Days after receiving Buyer's notice, whether
Seller will remove or cause the Title Company to insure against such
Disapproved Matter at or prior to Closing (and if Seller elects to
cause the Title Company to insure against such Disapproved Matter at
the Closing, it will become a Permitted Exception). Seller's failure
to deliver such notice to Buyer within this five (5) Business Day
period shall be deemed an election by Seller to not remove or insure
against such Disapproved Matter. If Seller elects (or is deemed to
elect) not to remove or cause the Title Company to insure against such
Disapproved Matter, Buyer then shall elect, by giving written notice
to Seller and Title Company no later than three (3) Business Days
prior to the Closing, either (i) to terminate this Agreement by
delivering written notice to Seller and Title Company (whereupon the
Deposit (including the Released Deposit and any interest earned
thereon, if applicable) shall be immediately refunded to Buyer without
further instructions from either Seller or Buyer), or (ii) to waive
its disapproval of such Disapproved Matter (in which event such
Disapproved Matter then shall be deemed to be approved by Buyer and
will be a Permitted Exception). Buyer's failure to give a written
termination notice prior to the date described in the preceding
sentence shall be deemed a waiver of its disapproval of such
Disapproved Matter.
5. DUE DILIGENCE.
5.1 DUE DILIGENCE DELIVERIES. Seller shall use its best efforts
to expeditiously deliver to Buyer or make available to Buyer at the Hotel
copies of the documents and materials regarding the Hotel requested by Buyer
prior to the earlier of (i) the expiration of the Due Diligence Period, or
(ii) on or before November 10, 1998, if Seller delivers the Seller
Acceleration Notice) (all of such documents and materials delivered or made
available being the "DUE DILIGENCE MATERIALS" and which shall include
recertifications to Buyer of all of Seller's material third party reports).
Seller promptly shall provide to Buyer any supplement, addition or new
information received or discovered by Seller relating to the Property and/or
any of the documents and materials delivered pursuant to this SECTION 5.1.
During the Due Diligence Period and with reasonable advance notice to Seller,
Buyer, its employees, agents, contractors
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and consultants shall be entitled to inspect and photocopy (at Buyer's sole
cost and expense), at Seller's Broker's office or at the Hotel during
reasonable business hours, the books and records relating to the ownership or
operation of the Property in the possession of Seller or Hotel Manager,
excluding, however, the Protected Material. As used in this Agreement,
"PROTECTED MATERIAL" means appraisals and economic evaluations of the
Property prepared for Seller, reports regarding the Property prepared solely
for internal use or for the information of the investors in Seller (other
than third party due diligence reports, asset management reports and the
current operating budget), any confidential materials such as those which are
protected by attorney-client privilege, any materials protected by the
attorney work product doctrine and any proprietary materials which Seller is
prohibited from disclosing under applicable Laws or by agreement. The
foregoing documents and materials have been delivered or made available to
Buyer to accommodate and facilitate Buyer's due diligence with respect to the
Property, and, except as expressly set forth in this Agreement, Seller makes
no representations or warranties regarding the accuracy or thoroughness of
the information contained in such documents and materials. In addition, upon
request by Buyer, Seller shall use its best efforts to cause GWC to provide
such documents and materials regarding the Hotel as reasonably requested by
Buyer. Upon receipt of such documents and materials, Seller shall
expeditiously deliver them to Buyer. As soon as reasonably possible after
the end of the Due Diligence Period, Buyer and Seller will compile and agree
upon an inventory of the documents and materials provided to Buyer and they
will acknowledge in writing such agreement. Notwithstanding the foregoing,
(i) Buyer shall not negotiate with, solicit or contact any party which has a
group Booking at the Hotel pursuant to a signed agreement for a booking at
any other property owned by Buyer for the same period covered by such party's
group Booking agreement at the Hotel unless Buyer can provide evidence
reasonably satisfactory to Seller that such solicitation or contact was
initiated by Buyer prior to the Effective Date; and (ii) until after the
Approval Date, Buyer shall not have access to the identity of any members in
the Guest Membership Program (but shall have access to the identity of any
group).
5.2 DUE DILIGENCE MATTERS. During the Due Diligence Period, Buyer
will review the materials provided by Seller pursuant to SECTION 5.1 and,
subject to the limitations set forth in SECTION 5.3, Buyer will conduct such
other due diligence studies, tests, investigations and inspections of the
Property as Buyer deems necessary or appropriate under the circumstances in
connection with its acquisition of the Property, including, without
limitation, studies, tests, investigations and inspections of the physical
and environmental condition of the Hotel, the physical condition of all
Personal Property, compliance with all Laws, review of the Service Contracts,
Equipment Leases, Leases, Bookings, Occupancy Commitments, Licenses and
Permits (including the assignability thereof), economic analyses and
forecasts prepared by or on behalf of Buyer, occupancy rates, market studies,
insurance matters, and all other matters relating to the ownership, use and
operation of the Property. In determining what studies, tests,
investigations and inspections Buyer deems necessary or desirable to conduct,
Buyer shall take into account the fact that, except as expressly set forth in
this Agreement, Seller is not making any representation or warranty regarding
any of the information, materials or documents delivered or made available by
Seller to Buyer. Buyer shall deliver to Seller, promptly after Buyer's
receipt thereof, copies of all reports, studies and results of tests,
inspections and investigations with respect to the Property prepared for
Buyer prior to the Closing by third parties (which delivery obligation shall
survive the Closing or any termination of this Agreement).
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5.3 BUYER'S INSPECTIONS AND INTERVIEWS. During the Due Diligence
Period and through the Closing Date and with reasonable advance notice to
Seller, Buyer, its agents, representatives, consultants and counsel may enter
onto the Hotel Parcel during reasonable business hours (subject to the rights
of guests, Tenants and licensees) to perform inspections and tests of the
Hotel and the structural and mechanical systems within any Hotel
Improvements, subject to the limitations contained herein. In addition (i)
during the Due Diligence Period and through the Closing Date, Buyer may
interview the Hotel's general manager, chief engineer, director of sales and
marketing, other department representatives, Hideo Tanaka, Hideki Hayashi,
Hiroki Hayashi and Noriko Hayashi regarding the operations of the Hotel,
(ii) after the Approval Date and through the Closing Date, Buyer may
interview Hotel Employees and prospective employees regarding their
application for employment after Closing and the terms and conditions of such
employment without a representative of Seller being present, (iii) during the
Due Diligence Period and through the Closing Date, Buyer may meet, with
representatives of the Union, (until after the Approval Date, however, Buyer
shall be accompanied by representatives of Seller reasonably acceptable to
Buyer) and otherwise subject to the limitations contained herein, (iv) during
the Due Diligence Period and through the Closing Date, Buyer may interview
any Governmental Authority with respect to the Hotel (provided, however, that
Seller may have a representative present during any interview with officials
of the MLC, Buyer shall not contact or meet with the MLC until after November
10, 1998, and Buyer may not submit any applications to Governmental
Authorities until after the Approval Date), and (v) during the Due Diligence
Period and through the Closing Date, Buyer may interview any of the Hotel's
service providers and any consultants retained by Seller whose reports are
included in the Due Diligence Materials and parties under Assumed Contracts.
Other than the interviews provided for in the preceding sentence, neither
Buyer nor Buyer's employees, agents, contractors or consultants shall contact
or interview any Hotel Employees, Tenants, Governmental Authorities, Union
representatives, or the Hotel's service providers, provided, however that
nothing in this Agreement shall restrict Buyer from applying for a
declaratory ruling on a confidential basis from the Hawaii Department of
Labor under the DWA after due consultation with Seller. In conducting such
inspections and interviews (1) Buyer shall exercise its best efforts to
minimize disruption of Hotel operations and disruption to Seller, Hotel
Manager, Tenants, and guests and other occupants and users of the Hotel, (2)
Buyer shall coordinate all site visits and interviews to the Hotel through
Seller's Broker, and Seller may, without unreasonably delaying such visits
and interviews, cause its agents (including representatives of Seller's
Broker), consultants or representatives to accompany Buyer's employees,
agents, contractors and consultants on any site visits and interviews to the
Hotel (except that after the Approval Date, Buyer may interview prospective
employees without a representative of Seller being present); and (3) Buyer or
its agents, representatives, consultants and counsel shall not drill or bore
on or through the surface or conduct any other invasive or destructive
testing of the Hotel Parcel or Hotel Improvements without Seller's prior
written consent, which consent may be given or withheld in Seller's
reasonable discretion, and (4) Buyer shall provide reasonable advance notice
to Seller of such interviews. After making such tests and inspections, Buyer
shall promptly restore the Property to the condition that existed prior to
making such tests and inspections (which obligation shall survive the Closing
or any termination of this Agreement). Prior to Buyer entering the Hotel to
conduct the inspections and tests described above, Buyer shall obtain and
maintain, and shall deliver to Seller evidence thereof, at no cost or expense
to Seller, general liability insurance, from an insurer reasonably acceptable
to Seller, in the amount of Two Million Dollars
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($2,000,000) combined single limit for personal injury and property damage
per occurrence. In due course, such insurance policies shall name Seller as
an additional insured party, which insurance shall provide coverage against
any claim for personal liability or property damage caused by Buyer or its
agents or consultants in connection with such inspections and tests.
5.4 INDEMNIFICATION. Buyer shall keep the Property free from all
liens, and shall indemnify, defend, and hold harmless Seller and Seller's
Affiliates, and each of their respective officers, directors, members,
shareholders, agents, lenders and employees, and each of their successors,
heirs, and assigns, and each of them (collectively, the "SELLER PARTIES"),
from and against all Claims (including, reasonable attorneys' fees and costs)
incurred, suffered by, or claimed against the Seller Parties, or any of them,
by reason of Buyer exercising the rights granted pursuant to SECTION 5,
including, without limitation, any damage to the Property or injury to
Persons caused by Buyer and/or its agents, representatives or consultants,
exclusive, however, of any Claims to the extent resulting from the negligence
or willful misconduct of Seller or its agents. The foregoing provisions
shall survive the Closing or any termination of this Agreement.
5.5 BUYER'S RIGHT OF TERMINATION. Buyer may terminate this
Agreement at any time prior to and including the Approval Date in its sole
and absolute discretion for any reason whatsoever by sending to Seller and
Escrow Agent written notice of such termination. If Buyer terminates this
Agreement pursuant to this SECTION 5.5, the Initial Deposit plus all interest
accrued thereon shall be immediately refunded to Buyer upon delivery of
notice by Buyer to Escrow Agent and notwithstanding any conflicting notice
from Seller, and neither Buyer nor Seller shall have any further rights or
obligations under this Agreement, except for those obligations that expressly
survive the termination of this Agreement; provided, however that the
Released Deposit and any interest earned thereon, if any, shall be retained
by Seller to the extent provided in SECTION 3.1.1. If Buyer elects to
proceed with its acquisition of the Property, Buyer shall (i) deliver to
Seller and Escrow Agent unconditional written notice of its election to
proceed (the "NOTICE TO PROCEED"), and (ii) deliver to Escrow Agent the
Additional Deposit on or before 1:00 p.m., New York time, on the first
Business Day following the Approval Date. Buyer's failure to terminate this
Agreement or to deliver a Notice to Proceed and the Additional Deposit prior
to the expiration of the time periods specified in this SECTION 5.5 shall be
conclusively deemed Buyer's disapproval of the Property and its election to
terminate this Agreement. Buyer's failure to deliver the Additional Deposit
on or before 1:00 p.m., New York time, on the first Business Day following
the Approval Date shall be conclusively deemed Buyer's disapproval of the
Property and election to terminate this Agreement, notwithstanding any Notice
to Proceed previously delivered; provided, however, if Buyer delivers the
Notice to Proceed but fails to deliver the Additional Deposit on or before
1:00 p.m., New York time, on the first Business Day following the Approval
Date, Seller will be entitled to retain the Released Deposit. Upon written
instruction from Seller, Escrow Agent shall return any documents deposited
into Escrow to the party depositing the same. Upon Buyer's delivery of the
Notice to Proceed and Additional Deposit, Buyer will be deemed to have
satisfied itself of all matters with respect to the Property and the only
remaining contingencies to Buyer's obligation to consummate the transaction
contemplated herein shall be Buyer's Conditions Precedent as set forth in
SECTIONS 9.1.1 THROUGH 9.1.8.
5.6 FF&E INVENTORY. As soon as reasonably practicable, Buyer
shall cause a third party accounting firm reasonably approved by Seller and
Buyer to complete an inventory of the
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FF&E located at the Hotel (the "FF&E INVENTORY") at a cost and pursuant to
procedures reasonably approved by Seller and Buyer. Buyer shall pay the cost
of the FF&E Inventory and upon completion of the FF&E Inventory, Buyer shall
deliver a copy of the FF&E Inventory to Seller for its approval, which after
approval by Seller and Buyer, shall be deemed to be part hereof. Seller
shall reimburse Buyer for fifty percent (50%) of the cost of the FF&E
Inventory within 5 Business Days after Buyer's demand therefor.
5.7 PROJECT NAMES. Prior to the expiration of the Due Diligence
Period, Seller shall use its best efforts to (i) cause Grand Wailea Resort
Hotel & Spa, Inc. to change its name so that a registration of the trade name
"Grand Wailea Resort Hotel & Spa" may occur, and (ii) cause GWC and its
Affiliates to execute such assignments, consents and other instruments as may
be necessary to allow Seller to register other Project Names and the name
"Spa Grande".
6. REPRESENTATIONS AND WARRANTIES
6.1 SELLER'S REPRESENTATIONS REGARDING THE HOTEL. Subject to
SECTION 6.5 and except as disclosed in writing to Buyer during the Due
Diligence Period, Seller represents and warrants to Buyer that the following
matters are true and correct as of the execution of this Agreement (and will
also be true and correct as of the Closing, unless Seller delivers to Buyer
written notice that any representation and warranty has become materially
untrue or incorrect prior to the Approval Date (or November 10, 1998, if
Seller delivers the Seller Acceleration Notice), which notice shall set forth
in reasonable detail the material untruth or incorrectness):
6.1.1 LITIGATION. Except for the Known Litigation, to
Seller's Knowledge, there is no litigation, action, suit, arbitration,
investigation or proceeding pending or threatened against the Property
(or any portion thereof) or relating to its operation, including any
condemnation, eminent domain, environmental, zoning or other land-use
regulation proceedings.
6.1.2 VIOLATION OF LAWS. Neither Seller nor, to Seller's
Knowledge, GWC, as the prior owner of the Hotel, has received written
notice of any uncured or uncorrected violations of building codes,
zoning codes, health codes, insurance requirements, land use
requirements or other Laws relating to the Property. Seller has
received no written notice of any special assessment proceeding
affecting the Hotel or the use thereof. To Seller's Knowledge, there
is no violation of applicable Laws relating to the Property that would
materially and adversely affect the operation of the Hotel.
6.1.3 TAX PROTESTS AND APPEALS. Neither Seller nor, to
Seller's Knowledge, GWC, as the prior owner of the Hotel, has filed
notices of protest or appeal against, or commenced proceedings to
recover, real property tax assessments or sales or personal property
taxes levied against the Hotel Parcel, the Hotel Improvements or
Seller, which notices of protest, appeals or proceedings are pending
as of the Effective Date. Notwithstanding the foregoing, Buyer
acknowledges that Hotel Manager had previously filed a real property
tax appeal which has been withdrawn.
6.1.4 LEASES. Except for the Leases disclosed on SCHEDULE 1,
no written or oral leases, subleases, licenses or concessions entered
into by Seller (or Hotel Manager as
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agent for Seller) are in existence that affect the Hotel and would be
binding on Buyer after the Closing Date. Except as disclosed on
SCHEDULE 1, Seller has not received any written notice of any
presently effective default by Seller under the Leases.
6.1.5 USE PERMITS AND OTHER APPROVALS. Neither Seller nor,
to Seller's Knowledge, GWC, as the prior owner of the Hotel, has
received written notice from any Governmental Authority stating that
(i) the Licenses and Permits necessary for the operation of the Hotel
as it is currently being operated are not in full force and effect, or
(ii) there is any uncured violation of any such Licenses and Permits.
To Seller's Knowledge, there is no violation of any License and Permit
that would materially and adversely affect the operation of the Hotel.
To Seller's Knowledge, there are no licenses or permits issued by
Governmental Authorities necessary to operate the Hotel as currently
operated other than the Licenses and Permits and Liquor License
6.1.6 HAZARDOUS SUBSTANCES. To Seller's Knowledge, there are
no pending proceedings or inquiries by any Governmental Authority
relating to or arising under any Environmental Laws regarding
Hazardous Substances with respect to the Hotel. Neither Seller nor,
to Seller's Knowledge, GWC, as the prior owner of the Hotel, has
received written notice from any Governmental Authority threatening
any such proceeding or inquiry. Neither Seller nor, to Seller's
Knowledge, GWC, as the prior owner of the Hotel, has received written
notice from any Governmental Authority of an uncured violation of
Environmental Laws regarding Hazardous Substances with respect to the
Hotel. Neither Seller nor, to Seller's Knowledge, GWC, as the prior
owner of the Hotel, has used, stored, disposed of or released any
Hazardous Materials in or on the Hotel in violation of Environmental
Laws, except for materials and supplies used in the Ordinary Course in
accordance with customary industry practices and procedures.
6.1.7 SERVICE CONTRACTS. To Seller's Knowledge, (i) there
are no written or oral service, maintenance, repair or other contracts
to which Seller or Hotel Manager as its agent is a party which will
affect the Property following the Closing except the Equipment Leases
and the Service Contracts delivered to Buyer pursuant to SECTION 5.1,
or as otherwise agreed to in writing by Buyer prior to the Closing,
and (ii) except as shown on the copies of such agreements so delivered
to Buyer, there are no amendments, modifications, or supplements
thereto. Seller has not received or given any written notice of a
material default under the terms of any Equipment Lease or Service
Contract that has not been cured.
6.1.8 DUE DILIGENCE MATERIALS. Except to the extent that
Seller is not required to provide or make available such items
pursuant to SECTION 5.1, as of the Approval Date (or November 10,
1998, if Seller delivers the Seller Acceleration Notice), the Due
Diligence Materials will represent all of the material agreements,
contracts, documents, studies and reports in Seller's possession
relating to the condition, ownership, operation, maintenance and
operation of the Hotel. To Seller's Knowledge, the Due Diligence
Materials prepared by Seller or at Seller's direction are true,
correct and complete in all material respects. The Protected Material
does not contain any information not otherwise disclosed or known to
Buyer prior to the Approval Date (or November 10, 1998, if Seller
delivers the Seller Acceleration Notice) which an institutional
investor in
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resort properties would reasonably find to materially and adversely
affect the value of the Hotel.
6.1.9 SMA PERMIT. Neither Seller nor, to Seller's Knowledge,
GWC, as the prior owner of the Hotel, has received written notice that
(i) the SMA Permit is not in full force and effect or (ii) there is
any uncured violation of the SMA Permit.
6.1.10 INSURANCE. Neither Seller nor, to Seller's Knowledge,
GWC, as the prior owner of the Hotel, has received written notice from
any insurance company of any defects or inadequacies in the Hotel that
would result in a termination of Seller's existing insurance coverage
with respect to the Hotel or would materially and adversely affect
Buyer's ability to obtain insurance for the Hotel, to the extent
available on commercially reasonable terms. Prior to the expiration
of the Due Diligence Period (or November 10, 1998, if Seller delivers
the Seller Acceleration Notice), Seller will deliver to Buyer true and
correct copies of certificates evidencing all of the property and
liability insurance policies maintained by Seller with respect to the
Hotel.
6.1.11 LABOR MATTERS. To Seller's Knowledge and except to the
extent attributable to Seller's proposed sale of the Property to Buyer
in accordance with the terms and conditions of this Agreement, (i) no
work stoppage is being threatened which could materially adversely
affect the operations of the Hotel, and (ii) there are presently no
labor contract negotiations in progress with any union representing
any Hotel Employees. Neither Seller nor to Seller's Knowledge, GWC,
as the prior owner of the Hotel, has received written notice of any
pending charge of unfair labor practices.
6.1.12 PERSONAL PROPERTY. Seller has good and marketable
title to the Personal Property or the Intangible Property and there
will be no liens, encumbrances or competing claims or rights with
respect to the Personal Property or the Intangible Property upon
transfer of the Personal Property or the Intangible Property to Buyer
at Closing (other than the First Mortgage).
6.1.13 GUEST MEMBERSHIP PROGRAM. The written materials
delivered to Buyer describing the Guest Membership Program are true,
correct and complete in all material respects.
6.2 SELLER'S REPRESENTATIONS REGARDING SELLER. Subject to SECTION
6.5, Seller represents and warrants to Buyer that the following matters are
true and correct as of the execution of this Agreement and will also be true
and correct as of the Closing;
6.2.1 AUTHORITY. Seller: (i) is a validly existing limited
liability company in good standing under the laws of the State of
Delaware; (ii) is qualified to do business in all states where such
qualification is necessary; and, (iii) is duly authorized, qualified
and licensed to do all things required of it under or in connection
with this Agreement, and (iv) does not contemplate dissolution and/or
liquidation prior to the expiration of the 12-month period following
the Closing. This Agreement and all agreements and documents executed
by Seller in connection herewith have been duly authorized by all
necessary company and member action.
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6.2.2 CONSENTS. As of the date of this Agreement, (i) no
government, internal, or third-party, approval or consent which has
not already been obtained is required for Seller's execution and
delivery of, or performance of obligations under, this Agreement
(other than the approval of the MLC for the transfer of the Liquor
License), and (ii) Seller's execution, delivery and performance of
this Agreement do not and will not violate, and are not restricted by,
any other contractual obligation or any applicable Law to which Seller
is a party or by which Seller or any of the property comprising the
Property is bound.
6.2.3 LAWSUITS. As of the date of this Agreement, there are
no lawsuits filed and served against Seller whose outcome could
adversely affect Seller's ability to perform its obligations under
this Agreement.
6.2.4 BROKER. Except Seller's Broker, Seller has not engaged
or dealt with any broker, finder or similar agent in connection with
the transactions contemplated by this Agreement.
6.2.5 NON-FOREIGN STATUS. Seller is not a "FOREIGN PERSON"
as defined in Section 1445(f)(3) of the Code.
6.2.6 VALIDITY OF AGREEMENT. This Agreement constitutes, and
all other documents required by this Agreement to be executed by
Seller shall constitute when so executed, the valid and binding
obligation of Seller, enforceable against Seller in accordance with
their respective terms, except to the extent that enforcement may be
limited by applicable bankruptcy, insolvency, moratorium and other
principles relating to or limiting the rights of contracting parties
generally.
Notwithstanding anything to the contrary in this Agreement,
information possessed by or known to any person or entity other than Seller
(including the Hotel Manager or Seller's consultants, agents and advisors or
their respective employees or representatives) shall not be imputed or
attributed to Seller. All of the representations and warranties contained
herein are qualified by any written disclosures made to Buyer by or on behalf
of Seller prior to the expiration of the Due Diligence Period (or November
10, 1998, if Seller delivers the Seller Acceleration Notice). Promptly upon
becoming aware of any event or circumstance which makes any representation or
warranty of Seller hereunder materially untrue or misleading, Seller shall
provide Buyer with written notice of such event or circumstance and Seller
shall have an opportunity to cure such matter, (and such right to cure shall
not limit the effect of SECTION 9.1.3). Notwithstanding anything to the
contrary contained herein, Seller shall have no liability with respect to any
representations and warranties if, prior to Closing, any of John Saer, Scott
Dalecio, Whit Markowitz or Gary Beasley discovers or learns of information
from whatever source that contradicts any of Seller's representations and
warranties or renders any of the foregoing representations and warranties
untrue or incorrect and Buyer nevertheless consummates the transaction
contemplated by this Agreement.
6.3 BY BUYER. Buyer represents and warrants to Seller that the
following matters are true and correct as of the execution of this Agreement
and will also be true and correct as of the Closing:
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6.3.1 AUTHORITY. Buyer is (i) a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware; (ii) qualified to do business in all states where such
qualification is necessary; and (iii) duly authorized, qualified and
licensed to do all things required of it under or in connection with
this Agreement. This Agreement and all agreements and documents
executed by Buyer in connection herewith have been duly authorized by
all necessary company action.
6.3.2 CONSENTS. No government, internal or other third-party
approvals or consents which have not already been obtained are
required for Buyer's execution and delivery of, or performance of
obligations under, this Agreement, and Buyer's execution and
performance of this Agreement do not and will not violate, and are not
restricted by, any other contractual obligation or applicable Law to
which Buyer is a party or by which Buyer is otherwise bound.
6.3.3 LAWSUITS. As of the date of this Agreement, there are
no lawsuits filed and served against Buyer or, to Buyer's knowledge,
otherwise pending or threatened whose outcome could adversely affect
Buyer's ability to purchase the Hotel and otherwise perform its
obligations under this Agreement.
6.3.4 BROKER. Except for Seller's Broker, Buyer has not
engaged or dealt with any broker, finder or similar agent in
connection with the transaction contemplated by this Agreement.
6.3.5 VALIDITY OF AGREEMENT. This Agreement constitutes, and
all other documents required by this Agreement to be executed by Buyer
when so executed shall constitute, the valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective
terms except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, moratorium and other principles
relating to or limiting the rights of contracting parties generally.
6.3.6 INVESTIGATIONS; PURCHASE "AS IS"
6.3.6.1 During the Due Diligence Period, Buyer and
its agents, representatives and consultants will be afforded
access to the documents and information relating to the
Property delivered pursuant to SECTION 5.1. Buyer
acknowledges and agrees that on June 15, 1998, Seller acquired
the Property from GWC following a limited due diligence period
pursuant to a deed in lieu of foreclosure. Other than the
FF&E Inventory, Seller has not and will not receive a complete
inventory of FF&E or other personal property. As part of such
transactions, GWC continues to manage the Hotel for Seller
pursuant to the Hotel Management Agreement. Accordingly, most
of the information regarding the Property delivered or made
available to Buyer by or on behalf of Seller was prepared by
third parties not under the control or direction of Seller.
Seller has not made, and does not make, any representations or
warranties as to the accuracy or completeness of such
information except as expressly set forth in this Agreement,
and Seller shall have no liability if any such information is
inaccurate, misleading or incomplete. Possession of documents
by Hotel Manager is not
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deemed to be within Seller's possession or control, but Seller
shall use its best efforts to cause the Hotel Manager to
provide any documents in its or its Affiliates' possession or
control.
6.3.6.2 Buyer shall conduct its own investigation
of the Property, make all inquiries, inspections, tests,
audits, studies and analyses that it deems necessary or
desirable in connection with purchasing the Property (subject
to the provisions of this Agreement), and approve or
disapprove in its sole discretion the results of its
investigations regarding the Property (including engineering,
structural and other tests with respect to the physical
condition of the Property, economic feasibility studies, soils
and geological reports, zoning, entitlement and other land use
matters, the status of title to the Property, survey matters,
parking rights, reviews of books, records and financial
statements, projections relating to the operation of the
Hotel, review of the documents delivered to Buyer pursuant to
SECTION 5.1, licenses and permits necessary to operate the
Property (and the assignability of any existing License and
Permit), and other documents obtained or prepared by or for
Buyer in connection with its review). In determining whether
to purchase the Property, Buyer is relying solely on the
express representations and warranties of Seller set forth in
SECTION 6, and on its own inspections, tests, audits, studies
and investigations of the Property, and on Buyer's own
judgment with respect thereto.
6.3.6.3 EXCEPT AS EXPRESSLY SET FORTH IN SECTION
6, BUYER IS BUYING THE PROPERTY WITHOUT ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND
WHATSOEVER, BY SELLER, ITS AGENTS, BROKERS, ADVISORS,
CONSULTANTS, COUNSEL, EMPLOYEES, OFFICERS, DIRECTORS,
SHAREHOLDERS, OR AFFILIATES. AS A MATERIAL INDUCEMENT TO
SELLER IN AGREEING TO SELL THE PROPERTY TO BUYER, BUYER IS
PURCHASING THE PROPERTY IN ITS "AS-IS," "WHERE IS" CONDITION,
WITH ALL FAULTS, AND SELLER WOULD NOT HAVE AGREED TO SELL THE
PROPERTY TO BUYER WITHOUT BUYER'S EXPRESS AGREEMENT TO THE
FOREGOING.
6.3.6.4 WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, BUYER ACKNOWLEDGES THAT SELLER EXPRESSLY DISCLAIMS
AND NEGATES, AS TO PERSONAL PROPERTY, FIXTURES, AND ALL OF THE
OTHER PROPERTY: (A) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY; (B) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE; (C) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS; AND
(D) ANY IMPLIED OR EXPRESS WARRANTY WITH RESPECT TO THE
CONDITION OF THE PROPERTY, ITS COMPLIANCE WITH ANY LAWS, THE
PAST OR PROJECTED FINANCIAL CONDITION, PERFORMANCE, AND
OPERATING RESULTS OF THE HOTEL (INCLUDING INCOME OR EXPENSES
THEREOF OR OCCUPANCY RATES THEREFOR) OR THE USES PERMITTED ON,
THE DEVELOPMENT REQUIREMENTS FOR, OR ANY OTHER MATTER OR
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THING RELATING TO THE PROPERTY OR ANY PORTION THEREOF, EXCEPT
AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 6 AND THE CLOSING
DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Buyer acknowledges that, to the extent required to be
operative, the disclaimers of warranties contained in this
SECTION 6.3.6 are "conspicuous" disclaimers for purposes of
any applicable Law.
Notwithstanding anything to the contrary contained herein,
Buyer shall have no liability with respect to any
representations and warranties if, prior to Closing, any of
Lance Graber, Bernard Siegel or Keith Hansen discovers or
learns of information from whatever source that contradicts
any of Buyer's representations and warranties or renders any
of the foregoing representations and warranties untrue or
incorrect and Seller nevertheless consummates the transaction
contemplated by this Agreement.
6.4 WAIVER AND RELEASE.
6.4.1 EXCEPT FOR A CLAIM MADE UNDER THIS SECTION 6 FOR A
BREACH OF CONTRACTUAL REPRESENTATION, FRAUD OR ANY OTHER BREACH BY
SELLER HEREUNDER, BUYER HEREBY WAIVES AND RELINQUISHES, AND RELEASES
THE SELLER PARTIES FROM, ANY AND ALL CLAIMS AGAINST THE SELLER PARTIES
OR ANY OF THEM BASED ON (A) A FAILURE TO DISCLOSE TO BUYER ANY
INFORMATION REGARDING THE PROPERTY OR ON ANY MISREPRESENTATION
REGARDING THE PROPERTY (INCLUDING ANY DEFECTIVE, HAZARDOUS OR UNLAWFUL
CONDITION WHICH SELLER SHOULD BE AWARE OF OR WHICH COULD BE DISCOVERED
THROUGH AN INSPECTION OF THE PROPERTY OR THE PROPERTY RECORDS), OR (B)
ARISING FROM OR RELATED TO THE EXISTENCE OR PRESENCE OF HAZARDOUS
SUBSTANCES IN, ON, UNDER OR ABOUT THE HOTEL OR THE VIOLATION OF ANY
PROPERTY WITH ANY ENVIRONMENTAL LAWS.
6.4.2 BUYER UNDERSTANDS THAT SUCH WAIVER AND RELEASE INCLUDES
STATUTORY AS WELL AS "COMMON LAW" AND EQUITABLE RIGHTS AND REMEDIES
AND THAT IT COVERS POTENTIAL CLAIMS OF WHICH BUYER MAY BE CURRENTLY
UNAWARE OR UNABLE TO DISCOVER. BUYER ACKNOWLEDGES THAT THE FOREGOING
WAIVER AND RELEASE IS OF MATERIAL CONSIDERATION TO SELLER IN ENTERING
INTO THIS AGREEMENT, THAT BUYER'S COUNSEL HAS ADVISED BUYER OF THE
POSSIBLE LEGAL CONSEQUENCES OF MAKING SUCH WAIVER AND RELEASE AND THAT
BUYER HAS TAKEN INTO ACCOUNT, IN AGREEING TO PURCHASE THE PROPERTY AT
THE PURCHASE PRICE SPECIFIED HEREIN, SELLER'S DISCLAIMER OF ANY
WARRANTIES AND REPRESENTATIONS REGARDING THE PROPERTY OTHER THAN THOSE
EXPRESSLY SET FORTH HEREIN. BUYER ALSO ACKNOWLEDGES THAT CALIFORNIA
CIVIL CODE SECTION 1542 PROVIDES AS FOLLOWS, AND
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THAT THE PROTECTION AFFORDED BY SAID CODE SECTION IS HEREBY WAIVED:
"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."
JKS
-----
BUYER
The waivers and release set forth in this SECTION 6 shall survive
the Closing.
6.5 SURVIVAL AND LIMITATIONS. The Parties' representations and
warranties set forth in this SECTION 6 (and their respective liability for
any breach thereof) shall survive Closing for a period of twelve (12) months
and shall not be deemed to merge into any of the Closing Documents; PROVIDED,
HOWEVER, Seller shall have no liability to Buyer for any breach of such
representations and warranties unless:
6.5.1 The facts constituting such breach have not been
disclosed to Buyer in writing by Seller prior to Closing and Buyer
nevertheless consummates the transaction contemplated hereby.
6.5.2 Buyer has given Seller written notice claiming such
breach, and stating in reasonable detail the factual basis for such
claim, within twelve (12) months after the Closing Date;
6.5.3 The loss from any single breach of Seller's
representations and warranties (or, if Buyer incurs losses from a
series of repetitive breaches of substantially identical matters), the
aggregate losses for such breaches exceeds Twenty-Five Thousand
Dollars ($25,000);
6.5.4 The aggregate losses from all breaches of Seller's
representations and warranties satisfying the requirement in SECTION
6.5.3 herein exceeds Five Hundred Thousand Dollars ($500,000) and then
only to the extent that such aggregate losses exceed Five Hundred
Thousand Dollars ($500,000); and
6.5.5 Notwithstanding anything to the contrary herein, in no
event shall Seller's aggregate liability for all breaches of its
representations and warranties herein exceed Thirty Million Dollars
($30,000,000).
6.6 NOTICE OF SUBSEQUENT EVENT OR DISCOVERY. Prior to Closing,
Buyer and Seller shall each give the other prompt notice of its discovery of
any event or condition which has the effect of making any representations and
warranties contained in SECTION 6 materially inaccurate. From and after the
Closing, Buyer shall in good faith endeavor to notify Seller within thirty
(30) days after discovery thereof by the Hotel general manager, controller,
John Saer, Scott Dalecio,
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Whit Markowitz, or Gary Beasley of actual knowledge of any condition or state
of facts which constitutes a breach of any such representations and
warranties. If Buyer fails to timely notify Seller of such breach (despite
any good faith endeavor), Buyer shall be conclusively deemed to have waived
such breach.
7. OPERATION OF THE HOTEL PENDING CLOSING AND OTHER AGREEMENTS.
7.1 ORDINARY COURSE. Seller shall cause the Hotel Manager to
operate the Hotel in the Ordinary Course and except for emergencies, shall
not cause, approve or permit any material change in the operations of the
Hotel (except with Buyer's prior written approval which shall not be
unreasonably withheld or delayed and, with respect to the matters set forth
in SECTIONS 7.1.5 and 7.1.7 through 7.1.9, which after the Approval Date, may
be withheld in Buyer's sole and absolute discretion) including, without
limitation, the following:
7.1.1 The making of any material alterations or other
material changes in the Hotel Improvements except as may be currently
required by applicable Law, the ADA Compliance Obligations, or in
accordance with the Capital Expenditure Plan.
7.1.2 The cancellation or surrender of any existing License
and Permit for the Hotel.
7.1.3 The making, termination or material modification of any
Lease (except that a Lease may be terminated for failure on the part
of the Tenant to pay rent for more than three (3) months or other
material breach by the Tenant), which new or amended agreements will
survive the Closing without obtaining Buyer's prior written consent.
7.1.4 The making, termination or material modification of any
Service Contract or Equipment Lease, without obtaining Buyer's prior
written consent (and except that any Service Contract or Equipment
Lease may be terminated for material breach thereof by the vendor or
lessor, as applicable).
7.1.5 The sale, conveyance, assignment, encumbrance or other
transfer of the Hotel or any portion thereof or any rights to use or
occupy the same (except as permitted in SECTION 7.1.3 or for Occupancy
Commitments entered into by Seller, or by Hotel Manager as agent for
Seller, in accordance with this SECTION 7.1.5). Notwithstanding the
foregoing, Seller may continue to accept Bookings, Booking Deposits
and other Occupancy Commitments for periods after the Closing in the
Ordinary Course (provided that any Bookings or Occupancy Commitments
for the period after the Closing Date (or after December 18, 1998 if
Buyer so elects pursuant to SECTION 8.12) shall be made on prevailing
rates and terms given to non-affiliated third parties), and, after the
Closing, Buyer shall honor all such Bookings, Booking Deposits (to the
extent Buyer receives a credit therefor) and Occupancy Commitments in
accordance with their terms.
7.1.6 The making of any group Bookings (i.e., any group
Booking pursuant to a written contract) for the period after the
Closing Date (or after December 18, 1998 if Buyer so elects pursuant
to SECTION 8.12) without Buyer's written consent, which consent shall
not be unreasonably withheld or delayed. Buyer may not withhold
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consent to group Booking which are consistent taken as a whole with
the terms and conditions of group booking made during the past twelve
months. Buyer shall approve or disapprove of any proposed group
Booking within one (1) day after Seller provides Buyer's on-site
marketing personnel with a proposal for a group Booking. Buyer's
failure to affirmatively approve or disapprove of the proposal within
one (1) day shall be conclusively deemed to be Buyer's approval of
such group Booking. Any group Booking approved or deemed approved by
Buyer shall be assumed liabilities of Buyer after the Closing.
7.1.7 The imposition of any liens or encumbrances with
respect to the Property or any portion thereof, which would survive
the Closing, except for the Mortgages and to the extent such lien or
encumbrance is bonded against to Buyer's reasonable satisfaction or
attributable to the activities of Buyer or its agents.
7.1.8 The termination of the employment of any Hotel Employee
(except for cause) or hiring of any new Hotel Employee or
modifications in terms and conditions of the employment of any Hotel
Employee, except to the extent made in the Ordinary Course (it being
understood and agreed, however, that Seller shall cause the employment
of all such Hotel Employees at the Hotel to be terminated as provided
in Section 8).
7.1.9 The granting of any license or sublicense with respect
to the Project Names, except to the extent expressly permitted in
accordance with the terms and conditions of this Agreement.
As used in this SECTION 7, an agreement or series of related agreements (or
an amendment to an agreement or series of related agreements) is not
"material" unless it is binding on Buyer after the Closing. Except as
otherwise expressly provided in this SECTION 7.1, Buyer shall approve or
disapprove of any action proposed by Seller for which Buyer's approval is
required hereunder as soon as practicable but within not more than five (5)
day after Seller requests Buyer's approval for such action. Buyer's failure
to affirmatively approve or disapprove of the proposed action with five (5)
days shall be conclusively deemed to be Buyer's approval of such action.
7.2 FF&E AND INVENTORY. No portion of the FF&E will be removed
from the Real Property without the written consent of Buyer except in the
Ordinary Course and unless replaced by Seller prior to the Closing with FF&E
of comparable or higher quality and value. FF&E shall be maintained,
repaired and replaced by Seller in the Ordinary Course. Seller shall
purchase and maintain levels of Inventory, Liquor Inventory, Expendables and
Consumables in the Ordinary Course.
7.3 NOTICES. Seller shall promptly deliver to Buyer a copy of any
notice received by Seller prior to the Closing from (i) any Governmental
Authority alleging a violation of any applicable Law, or (ii) a party to any
Service Contract, Lease or Equipment Lease alleging a default by Seller under
any such document. Seller shall use its best efforts to cause Hotel Manager
to promptly deliver to Buyer copies of such notices received by Hotel Manager.
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7.4 INSURANCE. Seller shall maintain in effect through the
Closing insurance coverage that is comparable or better than the existing
insurance coverage for the Hotel.
