United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number: 33-6678
UNION SQUARE HOTEL PARTNERS, L.P.
Exact Name of Registrant as Specified in its Charter
Delaware 13-3389008
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Balance Sheets
At September 30, At December 31,
1996 1995
Assets Real estate, at cost:
Land $ 0 $ 32,231,229
Building 0 80,121,007
Furniture, fixtures and equipment 0 29,586,047
-------------- --------------
0 141,938,283
Less accumulated depreciation 0 (43,176,995)
-------------- --------------
0 98,761,288
Property held for disposition 96,076,204 0
Cash and cash equivalents 3,469,909 3,378,174
Replacement reserve receivable 903,639 500,440
Rent receivable 1,074,110 318,626
Deferred charges, net of accumulated
amortization of $4,195,084 in 1996
and $3,849,203 in 1995 400,946 495,582
-------------- --------------
Total Assets $ 101,924,808 $ 103,454,110
============== ==============
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued expenses $ 42,720 $ 41,645
Due to affiliates 24,133 20,397
Mortgage loan payable 70,000,000 70,000,000
Accrued interest 12,560,535 13,104,156
Deferred interest 9,672,070 8,800,319
Notes and loans - affiliate 56,484,017 53,016,740
Loan payable - Hyatt 3,772,578 3,772,578
-------------- --------------
Total Liabilities 152,556,053 148,755,835
-------------- --------------
Partners' Deficit:
General Partner (1,189,532) (1,136,237)
Limited Partners (49,441,713) (44,165,488)
-------------- --------------
Total Partners' Deficit (50,631,245) (45,301,725)
-------------- --------------
Total Liabilities and Partners' Deficit $ 101,924,808 $ 103,454,110
============== ==============
Statement of Partners' Deficit
For the nine months ended September 30, 1996
Limited General
Partners Partner Total
Balance at December 31, 1995 $ (44,165,488) $ (1,136,237) $ (45,301,725)
Net loss (5,276,225) (53,295) (5,329,520)
------------- ------------ -------------
Balance at September 30, 1996 $ (49,441,713) $ (1,189,532) $ (50,631,245)
============= ============ =============
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income Rental income:
Operating income $ 2,822,558 $ 2,268,521 $ 7,570,975 $ 5,840,807
Replacement escrow 358,749 315,779 1,026,492 921,767
Interest income 28,660 18,394 107,172 88,837
Miscellaneous income 300 630 1,375 1,990
----------- ----------- ----------- -----------
Total Income 3,210,267 2,603,324 8,706,014 6,853,401
----------- ----------- ----------- -----------
Expenses
Interest expense 3,396,780 3,280,293 10,240,708 9,861,532
Depreciation and amortization 995,668 1,319,067 3,654,258 4,085,770
General and administrative 62,732 109,856 140,568 179,139
----------- ----------- ----------- -----------
Total Expenses 4,455,180 4,709,216 14,035,534 14,126,441
----------- ----------- ----------- -----------
Net Loss $(1,244,913) $(2,105,892) $(5,329,520) $(7,273,040)
=========== =========== =========== ===========
Net Loss Allocated:
To the General Partner $ (12,449) $ (21,059) $ (53,295) $ (72,730)
To the Limited Partners (1,232,464) (2,084,833) (5,276,225) (7,200,310)
----------- ----------- ----------- -----------
$(1,244,913) $(2,105,892) $(5,329,520) $(7,273,040)
=========== =========== =========== ===========
Per limited partnership unit
(7,174,100 outstanding) $(.17) $(.29) $(.74) $(1.00)
----------- ----------- ----------- -----------
Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities:
Net loss $ (5,329,520) $ (7,273,040)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
Depreciation and amortization 3,654,258 4,085,770
Rental income from replacement escrow (1,026,492) (921,767)
Increase in deferred interest on notes
and loans - affiliate 3,467,277 3,129,619
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable (755,484) (611,260)
Deferred charges (251,245) 0
Accounts payable and accrued expenses 1,075 12,306
Due to affiliates 3,736 6,030
Accrued and deferred interest 328,130 1,170,138
------------ ------------
Net cash provided by (used for)
operating activities 91,735 (402,204)
------------ ------------
Cash Flows From Investing Activities:
Proceeds from replacement reserve receivable 623,293 544,816
Additions to real estate (623,293) (544,816)
------------ ------------
Net cash used for investing activities 0 0
------------ ------------
Net increase (decrease) in cash and
cash equivalents 91,735 (402,204)
Cash and cash equivalents, beginning of period 3,378,174 2,668,685
------------ ------------
Cash and cash equivalents, end of period $ 3,469,909 $ 2,266,481
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 6,445,301 $ 5,561,775
------------ ------------
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's 1995 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1996 and the results of operations and cash flows
for the nine months ended September 30, 1996 and 1995 and the statement of
partner's deficit for the nine months ended September 30, 1996. Results of
operations for the periods are not necessarily indicative of the results to be
expected for the full year.
The following significant events have occurred subsequent to fiscal year 1995
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5):
On July 2, 1996, a payment of $2,609,326 was made to the Bank of Nova Scotia
("BNS") representing the excess of rents received by the Partnership less
disbursements for the period from July 1, 1995 through June 30, 1996, as
defined in the Amended and Restated Promissory Note Secured by the Deed of
Trust dated June 30, 1992. This payment was applied toward reducing BNS'
portion of the accrued interest on the Partnership's first mortgage.
As discussed in prior reports, the Partnership has been exploring viable
options with respect to the January 1997 maturity of the Partnership's secured
mortgage debt. To this end, the Partnership retained a nationally recognized
real estate firm to facilitate a sale of the Hotel or obtain replacement
financing for the Partnership's debt. In late August 1996, after evaluating
several purchase offers, the Partnership commenced exclusive negotiations with
one prospective purchaser.
On November 5, 1996, the Partnership and HT-Hotel Equities, Inc. ("HT"), an
affiliate of California Hyatt Corporation, the current operator of the Hotel,
entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the
"Purchase and Sale Agreement") providing for the sale of the Hotel, subject to
certain conditions, for $126,900,000 in cash and the assumption by HT of
certain of the Partnership's debt owed to an affiliate of HT (collectively, the
"Transaction"), all as more fully described in the Purchase and Sale Agreement.
HT will assume all obligations of the Partnership with respect to the Hotel's
current management arrangements.
In connection with the sale of the Hotel, the Partnership expects to repay in
full all indebtedness outstanding under the first deed of trust note secured by
the Hotel, the balance of which, it is estimated, will be approximately
$89,700,000 as of December 31, 1996. In addition, the Partnership has also
entered into an Allocation and Release Agreement (the "Allocation Agreement")
with Capital Growth Mortgage Investors, L.P. ("Capital Growth"), the holder of
a second deed of trust note secured by the Hotel. Pursuant to the Allocation
Agreement, Capital Growth has agreed, subject to certain limitations, to
temporarily forebear during the pendency of the sale from pursuing a
foreclosure action on the second deed of trust note, and to accept
approximately $30 million in repayment of all of the Partnership's obligations
to Capital Growth (including unsecured debt obligations and the obligation to
reimburse Capital Growth for certain costs). Capital Growth's willingness to
accept these terms is conditioned on, among other matters, the proposed
Transaction being consummated by March 31, 1997. The general partner of
Capital Growth is an affiliate of the General Partner. Consequently, the
Partnership and Capital Growth each engaged an independent, nationally
recognized investment banking firm to negotiate the allocation of proceeds
available from the sale of the Hotel (after the payment of transaction costs,
the making of closing adjustments, and the repayment of the first deed of trust
note) between the Partnership and Capital Growth.
The Partnership has been advised by its independent investment banking firm
that, in such firm's opinion as investment bankers, the allocation of available
proceeds to be made between the Partnership and Capital Growth pursuant to the
Allocation Agreement is fair, from a financial point of view, to the
unitholders of the Partnership, and in that context, the amount of the
allocation is at least as favorable to the Partnership as might have been
obtained if the allocation had been negotiated with an unaffiliated lender in
similar circumstances.
In addition, as a condition to the effectiveness of the Allocation Agreement,
certain affiliates of the General Partner, other than Capital Growth, have
entered into a Consent and Release Agreement (the "Unsecured Debt Release
Agreement"), pursuant to which they have agreed to fully release the
Partnership from the Partnership's unsecured indebtedness to them in an
aggregate amount projected to be approximately $14,300,000 as of December 31,
1996.
Upon completion of the sale of the Hotel, the General Partner intends to
dissolve the Partnership and to make one or more liquidating distributions in
accordance with the terms of the Partnership Agreement. Any such distributions
will be made only after satisfaction of all debts, liabilities and obligations
of the Partnership (excluding the amount of the unsecured debt obligations
forgiven as described above), payment of other expenses of the Transaction and
of the dissolution and liquidation of the Partnership, and the establishment of
any reserves for contingencies that the General Partner deems necessary.
Neither the amount that will be available for distribution to the unitholders
of the Partnership, nor the timing thereof, can be determined with complete
certainty at this time. However, it is currently anticipated that the proceeds
remaining after the above described sale of the Hotel (together with the
estimated Partnership cash reserves), and after the preceding payments have
been made and the unsecured debt referred to above has been forgiven, can be
expected to be in the approximate range of $9 million to $12 million, or
approximately $1.25 to $1.67 per Partnership unit outstanding, assuming a
closing of the sale of the Hotel on or prior to March 31, 1997. In addition,
the amount of any distribution to the unitholders would depend upon the timing
of the sale, and will vary depending on results of operations prior to the sale
and, if necessary, the willingness of the holder of the first deed of trust to
renegotiate any maturing debt, or to otherwise forebear from initiating
foreclosure proceedings as described below.
The Transaction is subject to the satisfaction of certain conditions, including
the Partnership obtaining the approval of a majority in interest of the
outstanding unitholders. A proxy statement will be mailed for this purpose as
promptly as practicable following the filing with the Securities and Exchange
Commission and clearance of the requisite disclosure documents.
Because most of the Partnership's debt is scheduled to mature on January 2,
1997, in the event the Transaction cannot be consummated by that date, the
Partnership expects to seek the agreement of the holder of its first deed of
trust note to renegotiate any maturing debt, or to otherwise forebear from
exercising any remedies in respect of the Hotel, in order to permit, if
necessary, the Transaction to be consummated after such maturity date. If no
such agreement can be reached, or the Transaction were not to be consummated,
there can be no assurance that a satisfactory alternative with respect to the
Partnership's debt can be implemented, or that the secured lenders will not
initiate foreclosure proceedings against the Hotel. If foreclosure proceedings
are started, the General Partner will make a determination at such time as to
whether a filing on behalf of the Partnership under Chapter 11 of the United
States Bankruptcy Code would be beneficial.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Partnership has suffered continuing losses, including losses incurred each
year since the date of the Restructuring (as defined herein). Although the
Partnership has met the minimum debt service payments required by the
Restructuring, income from the Hotel's operations has not been adequate to fund
all accrued interest and other debt service obligations of the Partnership,
resulting in losses and an increasing level of indebtedness for each of the
years since the date of the Restructuring.
As a result of these losses, increasing aggregate indebtedness, and the
impending January 2, 1997 maturity date of the Partnership's secured mortgage
loans, the audit report on the financial statements presented for the year
ended December 31, 1995 by the Partnership's independent accountants, Coopers &
Lybrand L.L.P., included an explanatory paragraph describing the uncertainty
about the Partnership's ability to continue as a going concern. The financial
statements presented herein do not reflect any impact upon the Partnership's
business or financial condition that would result from the Partnership's
cessation of the active conduct of business as a going concern nor the
occurrence of a bankruptcy filing or foreclosure proceeding. The values
reflected on the financial statements for the Hotel and other Partnership
property and various other elements of the Partnership's financial condition
would be adversely impacted by the cessation of business.
The Partnership's liquidity and capital resources were substantially impacted
by the funding of the Renovation Plan which was completed in January 1990 (the
"Renovation Plan") and extensive borrowing subsequent to the initial offering.
Combined with poor hotel market conditions and weak results from operations
from 1989 through 1994, these factors led to a default by the Partnership on
its January 2, 1992 debt service payment with respect to its $70 million first
mortgage loan (the "Mortgage Loan"). This default created other defaults under
the Partnership's subordinate financings. Effective June 30, 1992, a
restructuring of the Partnership's indebtedness and property leasing
arrangements (the "Restructuring") was successfully executed resulting in the
waiver or cure of each of the Partnership's defaults. Although the Partnership
has met its minimum debt service payments to date, there can be no assurance
that the Hotel will generate sufficient cash flow to enable the Partnership to
satisfy its future debt service obligations.
On April 27, 1993, an affiliate of the General Partner, Lehman Brothers
Holdings Inc. ("Lehman"), elected not to renew the Guaranty of the minimum pay
rate under the restructured Mortgage Loan for the year commencing July 4, 1993.
Nevertheless, the Partnership has continued to make its quarterly minimum debt
service payments to the Bank of Nova Scotia ("BNS") with cash flow from
operations, including the payments due on July 2, 1996 and October 2, 1996. In
addition, on July 2, 1996, a payment of $2,609,326 was made to BNS representing
the excess of rents received by the Partnership less disbursements for the
period from July 1, 1995 through June 30, 1996, as defined in the Amended and
Restated Promissory Note Secured by the Deed of Trust dated June 30, 1992. This
payment was applied toward reducing BNS' portion of the accrued interest on the
Partnership's first mortgage.
As discussed in prior reports, the Partnership has been exploring viable
options with respect to the January 1997 maturity of the Partnership's secured
mortgage debt. To this end, the Partnership retained a nationally recognized
real estate firm to facilitate a sale of the Hotel or obtain replacement
financing for the Partnership's debt. In late August 1996, after evaluating
several purchase offers, the Partnership commenced exclusive negotiations with
one prospective purchaser.
On November 5, 1996, the Partnership and HT-Hotel Equities, Inc. ("HT"), an
affiliate of California Hyatt Corporation, the current operator of the Hotel,
entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the
"Purchase and Sale Agreement") providing for the sale of the Hotel, subject to
certain conditions, for $126,900,000 in cash and the assumption by HT of
certain of the Partnership's debt owed to an affiliate of HT (collectively, the
"Transaction"), all as more fully described in the Purchase and Sale Agreement.
HT will assume all obligations of the Partnership with respect to the Hotel's
current management arrangements.
In connection with the sale of the Hotel, the Partnership expects to repay in
full all indebtedness outstanding under the first deed of trust note secured by
the Hotel, the balance of which, it is estimated, will be approximately
$89,700,000 as of December 31, 1996. In addition, the Partnership has also
entered into an Allocation and Release Agreement (the "Allocation Agreement")
with Capital Growth Mortgage Investors, L.P. ("Capital Growth"), the holder of
a second deed of trust note secured by the Hotel. Pursuant to the Allocation
Agreement, Capital Growth has agreed, subject to certain limitations, to
temporarily forebear during the pendency of the sale from pursuing a
foreclosure action on the second deed of trust note, and to accept
approximately $30 million in repayment of all of the Partnership's obligations
to Capital Growth (including unsecured debt obligations and the obligation to
reimburse Capital Growth for certain costs). Capital Growth's willingness to
accept these terms is conditioned on, among other matters, the proposed
Transaction being consummated by March 31, 1997. The general partner of
Capital Growth is an affiliate of the General Partner. Consequently, the
Partnership and Capital Growth each engaged an independent, nationally
recognized investment banking firm to negotiate the allocation of proceeds
available from the sale of the Hotel (after the payment of transaction costs,
the making of closing adjustments, and the repayment of the first deed of trust
note) between the Partnership and Capital Growth.
The Partnership has been advised by its independent investment banking firm
that, in such firm's opinion as investment bankers, the allocation of available
proceeds to be made between the Partnership and Capital Growth pursuant to the
Allocation Agreement is fair, from a financial point of view, to the
unitholders of the Partnership, and in that context, the amount of the
allocation is at least as favorable to the Partnership as might have been
obtained if the allocation had been negotiated with an unaffiliated lender in
similar circumstances.
In addition, as a condition to the effectiveness of the Allocation Agreement,
certain affiliates of the General Partner, other than Capital Growth, have
entered into a Consent and Release Agreement (the "Unsecured Debt Release
Agreement"), pursuant to which they have agreed to fully release the
Partnership from the Partnership's unsecured indebtedness to them in an
aggregate amount projected to be approximately $14,300,000 as of December 31,
1996.
Copies of the Purchase and Sale Agreement, the Allocation Agreement and the
Unsecured Debt Release Agreement are filed as exhibits hereto, and the
description of the Transaction contained herein is qualified in its entirety by
reference to such agreements.
Upon completion of the sale of the Hotel, the General Partner intends to
dissolve the Partnership and to make one or more liquidating distributions in
accordance with the terms of the Partnership Agreement. Any such distributions
will be made only after satisfaction of all debts, liabilities and obligations
of the Partnership (excluding the amount of the unsecured debt obligations
forgiven as described above), payment of other expenses of the Transaction and
of the dissolution and liquidation of the Partnership, and the establishment of
any reserves for contingencies that the General Partner deems necessary.
Neither the amount that will be available for distribution to the unitholders
of the Partnership, nor the timing thereof, can be determined with complete
certainty at this time. However, it is currently anticipated that the proceeds
remaining after the above described sale of the Hotel (together with the
estimated Partnership cash reserves), and after the preceding payments have
been made and the unsecured debt referred to above has been forgiven, can be
expected to be in the approximate range of $9 million to $12 million, or
approximately $1.25 to $1.67 per Partnership unit outstanding, assuming a
closing of the sale of the Hotel on or prior to March 31, 1997. In addition,
the amount of any distribution to the unitholders would depend upon the timing
of the sale, and will vary depending on results of operations prior to the sale
and, if necessary, the willingness of the holder of the first deed of trust to
renegotiate any maturing debt, or to otherwise forebear from initiating
foreclosure proceedings as described below.
The Transaction is subject to the satisfaction of certain conditions, including
the Partnership obtaining the approval of a majority in interest of the
outstanding unitholders. A proxy statement will be mailed for this purpose as
promptly as practicable following the filing with the Securities and Exchange
Commission and clearance of the requisite disclosure documents.
Because most of the Partnership's debt is scheduled to mature on January 2,
1997, in the event the Transaction cannot be consummated by that date, the
Partnership expects to seek the agreement of the holder of its first deed of
trust note to renegotiate any maturing debt, or to otherwise forebear from
exercising any remedies in respect of the Hotel, in order to permit, if
necessary, the Transaction to be consummated after such maturity date. If no
such agreement can be reached, or the Transaction were not to be consummated,
there can be no assurance that a satisfactory alternative with respect to the
Partnership's debt can be implemented, or that the secured lenders will not
initiate foreclosure proceedings against the Hotel. If foreclosure proceedings
are started, the General Partner will make a determination at such time as to
whether a filing on behalf of the Partnership under Chapter 11 of the United
States Bankruptcy Code would be beneficial.
In view of the previous decision to market the Hotel, the Partnership's real
estate at cost, less accumulated depreciation at September 30, 1996, has been
recorded on the Partnership's Balance Sheet as "Property held for disposition."
Property held for disposition at September 30, 1996 was $96,076,204.
This Form 10-Q contains certain forward-looking statements that are based on
current expectations. In light of the important factors that can materially
affect results, including those set forth above and in the Form 10-K previously
filed, the inclusion of forward-looking information herein should not be
regarded as a representation by the General Partner or any other person that
the objectives or plans of the Partnership will be achieved.
At September 30, 1996, the Partnership had cash and cash equivalents, which are
held in an interest-bearing account, of $3,469,909, compared to $3,378,174 at
December 31, 1995. The increase is due to cash provided by operating
activities.
A reserve account has been established on behalf of the Partnership to cover
certain costs for replacement of furniture and equipment at the Hotel and is
noted as "Replacement reserve receivable" on the Partnership's balance sheet.
Replacement reserve receivable increased from $500,440 at December 31, 1995 to
$903,639 at September 30, 1996, largely due to contributions to the reserve
exceeding expenditures for furniture, fixtures and equipment ("FF&E"). Rent
receivable increased by $755,484 from December 31, 1995 to $1,074,110 at
September 30, 1996, due to the timing of payments and the increase in rent from
operations.
Accounts payable and accrued expenses were $42,720 at September 30, 1996,
largely unchanged from $41,645 at December 31, 1995. Accrued interest
decreased to $12,560,535 at September 30, 1996 compared with $13,104,156 at
December 31, 1995. The change primarily represents the net of accrued interest
expense for the period less the minimum interest payments made on January 2,
1996, April 2, 1996 and July 2, 1996 and the annual excess cash flow payment
made on July 2, 1996. Deferred interest increased from $8,800,319 at December
31, 1995 to $9,672,070 at September 30, 1996, and Notes and Loans Affiliate
increased from $53,016,740 at December 31, 1995 to $56,484,017 at September 30,
1996. These accounts have increased due to the compounding of unpaid interest
on the principal balances.
Results of Operations
The average occupancy rate and average room rate at the Hotel for the
nine-month period ended September 30, 1996 were 86.5% and $154.54,
respectively, compared to 81.2% and $141.88, respectively, for the comparable
nine-month period in 1995.
For the three-month and nine-month periods ended September 30, 1996, the
Partnership incurred net losses of $1,244,913 and $5,329,520, respectively,
compared to net losses of $2,105,892 and $7,273,040, respectively, for the
three- and nine-month periods ended September 30, 1995. The decrease in the
Partnership's net loss is primarily attributable to an increase in rental and
interest income, and a decrease in depreciation and amortization and general
and administrative expenses, which was partially offset by an increase in
interest expense.
For the three-month and nine-month periods ended September 30, 1996, rental
income included operating income of $2,822,558 and $7,570,975, respectively,
compared to $2,268,521 and $5,840,807, respectively, for the same periods in
1995. The improvement for the 1996 periods is due primarily to improved Hotel
operating results. Operating results were positively impacted by higher
average occupancy and room rates at the Hotel during 1996 compared to 1995,
which resulted in increases in room sales and telecommunication sales for the
1996 periods. Interest income for the three-month and nine- month periods
ended September 30, 1996 was $28,660 and $107,172, respectively, compared with
$18,394 and $88,837, respectively, for the same periods in 1995. The increases
in 1996 are due primarily to higher average cash balances being maintained by
the Partnership.