7.5 HOTEL MANAGEMENT AGREEMENT; TSA LEASES. Buyer shall not
assume any obligations under the Hotel Management Agreement or the TSA
Leases, and Seller shall cause the Hotel Management Agreement and the TSA
Leases to be terminated as of Closing. Seller shall be solely responsible
for the costs of terminating the Hotel Management Agreement and the TSA
Leases and such costs shall not be Accounts Payable. At Closing, Seller
shall deliver possession of the Property to Buyer free and clear of any
possessory or other rights of the Hotel Manager, its Affiliates or of the
tenants under the TSA Leases (except to the extent Buyer executes new leases
with TSA Management). Seller shall remain responsible for all amounts due
GWC and its Affiliates under the Hotel Management Agreement or otherwise and
shall hold harmless, indemnify and defend Buyer and Buyer's Affiliates and
each of their respective officers, directors, shareholders, agents, and
employees, and each of their successors, heirs, and assigns (collectively,
the "BUYER PARTIES") from and against any Claims therefor. If TSA
Management so desires, Buyer shall negotiate with TSA Management for the
extension of any TSA Lease on market rents, for a term and other terms and
conditions as may be acceptable to TSA Management and Buyer; provided,
however, Buyer and Seller acknowledge and agree that the foregoing shall not
be deemed to require Buyer to enter into any new lease with TSA Management
for any space covered by a TSA Lease unless approved by Buyer in its sole and
absolute discretion.
7.6 LIQUOR LICENSE(S) AND INVENTORY.
7.6.1 APPLICATION FOR NEW LICENSES. Buyer shall be
responsible, at its sole cost and expense, for preparing, filing and
prosecuting all applications before the MLC for (i) the issuance of a
temporary liquor license effective as of the Closing Date, and (ii)
the transfer of the Liquor License or issuance of a new liquor license
at the Hotel to Buyer or its nominee following Closing in accordance
with the Liquor License Agreement. Immediately after November 10,
1998, Buyer may commence and pursue the application process for the
issuance of a temporary liquor license and the transfer of the Liquor
License or issuance of a new liquor license to Buyer pursuant to
applicable MLC requirements. Seller shall cooperate, and shall use
reasonable efforts to cause the Liquor Licensee (if other than Seller)
to cooperate, with Buyer in such applications as Buyer may reasonably
request (but without any obligation on the part of Seller or the
Liquor Licensee to incur out-of-pocket expense or liability in doing
so) in accordance with the Liquor License Agreement. Buyer shall keep
Seller informed as to the status and progress of its applications
before the MLC. Buyer shall use its best efforts to obtain a
temporary liquor license and transfer of the Liquor License or
issuance of a new liquor license and Buyer shall cooperate with Seller
in connection therewith. Notwithstanding anything contained in this
SECTION 7.6 to the contrary, Seller shall be liable for the payment of
any and all of Seller's tax liabilities required to be paid to the
Hawaiian tax authorities attributable to the period prior to Closing
as a precondition to the transfer of the Liquor License to Buyer or
the issuance of a new liquor license to Buyer pursuant to applicable
MLC requirements. If no temporary liquor license is issued to Buyer
as of the Closing Date, Seller, if it is the Liquor Licensee, shall in
good faith negotiate an agreement between Buyer and Seller whereby the
activities for which
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a liquor license may be required under applicable MLC requirements at
the Hotel may be conducted by Seller (to the extent permissible);
provided, however, (i) such arrangement shall be at no cost to Seller
and (ii) Buyer shall indemnify defend and hold harmless Seller Parties
from and against Claims arising from such arrangement and the sale of
alcoholic beverages at the Hotel.
7.6.2 TRANSFER OF LIQUOR INVENTORY. Notwithstanding any
other provision of this Agreement, the Liquor Inventory shall be sold
and transferred to Buyer (or Buyer's nominee) only in such manner as
complies with applicable alcoholic beverage control Laws and the terms
of the Liquor License. In no event shall there be a reduction in the
Purchase Price or a proration credit in Buyer's favor if, as of the
Closing, the Liquor Inventory is not able to be sold and transferred
in a manner complying with the applicable alcoholic beverage control
laws and the terms of the Liquor License; provided, however, if Seller
is required by such Laws to dispose of the Liquor Inventory other than
by sale or transfer to Buyer or Buyer's nominee, any net proceeds to
Seller from such disposition shall be credited against the Purchase
Price at, or paid over to Buyer after, Closing, unless prohibited by
Law.
7.7 PROJECT LOGO. Buyer acknowledges that prior to the date
hereof, Seller's predecessor in interest granted an oral license (i) to the
Grand Waikapu Golf Course ("GRAND WAIKAPU"), to use the Project Logo in
connection with operations at Grand Waikapu and (ii) an oral license to Yuri
Takano ("SPA LICENSEE"), to use the Project Logo and the name "Spa Grande" in
connection with the operation of various "Spa Grandes" in Japan. Seller will
use commercially reasonable efforts to cause Grand Waikapu to enter into a
written license agreement on terms and conditions satisfactory to Buyer prior
to Closing. Buyer acknowledges that from and after the Closing, Buyer's
rights to the Project Logo will be subject to the right, if any, of (i) Grand
Waikapu to continue to use the Project Logo in a manner substantially
consistent with Grand Waikapu's current use of the Project Logo; and (ii) the
Spa Licensee to continue to use the Project Logo and the name "Spa Grande" in
a manner substantially consistent with the Spa Licensee's current use of the
Project Logo and the name "Spa Grande"; provided, however that the foregoing
shall not be deemed or construed to limit Buyer's right to terminate such
licenses.
7.8 GUEST MEMBERSHIP PROGRAM. Prior to the Approval Date, Buyer
shall deliver written notice to Seller electing to either (i) acquire the
assets of the Guest Membership Program in accordance with the terms of the
GWRHS Agreement, or (ii) terminate the Guest Membership Program. If the
Guest Membership Program has not been terminated prior to Closing, Seller
will cause to be transferred to Buyer all outstanding deposits held or
required to be held from members in the Guest Membership Program in
accordance with the GWRHS Agreement. Whether or not the Guest Membership
Program is terminated, Buyer shall honor post-Closing reservations made by
such members for accommodations for the period following Closing in
accordance with the terms and conditions of each member's agreement with
GWRHS. If Buyer elects to acquire the assets of the Guest Membership
Program, at Closing Buyer and Seller shall enter into such transfer documents
as are reasonably required by Seller and Buyer. Buyer shall indemnify,
defend and hold Seller Parties harmless from and against all Claims arising
out of or in connection with Buyer's operation or termination of the Guest
Membership Program after the Closing; provided, however that Buyer shall have
no liability with respect to (i) Claims made by
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members for the return of deposits made pursuant to the Guest Membership
Program to the extent that Buyer did not receive a credit for or was not
transferred such outstanding deposit at Closing, and (ii) reservations for
the period after Closing made pursuant to the Guest Membership Program which
were not disclosed or made available to Buyer during the Due Diligence Period
(or prior to November 10, 1998, if Seller delivers the Seller Acceleration
Notice). Within the terms and conditions of the Guest Membership Program,
Buyer shall return the deposit provided by any member pursuant to its
agreement and take such other measures permitted under the Guest Membership
Program in order to mitigate any damages payable hereunder.
7.9 LOT 462 LICENSE AGREEMENT. During the Due Diligence Period,
Seller shall use its best efforts to obtain a written license agreement from
the owner of Lot 462 allowing the owner of the Hotel to use Lot 462 for group
functions in connection with group Bookings entered into prior to the date
hereof.
7.10 FIRST MORTGAGE LOAN. From and after the Effective Date to the
Closing Date, Seller shall pay all monetary obligations due or otherwise
allocable under the loan documents evidencing the First Mortgage Loan for the
period prior to the Closing Date.
7.11 ASSUMED CONTRACTS. Buyer shall assume all Leases other than
the TSA Leases. Prior to the Approval Date, Buyer shall deliver written
notice to Seller of any Equipment Lease or Service Contract that is
terminable on thirty (30) days or fewer notice and that Buyer elects not to
assume at Closing. Buyer shall assume all other Service Contracts and
Equipment Leases. Seller shall terminate all contracts with respect to the
Hotel that are not Assumed Contracts prior to or at Closing. Buyer shall
indemnify, defend and hold Seller Parties harmless from and against all
Claims arising out of or in connection with the Assumed Contracts from and
after the Closing. Seller shall indemnify, defend and hold Buyer Parties
harmless from and against all Claims arising out of or in connection with the
Assumed Contracts prior to Closing. Buyer's assumption of the Assumed
Contracts shall in all events be subject to the truth of Seller's
representations and warranties expressly set forth in this Agreement.
7.12 REPORT OF BULK SALE. At or prior to the Closing, Seller shall
file a Report of Bulk Sales with the State of Hawaii, Department of Taxation,
pursuant to the requirement of Section 237-43 of the Hawaii Revised Statutes
and provide Buyer with a copy thereof bearing the Certificate of the Director
of Taxation of the State of Hawaii (the "BULK SALES CERTIFICATE").
7.13 NOTICE OF PURCHASE. Seller shall file a Notice of Purchase
(the "NOTICE OF PURCHASE") with the State of Hawaii, Department of Taxation
not less than ten (10) days prior to Closing, pursuant to the requirements of
Section 231-33 of the Hawaii Revised Statues and provide Buyer with a copy
thereof.
7.14 PARKING PARCELS. Buyer acknowledges and agrees that Seller is
obligated to convey the Parking Parcels to the County of Maui and that Seller
may do so prior to Closing, in which event the Parking Parcels shall not be
conveyed to Buyer at Closing and there shall be no adjustment to the Purchase
Price. If Seller does not convey the Parking Parcels to the County of Maui
prior to Closing, the Parking Parcels will be conveyed to Buyer at Closing as
part of the Property pursuant to the Deed and subject to the County of Maui's
right to receive such a
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conveyance after Closing. If Seller does not convey the Parking Parcels to
the County of Maui prior to Closing, Buyer shall indemnify, defend and hold
Seller Parties harmless from and against all Claims arising out of or in
connection with the Parking Parcels from and after the Closing.
7.15 SAFLOK UPGRADE. Prior to Closing, Seller shall use its best
efforts to cause the Saflok door lock system to be upgraded to be Year 2000
Compliant under the extended maintenance contract without cost to Buyer.
Buyer acknowledges and agrees that Buyer may elect to assume the Saflok
extended maintenance contract and that other than the immediately preceding
sentence Seller shall have no liability with respect to whether the Saflok
system is Year 2000 Compliant after Closing.
8. PRORATIONS, CREDITS AND OTHER ADJUSTMENTS. Except as otherwise
expressly provided in this Agreement, all income and expenses of the Property
with respect to the period prior to the Proration Time shall be for the
account of Seller and all income and expenses of the Property with respect to
the period from and after the Proration Time shall be for the account of
Buyer, in all cases without duplication.
8.1 PRORATION OF TAXES. All Taxes for a period in which Closing
occurs shall be prorated between Seller and Buyer as of the Closing Date,
based on the most recent tax bills then available. Seller shall be charged
with said proration for the period through the day prior to the Closing Date
and Buyer shall be charged with said proration for the period from and after
the Closing Date. Such proration shall satisfy the obligation of Seller to
Buyer with respect to all Taxes on the Property for the tax fiscal year in
which the Closing Date occurs and all prior tax fiscal years. Buyer shall
acquire the Property subject to all Taxes levied against the Property after
the Closing or which otherwise constitute Permitted Exceptions (including any
increase in ad valorem taxes on account of the transaction contemplated by
this Agreement) except to the extent such Taxes are expressly made Seller's
responsibility hereunder. Seller shall pay at Closing all room occupancy and
use taxes due and payable with respect to the Hotel for the period prior to
the Closing, and Buyer shall pay all room occupancy and use taxes due and
payable with respect to the Hotel for the period on and after the Closing.
Seller and Buyer each shall pay fifty percent (50%) of all room occupancy and
use taxes due and payable with respect to the Hotel for the night commencing
prior to and ending on the day on which the Proration Time occurs. Seller
shall be solely responsible for the payment of all sales tax due with respect
to sales by Seller of goods and services held for resale in the ordinary
course of business at the Hotel for the period prior to the Closing. Buyer
shall be solely responsible for the payment of all sales tax due with respect
to sales by Buyer of goods and services held for resale in the course of
business at the Hotel for the period on and after the Closing.
8.2 PRORATION OF EXPENSES. The following items of expense with
respect to any portion or aspect of the Property shall be prorated between
Seller and Buyer as of the Closing Date:
8.2.1 Periodic charges under Assumed Contracts (such as
monthly rents or fixed periodic charges), but not charges made on a
per-order or per-call basis.
8.2.2 Utility charges (but excluding any utility deposits).
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8.2.3 All other operating expenses of the Hotel of a strictly
periodic nature, other than Employee Obligations (and not based upon
specific orders for goods or services).
8.3 CREDITS TO BUYER. At the Closing and without limiting
Seller's representations and warranties, Buyer shall assume all of the
obligations of Seller under the Leases, Occupancy Commitments and Bookings as
of the Proration Time, including obligations with respect to any prepaid
rents or other amounts under the Leases, tenant security deposits and Booking
Deposits not earned as of the Proration Time, and Buyer shall receive a
credit against the Purchase Price at the Closing in an amount equal to (i)
all such amounts (and, therefore, Seller shall have the right to retain any
amounts relating to such items on deposit in Seller's account), (ii) the
value of gift certificates, donations, free rooms and trade outs, all
determined at face value, (iii) amounts required to complete the Capital
Expenditure Plan, (iv) (without duplication) $386,000 representing the
capitalized cost of the Fidelio Agreements, and (v) interest on the First
Mortgage Loan allocable to the period before the Closing to the extent not
paid by Seller prior to or on the Closing Date. All prepaid rents and other
amounts under the Leases, tenant deposits and Booking Deposits as of the
Proration Time shall be the obligation of Buyer after the Closing to the
extent Buyer receives a credit therefore.
8.4 CREDITS TO SELLER. In addition to any other credit set forth
in this SECTION 8, Seller shall receive a proration credit equal to the sum
of (i) all costs and expenses incurred by Seller for capital projects (other
than the Capital Expenditure Plan) specifically requested by Buyer, (ii) the
aggregate balance of all Cash Banks at the Hotel as of Closing, (iii) for
prepayments by Seller under Assumed Contracts, security deposits under the
Equipment Leases or Service Contracts and utility deposits owed to Seller and
assigned to Buyer at Closing, and (iv) credits pursuant to SECTION 8.12. If
the MLC prohibits Buyer from purchasing the Liquor Inventory at Closing,
Buyer shall deposit the value, at Seller's cost, of the Liquor Inventory, in
Escrow (with a corresponding debit to the Purchase Price). Upon Buyer
receiving approval of the transfer of the Liquor License to Buyer pursuant to
the Liquor License Agreement, the amount deposited for the Liquor Inventory,
together with any interest accrued thereon, shall be released to Seller and
title to the Liquor Inventory shall pass to Buyer pursuant to the terms of
the Liquor License Agreement.
8.5 ACCOUNTS RECEIVABLE. At the Closing, Seller shall assign to
Buyer the Accounts Receivable (as shown on the books of the Hotel as of the
Proration Time), and the Purchase Price shall be increased by an amount equal
to the sum of: (1) 95% of the amounts owed from credit card companies
pursuant to signed credit card receipts, regardless of whether such credit
card receipts have been delivered by Seller to the credit card companies (net
of fees payable in connection with the processing of credit card charges),
plus (2) 75% of the amount of all other Accounts Receivable past due 90 days
or less (excepting, however, amounts due from transient guests for lodging
and other items on the night commencing prior to and ending on the day on
which the Proration Time occurs), plus (3) one-half of the amounts due from
transient guests for lodging and other items on said night (or, to the extent
that such transient guests settle their accounts with a credit card, Seller
shall receive 95% of the amount described in this clause (3)). All Accounts
Receivable as of the Proration Time for which the Purchase Price is so
increased, and all accounts receivable arising out of Hotel operations from
and after the Proration Time, shall be the property of Buyer after the
Closing, subject to the following reconciliations: (x) on
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the date that is three (3) months after the Closing Date, and again on the
date that is six (6) months after the Closing Date, Buyer shall pay Seller
any amounts received by Buyer from and after the Closing on account of the
Accounts Receivable in excess of the payment Seller receives at the Closing
for the Accounts Receivable (or, with respect to the six-month
reconciliation, in excess of payments received by Seller at the Closing and
at the three-month reconciliation), and (y) upon completion of the six-month
reconciliation, if it is determined that Seller has received payments on
account of Accounts Receivable greater than amounts collected by Buyer after
the Closing with respect thereto, then Seller promptly shall reimburse Buyer
for such excess amount, and Buyer shall re-assign to Seller the right to
collect any Accounts Receivable remaining unpaid as of such date. After the
reconciliations made pursuant to the preceding sentence, there shall be no
further adjustment between Seller and Buyer with respect to Accounts
Receivable.
8.6 ACCOUNTS PAYABLE. At the Closing, Buyer shall assume all of
the Accounts Payable (as shown on the books and records of the Hotel as of
the Proration Time), and Buyer shall receive a credit against the Purchase
Price in an amount equal to the Accounts Payable (excepting, however,
amounts, if any, due with respect to goods or services not received by Seller
as of the Proration Time and to be furnished by the supplier thereof after
the Proration Time, and less any discounts then available in the ordinary
course of business for the prompt payment of the Accounts Payable). For any
Accounts Payable for which Buyer did not receive a credit at Closing (the
"UNCREDITED AP"), Buyer will send such Uncredited APs to Seller and Seller
will determine in good faith as soon as reasonably practicable whether to pay
the Uncredited AP. If Seller elects to pay the Uncredited AP, Seller will
notify in writing Buyer and Buyer shall promptly pay the Uncredited AP. If
Seller determines not to pay the Uncredited AP, Seller shall so notify Buyer
(or if Seller fails to respond), then Seller shall be solely responsible for
such Uncredited AP. In no event shall Buyer be deemed to have assumed
Uncredited APs. Buyer shall pay the Accounts Payable until the first to
occur of (i) ninety (90) days after Closing, and (ii) such time as the amount
of unpaid Accounts Payable for which Buyer did not receive a credit exceeds
$400,000, at which time Seller shall reimburse Buyer for all Uncredited AP
paid by Buyer, Buyer shall thereafter forward all such Uncredited AP to
Seller and Seller shall thereafter pay them. Buyer shall have no
responsibility for determining the validity of any Accounts Payable.
8.7 ITEMS EXCLUDED FROM PRORATIONS. Notwithstanding any other
provision of this Agreement to the contrary, no prorations shall be made or
credit given for the following:
8.7.1 Capital expenditures other than capital expenditures
incurred in connection with a capital project requested in writing by
Buyer (other than the Capital Expenditure Plan to the extent set forth
in SECTION 8.3);
8.7.2 Purchase orders for any Inventory, FF&E, Expendables,
Consumables or Liquor Inventory not yet received by Seller as of the
Proration Time;
8.7.3 Costs and expenses associated with any contracts that
are not Assumed Contracts, including the costs and expenses associated
with terminating the same (which are Seller's sole cost and expense).
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8.7.4 Except as expressly provided for elsewhere in this
SECTION 8, Property operating expenses of a non-periodic nature.
8.8 BASIS OF PRORATIONS. Unless this SECTION 8 expressly provides
otherwise: (A) all prorations hereunder with respect to the Property shall be
made as of Proration Time, on the Closing Date, or, if Buyer elects pursuant
to SECTION 8.12, the Economic Closing Date, (B) all prorations shall be made
on an actual daily basis, and (C) for purposes of such prorations, all items
of revenue and expense with respect to Hotel operations shall be classified
and determined in accordance with Generally Accepted Accounting Principles.
8.9 GUESTS' PROPERTY. All baggage or other property of Hotel
guests checked or left in Seller's or Hotel Manager's care (other than
property left in Hotel safe deposit boxes) as of the Closing shall be listed
in an inventory to be prepared in duplicate by Seller and signed by Seller's
and Buyer's representatives on the Closing Date. From and after the Closing
Date, Buyer shall be responsible for all baggage and property listed in such
inventory, and shall indemnify, defend and hold Seller Parties harmless from
and against all Losses relating thereto. Seller shall indemnify, defend and
hold Buyer Parties harmless from and against Losses for baggage and property
not listed in such inventory but shown to have been left in Hotel Manager's
care prior to the Closing Date (other than Losses caused by the negligence or
willful misconduct of Buyer or its employees or agents). All baggage or
other property of guests retained by Seller as security for unpaid Accounts
Receivable shall be left at the Property without any responsibility or
liability therefor on the part of Buyer (other than for Losses arising from
the negligence or willful misconduct of Buyer or its employees or agents) for
a period not to exceed 30 days after the Closing Date, within which time any
such remaining baggage or other property shall be removed by Seller. Seller
and Buyer acknowledge that property left in Hotel safe deposit boxes will not
be inventoried and that the indemnifications set forth in this SECTION 8.9
shall not cover property left in Hotel safe deposit boxes (and from and after
the Closing Date, Seller will have no liability for any property left in
Hotel safe deposit boxes).
8.10 PRORATION PROCEDURES.
8.10.1 Not later than 9:00 a.m. Los Angeles time on the fifth
Business Day prior to the scheduled Closing Date, Seller shall prepare
and deliver to Buyer a draft settlement statement setting forth
amounts to be prorated between Seller and Buyer at the Closing,
together with reasonable documentation supporting the information set
forth in such settlement statement. The draft settlement statement
shall contain Seller's good faith estimate of the amounts (based on
facts and circumstances then known to Seller), as of the anticipated
Proration Time, of real and personal property taxes, room occupancy
and use taxes, Accounts Receivable, Cash on Hand, Accounts Payable,
rents and other amounts payable under the Leases, tenant security
deposits and Booking Deposits not earned, and any other amount to be
prorated between Seller and Buyer, or to be credited to either party,
pursuant to this Agreement. Buyer shall review the draft settlement
statement and, not later than 5:00 p.m. Los Angeles time on the second
Business Day prior to the scheduled Closing Date, Buyer shall furnish
to Seller any comments which Buyer may have with respect thereto, or
any objection it may have to the amounts shown thereon, together with
its reasons for such objection. Thereafter, Seller and Buyer (each
acting reasonably and in good faith) shall attempt to resolve,
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prior to the Closing Date, any disagreement with respect to such draft
settlement statement.
8.10.2 Seller and Buyer shall cause the information set forth
in the draft settlement statement to be updated with actual
information available as of the Proration Time (and representatives of
both Seller and Buyer shall participate in conducting any necessary
inventories and compiling and verifying any necessary information as
of the Proration Time for purposes of updating such settlement
statement). Not later than 7:00 a.m. Los Angeles time on the Closing
Date, Seller shall deliver to Title Company and Buyer a settlement
statement for purposes of the Closing, which statement shall include
the matters on which Seller and Buyer have agreed pursuant to SECTION
8.10.1, as updated with actual information as of the Proration Time
(and, with respect to any matter on which Seller and Buyer still
disagree as of such time, Seller's good faith determination of the
amount in question as of the Proration Time will be used for purposes
of Closing, subject to reconciliation after the Closing pursuant to
SECTION 8.10.3). The amounts shown in such settlement statement shall
be used in determining the amounts due to Seller and Buyer at the
Closing, and Title Company shall rely conclusively thereon in settling
the accounts of Buyer and Seller.
8.10.3 As soon as reasonably practicable after the Closing
(but in no event later than 90 days after the Closing, or, with
respect to Accounts Receivable, six months after the Closing), Seller
and Buyer (acting reasonably and in good faith) shall reconcile
between themselves, outside of escrow, the amounts to be prorated
pursuant to this Agreement, using any updated information with respect
to such matters then available. Each party shall provide to the other
reasonable access to the books, records, computer runs and other
documents relating to the Hotel which contain information relevant to
completing the final reconciliation. If the final reconciliation of
prorations, as agreed to between Buyer and Seller, shows any amount
due from Seller to Buyer, or vice versa, the party owing such amount
shall pay such amount (in immediately available funds) within five
Business Days after reaching agreement on the final reconciliation.
8.10.4 If Seller and Buyer are unable to agree on a final
reconciliation of the amounts to be prorated pursuant to this
Agreement within 90 days after the Closing (or, with respect to
Accounts Receivable, six months after the Closing), either party may
submit the matter to the Accountant for determination. The Accountant
shall review the information presented by Seller and Buyer regarding
the proration matters on which Seller and Buyer disagree, and shall
determine the matter in a manner consistent with the provisions of
this SECTION 8 as a neutral arbitrator. The Accountant's
determination shall be binding and conclusive upon both parties and
enforceable in any court of competent jurisdiction. Seller and Buyer
each shall pay 50% of the fees, charges and other expenses of the
Accountant for making such determination. If the Accountant's
determination discloses that either Seller or Buyer owes any sum to
the other party, the party which owes such sum shall pay the full
amount thereof within 15 Business Days after the Accountant's
determination.
8.11 EMPLOYEES. Seller has advised Buyer that pursuant to the
Management Agreement, all Hotel Employees are employed by Hotel Manager.
Seller shall cause Hotel
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Manager and its Affiliates to terminate Seller's or Hotel Manager's (as
applicable) employment of all of the Hotel Employees as of the close of
business on the day immediately prior to the Closing Date. Seller and Buyer
acknowledge that after the Approval Date (or earlier, if either the Seller
Acceleration Notice or Buyer Acceleration Notice is delivered and the
applicable Released Deposit is released to Seller), Buyer may interview
applicants for employment, which may include the present Hotel Employees (and
applicants not among the Hotel Employees) and will decide in its sole and
absolute discretion whether to employ any of such Hotel Employees after the
Closing Date. At the Closing, Seller shall cause the Hotel Manager to pay off
or otherwise be responsible for all wages, salaries and accrued vacation pay
and sick pay, medical insurance, fringe benefits and payroll taxes, if any,
due to the Hotel Employees (other than the Severance Obligations) on account
of such termination or otherwise due as of such day. To the extent feasible
without compromising Buyer's right to set initial terms and conditions of
employment, Buyer shall cause to be accepted a trustee-to-trustee transfer of
the funds and obligations representing the Hotel Employees' interests in a
"Section 401(k) plan" maintained by Hotel Manager for their benefit (among
others) and shall cause the creation of accounts representing such interests
in a similar plan, if one is created, maintained or established at Buyer's
sole discretion by Buyer (or by the party, if other than Buyer, which Buyer
causes to employ any Hotel Employees) provided that Buyer is satisfied that
(i) such 401(k) plan has received a favorable letter of determination as to
its qualification under Section 401(a) of the Code, (ii) such plan has at all
times been administered in conformity with the terms of said plan and ERISA,
and (iii) all filing and notification requirements required to properly
effect such transfer are timely observed and performed by Hotel Manager.
Buyer shall be responsible for any and all contingent or actual Severance
Obligations and shall have full and exclusive power and authority,
notwithstanding anything contained herein to the contrary to resolve such
matters. Buyer shall be responsible for severance obligations, if any, if
Buyer assumes the employment contract of any non-Union employee of Seller or
Hotel Manager.
8.11.1 If Buyer gives a Notice to Proceed and delivers the
Additional Deposit to Escrow Agent, Seller shall promptly (A) cause
the Employee Notices to be delivered by certified mail to (i) Hotel
Employees, (ii) the Director of the State of Hawaii Department of
Labor, (iii) the Union, and (iv) the Mayor of Maui, (B) cause the
Employee Notice to be posted at employee entrances, employee meeting
rooms and employee locker rooms at the Hotel (collectively, the
"APPROVED DELIVERY METHOD"). If Seller delivers the Seller
Acceleration Notice, Seller shall deliver the Employee Notices by the
Approved Delivery Method and in addition, Seller may cause the
Employee Notice to be included with each Hotel Employee's paycheck (or
paycheck stub, if the Hotel Employee's next paycheck is deposited
directly into such Hotel Employee's bank account). Buyer acknowledges
and agrees that it has approved the form of the Employee Notices and
the Approved Delivery Method.
8.11.1.1 Buyer may elect to accelerate the
delivery of the Employee Notices before the Approval Date by
delivering written notice (the "BUYER ACCELERATION NOTICE") to
Seller and Escrow Agent directing Seller to dispatch the
Employee Notices in accordance with the Approved Delivery
Method and causing the applicable Released Deposit to be
delivered to Seller by wire transfer, in which case Seller
shall within one (1) Business Day after receipt of the Buyer
Acceleration Notice cause the Employee Notices to be
dispatched in accordance
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with the Approved Delivery Method (excluding delivery by
paycheck); provided, however, that the Employee Notice will be
included in the next regularly scheduled paycheck if (A) Buyer
so requests and (B) Buyer agrees to bear 100% of all DWA
Penalties to the extent such penalties arise from also
delivering the Employee Notice with the subsequent paycheck.
8.11.1.2 Seller may elect to accelerate the
delivery of the Employee Notices before the Approval Date by
delivering written notice (the "SELLER ACCELERATION NOTICE")
to Buyer on or before November 11, 1998. On or before noon
Hawaii time on November 12, 1998, Buyer shall notify Seller in
writing whether Buyer will cause the applicable Released
Deposit to be released to Seller in response to the Seller
Acceleration Notice, in which case Seller shall cause the
Employee Notices to be dispatched in accordance with the
Approved Delivery Method on November 13, 1998 and Buyer will
cause the Released Deposit to be delivered to Seller by wire
transfer on November 13, 1998. If Buyer fails to respond to
the Seller Acceleration Notice or does not agree in writing to
the release of the Released Deposit within the time period
specified, Seller may terminate this Agreement by delivering
written notice to Buyer and Escrow Agent, in which case,
Escrow Agent shall cause the Initial Deposit to be refunded to
Buyer and this Agreement will terminate, except for those
obligations which expressly survive termination.
8.11.1.3 If Buyer delivers the Buyer Acceleration
Notice, Buyer and Seller each shall be responsible for fifty
percent (50%) of the DWA Penalties, if any. If the Employee
Notices are dispatched after Buyer's delivery of a Notice to
Proceed in accordance with Section 8.11.1, or if Seller
delivers the Seller Acceleration Notice, Seller shall be
solely responsible for the DWA Penalties, if any.
Notwithstanding anything to the contrary contained in this
Agreement in all events, Buyer has sole liability and
responsibility for (A) any DWA Allowance payable to a Hotel
Employee, (B) any and all damages and liabilities resulting
from the form of the Employee Notice, and (C) any and all
damages and liabilities resulting from any violations of the
WARN Act, in each case, irrespective of whether the Employee
Notices are dispatched pursuant to a Buyer Acceleration
Notice, Seller Acceleration Notice or after Buyer's delivery
of a Notice to Proceed. Subject to the WARN Act and DWA
obligations accepted by Buyer, nothing in this Agreement,
express or implied, shall confer upon any Hotel Employee, or
any representative of any such employee, any rights or
remedies, including any right to employment, continued
employment for any period, or any expectation of continued
employment or seniority rights, of any nature whatsoever.
Buyer shall have the exclusive right to establish its initial
terms and conditions of employment.
8.11.2 Buyer shall have no duty, obligation or liability to
any Hotel Employee with respect to any Hotel Employee Obligations
(other than the actual or contingent Severance Obligations) and,
except as expressly provided for herein, the foregoing matters shall
be the sole responsibility of Hotel Manager. Seller shall have no
duty, obligation or liability to any Buyer Employee with respect to
any Buyer Employee
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Obligations, and, except as expressly provided for herein, the
foregoing matters shall be the sole responsibility of Buyer or the
Person employing the Buyer Employees.
8.11.3 Seller shall indemnify, defend and hold Buyer Parties
harmless from and against any and all Claims arising from or relating
to (i) any violation (or alleged violation) by Seller of any Law
governing employment matters, or of any Collective Bargaining
Agreement in effect with respect to Hotel Employees, occurring prior
to the Closing Date (other than for violations or alleged violations
under the WARN Act or the DWA, which have been allocated to Buyer in
accordance with SECTION 8.11.1.3), and (ii) any Claims asserted by
any Hotel Employees, the Union, Hotel Manager or its Affiliates, or
another Person, based upon any Hotel Employee Obligations.
8.11.4 Buyer shall indemnify, defend and hold Seller Parties
harmless from and against any and all Claims arising from or relating
to (i) any violation (or alleged violation) of the WARN Act, or any
other Law governing employment matters, or any new collective
bargaining agreement in effect with respect to the Buyer Employees,
occurring after the Closing Date (other than violations or alleged
violations under the WARN Act or the DWA, which have been allocated to
Seller in accordance with SECTION 8.11.1.3), (ii) any Claims asserted
by any Buyer Employees, the Union, or another Person, based upon any
Buyer Employee Obligations, and (iii) the contingent or actual
Severance Obligations.
8.11.5 Intentionally Omitted.
8.12 ECONOMIC CLOSING DATE. Notwithstanding anything to the
contrary herein, if on or after December 18, 1998 Buyer (i) deposits into
Escrow the cash balance of the Purchase Price in accordance with SECTION
3.1.4 and (ii) delivers written notice to Seller and Escrow Agent of its
desire to affect the prorations, credits and adjustments set forth in SECTION
8 as of the Business Day immediately following the date the cash balance is
deposited (which date shall be the "ECONOMIC CLOSING DATE"), then all
prorations, credits and adjustments for purposes of SECTION 8 shall be
determined as of the Proration Time on the Economic Closing Date (and Seller
shall receive a credit at Closing equal to the difference between (a) the sum
of all wages, salaries, accrued vacation pay and sick pay, medical insurance,
fringe benefits and other amounts paid out by Seller at Closing to such Hotel
Employees pursuant to SECTION 8.11, minus (b) the sum of such amounts as
would have been paid by Seller to such Hotel Employees pursuant to SECTION
8.11 had the Closing actually occurred on the Economic Closing Date);
provided, however, that all of Buyer's obligations for actual or contingent
Severance Obligations shall be effective as of the Closing Date.
9. CONDITIONS TO CLOSING.
9.1 BUYER'S CONDITIONS PRECEDENT. Buyer's obligation to close the
transactions contemplated by this Agreement shall be subject to timely
satisfaction of each of the following conditions (each, a "BUYER'S CONDITION
PRECEDENT"):
9.1.1 NO TERMINATION. Buyer has not terminated this Agreement
in accordance with SECTION 5 of this Agreement within the time periods
described therein.
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9.1.2 PERFORMANCE OF SELLER'S OBLIGATIONS. Seller shall have
timely performed, in all material respects, all of its obligations
required under this Agreement to be performed by Seller at or before
Closing.
9.1.3 ACCURACY OF REPRESENTATIONS. Each of Seller's
representations and warranties set forth in this Agreement shall be
true and correct, in all material respects, as of Closing,
9.1.4 TITLE POLICY. Title Company shall be committed to issue
the Title Policy to Buyer as of the Closing Date.
9.1.5 ESTOPPEL CERTIFICATES. Buyer shall have received and
reasonably approved prior to the Approval Date executed estoppel
certificates substantially in the form of EXHIBIT J attached hereto
from each of the Tenants. If Seller is unable to obtain an estoppel
certificate from any Tenant, then, in lieu thereof, Seller shall
provide to Buyer a certificate pertaining to that tenant's Lease
covering the same matters that would have been set forth in the
Tenant's estoppel certificate (and if, after the Closing, Seller
delivers to Buyer an estoppel certificate from a Tenant for whom
Seller executed a Seller's certification at the Closing, then Seller
thereafter shall be released from such certification). Subject to the
preceding sentence, Seller's liability in connection with any Seller's
certificate shall not merge into any instrument or conveyance
delivered at the Closing; provided, however, any action, suit or
proceeding with respect to the truth, accuracy or completeness of such
certificate shall be commenced, if at all, on or before the date which
is twelve (12) months after the Closing Date and, if not commenced on
or before such date, thereafter shall be void and of no force or
effect.
9.1.6 SELLER'S DELIVERIES. Seller shall have delivered, or
caused to be delivered to Escrow Agent, all of Seller's Closing
Documents set forth in SECTION 11.2.
9.1.7 FIRST MORTGAGE LOAN. Buyer is able to assume the First
Mortgage Loan (and thereby satisfy $275,000,000 of the Purchase Price)
provided that Buyer has complied with all covenants, conditions and
requirements for the First Mortgage Loan and the assumption thereof to
the extent specifically set forth in the documents provided by Seller
to Buyer on or before November 10, 1998 (including, without
limitation, delivery of all documents, notices, certificates and
opinions and information and payment of all expenses required to be
borne by the assuming party thereunder).
9.1.8 CASUALTY. Buyer has not terminated this Agreement in
accordance with SECTION 10 of this Agreement within the time periods
described therein.
The conditions precedent set forth in the SECTION 9.1 are
solely for the benefit of Buyer and may be waived only by Buyer. Neither
Seller nor Buyer shall act or fail to act for the intended purpose of
permitting or causing any of the foregoing conditions precedent to fail. If
any of the Buyer's Conditions Precedent have not been satisfied on or before
the scheduled Closing Date, and such Buyer's Condition Precedent has not
previously been waived by Buyer, Buyer may (i) waive such Buyer's Condition
Precedent, in which event the transaction contemplated by this Agreement will
close in accordance with the terms hereof, or (ii) terminate
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this Agreement by delivering written notice of such termination (a
"TERMINATION NOTICE") on or before the scheduled Closing Date.
Notwithstanding the foregoing, if Buyer delivers such a Termination Notice,
Seller shall have the right to extend the Closing Date for up to seven (7)
Business Days in order to attempt to cause such Buyer's Conditions Precedent
to be satisfied, which right shall be exercised (if at all) by Seller
delivering to Buyer written notice of such extension within two (2) Business
Days after Seller's receipt of such Termination Notice. If Seller so elects
to extend the Closing Date, and Seller causes such Buyer's Conditions
Precedent to be satisfied on or before the extended Closing Date, then the
Closing shall occur on such extended Closing Date; otherwise, Buyer's
Termination Notice shall become effective on the date Seller's extension
expires. Buyer acknowledges and agrees that, other than as expressly set
forth in SECTION 9.1.7, obtaining financing for its purchase of the Property
is not a condition precedent to Buyer's obligation to purchase the Property,
and Buyer may assume the First Mortgage Loan solely on the terms and
conditions set forth in the First Mortgage Loan documents, and Seller and
Lender are under no obligation to modify the terms or conditions of the First
Mortgage Loan. Buyer shall take actions required to satisfy the terms and
conditions of the First Mortgage Loan documents for the assumption of the
First Mortgage Loan to the extent specifically set forth in the documents
delivered by Seller to Buyer on or before November 10, 1998. Neither Seller
nor its Affiliates shall take actions which would cause Buyer not to satisfy
the conditions set forth in First Mortgage Loan documents for the assumption
of the First Mortgage Loan.
9.2 SELLER'S CONDITIONS PRECEDENT. Seller's obligation to close
the transactions contemplated by this Agreement shall be subject to timely
satisfaction of each of the following conditions (each, a "SELLER'S CONDITION
PRECEDENT"):
9.2.1 NO TERMINATION. Buyer has not terminated this
Agreement in accordance with SECTIONS 5 and 10 of this Agreement
within the time periods described in such Sections.
9.2.2 PERFORMANCE OF BUYER'S OBLIGATIONS. Buyer shall have
timely performed, in all material respects, all of its obligations
required under this Agreement to be performed by Buyer at or before
Closing.
9.2.3 ACCURACY OF REPRESENTATIONS. Each of Buyer's
representations and warranties set forth in this Agreement shall be
true and correct in all material respects, as of Closing.
9.2.4 BUYER'S DELIVERIES. Buyer shall have delivered, or
caused to be delivered to Escrow Agent, all of Buyer's Closing
Documents set forth in SECTION 11.3 and all sums required to be paid
by Buyer under the terms of this Agreement.
The conditions precedent set forth in this SECTION 9.2 are solely for the
benefit of Seller and may be waived only by Seller. Neither Seller nor Buyer
shall act or fail to act for the intended purpose of permitting or causing
any of the foregoing conditions precedent to fail. If any of the Seller's
Conditions Precedent have not been satisfied on or before the scheduled
Closing Date, and such Seller's Condition Precedent has not previously been
waived by Seller, Seller may (i) waive such Seller's Condition Precedent, in
which event the transaction contemplated by the
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Agreement will close in accordance with the terms hereof, or (ii) terminate
this Agreement by delivering a Termination Notice on or before the scheduled
Closing Date. Notwithstanding the foregoing, if Seller delivers such a
Termination Notice, Buyer shall have the right to extend the Closing Date for
up to seven (7) Business Days in order to attempt to cause such Seller's
Conditions Precedent to be satisfied, which right shall be exercised (if at
all) by Buyer delivering to Seller written notice of such extension within
two (2) Business Days after Buyer's receipt of such Termination Notice. If
Buyer so elects to extend the Closing Date, and Buyer causes such Seller's
Conditions Precedent to be satisfied on or before the extended Closing Date,
then the Closing shall occur on such extended Closing Date; otherwise,
Seller's Termination Notice shall become effective on the date Buyer's
extension expires.