Total expenses were $4,455,180 and $14,035,534 for the three- month and
nine-month periods ended September 30, 1996, respectively, compared to
$4,709,216 and $14,126,441, respectively for the three-month and nine-month
periods ended September 30, 1995. The decreases are due primarily to lower
depreciation and amortization and general and administrative expenses, which
was partially offset by higher interest expense resulting from the compounding
of interest on the principal debt balances.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(10)(a) Purchase and Sale Agreement and Joint Escrow
Instructions dated as of November 4, 1996
(10)(b) Allocation and Release Agreement dated as of
November 1, 1996
(10)(c) Consent and Release Agreement dated as of
November 1, 1996
(27) Financial Data Schedule
(b) Reports on Form 8-K -
On September 6, 1996, the Partnership filed a Form 8-K which
provided an update on certain information relating to the
current status of the Partnership and the Hotel, the Grand
Hyatt San Francisco. The Partnership also reported that it
retained Eastdil Realty Company, a nationally-recognized real
estate firm, to facilitate a sale of the Hotel or obtain
replacement financing for the Partnership's debt. On
November 8, 1996, the Partnership filed a Form 8-K which
provided a discussion of definitive agreements executed by the
Partnership relating to the proposed sale of the Hotel, the
Grand Hyatt San Francisco.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNION SQUARE HOTEL PARTNERS, L.P.
BY: UNION SQUARE/GP CORP.
General Partner
Date: November 14, 1996
BY: /s/ Jeffrey C. Carter
President, Director and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 3,469,909
<SECURITIES> 0
<RECEIVABLES> 1,074,110
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 142,561,576
<DEPRECIATION> 46,485,372
<TOTAL-ASSETS> 101,924,808
<CURRENT-LIABILITIES> 66,853
<BONDS> 152,489,200
<COMMON> 0
0
0
<OTHER-SE> (50,631,245)
<TOTAL-LIABILITY-AND-EQUITY> 101,924,808
<SALES> 8,598,842
<TOTAL-REVENUES> 8,706,014
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,794,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,240,708
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,329,520)
<EPS-PRIMARY> (.74)
<EPS-DILUTED> (.74)
</TABLE>
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
Dated as of November 4, 1996
between
UNION SQUARE HOTEL PARTNERS,
L.P. a Delaware limited partnership
as Seller
and
HT-HOTEL EQUITIES, INC.
a Delaware corporation
as Buyer
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
This PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is made as of November 4, 1996, between UNION SQUARE HOTEL
PARTNERS, L.P., a Delaware limited partnership ("Seller"), and HT-HOTEL
EQUITIES, INC., a Delaware corporation ("Buyer"), for the purpose of setting
forth the agreement of the parties and of instructing FIRST AMERICAN TITLE
INSURANCE COMPANY ("Escrow Holder") with respect to the transactions
contemplated by this Agreement.
R E C I T A L S
A. Seller is the owner of certain real property located at 345
Stockton Street, San Francisco, California, as more particularly described in
Exhibit A attached hereto and incorporated herein by reference, upon which is
located certain improvements commonly known as the "Grand Hyatt San
Francisco," consisting of a 687 key hotel building (695 keys including the
six (6) general manager rooms and two (2) business plan center rooms), and
which also contains meeting rooms and banquet facilities, a three-story
commercial building, and service areas (the "Hotel").
B. Seller is the owner of certain items of personal property
located in and used in the operation of the Hotel, including, but not limited
to furniture and furnishings, hotel equipment, uniforms and kitchenware.
C. The Hotel is leased to and operated by California Hyatt
Corporation ("Operator") pursuant to that certain Agreement and Lease, dated
January 4, 1973, as amended by First Amendment to Lease dated as of August
29, 1986, Second Amendment to Lease dated as of May 1, 1989, Third Amendment
to Lease dated as of June 30, 1992, and Fourth Amendment to Lease dated as of
August 29, 1996, the landlord's interest in such lease having been assigned
by mesne assignments to Seller (as so amended and assigned, and as such lease
may hereafter be further amended, the "Operating Lease").
D. Buyer desires to purchase the Property (as hereinafter
defined) and assume the landlord's interest in the Operating Lease from
Seller, and Seller desires to sell the Property and assign the landlord's
interest in the Operating Lease to Buyer, on the terms and conditions set
forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Seller and Buyer agree as
follows:
II. EFFECTIVE DATE
This Agreement shall be effective (the "Effective Date") when a fully
executed copy of this Agreement (or a fully executed copy in counterparts) is
deposited with Escrow Holder. Escrow Holder is hereby instructed to
immediately notify in writing each party to this Agreement of the Effective
Date.
III. DEFINITIONS
The following terms and references shall have the meanings indicated
below:
(a) "Adjustments" shall have the meaning ascribed thereto in section 9.6(b)
of this Agreement.
(b) "Agreement" shall have the meaning ascribed thereto in the introductory
paragraph of this Agreement.
(c) "Assignment and Assumption of Contracts" shall have the meaning ascribed
thereto in Article III of this Agreement.
(d) "Assignment and Assumption of Operating Lease" shall have the meaning
ascribed thereto in Article III of this Agreement.
(e) "Balance" shall have the meaning ascribed thereto in Section 4.2(b) of
this Agreement.
(f) "Bill of Sale" shall have the meaning ascribed thereto in Article III of
this Agreement.
(g) "Broker" shall have the meaning ascribed thereto in Section 14.2(a) of
this Agreement.
(h) "Buyer" shall have the meaning ascribed thereto in the introductory
paragraph of this Agreement.
(i) "Closing" means the consummation of the transactions contemplated by
this Agreement.
(j) "Closing Date" means the date the Grant Deed is recorded.
(k) "Closing Statements" shall have the meaning ascribed thereto in Section
9.8(a) of this Agreement.
(l) "Condemnation Notice" shall have the meaning ascribed thereto in Section
13.2 of this Agreement.
(m) "Contracts" shall have the meaning ascribed thereto in Article III of
this Agreement.
(n) "Deposit" shall have the meaning ascribed thereto in Section 4.2(a) of
this Agreement.
(o) "Documents" shall have the meaning ascribed thereto in Section 6.4(b)
of this Agreement.
(p) "Effective Date" shall have the meaning ascribed thereto in Article I
of this Agreement.
(q) "Equipment Lease" means a personal property lease entered into by
Seller and covering any items that, if not leased, would constitute
Personal Property.
(r) "Escrow" shall have the meaning ascribed thereto in Section 9.1 of this
Agreement.
(s) "Escrow Holder" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
(t) "Estoppel Agreement" shall have the meaning ascribed thereto in Section
8.3 of this Agreement.
(u) "Excluded Reports" shall have the meaning ascribed thereto in Section
5.2(c) of this Agreement.
(v) "FF&E" means furniture, trade fixtures, equipment, machinery,
appliances, fittings, and other removable articles of personal property
of every kind and nature that are owned by Seller and used exclusively
in the operation of the Hotel. FF&E shall exclude any personal
property owned or leased by the Operator.
(w) "FF&E Reserves" means all of Seller's funds, reserves, escrows, and
accounts for the replacement and repair of FF&E which are held in trust
for Seller by Operator, including, without limitation, the "Fund for
Replacement of and Additions to Furnishings and Equipment" and the
"Reserve for Replacement of Operating Equipment," as such terms are
defined in the Operating Lease.
(x) "Fifth Amendment" shall have the meaning ascribed thereto in Section
9.3(f) of this Agreement.
(y) "Grant Deed" shall have the meaning ascribed thereto in Article III of
this Agreement.
(z) "Holiday" shall have the meaning ascribed thereto in Section 14.17 of
this Agreement.
(aa) "Hotel" shall have the meaning ascribed thereto in Recital A of this
Agreement.
(bb) "Hyatt Loan" means the non-recourse loan from Hyatt Corporation to
Seller governed by that certain Loan Agreement dated May 1, 1989 (as
amended) and evidenced by that certain Amended and Restated Promissory
Note dated June 30, 1992 executed by Seller and payable to Hyatt
Corporation in the original principal amount of $3,217,733, which
promissory note is secured by that certain Third Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing, dated as of May 1, 1989
to First American Title Insurance Company, a California corporation, as
trustee, for the benefit of Hyatt Corporation and encumbering the Property
(as such deed of trust has heretofore been amended and supplemented) and
by that certain Third Assignment of Lessor's Interest in Leases, dated as
of May 1, 1989 (as such assignment has heretofore been amended and
supplemented) by Seller to Hyatt Corporation. In connection with the
transactions contemplated hereby, Buyer shall assume the obligations of
the borrower under the Hyatt Loan and shall cause Hyatt Corporation to
release Seller from any and all obligations in connection with the Hyatt
Loan.
(cc) "Improvements" shall have the meaning ascribed thereto in Article III of
this Agreement.
(dd) "Information" shall have the meaning ascribed thereto in Section 5.1(d)
of this Agreement.
(ee) "Land" shall have the meaning ascribed thereto in Article III of this
Agreement.
(ff) "Limited Partner Approval" shall have the meaning set forth in Section
8.1(a) hereof.
(gg) "Limited Partners" means, collectively, the limited partners and unit
holders of Seller.
(hh) "Limited Partner Vote" shall have the meaning set forth in Section
8.1(a) hereof.
(ii) "Limited Partner Vote Notice" shall have the meaning set forth in
Section 8.1(b) hereof.
(jj) "Liquor Licenses" means any government licenses, permits, or other
authorizations for the sale and/or service of liquor, wine, beer, or
other alcoholic beverage at the Hotel.
(kk) "Meeting" shall have the meaning set forth in Section 8.1(a) hereof.
(ll) "Meeting Notice" shall have the meaning set forth in Section 8.1(b)
hereof.
(mm) "Miscellaneous Property Assets" shall have the meaning ascribed thereto
in Article III of this Agreement.
(nn) "Operating Lease" shall have the meaning ascribed thereto in Recital C
of this Agreement.
(oo) "Operator" shall have the meaning ascribed thereto in Recital C of this
Agreement.
(pp) "Owner's Title Policy" shall have the meaning ascribed thereto in
Section 6.1 of this Agreement.
(qq) "Permits" shall have the meaning ascribed thereto in Article III of this
Agreement.
(rr) "Permitted Exceptions" shall have the meaning ascribed thereto in
Section 6.1 of this Agreement.
(ss) "Personal Property" shall have the meaning ascribed thereto in Article
III of this Agreement.
(tt) "Postponement Notice" shall have the meaning set forth in Section 8.1(b)
hereof.
(uu) "Pritzker Affiliate" shall mean and include (i) any one or more of the
direct lineal descendants, natural or adoptive, of Nicholas J. Pritzker,
deceased, or their respective current or former spouses, (ii) any one or
more trusts, the principal beneficiaries of which are one or more of the
persons described in clause (i) above, and (iii) any general or limited
partnership, corporation or limited liability company, one hundred
percent (100%) of the voting securities or ownership interests in which
are owned, directly or indirectly, by one or more of the persons or
entities described in clauses (i) or (ii) above.
(vv) "Pritzker Transferee" shall mean and include any general or limited
partnership, corporation or limited liability company, at least fifty- one
percent (51%) of the voting securities or ownership interests in which are
owned, directly or indirectly, by a Pritzker Affiliate.
(ww) "Property" shall have the meaning ascribed thereto in Article III of this
Agreement.
(xx) "Proration Escrow" shall have the meaning ascribed thereto in Section
9.6(d) of this Agreement.
(yy) "Protected Marks" shall mean all trademarks, service marks, trade names,
logos, designs, and all goodwill appurtenant thereto, owned by Hyatt
Corporation, a Delaware corporation, or any direct or indirect parent or
subsidiary of Hyatt (including Operator), or other corporation under
common control with Hyatt Corporation, or which may be owned by lessees
under Subleases.
(zz) "Protected Name" shall mean the name "Hyatt", and any variations thereof
or derivations thereof, whether used alone or in combination with one or
more other words or names.
(aaa) "Proxy Materials" shall have the meaning
set forth in Section 8.1(c) hereof.
(bbb) "PTR" shall have the meaning ascribed thereto in Section 6.2(a)
of this Agreement.
(ccc) "Purchase Price" shall have the meaning ascribed thereto in
Section 4.1 of this Agreement.
(ddd) "Real Property" shall have the meaning ascribed thereto
in Article III of this Agreement.
(eee) "Seller" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.
(fff) "Seller's Non-Foreign Affidavit" shall have the meaning ascribed
thereto in Section 7.1 of this Agreement.
(ggg) "Seller's Partnership Agreement" shall mean that certain Second
Amended and Restated Agreement of Limited Partnership of Shearson
Union Square Associates Limited Partnership, dated as of
September 1, 1986.
(hhh) "Sublease" means any space lease, license, concession, or other
such arrangement for the use of space within the Hotel, other than
the transient use of guest rooms, banquet rooms, dining rooms,
conference rooms, or other facilities in the Hotel by Hotel guests
in the ordinary course of Hotel business, including, without
limitation, those subleases set forth on Exhibit A-1 attached
hereto.
(iii) "Survey" shall have the meaning ascribed thereto in Section 6.2 of
this Agreement.
(jjj) "Title Company" shall have the meaning ascribed thereto in Section
6.1 of this Agreement.
(kkk) "Transfer" shall have the meaning ascribed thereto in Section
14.3(a) of this Agreement.
IV. PROPERTY SUBJECT TO AGREEMENT
Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to
purchase from Seller, subject to the terms and conditions set forth herein,
all of Seller's right, title and interest in and to the following
(collectively, the "Property"):
1. Land - that certain land described in Exhibit A attached hereto, and all
appurtenant rights, privileges, and easements thereto (collectively, the
"Land"). The Land and the Improvements (collectively, the "Real Property")
shall be conveyed from Seller to Buyer pursuant to a Grant Deed (the "Grant
Deed") substantially in the form of Exhibit B attached hereto and
incorporated herein by reference.
2. Improvements - those certain buildings, structures, fixtures, and other
improvements, including, without limitation, the Hotel, located on the Land
(collectively, the "Improvements").
3. Personal Property - that certain personal property located at and used
exclusively for the operation, maintenance, and management of the Hotel as of
the Closing Date, including, without limitation, the FF&E (collectively, the
"Personal Property"). Notwithstanding anything to the contrary contained in
this Agreement, the Personal Property does not include: the property leased
by Seller under the contracts described in Schedule II to the Bill of Sale;
all personal property owned by the Operator; all personal property owned by
guests of the Hotel; property owned by any subtenant under any Sublease; and
property owned by any suppliers, vendors or contractors serving the Hotel or
any sublessee. The Personal Property shall be conveyed from Seller to Buyer
pursuant to a Bill of Sale (the "Bill of Sale") substantially in the form of
Exhibit C attached hereto and incorporated herein by reference.
4. Contracts - those certain contracts and agreements relating to the
improvement, maintenance, repair, or operation of the Hotel in effect on the
Closing Date, if any, entered into by Seller, including, without limitation,
the Equipment Leases (collectively, the "Contracts"). Seller's interest in
the Contracts shall be conveyed to Buyer pursuant to an Assignment and
Assumption of Contracts, Permits and Miscellaneous Property Assets (the
"Assignment and Assumption of Contracts") substantially in the form of
Exhibit D attached hereto and incorporated herein by reference. "Contracts"
does not include contracts or agreements entered into by Operator.
5. Operating Lease - the Operating Lease as in effect on the Closing Date.
Seller's interest in the Operating Lease shall be conveyed to Buyer pursuant
to an Assignment, Assumption and Indemnity Agreement (the "Assignment and
Assumption of Operating Lease") substantially in the form of Exhibit E
attached hereto and incorporated herein by reference.
6. Permits - all licenses, franchises and permits obtained by Seller, if any,
used in or relating to the ownership, occupancy or operation of the Property
or any part thereof (the "Permits"), other than those which, under applicable
law or under provisions applicable to any particular Permit in question, are
nontransferable. Seller's interest in the Permits shall be conveyed to Buyer
pursuant to the Assignment and Assumption of Contracts.
7. Miscellaneous Property Assets - all contract rights, leases, concessions,
trademarks, service marks, trade names (including the names of restaurants,
lounges and meeting rooms), logos, copyrights, and rights under guaranties or
warranties relating to goods, merchandise or services at or relating to the
Hotel (collectively, the "Miscellaneous Property Assets"), but the
Miscellaneous Property Assets shall not include (and there shall be expressly
excluded) the Contracts, the Operating Lease, the Permits, and the Protected
Name and all Protected Marks. Seller's interest in the Miscellaneous Property
Assets shall be conveyed to Buyer pursuant to the Assignment and Assumption
of Contracts.
V. PURCHASE PRICE, PAYMENT OF PURCHASE PRICE AND LIQUIDATED DAMAGES
A. Purchase Price. Subject to the terms, conditions, and provisions
contained in this Agreement, Buyer agrees to pay, and Seller agrees to
accept, as consideration for conveyance of the Property to Buyer, the
sum of One Hundred Twenty-Six Million Nine Hundred Thousand Dollars
($126,900,000) (the "Purchase Price").
B. Payment of Purchase Price; Deposit. The Purchase Price shall be paid
by Buyer as follows:
1. Ten Million Dollars ($10,000,000) (the "Deposit") shall be placed into
Escrow by wire transfer of immediately available funds to Escrow Holder
within one (1) business day following the Effective Date. Escrow Holder
shall immediately notify Seller by facsimile in accordance with Section 14.1
hereof of Escrow Holder's receipt of the Deposit. The Deposit shall become
nonrefundable upon deposit into Escrow, except as otherwise provided herein.
2. The balance of the Purchase Price, subject to adjustments as provided
in Sections 9.6 and 9.7 hereof and taking into account all interest earned on
the Deposit (the "Balance"), shall be placed into Escrow by wire transfer of
immediately available funds to Escrow Holder at least one (1) business day
before the scheduled Closing. If the purchase of the Property by Buyer
hereunder is consummated, then the Deposit shall constitute a part of and be
applied against the Purchase Price. If the purchase of the Property by
Buyer hereunder is not consummated, then the Deposit shall either be
returned to Buyer or be paid to Seller in accordance with the provisions
hereinafter set forth.
C. Allocation of Purchase Price. Subject to the prorations and adjustments
hereinafter provided, the Purchase Price shall be allocated as follows:
$118,556,000 for the Real Property and $8,344,000 for the Personal
Property. Notwithstanding the allocation of the Purchase Price, the
sale of the Property shall be on an all or nothing basis, the sale of
each item of Property to be conditioned upon the simultaneous sale of
all other items of Property on a concurrent basis. Buyer shall have no
right to purchase, and Seller shall have no right to cause Buyer to
purchase, less than all of the Property as an entirety in accordance
with the provisions of this Agreement. Nevertheless, both Buyer and
Seller agree that in all public filings and reports, including, without
limitation, any transfer tax declarations and any federal or state income
tax returns, the various items of Property shall be valued as herein
provided or, if not specifically provided for herein, then Buyer and
Seller shall negotiate in good faith any additional allocations for the
Property using, to the extent required, the method set forth in section
1060 of the Internal Revenue Code of 1986 (as amended) and the Treasury
Regulations promulgated thereunder for purposes of filing Forms 8594 with
the Internal Revenue Service.
D. Investment of Deposit. Escrow Holder shall place the Deposit in money
market accounts, certificates of deposit, United States government
obligations, or in a collateralized interest-bearing account or
accounts, as shall be directed in writing by Buyer and Seller. All
interest on the Deposit shall accrue for the benefit of Buyer until the
Closing. Notwithstanding the foregoing, however, in the event of any
default by Buyer hereunder, all interest earned on such account shall
accrue to the benefit of Seller. Seller shall not be responsible for
nor bear the risk of loss of the Deposit, and shall not be responsible
for the rate of return thereon.
E. Liquidated Damages. IF THE SALE OF THE PROPERTY AS CONTEMPLATED HEREUNDER
IS NOT CONSUMMATED BECAUSE THIS AGREEMENT IS TERMINATED BY SELLER UNDER
SECTION 14.22(d) HEREOF, AND SELLER HAS OTHERWISE SATISFIED ALL MATERIAL
CONDITIONS REQUIRED TO BE SATISFIED BY SELLER ON OR BEFORE THE DATE OF SUCH
TERMINATION, ESCROW HOLDER, WITHOUT ANY FURTHER INSTRUCTION FROM EITHER
SELLER OR BUYER, AND DESPITE ANY INSTRUCTIONS FROM BUYER TO THE CONTRARY,
SHALL PAY TO SELLER THE DEPOSIT (INCLUDING ALL INTEREST EARNED FROM THE
INVESTMENT THEREOF) AND SELLER SHALL RETAIN SUCH AMOUNT AS LIQUIDATED
DAMAGES. THE PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT
OF A DEFAULT BY BUYER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. THEREFORE, BY PLACING THEIR SIGNATURES BELOW, THE PARTIES
EXPRESSLY AGREE AND ACKNOWLEDGE THAT THE DEPOSIT (PLUS INTEREST) HAS BEEN
AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF
SELLER'S DAMAGES IF THE SALE OF THE PROPERTY AS CONTEMPLATED HEREUNDER
IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE
PART OF BUYER. THE PARTIES FURTHER ACKNOWLEDGE THAT SUCH LIQUIDATED
DAMAGES HAVE BEEN AGREED UPON AS SELLER'S EXCLUSIVE REMEDY AGAINST
BUYER IN THE EVENT THAT THE SALE OF THE PROPERTY AS CONTEMPLATED HEREUNDER IS
NOT CONSUMMATED BECAUSE OF A DEFAULT HEREUNDER ON THE PART OF BUYER, PROVIDED
THAT (A) THE FOREGOING SHALL NOT LIMIT SELLER'S RIGHTS OR REMEDIES WITH
RESPECT TO (1) THE OBLIGATIONS OF BUYER UNDER SECTIONS 5.2(c), 14.2(b) AND
14.11 HEREOF, (2) THOSE RIGHTS AND OBLIGATIONS THAT, BY THEIR TERMS, SURVIVE
THE TERMINATION OF THIS AGREEMENT AND (3) DAMAGES OF SELLER RESULTING FROM A
BREACH OF THIS AGREEMENT ON THE PART OF BUYER BUT FOR WHICH SELLER IS NOT
ENTITLED TO THE LIQUIDATED DAMAGES DESCRIBED IN THIS SECTION 4.5; AND (B)
BUYER SHALL ALSO BE RESPONSIBLE FOR THE PAYMENT OF ALL TITLE COMPANY AND
ESCROW CANCELLATION CHARGES.
NOTHING CONTAINED IN THIS SECTION 4.5 SHALL BE DEEMED TO LIMIT ANY OF
THE INDEMNITIES OF BUYER OR SELLER CONTAINED ELSEWHERE IN THIS AGREEMENT. IN
THE EVENT THAT THE SALE OF THE PROPERTY AS CONTEMPLATED HEREUNDER IS
CONSUMMATED, THIS SECTION 4.5 SHALL BE OF NO FURTHER FORCE OR EFFECT.
"Seller"
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.,
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter/
--------------------
Print Name: Jeffrey C. Carter
Print Title: President
"Buyer"
HT-Hotel Equities, Inc.
a Delaware corporation
By:
------------------------
Print Name:
------------------------
Print Title:
------------------------
VI. "AS IS, WHERE IS" SALE
A. "AS IS, WHERE IS" Sale. Buyer acknowledges (i) that Seller owns the
Property but is a passive owner of the Property and has not and does not
directly operate or manage the Property and (ii) Operator, an affiliate of
Buyer, is the operator and manager of the Property. As an essential
inducement to Seller to sell the Property to Buyer on the favorable terms and
conditions set forth in this Agreement, Buyer acknowledges, understands, and
agrees as follows:
1. (i) Buyer is (or is controlled by) a sophisticated purchaser who is
familiar with this type of property and Operator, an affiliate of Buyer, has
leased and operated the Hotel under the Operating Lease since 1973; (ii)
except as set forth herein, neither Seller nor any of its agents, brokers,
officers, directors, shareholders, or employees has made or will make any
representations or warranties of any kind whatsoever, whether oral or
written, express or implied, with respect to the Property; and
(iii) Buyer will be purchasing the Property in its "AS IS, WHERE IS"
condition and "WITH ALL FAULTS". Buyer has been afforded the
opportunity to make any and all inspections of the Property
and such related matters as Buyer desired.
2. In particular, but without limiting the generality of subsection (a)
above, except as set forth herein, neither Seller nor any of its agents,
brokers, officers, directors, shareholders, or employees has made or will
make any representations or warranties, whether oral or written, express or
implied, with respect to the economic value of the Property, adequacy of
utilities serving the Property, the fitness or suitability of the Property
for Buyer's intended uses or the present use of the Property, or the physical
condition, occupation, or management of the Property, its compliance with
applicable statutes, laws, codes, ordinances, regulations, or requirements
relating to occupancy, leasing, zoning, subdivision, removal of architectural
or communications barriers, planning, building, fire, safety, health or
environmental matters (including, without limitation, the presence or absence
of asbestos or toxic or hazardous substances or materials), compliance with
covenants, conditions, and restrictions (whether or not of record), other
local, municipal, regional, state, or federal requirements, or other
statutes, laws, codes, ordinances, regulations, or requirements.
3. Further, but again without limiting the generality of subsection (a)
above, Seller expressly disclaims and negates, as to the Personal Property
and all of the other Property: (i) any implied or express warranty of
merchantability; (ii) any implied or express warranty of fitness for a
particular purpose; and (iii) any implied warranty with respect to the
condition of the Property, the past or projected financial condition of the
Property (including, without limitation, the income or expenses thereof) or
the uses permitted on, the development requirements for, or any other matter
or thing relating to all or any portion of the Property.
4. In addition, but again without limiting the generality of subsection (a)
above: (i) all documents, reports, studies and other information or materials
delivered or disclosed to Buyer by Seller (the "Information"), including,
without limitation, that certain Phase I Environmental Site Assessment, dated
as of July 17, 1996 (the "Environmental Assessment"), are being provided to
Buyer for informational purposes only and only as an accommodation to Buyer;
(ii) unless expressly stated otherwise, all of the Information relates to the
period from and after Seller's acquisition of title to the Property, and
Seller is not providing and will not provide any documents, reports, studies,
or other information or materials regarding any aspect of Seller's
relationship with Seller's predecessor(s)-in-title; (iii) Seller has not
made, is not making, and will not make any representation, warranty, or
promise of any kind, express or implied, concerning the accuracy or
completeness of all or any part of the Information; and (iv) any inaccuracy,
incompleteness, or deficiency in any part of the Information shall be solely
the risk and responsibility of Buyer, shall not be chargeable in any respect
to Seller, and shall not form the basis of any claims by Buyer against any
person or entity that prepared, authored, compiled, or created any part of
the Information, such claims being expressly waived and relinquished by
Buyer. Seller shall provide reasonable assistance (provided that such
assistance shall be at no cost to Seller) to Buyer in obtaining a reliance
letter from the firm which prepared the Environmental Assessment, entitling
Buyer (and Buyer's lender, if any) to rely thereon as if the same had been
addressed to Buyer (and Buyer's lender, if any).
5. Buyer hereby absolutely and unconditionally waives and releases Seller,
to the fullest extent permitted under law, from and of any and all demands,
claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses with respect to all obligations for or
pertaining to the existence of asbestos, hazardous materials, environmental
contami nation or conditions at, in, on, under or from the Property arising
under or based upon any federal, state, local or foreign laws or regulations,
or based upon common law or otherwise, whether now or hereafter in effect,
including, without limitation, all those provisions of law that exclude or
may exclude unknown or unsuspected claims from general release. THIS WAIVER
AND RELEASE BY BUYER SPECIFICALLY, BUT WITHOUT LIMITATION, INCLUDES
BUYER'S WAIVER AND RELEASE OF ANY CLAIMS UNDER SECTION 1542
OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES, "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", THE PROVISIONS
OF WHICH BUYER HEREBY SPECIFICALLY ACKNOWLEDGES, AFTER CONSULTATION WITH
LEGAL COUNSEL AND WITH FULL KNOWLEDGE OF THE CONSEQUENCES OF ITS ACTIONS.
__________ Buyer's initials
6. To the extent required to be operative, the disclaimers or warranties
contained herein are "conspicuous" disclaimers for purposes of any applicable
law, rule, regulation, or order.
B. Inspection.
1. Prior to the date hereof, Seller has permitted Buyer and its
representatives to enter upon and inspect the Property and to conduct soils,
engineering, and any other tests or studies as Buyer desired. In connection
with such inspections, Seller has provided to Buyer (subject to the
limitations set forth in Section 5.1(d) hereof), copies of any documents,
reports, studies and other information in Seller's possession relating to the
physical condition of the Property and requested by Buyer. Buyer has and
shall keep the Property free and clear of any mechanic's or materialmen's
liens arising out of any entry, inspection, test, or study conducted by Buyer
or its representatives. If Buyer has not already done so, Buyer shall
promptly restore the Property to its previous condition before any such
inspections, studies, or tests were performed.
2. If, during such inspections, Buyer or its representatives undertook any
borings or other disturbances of the soil, the soil shall be re-compacted to
its condition immediately before any such borings or other disturbances were
undertaken, and Buyer shall obtain, at Buyer's own expense, a certificate
from a licensed soils engineer that certifies that the soil has been re-
compacted to such condition.
3. Notwithstanding any general liability or other insurance that may be
maintained by Buyer, Buyer shall indemnify and defend Seller and Operator and
hold Seller and Operator harmless (using counsel reasonably satisfactory to
Seller) from any and all liability, loss, cost, damage, or expense
(including, without limitation, reasonable attorneys' fees and costs) that
Seller or Operator may sustain or incur by reason of or in connection with
any such entry, inspections, studies, or tests. The indemnity obligations of
Buyer under this Agreement shall survive any termination of this Agreement or
the delivery of the Grant Deed and the transfer of title to the Property. If
this Agreement is terminated for any reason other than pursuant to Section
14.22(c) hereof, Buyer shall deliver to Seller, without charge therefor, all
originals and copies of any and all inspections, studies, tests, surveys, or
other reports made by or for or provided to Buyer with respect to the
Property other than any economic studies, financial analyses or capital
improvement and rehabilitation studies or programs relating to the Property
(the "Excluded Reports").
VII. TITLE TO PROPERTY; APPROVALS
A. Title. At the Closing, Seller shall convey to Buyer fee title to the
Real Property by execution and delivery of the Grant Deed and by execution
and delivery of the Assignment and Assumption of Operating Lease. The
issuance by First American Title Insurance Company (the "Title Company") of
an American Land Title Association Owner's Policy of Title Insurance in the
amount of the Purchase Price (the "Owner's Title Policy") shall be conclusive
evidence of Seller's delivery of fee title acceptable to Buyer. At Closing,
the Title Company shall deliver the Owner's Title Policy to Buyer and shall
have obtained reinsurance for a portion of the title insurance coverage
reasonably satisfactory to Buyer from reinsurers reasonably satisfactory to
Buyer under direct access agreements reasonably satisfactory to Buyer;
provided that any additional cost for such reinsurance
(above the premium for the Owner's Title Policy) shall be borne by Buyer.
Buyer's sole recourse for any defect in the title actually acquired by
Buyer shall be to enforce Buyer's rights under the Owner's Title Policy,
and Seller shall have no liability to Buyer based upon
any defect in the title actually acquired by Buyer. The Owner's Title Policy
shall be issued by the Title Company in the amount of the Purchase Price, and
shall insure fee title to the Real Property in Buyer, subject only to the
Operating Lease, property taxes and assessments not yet delinquent, and such
other exceptions to title as may be accepted and/or approved by Buyer
pursuant to Section 6.2 hereof (collectively, the "Permitted Exceptions"),
and with full- extended coverage over the general exceptions and the
following endorsements: Access, ALTA 9, Restrictions, Survey and Tax
Information.
B. Approval of Title.
1. Seller has delivered to Buyer, and Buyer has reviewed: (i) that certain
preliminary title report dated July 16, 199[6], concerning the Real Property,
issued by the Title Company under order no. T-260418-MW (the "PTR"),
including copies of all documents referred to in the PTR as encumbering the
Real Property as well as (ii) a copy of that certain ALTA/ACSM Land Title
Survey of the Real Property prepared by Tronoff Associates and dated
September 12, 1996 (the "Survey"), which Seller shall, at Seller's expense,
cause to be certified to Buyer (and Buyer's lender, if any) prior to the
Closing (provided that any additional survey work required by Buyer or
Buyer's lender shall be at the sole cost and expense of Buyer). Buyer has
approved the condition of title to the Real Property subject to (i) all
matters disclosed on the Survey, and (ii) all matters disclosed in the PTR
and in all documents referred to in the PTR as encumbering the Real Property;
provided, however, that Buyer has not approved matters shown on the PTR or
disclosed on the survey to the extent required to be discharged by Seller on
or before the Closing as hereinafter specifically set forth in subparagraph
(b) of this Section 6.2.
2. Seller shall cause the matters of title reflected on the PTR as exceptions
no. 9 - 12 (inclusive), 16 and 17 to be removed from title or otherwise
insured against under the Owner's Title Policy at Closing. Buyer shall accept
the following matters of title (each of which shall be deemed a "Permitted
Exception" hereunder): matters reflected on the PTR as exceptions no. 1 - 8
(inclusive), 13, 14 and 15; the applicable zoning and use regulations of any
applicable governmental authority; possessory interests in the Property of
less than thirty (30) days' duration arising in the ordinary course of the
operation of the Hotel; rights of tenants and sub-tenants, under Subleases
entered into by Operator, as tenants only, without any option to purchase or
right of first refusal for all or any portion of the Real Property; and any
mechanic's or other liens arising out of Buyer's entry upon the Property.
Buyer has reviewed and approved all matters shown on the Survey (and shall
accept the Property and the Owner's Title Policy subject to any items shown
on the Survey which may be excepted by the Title Company).
3. Prior to the Closing, Seller shall not take any action or commit or suffer
any acts which would give rise to a material variance from the current legal
description of the Real Property, or cause the creation of any detrimental
exception or encumbrance against or respecting the Real Property other than
Permitted Exceptions, without in each case the prior written consent of
Buyer, which consent may be withheld in Buyer's discretion.
4. Notwithstanding the foregoing provisions of this Section 6.2, Buyer
acknowledges and agrees that any matters resulting from the act of Operator
or the failure of Operator to perform any action required to be performed by
it under the terms of the Operating Lease, made without the express written
direction of Seller, which could otherwise result in an unpermitted exception
to title (including, without limitation, Operator's execution and delivery of
any additional Subleases at the Property or creation of liens upon the
Property) shall be deemed to be "Permitted Exceptions" hereunder.
C. Personal Property and Contracts, Permits and Miscellaneous Property
Assets. At Closing, Seller shall transfer to Buyer title to Seller's
interest in the Personal Property and the Contracts, Permits and
Miscellaneous Property Assets by execution and delivery of the Bill of Sale
and the Assignment and Assumption of Contracts respectively. Buyer shall
assume all Contracts, including those Contracts, if any, that are terminable
only upon the payment of a penalty, and Buyer shall be responsible for any
such penalty. Seller and Buyer specifically waive compliance with California
Uniform Commercial Code, Sections 6101, et seq., commonly referred to as the
Uniform Commercial Code Bulk Transfers, and any similar provisions under the
laws of the State of California.
D. Approval of Other Matters.
1. Buyer has conducted and completed its inspections of the Property as
described in Section 5.2 hereof and Buyer shall have no right to terminate
this Agreement based upon the physical condition of the Property or any
matter which was (or might have been) disclosed by Buyer's inspections
thereof or otherwise, except as expressly set forth herein.
2. Buyer hereby acknowledges that the transfer documents attached hereto as
exhibits (the "Documents"), as revised to conform to the specific terms of
this Agreement, will be used at Closing. Buyer hereby unconditionally
approves the form of all the Documents, subject to completion of any
uncompleted information to be set forth therein in accordance with the terms
of this Agreement.
VIII. BUYER'S CONDITIONS PRECEDENT TO CLOSING
The following conditions are conditions precedent to Buyer's obligation
to purchase the Property:
A. Owner's Title Policy. The Title Company shall be irrevocably committed to
issue to Buyer the Owner's Title Policy (with such reinsurance and
endorsements thereto as are set forth in Section 6.1 hereof), subject only to
the Permitted Exceptions.
B. Seller's Non-Foreign Affidavit. Buyer shall have received a Non-Foreign
Affidavit ("Seller's Non-Foreign Affidavit") executed by Seller and
satisfying the requirements of Section 1445 of the United States Internal
Revenue Code of 1986, as amended, and the requirements of Section 18805 of
the California Revenue and Taxation Code, as amended, substantially in the
form attached hereto as Exhibit F and incorporated herein by reference.
C. Seller's Organizational Documents. Within fifteen (15) business days
after the Effective Date, Seller shall deliver the following to Buyer at the
address set forth in Section 14.1 hereof: certified copies of Seller's
Partnership Agreement and Certificate of Limited Partnership, and all
amendments or modifications thereto, and, if available, a certificate of good
standing.
D. Compliance by Seller. Seller shall have complied in all material respects
with each and every covenant and condition of this Agreement to be kept or
complied with by Seller.
E. Representations and Warranties. The representations and warranties of
Seller contained in Section 10.2 and elsewhere in this Agreement shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date, and Buyer shall have
received a certificate to that effect by a duly authorized officer of the
general partner of Seller (the liability thereunder being solely that of
Seller and not the personal liability of the officer executing the same).
F. Limited Partner Approval. Seller shall have obtained the Limited Partner
Approval and delivered the Limited Partner Vote Notice evidencing the same to
Buyer and Escrow Holder.
G. Covenant to Satisfy Conditions. Seller hereby agrees to use commercially
reasonable efforts to cause each of the conditions precedent to the
obligations of Buyer to be fully satisfied, performed and discharged on and
as of the Closing Date, except that Seller shall not have any obligation to
expend any funds, or incur any liabilities or obligations, which it would not
otherwise be required to spend or incur under the provisions of this
Agreement.
IX. SELLER'S CONDITIONS PRECEDENT TO CLOSING
The following conditions are conditions precedent to Seller's obligation
to sell the Property:
A. Limited Partner Vote. Although Seller believes that the approval of the
Limited Partners is not required for the sale of the Property to Buyer,
Seller has nonetheless agreed, at Seller's sole cost and expense, to present
the sale to the Limited Partners for their approval.
1. Solicitation. Seller shall solicit the authorization, approval or
ratification (the "Limited Partner Vote") by the Limited Partners of the sale
of the Property as contemplated hereby. Seller shall solicit the Limited
Partner Vote by duly noticing and holding a meeting of the Limited Partners
(the "Meeting") at which the Limited Partners may vote, in person or by
proxy, on the matters described above, or by soliciting the Limited Partners
written consent, whichever method Seller believes in its sole and absolute
discretion will more expeditiously result in the receipt of the approval of
the sale of the Property as contemplated hereby by the affirmative action of
Limited Partners holding a majority of the outstanding "Interests" (as
defined in Seller's Partnership Agreement) (the "Limited Partner Approval").
2. Limited Partner Vote Notice. Within three (3) business days of obtaining
knowledge thereof, Seller shall provide written notice (the "Meeting
Notice") to Buyer and Escrow Holder of the date set for the Meeting. In
addition, within three (3) business days of obtaining knowledge thereof,
Seller shall provide written notice (each, a "Postponement Notice") of any
postponement of the date set for the Meeting, and the new date therefor.
Finally, within three (3) business days after conducting the Limited Partner
Vote, Seller shall deliver written notice of the result thereof (the "Limited
Partner Vote Notice") to Buyer and Escrow Holder, in substantially the form
of Exhibit J attached hereto.
3. Proxy Materials. Buyer and Seller each acknowledges and agrees that Buyer
shall have no responsibility for, or involvement or participation in, the
preparation, execution, issuance or dissemination of the materials (the
"Proxy Materials") to be prepared and filed with the Securities and Exchange
Commission and thereafter distributed to the Limited Partners in connection
with soliciting the Limited Partner Approval. Notwithstanding the foregoing,
Buyer shall reasonably cooperate with Seller, to the extent requested by
Seller and/or the Securities and Exchange Commission, with respect to the
preparation of the Proxy Materials and in no event shall Buyer delay comments
or such cooperation for more than three business days, provided that Seller
shall pay any reasonable and actual out-of-pocket costs (excluding the fees,
charges and disbursements of attorneys and accountants) incurred by Buyer in
connection with such requested cooperation. Seller shall provide Buyer with
a draft of the Proxy Materials at least one business day prior to submission
of the Proxy Materials to the Securities and Exchange Commission and shall
deliver to Buyer final and definitive versions of the Proxy Materials
together with delivery thereof to the Limited Partners. If, at any time
prior to the Meeting, any event or circumstance relating to Buyer or Seller
should be discovered by such party which should be set forth in an amendment
or a supplement to the Proxy Materials, such party shall promptly inform the
other thereof and take appropriate action in respect thereof.
4. Indemnification. Each party hereto shall (i) indemnify (in such role, an
"Indemnifying Party") and hold harmless each other party and their respective
partners, affiliates, directors, officers and controlling persons (an
"Indemnified Party") against any and all loss, liability, claim, damage and
expense whatsoever to which an Indemnified Party may become subject, under the
Securities Exchange Act of 1934, as amended or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of any untrue statement or alleged untrue statement of a material fact
contained in the Proxy Materials, including any amendment or supplement
thereto, or any preliminary Proxy Materials, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (ii) reimburse
the Indemnified Party for any legal or other expenses reasonably incurred by
the Indemnified Party in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that (x) Buyer shall be liable under this Section 8.1(d)
only for information relating to Buyer included or incorporated by reference
in the Proxy Materials, and (y) Seller shall not be liable in any such case
under this Section 8.1(d) to the extent that any such loss, claim, damage,
liability or action arises out of any untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with written information furnished to Seller
by or on behalf of Buyer specifically for use therein.
Promptly after receipt by an Indemnified Party under this Section
8.1(d) of notice of any claim or the commencement of any action, the
Indemnified Party shall, if a claim in respect thereof is to be made against
the Indemnifying Party under this Section 8.1(d), promptly notify the
Indemnifying Party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify or a delay in notifying
the Indemnifying Party shall not relieve it from any liability which it may
have to an Indemnified Party under this Section 8.1(d) except to the extent
that such Indemnifying Party is materially prejudiced thereby. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be
entitled to participate therein, and, to the extent that it wish es, jointly
with any other similarly notified Indemnifying Party, to assume the defense
thereof with counsel reasonably satis factory to the Indemnified Party.
After notice from the Indemni fying Party to the Indemnified Party of its
election to assume the defense of such claim or action, the Indemnifying
Party shall not be liable to the Indemnified Party under this Section 8.1(d)
for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (i) the
employment thereof has been specifically authorized by the Indemnifying Party
in writing, (ii) such Indemnified Party shall have been advised in writing (a
copy of which shall be provided to the Indemnifying Party) by such counsel
that there may be one or more legal defenses available to it which are
different from or additional to those avail able to the Indemnifying Party
and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel or (iii) the Indemnifying Party
has failed to assume the defense to such claim or action and employ counsel
rea sonably satisfactory to the Indemnified Party, and, in the case of
clauses (i), (ii) and (iii), if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense of such claim or action on behalf of such
Indemnified Party; it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allega tions or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm of attorneys
at any time for all such Indemnified Parties, which firm shall be designated
in writing by such Indemnified Parties. Each Indemnified Party, as a
condition of the indemnity agreements contained herein shall use its
commercially reasonable efforts to cooperate with the Indemnifying Party in
the defense of any such claim or action. The Indemnifying Party shall not be
liable for any settlement of any such claim or action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there is a final judgment in favor of
the plaintiff in any such claim or action, the Indem nifying Party agrees to
indemnify and hold harmless any Indemnified Party from and against any loss
or liability by reason of such settlement or judgment.
5. Termination Right. In the event that a Limited Partner Vote Notice
evidencing disapproval by the Limited Partners of the sale of the Property as
contemplated hereby is delivered by Seller to Escrow Holder and Buyer then
this Agreement shall automatically terminate. In the event that no Limited
Partner Vote Notice (whether evidencing the approval or disapproval of the
Limited Partners) has been delivered to Escrow Holder on or before March 24,
1997, then either party may terminate this Agreement and cancel the Escrow by
written notice to the other party and the Escrow Holder.
B. Buyer's Organizational Documents. Within fifteen (15) business days after
the Effective Date, Buyer shall deliver the following to Seller at the
address set forth in Section 14.1 hereof:
(1) if Buyer or any partner or permitted assignee of Buyer is a corporation,
certified copies of each such corporation's Articles of Incorporation,
Bylaws, and all amendments or modifications thereto, appropriate corporate
resolutions and incumbency certificates, and a current certificate of good
standing;
(2) if Buyer or any partner or permitted assignee of Buyer is a general
partnership, certified copies of each such general partnership's Partnership
Agreement and Statement of Partnership, and all amendments and modifications
thereto;
(3) if Buyer or any partner or permitted assignee of Buyer is a limited
partnership, certified copies of each such limited partnership's Partnership
Agreement and Certificate of Limited Partnership, and all amendments or
modifications thereto, and, if available, a certificate of good standing; and
(4) if Buyer or any partner or permitted assignee of Buyer is a trust,
certified copies of each such trust's trust agreement, and all amendments and
modification thereto, and, if available, a certificate of good standing.
C. Estoppel by Operator. Buyer shall have caused Operator to deliver to
Buyer and Seller an Estoppel Agreement (the "Estoppel Agreement"), in the
form attached hereto as Exhibit G.
D. Compliance By Buyer. Buyer shall have complied in all material respects
with each and every covenant and condition of this Agreement to be kept or
complied with by Buyer.
E. Representations and Warranties. The representations and warranties of
Buyer contained in Section 10.1 and elsewhere in this Agreement shall be true
and correct in all material respects when made, and shall be true and correct
in all material respects on the Closing Date, and Seller shall have received
a certificate to that effect by a duly authorized officer of Buyer (the
liability thereunder being solely that of Buyer and not the personal
liability of the officer executing the same).