10. CONDEMNATION; RISK OF LOSS.
10.1 If, prior to the Closing, the Hotel, or any material part
thereof, is destroyed or materially damaged (as defined in SECTION 10.4),
Buyer shall have the right, exercisable within fifteen (15) days after
receiving written notice describing such destruction or material damage in
reasonable detail, either (i) to terminate this Agreement by delivering a
Termination Notice, or (ii) to accept the Hotel in its then condition and to
proceed with Closing with a reduction in the Purchase Price in the amount of
the deductible for the applicable insurance coverage. Buyer's failure to
deliver a Termination Notice within said 15-day period shall be deemed
Buyer's election to proceed under clause (ii) above. If Buyer elects (or is
deemed to elect) to proceed under clause (ii) above, (x) Seller shall
promptly and diligently pursue its claim for insurance proceeds and Seller
shall not compromise, settle or adjust any claims to such insurance proceeds
without Buyer's prior written consent (which consent shall not be
unreasonably withheld or delayed), (y) Buyer shall receive at the Closing an
assignment of all of Seller's rights to any insurance proceeds payable by
reason of such destruction or material damage, and (z) Seller shall have no
duty or obligation to repair or restore such destruction or material damage.
10.2 If prior to the Closing there is any non-material damage to
the Hotel, Buyer shall accept the Hotel in its then condition and proceed
with the Closing with a reduction in the Purchase Price in the amount of the
deductible for the applicable insurance coverage. In such event, (i) Seller
shall promptly and diligently pursue its claim for insurance proceeds and
Seller shall not compromise, settle or adjust any claims to such proceeds
without Buyer's prior written consent (which consent shall not be
unreasonably withheld or delayed), (ii) Buyer shall receive at the Closing an
assignment of all Seller's rights to any insurance proceeds payable by reason
of such damage, and (iii) Seller shall have no duty or obligation to repair
or restore such damage.
10.3 If prior to the Closing the Hotel, or any material part
thereof (as defined in SECTION 10.4), is subject to a taking or a threatened
taking by public authority, Buyer shall have the right, exercisable within
fifteen (15) days after receiving written notice describing such taking in
reasonable detail, either (i) to terminate this Agreement by delivering a
Termination Notice, or (ii) to accept the Hotel in its then condition and to
proceed with the Closing without an abatement or reduction in the Purchase
Price. Buyer's failure to deliver a Termination Notice within said 15-day
period shall be deemed Buyer's election to proceed under clause (ii) above,
(x) Seller shall promptly and diligently pursue its claims for a condemnation
award by reason of such taking and Seller shall not compromise, settle or
adjust any claims to such award without Buyer's prior written consent (which
consent shall not be unreasonably withheld or delayed), (y)
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Buyer shall receive at the Closing an assignment of all the Seller's rights
to any condemnation award payable by reason of such taking, and (z) Seller
shall have no duty or obligation to repair or restore the portion of the
Hotel remaining after such taking. If prior to the Closing any non-material
proration of the Hotel is subject to a taking or a threatened taking by
public authority, Buyer shall accept the Property in its then condition and
proceed with the Closing without an abatement or reduction in the Purchase
Price. In such event, (i) Seller shall promptly and diligently pursue its
claims for a condemnation award by reason of such taking and Seller shall not
compromise, setter or adjust any claims to such award without Buyer's prior
written consent (which consent shall not be unreasonably withheld or
delayed), (ii) Buyer shall receive at the Closing an assignment of all of
Seller's rights to any condemnation award payable by reason of such taking,
and (iii) Seller shall have no duty or obligation to repair or restore the
portion of the Hotel remaining after such taking.
10.4 For purposes of this SECTION 10, damage to the Hotel or a
taking of a portion thereof shall be deemed to involve a material portion
thereof if (i) the reasonably estimated cost of restoration or repair of such
damage (plus the lost net income for the period required to effect such
repair or restoration which is not covered by an assignment of proceeds under
Seller's business interruption insurance), or (ii) the amount of the
condemnation award with respect of such taking shall exceed Twenty Million
Dollars ($20,000,000).
10.5 Seller shall give Buyer written notice of any taking,
threatened taking, damage or destruction of the Hotel, promptly after
learning of the same. If Buyer is obligated or elects to proceed with the
Closing notwithstanding any damage or threatened taking of the Hotel and the
insurance proceeds or condemnation award will not be payable prior to the
scheduled Closing, then following the Closing, Seller agrees to execute such
reasonable documents and to undertake such reasonable further acts as may be
reasonably necessary to assist buyer in pursuing its claim for any insurance
proceeds or condemnation award. The preceding sentence shall survive the
Closing.
11. CLOSING.
11.1 TIME. Subject to extension as set forth in SECTION 9, the
Closing shall occur on or before the Closing Date.
11.2 SELLER'S DELIVERIES. On or before the Closing Date, Seller shall
deliver to Escrow Agent:
11.2.1 A duly executed and acknowledged original Deed;
11.2.2 Four (4) duly executed original counterparts of the Bill
of Sale and Assignment;
11.2.3 Four (4) duly executed original counterparts of the
Assignment of Leases;
11.2.4 Two (2) duly executed FIRPTA Certificates;
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11.2.5 Four (4) duly executed original counterparts of the
Liquor License Agreement (modified to the extent necessary to conform
to Buyer's obtaining a new liquor license and a temporary license);
11.2.6 A Certificate of Good Standing issued by the
Department of Commerce and Consumer Affairs of the State of Hawaii and
Tax Clearance Certificate issued by the Department of Taxation of the
State of Hawaii dated not earlier than ten (10) days prior to the
Closing Date.
11.2.7 Notices to Tenants duly executed by Seller.
11.2.8 Such other documents, if any, as reasonably required by
Buyer with respect to the GWRHS Agreement.
11.2.9 A certificate from the lender under the First Mortgage
Loan dated not more than ten (10) days before the then scheduled
Closing Date stating (i) the outstanding principal balance, (ii) that
there exists no Event of Default (as defined in First Mortgage loan
documents); and (iii) that payments of interest and principal are
current as of the date of the certificate.
11.2.10 Such other documents as the Escrow Agent or the
Title Company may reasonably require from Seller in order to effect
Closing in accordance with this Agreement, including, without
limitation, the Bulk Sales Certificate and the Notice of Purchase.
11.2.11 Seller shall deliver the Books and Records at
Closing outside of Escrow by leaving the Books and Records at the Hotel.
11.3 BUYER'S DELIVERIES: On or before the Closing Date, Buyer shall
deliver to Escrow Agent:
11.3.1 The balance of the Purchase Price, together with such
other sums as Escrow Agent shall require to pay Buyer's share of the
Closing costs, prorations, reimbursements and adjustments as set forth
in this Agreement, in immediately available funds;
11.3.2 Four (4) duly executed original counterparts of the Bill
of Sale and Assignment;
11.3.3 Four (4) duly executed original counterparts of the
Assignment of Leases;
11.3.4 Four (4) duly executed original counterparts of the
Liquor License Agreement (modified to the extent necessary to conform to
Buyer's obtaining a new liquor license and a temporary license); and
11.3.5 If Buyer elects to assume the First Mortgage Loan,
such assignment and assumption documents, certificates, opinions and
other documents as Lender may
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reasonably request, all in form and substance required by Lender, the
First Mortgage Loan documents and any applicable rating agencies.
11.3.6 Such other documents as the Escrow Agent or the Title
Company may reasonably require from Buyer in order to effect Closing
in accordance with this Agreement.
11.4 SELLER'S CLOSING COSTS. Seller shall pay (i) fifty percent
(50%) of the premium and all charges for the Title Binder and the Title
Policy, except charges for any endorsements not included within such Title
Binder and Title Policy and requested by Buyer; (ii) one-half of Escrow
Agent's fees and expenses for administering Escrow; (iii) any brokerage
commission due Seller's Broker pursuant to separate written agreement between
Seller and Seller's Broker, (iv) the cost and expense of its own counsel and
consultants, and (v) all conveyance taxes, sales, revenue and excise taxes
imposed on the sale, conveyances and transfers contemplated under this
Agreement (including State of Hawaii bulk sales tax).
11.5 BUYER'S CLOSING COSTS. Buyer shall pay (i) fifty percent
(50%) of all charges for the Title Binder (which includes reimbursement to
Seller of 50% of the premium Seller paid for the Title Binder) and the Title
Policy, one hundred percent (100%) of all endorsements to the Title Policy
and one hundred percent (100%) of the cost of any reinsurance in addition to,
or allocated among title companies in amounts different than the reinsurance
described in the Title Binder, (ii) the cost of any new Survey or update to
the Survey, (iii) all mortgage recording taxes, if any, due in connection
with the Closing; (iv) all recording and filing fees and charges incurred in
connection with the recording or other filing of the Deed or any other
Closing Document; (v) one-half of Escrow Agent's fees and expenses for
administering Escrow, (vi) the cost and expense of its own counsel and
consultants; (vii) all fees, costs and expenses that may be payable to third
parties (including Governmental Authorities, but specifically excluding fees
payable to GWC and or GWC's Affiliates) in order (x) to transfer the Licenses
and Permits into Buyer's name, (y) for Buyer to obtain new or substitute
Licenses and Permits, and (z) for Buyer to provide any applications or
notices to, or obtain any consents or approvals from the MLC, and (viii) all
costs and expenses incurred by Buyer in providing the documents,
certificates, opinions and other requirements of Lender, the First Mortgage
Loan and any applicable rating agencies in connection with the assumption of
the First Mortgage Loan .
11.6 OTHER CLOSING COSTS. Any other charges and expenses incurred
in effecting Closing shall be allocated between Buyer and Seller in
accordance with the custom for commercial real estate transactions in the
County of Maui, State of Hawaii.
11.7 ESCROW.
11.7.1 INSTRUCTIONS. Within one (1) Business Day after
execution of this Agreement, Buyer and Seller each shall deposit a
copy of this Agreement executed by it (or either of them shall deposit
a copy executed by both Buyer and Seller) with Escrow Agent. This
Agreement, together with such further instructions, if any, Buyer and
Seller shall provide to Escrow Agent by written agreement, shall
constitute the escrow instructions. If any requirements relating to
the duties or obligations of Escrow Agent hereunder are not acceptable
to Escrow Agent, or if Escrow Agent requires additional
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instructions, the parties hereto agree to make such deletions,
substitutions and additions hereto as counsel for Buyer and Seller
shall mutually approve, which additional instructions shall not
substantially alter the terms of this Agreement unless otherwise
expressly agreed to by Seller and Buyer.
11.7.2 DEPOSITS INTO ESCROW. Seller shall make its deposits
into escrow in accordance with SECTION 11.2. Buyer shall make its
deposits into escrow in accordance with SECTION 11.3. Escrow Agent is
authorized to close the escrow only if and when: (i) Escrow Agent has
received all items to be delivered by Seller and Buyer pursuant to
SECTIONS 11.2 and 11.3; and (ii) Title Company can and will issue the
Title Policy concurrently with the Closing.
11.7.3 CLOSE OF ESCROW. Provided that Escrow Agent shall not
have received written notice in a timely manner from Buyer or Seller
of the failure of any condition to the Closing or of the termination
of the Escrow, AND if and when Buyer and Seller have deposited into
Escrow items required by this Agreement and Title Company can and will
issue the Title Policy concurrently with the Closing, Escrow Agent
shall:
11.7.3.1 Deliver to Buyer: (1) the Deed by causing it
to be recorded in the Official Records and immediately upon
recording delivering to Buyer a conformed copy of the Deed;
(2) the Bill of Sale and Assignment; (3) the FIRPTA
Certificate; and (4) the Assignment of Leases; (5) the Liquor
License Agreement; (6) the Bulk Sales Certificate and Notice
of Sale; and (7) if received, a license agreement for the use
of Lot 462 in accordance with the provisions of SECTION 7.9.
11.7.3.2 Deliver to Seller: (1) the Purchase Price,
after satisfying the Closing costs, prorations and adjustments
and any broker commission to be paid by Seller pursuant to
SECTION 8 and SECTION 11.4; (2) the Bill of Sale and
Assignment; (3) the FIRPTA Certificate; (4) the Assignment of
Leases; and (5) the Liquor License Agreement.
11.7.3.3 Deliver to Buyer: any funds deposited by
Buyer, and any interest earned thereon, in excess of the
amount required to be paid by Buyer hereunder.
11.7.3.4 Deliver to Buyer the Title Policy issued by
Title Company.
11.7.3.5 Evidence of the mailing of Tenant Notices.
11.7.4 REAL ESTATE REPORTING PERSON. Escrow Agent is designated
the "real estate reporting person" for purposes of section 6045 of
title 26 of the United States Code and Treasury Regulation 1.6045-4 and
any instructions or settlement statement prepared by Escrow Agent shall
so provide. Upon the consummation of the transaction contemplated by
this Agreement, Escrow Agent shall file Form 1099 information return
and send the statement to Seller as required under the aforementioned
statutes and regulations.
11.7.5 PROCEDURE FOR TERMINATION OF ESCROW. Upon any termination
of this Agreement, Escrow Agent shall cancel Escrow and disburse the
Deposit, and all interest earned
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on the Deposit while in Escrow, and all other funds (if any) then held in
Escrow in accordance with the provisions of this Agreement.
11.7.6 MAINTENANCE OF CONFIDENTIALITY BY ESCROW AGENT. Except
as may be otherwise required by applicable Law, Escrow Agent shall
maintain the existence, terms and nature of this transaction and the
identities of the Parties in strictest confidence and shall not disclose
any thereof to any third Person (including any broker) without the prior
written consent of Buyer and Seller.
11.7.7 EMPLOYER IDENTIFICATION NUMBERS. For Escrow Agent's
information, Buyer's Employer Identification Number is 33-0583827 and
Seller's Employer Identification Number is 13-4009188.
12. LIQUIDATED DAMAGES AND LIMITATIONS OF REMEDIES FOR BUYER'S BREACH.
12.1 LIQUIDATED DAMAGES/DEPOSIT. IF BUYER DEFAULTS IN ITS
OBLIGATION TO CLOSE THE PURCHASE OF THE PROPERTY ON THE CLOSING DATE AND SUCH
BREACH IS NOT OTHERWISE EXCUSED, SELLER SHALL HAVE THE RIGHT TO RETAIN THE
INITIAL DEPOSIT (PLUS ALL INTEREST ACCRUED THEREON), AND THE ADDITIONAL
DEPOSIT, IF MADE (AND ALL INTEREST ACCRUED THEREON), AS FULL, AGREED AND
LIQUIDATED DAMAGES. THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS
SECTION 12.1 THAT:
12.1.1 IF BUYER FAILS TO CLOSE THE TRANSACTION IN BREACH OF THIS
AGREEMENT, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT
THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN.
12.1.2 THE DEPOSIT, TOGETHER WITH ALL INTEREST EARNED
THEREON, BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE
PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH A FAILURE
OF CLOSING TO OCCUR, AND THE DEPOSIT AND INTEREST IS NOT AN AMOUNT
WHICH IS UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT THE TIME
THIS AGREEMENT IS MADE (BUYER ACKNOWLEDGING AND AGREEING THAT BUYER
HAS FULLY CONSIDERED THE PROVISIONS OF THIS SECTION 12 AND SUCH
CIRCUMSTANCES PRIOR TO ENTERING INTO THIS AGREEMENT AND HAS CONSULTED
WITH BUYER'S COUNSEL WITH RESPECT THERETO). WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING : (1) SELLER WILL INCUR ADMINISTRATIVE
COSTS IN THE NEGOTIATION AND REVIEW OF THIS AGREEMENT AND OTHER
DOCUMENTS RELATING TO THIS TRANSACTION; (2) THERE ARE IMPORTANT
ECONOMIC REASONS FOR SELLER'S DESIRE TO SELL THE PROPERTY BY DECEMBER
30, 1998, AND IT WAS BUYER'S WILLINGNESS TO MEET THIS DEADLINE WHICH,
IN PART, CAUSED SELLER TO SELECT BUYER OVER OTHER POTENTIAL BUYERS,
AND IT IS UNLIKELY THAT A SALE TO ANOTHER PERSON COULD BE
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EFFECTED BY DECEMBER 30, 1998, AT A PRICE REFLECTING THE TRUE VALUE OF
THE PROPERTY, IN THE EVENT A DEFAULT UNDER THIS AGREEMENT BY BUYER;
(3) CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT SUBSTANTIALLY IN
EXCESS OF THE INITIAL DEPOSIT (AND INTEREST ACCRUED THEREON) AND THE
ADDITIONAL DEPOSIT (AND THE INTEREST ACCRUED THEREON) MAY BE INCURRED
BY SELLER IF THE SALE OF THE PROPERTY CONTEMPLATED HEREBY IS NOT
COMPLETED BY DECEMBER 30, 1998; AND (4) SELLER IS ENTERING INTO THIS
AGREEMENT WITH BUYER IN RELIANCE UPON BUYER'S COMMITMENT TO PURCHASE
THE PROPERTY FROM SELLER ON OR BEFORE DECEMBER 30, 1998. THE PAYMENT
OF SUCH AMOUNTS AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE
OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275
OR 3369.
12.1.3 UPON DELIVERY TO ESCROW AGENT BY SELLER OF A PROPERLY
GIVEN TERMINATION NOTICE, SELLER SHALL BE ENTITLED TO RECEIVE AND
RETAIN THE DEPOSIT, TOGETHER WITH ALL INTEREST EARNED THEREON, AS
LIQUIDATED DAMAGES, WHICH DAMAGES AND THE DAMAGES IN SECTION 12.2
SHALL BE SELLER'S SOLE REMEDY HEREUNDER IF BUYER IS IN BREACH OF THIS
AGREEMENT AND FAILS TO CLOSE, ALL OTHER REMEDIES AT LAW OR EQUITY
BEING HEREBY WAIVED BY SELLER ,AND BUYER SHALL FORTHWITH INSTRUCT
ESCROW AGENT TO RELEASE THE DEPOSIT AND ALL INTEREST EARNED THEREON TO
SELLER AND TO RETURN TO BUYER AND SELLER ALL DOCUMENTS AND INSTRUMENTS
THERETOFORE DEPOSITED INTO THE ESCROW BY OR ON BEHALF OF THEM;
PROVIDED, HOWEVER, THE DEPOSIT SHALL BE IN ADDITION TO AND NOT IN LIEU
OF ANY AMOUNTS OWED TO SELLER BY BUYER AS A RESULT OF BUYER'S
OBLIGATIONS PURSUANT TO SECTION 5.4; AND PROVIDED FURTHER THAT SELLER
SHALL BE ENTITLED TO RECOVER FROM BUYER REASONABLE ATTORNEYS' FEES AND
OTHER DIRECT OUT-OF-POCKET COSTS INCURRED BY THEM IN CONNECTION WITH
THE ENFORCEMENT OR DEFENSE OF OBLIGATIONS CONTAINED IN THIS SECTION 12.
LJG JKS
------ -----
SELLER BUYER
12.2 LIQUIDATED DAMAGES/RELEASED DEPOSIT. IN ADDITION, IF BUYER
ACCELERATES THE DELIVERY OF THE EMPLOYEE NOTICE OR SELLER DELIVERS THE SELLER
ACCELERATION NOTICE AND BUYER AGREES TO RELEASE THE RELEASED DEPOSIT, EXCEPT
TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER SHALL
HAVE THE RIGHT TO RETAIN THE RELEASED DEPOSIT (AND ANY INTEREST ACCRUED
THEREON) AS FULL, AGREED AND LIQUIDATED DAMAGES. THE PARTIES ACKNOWLEDGE AND
AGREE BY INITIALING THIS SECTION 12.2 THAT:
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12.2.1 IF BUYER ACCELERATES THE DELIVERY OF THE EMPLOYEE NOTICE
AND THE TRANSACTION DOES NOT CLOSE, SELLER WILL INCUR CERTAIN COSTS AND
OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICAL TO ASCERTAIN.
12.2.2 THE RELEASED DEPOSIT, TOGETHER WITH ALL INTEREST
THEREAFTER EARNED THEREON, BEARS A REASONABLE RELATIONSHIP TO THE
DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON
OF SUCH A FAILURE OF CLOSING TO OCCUR AFTER ACCELERATION OF DELIVERY OF
THE EMPLOYEE NOTICE, AND THE RELEASED DEPOSIT AND INTEREST IS NOT AN
AMOUNT WHICH IS UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT THE
TIME THIS AGREEMENT IS MADE (BUYER ACKNOWLEDGING AND AGREEING THAT BUYER
HAS FULLY CONSIDERED THE PROVISIONS OF THIS SECTION 12 AND SUCH
CIRCUMSTANCES PRIOR TO ENTERING INTO THIS AGREEMENT AND HAS CONSULTED
WITH BUYER'S COUNSEL WITH RESPECT THERETO). WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING : (1) CERTAIN COSTS AND OTHER DAMAGES IN AN
AMOUNT SUBSTANTIALLY IN EXCESS OF THE RELEASED DEPOSIT WILL BE INCURRED
BY SELLER IF THE SALE OF THE PROPERTY CONTEMPLATED IN THIS AGREEMENT
FAILS TO CLOSE AFTER BUYER HAS ACCELERATED THE DELIVERY OF THE EMPLOYEE
NOTICE AND (2) SELLER IS ENTERING INTO THIS AGREEMENT WITH BUYER IN
RELIANCE UPON BUYER'S COMMITMENT TO PURCHASE THE PROPERTY FROM SELLER
AFTER BUYER HAS ACCELERATED THE DELIVERY OF THE EMPLOYEE NOTICE. THE
PAYMENT OF SUCH AMOUNTS AS LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE
SECTIONS 3275 OR 3369.
12.2.3 UPON DELIVERY TO ESCROW AGENT OF THE BUYER ACCELERATION
NOTICE OR SELLER DELIVERS THE SELLER ACCELERATION NOTICE AND BUYER
AGREES TO RELEASE THE RELEASED DEPOSIT, SELLER SHALL BE ENTITLED TO
RECEIVE AND RETAIN THE RELEASED DEPOSIT, TOGETHER WITH ALL INTEREST
THEREAFTER EARNED THEREON, AS LIQUIDATED DAMAGES, AND ESCROW AGENT SHALL
DELIVER THE RELEASED DEPOSIT TO SELLER BY WIRE TRANSFER WITHOUT FURTHER
INSTRUCTIONS FROM BUYER OR SELLER (WHICH ACCELERATION NOTICE SHALL
CONSTITUTE BUYER'S INSTRUCTION TO RELEASE THE RELEASED DEPOSIT). SUCH
DAMAGES SHALL BE SELLER'S SOLE REMEDY HEREUNDER WITH RESPECT TO THE
ACCELERATION NOTICE, ALL OTHER REMEDIES AT LAW OR EQUITY BEING HEREBY
WAIVED BY SELLER.
LJG JKS
------ -----
SELLER BUYER
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<PAGE>
13. MISCELLANEOUS.
13.1 ASSIGNMENT. Neither this Agreement nor any of Buyer's rights
hereunder may be assigned, encumbered or transferred without Seller's prior
written consent, except Buyer may assign this Agreement to a wholly owned
subsidiary of Buyer upon not less than five (5) Business Days notice thereof to
Seller and provided that (i) the proposed assignee has no assets other than this
Agreement upon such assignment and will have no assets other than the Property
upon the Closing, (ii) the proposed assignee ratifies, for the benefit of
Seller, all of the representations, warranties and covenants of Buyer set forth
in this Agreement; (iii) the proposed assignee assumes in writing, for the
benefit of Seller, all of Buyer's obligations and liabilities under this
Agreement. If Buyer satisfies the foregoing conditions and the transaction
contemplated hereby closes, Buyer will thereafter be released from all of its
obligations under this Agreement.
13.2 NOTICES. Except in the case (if any) where this Agreement
expressly provides for an alternate form of communication, any notice, consent,
demand or other communication to be delivered to Buyer and Seller hereunder
shall be deemed delivered and received when made in writing and transmitted to
Buyer and Seller either by (i) receipted courier service, (ii) the United States
Postal Service, first class registered or certified mail, postage prepaid,
return receipt requested, (iii) electronic facsimile transmission, at the
address or addresses indicated for Buyer and Seller below (and/or to such other
address as Buyer and Seller may from time to time by written notice designate to
the other):
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IF TO SELLER: International Hotel Acquisition, LLC
c/o Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Lance J. Graber
Telephone: (212) 325-4464
Telecopy: (212) 325-8162
WITH A COPY ADDRESSED TO:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Mitchell B. Menzer, Esq.
(File No. 772,116-001)
Telephone: (213) 430-6577
Telecopy: (213) 430-6407
AND TO SELLER'S BROKER
Secured Capital Corp
11150 Santa Monica Boulevard
Suite 1400
Los Angeles, California 90025
Attention: Mark Kuskin, Esq.
Telephone: (310) 477-9600
Telecopy: (310) 477-3436
53
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IF TO BUYER:
KSL Recreation Corporation
56-140 PGA Boulevard
La Quinta, California 92253
Attention: John Saer and Gary Beasley
Telephone: 760-564-1088
Telecopy: 760-564-4880
WITH A COPY TO:
Allen, Matkins, Leck, Gamble & Mallory LLP
515 South Figueroa Street, 7th Floor
Los Angeles, California 90071
Attention: Michael F. Sfregola, Esq.
Telephone: 213-622-5555
Telecopy: 213-620-8816
IF TO ESCROW: First American Title Insurance Company
228 East 45th Street
New York, New York 10017
Attention: Steve Rogers, Esq.
Telephone: (212) 850-0666
Telecopy: (212) 818-0335
Any such notice, consent, demand or other communication shall be deemed
delivered and received only upon actual delivery or attempted delivery (as
evidenced by receipt) or upon completion of facsimile transmission (as evidenced
by telecopier confirmation sheet).
13.3 CONFIDENTIALITY. Subject to the provisions of SECTIONS 5.1 and
13.20 and except for Permitted Disclosures (defined below), (A) Buyer shall keep
strictly confidential the terms of this Agreement and the transaction
contemplated hereby, and (B) until and unless the Closing occurs, Buyer shall
keep confidential all information regarding the Property except to the extent
the same is (i) in the public domain or is information independently obtained by
Buyer from a third party on a non-confidential basis or (ii) required to be
submitted or disclosed by Buyer to any Governmental Authority by applicable Laws
or by court order. In addition, except as required by Law, neither Buyer nor
Seller shall issue any press release or communication with the public prior to
Closing without the prior written consent of the other party; provided, however
that Seller acknowledges and agrees that Buyer may need to communicate with the
press on an expedited basis prior to Closing and Seller agrees to respond
rapidly to any requests by Buyer with respect thereto (and Seller's failure to
approve or disapprove any press release within 24 hours after delivery thereof
to the person designated by Seller will be deemed Seller's approval of such
press release). As used herein, "PERMITTED DISCLOSURES" include only (i)
disclosures by Buyer to its officers, directors, shareholders, employees,
advisors, attorneys, accountants, consultants and lenders (and their attorneys
and accountants) as reasonably necessary in negotiation of this Agreement, the
conduct of due diligence, the consummation of
54
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the transactions contemplated hereby and the exercise of Buyer's rights and
the performance its duties hereunder, (ii) disclosure to any government
regulatory agency which requests the information in question in the course of
its regulatory functions, (iii) any other disclosure required by Law
(including in response to any subpoena but only after giving Seller notice of
such subpoena and a reasonable opportunity to seek an injunction or other
declaratory relief), (iv) disclosures permitted under SECTION 5.1 and SECTION
13.20 and (v) subject to the limitations contained herein and following the
Approval Date, such disclosures as may be necessary to permit Buyer to
perform the due diligence permitted hereby and to advertise, interview, test
and recruit for employment positions at the Hotel and to effectuate SECTION
8.11, all in accordance with the terms of this Agreement. In the case of any
Permitted Disclosure described in clause (i) above, Buyer shall advise the
person to whom such disclosure is made of the confidential nature of any
information disclosed and obtain from such person an undertaking to respect
such confidentiality. Buyer acknowledges that any use or disclosure of
information regarding Seller, the Property or the transaction contemplated by
this Agreement would cause irreparable injury to Seller, and that in the
event of a violation by Buyer of the provisions of this SECTION 13.3,
Seller's remedies at law would not be adequate. Accordingly, in such event,
Seller may proceed and protect its rights by an action in equity for specific
performance or for injunction against the violation hereof. If the Closing
fails to occur for any reason, Buyer promptly shall return to Seller (and
shall use its best efforts to cause Buyer's agents, representatives,
consultants, lenders, prospective investors and attorneys to return to
Seller) all documents and other materials delivered to Buyer by or on behalf
of Seller, together with all copies thereof. Except for Permitted
Disclosures (as such definition would apply to Seller ), Seller shall keep
strictly confidential the terms of this Agreement and the transaction
contemplated hereby except to the extent the same is (i) information that is
otherwise is in the public domain, (ii) is required to be submitted or
disclosed by Seller to any Governmental Authority by applicable Laws or by
court order or (iii) is required to be disclosed in connection with the
securitization of the First Mortgage Loan or to any rating agency in
connection with Buyer's assumption of the First Mortgage Loan. The
provisions of this SECTION 13.3 will survive termination of this Agreement.
This Section 10.3 supersedes the Confidentiality Agreement dated September 3,
1998 executed by Buyer in favor of Seller and Seller's Broker, which
Confidentiality Agreement is hereby deemed cancelled.
13.4 EFFECT OF TERMINATION. Upon any termination of this Agreement,
neither Buyer nor Seller shall have any further obligation or liability to the
other hereunder except (i) as provided below (regarding Buyer's return of
materials received from Seller), (ii) subject to SECTION 12.1, any liability
which Buyer or Seller may have hereunder by reason of the fact that termination
either (A) was wrongfully made by it, or (B) resulted from a breach of its
covenants or other obligations hereunder, and (iii) any obligation that
expressly survives termination of this Agreement. Within thirty (30) days after
termination of this Agreement without Closing, Buyer shall return to Seller all
materials of a confidential nature which Buyer has received from Seller pursuant
to this Agreement. Within thirty (30) days after Seller's request following the
termination of this Agreement without Closing, Buyer shall deliver to Seller all
reports, studies and analyses prepared by third parties at Buyer's request or
direction relating to the Property (unless this Agreement has been terminated
due to the default of Seller).
13.5 CONSTRUCTION; PARTICIPATION IN DRAFTING. Each of Buyer and
Seller acknowledge that it and its counsel have participated substantially in
the drafting of this
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Agreement and agree that, accordingly, in the interpretation and construction
of this Agreement, no ambiguity, real or apparent, in any provision hereof
shall be construed against Buyer or Seller by reason of the role of such
party or its counsel in the drafting of such provision.
13.6 NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall construed to confer any rights or remedies on any person other
than Buyer and Seller and their permitted successors and assigns, or to relieve,
discharge or alter the obligations of any third person to Buyer and Seller or to
give any third party any right of subrogation or action over Buyer and Seller.
Buyer and Seller agree that it is their specific intent that no broker shall be
a party to or a third party beneficiary of this Agreement or the escrow; and
further that the consent of a broker shall not be necessary to any agreement,
amendment, or document with respect to the transaction contemplated by this
Agreement.
13.7 SEVERABILITY. If any provision of this Agreement as applied to
Buyer and Seller or to any circumstances shall be held by a court of competent
jurisdiction to be void or unenforceable any reason, such event shall in no way
affect the validity or enforceability of this Agreement as a whole, or of any
other provisions hereof, or of the provision in question when applied to
circumstances materially different from those involved in such holding.
13.8 INTEGRATION AND BINDING EFFECT. This Agreement and any
agreements contemporaneously executed by Seller and Buyer constitute the entire
agreement among Buyer and Seller pertaining to the subject matter hereof and
supersedes all prior agreements, understandings and representations of the
Parties with respect to the subject matter hereof (including any letter of
intent, offer sheet, disclosure materials, offering circular or other such
written materials of any kind). This Agreement may not be modified, amended,
supplemented or otherwise changed, except by a writing executed by Buyer and
Seller. Except as otherwise expressly provided herein, this Agreement shall
bind and inure to the benefit of Buyer and Seller and their respective
successors and assigns.
13.9 COMPUTATION OF TIME. Any time period specified in this Agreement
which would otherwise end on a non-Business Day shall automatically be extended
to the immediately following Business Day.
13.10 CAPTIONS. Article and section headings used herein are for
convenience of reference only and shall not affect the construction of any
provision of this Agreement.
13.11 FURTHER ASSURANCES. Buyer and Seller shall cooperate with each
other as reasonably necessary to effect the provisions of this Agreement, shall
use reasonable and good faith efforts to satisfy conditions to Closing and, at
and after Closing, shall each execute and deliver such additional instruments or
other documents as the other party may reasonably request to accomplish the
purposes and intent of this Agreement; provided, however, that nothing in this
Section shall be deemed to enlarge the obligations of Buyer and Seller hereunder
or to require any to incur any material expense or liability not otherwise
required of it hereunder.
13.12 ENFORCEMENT COSTS. Should either Buyer or Seller institute any
action or proceeding to enforce any provision of this Agreement or for damages
by reason of any alleged breach of any provision hereof, the prevailing party
shall be entitled to recover from the other
56
<PAGE>
party all costs and expenses (including reasonable attorneys' fees and costs)
incurred by such prevailing party in connection with such action or
proceeding. For purposes of this Agreement, the term "ATTORNEYS' FEES" or
"ATTORNEYS' FEES AND COSTS" shall mean the reasonable fees and expenses of
counsel to the parties hereto, which may include printing, photostating,
duplicating and other expenses, air freight charges, and fees billed for law
clerks, paralegals and other persons not admitted to the bar but performing
services under the supervision of an attorney, and the reasonable costs and
fees incurred in connection with the enforcement or collection of any
judgment obtained in any such proceeding. Buyer and Seller shall also be
entitled to recover all costs and expenses (including attorneys' fees)
incurred in the enforcement of any judgment or settlement in its favor
obtained in such action or proceeding (and in any such judgement provision
shall be made for the recovery of such postjudgment costs and expenses.) The
provisions of this SECTION 13.12 shall survive the entry of any judgment, and
shall not merge, or be deemed to have merged, into any judgment.
13.13 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE AN AGREEMENT
MADE UNDER THE LAW OF THE STATE OF CALIFORNIA AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
13.14 COUNTERPARTS. This Agreement and any amendment hereto and all
closing documents may be executed in any number of counterparts and by each
party on separate counterparts, each of which when executed and delivered shall
be deemed an original and all of which taken together shall constitute but one
and the same instrument. Signature pages transmitted to the other party by
telecopy are valid and binding as if originally executed.
13.15 NO PARTNERSHIP. Notwithstanding anything to the contrary
contained herein, this Agreement shall not be deemed or construed to make the
parties hereto partners or joint venturers, or to render either party liable for
any of the debts or obligations of the other, it being the intention of the
parties to merely create the relationship of Seller and Buyer with respect to
the Property to be conveyed as contemplated hereby.
13.16 NO RECORDATION. This Agreement shall not be recorded or filed in
the public land or other public records of any jurisdiction by either Buyer and
Seller and any attempt to do so may be treated by the other party as a breach of
this Agreement.
13.17 EXHIBITS. EXHIBITS A through K, inclusive, and SCHEDULE 1
through 3, inclusive, attached hereto are incorporated herein by reference.
13.18 CONSTRUCTION. In this Agreement, unless a clear contrary
intention appears, (i) a singular number includes the plural number and vice
versa, (ii) reference to any gender includes each other gender, (iii) reference
to any Section, Recital or Exhibit means such Section or Recital of, or Exhibit
to, this Agreement, (iv) the words "hereunder", "hereof", "hereto" and words of
similar import are references to this Agreement as a whole and not to any
particular Section or other provision of this Agreement, and (v) the word
"including" (with the correlative meaning "INCLUDE") means including without
limiting the generality of any description preceding such term.
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13.19 TIME IS OF THE ESSENCE. Time is of the essence in the
performance of and compliance with each of the provisions and conditions of this
Agreement and the time periods and dates set forth herein shall be strictly
construed.
13.20 SHADOW MANAGEMENT. Upon the expiration of the Due Diligence
Period and provided Buyer has not elected to terminate this Agreement as
provided herein, Seller shall permit Buyer to establish and maintain a shadow
management operation with respect to the Hotel. Subject to the limitations in
SECTION 5 and subject to Seller's right to operate the Hotel in the Ordinary
Course as set forth in SECTION 7, personnel from Buyer's shadow management
operation shall have reasonable access during normal business hours to all
books, records and other information in the possession or control of Seller or
its agents concerning the Hotel and shall have the right (at Buyer's sole
expense) to establish duplicate books and records (whether intangible or
electronic form) in order to effect a smooth transition in the ownership and
management of the Hotel and the right to use a reasonable amount of meeting room
space at the Hotel, subject to availability and other reasonable restrictions,
for applicant processing and interviewing; provided, however, that Buyer and its
shadow management operation and employees shall not unreasonably interfere with
the normal management and operation of the Hotel, shall hold all information
acquired from such books and records confidential in accordance with the
provisions of this Agreement, shall repair any damage to the physical condition
of the Hotel caused by Buyer or its agents in any such shadow management
operation, and shall not be deemed to have assumed management responsibilities
prior to Closing by virtue of such shadow management.
13.21 GENERAL INDEMNITY PROVISIONS.
13.21.1 CLAIMS AGAINST SELLER AND INDEMNIFICATION OF
BUYER. Seller hereby agrees to indemnify and hold harmless Buyer
Parties from all losses, damages, costs and expenses, including, without
limitation, reasonable attorney's fees, actually incurred by Buyer
relating to the Property which (a) arise or result from acts,
occurrences or matters that occurred prior to the Closing, or (b) arise
or result from a breach by Seller of representations, warranties or
covenants of Seller in this Agreement; provided, however, that nothing
contained in this indemnification shall obligate Seller with respect to
obligations or liabilities expressly assumed by Buyer under this
Agreement or otherwise limited hereunder or negate or modify any
liability of Buyer for breach of Buyer's representations, warranties and
covenants in this Agreement.
13.21.2 DEFENSE OF CLAIMS AGAINST BUYER. With respect to
any claim for which Buyer has requested indemnification under SECTION
13.21.1 above, Seller will be entitled to assume the defense of any
related litigation, arbitration or other proceeding, provided that Buyer
may at its election and expense, participate in such defense, and
provided further that in the event of any difference of opinion or
strategy with respect to the defense of such action or the assertion of
counterclaims to be brought with respect thereto, Seller's counsel will,
after consultation with Buyer's counsel, determine the actual strategy,
defense and counterclaim to be employed. At Seller's reasonable
request, Buyer will cooperate with Seller in the preparation of any
defense to any such claim, and Seller will reimburse Buyer for any
reasonable expenses incurred in connection with such request. If Seller
does not elect to assume the defense of any such
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matter, Seller shall have the right, at its sole expense, to employ
separate counsel acceptable to Buyer and participate in such defense,
provided that in the event of any difference of opinion or strategy
with respect to the defense of such action or the assertion of
counterclaims to be brought with respect thereto, Buyer's counsel
will, after consultation with Seller's counsel, determine the actual
strategy, defense and/or counterclaim to be employed.
13.21.3 INDEMNIFICATION OF SELLER. Buyer hereby agrees to
indemnify and hold harmless Seller Parties from, all losses, damages,
costs and expenses, including, without limitation reasonable attorney's
fees, actually incurred by Seller relating to the Property which (a)
arise or result from acts, occurrences or matters that occur on or after
the Closing, or (b) arise or result from a breach by Buyer of Buyer's
representations, warranties or covenants of this Agreement, or (c) arise
on or after Closing with respect to obligations expressly assumed by
Buyer; provided, however, that nothing contained in this indemnification
shall obligate Buyer with respect to obligations or liabilities
expressly assumed by Seller under this Agreement or otherwise limited
under this Agreement or negate or modify any liability of Seller for
breach of Seller's representations, warranties and covenants in this
Agreement.
13.21.4 DEFENSE OF CLAIMS AGAINST SELLER. With respect to
any claim for which Seller has requested indemnification under SECTION
13.21.3 above, Buyer will be entitled to assume the defense of any
related litigation, arbitration or other proceeding, provided that
Seller may at its election and expense, participate in such defense, and
provided further that in the event of any difference of opinion or
strategy with respect to the defense of such action or the assertion of
counterclaims to be brought with respect thereto, Buyer's counsel will,
after consultation with Seller's counsel, determine the actual strategy,
defense and counterclaim to be employed. At Buyer's reasonable request,
Seller will cooperate with Buyer in the preparation of any defense to
any such claim, and Buyer will reimburse Seller for any reasonable
expenses incurred in connection with such request. If Buyer does not
elect to assume the defense of any such matter, Buyer shall have the
right, at its sole expense, to employ separate counsel acceptable to
Seller and participate in such defense, provided that in the event of
any difference of opinion or strategy with respect to the defense of
such action or the assertion of counterclaims to be brought with respect
thereto, Seller's counsel will, after consultation with Buyer's counsel
determine the actual strategy, defense and/or counterclaim to be
employed.
[Signatures on following page]
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IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed and delivered, each by its own representative hereunto duly authorized,
as of the date first above written.
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By: /s/ Lance J. Graber
----------------------------
Lance Graber
Vice President
BUYER: KSL RECREATION CORPORATION,
a Delaware corporation
By: /s/ John K. Saer, Jr.
----------------------------
John Saer
Chief Financial Officer
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ACCEPTANCE BY ESCROW AGENT
First American Title Insurance Company hereby acknowledges that it has
received a fully executed original or original executed counterparts of the
foregoing Purchase and Sale Agreement and Joint Escrow Instructions and agrees
to act as Escrow Agent thereunder and to be bound by and strictly perform the
terms thereof as such terms apply to Escrow Agent.
Dated: November 9, 1998 FIRST AMERICAN TITLE INSURANCE COMPANY
By: /s/ Bette Hollenbeck
------------------------------
Its Authorized Signatory
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EXHIBIT A
LEGAL DESCRIPTION OF HOTEL PARCEL
Lots 463-A, 463-C and 463-D in Honuaula, District of Makawao, Island and County
of Maui, State of Hawaii, as shown on Map 72, filed with Land Grant Application
No. 1804 of Matson Navigation Company being a portion of the land described in
and covered by Transfer Certificate of Title No. 511,711 issued to International
Hotel Acquisitions, LLC, a Delaware limited liability company.
A-1
<PAGE>
EXHIBIT B
FORM OF DEED
- ------------------------------------------------------------------------------
AFTER RECORDATION, RETURN BY MAIL ( ) PICK-UP ( )
_________________________
_________________________
_________________________
Attn: __________________
Total Pages: ______
- ------------------------------------------------------------------------------
TITLE OF DOCUMENT:
DEED
- ------------------------------------------------------------------------------
PARTIES TO DOCUMENT:
GRANTOR: INTERNATIONAL HOTEL ACQUISITIONS, LLC
a Delaware limited liability company
GRANTEE: _________________________
_________________________
_________________________
_________________________
- ------------------------------------------------------------------------------
PROPERTY DESCRIPTION: LIBER/PAGE/DOCUMENT NO.: N/A
Lots 463-A, 463-C, 463-D LAND COURT DOCUMENT NO.: _______
Map 72 TRANSFER CERTIFICATE OF TITLE
Land Court Appl. No. 1804 NO(S).: 511,711
Island of Maui
- ------------------------------------------------------------------------------
Tax Map Key No. (2) 2-1-8-109
B-1
<PAGE>
KNOW ALL MEN BY THESE PRESENTS:
That INTERNATIONAL HOTEL ACQUISITIONS, LLC, a Delaware limited
liability company, hereinafter called the "GRANTOR," for and in consideration
of the sum of TEN DOLLARS ($10.00) and other good and valuable consideration
to the Grantor paid by ____________________________, whose address is
___________________________________ hereinafter called the "GRANTEE," receipt
whereof is hereby acknowledged, does by these presents grant, bargain, sell,
assign and convey the real property described in EXHIBIT "A" hereto attached
and expressly made a part hereof, unto the Grantee, as Tenant in Severalty;
And the reversions, remainders, rents, issues and profits
thereof and all of the estate, right, title and interest of the Grantor, both
at law and in equity, therein and thereto;
TO HAVE AND TO HOLD the same, as to said real property,
together with all buildings, improvements, tenements, hereditaments, rights,
easements, privileges and appurtenances thereunto belonging or appertaining
or held and enjoyed therewith, and together also with the lessor's interest
in and to any leases demising all or any portion of said real property or the
improvements, and the benefit of all the lessee's covenants and all rights
and remedies of the lessor contained in said leases, unto the Grantee,
absolutely and in fee simple.
The Grantor and the Grantee agree that this Deed may be
executed in counterparts, each of which shall be deemed an original, and said
counterparts shall together constitute one and the same document, binding all
of the parties hereto, notwithstanding that all of the parties are not
signatory to the original or the same counterparts. For all purposes,
including, without limitation, recordation, filing and delivery of this Deed,
duplicate unexecuted and unacknowledged pages of the counterparts may be
discarded and the remaining pages assembled as one document.
[Signatures on next page]
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Grantee have executed
these presents this ________ day of _____________, 1998.
__________________________________
a _________________________________
By:
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
"Grantee"
INTERNATIONAL HOTEL ACQUISITIONS, LLC
By:
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
"Grantor"
<PAGE>
EXHIBIT C
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT is executed as of
______________, 1998 by INTERNATIONAL HOTEL ACQUISITIONS, LLC, a Delaware
limited liability company ("SELLER"), in favor of ________________________, a
____________ ("BUYER"), pursuant to that certain Purchase and Sale Agreement and
Joint Escrow Instructions dated as of November ___, 1998 (the "PURCHASE
AGREEMENT"), between Seller and Buyer. All initially capitalized terms used in
this Bill of Sale and Assignment without definition are defined in the Purchase
Agreement.
FOR VALUE RECEIVED, receipt of which is hereby acknowledged,
Seller does hereby grant, bargain, sell, convey, assign, transfer and set over
unto Buyer, absolutely and not as security, all of the following property
whether now existing or hereafter arising, in which Seller owns or has any
interest or right:
(a) All Personal Property, including, without limitation, the
Artwork;
(b) All Intangible Property; and
(c) All right, title and interest under or in connection with the
Assumed Contracts.
The foregoing conveyance does not include any of the Excluded
Property.
Seller hereby represents and warrants that, prior to the date
hereof, Seller has not sold, transferred, assigned, conveyed or encumbered any
of its right, title or interest in and to the above-described property to any
Person and hereby disclaims any implied warranties, including, without
limitation, any warranties of merchantability or fitness for a particular
purpose.
Buyer hereby assumes all of the obligations arising and accruing
under the Assumed Contracts for the period from and after the date hereof.
This Bill of Sale and Assignment may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
C-1
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have executed this Bill of
Sale and Assignment as of the day and year first above written.
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By:
---------------------------------
Lance Graber
Vice President
BUYER:
------------------------------------,
------------------------------------
By:
--------------------------------
Name:
------------------------------
Its:
------------------------------
C-2
<PAGE>
EXHIBIT D
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LESSOR'S INTEREST IN LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LESSOR'S INTEREST IN LEASES
(the "ASSIGNMENT") is made as of ___________, 1998 by INTERNATIONAL HOTEL
ACQUISITIONS, LLC, a Delaware limited liability company and
_______________________, a _________________, ("BUYER"), with respect to the
following Recitals:
R E C I T A L S
A. Seller and Buyer have entered into that certain Purchase and Sale
Agreement and Joint Escrow Instructions dated as of November ___,
1998 (the "PURCHASE AGREEMENT"), pursuant to which, among other
things, Seller has agreed to convey and Buyer has agreed to accept a
certain parcel of real property, together with the improvements
located thereon, located in the County of Maui, State of Hawaii (the
"PROPERTY"), all as more particularly described in the Purchase
Agreement.
B. Pursuant to the Purchase Agreement, each Seller is obligated to
assign to Buyer all of its respective right, title and interest in
and to the leases and other agreements listed in EXHIBIT A attached
hereto and incorporated herein by this reference (the "LEASES"),
together with all rents, issues and profits and all refundable rent,
security, damage or other deposits paid thereunder, providing for the
occupancy of space within the improvements located on the Property.
NOW, THEREFORE, for good valuable consideration, the receipt and
sufficiency for which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Seller hereby assigns, sells, transfers, sets over and delivers unto
Buyer, effective as of the Closing Date (as defined in the Purchase
Agreement), all of its respective estate, right, title and interest
in and to the Leases, together with all rents, issues and profits and
all refundable rent, security, damage and other deposits paid
thereunder. Seller hereby represents and warrants that, prior to the
Closing Date, it has not sold, transferred, assigned, conveyed or
encumbered any of its respective right, title or interest in and to
the Leases or such deposits paid thereunder to any Person.
2. This Assignment shall be binding upon and inure to the benefit of the
successors and assigns of the respective parties hereto.
3. THIS ASSIGNMENT SHALL BE GOVERNED BY, INTERPRETED UNDER AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
D-1
<PAGE>
4. Buyer hereby assumes all of the obligations arising and accruing
under the Leases for the period from and after the date hereof.
5. This Assignment may be executed in one or more counterparts, each of
which shall be deemed to be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, Seller and Buyer have executed this
Assignment as on the day and year first above written.
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By:
---------------------------------
Lance Graber
Vice President
BUYER:
------------------------------------
a-----------------------------------
By:
--------------------------------
Name:
-------------------------------
Its:
--------------------------------
D-2
<PAGE>
File No. 409166
F.A. FORM 31.1 (8/26/91)
ALTA Extended Owner
(Improved Land)
ENDORSEMENT #1
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures against loss which the Insured shall sustain by
reason of any of the following matters:
1. Any incorrectness in the assurance which the Company hereby gives:
(a) That there are no present violations on the land of any enforceable
covenants, conditions, or restrictions;
(b) That, except as shown in Schedule A, there are no encroachments of
buildings, structures, or improvements located on the land onto
adjoining lands, nor any encroachments onto the land of buildings,
structures, or improvements located on adjoining lands.
2. Unmarketability of the title to the estate or interest by reason of any
violations on the land, occurring prior to acquisition of title to the
estate or interest by the Insured, of any covenants, conditions, or
restrictions.
3. Damage to existing building improvements,
(a) which are located or encroach upon that portion of the land subject to
any easement shown in Schedule A, which damage results from the
exercise of the right to use or maintain the easement for the purposes
for which the same was granted or reserved;
(b) resulting from the exercise of any right to use the surface of the
land for the extraction or development of the minerals excepted from
the description of the land or shown as a reservation in Schedule A
[LETTERHEAD]
<PAGE>
File No. 409166
4. Any final court order or judgment requiring removal from any land adjoining
the land of any encroachment shown in Schedule A.
Wherever in this endorsement any or all the words "covenants, conditions or
restrictions" appear, they shall not be deemed to refer to or include the terms,
covenants and conditions contained in any lease referred to in Schedule A.
No coverage is provided under this endorsement as to any covenant, condition,
restriction or other provision relating to environmental protection.
The total liability of the Company under said policy and any endorsements
therein shall not exceed, in the aggregate, the face amount of the policy and
costs which the Company is obligated under the conditions and stipulations
thereof to pay.
This endorsement is made a part of the policy and is subject to the schedules,
conditions and stipulations therein, except as modified by the provisions
hereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
-----------------------------
Authorized Officer or Agent
F.A. FORM 31.1 (8/26/91)
ALTA Extended Owner
(Improved Land)
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #2
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss or damage which the insured
shall sustain by reason of the failure of the land to abut upon a physically
open street known as Alanui Drive;
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
-----------------------------------
Authorized Officer or Agent
CLTA Form 103.7 (Rev. 6-14-96)
ALTA or CLTA - Owner or Lender
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #3
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss or damage which the insured
shall sustain by reason of the failure of (i) Resort, Resort Hotel known as 3850
Wailea Alanui Drive, Wailea, Maui, Hawaii 96753, to be located on the land at
Date of Policy, or (ii) the map attached to this policy to correctly show the
location and dimensions of the land according to the public records.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
------------------------------
Authorized Officer or Agent
CLTA Form 116 (Rev. 6-14-96)
[LETTERHEAD]
<PAGE>
[MAP]
- --------------------------------------------------------------------------------
This "map" is not a plat of physical survey
and is attached for information only.
<PAGE>
File No. 409166
ENDORSEMENT #4
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company assures the Insured that said land is the same as that delineated on
the plat of a survey made by Alden S. Kajioka, Licensed land Surveyor
Certificate No. 6605-LS, with Controlpoint Surveying and Engineering, Inc.,
dated December 14, 1992, revised September 30, 1997, and revised April 17, 1998,
designated as Job No. 97001-17.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
-------------------------------
Authorized Officer or Agent
CLTA Form 116.1 (Revised 6-14-96)
ALTA or CLTA - Owner
[LETTERHEAD]
<PAGE>
File No. 409166
CLTA FORM 123.2 (Rev. 3-13-87)
ALTA Form 3.1 (6-1-87)
Zoning - completed structure
ENDORSEMENT #5
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
1. The Company insures the Insured against loss or damage sustained by reason
of any incorrectness in the assurance that, at Date of Policy:
(a) According to applicable zoning ordinances and amendments thereto, the
land is classified Zone H-1, H-2, H-M and O.
(b) The following use or uses are allowed under that classification
subject to compliance with any conditions, restrictions, or
requirements contained in the zoning ordinances and amendments
thereto, including but not limited to the securing of necessary
consents or authorizations as a prerequisite to the use or uses:
See attached hereto
2. The Company further insures against loss or damage arising from a final
decree of a court of competent jurisdiction
(a) prohibiting the use of the land, with any structure presently located
thereon, as specified in paragraph 1(b); or
(b) requiring the removal or alteration of the structure on the basis
that, at Date of Policy, the ordinances and amendments thereto have
been violated with respect to any of the following matters:
(i) Area, width or depth of the land as a building site for the
structure;
(ii) Floor space area of the structure;
(iii) Setback of the structure from the property lines of the land;
or
(iv) Height of the structure.
[LETTERHEAD]
<PAGE>
File No. 409166
There shall be no liability under this endorsement based on the invalidity of
the ordinances and amendments thereto until after a final decree of a court of
competent jurisdiction adjudicating the invalidity, the effect of which is to
prohibit the use or uses.
Loss or damage as to the matters insured against by this endorsement shall not
include loss or damage sustained or incurred by reason of the refusal of any
person to purchase, lease or lend money on the estate or interest covered by
this policy.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
---------------------------------
Authorized Officer or Agent
CLTA FORM 123.2 (Rev. 3-13-87)
ALTA Form 3.1 (6-1-87)
Zoning - completed structure
[LETTERHEAD]
<PAGE>
Chapter 19.14
HOTEL DISTRICTS
Sections:
19.14.010 Generally.
19.14.020 Permitted uses.
19.14.030 Area regulations.
19.14.040 Height regulations.
19.14.050 Lot coverage.
19.14.060 Floor area-lot area ratio.
19.14.070 Yards.
19.14.010 Generally.
A hotel district is a high density multiple-family area bordering business
districts and ocean fronts. This district includes public and semi-public
institutional and accessory uses. This district is basically residential in
character and, as such, should not be spotted with commercial enterprises.
(Prior code Section 8-1.7(a))
19.14.020 Permitted uses.
Within hotel districts, the following uses shall be permitted:
A. Any use permitted in residential and apartment districts;
B. Hotels;
C. Apartment-hotels;
D. Auditoriums and theaters;
E. Automobile parking lots and buildings;
F. Bona fide nonprofit clubs and lodges;
G. Nonprofit museums, libraries and art galleries and philanthropic
institutions;
H. Accessory uses:
1. Bar.
2. Barber shops.
3. Beauty parlors.
4. Dancing and hula studios.
5. Flower shops.
6. Gift and curio shops.
7. Haberdasheries.
8. Massage studios.
9. Music stores and studios.
10. Newsstands and magazine stands.
11. Pharmacies and drug stores.
12. Restaurants, with or without nightclub facilities.
13. Sandwich or coffee shops.
14. Tour service agencies and travel ticket offices.
15. Wearing apparel shops.
16. Other accessory, business or service establishments which supply
commodities or perform services primarily for the hotel guests; however, such
uses shall be approved by the commission as conforming to the intent of this
title;
I. Restrictions on accessory uses:
1. All such hotel and apartment-hotel buildings in which such accessory
uses shall be permitted and allowed shall contain more than twenty rooms, and
such accessory uses shall be permitted and allowed only as an adjunct to, and
as part of, the main building and no other.
2. All such personal service shops and businesses shall be operated
primarily as a service to, and for the convenience of, the tenants and
occupants of the buildings in which such services are located.
3. Where the lot area is in excess of twenty thousand square feet,
doors and entrances to such shops and businesses may be allowed to open to
the public street further, the shops and businesses may be constructed as
separate buildings; provided, that location of such shops and businesses shall
have been approved by the commission. (Ord. 2030 Section 4, 1991; prior code
Section 8-1.7(b))
19.14.030 Area regulations.
The minimum lot area shall be ten thousand square feet in H-1 hotel
districts, fifteen thousand square feet in H-M, and twenty thousand square feet
in H-2 districts. The minimum lot frontage shall be seventy feet for H-1,
eighty-five feet for H-M, and one hundred feet for H-2 districts. (Prior code
Section 8-1.7(c))
19.14.040 Height regulations.
No building shall exceed two stories in H-1, six stories in H-M, and twelve
stories in H-2 districts. (Prior code Section 8-1.7(d))
19.14.050 Lot coverage.
The total ground area occupied by all buildings shall not exceed twenty-five
percent of the lot area in H-1, thirty percent in H-M, and thirty-five percent
in H-2 districts. (Prior code Section 8-1.7(e))
19.14.060 Floor area-lot area ratio.
The gross floor area of all buildings shall not exceed fifty percent of
the lot area in H-1, one hundred percent in H-M, and one hundred fifty
percent in H-2 districts. (Prior code Section 8-1.7(f))
565
<PAGE>
File No. 409166
ENDORSEMENT #6
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company insures the Insured against loss or damage sustained by reason of
lack of priority of the lien of the insured mortgage over:
(a) any environmental protection lien which, at Date of Policy, is
recorded in those records established under state statutes at Date of
Policy for the purpose of imparting constructive notice of matters relating
to real property to purchasers for value and without knowledge, or filed in
the records of the clerk of the United States district court for the
district in which the land is located, except as set forth in Schedule A;
or
(b) any environmental protection lien provided for by any state statute
in effect at Date of Policy, except environmental protection liens provided
for by the following state statutes: NONE
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
-------------------------------
Authorized Officer or Agent
F.A. FORM 40 Environmental Protection Lien
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #7
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss or damage which the
insured shall sustain by reason of the failure of the land described as Lots
463-A, 463-C and 463-D in Schedule A to constitute a lawfully created parcel
according to local ordinances adopted pursuant thereto.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
------------------------------------
Authorized Officer or Agent
CLTA Form 116.7 (Rev. 6-14-96)
Subdivision Map Act Endorsement
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #8
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby assures the Insured that in the event of a loss
otherwise insured against by this policy, the amount of loss shall include the
loss caused to the interest, if any, of the insured in any immovable fixtures
located on the land as the Date of Policy.
Except to the extent that any immovable fixtures located on the land are
included within the term "land" as defined by the policy, no assurance is hereby
given that the insured mortgage either creates a lien or has established
priority on any immovable fixtures.
The Company insures the Insured against loss in the event the assurance
herein shall prove to be incorrect.
This endorsement is made a part of the policy and is subject to all of the
terms and provisions thereof and of any prior endorsements thereto. Except to
the extent expressly stated, it neither modifies any of the terms and provisions
of the policy and any prior endorsements, nor does it extend the effective date
of the policy and any prior endorsements, nor does it increase the face amount
of liability under the policy.
Dated: June 15, 1998
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
--------------------------------
Authorized Officer or Agent
F.A. Form 67
Immovable Fixtures
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #9
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss which the insured shall
sustain as a result of any exercise of the right of use or maintenance of the
easement referred to in paragraph 3b, 3c, 3d, 3e, 3g, 3h, 3i, 4 and 5 of
Schedule A over or through the land.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
Dated: June 15, 1998
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
---------------------------
Authorized Officer or Agent
CLTA Form 103.1 (Rev. 9-10-93)
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #10
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss which the insured
shall sustain by reason of any statutory lien for labor or material attaching
to the estate or interest referred to in Schedule A arising out of any work
of improvement under construction or completed at the Date of Policy.
This endorsement is made a part of the policy and is subject to all of the
terms and provisions thereof and of any prior endorsements thereto. Except to
the extent expressly stated, it neither modifies any of the terms and provisions
of the policy and any prior endorsements, nor does it extend the effective date
of the policy and any prior endorsements, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
---------------------------
Authorized Officer or Agent
CLTA Form 101.4 (Revised 9-10-93)
CLTA - Owner
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #11
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss or damage which the
insured shall sustain by reason of the failure of Lot 463-A and Lot 463-C of the
land described in Paragraph 3 of Schedule A to be contiguous.
This endorsement is made a part of the policy and is subject to all of the
terms and provisions thereof and of any prior endorsements thereto. Except to
the extent expressly stated, it neither modifies any of the terms and provisions
of the policy and any prior endorsement, nor does it extend the effective date
of the policy and any prior endorsement, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
---------------------------
Authorized Officer or Agent
CLTA Form 118.4 (Rev. 6-14-96)
Alta or Clta - Owner or Lender
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #12
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss or damage the insured
shall sustain by reason of the operation of federal bankruptcy, state
insolvency, or similar creditors' rights laws that is based on the transaction
creating the estate or interest insured by the policy being deemed a fraudulent
conveyance or a preferential transfer.
Neither the policy nor this endorsement insures the insured against loss or
damage by reason of any acts of, or conduct by, the insured which results in a
court finding the insured not to be a mortgagee in good faith.
This endorsement is made a part of the policy and is subject to all of the
terms and provisions thereof and of any prior endorsements thereto. Except to
the extent expressly stated, it neither modifies any of the terms and provisions
of the policy and any prior endorsement, nor does it extend the effective date
of the policy and any prior endorsement, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
-----------------------------
Authorized Officer or Agent
Special Endorsement
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #13
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss or damage the insured
shall sustain by reason of the merger of the mortgages referenced in the
Consolidated Mortgage and the estate or interest referred to in Schedule A.
Except to the extent expressly stated, it neither modifies any of the terms
and provisions of the policy and any prior endorsement, nor does it extend the
effective date of the policy and any prior endorsements, nor does it increase
the face amount thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
---------------------------
Authorized Officer or Agent
Special Endorsement Non-Merger
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #14
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss which the insured shall
sustain by reason of present violations on the land of the covenants, conditions
and restrictions referred to in paragraph 7 of Schedule A.
For purposes of this endorsement, the words "covenants", "conditions" or
"restrictions" shall not be deemed to refer to or include any covenants,
conditions or restrictions relating to environmental protection, except to the
extent that a notice of a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy and is not excepted in
Schedule A.
This endorsement is made a part of the policy and is subject to all of
the terms and provisions thereof and of any prior endorsements thereto.
Except to the extent expressly stated, it neither modifies any of the terms
and provisions of the policy and any prior endorsement, nor does it extend
the effective date of the policy and any prior endorsement, nor does it
increase the face amount thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
------------------------
Authorized 0fficer or Agent
CLTA Form 100.19 (Rev 6-14-96)
ALTA or CLTA - Owner or Lender
[LETTERHEAD]
<PAGE>
File No. 409166
ENDORSEMENT #15
Attached to Policy No. 129202
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
CODE NAME: INTERNATIONAL HOTEL ACQUISITIONS, LLC
The Company hereby insures the insured against loss which the insured shall
sustain in the event that the owner of the easement referred to in paragraph 5
of Schedule A shall compel the removal of any portion of the improvements on the
land which encroach upon said easement.
This endorsement is made a part of the policy and is subject to all of the
terms and provisions thereof and of any prior endorsements thereto. Except to
the extent expressly stated, it neither modifies any of the terms and provisions
of the policy and any prior endorsement, nor does it extend the effective date
of the policy and any prior endorsement, nor does it increase the face amount
thereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
BY: /s/ LUI SAMSONES
-------------------------
Authorized Officer or Agent
CLTA Form 103.3 (Rev 9-14-93)
[LETTERHEAD]
<PAGE>
EXHIBIT E-1
NONFOREIGN CERTIFICATION
INTERNATIONAL HOTEL ACQUISITIONS, LLC, a Delaware limited liability
company ("SELLER") is the transferor of that certain real property located in
the County of Maui, State of Hawaii, and more particularly described on EXHIBIT
A attached hereto (the "PROPERTY"), pursuant to the terms of that certain
Purchase and Sale Agreement and Joint Escrow instructions dated as of
November ___, 1998 (the "PURCHASE AGREEMENT") by and between Seller and
________________________, a _________________.
Section 1445 of the Internal Revenue Code of 1986 (the "CODE")
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform the transferee that withholding
of tax will not be required in connection the disposition of the Property, the
undersigned certifies the following.
1. Seller is not a foreign corporation, foreign partnership, foreign
trust or foreign estate, as those terms are defined in the Code and the
regulations promulgated thereunder;
2. Seller's U.S. employer identification number is
__________________________; and
3. Seller's address is c/o Credit Suisse First Boston, 11 Madison
Avenue, New York, New York 10010.
It is understood that this certificate may be disclosed to the
Internal Revenue Service and that any false statement contained herein could be
punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined the
foregoing certification and, to the best of my knowledge and belief, it is true,
correct and complete, and I further declare that I have authority to sign this
document on behalf of Seller.
Dated: _______________, 1998
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By:
-------------------------
Lance Graber
Vice President
E-1-1
<PAGE>
EXHIBIT E-2
FORM OF HAWAII CERTIFICATION
OF WITHHOLDING EXEMPTION
[Form N-289 to be attached hereto]
E-2-1
<PAGE>
EXHIBIT F
LIQUOR LICENSE TRANSFER AGREEMENT
THIS LIQUOR LICENSE TRANSFER AGREEMENT (this "AGREEMENT") is made and
dated as of ______________, 1998, by and between INTERNATIONAL HOTEL
ACQUISITIONS, LLC, a Delaware limited liability company ("SELLER"), and
________________________, a _________________ ("BUYER").
ARTICLE I
SECTION 1.01 DEFINITIONS. As used in this Agreement:
"CLOSE OF LIQUOR ESCROW" means the consummation of the acquisition of
the Liquor Property as contemplated hereunder.
"LIQUOR CLOSING DATE" means the date on which the Close of Liquor
Escrow shall occur.
"LIQUOR ESCROW HOLDER" means the Escrow Agent.
"LIQUOR PROPERTY" means the Liquor License, the Liquor Personalty, the
Liquor Inventory.
"LIQUOR INVENTORY" means all unopened and sealed alcoholic beverages
on hand at the Project as of 12:01 a.m. (Hawaii Time) on the Closing Date.
"LIQUOR PERSONALTY" means the fixtures, equipment, glassware and other
expendable items, and other personal property used in the sale of alcoholic
beverages at the Project.
"LIQUOR PURCHASE PRICE" means the value of the Liquor Inventory, at
Seller's original cost.
"MLC" means the Maui County Liquor Commission.
SECTION 1.02. OTHER TERMS. Initially capitalized terms used herein
without definition are defined in that certain Purchase and Sale Agreement and
Joint Escrow Instructions dated as of November ___, 1998 by and among Buyer and
Seller (the "PURCHASE AGREEMENT").
ARTICLE II
SECTION 2.01. AGREEMENT TO BUY AND SELL. Subject to the terms and
conditions contained in this Agreement, Seller agrees to sell, assign, convey,
and transfer to Buyer, and Buyer agrees to buy from Seller, the Liquor Property.
SECTION 2.02. PROPERTY TO BE TRANSFERRED. It is the intent of the
parties hereto that the execution of this Agreement will result in the
conveyance and transfer to Buyer of all
F-1
<PAGE>
property, tangible and intangible, of any kind, used or useful in connection
with the sale or service of alcoholic beverages in or about the Project.
ARTICLE III
SECTION 3.01. PURCHASE PRICE. Buyer shall deposit the Liquor
Purchase Price, in cash, with the Liquor Escrow Holder not less than two (2)
Business Days prior to the Liquor Closing Date. On the Liquor Closing Date,
Buyer shall cause Liquor Escrow Agent to release to Seller the Liquor Purchase
Price.
ARTICLE IV
SECTION 4.01. DOCUMENTATION AND DELIVERY OF DOCUMENTS. At least two
(2) Business Days prior to the Liquor Closing Date, Seller must execute and
deposit with the Liquor Escrow Holder a bill of sale and assignment,
substantially in the form of EXHIBIT A attached hereto (the "LIQUOR BILL OF
SALE") duly transferring to Buyer all of the Liquor Property. If a nominee is
designated, Seller must receive written notice of such designation at least five
(5) Business Days prior to the Liquor Closing Date. In addition, Seller shall
take such actions and execute and deliver any and all additional documents
requested by the MLC or reasonably requested by Buyer to effectuate the transfer
of the Liquor Property and carry out the intent of this Agreement.
ARTICLE V
SECTION 5.01. CONDITIONS PRECEDENT TO CLOSING. The obligations of
Buyer and Seller under this Agreement are subject to the Closing of Buyer's
purchase of the Property pursuant to the terms of the Purchase Agreement. The
obligations of Buyer hereunder are subject to Buyer's receipt of approval from
the MLC for the transfer of the Liquor Property to Buyer.
ARTICLE VI
SECTION 6.01. REPRESENTATION. Seller represents and warrants to
Buyer that, as of the date of this Agreement and as of the Liquor License
Closing Date, (i) Seller has not sold, transferred, assigned, conveyed, or
agreed to sell, transfer, assign, convey or encumber, any of Seller right, title
or interest in and to the Liquor Property to any Person (other than Buyer); and
(ii) Seller is the owner of the Liquor Property. Seller shall indemnify, defend
and hold Buyer harmless from and against all losses, damages and expenses
actually incurred by Buyer due to the inaccuracy of the foregoing
representations and warranties.
ARTICLE VII
SECTION 7.01. ASSIGNMENT. Buyer shall have the right to assign this
Agreement to any party designated by Buyer and approved by MLC, and shall
deliver written notice of such assignment to Seller at least five (5) Business
Days prior to the Liquor Closing Date.
F-2
<PAGE>
SECTION 7.02. NOTICES. Any demand, request, consent or other notice
given or required to be given under this Agreement shall be given in the manner
provided for in the Purchase Agreement.
SECTION 7.03. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
SECTION 7.04. GOVERNING LAW. This Agreement shall be governed by,
interpreted under, construed and enforced in accordance with the laws of the
State of Hawaii.
SECTION 7.05. ENTIRE AGREEMENT. This Agreement and the written
agreements referred to herein constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof. All additions,
variations or modifications to this Agreement shall be void and of no effect
unless in writing and signed by the parties hereto.
[Signatures on next page]
F-3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By:
-------------------------
Lance Graber
Vice President
BUYER:
------------------------------
a ,
-------------------------
By :
---------------------------
Name:
-------------------------
Its:
-------------------------
F-4
<PAGE>
EXHIBIT A TO LIQUOR LICENSE TRANSFER AGREEMENT
FORM OF LIQUOR BILL OF SALE
THIS BILL OF SALE AND ASSIGNMENT is executed as of ______________,
1998, by INTERNATIONAL HOTEL ACQUISITIONS, LLC, a Delaware limited liability
company ("SELLER"), in favor of ________________________, _________________,
("BUYER"). Initially capitalized terms used herein without definition are
defined in that certain Purchase and Sale Agreement and Joint Escrow
Instructions dated as of November ___, 1998, by and between Seller and Buyer
(the "PURCHASE AGREEMENT").
FOR VALUE RECEIVED, receipt of which is hereby acknowledged, Seller
does hereby grant, bargain, sell, convey, assign, transfer and set over unto
Buyer, absolutely and not as security, all property, tangible and intangible, of
any kind, used or useful in connection with the sale or service of alcoholic
beverages in or about the Project, in which Seller owns or has any interest or
right, including without limitation (i) all unopened and sealed alcoholic
beverages on hand at the Project as of 12:01 a.m. (Hawaii Time) on the date
hereof, (ii) all fixtures, equipment, glassware and other expendable items, and
other personal property used in the sale of alcoholic beverages at the Project
and (iii) that certain Alcoholic Beverage Licenses No. _____________.
Seller hereby represents and warrants that, Seller has not sold,
transferred, assigned, conveyed or encumbered any of Seller right, title or
interest in and to the above-described property to any Person.
IN WITNESS WHEREOF, Seller and Buyer have executed this Bill of Sale
and Assignment as of the day and year first above written.
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By:
-----------------------------
Lance Graber
Vice President
BUYER:
----------------------------------,
----------------------------------
By:
-------------------------------
Name:
------------------------
Its:
------------------------
F-A-1
<PAGE>
EXHIBIT G
TITLE BINDER
[Attached hereto]
G-1
<PAGE>
File No. 409166
Binder No. 129202
Attachment to Interim Binder A
SCHEDULE A
1. The estate or interest in the premises described or referred to herein is:
A Fee Simple Estate
2. Title to the estate or interest covered hereby at the date hereof is vested
in:
International Hotel Acquisitions, LLC, a Delaware limited liability company
3. The premises referred to herein is described as follows:
All of those certain parcels of land situate at Honuaula, District of Makawao,
Island and County of Maui, State of Hawaii, described as follows:
LOTS: 463-A, area 36.603 acres;
463-C, area 0.297 acre; and
463-D, area 0.003 acre, more or less, as shown on Map 72, filed with
Land Court Application No. 1804 of Matson Navigation Company.
AS TO LOT 463-A ONLY:
EXCEPTING any portion of the above described property lying below the
line of high water, said line of high water being defined by Sections
205A--41 to 205A--43.6 of the Hawaii Revised Statutes, as amended, and
also excepting any artificial accretions to said property waterward of
said high water line.
Being all of the land described in and covered by
Transfer Certificate of Title No. 511,711
Issued To : International Hotel Acquisitions, LLC, a Delaware
limited liability company
(Deed dated June 15, 1998, recorded as Land Court Document No. 2463683.)
Continued on Page 2, Schedule A
[LETTERHEAD]
<PAGE>
File No. 409166
Binder No. 129202
SCHEDULE A continued
Page 2
4. Exceptions:
1. TAXES FOR THE FISCAL YEAR 1998-1999 AND SUBSEQUENT YEARS
Tax Key: 2/2-1-8-109 (A.A. 38.517 Acres) Code 6
1st Installment (Delinquent after August 20, 1998)
2nd Installment (Delinquent after February 20, 1999)
2. Title to all mineral and metallic mines reserved to the State of
Hawaii.
3. AS TO LOT 463-A ONLY:
(a) Shoreline setback lines at they may be established by the State
Land Use Commission or by the County pursuant to Sections
205A--41 to 205A--43.6 inclusive of the Hawaii Revised Statutes.
(b) DESIGNATION OF EASEMENTS "64", "65", "66" AND "67", as shown on
Maps 19 and 72 of Land Court Application No. 1804, as set forth
by Land Court Order No. 50009, filed May 4, 1978.
(c) DESIGNATION OF EASEMENTS "231", "232", "233" AND "234", as shown
on Maps 46 and 72 of Land Court Application No. 1804, as set
forth by Land Court Order No. 79883, filed August 27, 1986.
(d) DESIGNATION OF EASEMENT "316", for sewer line purposes, as shown
on Maps 62 and 72 of Land Court Application No. 1804, as set
forth by Land Court Order No 92731, filed February 27, 1989.
(e) GRANT OF EASEMENT
In Favor Of: GTE Hawaiian Telephone Company Incorporated
Dated : December 10, 1990
Recorded as Land Court Document No. 1793998.
Granting a perpetual Easement 5 feet wide to build, etc.,
underground lines, etc., for the transmission and distribution of
communication
(f) The following as shown on survey map prepared by Alden S.
Kajioka, Registered Professional Land Surveyor, with Controlpoint
Surveying and Engineering, Inc., dated December 14, 1992, revised
September 30, 1997 and April 17, 1998, to-wit:
1. A portion of the south 4-level parking garage protrudes into
Easement 202.
Continued on Page 3, Schedule A
[LETTERHEAD]
<PAGE>
File No. 409166
Binder No. 129202
SCHEDULE A continued
Page 3
2. Chain link fence meanders along boundary line, as shown on
said surveyor's map as Item 8; and
3. Archaeological sites as shown on said survey map located as
per construction drawing. Rights of the State of Hawaii in
any historical or archaeological, site or related purpose
under Hawaii Revised Statutes 6E.
4. "25 ft. setback lines as shown on Grand Hyatt General Plan
Sheet No. C2.1"; and 150 ft. shoreline setback; and 300 ft.
shoreline setback line.
(g) DESIGNATION OF EASEMENTS "393", "396", "398", "399" AND "400", as
shown on Map 72 of Land Court Application No. 1804, as set forth
by Land Court Order No. 128145, filed June 26, 1997. Said
easements being for the following purposes:
Easement 393 non-exclusive easement for storm drain purposes,
in favor of Wailea Resort Company, Ltd.
Easement 396 non-exclusive easement for access purposes, in
favor of and appurtenant to Lot 463-B.
Easement 398 non-exclusive easement for access purposes, in
favor of County of Maui.
Easement 399 non-exclusive easement for water line purposes, in
favor of County of Maui
Easement 400 non-exclusive easement for sewer line purposes, in
favor of Wailea Resort Company, Ltd.
(h) DESIGNATION OF EASEMENTS "70" AND "71", as shown on Maps 19 and
72 of Land Court Application No. 1804, as set forth by Land Court
Order No. 50009, filed May 4, 1978.
Continued on Page 4, Schedule A
[LETTERHEAD]
<PAGE>
File No. 409166
Binder No. 129202
SCHEDULE A continued
Page 4
(i) GRANT OF EASEMENT
In Favor Of: Maui Electric Company, Limited
Dated : March 17, 1992
Recorded as Land Court Document No. 1915076.
Granting easements for electrical purposes over said Easements
"231" to "236", inclusive.
4. AS TO LOTS 463-A AND 463-C ONLY:
(a) GRANT OF EASEMENT
In Favor Of: Maui Electric Company, Limited
Dated : May 24, 1991
Recorded as Land Court Document No. 1836294.
Granting a perpetual right and easement ten feet wide to build,
construct, reconstruct, rebuild, repair, maintain and operate
underground power lines, etc. for the transmission of
electricity.
(b) DESIGNATION OF EASEMENTS "394", "395" AND "397", as shown on
Map 72 of Land Court Application No. 1804, as set forth by
Land Court Order No. 128145, filed June 26, 1997.
5. DESIGNATION OF EASEMENT "202", as shown on Map 32 and 72 of Land Court
Application No. 1804, as set forth by Land Court Order No. 63162,
filed July 7, 1982.
6. AS TO LOTS 463-C ONLY:
The condition that said lot shall be dedicated to the County of
Maui for beach access parking purposes pursuant to a requirement
for final subdivision approval imposed by the County of Maui
(which approval was granted on February 9, 1995), as set forth by
Land Court Order No. 128145, filed June 26, 1997.
Continued on Page 5, Schedule A
[LETTERHEAD]
<PAGE>
File No. 409166
Binder No. 129202
SCHEDULE A continued
Page 5
7. WAILEA COMMUNITY ASSOCIATION DECLARATION OF COVENANTS AND RESTRICTIONS
Dated: December 19, 1986
Filed as Land Court Document No. 1427923.
Said Declaration was supplemented by (a) instrument dated December 22,
1986, filed as Land Court Document No. 1427924 (affecting Lots 336,
337 and 339); (b) Additional Declaration of Covenants and Restrictions
dated February 19, 1987, filed as Land Court Document No. 1441102,
(affecting Lot 102); and (c) instrument dated April 30, 1987, filed as
Land Court Document No. 1464901 (affecting Lots 222 and 223); except
for the assessment liens provided for and mentioned in Article V,
Sections 6 and 9, in said Document No. 1427923, as supplemented and
Amended.
(Note: Lots 222 and 223 have been consolidated and resubdivided into
Lots 462 and 463.)
Said Declaration was amended by instruments dated September 2, 1994,
filed as Land Court Document No. 2180541, and dated September 29,
1997, recorded as Land Court Document No. 2408259. But deleting any
covenant, condition or restriction indicating a preference, limitation
or discrimination based on race, color, religion, sex, handicap,
familial status, or national origin to the extent such covenants,
conditions or restrictions violate 42 USC 3604(c).
NOTE: Amendment dated September 29, 1997, recorded as Land
Court Document No. 2408259 is not noted on Transfer
Certificate of Title No. 322,453.
8. CONSOLIDATED MORTGAGE
Mortgagor(s) : International Hotel Acquisitions, LLC, a
Delaware limited liability company
Mortgagee(s) : Credit Suisse First Boston Mortgage Capital LLC, a
Delaware limited liability company
Dated : June 15, 1998
Recorded June 15, 1998 in the Office of the Assistant Registrar of the
Land Court as Land Court Document No. 2463685
To Secure : $360,000,000.00
CONSOLIDATED, AMENDED AND RESTATED ASSIGNMENT OF LEASES AND RENTS
Assignor(s) : International Hotel Acquisitions, LLC, a
Delaware limited liability company
Assignee(s) : Credit Suisse First Boston Mortgage Capital LLC, a
Delaware limited liability company
Dated : June 15, 1998
Recorded June 15, 1998 in the Bureau of Conveyances as Document
No. 98-085519.