F. Covenant to Satisfy Conditions. Buyer hereby agrees to use commercially
reasonable efforts to cause each of the conditions precedent to the
obligations of Seller to be fully satisfied, performed and discharged on and
as of the Closing Date, except that Buyer shall not have any obligation to
expend any funds, or incur any liabilities or obligations, which it would not
otherwise be required to spend or incur under the provisions of this
Agreement.
X. ESCROW AND CLOSING
A. Deposit With Escrow Holder and Escrow Instructions. Escrow hereunder (the
"Escrow") shall be established with Escrow Holder at 345 California Street,
24th Floor, San Francisco, California. Upon execution of this Agreement, the
parties shall deposit an executed copy of this Agreement with Escrow Holder.
This Agreement shall serve as the instructions to Escrow Holder to consummate
the purchase and sale contemplated hereby. Seller and Buyer agree to execute
such additional and supplementary escrow instructions as are consistent with
this Agreement and as may be appropriate to enable Escrow Holder to comply
with the terms of this Agreement. If there is any conflict between the
provisions of this Agreement and any additional or supplementary escrow
instructions, however, the terms of this Agreement shall control.
B. Closing.
1. Except as may be provided otherwise herein, the Closing Date shall occur
prior to 5:00 p.m., Pacific time, on the seventh (7th) calendar day following
delivery of the Limited Partner Vote Notice evidencing the Limited Partner
Approval into Escrow, but in no event earlier than December 27, 1996 or later
than March 31, 1997, unless the parties hereto agree, each in its sole and
absolute discretion, to change the scheduled Closing Date. Notwithstanding
the foregoing, in the event that Seller delivers the Limited Partner Vote
Notice evidencing the Limited Partner Approval into Escrow on or before 3:00
p.m. Pacific time on December 24, 1996, then the Closing Date shall occur on
December 31, 1996 (unless the parties hereto agree, each in its sole and
absolute discretion, to change the scheduled Closing Date).
2. If either party has complied with the terms and conditions of this
Agreement on or before the scheduled Closing Date but the Closing does not
occur because of a breach or default hereunder by the other party, the
defaulting party shall be deemed to be in material breach of this Agreement
and the non-defaulting party may terminate this Agreement.
C. Deliveries by Seller.
(1) Within fifteen (15) business days after the Effective Date, Seller
shall deposit with Escrow Holder the following:
1. One (1) original Grant Deed, duly executed and acknowledged by Seller
and in recordable form;
2. Four (4) originals of the Bill of Sale, duly executed by Seller;
3. Four (4) original counterparts of the Assignment and Assumption of
Contracts, duly executed by Seller;
4. Four (4) original counterparts of the Assignment and Assumption of
Operating Lease, duly executed and acknowledged by Seller and in recordable
form;
5. Four (4) original counterparts of the Landlord's Certification attached
to the Estoppel Agreement, duly executed by Seller;
6. Four (4) original counterparts of a Fifth Amendment to the Operating Lease
(the "Fifth Amendment"), whereby the "Early Termination Fee" (as defined in
the Operating Lease) shall be increased (i) to $16,032,500 as of January 1,
1997 and (ii) to $17,635,750 as of January 1, 1998, duly executed by Seller;
7. Two (2) original Seller's Non-Foreign Affidavits, duly executed by
Seller;
8. Original copies, executed by or on behalf of Seller, of any required real
estate transfer tax declarations, or any similar documentation required to
evidence the payment of any tax imposed by the state, county and municipality
on the transaction contemplated hereby; and
9. Such articles of incorporation, agreements or certificates of partnership,
resolutions, authorizations, bylaws, certifications or other corporate,
partnership or trust documents or agreements relating to Seller and Seller's
partners as Buyer or Escrow Holder shall reasonably require in connection
with this transaction.
(2) Within one (1) business day following Seller's delivery of the
Limited Partner Vote Notice evidencing the Limited Partner Approval, Seller
shall deposit with Escrow Holder the following:
(a) Any other cash, documents, or instruments called for hereunder
or reasonably requested by Buyer and consistent herewith to be paid,
executed, or delivered by Seller that have not previously been delivered by
Seller to Escrow Holder.
D. Deliveries by Buyer.
(1) Within fifteen (15) business days after the Effective Date, Buyer
shall deposit with Escrow Holder the following:
1. Four (4) original counterparts of the Assignment and Assumption of
Contracts, duly executed by Buyer;
2. Four (4) original counterparts of the Assignment and Assumption of
Operating Lease, duly executed by Buyer;
3. Four (4) original Estoppel Agreements and four (4) original counterparts
of the Fifth Amendment, each duly executed by Operator;
4. Such articles of incorporation, agreements or certificates of partnership,
resolutions, authorizations, bylaws, certifications or other corporate,
partnership, or trust documents or agreements relating to Buyer (or Buyer's
permitted assignee, if any) as Seller or Escrow Holder shall reasonably
require in connection with this transaction;
5. Original copies, executed by or on behalf of Buyer, of any required real
estate transfer tax declarations, or any similar documentation required to
evidence the payment of any tax imposed by the state, county and municipality
on the transaction contemplated hereby; and
6. Any documents, or instruments reasonably requested by Seller or Title
Company to evidence Buyer's assumption of the Hyatt Loan and the release of
Seller from its obligations thereunder, each executed and delivered (in
recordable form where necessary) by Hyatt Corporation and/or Buyer, as
applicable.
(2) Within one (1) business day following Seller's delivery of the
Limited Partner Vote Notice evidencing the Limited Partner Approval, Buyer
shall deposit with Escrow Holder the following:
(a) Good and immediately available funds sufficient to pay the
Balance, Buyer's portion of the closing costs, and any other amounts payable
by Buyer in order to permit Escrow Holder to close the Escrow which, if
deposited by Buyer prior to the Closing Date, shall be invested for Buyer's
benefit at Buyer's sole discretion; and
(b) Any other cash, documents, or instruments called for hereunder
or reasonably requested by Seller and consistent herewith to be paid,
executed, or delivered by Buyer or that are required for Closing hereunder
that have not been previously delivered by Buyer to Escrow Holder.
E. Other Instruments; Revised Deliveries. Seller and Buyer shall each
deposit any other documents or instruments that may be reasonably required by
Escrow Holder, or that are otherwise required to close Escrow and consummate
the purchase and sale of the Property in accordance with the terms hereof
including, without limitation, the Closing Statements. In the event that
the interest hereunder of Buyer or Seller is assigned (as permitted hereby)
subsequent to the date that instruments have been delivered into Escrow but
prior to the Closing Date, the parties shall re-execute documents by and for
the benefit of the permitted assignee and shall deliver such revised
instruments to Escrow Holder and shall authorize Escrow Holder, upon its
receipt of the revised documentation, to destroy the instruments previously
deposited into Escrow, to the extent replaced by such revised documentation.
F. Prorations and Apportionments.
1. Payments required to be made by the Operator under the Operating Lease
shall be prorated, credited or applied in accordance with Section 9.6(b)
hereof. All other income and expenses in connection with the ownership,
operation and maintenance of the Property and not accounted for in the
calculation of amounts due under the Operating Lease, shall be prorated as of
the Closing Date. In addition, Seller shall retain that portion of the FF&E
Reserves (and at the Closing Operator shall deliver such portion to Seller
from the account in which the FF&E Reserves are held in trust for Seller)
equal to (i) $896,454, plus (ii) all amounts contributed to the FF&E Reserves
and attributable to the period from October 1, 1996 through October 31, 1996,
plus (iii) fifty percent (50%) of all amounts to be deposited into the FF&E
Reserves pursuant to the terms of the Operating Lease and attributable to the
period between November 1, 1996, and the Closing Date. The remaining fifty
percent (50%) of the FF&E Reserves attributable to the period between
November 1, 1996 and the Closing Date may be expended by the Operator in
accordance with the terms of the Operating Lease and any budgets approved
pursuant thereto, and any portion thereof which is not so expended by the
Operator shall be transferred to Buyer without any adjustment to the Purchase
Price. At close of Escrow, Buyer shall deposit in Escrow any additional
amount required to cover prorations and other charges to Buyer which have
been determined prior to close of Escrow in accordance with this Agreement.
Seller and Buyer shall settle any prorations not known at close of Escrow
within thirty (30) calendar days after the Closing Date (including
adjustments in accordance with the provisions of the Operating Lease which
would otherwise be made at the end of the Lease Year in which the Closing
occurs under the Operating Lease). In the event that either party hereto
receives amounts that are due to the other under the terms of this Section
9.6(a), such amounts shall be paid to the party entitled thereto within
thirty (30) calendar days of receipt by the other of such amount, which
payment shall be accompanied by a calculation thereof together with such
documentation as may be reasonably necessary to support such calculation.
(b) Rent required to be paid by Operator under the Operating Lease
for the month in which Closing occurs shall be prorated between Buyer and
Seller effective as of the Closing Date based on the actual number of days
elapsed. Buyer shall cause Operator to provide calculations (together with
reasonable documentation supporting such calculations) setting forth any
adjustments ("Adjustments") to rental payments required to be made by
Operator under the Operating Lease which are made on a Lease Year (as defined
in the Operating Lease) basis to both Buyer and Seller within sixty (60)
calendar days after the Closing Date. Buyer and Seller shall negotiate in
good faith to agree upon the amount of the Adjustments within ten (10)
calendar days after submission of the calculations therefor by Operator. No
Adjustments or prorations under the Operating Lease or otherwise shall be
made for periods subsequent to the Lease Year in which Closing occurs. Upon
close of Escrow, Buyer and Seller shall jointly notify Operator in writing of
the Closing Date and instruct Operator to make all payments thereafter to
Buyer.
2.) For a period of one (1) year following the Closing Date,
Buyer agrees to permit Seller, its independent auditors and other
representatives reasonable access to inspect the books, records and accounts
of Buyer and Operator pertaining to the Property, to the extent the same are
applicable to the period prior to the Closing Date.
3.) If Seller and Buyer are unable, after using reasonable
efforts in good faith, to agree upon any particular item, or the amount
thereof, for inclusion in the Closing Statements, the Closing shall
nevertheless occur, and proration adjustments shall be made, on a tentative
basis, on the basis of the individual items as proposed by Buyer, with any
differences between the amounts as proposed by Buyer and the amounts proposed
by Seller deposited by Buyer in an escrow with the Title Company under the
Title Company's form of strict joint order escrow (the "Proration Escrow").
Promptly after Operator's delivery of the Adjustment calculations, Buyer and
Seller shall meet and attempt in good faith to resolve any differences
between them with regard to any item of proration or Adjustment in dispute. If
however, the parties are unable, within ten (10) days following Operator's
delivery of the Adjustment calculations, to resolve all items in dispute,
each party will, within three business days and at its sole cost and expense,
engage an independent and disinterested certified public accountant with no
less than ten (10) years experience in calculating prorations of the type in
question (other than the accounting firm of Arthur Andersen & Co.) to
calculate (within ten (10) calendar days) the item or items of proration or
Adjustment in dispute, and, so long as the calculation of the higher
accountant of any particular item is no more than 110% of the value of the
lower accountant, the parties will agree to accept the average of the two
calculations. In the event that the higher calculation is more than 110% of
the lower calculation, then the two accountants shall within five (5)
calendar days jointly designate a third disinterested certified public
accountant. In the event that the two accountants after good faith attempts
shall have failed to agree on the third accountant within such five day
period, then either Buyer or Seller may request that the accounting firm of
Arthur Andersen & Co. designate the third accountant, and such designation(s)
shall be binding on the parties. If, within, ten (10) days after ap
pointment of the third accountant, a majority of the accountants concur on
the valuation, that valuation shall be binding and con clusive on Buyer and
Seller. If a majority of the accountants do not concur within that period,
the calculation farthest from the median of the three calculations shall be
disregarded and the average of the remaining two calculations shall be deemed
the calculation and shall be binding and conclusive. The cost of the third
accountant shall be borne solely by the parties who engaged the accountant
who delivered the original calculation that was farthest in value from the
third calculation. Buyer (on its own behalf and on behalf of Operator) and
Seller agree to furnish the accountant(s) with all appropriate information
utilized in the parties' own calculations.
4.) The provisions of this Section 9.6 shall survive the
Closing.
X.G. Costs and Expenses. Seller shall pay (a) the premium for the
Owner's Title Policy, (b) the cost of the Survey and a reasonable survey
certification to Buyer (and Buyer's lender if any)(provided that any
additional survey work required by Buyer or Buyer's lender shall be at the
sole cost and expense of Buyer), and (c) one-half (1/2) of all documentary
transfer taxes and sales taxes applicable to the transfer of the Property to
Buyer, (d) one-half (1/2) of Escrow Holder's fees and costs and (e) all charges
to remove any title exceptions which are not Permitted Exceptions and which
Seller has elected or is obligated to remove, including recording fees for
the same. Buyer shall pay (i) the cost of any endorsements to the Owner's
Title Policy and the costs of any additional survey work desired by Buyer,
(ii) one-half (1/2) of all documentary transfer taxes and sales taxes
applicable to the transfer of the Property to Buyer, (iii) one-half (1/2) of
Escrow Holder's fees and costs, and (iv) all filing and recording charges for
the Documents. All other taxes, costs, and charges of the Escrow shall be
paid equally by Seller and Buyer. Except as otherwise expressly herein
provided, each party hereto agrees to bear and pay for its own account the
fees and disbursements of its own counsel, accountants, appraisers, engineers
and other advisors in connection with the negotiation and preparation of this
Agreement and the close of Escrow.
X.H. Close of Escrow. Provided that (i) Escrow Holder has received
the documents and funds described in Sections 9.3, 9.4, and 9.5 hereof; (ii)
Escrow Holder has not received prior written notice from either party to the
effect that an agreement of either party made hereunder has not been
performed or to the effect that any condition set forth herein has not been
satisfied or waived; (iii) Buyer has not terminated this Agreement as
permitted herein; (iv) Seller has not terminated this Agreement as permitted
herein; and (v) the Title Company has issued or is unconditionally prepared
and committed to issue to Buyer the Owner's Title Policy (with such
reinsurance and endorsements thereto as are set forth in Section 6.1 hereof)
, Escrow Holder is authorized and instructed at 8:00 a.m., Pacific time, on
the scheduled Closing Date to:
1.) retain for Escrow Holder's own account all escrow fees and
costs, disburse to Title Company the fees and expenses incurred in connection
with the issuance of the Owner's Title Policy, and disburse to any other
persons or entities entitled thereto the amount of any other closing costs,
all in accordance with Buyer's and Seller's closing statements prepared by
Escrow Holder and pre-approved by the parties hereto (the "Closing
Statements").
2.) record in the appropriate office any documents or
instruments necessary to remove any exceptions to title which are not
Permitted Exceptions.
3.) request that the amount of the documentary transfer tax due
be shown on a separate paper and be affixed to the Grant Deed by the County
Recorder only after the permanent record is made;
4.) cause the Grant Deed and the Assignment and Assumption of
Operating Lease to be recorded in the County Recorder's Office of San
Francisco County, California and deliver conformed copies of such recorded
documents to each of Buyer and Seller;
5.) deliver by wire transfer the Deposit and the Balance to
Seller, as adjusted by Seller's share of prorations and costs of escrow, in
the manner specified by Seller in separate written instructions to Escrow
Holder;
6.) deliver to Buyer two (2) fully executed original
counterparts of each of the Bill of Sale, the Assignment and Assumption of
Contracts, and the Estoppel Agreement, and two (2) conformed copies of each
of the "as-recorded" Grant Deed and the Assignment and Assumption of
Operating Lease, and deliver to Seller two (2) fully executed original
counterparts of each of the Bill of Sale, the Assignment and Assumption of
Contracts, and the Estoppel Agreement, and two (2) conformed copies of each
of the "as-recorded" Grant Deed and the Assignment and Assumption of
Operating Lease;
7.) deliver two (2) original Seller's Non-Foreign Affidavits to
Buyer;
8.) return any remaining funds to Buyer after all payments
pursuant to clauses (a) and (e) immediately above;
9.) cause the Title Company to issue the Owner's Title Policy
(together with the endorsements and evidence of reinsurance described in
Section 6.2 hereof) to Buyer; and
10.) destroy all copies and counterparts
of the Fifth Amendment.
X.I. Notification; Closing Statements. If Escrow Holder cannot
comply with the instructions herein (or as may be provided later), Escrow
Holder is not authorized to cause the recording or delivery of any of the
foregoing documents. If Escrow Holder is unable to cause the recording,
Escrow Holder shall notify the parties of such fact without delay. If such
inability continues for a period of seven (7) calendar days (unless either
Seller or Buyer is then in default hereunder (in which event the provisions
of Section 9.2(b) shall apply), either Seller or Buyer may, upon written
notice to the other party and to Escrow Holder, demand the return of its
deposits, in which event Escrow Holder shall return all deposits to the
respective depositor (including the Deposit to Buyer) and this Agreement
shall terminate. Immediately after the Closing, Escrow Holder shall deliver
to Buyer and Seller, respectively, at their addresses listed in Section 14.1
hereof, a true, correct, and complete copy of the Seller's and Buyer's
Closing Statements, in forms customarily prepared by Escrow Holder, as well
as all other instruments and documents to be delivered to Buyer and Seller.
XI. REPRESENTATIONS, WARRANTIES, AND COVENANTS
XI.A. Buyer's Representations and Warranties. Buyer represents
and warrants to Seller as follows:
1.) Buyer is a corporation, duly created, validly existing, and
in good standing under the laws of the State of Delaware with full right,
power, and authority to take title to the Property, and to enter into and
otherwise perform and comply with all the terms and conditions of this
Agreement and no less than fifty-one percent (51%) of the voting securities
or ownership interests in Buyer are held (directly or indirectly) by a
Pritzker Affiliate as of the Effective Date;
2.) This Agreement and all documents executed by Buyer that are
to be delivered to Seller or Escrow Holder at the Closing are, and at the
time of Closing will be, duly authorized, executed, and delivered by Buyer;
this Agreement and all documents executed by Buyer that are to be delivered
to Seller at the Closing are, and at the Closing will be, legal, valid, and
binding obligations of Buyer, enforceable in accordance with their terms
(except as enforcement may be limited by bankruptcy, insolvency or similar
laws) and do not, and at the time of Closing will not, violate any provisions
of any agreement or judicial order to which Buyer is a party or to which
Buyer is subject; and
3.) Except as may be expressly provided otherwise in this
Agreement or in the documents or instruments being executed and delivered in
connection with this Agreement, no representations of any kind (whether oral
or written, express or implied) have been made by the Seller to Buyer, and
Buyer hereby represents and warrants to Seller that Buyer is investing in the
Property solely in reliance on Buyer's own investigations and evaluation
thereof, the representations and warranties of Seller set forth herein, and
not in reliance on anything else.
XI.B. Seller's Representations and Warranties. Seller represents
and warrants to Buyer as follows:
1.) Seller is a Delaware limited partnership duly created,
validly existing, and in good standing under the laws of the State of
Delaware and Seller has the full right, power, and authority to own and
convey the Property and to enter into and otherwise perform and comply with
all the terms and conditions of this Agreement.
2.) This Agreement and all documents executed by Seller that
are to be delivered to Buyer or Escrow Holder at the Closing are, and at the
time of Closing will be, duly authorized, executed, and delivered by Seller;
and this Agreement and all documents executed by Seller that are to be
delivered to Buyer at Closing are, and at the time of Closing will be, legal,
valid, and binding obligations of Seller, enforceable in accordance with
their terms (except as enforcement may be limited by bankruptcy, insolvency
or similar laws) and do not, and at the time of Closing will not, violate any
provisions of any agreement or judicial order to which Seller is a party or
to which Seller or the Property is subject.
3.) Seller is the owner of the landlord's interest under the
Operating Lease (subject only to those matters set forth in the PTR) and
Seller has not heretofore assigned any of its interest in the Operating
Lease, the Personal Property, the Permits or the Miscellaneous Property
Assets.
4.) Seller has not directly entered into any Subleases, and has
not entered into any leases with respect to the Hotel or the Land or any
portion thereof, other than the Operating Lease.
5.) Exhibit H hereto contains a complete list of all Contracts
currently in effect with respect to the Property.
To Seller's knowledge, all information contained on Exhibit H
is true, accurate and complete in all respects as of the date hereof and
copies of all Contracts which have heretofore been delivered to Buyer are
true, accurate and complete, and include all amendments or modifications
thereof (whether written or verbal). Except as disclosed on Exhibit H, (i)
to Seller's knowledge, no party to any Contract is in default thereunder;
(ii) to Seller's knowledge, no event or circumstance has occurred which,
either by itself, or with the giving of notice or passage of time,
or both, would constitute a breach or default or event of default under any
Contract; and (iii) to Seller's knowledge, no party to any Contract has
delivered any notice, either written or verbal, alleging the
occurrence of any breach thereof or default or event of default thereunder.
6.) To Seller's knowledge, except for notices or copies thereof
received by the Operator (including, without limitation, notices relating to
the Americans With Disabilities Act), as of the date of this Agreement,
Seller has not received any notices of violations of any laws, ordinances,
orders or requirements of any governmental authority, agency or officer
having jurisdiction against or affecting the Property or with respect to the
operation thereof for its currently intended purpose, which have not
previously been complied with, nor, to Seller's knowledge, do any facts or
circumstances exist which are not known to Operator and which, if known to
any applicable governmental agency or authority, would constitute a material
violation of any such laws, ordinances, orders or requirements and have a
material adverse impact on the operations of the Hotel.
7.) To Seller's knowledge, there are no actions,
investigations, suits or proceedings (including arbitrations, grievances,
judicial proceedings, administrative proceedings and tax contests) pending,
or threatened, with respect to the Property, or the ownership or operation
thereof, or any part thereof (other than those being administered by the
Operator), nor any judgments, orders, awards or decrees currently in effect
against Seller with respect to the ownership or operation of any part of the
Property which have not been fully discharged prior to the date hereof.
8.) To Seller's knowledge, there are no pending or threatened
requests, applications or proceedings to alter or restrict the zoning or
other use restrictions applicable to the Property, or to condemn all or any
portion of the Property by eminent domain proceedings or otherwise.
9.) Attached hereto as Exhibit I is a list of all Permits
obtained by Seller (and excluding permits obtained by the Operator) with
respect to the construction, operation, ownership or maintenance of the
Property, or the Improvements, which are currently in effect. To Seller's
knowledge, Seller has received no notice from any governmental authority of
intended non- renewal, suspension or revocation of any Permit, and Seller
has no knowledge of any threatened non-renewal, suspension or revocation
proceeding.
10.) To Seller's knowledge, except as may have been contracted
for by the Operator, there has been no construction or other work performed,
nor is any in process, at the Property, nor have any construction materials
been furnished to the Property or any portion thereof, which might hereafter
give rise to mechanic's, materialmen's or other liens against the Property
or any portion thereof.
11.) As used herein, the term "Seller's knowledge" shall mean
the actual knowledge of Jeffrey C. Carter, president of the general partner
of Seller.