[LETTERHEAD]
<PAGE>
EXHIBIT H
PROJECT LOGO
[Attached hereto]
H-1
<PAGE>
[LOGO]
<PAGE>
EXHIBIT I
FORM OF EMPLOYEE NOTICE
(Attached)
I-1
<PAGE>
November __, 1998
TO: All Employees
FROM: Grand Wailea Company and International Hotel Acquisitions, LLC
(cc: Director, State Department of Labor and Industrial Relations;
ILWC, Local 142)
Dear Employee:
The current owner of the Grand Wailea Hotel (International Hotel Acquisitions,
LLC), has entered into negotiations to sell the hotel. As your current employer,
the Grand Wailea Company will have no control over the details of that sale. If
and when the sale is completed, the contract under which Grand Wailea Company
operates the hotel for the current owner will expire, and Grand Wailea Company
will cease as your actual "employer." We expect this to occur, if at all,
sometime between December 18 and December 31, 1998. Of course, if the sale is
not completed, your employment with Grand Wailea Company will continue on the
same terms and conditions. If the sale is completed, we will let you know
promptly.
Although no determinations have yet been made regarding the hotel's future
workforce, all current Grand Wailea Company employees will be eligible to apply
for positions with the new owner. Similarly, while there may be employees laid
off or terminated, we are hopeful that many positions at the hotel will be
filled by current employees. However, that is by no means assured. Specifically,
we do not know at this time to which existing employees the buyer will offer
employment, what the selection process will be, or on what terms employment will
be offered. We do know, however, that the new employer will be setting its own
initial terms and conditions of employment and will be deciding whom to hire.
Those of you represented by a union should direct any questions you have about
the effect of the sale under the current collective bargaining agreement to your
union representatives. Those of you who experience unemployment may be eligible
for a "dislocated workers' allowance" as provided under state law, if you
receive a determination of eligibility for unemployment compensation benefits
from the State of Hawaii, Department of Labor and Industrial Relations.
The departure of the Grand Wailea Company as the hotel manager does not mean
that the Grand Wailea Resort, Hotel & Spa is going to disappear or that there
will be any lowering of our standards for hotel guests. Operations are expected
to go on. The new owners will have the right to operate using the same name.
This sale, therefore does not mean that, if you accept employment with the new
company, that your service with the hotel as an operating entity will be
terminated, or that you will be considered terminated from the operations of the
hotel. It may be that you and other selected employees will simply be
transferred to the payroll of the new owner, upon your accepting the new terms
of employment they establish.
The prospective purchaser has also asked us to advise you, consistent with the
National Labor Relations Act, that if there arises a duty to bargain with the
present union, it will certainly do so in good faith. Of course, these are
matters to be resolved in the future between the purchaser and the union, when
and if appropriate.
This notice is being given to you in accordance with the Hawaii Dislocated
Workers Act and the Worker Adjustment and Retraining Notification Act of 1988.
We sincerely wish you and the purchaser the best during this transition.
Sincerely,
WDC
<PAGE>
November __, 1998
Ms. Lorraine H. Akiba, Director
State of Hawaii, Department of Labor
and Industrial Relations
830 Punchbowl Street, Room 321
Honolulu, Hawaii 96813
Re: SALE OF THE GRAND WAILEA HOTEL; DISLOCATED WORKERS' ACT NOTICE
Dear Ms. Akiba:
The Grand Wailea Hotel is located at 3850 Wailea Alanui Drive, Wailea, Maui,
Hawaii 96753. International Hotel Acquisitions, LLC ("IHA") will sell the Grand
Wailea Hotel shortly. Grand Wailea Company ("GWC"), c/o Grand Wailea Hotel, 3850
Wailea Alanui Drive, Wailea, Maui, Hawaii 96753, is the manager of the Grand
Wailea Hotel and the present employer of the Hotel employees. GWC's contract to
manage the Grand Wailea Hotel will expire when IHA completes the sale. GWC
employs approximately one thousand two hundred (1,200) employees under its
management contract with IHA. GWC will cease being the employer of all its
employees at the time of the sale. Some or all of these employees may, based on
the decisions of the purchaser or their own choice, become unemployed as a
result of this sale. In any event, they will be off our payroll as of the
closing date of the sale.
We expect this to occur between December 18, 1998, and December 31, 1998. You
may contact [INSERT NAME AND TELEPHONE NUMBER OF COMPANY OFFICIAL] for further
information. GWC will make other information, such as the job titles of the
employees, the number of employees affected in each job category, the name of
each union representing employees and the name and address of the chief elected
officer of the union available for inspection at GWC's facilities. This letter
is being sent with the attached letter to the union that represents bargaining
unit employees and the attached letter is being sent to all employees.
Very truly yours,
EMPLOYER-HOTEL MANAGER SELLER
Grand Wailea Company International Hotel Acquisitions, LLC
3850 Wailea Alanui Drive c/o First Boston Corporation
Wailea, Maui, Hawaii 96753 11 Madison Avenue, 5th Ave
New York, New York 10010
By: By:
----------------------- ------------------------------
------------------- Lance J. Graber
Its: Payroll Manager Its: Vice President
<PAGE>
EXHIBIT J
FORM OF TENANT ESTOPPEL CERTIFICATE
_____________________ ("TENANT") certifies as follows:
1. Tenant is the tenant under that certain lease dated __________,
19___ (the "LEASE"), executed by __________________________________ ("LANDLORD")
as Landlord and Tenant, covering a portion of the property located at
________________________ (the "PROPERTY"). Tenant is not required to pay any
operating expenses for the Property.
2. Pursuant to the Lease, Tenant has leased approximately __________
square feet of space (the "PREMISES") at the Property and has paid a security
deposit of $__________. The term of the Lease commenced on __________, 19___
and the expiration date of the Lease is __________, 19___. Tenant has paid rent
through __________, 19___. The next rental payment in the amount of $__________
is due on __________, 19___.
3. The Lease provides for an option to extend the term of the Lease
for _____ years, at a rental rate for such extension term as set forth in the
Lease. Except as expressly provided in the Lease and all amendments,
modifications and supplements attached hereto, Tenant does not have any right or
option to renew or extend the term of the Lease, to lease other space at the
Property, to terminate or cancel the Lease, nor any preferential right to
purchase all or any part of the Premises or the Property.
4. Complete copies of the Lease and all amendments, modifications
and supplements thereto are attached hereto and the Lease, as so amended,
modified and supplemented, is in full force and effect, and represents the
entire agreement between Tenant and Landlord with respect to the Premises and
the Property. There are no amendments, modifications or supplements to the
Lease, whether oral or written, except as attached hereto.
5. All space and improvements leased by Tenant have been completed
and furnished in accordance with the provisions of the Lease, all amounts
required to be paid by Landlord to Tenant in connection therewith have been
paid, and Tenant has accepted and taken possession of the Premises, without
reservation of claims.
6. Landlord is not in any material respect in default in the
performance of the terms and provisions of the Lease. Tenant is not in any
material respect in default under the Lease and has not assigned, transferred or
hypothecated the Lease or any interest therein or subleased all or any portion
of the Premises, except as follows: __________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
J-1
<PAGE>
7. No free rent periods or rental concessions have been granted to
Tenant by Landlord and, there are no offsets or credits against rentals payable
under the Lease, except as follows: __________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
This Certificate is given to _________ ("BUYER"), Buyer's lender, and
their respective successors and assigns, each of whom will rely hereon in
connection with the conveyance of the Property of which the Premises constitute
a part.
DATED: _______________, 1998. [ADD TENANT SIGNATURE BLOCK]
J-2
<PAGE>
EXHIBIT K
FORM OF NOTICE TO TENANTS
[Name and Address of Tenant]
Re: Grand Wailea Resort Hotel & Spa
Greetings:
On _____________, 1998, International Hotel Acquisitions, LLC sold the
property commonly known as the "Grand Wailea Resort Hotel & Spa" to
____________________. Please make all payments under your lease and direct all
future correspondence regarding your lease as follows:
___________________________
___________________________
___________________________
Should you have any questions, please call ________________ at
(___) ____-________.
Sincerely,
__________________________
K-1
<PAGE>
SCHEDULE 1
SCHEDULE OF SERVICE CONTRACTS,
LEASES AND EQUIPMENT LEASES
LEASES
1. Concession Agreement dated May 5, 1995, by and between Grand Wailea Company
and Budget Rent A Car Systems, Inc.
2. Concession Agreement dated September 4, 1991 by and between Grand Wailea
Company and American Express Travel Related Services Company, Inc., as
amended by instrument dated _____________, 1996 (executed on or about
October 3, 1996).
3. Standard Concession Lease Agreement dated June 16, 1997, by and between
Grand Wailea Company, as Landlord, and Ki'i Gallery, Inc., as Tenant.
4. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and Richter's of Hawaii, as Tenant, as amended by
written notice dated May 22, 1996, from Tenant to Landlord of exercise of
option to extend lease term.
5. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and Senses Joint Venture, as Tenant, as assigned by
Tenant to W.H. Smith Hotel Stores Inc. pursuant to Assignment of Lease
dated November 27, 1991, and as amended by First Amendment to Lease dated
November 27, 1991 by and between Grand Hyatt Wailea, as Landlord, and W. H.
Smith Hotel Stores, Inc.
6. Standard Concession Lease Agreement dated November 24, 1997, by and between
Grand Wailea Resort Hotel and Spa, as Landlord, and Maui Clothing Company,
Inc., as Tenant.
7. Standard Concession Lease Agreement (undated), by and between Grand Wailea
Resort Hotel and Spa, as Landlord, and Noa Noa Kona, Inc., as Tenant.
8. Standard Concession Lease Agreement dated April 24, 1991, by and between
Grand Hyatt Wailea, as Landlord, and Sandal Tree Limited, as Tenant.
9. Standard Concession Lease Agreement dated August 8, 1991, by and between
Grand Wailea Company, as Landlord, and Lorenzi of Italy, as Tenant, and as
amended by Amendment to Standard Concession Lease Agreement dated August
30, 1996, by and between Grand Wailea Company and Lorenzi of Italy.
10. Standard Concession Lease Agreement dated February 27, 1996, by and between
TSA Management Company, as Landlord, and J. Chong, Inc., dba Tropicana I,
as Tenant.
11. Standard Concession Lease Agreement dated April 8, 1993, by and between
Grand Wailea Company, as Landlord, and Lahaina Printsellers, Ltd., as
Tenant, and as amended by Amendment to Standard Concession Lease Agreement
dated April 30, 1997, by and
1
<PAGE>
between Grand Wailea Company and Lahaina Printsellers, Ltd. Standard
Concession Lease Agreement dated February 27, 1996, by and between TSA
Management Company, Limited, as Landlord, and J. Chong, Inc., dba
Tropicana I, as Tenant (for 423 square feet formerly occupied by Lahaina
Print Sellers).
12. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and Edward D. Sultan Co., Ltd., as Tenant (HF Wichman
Lease), as amended by written notice dated August 2, 1996, from Tenant to
Landlord of exercise of option to extend lease term.
13. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and W. H. Smith Hotel Stores, Inc., as Tenant (Men's
Shop).
14. Standard Concession Lease Agreement dated September 10, 1991, by and
between Grand Wailea Company, as Landlord, and Resort Medical Services,
Ltd., as Tenant.
15. Concession Agreement with Wrap-A-Rainbow, Inc., dated November 4, 1996.
16. Service Agreement dated January 15, 1998, but effective as of January 15,
1998, by and between Grand Wailea Resort, Hotel and Spa, and Authentic
Concepts Inc.
17. Service Agreement dated January 12, 1998, but effective as of January 12,
1998, by and between Grand Wailea Resort, Hotel and Spa, and Lafferty
Watersports, Inc.
18. Service Agreement dated January 15, 1998, but effective as of January 15,
1998, by and between Grand Wailea Resort, Hotel and Spa, and Rainbow
Aquatics.
19. Service Agreement dated January 19, 1998, but effective as of January 19,
1998, by and between Grand Wailea Resort, Hotel and Spa, and Rochelle
Salzer Artworks.
20. Concession Agreement dated March 26, 1998 by and between Grand Wailea
Company, as Landlord, and JTB Hawaii, Inc., as Tenant.
21. Concession Agreement dated December 15, 1997, by and between TSA Management
Company, Ltd., and The Business Center LLC, together with amendment dated
April 13, 1998 by and among Solidrock L.L.C., TSA Management Company, Ltd.,
and Grand Wailea Company.
22. Standard Concession Sublease Agreement dated January 1, 1993, by and
between TSA Management, Inc., and Double Check Photo Systems, Inc.,
together with Guaranty dated February 4, 1998 by Pierre Crevolin, letter
dated April 17, 1998 addressed to Mr. Pierre Crevolin from Eileen Maniaci
regarding "Lease Renewal", and Extension of Lease letter addressed to TSA
Management Company, Ltd.
2
<PAGE>
SERVICE CONTRACTS
1. Mitsubishi Elevators & Escalators (Service Agreement dated August 1, 1993)
by and between Grand Wailea Resort, Hotel and Spa and MEC Elevator Company,
together with Vertical Transportation Maintenance Agreement (undated) by
and between MEC Elevator Company and Grand Wailea Resort, Hotel & Spa.
2. New Hermes Incorporated (Extended Warranty Agreement dated July 21, 1995)
by and between Grand Wailea Resort, Hotel & Spa, as buyer, and New Hermes,
Incorporated Service and Customer Support.
3. NEC Business Communication Systems (West), Inc. (Maintenance Service
Agreement NEC Business Communication Systems (Hawaii) dated November 21,
1996), by and between NEC Business Communication Systems (Hawaii), a
division of NEC Business Communication Systems (West), Inc., and Grand
Wailea Co., together with letter dated October 23, 1997 from NEC indicating
the automatic renewal of the NEAXA 2400 TELEPHONE switch, letter dated
November 18, 1997 offering to add the Centigram Voicemail system to fill
parts and labor telephone switch maintenance agreement.
4. Hawaii Sound Systems, Inc. (Agreement dated October 24, 1994 accepted by
Grand Wailea Resort).
5. Hewlett Packard (Agreement for Support Service Package Summary, Customer
Contract Information for Support Services, Support Service Summary,
Hardware Products Supported, Agreement Summary of Charges for Support
Services, dated February 18, 1998).
6. Johnson Controls (Renewal of Service Agreement - Metasys, JC 85/40 letter
dated July 23, 1996 accepted by Brian Haraguchi on August 7, 1996).
7. JRS International, Inc. (Service Agreement dated October 1, 1993, but
effective October 1, 1993), by and between Grand Wailea Resort, Hotel and
Spa and JRS International, Inc.
8. MGM Services, Inc. (Service Agreement dated November 8, 1994, but effective
January 1, 1995), by and between Grand Wailea Resort, Hotel and Spa and MGM
Services, Inc.
9. Maui Audio Center (Service Agreement dated August 1, 1993, but effective
August 1, 1993), by and between Grand Wailea Resort, Hotel and Spa and Maui
Audio Center.
10. NALCO Chemical Company (Service Agreement dated May 23, 1994, but effective
as of June 1, 1994), by and between Grand Wailea Resort, Hotel and Spa, and
NALCO Chemical Company.
11. GASCO, Inc. (Service Agreement dated April 20, 1994, but effective April
15, 1994), by and between Grand Wailea Resort, Hotel and Spa, and GASCO,
Inc.
3
<PAGE>
12. Restaurant Environmental Services, Inc. (Service Agreement dated August 11,
1997, but effective as of August 11, 1997), by and between Grand Wailea
Resort, Hotel and Spa, and Restaurant Environmental Services Inc.
13. Servidyne Systems, Inc. (Service Agreement dated July 20, 1993, but
effective as of August 1, 1993), by and between Grand Wailea Resort, Hotel
and Spa, and Servidyne Systems, Inc.
14. TCI of Hawaii, Inc. (Cable Television Bulk Billing Agreement - Hotel -
Owner Installed, dated January 1, 1997 by TCI of Hawaii, Inc. dated January
1, 1997), by and between TCI of Hawaii, Inc., as Operator, and Grand Wailea
Resort, as Owner.
15. Simplex (Service Agreement dated July 10, 1997, but effective July 1,
1997), by and between Grand Wailea Resort, Hotel and Spa, and Simplex.
16. Uniquest The Solution Source (Purchase and Software License Agreement
Hospitality Division entered into on or about May 1993), by and between
UNIQUEST, Inc. and Grand Wailea Resort Hotel & Spa.
17. Valley Isle Pest Control, Inc. (Service Agreement dated August 18, 1993,
but effective September 1, 1993), by and between Grand Wailea Resort, Hotel
and Spa and Valley Isle Pest Control, Inc.
18. SESAC (SESAC, Inc. Hotel, Motel & Resort Performance License dated
September 25, 1996, between SESAC, Inc., and Grand Wailea Company, dba:
Grand Wailea Resort, Hotel & Spa).
19. LodgeNet (LodgeNet Guest Pay Agreement (undated) by and between LodgeNet
Entertainment Corporation and Grand Wailea Resort, Hotel & Spa, and
Addendum attached thereto), executed on or about May 23, 1996.
20. AT&T (AT&T Commission Agreement Renewal Agreement entered into June 16,
1995, between AT&T Communications, Inc. acting on behalf of the Interstate
Division of AT&T Corp. and the AT&T Communications interexchange companies,
and Grand Wailea Resort, together with AT&T Commission Agreement Bonus
Addendum entered into June 16, 1995, and Letter of Authorization).
21. BHP Petroleum - Gas Express (Letter regarding Commercial Fleet charge
cards).
22. EPS Electronic Processing Source, Inc. (Merchant Processing Agreement
entered by and among First USA Merchant Services, Inc., Electronic
Processing Source, Inc. and Grand Wailea Company, dba Grand Wailea Resort,
Hotel & Spa, executed on May 24, 1993).
23. Murad, Inc. (Murad, Inc. Charter Club Membership Agreement agreed by Grand
Wailea Resort & Spa).
24. The Fidelio Agreements.
25. Extended maintenance contract for the Saflok door lock system.
4
<PAGE>
EQUIPMENT LEASES
1. Agreement dated October 23, 1997, by and between Grand Wailea Company and
International Business Machines Corporation, to provide
connectivity/networking.
2. Agreement dated November 21, 1997, by and between Grand Wailea Company and
International Business Machines Corporation, for desktop computer network
implementation.
3. Fidelio Agreements.
4. Audio Visual Headquarters (Agreement for Audio Visual Equipment and
Services, entered into on March 1, 1997), by and between Audiovisual
Headquarters Corporation, and Grand Wailea Resort Hotel & Spa.
5
<PAGE>
SCHEDULE 2
SCHEDULE OF KNOWN LITIGATION
Grand Wailea Company v. Hyatt Corporation, filed October 3, 1997 in the United
States District Court for the District of Hawaii (Civil No. 95-00350-HG)
Employee Claims listed on Exhibit 1 attached hereto
Claims listed on Exhibit 2 attached hereto
Matters listed on Exhibit 3 attached hereto
6
<PAGE>
CONFIDENTIAL
<TABLE>
<CAPTION>
CURRENT EMPLOYMENT RELATED ISSUES
March 5, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
COMPLAINANT ALLEGATION(S) DATE FILED AGENCY/COURT STATUS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BAUTISTA, Celso National Origin 1/10/97 Hawaii Civil Rights Submitted response to H.C.R.C.
Discrimination Comm. Case still pending.
- ----------------------------------------------------------------------------------------------------------------------------------
GARDELL, Barry Age Discrimination 3/2/95 Hawaii Civil Rights Plaintiff withdrew to file civil
Comm. lawsuit.
- ----------------------------------------------------------------------------------------------------------------------------------
GARDELL, Barry Age Discrimination 8/10/95 2nd Circuit Court Judgement against Plaintiff on
2/5/98. Awaiting appeal deadline.
Motion filed to recover costs.
Hearing date not scheduled.
- ----------------------------------------------------------------------------------------------------------------------------------
ILWU, Local 14 Class grievance on behalf 3/16/94 Arbitration ILWU filed a motion to vacate the
of the FT/PT Banquet 9/ /97 2nd Circuit Court arbitration award. Case still
employees. Binding 10/ /97 U.S. District Court pending. Resort removed motion to
arbitration. Federal Court.
- ----------------------------------------------------------------------------------------------------------------------------------
LAKE, Prince Racial Discrimination 9/19/96 H.C.R.C. Submitted response to H.C.R.C. Case
M-7574 still pending. In the process of
scheduling telephone interviews.
- ----------------------------------------------------------------------------------------------------------------------------------
LAKE, Prince Retaliation 9/19/96 H.C.R.C. Submitted response to H.C.R.C. Case
M-7898 still pending. In the process of
scheduling telephone interviews.
- ----------------------------------------------------------------------------------------------------------------------------------
LAKE, Prince Racial Discrimination 4/4/97 H.C.R.C. Submitted response to H.C.R.C. Case
M-8254 still pending.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
cc: Hideki Hayashi
<PAGE>
<TABLE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
POLICY YEAR: 08/01/93 THROUGH 07/31/94 01/30/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND WAILEA PAGE 1
<CAPTION>
CLAIM # AREA SIR ST DOL DATE REPT. CLMT ITEM CLAIMANT STAT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06952242 GENERAL 25000.00 HI 12/01/93 11/03/95 01 LBI ENZWEILER
02 LBI GRENIER
FACTS: ALLEGED HARASSMENT/TERMINATION
TOTAL CLAIMS: 1
<CAPTION>
CLAIM # LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR SUIT
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06952242 Closed 12/19/95 .00 .00 .00 .00 Y
Closed 12/19/95 .00 .00 .00 .00 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 .00 .00
.00 .00 .00 .00 .00
</TABLE>
<PAGE>
<TABLE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
POLICY YEAR: 08/01/95 THROUGH 07/31/96 01/30/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND WAILEA PAGE 2
<CAPTION>
CLAIM # AREA SIR ST DOL DATE REPT. CLMT. ITEM CLAIMANT STAT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06951593 SPA 25000.00 HI 08/15/95 08/17/95 01 LBI CANNON, FANNY
*CARRIER #: 17095390142 FACTS: SLIP & FALL - FRACTURED LEFT ANKLE (DIARY TO NANCY)
06951706 GUESTROOM 25000.00 HI 08/25/95 08/29/95 01 LBI RAKUSIN
FACTS: STUBBED TOE
06951788 POOL 25000.00 HI 08/26/95 09/11/95 01 LBI BUFORD, BLAKE
FACTS: CUT CHIN ON SLIDE
06951801 DINING ROOM 25000.00 HI 08/08/95 09/12/95 01 LBI TAMLEY, RICK
FACTS: CHIPPED DENTAL CAP ON BACON
06951852 POOL 25000.00 HI 09/10/95 09/18/95 01 LBI POTHIER, ALBINE
FACTS: TRIP & FALL @ POOL
06951853 VALET/PARKIN 25000.00 HI 08/26/95 09/18/95 01 APD BUDGET RENT-A-CAR
FACTS: COLLISION
06951859 GUESTROOM 25000.00 HI 08/03/95 09/19/95 01 LBI KRESS, CAITLIN
FACTS: CUT FOOT WITH SLIDING DOOR
06952217 GUESTROOM 25000.00 HI 09/11/95 11/02/95 01 LPD ORECCHIA, KATHY
FACTS: MISSING TENNIS RACKET
06952291 LOBBY 25000.00 HI 10/16/95 11/09/95 01 LBI SHARPE, PATRICK MARI
FACTS: FELL IN LOBBY
<CAPTION>
CLAIM # LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR SUIT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06951593 Closed 04/30/97 55000.00 .00 2091.34 57091.34 N
------------ ----------- --------- ---------- ----------
.00 55000.00 .00 2091.34 57091.34
06951706 Closed 10/27/95 .00 .00 128.49 128.49 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 128.49 128.49
06951788 Closed 10/09/96 .00 .00 743.19 743.19 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 743.19 743.19
06951801 Closed 01/23/96 .00 .00 375.14 375.14 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 375.14 375.14
06951852 Closed 03/07/96 .00 .00 635.46 635.46 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 635.46 635.46
06951853 Closed 10/09/95 1064.57 .00 227.13 1291.70 N
------------ ----------- --------- ---------- ----------
.00 1064.57 .00 227.13 1291.70
06951859 Closed 12/06/95 251.44 .00 345.99 597.43 N
------------ ----------- --------- ---------- ----------
.00 251.44 .00 345.99 597.43
06952217 Closed 12/29/95 .00 .00 200.50 200.50 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 200.50 200.50
06952291 Closed 09/19/96 8500.00 .00 1031.87 9531.87 N
------------ ----------- --------- ---------- ----------
.00 8500.00 .00 1031.87 9531.87
</TABLE>
<PAGE>
<TABLE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
POLICY YEAR: 08/01/95 THROUGH 07/31/96 01/30/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND WAILEA PAGE 3
<CAPTION>
CLAIM # AREA CLAIM # AREA SIR ST DOL DATE REPT. CLMT. ITEM CLAIMANT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06962185 RESTAURANT 06952402 SPA 25000.00 HI 08/05/95 11/21/95 01 LBI KARSH, TERRY
FACTS: SLIP & FALL
06963542 CIVIL RIGHT 06960714 SIDEWALK 25000.00 HI 02/25/96 02/28/96 01 LBI WESTON, DOROTHY
*CARRIER #: 17096402362 FACTS: FRACTURED ANKLE (DIARY TO NANCY)
06953707 CHAPEL 06960969 POOL 25000.00 HI 11/05/95 03/26/96 01 LBI SMIT, EUGENE
*CARRIER #: 17096405367 FACTS: KNEE INJURY (DIARY TO NANCY)
06964509 RESTAURANT 06961000 GENERAL 25000.00 HI 10/17/95 03/27/96 01 LPD HERTZ CORP.
FACTS: STOLEN VEHICLE
06961114 GENERAL 25000.00 HI 02/16/96 04/10/96 01 LBI BLANK, ROBERT
FACTS: RESERVATION PROBLEM
06961735 PATH/WALKWAY 25000.00 HI 03/14/96 06/11/96 01 LBI SCHECTER, SHARON
FACTS: TRIP & FALL (DIARY TO NANCY)
06962009 POOL 25000.00 HI 07/02/96 07/10/96 01 LBI STEIN, DAVID
FACTS: CUTS/LACERATION/ABRASION
06962131 DINING ROOM 25000.00 HI 06/22/96 07/24/96 01 LBI IREMONGER, STEPHEN
FACTS: STRUCK BY UMBRELLA
<CAPTION>
CLAIM # STAT. LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
06962185 Closed 08/22/96 10000.00 .00 89
------------ ----------- ----------- ---------
.00 10000.00 .00 89
06963542 0 50000.00 .00 2241.98 129
------------ ----------- ----------- ---------
50000.00 .00 2241.98 129
06953707 0 25000.00 .00 924.50 211
------------ ----------- ----------- ---------
25000.00 .00 924.50 211
06964509 Closed 09/30/96 .00 .00 36
------------ ----------- ----------- ---------
.00 .00 .00 36
06961114 Closed 07/31/96 .00 .00 26
------------ ----------- ----------- ---------
.00 .00 .00 26
06961735 0 25000.00 .00 5000.00 176
------------ ----------- ----------- ---------
25000.00 .00 5000.00 176
-----------------------------------------------------------
** Changes Made During Current Month ** == > 10000.00 .00 5000.00
-----------------------------------------------------------
06962009 Closed 10/09/96 .00 .00 46
------------ ----------- ----------- ---------
.00 .00 .00 46
06962131 Closed 10/10/96 1189.19 .00 37
------------ ----------- ----------- ---------
.00 1189.19 .00 37
</TABLE>
<PAGE>
<TABLE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
POLICY YEAR: 08/01/96 THROUGH 07/31/97 01/30/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND WAILEA PAGE 5
<CAPTION>
CLAIM # AREA SIR ST DOL DATE REPT. CLMT. ITEM CLAIMANT STAT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06962880 GENERAL 25000.00 HI 09/11/96 10/07/96 01 LBI CURRENT, JEANNE 0
FACTS: ALLEGED EMPLOYEE BENEFIT LIABILITY
06963441 HOTEL 25000.00 HI 12/07/96 12/16/96 01 LPD BUDGET RENT-A-CAR
FACTS: RENTAL CAR STRUCK BY FALLEN TREE
06963447 GUESTROOM 25000.00 HI 10/13/96 12/16/96 01 LBI LEVI, SARA
FACTS: CUT FOOT ON SHARP OBJECT IN ROOM
06963448 HOTEL 25000.00 HI 11/07/96 12/16/96 01 LPD HAKIMIANPOUR, ROBERT
FACTS: LOST BRACELET
06963772 POOL 25000.00 HI 09/02/96 01/21/97 01 LBI SEIFERT, SUSAN 0
FACTS: INJURED ON WATER SLIDE
06964280 HOTEL 25000.00 HI 01/26/97 03/13/97 01 LBI BAGGOT, TRACEY
FACTS: BUMPED HEAD ON CABINET DOOR
06964425 HOTEL 25000.00 HI 03/24/97 03/27/97 01 LBI FARMER, DANIELLE
FACTS: FELL INTO CONSTRUCTION HOLE
06964478 GARAGE 25000.00 HI 12/27/96 04/02/97 01 LPD BEAVER, TERRY
FACTS: ROOF OF VAN SCRAPED
06964507 POOL 25000.00 HI 04/01/97 04/04/97 01 LBI BELVILLE, HEATHER
FACTS: STRUCK ANKLE ON ROCK IN POOL
<CAPTION>
CLAIM # LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR SUIT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06962880 10000.00 .00 11223.34 59213.38 80436.72 N
------------ ----------- --------- ---------- ----------
10000.00 .00 11223.34 59213.38 80436.72
06963441 Closed 03/31/97 20978.30 .00 771.64 21749.94 N
------------ ----------- --------- ---------- ----------
.00 20978.30 .00 771.64 21749.94
06963447 Closed 12/22/97 .00 .00 1026.83 1026.83 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 1026.83 1026.83
06963448 Closed 12/31/97 .00 .00 304.34 304.34 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 304.34 304.34
06963772 10000.00 .00 1000.00 841.91 11841.91 N
------------ ----------- --------- ---------- ----------
10000.00 .00 1000.00 841.91 11841.91
06964280 Closed 12/22/97 .00 .00 735.10 735.10 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 735.10 735.10
06964425 Closed 12/22/97 6233.00 .00 1484.29 7717.29 N
------------ ----------- --------- ---------- ----------
.00 6233.00 .00 1484.29 7717.29
06964478 Closed 07/28/97 434.37 .00 .00 434.37 N
------------ ----------- --------- ---------- ----------
.00 434.37 .00 .00 434.37
06964507 Closed 08/29/97 2642.01 .00 1271.07 3913.08 N
------------ ----------- --------- ---------- ----------
.00 2642.01 .00 1271.07 3913.08
</TABLE>
<PAGE>
<TABLE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
POLICY YEAR: 08/01/96 THROUGH 07/31/97 01/30/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND WAILEA PAGE: 6
<CAPTION>
CLAIM # AREA SIR ST DOL DATE REPT. CLMT. ITEM CLAIMANT STAT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06964508 HOTEL GROUND 25000.00 HI 02/03/97 04/04/97 01 LBI WILLIAMS, PATTI 0
FACTS: SLIP AND FALL ON PATH
06964571 SIDEWALK 25000.00 HI 01/13/97 04/09/97 01 LBI CAESER, KAREN 0
FACTS: CLAIMANT FELL WHILE WALKING ON PATHWAY
06964815 POOL 25000.00 HI 04/26/97 05/02/97 01 LBI WIMBERLY, JIM
*CARRIER #: 17097417690 FACTS: CLMT SUSTAINED COMPOUND FRACTURE TO LT THUMB
06964816 HOTEL 25000.00 HI 04/27/97 05/02/97 01 LBI FAEHRMAN, JEANNE
FACTS: SLIP AND FALL ON STAGE
06964845 LOBBY 25000.00 HI 04/11/97 05/06/97 01 LBI SPATES, MARY FRANCES 0
FACTS: SLIP & FALL
06964881 POOL 25000.00 HI 04/16/97 05/08/97 01 LBI NEWMAN, RENEE LEN 0
FACTS: CUT TOE ON POOL DRAIN
06964981 HALLWAY 25000.00 HI 01/10/97 05/20/97 01 LBI GORAY, CHRISTINA 0
*CARRIER #: 17097419991 FACTS: SLIP & FALL
06964982 BATHROOM 25000.00 HI 05/12/97 05/20/97 01 LBI SENKARIC, ANISE
FACTS: SLIP & FALL
<CAPTION>
CLAIM # LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR SUIT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06964508 5000.00 .00 .00 915.85 5915.85 N
------------ ----------- --------- ---------- ----------
5000.00 .00 .00 915.85 5915.85
06964571 2500.00 .00 .00 967.64 3467.64 N
------------ ----------- --------- ---------- ----------
2500.00 .00 .00 967.64 3467.64
06964815 Closed 08/29/97 11134.90 .00 938.53 12073.43 N
------------ ----------- --------- ---------- ----------
.00 11134.90 .00 938.53 12073.43
06964816 Closed 09/02/97 6000.00 .00 792.89 6792.89 N
------------ ----------- --------- ---------- ----------
.00 6000.00 .00 792.89 6792.89
06964845 7500.00 .00 575.10 424.90 8500.00 N
------------ ----------- --------- ---------- ----------
7500.00 .00 575.10 424.90 8500.00
06964881 .00 5000.00 .00 1035.80 6035.80 N
------------ ----------- --------- ---------- ----------
.00 5000.00 .00 1035.80 6035.80
** Changes ----------------------------------------------------------------------
Made During -5000.00 5000.00 .00 .00 .00
Current Month
** == > ----------------------------------------------------------------------
06964981 17500.00 .00 1561.63 438.37 19500.00 Y
------------ ----------- --------- ---------- ----------
17500.00 .00 1561.63 438.37 19500.00
06964982 Closed 01/16/98 4500.00 .00 908.83 5408.83 N
------------ ----------- --------- ---------- ----------
.00 4500.00 .00 908.83 5408.83
** Changes ----------------------------------------------------------------------
Made During -7500.00 4500.00 103.33 261.96 -2841.17
Current Month
** == > ----------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
POLICY YEAR: 08/01/96 THROUGH 07/31/97 01/30/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND WAILEA PAGE: 7
<CAPTION>
CLAIM # AREA SIR ST DOL DATE REPT. CLMT. ITEM CLAIMANT STAT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06964983 GUESTROOM 25000.00 HI 04/12/97 05/20/97 01 LPD O'KEEFE, EDWARD 0
FACTS: CLAIMANT LOST JACKET
06965154 HALLWAY 25000.00 HI 01/01/97 06/05/97 01 LBI MCLAUGHLIN, NICOLA 0
*CARRIER #: 17097417581 FACTS: SLIP & FALL ON WET WALKWAY
06965430 BEACH 25000.00 HI 03/23/97 07/07/97 01 LBI COHN, KIM
FACTS: CLAIMANT STEPPED OFF OF BANK OF SLOPE
06966108 HOTEL GROUND 25000.00 HI 05/07/97 09/09/97 01 LBI SMITH, KEVIN
FACTS: CLAIMANT DRANK HYDROGEN PEROXIDE
P1000222 HOTEL 25000.00 HI 02/14/97 07/08/97 01 LPD GOLDMAN, MITCHEL
FACTS: 1/0 MONETARY DISPUTE
TOTAL CLAIMS: 22
<CAPTION>
CLAIM # LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR SUIT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06964983 300.00 .00 .00 311.49 611.49 N
------------ ----------- --------- ---------- ----------
300.00 .00 .00 311.49 611.49
06965154 50000.00 .00 7866.45 3759.22 61625.67 N
------------ ----------- --------- ---------- ----------
50000.00 .00 7866.45 3759.22 61625.67
06965430 Closed 08/25/97 .00 .00 267.18 267.18 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 267.18 267.18
06966108 Closed 01/15/98 .00 .00 337.68 337.68 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 337.68 337.68
** Changes ----------------------------------------------------------------------
Made During -1000.00 .00 -162.32 .00 -1162.32
Current Month