XI.C. Continuation and Survival of Representations and
Warranties; Limitations on Liability Therefor. All representations and
warranties made by the respective parties and contained in this Agreement
are intended to and shall remain true and correct as of the time of Closing,
shall be deemed to be material, and shall survive the execution and delivery
of this Agreement, the delivery of the Grant Deed, and transfer of title to
the Property, for a period of one (1) year, and shall not be deemed to have
been waived at the Closing, or merged into any of the documents of
conveyance or transfer to be delivered by Seller at the Closing; provided,
however, no person, firm or entity shall have any liability or obligation
with respect to any representation or warranty herein contained unless on or
prior to a date which is not later than one (1) year following the Closing
Date the party seeking to assert liability under any such representation or
warranty shall have notified the other party hereto in writing setting forth
specifically the representation or warranty allegedly breached, and a
description of the alleged breach in reasonable detail. All liability or
obligation of either party hereto under any representation or warranty shall
lapse and be of no further force or effect with respect to any matters not
contained in a written notice delivered as contemplated above on or prior to
one (1) year following the Closing. Notwithstanding the foregoing, Buyer
acknowledges and agrees that: (a) Seller shall have no liability whatsoever
with respect to any representation or warranty as to which Buyer and/or
Operator has any knowledge prior to Closing that such representation or
warranty made by Seller pursuant to this Agreement or the other Documents was
incorrect, false or misleading in any way, and (b) neither party shall have
any right to pursue remedies against the other for an untrue representation or
the breach of a warranty unless and until the actual damages of the claiming
party as a result of such incorrectness, falsity or breach are in excess of
$100,000 (the aforesaid amount being a threshold for enforcement and not a
deductible from liability).
XII. POSSESSION
Possession of the Property shall be delivered to Buyer immediately
following the Closing, subject only to the Permitted Exceptions.
XIII. OPERATION OF THE PROPERTY
Regarding the operation, maintenance and repair of the Property between
the Effective Date and the Closing Date (or earlier termination of this
Agreement), (a) Seller shall not be required to make any capital
improvements to the Property, except improvements or repairs that Seller
determines to be of an emergency nature; (b) Seller agrees that it will not,
without the prior written consent of Buyer, enter into any lease with respect
to any portion of the Property; (c) Seller shall not take any action, or
suffer any action to be taken in its name or on its behalf, the effect of
which would cause any of the representations or warranties of Seller herein
contained to be untrue or incorrect in any material respect on and as of the
Closing Date, or which would have the effect of causing Seller to be unable
to satisfy or perform any of the conditions precedent to the obligations of
Buyer hereunder; (d) Seller shall at all times (i) promptly deliver to Buyer
copies of any notices received by Seller (but not received by or from
Operator) from any person, firm, corporation or governmental agency alleging
any default on the part of Seller under any contract or agreement relating to
the Property, or any part thereof, or any violation of any applicable law or
ordinance with respect thereto which, if the facts alleged therein were true,
would constitute a breach of any representation or warranty of Seller herein
contained or adversely affect the ability of Seller to satisfy any condition
precedent to the obligations of Buyer hereunder, and (ii) promptly advise
Buyer in writing of any pending or threatened litigation, administrative
proceeding or condemnation proceeding brought with respect to the Property,
or which relates to the Property or any part thereof; (e) Seller will not
consent to, authorize or approve any change in zoning or similar land use
classification for the Land or any part thereof or any adjoining or nearby
parcels, or any special assessments not heretofore confirmed with respect to
the Land; and (f) Seller will not knowingly or deliberately create any lien
or encumbrance to attach to the Property, or any part thereof.
XIV. LOSS BY CASUALTY; CONDEMNATION
XIV.A. Damage or Destruction. Prior to the Closing Date, the
entire risk of loss or damage by earthquake, flood, landslide, fire,
hurricane, tornado or other casualty shall be assumed and borne by Seller.
If, prior to the Closing any part of the Property is damaged by earthquake,
flood, landslide, fire, hurricane, tornado or other casualty, Seller shall
promptly notify Buyer of such fact. In the event that the estimated cost to
repair any such damage exceeds, in the aggregate, $2,500,000, Buyer shall
have the right to terminate this Agreement upon written notice to Seller, in
which event this Agreement shall terminate. In the event that Buyer elects
not to terminate this Agreement as a result of any such damage, or the
estimated cost of repair (as reasonably determined by Buyer and Seller) does
not exceed, in the aggregate, $2,500,000, Seller shall, at the Closing, assign
and turn over, and Buyer shall be entitled to receive and keep, all insurance
proceeds payable to Seller with respect to such damage or destruction, Buyer
shall receive a credit against the Purchase Price in the amount of any
applicable insurance deductible, and the parties shall proceed to Closing
pursuant to the terms hereof without modification of the terms of this
Agreement.
XIV.B. Condemnation. If, prior to the Closing Date all or any
portion of the Property is taken by a condemnation or eminent domain (or is
the subject of a pending or contemplated taking which has not been
consummated), Seller shall promptly notify Buyer of such fact (the
"Condemnation Notice"). If in the reasonable opinion of Buyer the taking
materially interferes or would materially interfere with the economic
operation or use of the Property, then Buyer may elect to terminate this
Agreement by written notice to such effect given to Seller within ten (10)
days after receipt by Buyer of the Condemnation Notice, in which event this
Agreement shall terminate. If, under such circumstances, Buyer does not so
elect to terminate this Agreement, then the Closing shall take place as
herein provided without any abatement of the Purchase Price, and at the
Closing Seller shall assign to the Buyer, by written instrument, all of
Seller's right, title and interest in and to any condemnation award which may
be payable to Seller on account of such condemnation. If, prior to the
Closing Date, one or more portions of the Real Property shall be taken (or
are threatened to be taken) by exercise of right of eminent domain in a
manner which does not, in the reasonable opinion of Buyer, materially
interfere with the economic operation or use of the Property, then neither
party shall have any right to terminate its obligations hereunder by reason
thereof, but at the Closing Seller shall assign to the Buyer, by written
instrument, all of Seller's right, title and interest in and to any
condemnation awards which may be payable to Seller on account of such
condemnation. For purposes hereof, the term "taking" shall include any
temporary as well as permanent takings.
XV. MISCELLANEOUS
XV.A. Notices. Any communication, notice, or demand of any kind
whatsoever that either party may be required or may desire to give to or
serve upon the other shall be in writing, addressed to the parties at the
addresses set forth below, and delivered by personal service, by Federal
Express or other overnight delivery service, by facsimile transmission, or by
registered or certified mail, postage prepaid, return receipt requested:
If to Seller: Union Square Hotel Partners, L.P.
c/o Union Square/GP Corp.
3 World Financial Center, 29th Floor
New York, New York 10285-2900
Attention: Jeffrey C. Carter,
President Facsimile No.: (212) 528-9696
With a copy to: Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rand S. April, Esq.
Facsimile No.: (213) 687-5600
If to Buyer: HT-Hotel Equities, Inc.
200 West Madison
Chicago, Illinois 60606
Attention: General Counsel
Facsimile No.: (312) 750-8084
With a copy to: Neal, Gerber & Eisenberg
Two North LaSalle, Suite 2100
Chicago, Illinois 60602
Attention: Philip M. Kayman
Facsimile No.: (312) 269-1747
Any such notice shall be deemed delivered as follows: (a) if personally
delivered, on the date of delivery to the address of the person to receive
such notice as evidenced by a signed receipt; (b) if sent by Federal Express
or other overnight courier service, on the date of delivery to the address
of the person to receive such notice as evidenced by a signed receipt; (c)
if sent by facsimile transmission, on the date transmitted to the person to
receive such notice if sent by 5:00 p.m., Eastern time, and on the next
business day if sent after 5:00 p.m., Eastern time; or (d) if mailed, on the
date of delivery to the address of the person to receive such notice as
evidenced by a signed receipt. Any notice sent by facsimile transmission must
be confirmed by personally delivering, sending by courier, or mailing a copy
of the notice sent by facsimile transmission. Any party may change its
address for notice by written notice given to the other at least ten (10)
calendar days before the effective date of such change in the manner provided
in this Section 14.1.
XV.B. Brokers and Finders.
1.) If and only if the sale contemplated herein actually
closes (as evidenced by the recordation of the Grant Deed), Seller has agreed
to pay a brokerage commission to Eastdil Broker Services, Inc., or its
designee ("Broker") pursuant to a separate agreement with Broker. Seller
shall not pay any brokerage commission or finder's fee to any broker or
finder retained by Buyer, and Buyer shall be solely responsible for any such
commission or fee.
2.) In the event of any claim (other than Broker's) for
broker's fees, finder's fees, commissions, or other similar compensation in
connection herewith: (i) Buyer, if such claim is based upon any agreement
alleged to have been made by Buyer, shall indemnify Seller against and hold
Seller harmless (using counsel reasonably satisfactory to Seller) from any
and all damages, liabilities, costs, expenses, and losses (including, without
limitation, attorneys' fees and costs) that Seller sustains or incurs by
reason of such claim; and (ii) Seller, if such claim is based upon any
agreement alleged to have been made by Seller, shall indemnify Buyer against
and hold Buyer harmless (using counsel reasonably satisfactory to Buyer) from
any and all damages, liabilities, costs, expenses, and losses (including,
without limitation, attorneys' fees and costs) that Buyer sustains or incurs
by reason of such claim. The provisions of this subsection shall survive the
termination of this Agreement or the Closing.
XV.C. Assignment.
1.) Assignment by Buyer. Neither all nor any portion of
Buyer's interest under this Agreement may be sold, assigned, encumbered,
conveyed, or otherwise transferred, whether directly or indirectly,
voluntarily or involuntarily, or by operation of law or otherwise (including,
without limitation, by a transfer of interests in Buyer) (collectively, a
"Transfer"), without the prior written consent of Seller, which consent may
be granted or denied in Seller's sole and absolute discretion. Any attempted
Transfer without Seller's consent shall be null and void.
Buyer's request for consent to any Transfer shall set forth in
writing the details of the proposed Transfer, including, without limitation,
the name, ownership and financial condition of the prospective transferee and
financial details of the proposed Transfer. In addition, Buyer shall provide
Seller with copies of all transaction documentation, certified by Buyer to be
true, correct and complete. Seller shall not withhold consent to any Transfer
by Buyer, provided that each of the following conditions have been met, as
reasonably determined by Seller following its review of the transaction
documentation submitted by Buyer:
(1) in the event of a transfer of all or any portion of
Buyer's interest in this Agreement, the prospective transferee shall assume
in writing the obligations of Buyer under this Agreement and the Documents;
(2) as a result of any Transfer, no less than twenty-five
percent (25%) of the ownership interests in Buyer or the prospective
transferee, as the case may be, shall be owned and held (directly or
indirectly) by a Pritzker Affiliate;
(3) if, as a result of such Transfer, less than fifty-one
percent (51%) of the ownership interests in Buyer or the prospective
transferee, as the case may be, will be owned and held (directly or
indirectly) by a Pritzker Affiliate, the obligations of the Buyer hereunder
and with respect to the transactions contemplated hereby (including, without
limitation, the obligation of Buyer to pay the Purchase Price), shall be
guaranteed pursuant to a guaranty agreement, in form and substance reasonably
satisfactory to Seller (including the waiver of such guarantor's right to
enforce the liquidated damages provision set forth in Section 4.5 hereof), by
a Pritzker Affiliate satisfactory to Seller in its sole and absolute
discretion, such determination to be made by Seller based upon audited
financial statements (with footnotes) of such Pritzker Affiliate; and
(4) in the event that the total "Consideration" (as
hereinafter defined) given, pledged or committed by any prospective
transferee in connection with any Transfer exceeds such prospective
transferee's "Proportionate Share" (as hereinafter defined), then the
Purchase Price hereunder shall be increased by the amount of such excess, up
to a maximum amount of $132,000,000 (the "Maximum Amount"). As used herein,
(A) the term "Consideration" shall mean any and all consideration, regardless
of the form of such consideration and whether in direct payment of the
Purchase Price hereunder, as contribution (debt or equity) to the capital of
the prospective transferee, or otherwise, but specifically excluding the
value derived by Buyer as a result of the retention of any entity controlled
(directly or indirectly) by a Pritzker Affiliate as the manager or operator
of the Hotel, and (B) the term "Proportionate Share" shall mean the amount
obtained by multiplying $126,900,000 (the "Cash Consideration") by such
prospective transferee's percentage ownership interest in the Buyer or any
assignee of Buyer's interest hereunder (as applicable). Notwithstanding the
foregoing to the contrary, in the event that, in connection with any
Transfer, it is contemplated that the Operating Lease will be terminated,
then the Cash Consideration and the Maximum Amount set forth above in this
clause (iv) shall each be increased by the amount of the Early Termination
Fee (as defined in the Operating Lease) applicable as of the Effective Date,
exclusive of any increase to the Early Termination Fee which would be
effected by the Fifth Amendment.
(v) such Transfer shall be consummated on or before the fifth
(5th) calendar day prior to the scheduled Closing Date.
No Transfer, whether with or without Seller's consent, shall operate to
release Buyer or alter Buyer's primary liability to perform the obligations
of Buyer under this Agreement. Each of the parties acknowledges and agrees
that the restrictions on Transfer contained in this Section 14.3(a) shall not
survive the Closing (except and to the extent that such provisions were
breached prior to the Closing and Seller proceeded to close without knowledge
of such breach.)
2.) Assignment by Seller. Seller shall have the right to
assign all or any portion of the Property and/or its interest hereunder to
any entity (including, without limitation by delivery of a deed in lieu of
foreclosure to any secured lender of Seller (or a designee of such secured
lender)); provided, however, that no such assignment shall relieve Seller of
its obligations hereunder and any such assignee shall take subject to such
obligations and the rights of Buyer hereunder.
XV.D. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
administrators and permitted successors and assigns.
XV.E. Amendments. This Agreement may be amended or modified only
by a written instrument executed by both parties.
XV.F. Interpretation. Words used in the singular shall include the
plural, and vice-versa, and any gender shall be deemed to include the other.
The captions and headings of the Articles and Sections of this Agreement are
for convenience of reference only, and shall not be deemed to define or limit
the provisions hereof. Further, each party hereby acknowledges that such
party and its counsel, after negotiation and consultation, have reviewed and
revised this Agreement. As such, the terms of this Agreement shall be fairly
construed and the rule of construction, to the effect that any ambiguities
herein should be resolved against the drafting party, shall not be employed
in the interpretation of this Agreement or any amendments, modifications, or
exhibits hereto or thereto.
XV.G. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
California, without regard to its principles of conflicts of law.
XV.H. Entire Agreement. This Agreement, including the exhibits
attached hereto, constitutes the entire agreement between Buyer and Seller
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, letters of intent, negotiations, and discussions of the
parties, whether oral or written, and there are no warranties,
representations, or other agreements, express or implied, made to either
party by the other party in connection with the subject matter hereof except
as specifically set forth herein or in the documents delivered pursuant
hereto or in connection herewith.
XV.I. Attorneys' Fees and Costs. If either Buyer or Seller brings
any suit or other proceeding with respect to the subject matter or the
enforcement of this Agreement, the prevailing party (as determined by the
court, agency, or other authority before which such suit or proceeding is
commenced), in addition to such other relief as may be awarded, shall be
entitled to recover reasonable attorneys' fees, expenses, and costs of
investigation actually incurred. The foregoing includes, without limitation,
attorneys' fees, expenses, and costs of investigation incurred in appellate
proceedings, costs incurred in establishing the right to indemnification, or
in any action or participation in, or in connection with, any case or
proceeding under Chapter 7, 11, or 13 of the Bankruptcy Code, 11 United
States Code Section 101 et seq., or any successor statutes.
XV.J. Time of the Essence. Time is of the essence with respect to
all matters contemplated by this Agreement.
XV.K. Confidentiality. All information, surveys, reports, tests, and
studies relating to the Property obtained by Buyer before or after the
Effective Date, either by the observations and examinations of its agents and
representatives or by Seller's disclosure, shall remain confidential. If the
transaction contemplated herein fails to close for any reason other than
solely as a result of Seller's default hereunder, Buyer shall deliver to
Seller, at no cost to Seller, all originals and copies of all such
information, surveys, reports, tests, and studies, together with all copies
of the Records or other documents, work papers, or materials of Seller
obtained by or provided to Buyer, and Buyer shall make no further
distributions or disclosures of any such information, surveys, reports,
tests, studies, documents, work papers, and materials other than Excluded
Reports. Buyer and Seller agree that, to the extent reasonably practical,
they shall keep the contents of this Agreement confidential and that no
publicity or press release to the general public or otherwise with respect to
this transaction shall be made by either party without the prior written
consent of the other party, which consent may be denied in the sole and
absolute discretion of either party; provided, however, that Seller shall be
entitled to make any disclosures that Seller determines, in its sole and
absolute discretion, are necessary or desirable (i) to effect
the Limited Partner Approval (including, without limitation, the preparation,
filing and distribution (to the Securities and Exchanges Commission, the
Limited Partners and otherwise) of the Proxy Materials), (ii) to comply with
requirements of law or the Securities and Exchange Commission, or (iii)
otherwise to be disclosed or made available to the limited partners of Seller
or Seller's lenders. Notwithstanding the foregoing, nothing herein contained
shall be deemed to limit or impair in any way Seller's or Buyer's right or
ability to disclose the details of the herein contemplated transaction to (a)
their respective counsel, consultants, advisors or accountants, provided that
each such person is informed of the confidentiality requirements hereof and
agrees to abide by the same or (b) such persons as they deem necessary in
order to enable either of them to comply with any requirements of law or any
court order. Notwithstanding the foregoing, nothing herein contained shall
limit or impair in any way Buyer's right or ability to disclose the details
of the herein contemplated transaction to persons or entities who in good
faith are considering providing debt or equity financing to Buyer for
purposes of this transaction, or to governmental agencies in connection with
the application by Buyer for any required license or permit, or for transfer
of any Permit from Seller and Buyer. The confidentiality provisions of this
Section 14.11 shall survive the Closing.
XV.L. No Waiver. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by
the party making the waiver.
XV.M. Further Acts. Each party, at the request of the other, shall
execute, acknowledge (if appropriate), and deliver such additional documents,
and do such other additional acts, as may be reasonably required in order to
accomplish the intent and purposes of this Agreement.
XV.N. Exhibits. Exhibits A through J inclusive, are attached
hereto and incorporated herein by reference.
XV.O. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but
all of which when taken together shall constitute one and the same
instrument, with the same effect as if all of the parties to this Agreement
had executed the same counterpart.
XV.P. No Intent to Benefit Third Parties. Seller and Buyer do not
intend by any provision of this Agreement to confer any right, remedy, or
benefit upon any third party, and no third party shall be entitled to
enforce, or otherwise shall acquire any right, remedy, or benefit by reason
of, any provision of this Agreement.
XV.Q. Performance Due on Day Other Than Business Day. If the time
period for the performance of any act called for under this Agreement expires
on a Saturday, Sunday, or any other day on which banking institutions in the
State of California are authorized or obligated by law or executive order to
close (a "Holiday"), the act in question may be performed on the next
succeeding day that is not a Saturday, Sunday, or Holiday.
XV.R. Expenses of Purchase and Sale. Except as otherwise provided
in this Agreement, Seller and Buyer shall each bear its own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions
contemplated hereby.
XV.S. Severability. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction, unless such invalidity
materially changes the transaction set forth herein, in which event the Deposit
shall be returned to Buyer and this Agreement shall terminate.
XV.T. No Recording. Except in connection with a proceeding brought
to enforce the provisions of this Agreement, Buyer shall not record this
Agreement or any notice thereof. If such recording other than in connection
with such an enforcement proceeding shall occur, Seller shall have, in
addition to all other remedies for breach provided by law, the right to
terminate this Agreement by written notice to Buyer.
XV.U. Quitclaim. In the event of the termination of this Agreement
for any reason, Buyer shall deliver to Seller a quitclaim deed and such other
written instruments as Seller may reasonably require, executed and
acknowledged in recordable form, transferring to Seller any and all rights of
Buyer in the Property or any part thereof or interest therein; provided,
however, that Seller shall prepare any such instruments and shall pay all
charges, taxes and fees associated with recording the same.
XV.V. Termination of Agreement.
1.) If this Agreement is terminated pursuant to Section 9.9,
Article XIII or Section 14.19 hereof, or by reason of the failure of any
material condition precedent to Seller's or Buyer's obligations to occur
(other than as set forth in Section 8.1(e) and other than the failure of any
material condition precedent resulting from the material uncured breach by
Seller or Buyer of any of the provisions hereof), the Deposit (together with
all interest earned on such Deposit) shall be returned to Buyer and the Fifth
Amendment shall be null and void and of no further force or effect (and all
copies thereof shall be destroyed by Escrow Holder) and Escrow Holder shall
return all other cash, documents, instruments and other items theretofore
deposited into Escrow to the depositor party, without any further instruction
to Escrow Holder from either Seller or Buyer. Thereafter, this Agreement
shall be null and void and of no further force or effect and, except as
provided in Sections 5.2(c), 14.2(b) and 14.11 hereof, neither party shall
have any further rights or obligations hereunder, other than those rights and
obligations that, by their terms, survive the termination of this Agreement.
In the event of such termination, the costs of the Title Company and Escrow
Holder shall be borne equally by Buyer and Seller, and each party shall bear
its own costs (including attorneys' and accountants' fees) incurred
hereunder.
2.) If this Agreement is terminated pursuant to Section
8.1(e), two fully executed copies of the Fifth Amendment shall be delivered
to each of Buyer and Seller by Escrow Holder, the Deposit (together with all
interest earned on such Deposit) shall be delivered to Buyer by Escrow Holder
and Escrow Holder shall return all other cash, documents, instruments and
other items theretofore deposited into Escrow to the depositor party, without
any further instruction to Escrow Holder from either Seller or Buyer.
Thereafter, this Agreement shall be null and void and of no further force or
effect and, except as provided in Sections 5.2(c), 14.2(b) and 14.11 hereof,
neither party shall have any further rights or obligations hereunder, other
than those rights and obligations that, by their terms, survive the
termination of this Agreement. In the event of a termination pursuant to
Section 8.1(e), the costs of the Title Company and Escrow Holder shall be
borne equally by Buyer and Seller, and each party shall bear its own costs
(including attorneys' and accountants' fees) incurred hereunder.
3.) If this Agreement is terminated by Buyer as a result of
the material uncured breach by Seller (after notice and reasonable
opportunity to cure such breach) of any of the provisions hereof, two fully
executed copies of the Fifth Amendment shall be delivered to each of Buyer
and Seller by Escrow Holder, the Deposit (together with all interest earned
on such Deposit) shall be delivered to Buyer by Escrow Holder and Escrow
Holder shall return all other cash, documents, instruments and other items
theretofore deposited into Escrow to the depositor party, without any further
instruction to Escrow Holder from either Seller or Buyer. Thereafter, this
Agreement shall be null and void and of no further force or effect and,
except as provided in Sections 5.2(c), 14.2(b) and 14.11 hereof, neither party
shall have any further rights or obligations hereunder, other than those rights
and obligations that, by their terms, survive the termination of this
Agreement; provided, however, that Buyer may exercise all remedies available
to it, at law or in equity and the costs of the Title Company and Escrow Holder
shall be borne by Seller.