** == > ----------------------------------------------------------------------
P1000222 Closed 10/20/97 .00 .00 .00 .00 N
------------ ----------- --------- ---------- ----------
.00 .00 .00 .00 .00
102800.00 56922.58 22226.52 76746.94 258696.04
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTEL INSURANCE GROUP DETAILED CLAIMS REGISTER
POLICY YEAR 08/01/97 THROUGH 07/31/98
ALL TYPE CLAIMS 01/30/98
LOCATION: GRAND WAILEA BOTH OPEN AND CLOSED CLAIMS
CLAIM # AREA SIR ST DOL DATE REPT. CLMT. ITEM CLAIMANT STAT
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06965716 GUESTROOM 25000.00 HI 08/03/97 08/04/97 01 LBI OBLED, PIERRE O
*CARRIER 8: 170 97 420124 FACTS: CLAIMANT FELL OUT OF BED AND FRACTURED NECK
06966106 POOL 25000.00 HI 08/25/97 09/09/97 01 LBI WARNER, FREDERIC O
FACTS: SLIP AND FALL ON WET SURFACE NEAR POOL SLIDE
06966107 HOTEL GROUND 25000.00 HI 09/06/97 09/09/97 01 LBI CRITCHFIELD, CHERYL O
FACTS: SLIP AND FALL ON WET GRASS
06966109 HOTEL GROUND 25000.00 HI 09/04/97 09/09/97 01 LBI ROUPP, SUSAN O
FACTS: SLIP AND FALL ON WET FLOOR
06966749 POOL 25000.00 HI 09/28/97 10/02/97 01 LBI FERCONIO, MIKE O
FACTS: FINGER SMASHED IN DOOR OF WATER ELEVATOR
06968164 HOTEL GROUND 25000.00 HI 10/21/97 01/28/98 01 LBI PLESSET, BROOKE O
FACTS: CLAIMANT ALLEGES SKIN DAMAGE AFTER SALON VISIT
** Changes Made During Current Month **
TOTAL CLAIMS: 6
<CAPTION>
CLAIM # LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR SUIT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06965716 250000.00 .00 3936.74 1063.26 30000.00 N
--------- ---------- ------- ------- --------
250000.00 .00 3936.74 1063.26 30000.00
06966106 5000.00 .00 .00 1423.30 6423.30 N
--------- ---------- ------- ------- --------
5000.00 .00 .00 1423.30 6423.30
06966107 7500.00 .00 465.53 284.47 8250.00 N
--------- ---------- ------- ------- --------
7500.00 .00 465.53 284.47 8250.00
06966109 10000.00 .00 1000.00 .00 11000.00 N
--------- ---------- ------- ------- --------
10000.00 .00 1000.00 .00 11000.00
06966749 7500.00 .00 750.00 .00 8250.00 N
--------- ---------- ------- ------- --------
7500.00 .00 750.00 .00 8250.00
06968164 5000.00 .00 1000.00 .00 6000.00 N
--------- ---------- ------- ------- --------
5000.00 .00 1000.00 .00 6000.00
-----------------------------------------------------------------------------
5000.00 .00 1000.00 .00 6000.00
-----------------------------------------------------------------------------
60000.00 .00 7152.27 2771.03 69971.30
</TABLE>
<PAGE>
DETAILED CLAIMS REGISTER
PREFERRED HOTEL INSURANCE GROUP
ALL POLICY YEARS 01/10/98
ALL TYPE CLAIMS BOTH OPEN AND CLOSED CLAIMS
LOCATION: GRAND MAILEA
<TABLE>
<CAPTION>
- ------------------------------------------------------- CURRENT MONTH-----------------------------------------------------------
OCCURRANCES CLAIMS
OPENED CLOSED OPENED CLOSED LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 1 2 1500.00 9500.00 5734.55 261.96 16996.51
- ------------------------------------------------------- CURRENT MONTH-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------- OVERALL TOTALS ----------------------------------------------------------
OCCURRANCES CLAIMS
OPENED CLOSED TOTAL OPENED CLOSED TOTAL LOSS RES. LOSS PYMT. EXP. RES. EXP. PYMT. TOT. INCUR.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 29 50 21 30 51 280300.00 141927.78 51844.24 105344.09 579416.11
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS -by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- --------------------------------------------------------------------------------------------------------------
File No Cov Sut Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------
Policy year 08/01/93 - 07/31/94 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
24154 LBI 001 MELBY MARIE GRAND WAILEA RESORT (GL) 08/08/93 07/20/94
FOREIGN OBJECT IN FOOD NO HI
CHIPPED TOOTH ON PIZZA/IN ROOM 08/09/93 JG
24269 LBI 001 ZIMRING MURIEL GRAND WAILEA RESORT (GL) 08/28/93 12/16/93
SLIP & FALL NO HI
SLIP AND FALL, INJURED KNEE 08/30/93 CG
24294 LBI 001 JAMJOOM MOUTAISM GRAND WAILEA RESORT (GL) 08/30/93 09/07/93
CUTS/LACERATION/ABRASION NO HI
CLMT. CUT FOOT ON BTTM. OF JCZZI 08/31/93 JG
24301 LPD 001 STORY KEN GRAND WAILEA RESORT (GL) 08/19/93 11/24/93
LOST PROPERTY NO HI
MISSING GOLF CLUBS FROM VHCL. 08/23/93 JG
24319 LBI 001 ROOFIAN ILANA GRAND WAILEA RESORT (GL) 08/31/93 01/19/95
RECREATION ACTIVITIES NO HI
INJD. GOING DOWN WATER SLIDE 09/01/93 CG
24353 LPD 001 DIBELLO JAQUELINE GRAND WAILEA RESORT (GL) 08/21/93 09/19/95
SLIP & FALL NO HI
SLIP ON WET FLR./BRK.GLASSES 09/07/93 JG
24354 LBI 001 AKHIARZAD ANNIL GRAND WAILEA RESORT (GL) 09/06/93 08/15/95
CUTS/LACERATION/ABRASION NO HI
CLMT. INJD.ON GEORGE SLIDE/POOL 09/07/93 SM
24355 LPD 001 CIELO CHUCK GRAND WAILEA RESORT (GL) 08/27/93 11/24/93
LOST PROPERTY NO HI
MISSING STEREO FROM VEHICLE 09/07/93 JG
24419 LBI 001 WEINSTEIN VALERIE GRAND WAILEA RESORT (GL) 08/17/93 06/27/95
TRIP/FALL YES HI
TRIP & FALL/POOL STEP/CUT CHIN 09/15/93 JG
24674 LBI 001 MCNIEL CINDY GRAND WAILEA RESORT (GL) 10/18/93 09/22/95
SPORTING ACCIDENT NO HI
WATER SLIDE ACCIDENT 10/19/93 JG
24828 LBI 001 ROGERS KAREN GRAND WAILEA RESORT (GL) 10/25/93 06/24/94
TRIP/FALL NO HI
TRIP & FALL ON STEPS NEAR POOL 11/05/93 CG
[ILLE] LBI 001 ILLEGIBLE GRAND WAILEA RESORT (GL) 11/09/93 03/27/95
ILLEGIBLE NO HI
ILLEGIBLE 11/10/93 CG
<CAPTION>
- -------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
24154
0 0 525 169 694
24269
0 0 1,060 860 1,920
24294
0 0 0 0 0
242301
0 0 0 115 115
24319
0 0 1,400 463 1,863
24353
0 0 0 0 0
24354
0 0 0 193 193
24355
0 0 0 105 105
24419
0 0 1,250 3,342 4,592
24674
0 0 0 0 0
24828
0 0 0 233 233
[ILLE
0 0 2,265 1,374 3,639
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS-by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- --------------------------------------------------------------------------------------------------------------
File No Cov Sut Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------
Policy year 08/01/93 - 07/31/94 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
24946 LBI 001 MARKINOVICH CARRIE GRAND WAILEA RESORT (GL) 11/29/93 01/14/97
BATTERY/ASSAULT YES HI
ALLEDGED ASSAULT/RAPE 11/30/93 CG
24982 LBI 001 TREVES NACE, ET. AL GRAND WAILEA RESORT (GL) 11/04/93 07/20/94
CUTS/LACERATION/ABRASION NO HI
SLIPPED(WET)OFF BRIDGE - PLANTER 12/06/93 JG
25038 LBI 001 BADEAUX DAPHNE GRAND WAILEA RESORT (GL) 12/06/93 02/15/95
CUTS/LACERATION/ABRASION NO HI
CLMT. INJD. KNEE ON WATER SLID 12/10/93 CG
25039 LBI 001 RALLIS DEAN GRAND WAILEA RESORT (GL) 12/12/93 06/24/94
CUTS/LACERATION/ABRASION NO HI
SLIDE DOWN SLIDE HEAD 1ST/INJD. 12/13/93 CG
25130 LBI 001 GROTZ THOMAS GRAND WAILEA RESORT (GL) 12/17/93 05/11/94
SLIP & FALL NO HI
FALL ON STAIRS/TARZAN SWING 12/20/93 CG
25131 LBI 001 CUMMINGS CAROLYN GRAND WAILEA RESORT (GL) 12/14/93 08/04/94
TRIP/FALL NO HI
CLMT. LOST BALANCE/FELL IN POOL 12/20/93 CG
25132 LBI 001 KENNEDY REED GRAND WAILEA RESORT (GL) 12/21/93 10/14/97
# SLIP & FALL YES HI
FELL BACKWARD ON TAIL BONE/SPA 12/27/93 JG
LBI 002 KENNEDY KARIN GRAND WAILEA RESORT (GL) 12/21/93 01/29/97
# SLIP & FALL YES HI
FELL BACKWARD ON TAIL BONE/SPA 01/07/97 JG (25132 total:)
25175 LBI 001 KNAUER BLANCHE GRAND WAILEA RESORT (GL) 12/09/93 06/17/94
SLIP & FALL NO HI
FELL ON STEP NEAR SPA RESTROOM 12/10/93 JG
25613 LBI 001 PETRELLA ROSE GRAND WAILEA RESORT (GL) 02/20/94 03/27/95
SLIP & FALL NO HI
SCRAPED HER LEG ON EDGE/POOL 02/22/94 CG
25702 LBI 001 SUAREZ BENNY GRAND WAILEA RESORT (GL) 03/01/94 07/14/94
SLIP & FALL NO HI
FALL/WET FLOORS/INJD/RETAIL ST 03/03/94 CG
25771 LPD 001 MULTI IMAGE PRODUCTIONS GRAND WAILEA RESORT (GL) 02/22/94 05/16/94
CONTRACTOR LIABILITY NO HI
BLLRM RIGGING/LGHTING TRUSS DMG 03/11/94 CG
<CAPTION>
- -------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
24946
0 0 0 23,626 23,626
24982
0 0 8,750 534 9,284
25038
0 0 0 416 416
25039
0 0 0 283 283
25130
0 0 0 322 322
25131
0 0 0 375 375
25132
0 0 10,053 17,912 27,965
0 0 10,000 0 10,000
0 0 20,053 17,912 37,965
25175
0 0 0 110 110
25613
0 0 312 728 1,040
25702
0 0 0 158 158
25771
0 0 2,500 445 2,945
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS-by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- --------------------------------------------------------------------------------------------------------------
File No Cov Sut Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------
Policy year 08/01/93 - 07/31/94 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
25796 LBI 001 SASSER GAIL GRAND WAILEA RESORT (GL) 03/08/94 08/04/94
SLIP & FALL NO HI
FLGSTN. WLKWY. WET/POOL/INJ.BACK 03/14/94 CG
25839 LBI 001 HURST DORIS GRAND WAILEA RESORT (GL) 03/20/94 10/17/94
SLIP & FALL NO HI
FALL/SPA INJD. POSS.BRKN.WRIST 03/21/94 CG
25840 LBI 001 JONES SHELBY GRAND WAILEA RESORT (GL) 03/12/94 02/21/95
SLIP & FALL NO HI
FALL/SPA GRANDE/INJD. SHOULDER 03/21/94 CG
25919 LBI 001 PERTICONE PETER GRAND WAILEA RESORT (GL) 03/12/94 09/25/96
# SPORTING ACCIDENT YES HI
INJD/PAIN-SPINE, NECK/WTR.SLIDE 03/31/94 CG
25926 LBI 001 CORN THEODORE GRAND WAILEA RESORT (GL) 09/07/93 08/04/94
REPAIR OPERATIONS NO HI
SEWER BCKUP.CAUSE STAFF INFEC 04/04/94 CG
26281 LBI 001 KLEMME GARY GRAND WAILEA RESORT (GL) 03/19/94 12/05/94
TRIP/FALL NO HI
FELL ON CURB/TWST.ANKLE-SWLLN. 05/04/94 CG
26312 LBI 001 PLEASANT JEANNE GRAND WAILEA RESORT (GL) 05/03/94 09/23/94
CUTS/LACERATION/ABRASION NO HI
STEPPED ON SHARP OBJECT/CUT FT 05/10/94 CG
26562 LBI 001 LEIGHLAND DIANE GRAND WAILEA RESORT (GL) 12/31/93 12/21/95
SLIP & FALL YES HI
INJD. FOOT ON DANCE FLOOR 06/15/94 CG
26580 LBI 001 MURPHY WILLIAM GRAND WAILEA RESORT (GL) 06/01/94 08/04/94
RECREATION ACTIVITIES NO HI
INJD.LFT.RIB ON WATER SLIDE 06/02/94 CG
26616 LBI 001 WHALEN DANIEL GRAND WAILEA RESORT (GL) 06/17/94 07/20/95
RECREATION ACTIVITIES YES HI
STICHES-HEAD/ROPE BURNS/BOAT 06/20/94 CG
LBI 002 BORDEN CHRISTINE GRAND WAILEA RESORT (GL) 06/17/94 07/27/95
RECREATION ACTIVITIES YES HI
STITCHES HEAD/ROPE BURNS/BOAT 08/10/94 CG (26616 total:)
26636 LBI 001 STOFAO J GRAND WAILEA RESORT (GL) 06/16/94 07/20/95
RECREATION ACTIVITIES NO HI
FINGER ROPE/TARZAN SWING 06/21/94 CG
<CAPTION>
- -------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25796
0 0 0 159 159
25839
0 0 200 824 1,024
25840
0 0 0 744 744
25919
0 0 80,000 33,154 113,154
25926
0 0 0 269 269
26281
0 0 0 288 288
26312
0 0 0 293 293
26562
0 0 0 2,112 2,112
26580
0 0 100 266 366
26616
0 0 0 745 745
0 0 0 0 0
0 0 0 745 745
26636
0 0 0 314 314
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS-by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- --------------------------------------------------------------------------------------------------------------
File No Cov Sut Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------
Policy year 08/01/94 - 07/31/96 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
26774 LBI 001 WONG, TAMMYLYNN GRAND WAILEA RESORT (GL) 05/01/94 01/09/96
PARKING LOT YES HI
INSD. ALMOST HIT PEDESTRIAN 07/12/94 CG
26812 LBI 001 LOHRASB KHODADAD GRAND WAILEA RESORT (GL) 07/12/94 09/22/95
SLIP & FALL NO HI
TOP STAIR-LAVA SLD/INJD.SHLDR. 07/13/94 JG
26931 LBI 001 BORDEN CHRISTY GRAND WAILEA RESORT (GL) 07/02/94 08/08/94
DEFECTIVE EQUIPMENT NO JD
RIGGING BRK.HIT ON HAND/PULLEY 07/27/94 CG
27024 LBI 001 LAIRD SCOTT GRAND WAILEA RESORT (GL) 06/17/94 07/22/96
CUTS/LACERATION/ABRASION NO HI
HIT BY UMBRELLA ON HEAD 08/03/94 JG
27070 LBI 001 WORKMAN KERRY GRAND WAILEA RESORT (GL) 07/15/94 03/10/95
RECREATION ACTIVITIES NO HI
INJD.NECK & SHLDR/WATER SLIDE 08/08/94 CG
27112 LBI 001 CONNERS DIANE GRAND WAILEA RESORT (GL) 07/12/94 02/15/95
MEDICAL ATTENTION NO HI
ILLNESS FROM VENTALATIN IN RM. 08/12/94 CG
27438 LBI 001 GOODALL WHITNEY GRAND WAILEA RESORT (GL) 07/14/94 04/14/97
FALL-NOC NO HI
FELL OVER ROPE ON GRASS AREA 09/20/94 CG
27612 LBI 001 BAYBADO VIRGINIA GRAND WAILEA RESORT (GL) 07/03/94 03/21/96
FALL-FROM ELEVATION NO HI
EDGE OF DANCE FLOOR/INJD. FOOT 10/10/94 JG
30781 LPI 001 GARDELL BARRY GRAND WAILEA RESORT (GL) 06/15/94 04/11/96
UNCLASSIFIED YES HI
AGE/RACE DSCRMNIN DURING EMPLY 0602NB1706-04D013 09/27/94 CG
32037 LBI 001 RAZAVI SORAYA GRAND WAILEA RESORT (GL) 02/12/94 09/18/97
FALL-SWIMMING POOL YES HI
WATERSLIDE INJURY 0 02/27/96 CG
<CAPTION>
- -----------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURR
To Date: Loss Expense Loss Expense
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
26774
0 0 0 1,739 1,739
26812
0 0 0 0 0
26931
0 0 0 0 0
27024
0 0 13,000 872 13,872
27070
0 0 0 382 382
27112
0 0 0 312 312
27438
0 0 8,000 2,309 10,309
27612
0 0 0 1,205 1,205
30781
0 0 0 [ILLE] [ILLE]
32037
0 0 0 [ILLE] [ILLE]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Policy year 08/01/93 - 07/31/94 - SIR = $25,000 -
- ------------------------------------------------
Totals for policy year 08/01/93 - 07/31/94 Current month total:
Policy year total:
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Totals for policy year 08/01/93 - 07/31/94
0 0 139,415 102,556 241,971
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" reserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number NET RESERVES + NET PAYMENTS = TOTAL
Occurrences of claims Loss Expense Loss Expense INCURRED
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0
Closed 44 46 0 0 139,415 102,556 241,971
Total 44 46 0 0 139,415 102,556 241,971
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- ------------------------------------------------------------------------------------------------------------------------
Policy year 08/01/94 - 07/31/95 - SIR = $25,000 -
- ------------------------------------------------
<S> <C> <C> <C>
27233 LBI 001 SPAN JACK GRAND WAILEA RESORT (GL) 08/23/94 03/20/95
FALL - SWIMMING POOL NO HI
GETTING OUT JACUZZI/INJD. BACK 08/25/94 CG
27315 LBI 001 STEARNS DANIELLE GRAND WAILEA RESORT (GL) 08/22/94 12/15/94
CUTS/LACERATIONS/ABRASION NO HI
CUT FOOT - LIGHTBULB/POOL AREA 09/02/94 CG
27372 LBI 001 MCCORMICK DAN GRAND WAILEA RESORT (GL) 08/02/94 04/22/96
FALL - SWIMMING POOL NO HI
FELL/FLAGSTONE STEPS/SLIDE 09/14/94 JG
27388 LBI 001 LIEBOWITZ DAN GRAND WAILEA RESORT (GL) 09/14/94 12/13/94
RECREATION ACTIVITY NO HI
CLMT INJRD. KNEE ON WATER SLIDE 09/15/94 CG
27475 LBI 001 ENGEL MRS. RICHARD L. GRAND WAILEA RESORT (GL) 08/19/94 09/20/95
RECREATION ACTIVITY NO HI
INJD.RIBS ON WATER SLIDE 09/26/94 CG
28038 LBI 001 BROTT BORIS GRAND WAILEA RESORT (GL) 10/09/94 09/14/95
CUTS/LACERATIONS/ABRASION NO HI
BRK. TOOTH,CUT FACE/GLSS.DOOR 11/03/94 CG
28049 LBI 001 NEWMAN MARY GRAND WAILEA RESORT (GL) 11/06/94 06/16/95
FALL- NOC NO HI
BATHRM.FLOOR/CUT CHIN 11/30/94 CG
28213 LBI 001 WHITE ROBERT GRAND WAILEA RESORT (GL) 12/04/94 07/20/95
CUTS/LACERATIONS/ABRASION NO HI
BIRD/LOBBY - HIT CLMTS.FINGER 12/20/94 CG
28396 LBI 001 KATTER ANDREA GRAND WAILEA RESORT (GL) 01/01/95 05/08/96
CUTS/LACERATIONS/ABRASION NO HI
STEPPED ON STRGHT.PIN/CARPET 01/11/95 CG
28680 LBI 001 CRONISTER JUDY GRAND WAILEA RESORT (GL) 02/14/95 03/25/97
FALL-FLOOR/WALKWAY - HARD SURFACE NO HI
WET STEPS - BAR AREA 02/22/95 CG
28953 LBI 001 WILLIAMS FOEL GRAND WAILEA RESORT (GL) 03/12/95 12/20/95
RECREATION ACTIVITY NO HI
HURT RIBS ON [ILLE] SLIDE 03/22/95 CG
[ILLE] LBI 001 PANG CURTIS GRAND WAILEA RESORT (GL) 02/12/95 OPEN
# ASSAULT-PHYSICAL NO HI
ALTERCATION IN BAR/DANCE AREA 03/23/95 CG
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
27233 LBI 001 SPAN JACK
FALL - SWIMMING POOL 0 0 0 237 237
GETTING OUT JACUZZI/INJD. BACK
27315 LBI 001 STEARNS DANIELLE
CUTS/LACERATIONS/ABRASION 0 0 725 264 989
CUT FOOT - LIGHTBULB/POOL AREA
27372 LBI 001 MCCORMICK DAN
FALL - SWIMMING POOL 0 0 646 214 860
FELL/FLAGSTONE STEPS/SLIDE
27388 LBI 001 LIEBOWITZ DAN
RECREATION ACTIVITY 0 0 0 261 261
CLMT INJRD. KNEE ON WATER SLIDE
27475 LBI 001 ENGEL MRS. RICHARD L.
RECREATION ACTIVITY 0 0 2,200 827 3,027
INJD.RIBS ON WATER SLIDE
28038 LBI 001 BROTT BORIS
CUTS/LACERATIONS/ABRASION 0 0 2,853 329 3,182
BRK. TOOTH,CUT FACE/GLSS.DOOR
28049 LBI 001 NEWMAN MARY
FALL- NOC 0 0 0 224 224
BATHRM.FLOOR/CUT CHIN
28213 LBI 001 WHITE ROBERT
CUTS/LACERATIONS/ABRASION 0 0 381 250 631
BIRD/LOBBY - HIT CLMTS.FINGER
28396 LBI 001 KATTER ANDREA
CUTS/LACERATIONS/ABRASION 0 0 2,000 856 2,856
STEPPED ON STRGHT.PIN/CARPET
28680 LBI 001 CRONISTER JUDY
FALL-FLOOR/WALKWAY - HARD SURFACE 0 0 0 1,482 1,482
WET STEPS - BAR AREA
28953 LBI 001 WILLIAMS FOEL
RECREATION ACTIVITY 0 0 724 821 1,545
HURT RIBS ON WATER SLIDE
[ILLE] LBI 001 PANG CURTIS
# ASSAULT-PHYSICAL 25,000 3,895 0 [ILLE] [ILLE]
ALTERCATION IN BAR/DANCE AREA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- ------------------------------------------------------------------------------------------------------------------------
Policy year 08/01/94 - 07/31/95 - SIR = $25,000 -
- ------------------------------------------------
<S> <C> <C> <C>
29088 LBI 001 ALPERT GLEN GRAND WAILEA RESORT (GL) 03/13/95 07/20/95
CUTS/LACERATIONS/ABRASION NO HI
BURNED ARM ON STEAM TABLE 04/04/95 CG
29182 LBI 001 GOLDMAN JULIE GRAND WAILEA RESORT (GL) 04/07/95 12/28/95
FALL - STAIRS NO HI
POOL/CUT ARM - 1ST AID NEEDED 04/19/95 CG
28227 LBI 001 SICILYANO TONY GRAND WAILEA RESORT (GL) 04/18/95 05/19/95
FALL- FLOOR/WALKWAY - HARD SURFACE NO HI
NEAR LAVA SLIDE/INJD. FINGER 04/24/95 CG
29271 LBI 001 GOLDEN IRIS GRAND WAILEA RESORT (GL) 04/24/95 11/28/95
DAMAGED PROPERTY NO HI
SPA PRODUCT SPILLED ON LUGGAGE 05/01/95 CG
29518 LBI 001 NAZARIAN PHILLIP GRAND WAILEA RESORT (GL) 05/01/95 12/21/95
CUTS/LACERATIONS/ABRASION NO HI
CHILD CAUGHT HAND IN ELEVATOR 05/24/95 CG
29519 LBI 001 TUNNICLIFFE PETER GRAND WAILEA RESORT (GL) 04/17/95 12/21/95
ILLNESS - NOC NO HI
FAMILY GOT EAR INFECTIONS 05/24/95 CG
LBI 002 TUNNICLIFFE JENNIFER GRAND WAILEA RESORT (GL) 04/17/95 12/21/95
ILLNESS - NOC NO HI
FAMILY GOT EAR INFECTIONS 05/24/95 CG
LBI 003 TUNNICLIFFE RACHEL GRAND WAILEA RESORT (GL) 04/17/95 12/21/95
ILLNESS - NOC NO HI
FAMILY GOT EAR INFECTIONS 05/24/95 CG (29519 total:)
29608 LBI 001 EDELSON SHARON GRAND WAILEA RESORT (GL) 05/30/95 OPEN
CUTS/LACERATIONS/ABRASION NO HI
HEAD CUT/SHARP EDGE IN DISCO 06/01/95 CG
29672 LBI 001 HENSLEIT BEA GRAND WAILEA RESORT (GL) 05/14/95 08/23/96
FALL - FLOOR/WALKWAY - HARD SURFACE NO HI
HEEL CAUGHT/FALLEN DECOR NET 06/01/95 CG
29744 LBI 001 LEANZ MARILYN GRAND WAILEA RESORT (GL) 06/12/95 01/24/97
FALL - NOC NO HI
CHAIR BROKE/DISLOCATED SHLDR. 06/16/95 CG
29885 LBI 001 STEIN ALLEN GRAND WAILEA RESORT (GL) 06/28/95 12/21/95
DAMAGED PROPERTY NO HI
COMPUTER DMGD.BY STAFF 07/03/95 CG
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
29088 LBI 001 ALPERT GLEN
CUTS/LACERATIONS/ABRASION 0 0 500 330 830
BURNED ARM ON STEAM TABLE
29182 LBI 001 GOLDMAN JULIE
FALL - STAIRS 0 0 0 [ILLE] [ILLE]
POOL/CUT ARM - 1ST AID NEEDED
28227 LBI 001 SICILYANO TONY
FALL- FLOOR/WALKWAY - HARD SURFACE 0 0 0 [ILLE] [ILLE]
NEAR LAVA SLIDE/INJD. FINGER
29271 LBI 001 GOLDEN IRIS
DAMAGED PROPERTY 0 0 0 [ILLE] [ILLE]
SPA PRODUCT SPILLED ON LUGGAGE
29518 LBI 001 NAZARIAN PHILLIP
CUTS/LACERATION/ABRASION 0 0 0 [ILLE] [ILLE]
CHILD CAUGHT HAND IN ELEVATOR
29519 LBI 001 TUNNICLIFFE PETER
ILLNESS - NOC 0 0 0 [ILLE] [ILLE]
FAMILY GOT EAR INFECTIONS
LBI 002 TUNNICLIFFE JENNIFER
ILLNESS - NOC 0 0 0 [ILLE] [ILLE]
FAMILY GOT EAR INFECTIONS
LBI 003 TUNNICLIFFE RACHEL
ILLNESS - NOC 0 0 0 0 0
FAMILY GOT EAR INFECTIONS 0 0 0 263 263
29608 LBI 001 EDELSON SHARON
CUTS/LACERATIONS/ABRASION 20,000 3 0 1,437 21,437
HEAD CUT/SHARP EDGE IN DISCO
29672 LBI 001 HENSLEIT BEA
FALL - FLOOR/WALKWAY - HARD SURFACE 0 0 17,000 925 17,925
HEEL CAUGHT/FALLEN DECOR NET
29744 LBI 001 LEANZ MARILYN
FALL - NOC 0 0 0 2,561 2,561
CHAIR BROKE/DISLOCATED SHLDR.
29885 LBI 001 STEIN ALLEN
DAMAGED PROPERTY 0 0 0 272 272
COMPUTER DMGD.BY STAFF
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- --------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------
Policy year 08/01/93 - 07/31/95 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
30040 LBI 001 GOLDBERG RICHARD GRAND WAILEA RESORT (GL) 07/10/95 08/29/95
RECREATION ACTIVITY NO HI
INJD.FINGER ON TARZAN SWING 07/13/95 JG
30051 LBI 001 WALL CHUCK GRAND WAILEA RESORT (GL) 07/15/95 06/14/96
CUTS/LACERATIONS/ABRASION NO HI
CUT LEG ON LIGHT NEAR WALKWAY 07/17/95 CG
30061 LPD 001 JACKSON JANICE GRAND WAILEA RESORT (GL) 07/05/95 08/29/95
MISSING PROPERTY-FROM CCC NO HI
POCKET COMP.-LUGGAGE/BELL DESK 07/17/95 JG
30140 LPD 001 FUERST MITCHELL GRAND WAILEA RESORT (GL) 06/21/95 08/29/95
MISSING PROPERTY-NOC NO HI
CAMERON STOLEN FROM POOL AREA 07/27/95 JG
30171 LBI 001 LEAL CRISTI GRAND WAILEA RESORT (GL) 11/16/94 04/11/96
RECREATION ACTIVITY NO HI
NECK INJURY/WATER SLIDE 07/31/95 CG
30204 LBI 001 SANDHU DEVINDER GRAND WAILEA RESORT (GL) 07/25/95 03/21/96
FALL-FLOOR/WALKWAY-HARD SURFACE NO HI
FELL IN BATHROOM 08/02/95 JG
30277 LPD 001 FULLER MARYANN GRAND WAILEA RESORT (GL) 07/09/95 09/26/95
MISSING PROPERTY - NOC NO HI
ITEMS TAKEN FROM LUGGAGE 08/10/95 JG
34884 LBI 001 BRILLON MARY GRAND WAILEA RESORT (GL) 01/30/95 OPEN
# CUTS/LACERATIONS/ABRASION YES HI
NOSE INJD/SLIDING GLASS DOOR 12/23/96 JG
36957 LBI 001 HEIKAHI AILEEN GRAND WAILEA RESORT (GL) 05/08/95 01/21/98
UNCLASSIFIED YES HI
EAR INJURY CAUSED FALL 0602NB1706 041069 09/17/97 CG
- --------------------------------------------------------------------------------------------------------------
Totals for policy year 08/01/94 - 07/31/95 Current month total:
Policy year total:
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
30040
0 0 0 198 198
30051
0 0 0 372 372
30061
0 0 0 115 115
30140
0 0 0 105 105
30171
0 0 7,500 1,433 8,933
30204
0 0 0 537 537
30277
0 0 500 255 755
34884 2,629 2,629
15,000 7,092 0 5,440 27,532
36957 15,000 13,203 216 28,419
0 0 0 2,013 2,013
- ----------------------------------------------------------------------
15,000 15,831 2,844 27,?
60,000 10,990 35,029 31,726 137,745
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves refelct current month's transactions.
"To date" reserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 3 3 60,000 10,990 0 15,337 86,327
Closed 28 30 0 0 35,029 16,388 51,417
--------------------------------------------------------------------------------
Total 31 33 60,000 10,990 35,029 31,726 137,744
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/[ILLE]
0161 GRAND WAILEA RESORT (GL) by CARL WARREN & CO. Page LR 101
- --------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Totals for ALL policy years Current month total:
Policy year total:
There were 0 new claims valued in the current month
- --------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15,000 15,831 2,844 27,987
60,000 10,990 174,444 134,282 379,716
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 3 3 60,000 10,990 0 15,337 86,327
Closed 72 76 0 0 174,444 118,945 293,389
-------------------------------------------------------------------------------
Total 75 79 60,000 10,990 174,444 134,282 379,716
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/[ILLE]
0162 GRAND WAILEA RESORT (AL) by CARL WARREN & CO. Page LR 102
- ---------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- ---------------------------------------------------------------------------------------------------------------------
Policy year 08/01/93 - 07/31/94 - SIR = $5,000 -
- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
24635 CGK 001 MORINELIO CARMEN GRAND WAILEA RESORT (AL) 10/14/93 06/24/94
DAMAGED/STOLEN VEHICLE NO HI
DMG. TO RENTED VHCL. BY VALET 10/15/93 CG
24967 CGK 001 COPE BILL GRAND WAILEA RESORT (AL) 11/24/93 09/14/94
HIT FIXED OBJECT NO HI
VALET DRVR.HIT PILAR W/CLM. VHC 12/01/93 JG
- ---------------------------------------------------------------------------------------------------------------------
Totals for policy year 08/01/93 - 07/31/94 Current month total:
Policy year total:
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------------------------------------------------------
Policy year 08/01/93 - 07/31/94 - SIR = $5,000 -
- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
24635 CGK 001 MORINELIO CARMEN 0 0 0 150 150
DAMAGED/STOLEN VEHICLE
DMG. TO RENTED VHCL. BY VALET
24967 CGK 001 COPE BILL 0 0 3,802 841 4,643
HIT FIXED OBJECT
VALET DRVR.HIT PILAR W/CLM. VHC
- ------------------------------------------------------------------------------------------------------------------------
Totals for policy year 08/01/93 - 07/31/94 0 0 3,802 991 4,793
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" rserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0 0
Closed 2 2 0 0 3,802 991 4,793
------------------------------------------------------------------------------
Total 2 2 0 0 3,802 991 4,793
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/[ILLE]
0162 GRAND WAILEA RESORT (AL) by CARL WARREN & CO. Page LR 102
- ---------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Occurrence # Date Reported Adjuster
- ---------------------------------------------------------------------------------------------------------------------
Policy year 08/01/94 - 07/31/95 - SIR = $5,000 -
- -----------------------------------------------
<S> <C> <C> <C> <C>
27944 APD 001 WHEELS R US GRAND WAILEA RESORT (AL) 08/01/94 01/25/95
AT FAULT ACCIDENT NO HI
INSD. VAN BACKED INTO CLMT.VHCL 11/15/94 CG
- ---------------------------------------------------------------------------------------------------------------------
Totals for policy year 08/01/94 - 07/31/95
Current month total:
Policy year total:
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------------------------------------------------------
Policy year 08/01/94 - 07/31/95 - SIR = $5,000 -
- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
27944 APD 001 WHEELS R US 0 0 4,464 484 4,948
AT FAULT ACCIDENT
INSD. VAN BACKED INTO CLMT.VHCL
- ------------------------------------------------------------------------------------------------------------------------
Totals for policy year 08/01/94 - 07/31/95 0 0 4,464 484 4,948
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" rserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0 0
Closed 1 1 0 0 4,464 484 4,948
-------------------------------------------------------------------------------
Total 1 1 0 0 4,464 484 4,948
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED HOTELS - by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0162 GRAND WAILEA RESORT (AL) by CARL WARREN & CO. Page LR 102
- --------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdictio
Description Occurrence # Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Totals for ALL policy years Current month total:
Policy year total:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ---------------------------------------------------------------------------------------------------------------------
0 0 8,266 1,475 9,741
</TABLE>
There were 0 new claims valued in the current month
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0 0
Closed 3 3 0 0 8,266 1,475 9,741
-------------------------------------------------------------------------------
Total 3 3 0 0 8,266 1,475 9,741
-------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT (AL) by CARL WARREN & CO. Page LR 102
- --------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- --------------------------------------------------------------------------------------------------------------------
Policy year 10/01/90 - 09/30/91 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
18646 LBI 001 REYES JOSE GRAND WAILEA RESORT 09/20/91 08/14/96
SLIP & FALL NO HI
RESTAURANT/SLIP & FALL 10/09/91 CG
18838 LBI 001 KLAPPERT SHERRIE GRAND WAILEA RESORT 09/02/91 10/29/93
# SLIP & FALL YES HI
SLIP & STUMBLE ON WET SURFACE 10/31/91 CG
18996 LBI 001 SPECTOR KIMO GRAND WAILEA RESORT 09/02/91 03/27/92
AUTOMATIC DOORS NO HI
HAND CAUGHT IN ELEVATOR DOOR 11/19/91 CG
19905 LBI 001 COLAIRINO PHILLIP A. GRAND WAILEA RESORT 09/20/91 01/10/94
MEDICAL ATTENTION NO HI
INJURED FINGERS ON TARZAN ROPE 03/09/92 CG
- --------------------------------------------------------------------------------------------------------------------
Totals for policy year 10/01/90 - 09/30/91 Current month total:
Policy year total:
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- --------------------------------------------------------------------------------------------------------------------
Policy year 10/01/90 - 09/30/01 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
18646 LBI 001 REYES JOSE
SLIP & FALL 0 0 0 2,338 2,338
RESTAURANT/SLIP & FALL
18838 LBI 001 KLAPPERT SHERRIE
# SLIP & FALL 0 0 2,556 11,362 13,918
SLIP & STUMBLE ON WET SURFACE
18996 LBI 001 SPECTOR KIMO
AUTOMATIC DOORS 0 0 310 680 990
HAND CAUGHT IN ELEVATOR DOOR
19905 LBI 001 COLAIRINO PHILLIP A.
MEDICAL ATTENTION 0 0 0 252 252
INJURED FINGERS ON TARZAN ROPE
- --------------------------------------------------------------------------------------------------------------------
0 0 2,866 14,633 17,499
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" reserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0 0
Closed 4 4 0 0 2,866 14,633 17,499
-------------------------------------------------------------------------------
Total 4 4 0 0 2,866 14,633 17,499
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page LR
- ------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ------------------------------------------------------------------------------------------------------------------------
Policy year 10/01/90 - 09/30/01 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
18647 LBI 001 KINNEE JOY GRAND WAILEA RESORT 10/02/91 04/12/94
# CONDITION OF PROPERTY NO HI
CHAIR FELL APART/FINGERS, BACK 10/09/91 CG
18882 LBI 001 ENGLERT CATHY GRAND WAILEA RESORT 10/14/91 12/31/92
FOREIGN OBJECT IN FOOD NO HI
ILLNESS FROM FOOD 10/17/91 CG
LBI 002 GREEN BOBBY GRAND WAILEA RESORT 10/14/91 12/31/92
FOREIGN OBJECT IN FOOD NO HI
ILLNESS FROM FOOD 10/17/91 CG
LBI 003 FITZGERALD TIM GRAND WAILEA RESORT 10/14/91 12/31/92
FOREIGN OBJECT IN FOOD NO HI
ILLNESS FROM FOOD 10/17/91 CG
LBI 004 STERNBERG LARRY GRAND WAILEA RESORT 10/14/91 12/31/92
FOREIGN OBJECT IN FOOD NO HI
ILLNESS FROM FOOD 10/17/91 CG
LBI 005 BAUM DR. GRAND WAILEA RESORT 10/14/91 12/18/92
FOREIGN OBJECT IN FOOD NO HI
ILLNESS FROM FOOD 10/17/91 CG (18882 total:)
18890 LBI 001 LA MONTE LOUIS P. GRAND WAILEA RESORT 10/12/91 11/05/93
# SWIMMING NO HI
INJURED ON SLIDE/WHIPLASH ETC. 11/07/91 CG
18933 LPD 001 BENSEN RICHARD GRAND WAILEA RESORT 10/24/91 03/13/92
DAMAGED/STOLEN VEHICLE NO HI
MOLDING DAMAGED ON VEHICLE 11/04/91 CG
18957 LPD 001 YANG CINDY GRAND WAILEA RESORT 11/06/91 04/22/92
DAMAGED/STOLEN VEHICLE NO HI
CRACKED WINDSHIELD & TURN SIG. 11/15/91 CG
19002 LBI 001 WINTERS RANDY GRAND WAILEA RESORT 11/18/91 08/29/96
# SWIMMING YES HI
CLMT INJURED ON POOL SLIDE 11/25/91 CG
19102 LBI 001 LAZOR JOE GRAND WAILEA RESORT 12/05/91 01/06/95
# SWIMMING YES HI
TOSSED BY WAVES QUADRAPLEGIC 12/06/91 CG
19285 LBI 001 MILLER STEPHEN GRAND WAILEA RESORT 11/08/91 10/14/94
# MEDICAL ATTENTION YES NY
SEVERE PERSONAL INJURIES 12/19/91 CG
<CAPTION>
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
Policy year 10/01/90 - 09/30/01 - SIR = $10,000 -
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
18647 LBI 001 KINNEE JOY
# CONDITION OF PROPERTY 0 0 8,002 3,788 11,790
CHAIR FELL APART/FINGERS, BACK
18882 LBI 001 ENGLERT CATHY
FOREIGN OBJECT IN FOOD 0 0 0 515 515
ILLNESS FROM FOOD
LBI 002 GREEN BOBBY
FOREIGN OBJECT IN FOOD 0 0 0 0 0
ILLNESS FROM FOOD
LBI 003 FITZGERALD TIM
FOREIGN OBJECT IN FOOD 0 0 0 0 0
ILLNESS FROM FOOD
LBI 004 STERNBERG LARRY
FOREIGN OBJECT IN FOOD 0 0 0 0 0
ILLNESS FROM FOOD
LBI 005 BAUM DR.
FOREIGN OBJECT IN FOOD 0 0 0 0 0
ILLNESS FROM FOOD 0 0 0 515 515
18890 LBI 001 LA MONTE LOUIS P.
# SWIMMING 0 0 13,000 4,649 17,649
INJURED ON SLIDE/WHIPLASH ETC.
18933 LPD 001 BENSEN RICHARD
DAMAGED/STOLEN VEHICLE 0 0 0 300 300
MOLDING DAMAGED ON VEHICLE
18957 LPD 001 YANG CINDY
DAMAGED/STOLEN VEHICLE 0 0 8,219 1,095 9,314
CRACKED WINDSHIELD & TURN SIG.
19002 LBI 001 WINTERS RANDY
# SWIMMING 0 0 87,500 69,915 157,415
CLMT INJURED ON POOL SLIDE
19102 LBI 001 LAZOR JOE
# SWIMMING 0 0 1,000,000 63,955 1,063,955
TOSSED BY WAVES QUADRAPLEGIC
19285 LBI 001 MILLER STEPHEN
# MEDICAL ATTENTION 0 0 0 84,389 84,389
SEVERE PERSONAL INJURIES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- ---------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ---------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
19309 LBI 001 RIAHI FRED GRAND WAILEA RESORT 12/22/91 03/16/92
MEDICAL ATTENTION NO HI
SON BIT BY MOSQUITOS 6-MEDICAL CLNC 01/02/92 CG
19396 LBI 001 GUY GENE GRAND WAILEA RESORT 01/03/92 01/10/94
EMPLOYEE RELATIONS NO HI
WINDOW WASHER FELL THROUGH AWNING 01/14/92 CG
19557 LBI 001 LOBINGER TOD C. GRAND WAILEA RESORT 11/02/91 11/19/92
SLIP & FALL NO HI
CLMT SLIPPED ON WATER-SPA 01/30/92 CG
19558 LBI 001 HARRINGTON BARBARA GRAND WAILEA RESORT 10/15/91 11/19/92
SLIP & FALL NO HI
SLIPPED WHILE LEAVING JACUZZI 01/28/92 CG
19586 LPD 001 SCIGLIANO MRS. BILL GRAND WAILEA RESORT 11/08/91 10/18/93
TRIP/FALL NO HI
FALL BAD LIGHTING/BEACH PATH 02/04/92 CG
19601 LBI 001 HERSKOWITZ BERNARD GRAND WAILEA RESORT 01/29/92 08/09/95
SWIMMING NO HI
KNOCKED DOWN BY WAVE 02/04/92 CG
19614 LPD 001 O'CONNOR JANE GRAND WAILEA RESORT 01/10/92 01/10/94
LOST PROPERTY NO HI
LOST DIAMOND RING ($8,500) 02/04/92 CG
19674 LPD 001 GIVENS DAVID GRAND WAILEA RESORT 01/23/92 11/13/92
LOST PROPERTY NO HI
STOLEN "PASSPORT" RADAR DETEC. 02/12/92 CG
19726 LBI 001 LARSON SCOTT GRAND WAILEA RESORT 02/11/92 06/25/92
MEDICAL ATTENTION NO HI
FALL - ELEVATOR JOLTED TO A STOP 02/19/92 CG
19727 LBI 001 TAGIMA YUTA GRAND WAILEA RESORT 02/06/92 09/17/92
MEDICAL ATTENTION NO HI
CLMT INJURED COMING DOWN SLIDE 02/21/92 CG
19950 LBI 001 ASIDON SHELLEY GRAND WAILEA RESORT 01/03/92 10/18/93
SLIP & FALL NO HI
SLIP & FALL POOL 03/12/92 CG
LPD 001 ASIDON SHELLEY GRAND WAILEA RESORT 01/03/92 10/18/93
DAMAGE/GUESTS PROPERTY NO HI
BROKEN CAMERA 03/12/92 CG (19958 total:)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
19309 LBI 001 RIAHI FRED
MEDICAL ATTENTION 0 0 0 573 573
SON BIT BY MOSQUITOS
19396 LBI 001 GUY GENE
EMPLOYEE RELATIONS 0 0 0 1,525 1,525
WINDOW WASHER FELL THROUGH AWNING
19557 LBI 001 LOBINGER TOD C.
SLIP & FALL 0 0 6,400 842 7,242
CLMT SLIPPED ON WATER-SPA
19558 LBI 001 HARRINGTON BARBARA
SLIP & FALL 0 0 0 703 703
SLIPPED WHILE LEAVING JACUZZI
19586 LPD 001 SCIGLIANO MRS. BILL
TRIP/FALL 0 0 187 755 942
FALL BAD LIGHTING/BEACH PATH
19601 LBI 001 HERSKOWITZ BERNARD
SWIMMING 0 0 0 2,680 2,680
KNOCKED DOWN BY WAVE
19614 LPD 001 O'CONNOR JANE
LOST PROPERTY 0 0 0 414 414
LOST DIAMOND RING ($8,500)
19674 LPD 001 GIVENS DAVID
LOST PROPERTY 0 0 0 230 230
STOLEN "PASSPORT" RADAR DETEC.
19726 LBI 001 LARSON SCOTT
MEDICAL ATTENTION 0 0 400 858 1,258
FALL - ELEVATOR JOLTED TO A STOP
19727 LBI 001 TAGIMA YUTA
MEDICAL ATTENTION 0 0 860 859 1,719
CLMT INJURED COMING DOWN SLIDE
19950 LBI 001 ASIDON SHELLEY
SLIP & FALL 0 0 0 522 522
SLIP & FALL POOL
LPD 001 ASIDON SHELLEY
DAMAGE/GUESTS PROPERTY 0 0 0 0 0
BROKEN CAMERA 0 0 0 522 522
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- ----------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ----------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
19956 LPD 001 LUSSIER GREGORY GRAND WAILEA RESORT 11/01/91 01/10/94
DAMAGED/STOLEN VEHICLE NO HI
ITEMS REMOVED - VEH. EXTERIOR 03/10/92 CG
20056 LPD 001 DAVIDGE GREG GRAND WAILEA RESORT 03/14/92 11/19/92
DAMAGED/STOLEN VEHICLE NO HI
BROKEN SURFBOARD RACK 03/24/92 CG
20141 LBI 001 ASHOURI NANCY GRAND WAILEA RESORT 02/16/92 02/10/93
SLIP & FALL NO HI
SLIP & FALL - POOL AREA 04/01/92 CG
20175 LBI 001 KOUBENEC RANJITA GRAND WAILEA RESORT 03/26/92 11/21/95
# MEDICAL ATTENTION YES HI
FAINTED GETTING OUT OF SPA 04/06/92 CG
20404 LBI 001 MARTIN ROBERT GRAND WAILEA RESORT 01/21/92 12/08/93
SPORTING ACCIDENT NO HI
INJURED SHOULDER - WATER SLIDE 05/06/92 CG
20486 LBI 001 BURNIS WALTER J. GRAND WAILEA RESORT 05/04/92 08/26/93
SLIP & FALL NO HI
SLIPPED & FELL IN SPA 05/13/92 CG
20559 LBI 001 KREISS ROBERT MR. & MRS. GRAND WAILEA RESORT 03/29/92 10/19/93
ARREST YES HI
ARRESTED FOR NOT PAYING BILL 05/26/92 CG
20666 APD 001 HERTZ RENT-A-CAR (FRANCIS) GRAND WAILEA RESORT 01/13/92 01/10/94
DAMAGED/STOLEN VEHICLE NO HI
CAR DAMAGED WHILE VALET PARKED 06/08/92 CG
20755 LBI 001 MOXON MARY ANN GRAND WAILEA RESORT 04/27/92 05/20/93
SLIP & FALL NO HI
SLIP & FALL 06/11/92 CG
20805 LBI 001 FINCH PAT GRAND WAILEA RESORT 06/18/92 04/14/97
# MEDICAL ATTENTION YES HI
CLMT. DIED WHILE IN SPA 06/22/92 CG
21010 LBI 001 TRAVER WILLIAM E. GRAND WAILEA RESORT 04/16/92 12/08/93
MEDICAL ATTENTION NO HI
POSSIBLE LEGIONNAIRES DISEASE 07/15/92 CG
[ILLE] LBI 001 JOHNSEN MATTHEW GRAND WAILEA RESORT 07/16/92 8/23/95
MEDICAL ATTENTION NO HI
BROKEN ANKLE ON WATER SLIDE 08/03/92 SM
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description To Date: Loss Expense Loss Expense
- ----------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C>
19956 LPD 001 LUSSIER GREGORY
DAMAGED/STOLEN VEHICLE 0 0 0 302 302
ITEMS REMOVED - VEH. EXTERIOR
20056 LPD 001 DAVIDGE GREG
DAMAGED/STOLEN VEHICLE 0 0 887 478 1,365
BROKEN SURFBOARD RACK
20141 LBI 001 ASHOURI NANCY
SLIP & FALL 0 0 0 874 874
SLIP & FALL - POOL AREA
20175 IBI 001 KOUBENEC RANJITA
# MEDICAL ATTENTION 0 0 20,000 21,479 41,479
FAINTED GETTING OUT OF SPA
20404 LBI 001 MARTIN ROBERT
SPORTING ACCIDENT 0 0 694 1,506 2,200
INJURED SHOULDER - WATER SLIDE
20486 LBI 001 BURNIS WALTER J.
SLIP & FALL 0 0 46 1,022 1,068
SLIPPED & FELL IN SPA
20559 LBI 001 KREISS ROBERT MR. & MRS.
ARREST 0 0 0 7,473 7,473
ARRESTED FOR NOT PAYING BILL
20666 APD 001 HERTZ RENT-A-CAR (FRANCIS)
DAMAGED/STOLEN VEHICLE 0 0 0 [ILLE] [ILLE]
CAR DAMAGED WHILE VALET PARKED
20755 LBI 001 MOXON MARY ANN
SLIP & FALL 0 0 0 [ILLE] [ILLE]
SLIP & FALL
20805 LBI 001 FINCH PAT
# MEDICAL ATTENTION 0 0 677,500 [ILLE] [ILLE]
CLMT. DIED WHILE IN SPA
21010 LBI 001 TRAVER WILLIAM E.
MEDICAL ATTENTION 0 0 0 [ILLE] [ILLE]
POSSIBLE LEGIONNAIRES DISEASE
[ILLE] LBI 001 JOHNSEN MATTHEW
MEDICAL ATTENTION 0 0 0 [ILLE] [ILLE]
BROKEN ANKLE ON WATER SLIDE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- ----------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ----------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
21229 LBI 001 EXLINE SANDRA GRAND WAILEA RESORT 05/25/92 08/26/93
TRIP/FALL NO HI
TRIP AND FALL 08/01/92 CG
21230 APD 001 AVIS RENT-A CAR GRAND WAILEA RESORT 02/23/92 04/16/93
MEDICAL ATTENTION NO HI
HIT AND RUN 08/04/92 CG
21314 LBI 001 DYCHTWALD KEN GRAND WAILEA RESORT 08/11/92 01/18/94
MEDICAL ATTENTION NO HI
TOE CAUGHT ON ELEVATOR DOOR 08/13/92 SM
21315 LBI 001 GUCCIARDO CHARLES GRAND WAILEA RESORT 08/10/92 01/11/94
MEDICAL ATTENTION NO HI
HIT HEAD ON POOL SLIDE 08/13/92 SM
21328 LBI 001 BYERS ROBERT GRAND WAILEA RESORT 08/10/92 03/29/93
MEDICAL ATTENTION NO HI
INJURED TOE IN POOL 08/17/92 SM
21346 LBI 001 THORPE TOM GRAND WAILEA RESORT 07/05/92 07/12/93
SLIP & FALL NO HI
FELL OFF OF SIDEWALK INTO POND LOC. #9 08/18/92 CG
21365 ABI 001 VICTARELLI NAOKO GRAND WAILEA RESORT 08/15/92 10/29/93
BROADSIDE NO HI
AUTO ACCIDENT LOC. #25 08/20/92 SM
APD 001 VICTARELLI NAOKO GRAND WAILEA RESORT 08/15/92 11/13/92
BROADSIDE NO HI
AUTO ACCIDENT LOC. #25 08/20/92 SM (21365 total:)
21388 LBI 001 LEEVER SID GRAND WAILEA RESORT 08/20/92 02/12/96
# MEDICAL ATTENTION YES HI
TIP OF FINGER CUT OFF ON CHAIR LOCATION #24 08/24/92 JG
21438 LBI 001 GILBERT JOHN C. GRAND WAILEA RESORT 08/10/92 01/18/93
MEDICAL ATTENTION NO HI
BROKE RIB ON WATER SLIDE LOCATION #23 08/28/92 CG
21506 LPD 001 TASHOMBE FULTON GRAND WAILEA RESORT 08/22/92 02/12/93
LOST PROPERTY NO HI
MISSING ELECTRIC KEYBOARD LOCATION #38 09/03/92 SM
[ILLE] ABI 001 HOLT CURTIS DONOVAN GRAND WAILEA RESORT 04/22/92 04/16/93
BACKING NO HI
AUTO ACCIDENT KEOHOKAPU PAUL #34 09/08/92 SM
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
21229
0 0 1,099 970 2,069
21230
0 0 0 175 175
21314
0 0 409 1,194 1,603
21315
0 0 0 615 615
21328
0 0 0 0 0
21346
0 0 0 1,526 1,526
21365
0 0 1,766 758 2,524
0 0 0 0 0
0 0 1,766 758 2,524
21388
0 0 7,413 6,603 14,016
21438
0 0 1,750 400 2,150
21506
0 0 0 194 194
[ILLE]
0 0 0 149 149
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- -------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- -------------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
APD 001 HOLT CURTIS DONOVAN GRAND WAILEA RESORT 04/22/92 10/29/93
BACKING NO HI
AUTO ACCIDENT KEOHOKAPU PAUL #34 09/08/92 SM (21521 total:)
21705 APD 001 TANAKA JOHN GRAND WAILEA RESORT 09/18/92 01/18/93
INTERSECTION NO HI
VEHICLE COLLISION 09/30/92 CG
21793 APD 001 VOSS LYNDA GRACE GRAND WAILEA RESORT 07/15/92 12/08/93
TRIP/FALL NO HI
FELL ON STAIRS 10/12/92 CG
21868 LBI 001 CAHN SAMMY MRS. GRAND WAILEA RESORT 08/05/92 12/08/93
MEDICAL ATTENTION NO HI
INJURED KNEE ON BEACH 10/20/92 CG
22295 LBI 001 JOHNSEN KENT GRAND WAILEA RESORT 07/16/92 10/31/95
MEDICAL ATTENTION NO HI
BROKEN LEG 12/17/92 SM
22486 LPD 001 MEDIA SYSTEMS, INC. GRAND WAILEA RESORT 08/22/92 04/16/93
LOST PROPERTY NO HI
MISSING CAMERA EQUIPMENT LOCATION #34 01/13/93 CG
22811 LBI 001 CURLL BRIAN GRAND WAILEA RESORT 05/15/92 04/10/95
# ARREST YES HI
FALSE ARREST 12/HUMUHUMU 02/25/93 CG
LBI 002 CHRISTENSON EVELYN GRAND WAILEA RESORT 05/15/92 09/30/94
# ARREST YES HI
FALSE ARREST 12/HUMUHUMU 03/03/94 CG
LBI 003 DEPONTE CAMILLE GRAND WAILEA RESORT 05/15/92 08/31/95
# ARREST YES HI
FALSE ARREST 12/HUMUHUMU 12/14/94 CG
LPI 004 KATSOUM HASSAM GRAND WAILEA RESORT 05/15/92 08/31/95
# ARREST YES HI
FALSE ARREST 12/HUMUHUMU 02/25/93 CG
LPI 005 MITSUTA COLEEN GRAND WAILEA RESORT 05/15/92 08/31/95
# ARREST YES HI
FALSE ARREST 12/HUMUHUMU 02/25/93 CG
LPI 006 VAN [ILLE] [ILLE] LISA GRAND WAILEA RESORT 05/15/92 08/31/95
# ARREST YES HI
FALSE ARREST 12/HUMUHUMU 02/25/93 CG (22811 total:)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 0 0 0 0
0 0 0 149 149
21705
0 0 1,475 373 1,848
21793
0 0 0 271 271
21868
0 0 0 528 528
22295
0 0 0 0 0
22486
0 0 0 110 110
22811
0 0 25,000 24,073 49,073
0 0 7,500 0 7,500
0 0 5,000 0 5,000
0 0 0 0 0
0 0 0 0 0
0 0 0 [ILLE] [ILLE]
0 0 37,500 [ILLE] [ILLE]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- -------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- -------------------------------------------------------------------------------------------------------------------------
Policy year 10/01/91 - 09/30/92 - SIR = $10,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
23884 LBI 001 FRANCIS ZORAIDA GRAND WAILEA RESORT 01/13/92 07/22/93
UNCLASSIFIED NO HI
UNKNOWN "5" 06/21/93
25820 LBI 001 DOWNIE TOM GRAND WAILEA RESORT 09/09/92 11/18/97
# RECREATION ACTIVITIES YES HI
INJD.NECK/CASCADE FALLS SPA "24" 03/14/94 CG
26202 LBI 001 RUSSELL JUDY GRAND WAILEA RESORT 04/08/92 01/23/96
# SLIP & FALL YES HI
SLIPPED ON BLK.PLASTIC LINER "3" 04/26/94 CG
- ------------------------------------------------------------------------------------------------------------------
Totals for policy year 10/01/91 - 09/30/92
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
23884
0 0 0 58 58
25820
0 0 0 76,742 76,742
26202
0 0 0 16,174 16,174
- ------------------------------------------------------------------------
Current month total:
Policy year total: 0 0 1,875,106 557,252 2,432,358
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" reserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES NET PAYMENTS TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0 0
Closed 51 63 0 0 1,875,106 557,252 2,432,358
------------------------------------------------------------------------------
Total 51 63 0 0 1,875,106 557,252 2,432,358
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS-by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- -----------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- -----------------------------------------------------------------------------------------------------------------------
Policy year 10/01/92 - 09/30/93 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
22130 LPD 001 EDENS JENNIFER GRAND WAILEA RESORT 10/17/92 01/11/94
BATTERY/ASSAULT NO HI
SEXUAL ASSAULT 11/25/92 SM
22400 LBI 001 SMITH JACK F. GRAND WAILEA RESORT 11/30/92 08/26/93
FOOD/POISONING NO HI
ILLNESS FROM FOOD 01/05/93 CG
22508 LBI 001 MARSHALL MARTIN GRAND WAILEA RESORT 01/06/93 04/16/93
SLIP & FALL NO HI
SLIP & FALL ON WET FLOOR 01/15/93 SM
22537 LBI 001 FOLEY VALERIE ANNE GRAND WAILEA RESORT 01/12/93 08/09/95
SLIP & FALL NO HI
CLMT. HIT HEAD ON VIDEO SCREEN 01/21/93 SM
22538 APD 001 GORDON SHEP GRAND WAILEA RESORT 01/14/93 04/16/93
DAMAGED/STOLEN VEHICLE NO HI
VEHICLE DAMAGED BY VALET 01/21/93 SM
22597 LPD 001 TAKAYAMA MASAHISA GRAND WAILEA RESORT 12/24/92 01/11/94
LOST PROPERTY NO HI
MISSING ROLEX 01/28/93 SM
22637 LPD 001 MICHELL PRESTON GRAND WAILEA RESORT 01/22/93 08/02/93
DAMAGED/STOLEN VEHICLE NO HI
DAMAGED VEHICLE WINDSHIELD 01/29/93 DN
22719 LBI 001 ROTTER MARILYN GRAND WAILEA RESORT 01/21/93 12/08/93
SLIP & FALL NO HI
SLIP & FALL IN BATHROOM SITE #34 02/10/93 CG
22812 LBI 001 RUSH EDDIE GRAND WAILEA RESORT 01/06/93 08/26/93
SLIP & FALL NO HI
SLIP & FALL @ POOL/INJRD.FOOT 24/POOL 02/25/93 DN
23058 LBI 001 STEPHAN TERRI GRAND WAILEA RESORT 03/13/93 12/08/93
MEDICAL ATTENTION NO HI
HIT HEAD/RAPID SLD./CONCUSSION "LOC 23" 03/22/93 CG
23104 LBI 001 WEAVER GEORGIA GRAND WAILEA RESORT 02/28/93 02/07/94
TRIP/FALL NO HI
TRIP & FALL ON CRACK ON STAIRS "24" 03/30/93 SM
23120 LBI 001 JOSSEN ROBERT GRAND WAILEA RESORT 02/15/93 01/11/94
MEDICAL ATTENTION NO HI
CLMT. FRACTURED TOE/HOOK ON BED "34" 04/09/93 SM
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
22130
0 0 0 2,587 2,587
22400
0 0 750 424 1,174
22508
0 0 161 321 472
22537
0 0 0 2,520 2,520
22538
0 0 255 160 415
22597
0 0 0 237 237
22637
0 0 0 159 159
22719
0 0 167 386 553
22812
0 0 0 842 842
23058
0 0 510 419 929
23104
0 0 0 1,030 1,030
23120
0 0 0 710 710
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS-by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- ----------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ----------------------------------------------------------------------------------------------------------------------
Policy year 10/01/92 - 09/30/93 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
23187 LPD 001 MARTINEZ GEORGE GRAND WAILEA RESORT 04/06/93 08/02/93
LOST PROPERTY NO HI
MISSING JEWELRY FROM ROOM "29" 04/08/93 DN
23539 LBI 001 THAYER TERRY GRAND WAILEA RESORT 02/11/93 02/22/94
SLIP & FALL NO HI
SLIP & FALL ON SLIDE "24" 05/20/93 CG
23602 LPD 001 WARD-LESSE PAMELA GRAND WAILEA RESORT 05/24/93 08/26/93
LOST PROPERTY NO HI
DIAMOND TENNIS BRACELET MISSING #16 05/27/93 GL
23648 LBI 001 BEYER KAREN GRAND WAILEA RESORT 05/21/93 12/08/93
MEDICAL ATTENTION NO HI
BROKE TOE IN PARKING AREA "25" 05/30/93 CG
23670 LBI 001 RIEDLE RICHARD GRAND WAILEA RESORT 05/31/93 12/09/93
TRIP/FALL NO HI
TRIPPED ON EDGE OF SCREEN DOOR "19" 06/03/93 CG
23688 LBI 001 DAVOUDI ELYNN GRAND WAILEA RESORT 06/06/93 02/13/95
MEDICAL ATTENTION NO HI
CLMT. INJURED ON WATER SLIDE "24" 06/06/93 SM
23732 LBI 001 BINGHAM SHERRI GRAND WAILEA RESORT 06/13/93 08/18/95
# SLIP & FALL YES HI
SLIP & FALL ON MAIN STAIRCASE "17" 06/14/93 CG
23738 LPD 001 OSHIMA YOSHIKO GRAND WAILEA RESORT 05/11/93 12/08/93
LOST PROPERTY NO HI
MISSING NECKLACE & PENDANT/RM. "28" 06/14/93 CG
23774 LBI 001 VELGOT CHRISTINE GRAND WAILEA RESORT 06/10/93 06/10/94
SWIMMING NO HI
INJ.BACK, NECK, SHLDR/WIKI SLIDE "24" 06/21/93 SM
23925 LBI 001 DEMUNCK MARCIA GRAND WAILEA RESORT 04/14/93 12/09/93
FOOD/POISONING NO HI
ILLNESS FROM FOOD/TRIP & FALL "19"RM.8071 06/06/93 CG
23957 LBI 001 VIRUS MARLENE GRAND WAILEA RESORT 10/28/92 12/20/93
SLIP & FALL NO HI
SLIP & FALL, INJURY TO KNEE "13" 07/16/93 JG
[ILLE] [ILLE] KRAMMER MR. [ILLE] GRAND WAILEA RESORT 07/18/93 11/11/93
SPORTING ACCIDENT NO HI
[ILLE] "23" 07/18/93 JG
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
23187
0 0 0 125 125
23539
0 0 302 346 648
23602
0 0 0 155 155
23648
0 0 0 656 656
23670
0 0 0 641 641
23688
0 0 267 1,420 1,687
23732
0 0 50,000 50,626 100,626
23738
0 0 0 225 225
23774
0 0 0 136 136
23925
0 0 0 [ILLE] [ILLE]
23957
0 0 414 [ILLE] [ILLE]
[ILLE]
0 0 0 137 137
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page 18
- -----------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- -----------------------------------------------------------------------------------------------------------------------
Policy year 10/01/92 - 09/30/93 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
24072 LBI 001 DILLINGHAM ELSIE GRAND WAILEA RESORT 07/27/93 12/20/93
FALLING OBJECT NO HI
COFFEE SPILLED ON CLAIMANT 07/29/93 JG
LPD 001 DILLINGHAM ELSIE GRAND WAILEA RESORT 07/27/93 09/30/94
FALLING OBJECT NO HI
COFFEE SPILLED ON CLAIMANT 07/29/93 JG (24072 total:)
24074 LBI 001 CHIN PETER GRAND WAILEA RESORT 07/11/93 03/28/95
MEDICAL ATTENTION NO HI
CLMT. INJD. IN SPA "40" 07/28/93 JG
24091 LBI 001 ORTIZ SANDRA GRAND WAILEA RESORT 03/19/93 06/20/94
RECREATION ACTIVITIES NO HI
BROKE ANGLE ON PORTABLE STAGE "38" 08/03/93 JG
24441 LBI 001 BELKMAN HEATHER GRAND WAILEA RESORT 07/29/93 01/19/94
SPORTING ACCIDENT NO HI
CLMT.BRK.TOOTH ON WATER SLIDE "23" 09/17/93 CG
25256 LBI 001 GILKEY DAVID GRAND WAILEA RESORT 07/23/93 11/07/96
# SPORTING ACCIDENT NO HI
HIT LEFT HIP/DOWN WATER SLIDE "23" 01/10/94 CG
31273 LBI 001 ENZWEILER GRAND WAILEA RESORT 02/01/93 OPEN
EMPLOYEE RELATIONS YES HI
WRONGFULL TERMINATION 11/13/93 CG
GRENIER GRAND WAILEA RESORT 02/01/93 OPEN
EMPLOYEE RELATIONS YES HI
WRONGFULL TERMINATION 11/13/93 CG (31273 total:)
- -----------------------------------------------------------------------------------------------------------------------
Totals for policy year 10/01/92 - 09/30/93 Current month total:
Policy year total:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
File No NET RESERVES + NET PAYMENTS = TOTAL
Current: Loss Expense Loss Expense INCURRED
To Date: Loss Expense Loss Expense
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
24072
0 0 460 318 778
0 0 0 0 0
0 0 460 318 778
24074
0 0 5,000 2,385 7,385
24091 0 0 0 527 527
24441
0 0 0 212 212
25256
0 0 0 31,725 31,725
31273
1,500 3 0 974 2,477
1,500 0 0 0 1,500
3,000 3 0 974 3,977
- -------------------------------------------------------------------------------
3,000 3 58,286 101,981 163,270
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" reserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES + NET PAYMENTS = TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 1 2 3,000 3 0 974 3,977
Closed 29 30 0 0 58,286 101,008 159,294
-------------------------------------------------------------------------------
Total 30 32 3,000 3 58,286 101,981 163,271
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page LR[ILLE]
- ---------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ---------------------------------------------------------------------------------------------------------------------------
Policy year 10/01/93 - 09/30/94 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
30613 OGK 001 ALAMO RENT A CAR GRAND WAILEA RESORT 06/22/94 04/11/96
DAMAGED/STOLEN VEHICLE NO HI
ALLGD.VHCL.DMGD. IN VALET PRKG. 09/13/95 CG
- ---------------------------------------------------------------------------------------------------------------------------
Totals for policy year 10/01/93 - 9/30/94 Current month total:
Policy year total:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description to Date: Loss Expense Loss Expense
- ---------------------------------------------------------------------------------------------------------------------------
Policy year 10/01/93 - 09/30/94 - SIR = $25,000 -
- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30613 OGK 001 ALAMO RENT A CAR 0 0 0 220 220
DAMAGED/STOLEN VEHICLE
ALLGD.VHCL.DMGD. IN VALET PRKG.
- ----------------------------------------------------------------------------------------------------------------------------
Totals for policy year 10/01/93 - 9/30/94
0 0 0 220 220
</TABLE>
(*) new claim
There were 0 new claims valued in the current month
(#) SIR exceeded
Note: Shaded areas are memo occurrence totals
"Current" reserves reflect current month's transactions.
"To date" reserves reflect outstanding reserves at valuation date.
"To date" payments include current month's payments.
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES + NET PAYMENTS = TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 0 0 0 0 0 0 0
Closed 1 1 0 0 0 220 220
------------------------------------------------------------------------------
Total 1 1 0 0 0 220 220
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT HOTELS by policy year LOCATION REGISTER AT FULL VALUE - JANUARY 1998 Valuation date: 01/31/9[ILLE]
0042 GRAND WAILEA RESORT by CARL WARREN & CO. Page LR[ILLE]
- ---------------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant Location Date of Loss Closed Date
Cause Litigation Jurisdiction
Description Driver Date Reported Adjuster
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Totals for ALL policy years Current month total:
Policy year total:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
File No Cov Suf Claimant NET RESERVES + NET PAYMENTS = TOTAL
Cause Current: Loss Expense Loss Expense INCURRED
Description to Date: Loss Expense Loss Expense
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Totals for ALL policy years
3,000 3 1,936,258 674,086 2,613,347
</TABLE>
There were 0 new claims valued in the current month
<TABLE>
<CAPTION>
STATUS RECAP: Number of Number of NET RESERVES + NET PAYMENTS = TOTAL
Occurrences Claims Loss Expense Loss Expense INCURRED
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Open 1 2 3,000 3 0 974 0
Closed 85 98 0 0 1,936,258 673,113 2,609,371
------------------------------------------------------------------------------
Total 86 100 3,000 3 1,936,258 674,086 2,613,347
</TABLE>
<PAGE>
[LOGO]
[LETTERHEAD]
Date: May 12, 1998
To: Mr. Hideki Hayashi
From: Hideo Tanaka
Re: Litigation
Per you request, the following is the list of current ongoing legal issues
that I am aware of at this time. These do not include the numerous cases
involving general liability nor ongoing employment related issues.
GWC - Alphatel
Issue regarding return of equipment sent for repairs under a maintenance
agreement.
GWC - Sandwich Isle's Espresso
Issue regarding return of funds paid to Sandwich Isle's Espresso in error.
Both is these cases are represented by MMMM. In addition to this, Greg's
office contacts Rodgers & Greenfeld out of LA for various issue's regarding
group contracts and any problems that may arise pertaining to groups and
sales contracts. I am not aware of any ongoing litigation at this time.
EXHIBIT 3
<PAGE>
SCHEDULE 3
SCHEDULE OF ARTWORK
7
<PAGE>
Rental Art List Location: Grand Wailea Resort
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Name of the Art Artist Location
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
1 Sun Zhou Ling Public area
2 Moon Zhou Ling Public area
3 Water Zhou Ling Public area
4 Fire Zhou Ling Public area
5 Festival Zhou Ling Public area
6 Untitled artwork Will David Meeting Corridor
7 Untitled artwork Jud Fine Meeting room
8 Tropical birds Hunt Slomen Corridor
9 Black & White Birds Hunt Slomen Corridor
10 Finches Hunt Slomen Corridor
11 Maui Cliff Wever Jennifer Markes Napua Lobby
12 Untitled artwork Hunsaker Entry
13 Untitled artwork Hunsaker Prefunction Console
14 Untitled artwork Hunsaker Prefunction Console
15 Untitled artwork Hunsaker Console
16 Mara Series Barbara Weldon Napua Tower
17 Untitled artwork Hunt Slomen Napua Tower
18 Untitled artwork Hunt Slomen Napua Tower
19 Mt. Nymph Zhou Ling Owners office
20 Tropical night Zhou Ling Owners office
21 Girl in violet Zhou Ling Owners office
22 Girl in rose Zhou Ling Owners office
23 Spring Zhou Ling Owners office
24 Black Panther Zhou Ling Owners office
25 Goddess of the roses Zhou Ling Owners office
26 Reading Figure Fernando Botero Lobby
27 Working model for the broadgate Venus Fernando Botero Lobby
28 Woman Smoking a cigarette Fernando Botero Lobby
29 The Lovers Fernando Botero Lobby
30 Insomnia Fernando Botero Lobby
31 Woman with mirror Fernando Botero Lobby
32 Mother and child Fernando Botero Lobby
33 Man with Cane Fernando Botero Lobby
34 La France Fernando Botero Lobby
35 La Branche rockefeller Fernand Leger Retail arcade
36 Les Acrobates Fernand Leger Retail arcade
37 La Cheval Fernand Leger Retail arcade
38 Le Pigeon Fernand Leger Retail arcade
39 Les Femmes au perroquet Fernand Leger Retail arcade
40 La tete a deux mains Fernand Leger Retail arcade
41 Nature Morte Fernand Leger Retail arcade
42 Composition Fernand Leger Retail arcade
43 Composition abstraits Fernand Leger Retail arcade
44 Les beigneuses Fernand Leger Retail arcade
45 La Branche Fernand Leger Retail arcade
46 Le Grand Coq Fernand Leger Retail arcade
47 Le Visage Fernand Leger Retail arcade
48 Fragment ou la Femme aux feuilles Fernand Leger Retail arcade
49 The children's garden Fernand Leger Retail arcade
50 La Fleur qui marche Fernand Leger Retail arcade
</TABLE>
<PAGE>
Rental Art List Location: Grand Wailea Resort
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Name of the Art Artist Location
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
51 Composition aux fruits Fernand Leger Retail arcade
52 Snobisme dedaigneux Sophia Vari Prefunction Haleakala
53 Various titled original paintings (24 pcs) Zhou Ling Various suites
54 Bird Talk Zhou Ling Prefunction Haleakala
55 Color my world Zhou Ling Napua Tower
56 Goddess of roses Zhou Ling Napua Tower
57 Before the storm Jennifer Markes Napua Tower
58 Ici oui Jennifer Markes Napua Tower
59 TI Leaf Dancer Jan Fisher Napua Tower
</TABLE>
<PAGE>
FIRST AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS (this "AMENDMENT") is made as of November 12, 1998, between
INTERNATIONAL HOTEL ACQUISITIONS, LLC, a Delaware limited liability company
("SELLER") and KSL RECREATION CORPORATION, a Delaware corporation ("BUYER").
A. Seller and Buyer have entered into that certain Agreement for Purchase
and Sale and Joint Escrow Instructions dated as of November 5, 1998 (the
"AGREEMENT").
B. Seller and Buyer desire to amend the Agreement as set forth in this
Amendment. All initially capitalized terms herein without definition shall have
the definition ascribed to such terms in the Agreement. All references to
"Sections" are to sections of the Agreement.
IN CONSIDERATION OF the foregoing Recitals and the mutual covenants
and conditions contained herein, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller do hereby agree and covenant with each other as
follows:
1. PERSONAL PROPERTY. The vehicles owned by Seller and more particularly
identified on EXHIBIT A attached hereto (the "VEHICLES") are included within the
definition of "Personal Property". On or before the Closing Date, Seller shall
deliver to the Escrow Agent duly executed certificates of title to the Vehicles,
which certificates shall be delivered to Buyer in accordance with SECTION
11.7.3.
2. SCHEDULE 1. The SCHEDULE 1 attached to the Agreement is replaced in its
entirety with the SCHEDULE 1 attached to this Amendment. The first sentence of
Section 7.11 is amended to change the reference to the "Approval Date" to
November 18, 1998.
3. ARCHAEOLOGICAL REPORT. On or prior to the Closing Date: (i) Seller shall
use its best efforts to cause Paul Rosendahl (the "ARCHAEOLOGIST") to complete
the final Archaeological Report with respect to the Property and to submit such
report to the Hawaii Department of Land and Natural Resources Historic
Preservation Division ("DNLR") in order to satisfy Condition No. 13 in the SMA
Permit and (ii) Seller shall cause any outstanding amounts owing to the
Archaeologist for issuance of the final Archaeological Report to be paid in
full. Seller and Purchaser acknowledge that submission of the final
Archaeological Report is not a Buyer's Condition Precedent to Closing. Seller
shall indemnify, defend and hold the Buyer Parties harmless from all losses,
damages, costs and expenses including, without limitation, reasonable attorneys'
fees, actually incurred or arising out of or related to any failure to satisfy
Condition No. 13 of the SMA Permit and any failure to pay any amounts owed to
the Archaeologist for issuance of the final Archaeological Report, which
indemnity will expire on the earlier of (i) the date that the a final
Archaeological Report is approved by the DNLR and the Archaeologist is
1
<PAGE>
paid for issuance of the final Archaeological Report and (ii) the date that is
12 months after the Closing Date.
4. PROJECT NAMES.
4.1 SECTION 5.7 is hereby amended and restated in its entirety as follows:
"Prior to the Closing Date, Seller shall (i) cause Grand Wailea Resort
Hotel & Spa, Inc., Grand Wailea Weddings, Inc., Grand Wailea Resort, Inc.,
TSA Grand Hotel Wailea, Inc. and GWC to file amendments to their respective
articles of incorporation or organization, as applicable, to change their
names to omit the phrase "Grand Wailea" from each such name so that
registration of the name "Grand Wailea Resort Hotel & Spa" may occur, and
(ii) cause GWC and its Affiliates to execute such assignments, consents and
other instruments as may be necessary to allow Seller to register all other
Project Names and the name "Spa Grande"."
4.2 A new SECTION 9.1.9 is added to the Agreement as follows:
"9.1.9. NAME CHANGES. Grand Wailea Resort Hotel & Spa, Inc., Grand Wailea
Weddings, Inc., Grand Wailea Resort, Inc., TSA Grand Hotel Wailea, Inc. and
GWC have filed amendments to their respective articles of incorporation or
organization, as applicable, to change their names to omit the phrase
"Grand Wailea" from each such name."
5. EMPLOYEE NOTICE. The form of Employee Notice attached to the Agreement as
EXHIBIT I is replaced in its entirety with the Employee Notice attached hereto
as EXHIBIT B.
6. ESTOPPEL CERTIFICATES. The first sentence of SECTION 9.1.5 is hereby
amended and restated in its entirety as follows:
"Not later than five (5) Business Days prior to the Closing Date, Buyer
shall have received and reasonably approved executed estoppel certificates
substantially in the form of EXHIBIT J attached hereto from each of the
Tenants (provided, however, Buyer will have no right to disapprove any
tenant estoppel certificate solely because of matters disclosed in writing
by Seller to Buyer prior to November 12, 1998)."
7. LOT 462.
7.1 SECTION 7.9 is hereby amended and restated in its entirety as follows:
"Prior to the Closing Date, Seller shall obtain a written license agreement
(the "LOT 462 LICENSE AGREEMENT") from TSA International, Limited, a Hawaii
corporation ("TSA"), in form and substance reasonably acceptable to Buyer,
to allow the owner of the Hotel to use Lot 462 for group functions in
connection with group Booking agreements entered into prior to the date
hereof, which group Booking agreements specifically require the use
2
<PAGE>
of the area known as "Lai Honua". From and after November 12, 1998, Seller
shall not accept any additional group Bookings for the area known as "Lai
Honua". "
7.2 A new SECTION 9.1.10 is added to the Agreement as follows:
"9.1.10. LOT 462 LICENSE. Buyer shall have received the Lot 462 License
Agreement, in form and substance reasonably acceptable to Buyer."
8. SMA PERMIT. Prior to the Closing Date, Seller shall deliver to the County
of Maui Planning Department a letter substantially in the form of EXHIBIT C
attached hereto, notifying the County of Maui Planning Department that ownership
of the Property was transferred to Seller. Seller shall provide (and shall use
its best efforts to cause GWC to provide) any other letters or information
reasonably requested by Buyer with respect to the transfer and assignment of the
SMA Permit to Buyer upon Closing (and this covenant will survive the Closing for
a period of 12 months). Seller and Buyer acknowledge that the consent of the
County of Maui Planning Department to the transfer of the SMA Permit to Buyer
upon Closing is not a Buyer's Condition Precedent to Closing.
9. ASSUMED LIABILITIES. Notwithstanding anything to the contrary contained in
the Agreement, (i) Buyer's assumption of any liabilities and obligations in
connection with its assumption of the First Mortgage Loan for the benefit of
Lender shall not, as between Seller and Buyer, be deemed Buyer's assumption of
any liabilities and obligations pursuant to the Agreement (except to the extent
otherwise specifically assumed by Buyer pursuant to the Agreement), including,
without limitation, for purpose of applying the indemnification provisions set
forth in SECTION 13.21 and (ii) any statements or covenants made by Lender in
connection with Buyer's assumption of the First Mortgage Loan shall not, as
between Seller and Buyer, be deemed statements or covenants of Seller for any
purpose under the Agreement (except to the extent otherwise specifically made by
Seller pursuant to the Agreement), including, without limitation, for purpose of
applying the indemnification provisions set forth in SECTION 13.21.
10. MISCELLANEOUS.
10.1 Each of Buyer and Seller acknowledge that it and its counsel have
participated substantially in the drafting of this Amendment and agree that,
accordingly, in the interpretation and construction of this Amendment, no
ambiguity, real or apparent, in any provision hereof shall be construed against
Buyer or Seller by reason of the role of such party or its counsel in the
drafting of such provision.
10.2 If any provision of this Amendment as applied to Buyer and Seller or
to any circumstances shall be held by a court of competent jurisdiction to be
void or unenforceable for any reason, such event shall in no way affect the
validity or enforceability of this Amendment as a whole, or of any other
provisions hereof, or of the provision in question when applied to circumstances
materially different from those involved in such holding.
3
<PAGE>
10.3 THIS AMENDMENT SHALL BE DEEMED TO BE AN AGREEMENT MADE UNDER THE LAW
OF THE STATE OF CALIFORNIA AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
10.4 This Amendment may be executed in any number of counterparts and by
each party on separate counterparts, each of which when executed and delivered
shall be deemed an original and all of which taken together shall constitute but
one and the same instrument. Signature pages transmitted to the other party by
telecopy are valid and binding as if originally executed.
10.5 This Amendment shall not be recorded or filed in the public land or
other public records of any jurisdiction by either Buyer or Seller and any
attempt to do so may be treated by the other party as a breach of the Agreement.
10.6 EXHIBITS A-C and SCHEDULE 1 attached hereto are incorporated into this
Amendment by reference.
10.7 Except as amended by this Amendment, the Agreement shall remain in
full force and effect.
4
<PAGE>
IN WITNESS WHEREOF, Buyer and Seller have caused this Amendment to be
executed and delivered, each by its own representative hereunto duly authorized,
as of the date first above written.
SELLER: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By: /s/ Lance J. Graber
----------------------------
Lance Graber
Vice President
BUYER: KSL RECREATION CORPORATION,
a Delaware corporation
By: /s/ John K. Saer, Jr.
----------------------------
John Saer
Chief Financial Officer
5
<PAGE>
EXHIBIT A
SCHEDULE OF VEHICLES
1. Ford Van License Number 464TGS
2. Ford Pickup License Number 283TGS
3. Ford Pickup License Number 240TGS
4. Ford Pickup License Number 487MCE
5. Ford Bus License Number Grand1
6
<PAGE>
EXHIBIT B
FORM OF EMPLOYEE NOTICE
[ATTACHED HERETO]
7
<PAGE>
November 12, 1998
TO: All Employees
FROM: Grand Wailea Company
Dear Employees:
The Owner of Grand Wailea Resort, Hotel & Spa has entered into an agreement to
sell the hotel. The transfer of ownership is expected to occur on or before
December 31, 1998. If and when the sale is completed, the Grand Wailea Company
(GWC) will cease being your actual "employer". This notice is being given to you
in accordance with the Hawaii Dislocated Workers Act and the Worker Adjustment
and Retraining Notification Act of 1988. You may call the State Employment
Security Office at 984-8400 for more information. If you experience unemployment
you may be eligible for a "dislocated workers' allowance" as provided under
state law, if you receive a determination of eligibility for unemployment
compensation benefits from the State of Hawaii Department of Labor and
Industrial Relations.