4.) If this Agreement is terminated by Seller as a result of
the material uncured breach by Buyer (after notice and reasonable opportunity
to cure such breach) of any of the provisions hereof, the Fifth Amendment
shall be null and void and of no further force or effect (and all copies
thereof shall be destroyed by Escrow Holder) and the Deposit (together with
all interest earned on such Deposit) shall be delivered to Seller by Escrow
Holder, without any further instruction to Escrow Holder from either Seller
or Buyer. Thereafter, this Agreement shall be null and void and of no further
force or effect and, except as provided in Sections 5.2(c), 14.2(b) and 14.11
hereof, neither party shall have any further rights or obligations hereunder,
other than those rights and obligations that, by their terms, survive the
termination of this Agreement; provided, however, that (subject to the
provisions for liquidated damages set forth in Section 4.5 hereof), Seller
may exercise all remedies available to it, at law or in equity and the costs
of the Title Company and Escrow Holder shall be borne by Buyer.
XV.W. Waiver of Known Defaults. Notwithstanding anything to the
contrary contained in this Agreement, in the event that either party hereto
has actual knowledge of the default of the other party (a "Known Default"),
but nonetheless elects to consummate the transactions contemplated hereby and
proceeds to Closing, then the rights and remedies of the non-defaulting
party shall be waived with respect to any such Known Default upon the Closing
and the defaulting party shall have no liability with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date above.
"Seller"
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.,
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter
__________________________________
Print Name: Jeffrey C. Carter
Print Title: President
"Buyer"
HT-HOTEL EQUITIES, INC.
a Delaware corporation
By:
__________________________________
Print Name:
___________________________
Print Title: ___________________________
By:
_________________________________
Print Name:
___________________________
Print Title: ___________________________
ACCEPTED AND AGREED:
"Escrow Holder"
FIRST AMERICAN TITLE INSURANCE COMPANY
By: _____________________________
Print Name: ______________________
Print Title:________________________
EXHIBIT A
LEGAL DESCRIPTION
All that certain real property situated in the City and County of San
Francisco, State of California, described as follows:
BEGINNING at the point of intersection of the northerly line of Post Street
with the westerly line of Stockton Street; running thence northerly along
said line of Stockton Street 275.00 feet and 10-3/4 inches to the southerly
line of Sutter Street; thence at a right angle westerly along said line of
Sutter Street 117.00 feet and 6 inches; thence at a right angle southerly 100
feet; thence at a right angle westerly 20 feet; thence at a right angle
southerly 175 feet and 10- 3/4 inches to the northerly line of Post Street;
thence at a right angle easterly along said line of Post Street 137.00 feet
and 6 inches to the point of beginning.
BEING a portion of 50 Vara Block No. 142, which said Block is delineated and
shown on the record of Survey Map thereof recorded January 8, 1970 in Book
"S" of Maps, Page 47, in the Office of the Recorder of the City and County of
San Francisco, State of California.
EXHIBIT A-1
SUBLEASES
1. Sublease to D. Fine, Inc., 300 Post Street
2. Sublease to Marta's Flowers, 345 Stockton Street
EXHIBIT B
FORM OF GRANT DEED
[See Following Pages]
______________, 199_
San Francisco County Recorder
_________________________________
_________________________________
San Francisco, California _________
Dear County Recorder:
In accordance with Section 11932 of the California Revenue and
Taxation Code, the undersigned hereby requests that this statement of
documentary transfer tax not be recorded with the attached Grant Deed
(the "Deed") but be affixed to the Deed after recordation and be returned
as directed on the Deed.
The Deed names ____________, as grantee. The property that is the
subject of the Deed is located in the County of San Francisco, State of
California.
The amount of documentary transfer tax due on the attached Deed
is $_______________, computed on the full value of the property less any
encumbrances remaining on the property.
Grantor"
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.,
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter
__________________________________
Print Name: Jeffrey C. Carter
Print Title: President
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
. . . . . . . . . . . . . . . . (Space Above Line For Recorder's Use Only)
GRANT DEED
The undersigned Grantor declares that documentary transfer tax is not shown
pursuant to Section 11932 of the California Revenue and Taxation Code, as
amended.
FOR VALUE RECEIVED, UNION SQUARE HOTEL PARTNERS, L.P., a Delaware
limited partnership (formerly known as Shearson Union Square Associates
Limited Partnership, a Delaware limited partnership), grants to
, a ("Grantee"), all that certain real property (the "Property") situated in
the County of San Francisco, State of California, more particularly described
in Exhibit A attached hereto and incorporated herein by reference.
THE PROPERTY IS CONVEYED TO GRANTEE SUBJECT TO: (a) all liens,
encumbrances, easements, covenants, conditions, and restrictions of record;
(b) all matters that would be revealed or disclosed in an accurate survey of
the Property; (c) all matters that would be revealed or disclosed by a
physical inspection of the Property; (d) interests of tenants and other
parties in possession; (e) a lien not yet delinquent for taxes for real
property and personal property, and any general or special assessments
against the Property; and (f) zoning ordinances and regulations and any other
laws, ordinances, or governmental regulations or orders restricting or
regulating the use, occupancy, or enjoyment of the Property.
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of
___________, 199_.
"Seller"
UNION SQUARE HOTEL PARTNERS,
L.P., a Delaware limited
partnership
By: Union Square/GP Corp.,
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter
__________________________________
Print Name: Jeffrey C. Carter
Print Title: President
STATE OF __________ )
:ss.
COUNTY OF _________ )
On the ____ day of __________, 199_, before me, ___________________
____________________________________________________________, personally
appeared _________________________________________________________________
__ personally known to me or __ proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
(SEAL)
Exhibit A to Grant Deed
Legal Description
All that certain real property situated in the City and County of San
Francisco, State of California, described as follows:
BEGINNING at the point of intersection of the northerly line of Post Street
with the westerly line of Stockton Street; running thence northerly along
said line of Stockton Street 275.00 feet and 10-3/4 inches to the southerly
line of Sutter Street; thence at a right angle westerly along said line of
Sutter Street 117.00 feet and 6 inches; thence at a right angle southerly 100
feet; thence at a right angle westerly 20 feet; thence at a right angle
southerly 175 feet and 10- 3/4 inches to the northerly line of Post Street;
thence at a right angle easterly along said line of Post Street 137.00 feet
and 6 inches to the point of beginning.
BEING a portion of 50 Vara Block No. 142, which said Block is delineated and
shown on the record of Survey Map thereof recorded January 8, 1970 in Book
"S" of Maps, Page 47, in the Office of the Recorder of the City and County of
San Francisco, State of California.
EXHIBIT C
FORM OF BILL OF SALE
[See Following Pages]
BILL OF SALE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, UNION SQUARE HOTEL PARTNERS, L.P., a Delaware limited
partnership ("Seller"), does hereby sell and convey to ("Buyer"), all of
Seller's right, title, and interest in and to the personal property,
furniture, fixtures and equipment (collectively, the "Personal Property")
owned by Seller, located at and used exclusively for the operation,
maintenance, or management of the "Hotel" (as hereafter defined), including,
without limitation, the personal property described on Schedule I attached
hereto, but expressly excluding, without limitation, any and all personal
property leased by Seller under the contracts set listed on Schedule II
attached hereto, and any and all personal property owned or leased by the
California Hyatt Corporation, guests of the Hotel, tenants under leases at
the Hotel, and suppliers, contractors and vendors serving the Hotel. The
"Hotel" shall mean and refer to that certain hotel commonly known as the
"Grand Hyatt San Francisco" located at 345 Stockton Street, San Francisco,
California.
Seller represents and warrants to Buyer that Seller has good and
marketable title to the Personal Property. Seller has not made and does not
make any representations or warranties of any kind whatsoever, oral or
written, express or implied, with respect to the condition any of the
Personal Property or any such related matters (including, without limitation,
any representation or warranty of merchantability or fitness for a particular
purpose) and that the Personal Property is sold to Buyer in its present "AS
IS, WHERE IS" condition.
By its acceptance of this Bill and Sale and the Personal Property, Buyer
hereby acknowledges receipt of the Personal Property and further acknowledges
that Buyer is receiving such Personal Property in its present "AS IS, WHERE
IS" condition without recourse or representation or warranty of any kind
whatsoever as to the condition thereof.
This Bill of Sale shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors,
and assigns.
This Bill of Sale shall be governed by and construed and enforced in
accordance with the laws of the State of California, without regard to its
principles of conflicts of law.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
___________, 199_.
"Seller"
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.,
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter
_____________________________________
Print Name: Jeffrey C. Carter
Print Title: President
Schedule I to Bill of Sale
Description of Certain Personal Property
The following personal property to the extent located in and
about the land and improvements known as the Grand Hyatt-San Francisco,
San Francisco, California, consisting of:
(i) furniture and furnishings (including furniture,
carpeting, draperies, lamps and other items for all guest
rooms, offices, and public areas);
(ii) hotel equipment (including office equipment,
dining room wagons, material handling equipment, cleaning and
engineering equipment, vehicles and all equipment required for
the operation of kitchens, bars, laundries and dry cleaning
facilities);
(iii) uniforms, tools and utensils (including staff
uniforms and dining room, engineering and housekeeping tools
and utensils); and
(iv) china, glassware, linens, silverware and the like.
Schedule II to Bill of Sale
Description of Excluded Personal Property
All personal property leased by Seller under the following contracts:
(i) Lease Agreement, dated as of September 15,
1989, by and between Seller and Telerent Leasing
Corporation, as amended by Lease Addendum #II executed by
Seller on September 24, 1994.
(ii) Lease Renewal Agreement, dated as of
November 21, 1995, by and between Seller and M&SD
Financial Services, a division of Electronic Data Systems
Corporation.
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS
[See Following Pages]
ASSIGNMENT AND ASSUMPTION OF
CONTRACTS, PERMITS AND MISCELLANEOUS
PROPERTY ASSETS
This ASSIGNMENT AND ASSUMPTION OF CONTRACTS, PERMITS AND MISCELLANEOUS
PROPERTY ASSETS (this "Assignment") is made as of , 199_ by UNION SQUARE
HOTEL PARTNERS, L.P., a Delaware limited partnership ("Assignor"), in favor
of ("Assignee"), with reference to the following facts:
A. Assignor is the owner of that certain real property located at 345
Stockton Street in the County of San Francisco, State of California, commonly
known as the "Grand Hyatt San Francisco" and more particularly described in
Exhibit A attached hereto and incorporated herein by reference, together with
all buildings and other improve ments thereon (collectively, the "Real
Property"). The Real Property is being conveyed to Assignee pursuant to a
certain Grant Deed exe cuted by Assignor in favor of Assignee.
B. Assignor, as the owner of the Real Property, has an interest in the
following items: (i) those certain agreements, warranties, and contracts
listed on Exhibit B attached hereto and incorporated herein by reference
(collectively, the "Contracts"), (ii) those certain licenses, franchises and
permits listed on Exhibit B attached hereto, obtained by Seller, if any, used
in or relating to the ownership, occupancy or operation of the Property or any
part thereof (collectively, the "Permits"), and (iii) Assignor's interest,
if any, in and to any contract rights, leases, concessions, trademarks,
service marks, trade names (including the names of restaurants, lounges and
meeting rooms), logos, copyrights, and rights under guaranties or warranties
relating to goods, merchandise or services at or relating to the Hotel
(collectively, the "Miscellaneous Property Assets" and, collectively with the
Permits and the Contracts, the "Assigned Assets").
NOW, THEREFORE, in consideration of the foregoing facts:
1. Assignor hereby assigns, transfers, and conveys to Assignee
all of Assignor's right, title, and interest in and to the Assigned Assets.
This Assignment is made without recourse or representation or warranty
whatsoever. By executing this Assignment and assuming the obligations under
the Assigned Assets, Assignee acknowledges and agrees that Assignee and
Assignee's representatives have been afforded the opportunity to make and
have made such inspections of the Assigned Assets assigned hereby and matters
related thereto as they have deemed necessary and desirable. Assignee
acknowledges that Assignor has not made and does not make any representations
or warranties of any kind whatsoever, oral or written, express or implied,
with respect to any of the Assigned Assets or any such related matters,
except as and to the extent set forth in that certain Purchase and Sale
Agreement and Joint Escrow Instructions, dated as of November 4, 1996, by and
between Assignee and Assignor.
2. Assignee hereby agrees to and accepts such assignment and, in
addition, expressly assumes and agrees to keep, perform, and fulfill all of
the terms, covenants, obligations, and conditions required to be kept,
performed, and fulfilled by Assignor under, or with respect to, the Assigned
Assets from and after the "Closing Date" (as hereafter defined). Assignee
further agrees to indemnify, defend, and hold Assignor harmless from and
against any and all liability, loss, cost, damage, and expense (including,
without limitation, reasonable attorneys' fees and costs) directly or
indirectly related to any breach or default by Assignee under the Contracts
or the Permits or in Assignee's obligations hereunder, accruing from and
after the Closing Date. Assignor agrees to indemnify, defend, and hold
Assignee harmless from and against any and all liability, loss, cost, damage,
and expense (including, without limitation, reasonable attorneys' fees and
costs) directly or indirectly related to any breach or default by Assignor
under the Contracts or the Permits prior to the Closing Date."Closing Date"
shall mean and refer to the date this Assignment is delivered to Assignee.
3. The provisions of this Assignment shall be binding upon and
inure to the benefit of Assignor and Assignee and their respective successors
and permitted assigns.
4. This Assignment may be executed in as many counterparts as may
be deemed necessary and convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which such counterparts shall constitute one and the
same instrument.
5. This Assignment and the legal relations of the parties hereto
shall be governed by and construed and enforced in accordance with the laws
of the State of California, without regard to its principles of conflicts of
law.
6. In the event of any litigation between Assignor and Assignee
arising out of the obligations of Assignor or Assignee under this Assignment
or concerning the meaning or interpretation of any provision contained
herein, the losing party shall pay the prevailing party's costs and expenses
of such litigation, including, without limitation, reasonable attorneys' fees
and costs. The prevailing party shall be determined by the court based upon
an assessment of which party's major arguments or positions taken in the
proceedings could fairly be said to have prevailed over the other party's
major arguments or positions on major disputed issues in the court's
decision.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment and Assumption of Contracts, Permits and Miscellaneous Property
Assets as of the date first set forth above.
"Assignor"
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.,
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter
__________________________________
Print Name: Jeffrey C. Carter
Print Title: President
"Assignee"
By: ____________________________________
a___________________________________
By:__________________________________
Print Name: _____________________
Print Title: _____________________
Exhibit A to Assignment and Assumption of Contracts
Legal Description
All that certain real property situated in the City and County of
San Francisco, State of California, described as follows:
BEGINNING at the point of intersection of the northerly line of Post Street
with the westerly line of Stockton Street; running thence northerly along
said line of Stockton Street 275.00 feet and 10-3/4 inches to the southerly
line of Sutter Street; thence at a right angle westerly along said line of
Sutter Street 117.00 feet and 6 inches; thence at a right angle southerly 100
feet; thence at a right angle westerly 20 feet; thence at a right angle
southerly 175 feet and 10- 3/4 inches to the northerly line of Post Street;
thence at a right angle easterly along said line of Post Street 137.00 feet
and 6 inches to the point of beginning.
BEING a portion of 50 Vara Block No. 142, which said Block is delineated and
shown on the record of Survey Map thereof recorded January 8, 1970 in Book
"S" of Maps, Page 47, in the Office of the Recorder of the City and County of
San Francisco, State of California.
Exhibit B to Assignment and Assumption of
Contracts, Permits and Miscellaneous Property Assets
1. Contracts:
Lease Agreement, dated as of September 15, 1989, by
and between Seller and Telerent Leasing Corporation, as
amended by Lease Addendum #II executed by Seller on September 24, 1994.
Lease Renewal Agreement, dated as of November 21,
1995, by and between Seller and M&SD Financial Services, a
division of Electronic Data Systems Corporation.
2. Permits:
Permit to Operate Underground Storage Tank, effective
February 1, 1996 and expiring February 1, 1997, issued to
Seller by the Department of Public Health of the City and
County of San Francisco for Tank No. 017020001001 (diesel
fuel).
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION OF OPERATING LEASE
[See Following
Pages]
Recording Requested by:
____________________
____________________
____________________
When recorded mail to:
____________________
____________________
____________________
----------------------------------------------------------------
Space Above This Line For Recorder's Use
ASSIGNMENT, ASSUMPTION AND INDEMNITY AGREEMENT
This ASSIGNMENT, ASSUMPTION AND INDEMNITY AGREEMENT (this "Assignment")
is entered as of , 199_, by and between Union
Square Hotel Partners, L.P., a Delaware limited partnership ("Assignor") and
___________________, a ______________________ ("Assignee").
RECITALS
A. California Hyatt Corporation, a California corporation
("Tenant") and Massachusetts Life Insurance Company ("Mass. Mutual") are
parties to that certain Lease and Agreement dated January 4, 1973 (the
"Lease") covering that certain real property located in the City and County
of San Francisco and improvements thereon known as the Hyatt on Union Square,
as more particularly described on Exhibit A attached hereto (the "Property").
A short form of the Lease was recorded on January 4, 1973 in the Official
Records of the City and County of San Francisco at Book B176, Page 76, Series
V-43591.
B. Assignor is the successor in interest to Mass. Mutual's
interest in the Lease pursuant to that certain Assumption, Consent and
Indemnity Agreement recorded on July 31, 1980 in the Official Records of the
City and County of San Francisco at Book D34, Page 481, Series C-124183.
C. Assignor and Assignee are parties to that certain
Purchase and Sale Agreement and Joint Escrow Instructions pursuant to which
Assignor has agreed to sell and Assignee has agreed to purchase the Property
and Assignor has agreed to assign and Assignee has agreed to assume the Lease.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and
Assignee agree
as follows:
(a) Assignor assigns and transfers to Assignee all of the
right, title and interest of Assignor in, to and under the Lease.
(b) Assignor warrants to Assignee that Assignor has the
right and authority to assign and transfer to Assignee the Lease.
(c) Assignee assumes as of and from the date hereof all of
Assignor's obligations under the Lease.
(d) Assignee agrees to indemnify and hold Assignor
harmless from and against any and all losses, costs, liabilities, damages and
expenses (including reasonable attorneys' fees and expenses), accruing on or
after the date hereof and arising out of the Lease.
(e) Assignee further agrees to indemnify and hold Assignor
harmless from and against any and all losses, costs, liabilities, damages and
expenses (including reasonable attorneys' fees and expenses), whenever
arising or accruing, with respect to any and all claims and liabilities
relating to current or former employees of Tenant, whether with respect to
the Worker Adjustment and Retraining Notification Act, codified at 29 U.S.C.
2101 et.seq., or otherwise.
(f) In the event of any litigation between Assignor and
Assignee arising out of the obligations of Assignor or Assignee under this
Agreement or concerning the meaning or interpretation of any provision
contained herein, the losing party shall pay the prevailing party's costs and
expenses of such litigation, including, without limitation, reasonable
attorneys' fees and costs. The prevailing party shall be determined by the
court based upon an assessment of which party's major arguments or positions
taken in the proceedings could fairly be said to have prevailed over the
other party's major arguments or positions on major disputed issues in the
court's decision.
(g) This Assignment shall be binding on, and inure to the
benefit of, the parties hereto, their successors in interest and assigns.
(h) This Assignment may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all of which such counterparts shall
constitute one and the same instrument.
(i) This Assignment and the legal relations of the parties
hereto shall be governed by and construed and enforced in accordance with the
laws of the State of California, without regard to its principles of
conflicts of law.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment as of the day and year first hereinabove written.
HT-HOTEL EQUITIES, INC. UNION SQUARE HOTEL a Delaware
PARTNERS, L.P. , a corporation Delaware limited partnership
By________________________ By: UNION SQUARE/ GP Corp.,
Title _____________________ its general partner
By________________________ By:
________________________ Title_____________________
Jeffrey Carter, President
STATE OF __________ )
:ss.
COUNTY OF _________ )
On the ____ day of __________, 199_, before me,
___________________
____________________________________________________________, personally
appeared
_________________________________________________________________
__ personally known to me or __ proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
- ------------------------
(SEAL)
STATE OF __________ )
:ss.
COUNTY OF _________ )
On the ____ day of __________, 199_, before me,
___________________
____________________________________________________________, personally
appeared ___________________________________________________________________
personally known to me or __ proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
- ------------------------
(SEAL)
Exhibit A To Assignment of Lease
Legal Description
All that certain real property situated in the City and County of San
Francisco, State of California, described as follows:
BEGINNING at the point of intersection of the northerly line of Post S treet
with the westerly line of Stockton Street; running thence northerly along
said line of Stockton Street 275.00 feet and 10-3/4 inches to the southerly
line of Sutter Street; thence at a right angle westerly along said line of
Sutter Street 117.00 feet and 6 inches; thence at a right angle
southerly 100 feet; thence at a right angle westerly 20 feet; thence at a
right angle southerly 175 feet and 10- 3/4 inches to the northerly line of
Post Street; thence at a right angle easterly along said line of Post Street
137.00 feet and 6 inches to the point of beginning.
BEING a portion of 50 Vara Block No. 142, which said Block is delineat ed and
shown on the record of Survey Map thereof recorded January 8, 1970 in Book
"S" of Maps, Page 47, in the Office of the Recorder of the City and County
of San Francisco, State of California.
EXHIBIT F
FORM OF NON-FOREIGN AFFIDAVIT
[See Following Page]
NON-FOREIGN AFFIDAVIT OF
UNION SQUARE HOTEL PARTNERS, L.P.
A DELAWARE LIMITED PARTNERSHIP
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"IRC"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. In addition, Section
18805 of the California Revenue and Taxation Code, as amended (the "R&T
Code"), provides that a transferee of a California real property interest
must withhold tax if the transferor's last known street address is outside
the boundaries of the State of California. To inform the transferee that
withholding of tax is not required upon the disposition of a U.S. and
California real property interest by UNION SQUARE HOTEL PARTNERS, L.P., a
Delaware limited partnership ("Transferor"), the undersigned Transferor
hereby certifies as follows:
1. Transferor is not a foreign person, foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the IRC and the regulations promulgated thereunder);
2. Transferor's U.S. taxpayer I.D. number is ________; and
3. Transferor's office address is _________________.
Transferor understands that this certification may be disclosed to
the Internal Revenue Service and/or the California Franchise Tax Board and
that any false statement contained herein could be punished by fine,
imprisonment, or both.
Under penalties of perjury, Transferor declares that it has
examined the foregoing certification and it is true, correct, and complete.
"Transferor"
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.
a Delaware corporation
Its: General Partner
By: s/Jeffrey C. Carter
________________________________
Print Name: Jeffrey C. Carter
Print Title: President
EXHIBIT G
FORM OF ESTOPPEL AGREEMENT
[See Following Page]
ESTOPPEL AGREEMENT OF CALIFORNIA HYATT
CORPORATION ________________, 199_
HT-Hotel Equities, Inc.
200 West Madison
Chicago, Illinois 60606
Attention: General Counsel
Union Square Hotel Partners, L.P.
c/o Union Square/GP Corp.
3 World Financial Center, 29th Floor
New York, New York 10285-2900
RE: Grand Hyatt San Francisco
Ladies and Gentlemen:
California Hyatt Corporation, a Delaware corporation ("Tenant"), as
lessee and operator, and Union Square Hotel Partners, L.P., a Delaware
limited partnership ("Landlord"), as successor-in-interest to the lessor and
as owner, are parties to that certain Agreement and Lease, dated January 4,
1973, as amended by First Amendment to Lease dated as of August 29, 1986,
Second Amendment to Lease dated as of May 1, 1989, Third Amendment to Lease
dated as of June 30, 1992, and Fourth Amendment to Lease dated as of August
29, 1996 (collectively, the "Lease"), pursuant to which Landlord has leased
to Tenant for Tenant's operation in accordance therewith, certain real
property and improve ments thereon (collectively, the "Property") located in
San Francisco County, California, which Property is more particularly
described in Exhibit "A" attached hereto. Tenant understands that HT-Hotel
Equities, Inc., a Delaware corporation ("Purchaser"), has entered into an
agreement with Landlord to purchase the Property, subject to the Lease.
Landlord has requested that Tenant deliver this Estoppel Certificate to
Purchaser and Landlord, and by delivering this Estoppel Certificate to
Purchaser, Tenant acknowledges that Landlord has ad vised Tenant of the
prospective transaction described in this paragraph.
Tenant hereby certifies to Landlord and to Purchaser, as of the date
hereof, as follows:
1. Lease. The Lease attached hereto as Exhibit "B" is a true, correct,
and complete copy of the Lease, is in full force and effect, and Landlord and
Tenant have not entered into any other agreement that has modified,
supplemented, or amended in any way the terms or provisions of the Lease, and
the Lease represents the entire agreement between Landlord and Tenant as to
the Property and the premises demised thereunder.
2. Landlord's Obligations. Landlord has done all things required of
Landlord under the Lease to be done as of the date hereof, and Tenant, as of
the date hereof, has no offset, defense, deduction, or claim against
Landlord, and Landlord is not in default under the Lease, and no event has
occurred which, with the passage of time or with the giving of notice, or
both, would result in a default by Landlord under the Lease.
3. Rent. Tenant is not entitled to, and has made no agreement with
Landlord or its agents or employees concerning, free rent, partial rent,
rebate of rent payments, credit or offset or reduction in rent, or any other
type of rental concession.
4. Purchase Rights. Except as expressly provided in the Lease, Tenant has
no right to renew or extend the term of the Lease, nor any option or
preferential right to purchase all or any part of the premises demised
thereunder or all or any part of the Property, nor any right, title, or
interest with respect to the Property other than as a tenant and operator of
the Property under the Lease.
5. Security Deposit. Landlord holds no security or other depos it of
Tenant, and all security or other deposits of Tenant previously held by
Landlord have been refunded in full to Tenant.
6. Assignment and Subletting. Tenant has not assigned any of its rights
under the Lease, and except as described on Exhibit "C" attached hereto, has
not sublet the demised premises to any sublessee. Except as described on
Exhibit "C", no one except Tenant and its employees occupies the premises
demised under the Lease.
7. Insurance. All insurance, if any, required to be maintained by Tenant
under the Lease is presently in full force and effect.
8. Pending Actions. No actions, voluntary or otherwise, are pending
against Tenant under the bankruptcy, insolvency, or similar laws of the
United States or any state thereof.
9. Consent to Sale. Tenant acknowledges and consents to Landlord's sale of
the Property and assignment of the Lease to Purchaser.
10. Notices. The address for notices to be sent to Tenant is .
Very truly yours,
CALIFORNIA HYATT CORPORATION,
a Delaware corporation
By:
________________________
Print Name:
________________ Print
Title:________________
LANDLORD'S CERTIFICATION:
By its execution hereof, Landlord hereby certifies to Tenant
and to Purchaser that Tenant has done all things required of Tenant under
the Lease to be done as of the date hereof, and Landlord, as of the date
hereof, has no offset, defense, deduction, or claim against Tenant (other
than for the payment of rent under the Lease not yet due and payable), and
Tenant is not in default under the Lease, and no event has occurred which,
with the passage of time or with the giving of notice, or both, would result
in a default by Tenant under the Lease.
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.
a Delaware corporation
Its: General Partner
By:
________________________________
Print Name: Jeffrey C. Carter
Print Title: President
Exhibit "A" to Estoppel Agreement
LEGAL DESCRIPTION OF PROPERTY
All that certain real property situated in the City and County of San
Francisco, State of California, described as follows:
BEGINNING at the point of intersection of the northerly li ne of Post Street
with the westerly line of Stockton Street; running thence northerly along
said line of Stockton Street 275.00 feet and 10-3/4 inches to the southerly
line of Sutter Street; thence at a right angle westerly along said line of
Sutter Street 117.00 feet and 6 inches; thence at a right angle southerly 100
feet; thence at a right angle westerly 20 feet; thence at a right angle
southerly 175 feet and 10-3/4 inches to the northerly line of Post Street;
thence at a right angle easterly along said line of Post Street 137.00 feet
and 6 inches to the point of beginning.
BEING a portion of 50 Vara Block No. 142, which said Block is delineated and
shown on the record of Survey Map thereof recorded January 8, 1970 in Book
"S" of Maps, Page 47, in the Office of the Recorder of the City and County of
San Francisco, State of California.
Exhibit "B" to Estoppel Agreement
LEASE
[To Be Attached]
Exhibit "C" to Estoppel Agreement
SUBLEASES
[To Be Attached]
EXHIBIT H
LIST OF CONTRACTS
1. Lease Agreement, dated as of September 15, 1989, by and between
Seller and Telerent Leasing Corporation, as amended by Lease Addendum
#II executed by Seller on September 24, 1994
2. Lease Renewal Agreement, dated as of November 21, 1995, by and
between Seller and M&SD Financial Services, a division of Electronic
Data Systems Corporation
EXHIBIT I
LIST OF PERMITS
1. Permit to Operate Underground Storage Tank, effective February
1, 1996 and expiring February 1, 1997, issued to Seller by the
Department of Public Health of the City and County of San Francisco for
Tank No. 017020001001 (diesel fuel).
EXHIBIT J
FORM OF LIMITED PARTNER VOTE NOTICE
[See Following Page]
LIMITED PARTNER VOTE NOTICE
[Date]
To: HT-Hotel Equities, Inc.
First American Title Insurance Company
From: Union Square Hotel Partners, L.P.
Re: Grand Hyatt San Francisco
Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in that certain Purchase and Sale Agreement and
Joint Escrow Instructions, dated as of November 4, 1996 (the "Purchase
Agreement") by and among HT-Hotel Equities, Inc., Union Square Hotel
Partners, L.P., and First American Title Insurance Company.
This notice shall serve to inform you that a meeting (the
"Meeting") of the limited partners and unit holders (collectively, the
"Limited Partners") of Union Square Hotel Partners, L.P. was held on , 199
at which time the Limited Partners voted to [approve/disapprove] the sale of
the Property in accordance with the terms and conditions of the Purchase
Agreement.
The undersigned hereby certifies that the Meeting was duly noticed
and held in accordance with the terms of the Seller's Partnership Agreement
and that a vote of the Limited Partners was solicited at such Meeting in
accordance with the Proxy Materials.
Very truly yours,
UNION SQUARE HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: Union Square/GP Corp.,
a Delaware corporation,
Its: General Partner
By: ______________________
Jeffrey C. Carter
President
TABLE OF CONTENTS
ARTICLE I
EFFECTIVE DATE
2
ARTICLE II
DEFINITIONS
2
ARTICLE III
PROPERTY SUBJECT TO AGREEMENT
7
ARTICLE IV
PURCHASE PRICE, PAYMENT OF
PURCHASE PRICE AND LIQUIDATED DAMAGES
8
4.1 Purchase Price.
8
4.2 Payment of Purchase Price; Deposit.
8
4.3 Allocation of Purchase Price.
9
4.4 Investment of Deposit.
9
4.5 Liquidated Damages.
9
ARTICLE V
"AS IS, WHERE IS" SALE
11
5.1 "AS IS, WHERE IS" Sale.
11
5.2 Inspection.
13
ARTICLE VI
TITLE TO PROPERTY; APPROVALS
14
6.1 Title.
14
6.2 Approval of Title.
15
6.3 Personal Property and Contracts, Permits
and Miscellaneous Property Assets.
16
6.4 Approval of Other Matters.
16
ARTICLE VII
BUYER'S CONDITIONS PRECEDENT TO CLOSING
16
7.1 Owner's Title Policy.
16
7.2 Seller's Non-Foreign Affidavit.
16
7.3 Seller's Organizational Documents.
17
7.4 Compliance by Seller.
17
7.5 Representations and Warranties.
17
7.6 Limited Partner Approval.
17
7.7 Covenant to Satisfy Conditions.
17
ARTICLE VIII
SELLER'S CONDITIONS PRECEDENT TO CLOSING
17
8.1 Limited Partner Vote.
17
8.2 Buyer's Organizational Documents.
20
8.3 Estoppel by Operator.
21
8.4 Compliance By Buyer.
21
8.5 Representations and Warranties.
21
8.6 Covenant to Satisfy Conditions.
21
ARTICLE IX
ESCROW AND CLOSING
21
9.1 Deposit With Escrow Holder and Escrow
Instructions.
21
9.2 Closing.
21
9.3 Deliveries by Seller.
22
9.4 Deliveries by Buyer.
23
9.5 Other Instruments; Revised Deliveries.
24
9.6 Prorations and Apportionments.
24
9.7 Costs and Expenses.
26
9.8 Close of Escrow.
26
9.9 Notification; Closing Statements.
27
ARTICLE X
REPRESENTATIONS, WARRANTIES, AND COVENANTS
28
10.1 Buyer's Representations and Warranties.
28
10.2 Seller's Representations and Warranties.
28
10.3 Continuation and Survival of
Representations and Warranties;
Limitations on Liability Therefor.
30
ARTICLE XII
OPERATION OF THE PROPERTY
31
ARTICLE XIII
LOSS BY CASUALTY; CONDEMNATION
32
13.1 Damage or Destruction.
32
13.2 Condemnation.
32
ARTICLE XIV
MISCELLANEOUS
33
14.1 Notices.
33
14.2 Brokers and Finders.
34
14.3 Assignment.
34
14.4 Successors and Assigns.
36
14.5 Amendments.
36
14.6 Interpretation.
36
14.7 Governing Law.
36
14.8 Entire Agreement.
36
14.9 Attorneys' Fees and Costs.
36
14.10 Time of the Essence.
37
14.11 Confidentiality.
37
14.12 No Waiver.
37
14.13 Further Acts.
38
14.14 Exhibits.
38
14.15 Counterparts.
38
14.16 No Intent to Benefit Third Parties.
38
14.17 Performance Due on Day Other Than
Business Day.
38
14.18 Expenses of Purchase and Sale.
38
14.19 Severability.
38
14.20 No Recording.
38
14.21 Quitclaim.
38
14.22 Termination of Agreement.
39
14.23 Waiver of Known Defaults
40
ALLOCATION AND RELEASE AGREEMENT
THIS ALLOCATION AND RELEASE AGREEMENT (this "Agree-
ment") is made and entered into as of November 1, 1996 by
and between CAPITAL GROWTH MORTGAGE INVESTORS, L.P., a
Delaware limited partnership ("Lender") and UNION SQUARE
HOTEL PARTNERS, L.P., a Delaware limited partnership
(formerly known as Shearson Union Square Associates
Limited Partnership, a Delaware limited partnership)
("Borrower").
R E C I T A L S
WHEREAS, Borrower is the owner of that certain
property located in San Francisco, California, as more
particularly described on Exhibit A attached hereto,
commonly known as the Grand Hyatt San Francisco hotel
(the "Hotel");
WHEREAS, Lender is the holder of the following
promissory notes made by Borrower (collectively, the
"Promissory Notes"): (i) the Zero Coupon Mortgage Note
due January 2, 1997, dated as of August 20, 1986, as
amended and restated as of June 30, 1992, in the original
principal amount of $13,325,000 and the face amount of
$42,207,708.58 (the "Secured Note"), (ii) the Promissory
Note, dated May 1, 1989, in the original principal amount
of $1,000,000 (the "May 1 Note"), and (iii) the Note,
dated as of July 12, 1991, in the original principal
amount of $1,611,952.35 (the "July 12 Note" and, collec-
tively with the May 1 Note, the "Unsecured Notes");
WHEREAS, the Secured Note is a non-recourse
note which is secured by: (i) that certain second prior-
ity Deed of Trust, Assignment of Rents, Security Agree-
ment and Fixture Filing, dated as of August 29, 1986,
encumbering the Hotel, as amended (as so amended, the
"Deed of Trust") by that certain First Agreement Supple-
menting Capital Growth Deed of Trust and Capital Growth
Assignment of Lessor's Interest in Leases, Security
Agreement and Fixture Filing, dated as of June 30, 1992
(the "First Supplement") and (ii) that certain second
priority Assignment of Lessor's Interest in Leases, dated
as of August 29, 1986, as amended by the First Supplement
(as so amended, the "Assignment of Leases");
WHEREAS, both the first priority mortgage debt
encumbering the Hotel (the "First Mortgage Debt") and the
Secured Note are scheduled to mature and become due and
payable on January 2, 1997;
WHEREAS, in order to generate funds to apply
toward, among other things, the repayment of the First
Mortgage Debt and the Secured Note, Borrower anticipates
entering into a purchase and sale agreement (the "Pur-
chase Agreement") with an affiliate ("Buyer") of Hyatt
Corporation for the sale (the "Sale") of the Hotel in
consideration for (a) a cash purchase price (the "Gross
Purchase Price") of $126,900,000, (b) Buyer's assumption
of mortgage debt subordinate to the Secured Note, and (c)
the covenants, representations, warranties and indemni-
ties made by Buyer and contained in the Purchase Agree-
ment and in the property transfer documents executed in
connection therewith, with no other consideration of any
kind being paid by Buyer to Borrower;
WHEREAS, the Unsecured Notes will mature and
become due and payable (to the extent of sufficient sales
proceeds) upon the consummation of the Sale;
WHEREAS, the net proceeds that Borrower expects
to receive from the payment of the Gross Purchase Price
in connection with the Sale, after the payment of transac-
tion costs, the making of closing adjustments and the
repayment of the First Mortgage Debt (the "Net Sales Pro-
ceeds"), would not be sufficient to repay in full the
obligations of the Borrower under the Promissory Notes
(the "Obligations");
WHEREAS, in consideration of Borrower's efforts
and expense in connection with the sale of the Hotel,
Borrower will be entitled to retain a portion of the Net
Sales Proceeds for distribution to its constituent part-
ners;
WHEREAS, Lender and Borrower have each deter-
mined that, taking into account a number of factors (in-
cluding, without limitation, the terms of the agreement
and lease pursuant to which the Hotel is managed by
California Hyatt Corporation), an orderly sale of the
Hotel by Borrower (and not by Lender or any other third
party) is the means most likely to result in the maximum
amount of Net Sales Proceeds;
WHEREAS, Lender, in order to maximize such Net
Sales Proceeds, to avoid costly and time-consuming fore-
closure proceedings and/or litigation, which could result
if Borrower failed to sell the Hotel on or before the
maturity of the Secured Note, and in consideration of
Borrower's undertakings and efforts with respect to the sale
of the Hotel, is willing to accept the "Pay-Off Amount"
(as hereinafter defined) and allow Borrower to retain
certain of the Net Sales Proceeds, upon the terms and
conditions set forth herein;
WHEREAS, Borrower and Lender have each engaged
an independent financial advisor (collectively, the
"Independent Advisors") to negotiate an allocation (the
"Allocation") between Borrower and Lender of the anticipated
Net Sales Proceeds, and the Independent Advisors have
independently negotiated and presented an Allocation to
Borrower and Lender;
WHEREAS, Lender's Independent Advisor has
opined to Lender that the Allocation is fair, from a
financial point of view, to the limited partners of
Lender and that the Allocation is at least as favorable
to Lender as an allocation of proceeds would be if it
were between unaffiliated parties in similar circumstances
and, in reliance thereon, Lender has approved the
Allocation;
WHEREAS, Borrower's Independent Advisor has
opined to Borrower that the Allocation is fair, from a
financial point of view, to the limited partners of
Borrower and that the Allocation is at least as favorable
to Borrower as an allocation of proceeds would be if it
were between unaffiliated parties in similar circumstanc-
es and, in reliance thereon, Borrower has approved the
Allocation;
WHEREAS, Lender and Borrower now desire to set
forth their agreement with respect to the Allocation of
Net Sales Proceeds and the satisfaction of the Obliga-
tions.
NOW, THEREFORE, in consideration of the cove-
nants and conditions herein contained and other good and
valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Sale of Hotel and Acceptance of Pay-Off Amount.
a. Sale of Hotel. Lender shall permit Borrower to
consummate the Sale generally in accordance with the
terms of the Purchase Agreement, as the same may be
amended or otherwise modified from time to time in Borrower's
sole and absolute discretion, provided, however, that no
such modification shall reduce the Gross Purchase Price
to an amount which is not sufficient to yield Net Sales
Proceeds in cash in an amount at least equal to the Pay-
Off Amount, as defined below. Lender acknowledges that,
pursuant to the Purchase Agreement, the Gross Purchase
Price may be increased to a maximum of $132,000,000 under
certain circumstances. Borrower shall deliver to Lender
a fully executed copy of the Purchase Agreement within
three (3) business days following the execution thereof
by Buyer and Borrower. As used herein, the term,
"Effective Date" shall mean the date that the Purchase Agree-
ment becomes effective, as more particularly set forth
therein. Borrower shall notify Lender of the Effective
Date promptly following notification thereof to Borrower.
b. Pay-Off Amount. The term "Pay-Off Amount" as
used herein means the sum of the following amounts in
cash:
(1) the amount of $30,000,000, which amount
includes the amount of $150,000 in reimbursement of costs
and expenses (including reasonable attorneys' fees)
incurred by Lender in connection with the transactions
contemplated hereby (regardless of the actual amount of
such costs and expenses), said $150,000 plus the amounts
referred to in clause (2) below being the only amounts
that Borrower shall be obligated to pay or reimburse to
Lender for such costs and expenses, plus
(2) the cost incurred by Lender in obtaining
Lender's Fairness Opinion, provided that such cost shall
not exceed the sum of $250,000, plus
(3) in the event that the Gross Purchase Price
is increased under the terms of the Purchase Agreement to
an amount above $126,900,000, then one-half (1/2) of the
amount of such excess shall additionally be payable to
Lender, plus
(4) in the event that the First Mortgage Debt
is repaid in full upon the consummation of the Sale for
less than $89,714,536 as a result of (i) the fact that
the Sale is consummated prior to December 31, 1996, or
(ii) the fact that as a result of an arithmetical error,
the amount necessary to repay the First Mortgage Debt on
December 31, 1996 is less than $89,714,536 (or corre-
spondingly less as of some other date), or (iii) the fact
that Borrower negotiates and obtains the agreement of the
holder of the First Mortgage Debt to accept a discounted
payment for the full satisfaction and release of the
First Mortgage Debt, then, and only then, Borrower shall
additionally pay to Lender an amount equal to the product
of: (A) the difference between $89,714,536 and such
lesser repayment amount, multiplied by (B) 0.8559947.
c. Acceptance of Pay-Off Amount. Lender shall
accept the Pay-Off Amount in full satisfaction of all of
the outstanding Obligations.
d. Time Deadline; Extension of Maturity of Secured
Note. Borrower shall use its commercially reasonable
best efforts to consummate the Sale on or before January
2, 1997, provided, however, that Borrower shall have
until March 31, 1997 (the "Outside Closing Date") in
which to obtain the approval of Borrower's limited part-
ners to the Sale and to consummate the Sale. Lender
hereby covenants and agrees that, unless foreclosure pro-
ceedings with respect to the First Mortgage Debt have
been commenced, Lender shall not commence foreclosure
proceedings with respect to the indebtedness evidenced by
the Secured Note, or attempt to have a receiver appointed
for the Hotel, until the first business day following the
Outside Closing Date.
e. Agreement Contingent. This Agreement is contin-
gent upon the consummation of the Sale. In the event the
Sale has not been consummated on or before the Outside
Closing Date, this Agreement shall terminate and be of no
further force or effect and Lender shall not thereafter
be obligated to accept the Pay-Off Amount in satisfaction
of the Obligations.
f. Hotel Operation. From and after the date
hereof, Borrower shall continue to operate the Hotel (to
the extent within Borrower's control) materially in
accordance with Borrower's past practices and the terms of
the Operating Lease.
g. No Other Consideration or Commission. Borrower
represents and warrants to Lender that neither Borrower
nor any affiliate of Borrower will be paid (directly or
indirectly) any commission, fee or other consideration of
any kind from Buyer (or its affiliates) on account of
Buyer's purchase of the Hotel, whether pursuant to the
Purchase Agreement, the property transfer documents exe-
cuted in connection therewith, or otherwise, other than
(a) the Gross Purchase Price, (b) the assumption of mort-
gage debt subordinate to the Secured Note, and (c) the
covenants (relating to the Hotel and the transfer of the
Hotel), representations, warranties and indemnities more
particularly set forth in the Purchase Agreement and the
property transfer documents executed in connection there-
with (including, without limitation, Buyer's assumption
of the landlord's obligations under the Operating Lease
and with respect to the contracts, personal property and
miscellaneous property assets in connection with Buyer's
purchase of the Hotel). The Purchase Agreement (includ-
ing the property transfer documents attached as exhibits
thereto) is the entire agreement between the parties with
respect to Buyer's purchase of the Hotel.
2. Borrower's Retention of Certain Net Sales Proceeds.
Lender acknowledges and agrees that the Independent
Advisors agreed upon the Allocation based upon the as-
sumption that the Net Sales Proceeds would not only be
sufficient to pay to Lender the Pay-Off Amount, but would
also be sufficient to enable Borrower to retain a portion
of the Net Sales Proceeds. Accordingly, Lender further
acknowledges and agrees that, after payment to Lender of
the Pay-Off Amount as contemplated herein, Borrower shall
have the absolute right to keep and retain any and all
remaining Net Sales Proceeds, free from any claim of
Lender, in consideration of Borrower's undertakings and
efforts regarding the Sale.