The departure of GWC as your employer does not mean the hotel or its high
standards of operations will end. You will be eligible to apply for positions
with the new owner. While there may be some layoffs or terminations, and while
no one knows at this time which of you will accept any offers from the
purchaser, it is our hope that many of you will be accepted to assume those
positions. The new owner will be setting up its selection process and standards
and its own initial terms and conditions of employment, including subjects such
as service credit and seniority, and will decide on its own workforce. If you
accept an offer to continue to work in the hotel's operations, your service with
the hotel as an operating entity may continue without any period of
unemployment. If so, you may not be considered terminated from the operations of
the hotel. It is possible that you and other selected employees will simply be
transferred to the payroll of the new owner, upon your accepting their new terms
and conditions of employment.
Those of you represented by a union may direct any questions to your union
representatives. The purchaser has acknowledged, consistent with the National
Labor Relations Act, that if there arises a future duty to bargain with the
present union, it will certainly do so in good faith, when and if appropriate.
We sincerely wish everyone the very best during this transition.
Sincerely,
Grand Wailea Company, as employer and owner's agent
cc: Hawaii Director of Labor and Industrial Relations
ILWU Local 142
Mayor of Maui
<PAGE>
November 12, 1998
VIA OVERNIGHT COURIER
Eusebio Lapenia
President
ILWU Local 142
451 Atkinson Drive
Honolulu, Hawaii 96814
Re: SALE OF THE GRAND WAILEA HOTEL; DISLOCATED WORKERS' ACT NOTICE
Dear Mr. Lapenia:
The Grand Wailea Hotel is located at 3850 Wailea Alanui Drive, Wailea, Maui,
Hawaii 96753. International Hotel Acquisitions, LLC ("IHA") will sell the Grand
Wailea Hotel shortly. Grand Wailea Company ("GWC"), c/o Grand Wailea Hotel, 3850
Wailea Alanui Drive, Wailea, Maui, Hawaii 96753, is the manager of the Grand
Wailea Hotel and the present employer of the Hotel employees. GWC's contract to
manage the Grand Wailea Hotel will expire when IHA completes the sale. GWC
employs approximately one thousand two hundred (1,200) employees under its
management contract with IHA. GWC will cease being the employer of all its
employees at the time of the sale. Some or all of these employees may, based on
the decisions of the purchaser or their own choice, become unemployed as a
result of this sale. In any event, they will be off our payroll as of the
closing date of the sale.
We expect this to occur between December 18, 1998, and December 31, 1998. You
may contact Stacey Hiramoto, Executive Director of Human Resources, at (808)
875-1234 for further information. GWC will make other information, such as the
job titles of the employees, the number of employees affected in each job
category, the name of each union representing employees and the name and address
of the chief elected officer of the union available for inspection at GWC's
facilities. This letter is being sent with the attached letter to the Mayor of
the County of Maui and the Director of the State of Hawaii, Department of Labor
and Industrial Relations and the attached letter is being sent to all employees.
Very truly yours,
EMPLOYER-HOTEL MANAGER SELLER
Grand Wailea Company International Hotel Acquisitions, LLC
3850 Wailea Alanui Drive c/o CSFB
Wailea, Maui, Hawaii 96753 11 Madison Avenue, 5th Ave
New York, New York 10010
<PAGE>
November 12, 1998
VIA OVERNIGHT COURIER
Mayor Linda Lingle
County of Maui
200 South High Street
Wailuku, Maui 96793
Re: SALE OF THE GRAND WAILEA HOTEL; DISLOCATED WORKERS' ACT NOTICE
Dear Mayor Lingle:
The Grand Wailea Hotel is located at 3850 Wailea Alanui Drive, Wailea, Maui,
Hawaii 96753. International Hotel Acquisitions, LLC ("IHA") will sell the Grand
Wailea Hotel shortly. Grand Wailea Company ("GWC"), c/o Grand Wailea Hotel, 3850
Wailea Alanui Drive, Wailea, Maui, Hawaii 96753, is the manager of the Grand
Wailea Hotel and the present employer of the Hotel employees. GWC's contract to
manage the Grand Wailea Hotel will expire when IHA completes the sale. GWC
employs approximately one thousand two hundred (1,200) employees under its
management contract with IHA. GWC will cease being the employer of all its
employees at the time of the sale. Some or all of these employees may, based on
the decisions of the purchaser or their own choice, become unemployed as a
result of this sale. In any event, they will be off our payroll as of the
closing date of the sale.
We expect this to occur between December 18, 1998, and December 31, 1998. You
may contact Stacey Hiramoto, Executive Director of Human Resources, at (808)
875-1234 for further information. GWC will make other information, such as the
job titles of the employees, the number of employees affected in each job
category, the name of each union representing employees and the name and address
of the chief elected officer of the union available for inspection at GWC's
facilities. This letter is being sent with the attached letter to the union that
represents bargaining unit employees and the attached letter is being sent to
all employees.
Very truly yours,
EMPLOYER-HOTEL MANAGER SELLER
Grand Wailea Company International Hotel Acquisitions, LLC
3850 Wailea Alanui Drive c/o CSFB
Wailea, Maui, Hawaii 96753 11 Madison Avenue, 5th Ave
New York, New York 10010
<PAGE>
November 12, 1998
VIA OVERNIGHT COURIER
Roger Tacdol
Division Director
ILWU Local 142
896 Lower Main Street
Wailuku, Maui, Hawaii 96793
Re: SALE OF THE GRAND WAILEA HOTEL; DISLOCATED WORKERS' ACT NOTICE
Dear Mr. Tacdol:
The Grand Wailea Hotel is located at 3850 Wailea Alanui Drive, Wailea, Maui,
Hawaii 96753. International Hotel Acquisitions, LLC ("IHA") will sell the Grand
Wailea Hotel shortly. Grand Wailea Company ("GWC"), c/o Grand Wailea Hotel, 3850
Wailea Alanui Drive, Wailea, Maui, Hawaii 96753, is the manager of the Grand
Wailea Hotel and the present employer of the Hotel employees. GWC's contract to
manage the Grand Wailea Hotel will expire when IHA completes the sale. GWC
employs approximately one thousand two hundred (1,200) employees under its
management contract with IHA. GWC will cease being the employer of all its
employees at the time of the sale. Some or all of these employees may, based on
the decisions of the purchaser or their own choice, become unemployed as a
result of this sale. In any event, they will be off our payroll as of the
closing date of the sale.
We expect this to occur between December 18, 1998, and December 31, 1998. You
may contact Stacey Hiramoto, Executive Director of Human Resources at (808)
875-1234 for further information. GWC will make other information, such as the
job titles of the employees, the number of employees affected in each job
category, the name of each union representing employees and the name and address
of the chief elected officer of the union available for inspection at GWC's
facilities. This letter is being sent with the attached letter to the Mayor of
the County of Maui and the Director of the State of Hawaii, Department of Labor
and Industrial Relations and the attached letter is being sent to all employees.
Very truly yours,
EMPLOYER-HOTEL MANAGER SELLER
Grand Wailea Company International Hotel Acquisitions, LLC
3850 Wailea Alanui Drive c/o CSFB
Wailea, Maui, Hawaii 96753 11 Madison Avenue, 5th Ave
New York, New York 10010
<PAGE>
November 12, 1998
VIA OVERNIGHT COURIER
Ms. Lorraine H. Akiba, Director
State of Hawaii, Department of Labor
and Industrial Relations
830 Punchbowl Street, Room 321
Honolulu, Hawaii 96813
Re: SALE OF THE GRAND WAILEA HOTEL; DISLOCATED WORKERS' ACT NOTICE
Dear Ms. Akiba:
The Grand Wailea Hotel is located at 3850 Wailea Alanui Drive, Wailea, Maui,
Hawaii 96753. International Hotel Acquisitions, LLC ("IHA") will sell the Grand
Wailea Hotel shortly. Grand Wailea Company ("GWC"), c/o Grand Wailea Hotel, 3850
Wailea Alanui Drive, Wailea, Maui, Hawaii 96753, is the manager of the Grand
Wailea Hotel and the present employer of the Hotel employees. GWC's contract to
manage the Grand Wailea Hotel will expire when IHA completes the sale. GWC
employs approximately one thousand two hundred (1,200) employees under its
management contract with IHA. GWC will cease being the employer of all its
employees at the time of the sale. Some or all of these employees may, based on
the decisions of the purchaser or their own choice, become unemployed as a
result of this sale. In any event, they will be off our payroll as of the
closing date of the sale.
We expect this to occur between December 18, 1998, and December 31, 1998. You
may contact Stacey Hiramoto, Executive Director of Human Resources at (808)
875-1234 for further information. GWC will make other information, such as the
job titles of the employees, the number of employees affected in each job
category, the name of each union representing employees and the name and address
of the chief elected officer of the union available for inspection at GWC's
facilities. This letter is being sent with the attached letter to the union that
represents bargaining unit employees and the attached letter is being sent to
all employees.
Very truly yours,
EMPLOYER-HOTEL MANAGER SELLER
Grand Wailea Company International Hotel Acquisitions, LLC
3850 Wailea Alanui Drive c/o CSFB
Wailea, Maui, Hawaii 96753 11 Madison Avenue, 5th Ave
New York, New York 10010
<PAGE>
EXHIBIT C
FORM OF COUNTY OF MAUI LETTER
INTERNATIONAL HOTEL ACQUISITIONS, LLC
c/o the Grand Wailea Hotel
3850 Wailea Alanui Drive
Wailea, Maui, Hawaii 96753
November __, 1998
Ms. Colleen Suyama
County of Maui Planning Department
200 S. High Street
Wailuku, Maui, Hawaii 96793
Re: SPECIAL MANAGEMENT AREA PERMIT NO. 87/SMA-35
Dear Ms. Suyama:
This letter is provided to advise you that in June, 1998, ownership of
the Grand Wailea Hotel was transferred by the Grand Wailea Company ("GWC") to
International Hotel Acquisitions, LLC ("IHA"), and in connection with such
transfer, Special Management Permit No. 87/SMA-35 was assigned to IHA by GWC.
For your information, enclosed is a copy of the Deed dated as of June 15, 1998,
executed by GWC, as grantor, and IHA, as grantee, recorded in the Office of the
Assistant Registrar of the Land Court on June 15, 1998 as Instrument No.
2463683.
Very truly yours,
Lance Graber
Vice President
International Hotel Acquisitions, LLC
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SCHEDULE 1
[Attached hereto]
9
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SCHEDULE 1
SCHEDULE OF SERVICE CONTRACTS, LEASES AND EQUIPMENT LEASES
LEASES
1. Concession Agreement dated May 5, 1995, by and between Grand Wailea Company
and Budget Rent A Car Systems, Inc.
2. Concession Agreement dated September 4, 1991 by and between Grand Wailea
Company and American Express Travel Related Services Company, Inc., as
amended by instrument dated _____________, 1996 (executed on or about
October 3, 1996).
3. Standard Concession Lease Agreement dated June 16, 1997, by and between
Grand Wailea Company, as Landlord, and Ki'i Gallery, Inc., as Tenant.
4. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and Richter's of Hawaii, as Tenant, as amended by
written notice dated May 22, 1996, from Tenant to Landlord of exercise of
option to extend lease term.
5. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and Senses Joint Venture, as Tenant, as assigned by
Tenant to W. H. Smith Hotel Stores Inc. pursuant to Assignment of Lease
dated November 27, 1991, and as amended by First Amendment to Lease dated
November 27, 1991 by and between Grand Hyatt Wailea, as Landlord, and W. H.
Smith Hotel Stores, Inc.
6. Standard Concession Lease Agreement dated November 24, 1997, by and between
Grand Wailea Resort Hotel and Spa, as Landlord, and Maui Clothing Company,
Inc., as Tenant.
7. Standard Concession Lease Agreement (undated), by and between Grand Wailea
Resort Hotel and Spa, as Landlord, and Noa Noa Kona, Inc., as Tenant.
8. Standard Concession Lease Agreement dated April 24, 1991, by and between
Grand Hyatt Wailea, as Landlord, and Sandal Tree Limited, as Tenant.
9. Standard Concession Lease Agreement dated August 8, 1991, by and between
Grand Wailea Company, as Landlord, and Lorenzi of Italy, as Tenant, and as
amended by Amendment to Standard Concession Lease Agreement dated August
30, 1996, by and between Grand Wailea Company and Lorenzi of Italy.
10. Standard Concession Lease Agreement dated February 27, 1996, by and between
TSA Management Company, as Landlord, and J. Chong, Inc., dba Tropicana I,
as Tenant.
11. Standard Concession Lease Agreement dated April 8, 1993, by and between
Grand Wailea Company, as Landlord, and Lahaina Printsellers, Ltd., as
Tenant, and as amended by Amendment to Standard Concession Lease Agreement
dated April 30, 1997, by and between Grand Wailea Company and Lahaina
Printsellers, Ltd. Standard Concession
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Lease Agreement dated February 27, 1996, by and between TSA Management
Company, Limited, as Landlord, and J. Chong, Inc., dba Tropicana I, as
Tenant (for 423 square feet formerly occupied by Lahaina Print Sellers).
12. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and Edward D. Sultan Co., Ltd., as Tenant (HF Wichman
Lease), as amended by written notice dated August 2, 1996, from Tenant to
Landlord of exercise of option to extend lease term.
13. Standard Concession Lease Agreement (undated), by and between Grand Hyatt
Wailea, as Landlord, and W. H. Smith Hotel Stores, Inc., as Tenant (Men's
Shop).
14. Standard Concession Lease Agreement dated September 10, 1991, by and
between Grand Wailea Company, as Landlord, and Resort Medical Services,
Ltd., as Tenant.
15. Concession Agreement dated December 15, 1997, by and between TSA Management
Company, Ltd., and The Business Center LLC, together with amendment dated
April 13, 1998 by and among Solidrock L.L.C., TSA Management Company, Ltd.,
and Grand Wailea Company.
16. Standard Concession Sublease Agreement dated January 1, 1993, by and
between TSA Management, Inc., and Double Check Photo Systems, Inc.,
together with Guaranty dated February 4, 1998 by Pierre Crevolin, letter
dated April 17, 1998 addressed to Mr. Pierre Crevolin from Eileen Maniaci
regarding "Lease Renewal", and Extension of Lease letter addressed to TSA
Management Company, Ltd.
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Service Contracts
l. Mitsubishi Elevators & Escalators (Service Agreement dated August 1, 1993)
by and between Grand Wailea Resort, Hotel and Spa and MEC Elevator Company,
together with Vertical Transportation Maintenance Agreement (undated) by
and between MEC Elevator Company and Grand Wailea Resort, Hotel & Spa.
2. New Hermes Incorporated (Extended Warranty Agreement dated July 21, 1995)
by and between Grand Wailea Resort, Hotel & Spa, as buyer, and New Hermes,
Incorporated Service and Customer Support.
3. NEC Business Communication Systems (West), Inc. (Maintenance Service
Agreement NEC Business Communication Systems (Hawaii) dated November 21,
1996), by and between NEC Business Communication Systems (Hawaii), a
division of NEC Business Communication Systems (West), Inc., and Grand
Wailea Co., together with letter dated October 23, 1997 from NEC indicating
the automatic renewal of the NEAXA 2400 TELEPHONE switch, letter dated
November 18, 1997 offering to add the Centigram Voicemail system to fill
parts and labor telephone switch maintenance agreement.
4. Hawaii Sound Systems, Inc. (Agreement dated October 24, 1994 accepted by
Grand Wailea Resort).
5. Hewlett Packard (Agreement for Support Service Package Summary, Customer
Contract Information for Support Services, Support Service Summary,
Hardware Products Supported, Agreement Summary of Charges for Support
Services, dated February 18, 1998).
6. Johnson Controls (Renewal of Service Agreement - Metasys, JC 85/40 letter
dated July 23, 1996 accepted by Brian Haraguchi on August 7, 1996).
7. JRS International, Inc. (Service Agreement dated October 1, 1993, but
effective October 1, 1993), by and between Grand Wailea Resort, Hotel and
Spa and JRS International, Inc.
8. MGM Services, Inc. (Service Agreement dated November 8, 1994, but effective
January 1, 1995), by and between Grand Wailea Resort, Hotel and Spa and MGM
Services, Inc.
9. Maui Audio Center (Service Agreement dated August 1, 1993, but effective
August 1, 1993), by and between Grand Wailea Resort, Hotel and Spa and Maui
Audio Center.
10. NALCO Chemical Company (Service Agreement dated May 23, 1994, but effective
as of June 1, 1994), by and between Grand Wailea Resort, Hotel and Spa, and
NALCO Chemical Company.
11. GASCO, Inc. (Service Agreement dated April 20, 1994, but effective April
15, 1994), by
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and between Grand Wailea Resort, Hotel and Spa, and GASCO, Inc.
12. Restaurant Environmental Services, Inc. (Service Agreement dated August 11,
1997, but effective as of August 11, 1997), by and between Grand Wailea
Resort, Hotel and Spa, and Restaurant Environmental Services Inc.
13. Servidyne Systems, Inc. (Service Agreement dated July 20, 1993, but
effective as of August 1, 1993), by and between Grand Wailea Resort, Hotel
and Spa, and Servidyne Systems, Inc.
14. TCI of Hawaii, Inc. (Cable Television Bulk Billing Agreement - Hotel -
Owner Installed, dated January 1, 1997 by TCI of Hawaii, Inc. dated January
1, 1997), by and between TCI of Hawaii, Inc., as Operator, and Grand Wailea
Resort, as Owner.
15. Simplex (Service Agreement dated July 10, 1997, but effective July 1,
1997), by and between Grand Wailea Resort, Hotel and Spa, and Simplex.
16. Uniquest The Solution Source (Purchase and Software License Agreement
Hospitality Division entered into on or about May 1993), by and between
UNIQUEST, Inc. and Grand Wailea Resort Hotel & Spa.
17. Valley Isle Pest Control, Inc. (Service Agreement dated August 18, 1993,
but effective September 1, 1993), by and between Grand Wailea Resort, Hotel
and Spa and Valley Isle Pest Control, Inc.
18. SESAC (SESAC, Inc. Hotel, Motel & Resort Performance License dated
September 25, 1996, between SESAC, Inc., and Grand Wailea Company, dba:
Grand Wailea Resort, Hotel & Spa).
19. LodgeNet (LodgeNet Guest Pay Agreement (undated) by and between LodgeNet
Entertainment Corporation and Grand Wailea Resort, Hotel & Spa, and
Addendum attached thereto), executed on or about May 23, 1996.
20. AT&T (AT&T Commission Agreement Renewal Agreement entered into June 16,
1995, between AT&T Communications, Inc. acting on behalf of the Interstate
Division of AT&T Corp. and the AT&T Communications interexchange companies,
and Grand Wailea Resort, together with AT&T Commission Agreement Bonus
Addendum entered into June 16, 1995, and Letter of Authorization).
21. BHP Petroleum - Gas Express (Letter regarding Commercial Fleet charge
cards).
22. EPS Electronic Processing Source, Inc. (Merchant Processing Agreement
entered by and among First USA Merchant Services, Inc., Electronic
Processing Source, Inc. and Grand Wailea Company, dba Grand Wailea Resort,
Hotel & Spa, executed on May 24, 1993).
23. Murad, Inc. (Murad, Inc. Charter Club Membership Agreement agreed by Grand
Wailea Resort & Spa).
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24. The Fidelio Agreements
25. Extended maintenance contract for Saflok door lock systems
26. Independent Contractor Agreement by and between Grand Wailea Resort, Hotel
& Spa and Ken Longacre of Wrap-A-Rainbow, Inc., dated to be effective
November 4, 1996
27. Service Agreement by and between Grand Wailea Resort, Hotel and Spa and
Authentic Concepts, Inc., dated and effective January 15, 1998.
28. Service Agreement by and between Grand Wailea Resort, Hotel and Spa and
Lafferty Watersports dated and effective January 12, 1998.
29. Service Agreement by and between Grand Wailea Resort, Hotel and Spa and
Rainbow Aquatics dated and effective January 15, 1998.
30. Service Agreement by and between Grand Wailea Resort, Hotel and Spa and
Rochelle Selzer dated and effective January 19, 1998.
31. Service Contract with Loomis Fargo & Co.
32. Service Contract with Vision Window Cleaning
33. Service Contract with AmeriClean Systems, Inc.
34. Service Contract with Maui Disposal Co., Inc.
35. Service Contract with Professional Cleaning Services (Nightshine Cleaning)
36. Service Contract with York International
37. Proposed 1999 Wholesale Contracts for each of the following (the ones
marked with an "*" have been executed):
- Aloha 7 Travel
- JTB Hawaii, Inc.
- Kintetsu International Express (USA), Inc.
- Pacifico Creative Services*
- Discovery Aloha, Inc.
- NTA Pacific
- Trans Orbit Hawaii, Inc.*
- Travel Plaza*
- Pleasant Holidays
- AmericanTours International*
- Connection Holidays
- Connoiseur Holidays Unlimited *
- Eurotours (New World Travel)
- Fantasy Holidays *
- Haddon Holidays
- Happy Tours *
- Liberty Travel/Gogo Tours *
- Rendevous Tours *
- Runaway Tours
- Soltur Inc.
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- Sterling Management, Inc
- Roberts Hawaii
- Sun Islands Hawaii
38. 1998 Wholesale Contracts for each of the following:
- Aloha 7 Travel
- JTB Hawaii, Inc.
- Kintetsu International Express (USA), Inc.
- Pacifico Creative Services
- R&C Hawaii Tours, Inc.
- Diamond Travel Hawaii
- Discovery Aloha, Inc.
- Hankyu Express USA, Inc.
- Meitetsu Hawaii, Inc.
- NTA Pacific
- Regency Tours
- Tokyu VITA Hawaii Tours
- Trans Orbit Hawaii, Inc.
- Travel Plaza
- Pleasant Holidays
- AmericanTours International Connection Holidays
- Connoisseur Holidays Unlimited
- Consortium Tours of North America
- Eurotours (New World Travel)
- Fantasy Holidays
- Gryphon Golf & Spa Experience, Inc.
- Haddon Holidays
- Happy Tours
- Liberty Travel/Gogo Tours
- Oceans Apart Vacations
- Rendevous Tours
- Runaway Tours
- Soltur Inc.
- Sterling Management, Inc
- Suntreks Hawaii
- Sun Islands Hawaii *
39. Service Agreement dated August 1, 1993 and effective as of August 1, 1993
by and between Grand Wailea Resort, Hotel and Spa ("GWRHS") and MEC
Elevator Company
40. Service Agreement dated August 11, 1997 and effective as of August 11, 1997
by and between GWRHS and Restaurant Environmental Services
41. Total Water Management Agreement effective as of May 1, 1998 between Grand
Wailea Resort and NALCO Chemical Company
42. Lodgenet Guest Pay Agreement between GWRHS and Lodgnet Entertainment
Corporation, together with Addendum to Lodgenet Guest Pay Agreement and
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correspondence related thereto
43. AT&T Networked Commerce Services General Agreement (unexecuted copy only)
44. Computerized Security Systems, Inc. Extended Service Agreement dated as of
July 15, 1995 by and between Computerized Security Systems, Inc. and the
Grand Wailea Resort for Saflok door lock system
45. Service Agreement dated as of August 1, 1997 by and between Loomis Fargo &
Co. and GWRHS
46. Service Agreement dated as of April 27, 1998 and effective as of May 9,
1998 by and between GWRHS and Vision Window Cleaning
47. Letter Agreement dated February 9, 1998 by and between AmeriClean Systems,
Inc. and GWRHS
48. Service Agreement by and between Grand Wailea Resort and Maui Disposal Co.,
Inc.
49. Time and Material Agreement dated December 30, 1991 and effective as of
September 1, 1991 by and between Hyatt Corporation and Professional
Cleaning Services, together with Letter dated August 8, 1991 from
Professional Cleaning Services to GWRHS regarding proposal for degreasing
of Kitchen Exhaust Duct System
50. Service Agreement dated April 7, 1992 and effective as of August 20, 1991
by and between Hyatt Corporation and York International
Equipment Leases
l. Agreement dated October 23, 1997, by and between Grand Wailea Company and
International Business Machines Corporation, to provide
connectivity/networking.
2. Agreement dated November 21, 1997, by and between Grand Wailea Company and
International Business Machines Corporation, for desktop computer network
implementation.
3. The following Lease Agreements by and between Xerox and Grand Wailea
Company for copiers/facsimile machines:
- dated December 12, 1997 for DC 230 Copier in Kitchen
- dated February 2, 1998 for DC 265 Copier in Accounting
- dated July 24, 1997 for DC 230 Copier/Fax in HR
- dated July 24, 1997 for DC 220 Copier/Fax in Catering
- dated August 28, 1997 for DC 220 Copier in Banquets
- dated April 13, 1998 for DC 220 Copier/Fax in OTC
- dated August 24, 1997 for DC 230 Copier in Housekeeping
- dated August 20, 1998 for DC 220
- dated July 24, 1997 for DC 220 Copier/Fax in Accounting
- dated January 26, 1998 for DC 220 Copier in Spa
- dated July 24, 1997 for DC 220 Copier/Fax in Engineering
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- undated for DC 265 Copier in Front Office
- dated January 16, 1998 for 53282 Copier in Laundry
- dated January 16, 1998 for 53282 Copier in Purchasing
- dated January 16, 1998 for 53282 Copier in Housekeeping
- dated January 16, 1998 for 53282 Copier in Planning
- dated December 12, 1997 for 5892 Copier in Catering
- undated for 7042 Fax in Housekeeping
- dated January 26, 1998 for 7042 Fax in Napua Towers
- dated August 4, 1998 for DWC 657 Fax in Reservations
4. Audio Visual Headquarters (Agreement for Audio Visual Equipment and
Services, entered into on March 1, 1997), by and between Audiovisual
Headquarters Corporation, and Grand Wailea Resort Hotel & Spa.
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ASSIGNMENT OF AGREEMENT OF PURCHASE AND SALE
THIS ASSIGNMENT OF AGREEMENT OF PURCHASE AND SALE ("Assignment") is
entered into as of the 10th day of December, 1998, by and between KSL RECREATION
CORPORATION, a Delaware corporation ("Assignor"), and KSL GRAND WAILEA RESORT,
INC., a Delaware corporation ("Assignee").
R E C I T A L S:
A. International Hotel Acquisitions, LLC, a Delaware limited
liability company, as Seller, and Assignor, as Buyer entered into that certain
Agreement of Purchase and Sale and Joint Escrow Instructions dated as of
November 5, 1998, as amended by that certain First Amendment to Agreement for
Purchase and Sale and Joint Escrow Instructions dated as of November 12, 1998
(collectively, the "Purchase Agreement"), pertaining to certain improved real
property located in Honuaula, District of Makawao, Island and County of Maui,
State of Hawaii, more particularly described on EXHIBIT "A" thereto (the
"Property"). Pursuant to the Purchase Agreement and in order to facilitate the
sale of the Property, an escrow was established at First American Title
Insurance Company, 114 East Fifth Street, Santa Ana, California 92701,
Attention: Bette Hollenbeck, under Escrow No. REQ-01454 (the "Escrow").
B. Assignee is a wholly owned subsidiary of Assignor, and therefore,
in accordance with the terms of Section 13.1 of the Purchase Agreement, Seller's
prior written consent to this Assignment is not required.
C. Assignor desires to assign to Assignee, and Assignee desires to
accept the assignment of, all of Assignor's right, title and interest in and to
the Property, the Purchase Agreement and the Escrow.
A S S I G N M E N T
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Assignor hereby assigns, transfers, conveys and sets over unto
Assignee all of Assignor's right, title and interest in, to and under the
Property, the Purchase Agreement and the Escrow.
2. Assignee hereby accepts the foregoing assignment and hereby
assumes all of Assignor's obligations under the Purchase Agreement and agrees to
be bound by the terms of the Purchase Agreement and the Escrow.
3. Assignor and Assignee shall concurrently with the execution of
this Agreement execute the attached Acknowledgment and Assumption in the form of
EXHIBIT "A"
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attached hereto and incorporated herein, for the benefit of Seller, in order to
comply with the terms of Section 13.1 of the Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed this Assignment as of
the date first written above.
ASSIGNOR: KSL RECREATION CORPORATION,
a Delaware corporation
By: /s/ John K. Saer, Jr.
-----------------------------------
Name: John Saer
----------------------------
Title: Chief Financial Officer
----------------------------
ASSIGNEE: KSL GRAND WAILEA RESORT, INC.
a Delaware corporation
By: /s/ John K. Saer, Jr.
-----------------------------------
Name: John Saer
----------------------------
Title: Chief Financial Officer
----------------------------
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EXHIBIT "A"
ACKNOWLEDGMENT AND ASSUMPTION
December ___, 1998
International Hotel Acquisitions, LLC
c/o Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010
Attn: Lance J. Graber
Re: Acquisition of Grand Wailea Resort Hotel & Spa, Maui, Hawaii
("Property")
Dear Mr. Graber:
In accordance with the terms of Section 13.1 of that certain Agreement
of Purchase and Sale and Joint Escrow Instructions dated as of November 5, 1998,
as amended by that certain First Amendment to Agreement for Purchase and Sale
and Joint Escrow Instructions dated as of November 12, 1998 (collectively, the
"Purchase Agreement") between International Hotel Acquisitions, LLC ("Seller")
and KSL Recreation Corporation, a Delaware corporation ("KSL Rec"), this letter
shall constitute notice of KSL Rec's election to assign the Purchase Agreement
to a wholly owned subsidiary of KSL Rec, which subsidiary is KSL Grand Wailea
Resort, Inc., a Delaware corporation ("KSL Grand Wailea").
In connection therewith, KSL Grand Wailea hereby states that KSL Grand
Wailea has no other assets other than the Purchase Agreement, and that upon
Closing, KSL Grand Wailea will have no assets other than the Property.
Additionally, KSL Grand Wailea hereby ratifies, for the benefit of Seller, all
of the representations, warranties and covenants of KSL Rec
EXHIBIT "A"
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set forth in the Purchase Agreement, and assumes in writing, for the benefit of
Seller, all of KSL Rec's obligations and liabilities under the Purchase
Agreement.
Very truly yours,
KSL RECREATION CORPORATION,
a Delaware corporation
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
KSL GRAND WAILEA RESORT, INC.,
a Delaware corporation
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
cc: Mark Kuskin, Esq. (via fax)
Mr. Bernie Siegel (via fax)
Mitchell B. Menzer, Esq. (via fax)
Christine H. Suh, Esq. (via fax)
Steve Rogers, Esq. (via fax)
Ms. Bette Hollenbeck (via fax)
Danton Wong, Esq. (via fax)
Michael F. Sfregola, Esq. (via fax)
Jennifer M. Casey, Esq. (via fax)
Heidi K. Eick, Esq. (via fax)
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SECOND AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE AND
JOINT ESCROW INSTRUCTIONS
THIS SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE AND JOINT
ESCROW INSTRUCTIONS (this "Second Amendment") is made and entered into as of
this 23rd day of December, 1998, by and between INTERNATIONAL HOTEL
ACQUISITIONS, LLC, a Delaware limited liability company ("Seller"), and KSL
GRAND WAILEA RESORT, INC., a Delaware corporation ("Buyer").
R E C I T A L S :
WHEREAS, Seller and KSL Recreation Corporation, a Delaware corporation
("KSL Rec") entered into that certain Agreement for Purchase and Sale and Joint
Escrow Instructions, dated November 5, 1998, and that certain First Amendment to
Agreement for Purchase and Sale and Joint Escrow Instructions dated as of
November 12, 1998 (collectively, the "Agreement of Sale"), pursuant to which
Seller agreed to sell and Buyer agreed to buy certain improved real property
known as "Grand Wailea Resort Hotel & Spa", located in Wailea, Maui, Hawaii and
as more particularly described therein;
WHEREAS, KSL Rec assigned its rights to Buyer pursuant to that certain
Assignment of Agreement for Purchase and Sale dated as of December 10, 1998;
WHEREAS, the parties hereto desire to modify certain terms of the
Agreement of Sale in certain respects.
A G R E E M E N T :
NOW, THEREFORE, incorporating the foregoing recitals, and for good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Agreement of Sale.
2. PURCHASE PRICE. The definition of "Purchase Price" contained in
Article 1 of the Agreement of Sale is modified by deleting the amount "Three
Hundred Seventy-Five Million Dollars ($375,000,000.00)", contained therein, and
replacing it with the amount "Three Hundred Seventy-Two Million Seven Hundred
Seventy-Five Thousand Dollars ($372,775,000.00)."
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3. UNEMPLOYMENT INSURANCE RATING. Seller has heretofore delivered
to Buyer a Waiver of Employer's Experience Record (in the form heretofore
provided by Buyer to Seller) executed by GWC (the "Waiver") in connection with
the transfer of Hotel Manager's state and federal unemployment insurance number,
rating and reserve accounts and FICA, FUTA and SUTA tax amounts. Seller hereby
represents and warrants to Buyer that it has no reason to believe that such
Waiver will be revoked or will otherwise be ineffective to effect such transfer
as of the Closing Date; however, if such Waiver is revoked or is otherwise
ineffective, Seller will reduce the cash portion of the Purchase Price paid at
Closing in the amount of $281,400.00. Within sixty (60) days following Closing,
Seller covenants to file and pay (or cause GWC and/or Hotel Manager to file and
pay) all reports and amounts referenced in the first sentence of this
Paragraph 3 relating to all periods ending prior to the Closing Date.
4. LOT 462 LICENSE AGREEMENT. SECTIONS 7.9 and 9.1.10 of the
Agreement are hereby deleted in their entirety. Seller shall have no further
duty, obligation or liability to Buyer with respect to the inability to obtain
the Lot 462 License Agreement, or with respect to any group Bookings or other
Occupancy Commitments (whether oral or written) heretofore disclosed to Buyer or
of which Buyer has actual knowledge (which, for purposes of this paragraph 4
only, shall be deemed to include the actual knowledge of Andrew Beaman, Esq.)
for the use of the area known as "Lai Honua" or any Claims made by hotel guests
or other Persons for the use of such area pursuant to the terms of any such
group Bookings or other Occupancy Commitments (collectively, the "Lai Honua
Agreements"). As used herein and in the Agreement, the term "Bookings" shall be
deemed to include the Lai Honua Agreements notwithstanding anything seemingly
contained in the Agreement to the contrary and, accordingly, Seller's
obligations under the Lai Honua Agreements shall be treated as obligations
expressly assumed by Buyer as provided in SECTION 2.2 and shall be included for
purposes of the indemnification provisions set forth in SECTION 13.21.3 of the
Agreement.
5. ECONOMIC CLOSING DATE. Notwithstanding anything contained in
SECTION 8.12 of the Agreement to the contrary, if on or before 1:00 p.m. Eastern
Standard Time on December 24, 1998 Buyer deposits into Escrow the cash balance
of the Purchase Price in accordance with the provisions of SECTION 3.1.4 of the
Agreement, the Economic Closing Date will be deemed to be December 23, 1998 and
all prorations, credits and adjustments for purposes of SECTION 8 of the
Agreement shall be determined as of 12:01 a.m. on such date.
6. INTEREST RATE CAP AGREEMENT. Concurrently with the Closing,
Seller shall assign to Buyer the Interest Rate Cap Agreement with respect to
the First Mortgage Loan, and Seller shall receive a credit from Buyer at Closing
of Twenty-Seven Thousand Dollars ($27,000.00). Seller shall cooperate with
Buyer to obtain Sumitomo Bank's consent to such assignment.
7. EMPLOYEE HOUSING. The following is hereby added to the Agreement
of Sale as a new representation of Seller contained in SECTION 6.1.: "6.1.14
EMPLOYEE HOUSING. Buyer shall have no obligation or liability to pay any
housing subsidy to Kiawe Partners, a
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Hawaii limited partnership ("KIAWE PARTNERS"), or any assignee, affiliate or
subsidiary of Kiawe Partners, relating to Kiawe Terrace Apartments, including,
but not limited to, any obligation set forth under the following agreements:
(a) Employee Housing Agreement dated June 15, 1998 between Kiawe Partners and
Seller; (b) Agreement with Regard to Employee Housing dated November 8, 1998
between Kiawe Partners, GWC and SCP (Maui 5), Inc., a Hawaii corporation; (c)
Agreement Relating to Employee Housing dated August 28, 1991 between Kiawe
Partners, GWC, Wailea Beach Palace Company, a Hawaii limited partnership "WAILEA
PALACE"), and the Department of Water Supply of the County of Maui; (d) First
Amendment to Employee Housing Agreement between Kiawe Partners, GWC and Wailea
Palace (exhibit A to document (c)); (e) First Amendment to Employee Housing
Agreement dated April 22, 1991, between Kiawe Partners, GWC and Wailea Palace;
and (f) Employee Housing Agreement dated December 21, 1990, between Kiawe
Partners, GWC and Wailea Palace."
8. ACQUISITION OF LOT 462. If Buyer enters into a fully executed
written agreement with the fee owner of Lot 462 (and the holder(s) of any
indebtedness secured thereby) on or prior to January 31, 1999, pursuant to which
Buyer has agreed to purchase the area known as Lai Honua on terms acceptable to
Buyer in its sole and absolute discretion (the "LOT 462 SALE AGREEMENT"), then
Buyer shall pay to Seller the amount of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00). Such payment shall be made to Seller, if at all,
within thirty (30) days following consummation of the purchase of such property
pursuant to the Lot 462 Sale Agreement only. Seller shall not be entitled to
such payment if Buyer acquires Lot 462 or any material portion thereof pursuant
to an agreement other than the Lot 462 Sale Agreement. For purposes of this
SECTION 8; however, a long term ground lease, long term exclusive easement or
other long term arrangement which is substantially the equivalent of a transfer
of the beneficial ownership of Lai Honua property shall be considered a purchase
for purposes of this paragraph 8.
9. FIDELIO AGREEMENT. The dollar figure referenced in clause (iv)
of Section 8.3 is hereby changed to Three Hundred Sixty-Five Thousand Eight
Hundred Two Dollars ($365,802.00).
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10. COOPERATION REGARDING FINANCIAL INFORMATION. After Closing,
Seller shall make available (and shall exercise its best efforts to cause Hotel
Manager to make available) to Buyer any books, records or other financial data
in the possession or reasonable control of Seller or Hotel Manager (as
applicable) (including, without limitation, financial information and related
work product in the possession or control of KPMG Peat Marwick and Price
Waterhouse) to the extent necessary to permit Buyer's public accountants to
perform an audit (on an expeditious timetable) of any period of Hotel operations
beginning on or after January 1, 1995. In this connection, Seller hereby
consents to the release by Price Waterhouse to Buyer of all such information in
Price Waterhouse's possession or control, including, without limitation, any
financial statements, reports or other work product prepared or collected by it
with respect to Hotel operations for any such period, Seller shall further
exercise its best efforts to cause KPMG Peat Marwick to release the same or
similar information for all such periods to the extent in its possession or
control.
11. MISCELLANEOUS.
11.1 Each of Buyer and Seller acknowledge that it and its
counsel have participated substantially in the drafting of this Second
Amendment and agree that, accordingly, in interpretation and construction
of this Second Amendment, no ambiguity, real or apparent, in any provision
hereof shall be construed against Buyer or Seller by reason of the role of
such party or its counsel in the drafting of such provision.
11.2 If any provision of this Second Amendment as applied to
Buyer and Seller or to any circumstances shall be held by a court of
competent jurisdiction to be void or unenforceable for any reason, such
event shall in no way affect the validity or enforceability of this Second
Amendment as a whole, or of any other provisions hereof, or of the
provision in question when applied to circumstances materially different
from those involved in such holding.
11.3 THIS SECOND AMENDMENT SHALL BE DEEMED TO BE AN AGREEMENT
MADE UNDER THE LAWS OF THE STATE OF CALIFORNIA AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT GIVING EFFECT OF THE CONFLICT OF LAWS PRINCIPLES OF SUCH
STATE.
11.4 This Second Amendment may be executed in any number of
counterparts and by each party on separate counterparts, each of which when
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument. Signatures
pages transmitted to the party by telecopier are valid and binding as if
originally executed.
11.5 This Second Amendment shall not be recorded or filed in
the public land or other public records of any jurisdiction by either Buyer
or Seller, and any attempt to do so may be treated by the other party as a
breach of this Second Amendment.
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<PAGE>
11.6 Except as amended by this Second Amendment, the Agreement
of Sale shall remain in full force and effect. If any provision contained
in this Second Amendment conflicts with any provisions contained in the
Agreement of Sale, the provisions of this Second Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment as of the day and year first above written.
Seller: INTERNATIONAL HOTEL ACQUISITIONS, LLC,
a Delaware limited liability company
By: /s/ Lance J. Graber
----------------------------------
Name: Lance Graber
----------------------------
Title: Vice President
----------------------------
Buyer: KSL GRAND WAILEA RESORT, INC.,
a Delaware corporation
By: /s/ John K. Saer, Jr.
----------------------------------
Name: John K. Saer, Jr.
----------------------------
Title: Chief Financial Officer
----------------------------
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