3. Closing.
a. Closing Date. The closing (the "Closing") of
the satisfaction of the Obligations and the release of
any and all collateral securing the same (the "Collater-
al") shall occur on the date (the "Closing Date") set
forth in a written notice to Lender delivered by Borrower
one (1) business day prior to the Closing, which Closing
Date shall be no later than the Outside Closing Date.
The Closing shall be conducted concurrently with the
closing of the Sale and shall be made part of the escrow
established by Borrower with First American Title Insur-
ance Company (the "Title Company") with respect to the
Sale.
b. Lender's Closing Deliveries. No later than
thirty days after the Effective Date, the following items
shall be delivered by Lender to the Title Company, to be
held in escrow by the Title Company pending the consumma-
tion of the Sale:
(1) the original executed Promissory Notes;
(2) releases and full reconveyances of the
Collateral, to be prepared by Borrower in form and sub-
stance reasonably satisfactory to the parties (the "Col-
lateral Releases"), all in form for recordation required
in the State of California, together with the original
Deed of Trust and the original Assignment of Leases and
any other instruments reasonably required by the Title
Company for the release and reconveyance of the Collater-
al;
(3) UCC-3 Termination Statements for filing with
the California Secretary of State and the County Recorder
of San Francisco, California, evidencing the termination
of Lender's security interests in the Collateral, to be
prepared by Borrower in form and substance reasonably
satisfactory to the parties;
(4) an unconditional general release of Borrower
and its general partner and affiliates of Borrower's
general partner, duly executed by Lender, to be prepared
by Borrower in form and substance reasonably satisfactory
to the parties (the "General Release of Borrower");
(5) an unconditional general release of each
Additional Unsecured Lender (as hereinafter defined),
duly executed by Lender to be prepared by Borrower in
form and substance reasonably satisfactory to such Addi-
tional Unsecured Lender (each, a "General Release of
Additional Unsecured Lender");
(6) a Form 1099-A prepared by Borrower in form and
substance satisfactory to Lender, to be filed by Lender
with the Internal Revenue Service; and
(7) wire transfer instructions for the payment to
Lender of the Pay-Off Amount.
c. Borrower's Closing Deliveries. At the Closing,
the following items shall be delivered by Borrower to the
Title Company to be held in escrow by the Title Company
pending the consummation of the Sale:
(1) instruction to the Title Company to pay the Pay-
Off Amount to Lender out of Net Sales Proceeds;
(2) an unconditional general release of Lender and
its general partner and affiliates of Lender's general
partner, duly executed by Borrower, in form and substance
reasonably satisfactory to the parties (the "Borrower's
General Release of Lender");
(3) a certification made by the general partner of
Borrower for the benefit of Lender setting forth each and
every Additional Unsecured Lender holding unsecured debt
of Borrower and the original and outstanding principal
amount of such unsecured debt; and
(4) evidence of the consent of each Additional
Unsecured Lender to the transactions contemplated hereby,
together with an unconditional general release(s) of
Lender and its general partner and affiliates of Lender's
general partner, duly executed by each Additional Unse-
cured Lender, in form and substance reasonably satisfactory
to Lender (each, a "Release of Lender by Additional
Unsecured Lender" and, collectively with Borrower's
General Release of Lender, the "General Releases of
Lender").
d. Title Company Obligations. At Closing, Borrow-
er shall cause the Title Company to (i) wire transfer the
Pay-Off Amount and deliver the General Releases of Lender
to Lender, (ii) cause the Collateral Releases to be filed
and recorded in the appropriate offices and deliver
conformed copies thereof to Borrower and Lender, (iii)
deliver the Promissory Notes and the General Release of
Borrower to Borrower, and (iv) deliver each General Re-
lease of Additional Unsecured Lender to the applicable
Additional Unsecured Lender.
4. Agreement and Release by Additional Unsecured Lender(s).
It shall be a condition precedent to the obligations
of Lender and Borrower hereunder that Borrower shall have
obtained (or, in the case of clause (iii) of this Section
4, caused to be delivered to the Title Company at the
Closing): (i) the agreement of any and all lender(s) holding
unsecured debt of the Borrower other than the Unsecured
Notes (each, an "Additional Unsecured Lender") to
Borrower's retention of all Net Sales Proceeds in excess
of the Pay-Off Amount as set forth herein, (ii) a general
release of Borrower, its general partner and its affiliates
by such Additional Unsecured Lender(s), and (iii) a
Release of Lender by Additional Unsecured Lender executed
by each Additional Unsecured Lender.
5. Miscellaneous Provisions.
a. Authority. Each party hereto represents and
warrants to the other that it has full power and authori-
ty to enter into this Agreement and to consummate the
transactions contemplated hereby. The person executing
this Agreement on behalf of the general partner of each
party hereto has been duly authorized to sign this Agree-
ment on behalf of such general partner, but signs this
Agreement only in such person's capacity as an officer of
such general partner and shall have no personal liability
with respect to this Agreement or the transactions con-
templated hereby.
b. Severability. If any term or provision of this
Agreement or the application thereof to any persons or
circumstances shall, to any extent, be invalid or unen-
forceable, the remainder of this Agreement or the appli-
cation of such term or provision to persons or circum-
stances other than those as to which it is held invalid
or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
c. Integration of Agreement. This Agreement,
together with the Exhibits hereto and that certain letter
agreement between Borrower and Lender dated as of Septem-
ber 5, 1996 attached hereto as Exhibit B and incorporated
herein by this reference, constitutes the entire agree-
ment of the parties regarding the subject matter of this
Agreement and all prior or contemporaneous agreements,
understandings, representations and statements, oral or
written, are hereby merged herein.
d. Further Assurances. The parties agree to
mutually execute and deliver to each other, at, and from
time to time after, the Closing, such other and further
documents as may be reasonably required by counsel for
the parties to carry into effect the purposes and intents
of this Agreement, provided such documents are customari-
ly delivered in similar transactions, and do not impose
any material obligations upon any party hereunder except
as set forth in this Agreement.
e. Attorneys' Fees. In the event that any party
hereto fails to perform any of its obligations under this
Agreement or in the event a dispute arises concerning the
meaning or interpretation of any provision of this Agree-
ment, the defaulting party or the party not prevailing in
such dispute, as the case may be, shall pay any and all
costs and expenses reasonably incurred by the other
parties in enforcing or establishing its rights hereun-
der, including, without being limited to, court costs and
reasonable attorneys' fees, charges and disbursements.
f. Modifications; Counterparts. This Agreement
may not be modified, amended, altered or supplemented
except by written agreement executed and delivered by the
parties hereto. This Agreement may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed
shall be deemed to be an original, and all of which when
so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart
of this Agreement. Any delivery of a counterpart signa-
ture by telecopier shall, however, be promptly followed
by delivery of a manually executed counterpart.
g. Governing Law. This Agreement shall be gov-
erned by and construed in accordance with the laws of the
State of New York, as if this Agreement was made and to
be performed wholly within such State.
h. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
i. No Waiver. Except as otherwise expressly
provided herein, the failure of any party hereto to
enforce at any time any of the provisions of this Agree-
ment shall in no way be construed as a waiver of any of
such provisions, or the right of any party thereafter to
enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of
any other or subsequent breach.
j. Headings. The Article and Section headings
used herein are for reference purposes only and do not
control or affect the meaning or interpretation of any
term or provision hereof.
k. Recordation. No party hereto may record this
Agreement. To the extent that any such filing is made in
violation of the Agreement, the party effecting such
filing shall indemnify, defend and hold the other harm-
less from and against any damages incurred by the other
in connection therewith. The provisions of this para-
graph shall survive the termination of this Agreement.
l. No Modifications to Existing Loan Documents.
Except to the extent expressly set forth herein, each of
the loan documents executed and delivered in connection
with the Promissory Notes shall remain unmodified and in
full force and effect. Any material default by Borrower
under this Agreement shall be deemed to constitute a
default under the Secured Note. The parties expressly
agree that this Agreement is contingent and is effective
only upon the closing of the Sale under the terms and
conditions set forth herein. Both Borrower and Lender
agree that this Agreement does not constitute a modifica-
tion of the Obligations within the meaning of Treasury
Regulation section 1.1001-3.
IN WITNESS WHEREOF, the parties hereto have executed
this Allocation and Release Agreement as of the date and
year first above written.
UNION SQUARE HOTEL PARTNERS,
L.P.
By: Union Square/GP Corp., its
general partner
By: s/Jeffrey C. Carter
__________________
Name: Jeffrey C. Carter
Title: President
CAPITAL GROWTH MORTGAGE INVES-
TORS, L.P.
By: CG Realty Funding Inc., its
general partner
By: s/Kenneth L. Zakin
___________________
Name: Kenneth L. Zakin
Title: President
EXHIBIT A
LEGAL DESCRIPTION
All that certain real property situated in the City and
County of San Francisco, State of California, described
as follows:
BEGINNING at the point of intersection of the northerly
line of Post Street with the westerly line of Stockton
Street; running thence northerly along said line of
Stockton Street 275.00 feet and 10-3/4 inches to the
southerly line of Sutter Street; thence at a right angle
westerly along said line of Sutter Street 117.00 feet and
6 inches; thence at a right angle southerly 100 feet;
thence at a right angle westerly 20 feet; thence at a
right angle southerly 175 feet and 10-3/4 inches to the
northerly line of Post Street; thence at a right angle
easterly along said line of Post Street 137.00 feet and 6
inches to the point of beginning.
BEING a portion of 50 Vara Block No. 142, which said
Block is delineated and shown on the record of Survey Map
thereof recorded January 8, 1970 in Book "S" of Maps,
Page 47, in the Office of the Recorder of the City and
County of San Francisco, State of California.
EXHIBIT B
LETTER AGREEMENT
CONSENT AND RELEASE AGREEMENT
THIS CONSENT AND RELEASE AGREEMENT (this "Agreement")
is made and entered into as of November __, 1996
by and among LEHMAN LENDING CORP., a Delaware corporation
(formerly known as Shearson Lending Corp., a Delaware
corporation) ("Lehman Lending"), LEHMAN BROTHERS HOLDINGS
INC., a Delaware corporation (formerly known as Shearson
Lehman Brothers Holdings Inc.) ("Holdings") and UNION
SQUARE HOTEL PARTNERS, L.P., a Delaware limited partner-
ship (formerly known as Shearson Union Square Associates
Limited Partnership, a Delaware limited partnership)
("Borrower").
R E C I T A L S
WHEREAS, Borrower is the owner of that certain
property located in San Francisco, California and common
ly known as the Grand Hyatt San Francisco hotel (the "Ho-
tel");
WHEREAS, Lehman Lending is the holder of that
certain Restructuring Expense Note, dated as of June 30,
1992 (the "Lehman Lending Note") made by Borrower in
favor of Shearson Lending Corp., in the original princi-
pal amount of $1,000,000;
WHEREAS, Holdings is the holder of that certain
Amended and Restated Note, dated as of June 28, 1990 (the
"Holdings Note") made by Borrower in favor of Shearson
Lehman Brothers Holdings Inc., in the original principal
amount of $10,000,000;
WHEREAS, Capital Growth Mortgage Investors,
L.P. ("CapGrowth") is the holder of the following promis-
sory notes made by Borrower (collectively, the "CapGrowth
Notes"): (i) the Zero Coupon Mortgage Note due January 2,
1997, dated as of August 20, 1986, as amended and restat-
ed as of June 30, 1992, in the original principal amount
of $13,325,000 and the face amount of $42,207,708.58 (the
"CapGrowth Secured Note"), (ii) the Promissory Note,
dated May 1, 1989, in the original principal amount of
$1,000,000 (the "May 1 Note"), and (iii) the Note, dated
as of July 12, 1991, in the original principal amount of
$1,611,952.35 (the "July 12 Note" and, collectively with
the May 1 Note, the "CapGrowth Unsecured Notes");
WHEREAS, the CapGrowth Secured Note is a non-
recourse note which is secured by: (i) that certain second
priority Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of August 29,
1986, encumbering the Hotel, as amended (as so amended,
the "Deed of Trust") by that certain First Agreement
Supplementing Capital Growth Deed of Trust and Capital
Growth Assignment of Lessor's Interest in Leases, Security
Agreement and Fixture Filing, dated as of June 30,
1992 (the "First Supplement") and (ii) that certain
second priority Assignment of Lessor's Interest in Leases,
dated as of August 29, 1986, as amended by the First
Supplement (as so amended, the "Assignment of Leases");
WHEREAS, the first priority mortgage debt
encumbering the Hotel (the "First Mortgage Debt"), the
Lehman Lending Note and the CapGrowth Secured Note are
each scheduled to mature and become due and payable on
January 2, 1997;
WHEREAS, in order to generate funds to apply
toward, among other things, the repayment of the First
Mortgage Debt and the Secured Note, Borrower anticipates
entering into a purchase and sale agreement (the "Pur-
chase Agreement") with an affiliate ("Buyer") of Hyatt
Corporation for the sale (the "Sale") of the Hotel in
consideration for (a) a cash purchase price (the "Gross
Purchase Price") of $126,900,000, (b) Buyer's assumption
of mortgage debt subordinate to the Secured Note, and (c)
the covenants, representations, warranties and indemni-
ties made by Buyer and contained in the Purchase Agree-
ment and in the property transfer documents executed in
connection therewith, with no other consideration of any
kind being paid by Buyer to Borrower;
WHEREAS, the Holdings Note and the CapGrowth
Unsecured Notes will mature and become due and payable
(to the extent of sufficient sales proceeds) upon the
consummation of the Sale;
WHEREAS, the net proceeds that Borrower expects
to receive from the payment of the Gross Purchase Price
in connection with the Sale, after the payment of transac-
tion costs, the making of closing adjustments and the
repayment of the First Mortgage Debt (the "Net Sales Pro-
ceeds"), would not be sufficient to repay in full the
obligations of the Borrower under the CapGrowth Secured
Note and would therefore be insufficient to permit any
repayment of the CapGrowth Unsecured Notes, the Holdings
Note or the Lehman Lending Note;
WHEREAS, in consideration of Borrower's under-
takings and efforts in connection with the sale of the
Hotel, CapGrowth will permit Borrower to retain a portion
of the Net Sales Proceeds for distribution to Borrower's
constituent partners, upon the terms and conditions set
forth in that certain Allocation and Release Agreement,
dated as of November 1, 1996 (the "CapGrowth Allocation
Agreement") by and between CapGrowth and Borrower, a copy
of which is attached hereto as Exhibit A, provided that
Borrower (i) obtain the consent of its unsecured lenders
to the provisions of the CapGrowth Allocation Agreement,
including, without limitation, to the retention by Bor-
rower of a portion of the Net Sales Proceeds, (ii) obtain
the release by Holdings and Lehman Lending of Borrower
from any obligations under the Holdings Note and the
Lehman Lending Note, respectively, and (iii) obtain
general releases of Borrower, CapGrowth and their respec-
tive general partners and affiliates from each of Lehman
Lending and Holdings in their capacities as unsecured
creditors of Borrower;
WHEREAS, Holdings and Lehman Lending have also
agreed to permit Borrower to retain a portion of the Net
Sales Proceeds (to the extent set forth in the CapGrowth
Allocation Agreement) in consideration of Borrower's
undertakings and efforts in connection with the Sale of
the Hotel; and
WHEREAS, Holdings, Lehman Lending and Borrower
now desire to set forth their agreement with respect to
the release and forgiveness of the Holdings Note and the
Lehman Lending Note.
NOW, THEREFORE, in consideration of the cove-
nants and conditions herein contained and other good and
valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Consent by Holdings.
Holdings hereby consents to the terms and
provisions of the CapGrowth Allocation Agreement.
2. Consent by Lehman Lending.
Lehman Lending hereby consents to the terms and
provisions of the CapGrowth Allocation Agreement.
3. Extension of Maturity of Lehman Lending Note.
In order to permit Borrower sufficient time in
which to consummate the Sale, Lehman Lending and Borrower
hereby agree that the maturity date of the Lehman Lending
Note shall be extended until March 31, 1997, regardless
of the maturity of the First Mortgage Debt.
4. Release of Indebtedness and Borrower's Retention of
Certain Net Sales Proceeds.
Each of Holdings and Lehman Lending acknowledges and
agrees that, upon consummation of the Sale and after pay-
ment to CapGrowth of the Pay-Off Amount as contemplated
by (and as such term is defined in) the CapGrowth Alloca-
tion Agreement, Holdings and Lehman Lending shall cause
all of Borrower's obligations under, respectively, the
Holdings Note and the Lehman Lending Note and each of the
respective loan documents executed in connection there-
with to be fully and unconditionally released and forgiv-
en, and Borrower shall have the absolute right to keep
and retain any and all remaining Net Sales Proceeds, free
from any claim of Holdings or Lehman Lending.
5. Closing.
a. Closing Date. The closing (the "Closing") of
the satisfaction and release of Borrower's obligations
under the Holdings Note and the Lehman Lending Note and
each of the loan documents executed in connection there-
with shall occur on the date (the "Closing Date") set
forth in a written notice to Holdings and Lehman Lending
delivered by Borrower at least one (1) business day prior
to the Closing, which Closing Date shall be no later than
March 31, 1997. The Closing shall be conducted concur-
rently with the closing of the Sale and shall be made
part of the escrow established by Borrower with First
American Title Insurance Company (the "Title Company")
with respect to the Sale.
b. Closing Deliveries of Holdings and Lehman
Lending. No later than thirty days after the "Effective
Date" (as defined in the Purchase Agreement), the follow-
ing items shall be delivered by Holdings and/or Lehman
Lending (as applicable) to the Title Company, to be held
in escrow by the Title Company pending the consummation
of the Sale:
(1) the original executed Holdings Note;
(2) the original executed Lehman Lending Note;
(3) an unconditional general release of Borrower,
its general partner and affiliates of Borrower's general
partner, duly executed by Holdings and Lehman Lending, to
be prepared by Borrower, and to be in form and substance
reasonably satisfactory to the parties (the "General
Release of Borrower");
(4) an unconditional general release of CapGrowth,
its general partner and affiliates of CapGrowth's general
partner, duly executed by Holdings and Lehman Lending, to
be prepared by Borrower, and to be in form and substance
reasonably satisfactory to CapGrowth (the "General
Release of CapGrowth"); and
(5) instructions to the Title Company to mark
each of the Holdings Note and the Lehman Lending Note
"Cancelled" upon delivery to CapGrowth of the Pay-Off
Amount.
c. Borrower's Closing Deliveries. No later than
thirty days after the Effective Date, the following items
shall be delivered by Borrower to the Title Company to be
held in escrow by the Title Company pending the consumma-
tion of the Sale:
(1) instruction to the Title Company to pay the
Pay-Off Amount to CapGrowth out of Net Sales Proceeds;
(2) an unconditional general release of Holdings
and Lehman Lending and the affiliates of each, duly executed
by Borrower and CapGrowth, in form and substance
reasonably satisfactory to the parties (the "General
Release of Holdings and Lehman Lending").
d. Title Company Obligations. At Closing,
Borrower shall cause the Title Company to (i) deliver the
General Release of Holdings and Lehman Lending to Hold-
ings and Lehman Lending, and (ii) deliver the Holdings
Note, the Lehman Lending Note and the General Release of
Borrower to Borrower.
6. Agreement and Release by CapGrowth.
It shall be a condition precedent to the obligations
of Holdings, Lehman Lending and Borrower hereunder that
Borrower shall have obtained (or, in the case of clause
(iii) of this Section 6, caused to be delivered to the
Title Company at the Closing): (i) a fully executed
CapGrowth Allocation Agreement, (ii) a general release of
Borrower, its general partner and its affiliates by
CapGrowth, and (iii) the General Release of Holdings and
Lehman Lending, executed by CapGrowth.
7. Miscellaneous Provisions.
a. Authority. Each party hereto represents and
warrants to the other that it has full power and authority
to enter into this Agreement and to consummate the
transactions contemplated hereby. The person executing
this Agreement on behalf of the general partner of each
party hereto has been duly authorized to sign this Agree-
ment on behalf of such general partner, but signs this
Agreement only in such person's capacity as an officer of
such general partner and shall have no personal liability
with respect to this Agreement or the transactions con-
templated hereby.
b. Severability. If any term or provision of this
Agreement or the application thereof to any persons or
circumstances shall, to any extent, be invalid or unen-
forceable, the remainder of this Agreement or the appli-
cation of such term or provision to persons or circum-
stances other than those as to which it is held invalid
or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
c. Integration of Agreement. This Agreement,
together with the Exhibits hereto, constitutes the entire
agreement of the parties regarding the subject matter of
this Agreement and all prior or contemporaneous agree-
ments, understandings, representations and statements,
oral or written, are hereby merged herein.
d. Further Assurances. The parties agree to
mutually execute and deliver to each other, at, and from
time to time after, the Closing, such other and further
documents as may be reasonably required by counsel for
the parties to carry into effect the purposes and intents
of this Agreement, provided such documents are customari-
ly delivered in similar transactions, and do not impose
any material obligations upon any party hereunder except
as set forth in this Agreement.
e. Attorneys' Fees. In the event that any party
hereto fails to perform any of its obligations under this
Agreement or in the event a dispute arises concerning the
meaning or interpretation of any provision of this Agree-
ment, the defaulting party or the party not prevailing in
such dispute, as the case may be, shall pay any and all
costs and expenses reasonably incurred by the other
parties in enforcing or establishing its rights hereun-
der, including, without being limited to, court costs and
reasonable attorneys' fees, charges and disbursements.
f. Modifications; Counterparts. This Agreement
may not be modified, amended, altered or supplemented
except by written agreement executed and delivered by the
parties hereto. This Agreement may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed
shall be deemed to be an original, and all of which when
so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart
of this Agreement. Any delivery of a counterpart signa-
ture by telecopier shall, however, be promptly followed
by delivery of a manually executed counterpart.
g. Governing Law. This Agreement shall be gov-
erned by and construed in accordance with the laws of the
State of New York, as if this Agreement was made and to
be performed wholly within such State.
h. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
i. No Waiver. Except as otherwise expressly
provided herein, the failure of any party hereto to
enforce at any time any of the provisions of this Agree-
ment shall in no way be construed as a waiver of any of
such provisions, or the right of any party thereafter to
enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of
any other or subsequent breach.
j. Headings. The Article and Section headings
used herein are for reference purposes only and do not
control or affect the meaning or interpretation of any
term or provision hereof.
k. Recordation. No party hereto may record this
Agreement. To the extent that any such filing is made in
violation of the Agreement, the party effecting such
filing shall indemnify, defend and hold the other harm-
less from and against any damages incurred by the other
in connection therewith. The provisions of this para-
graph shall survive the termination of this Agreement.
l. No Modifications to Existing Loan Documents.
Except to the extent expressly set forth herein, each of
the loan documents executed and delivered in connection
with the Lehman Lending Note and the Holdings Note shall
remain unmodified and in full force and effect.
m. Agreement Contingent. This Agreement is contin-
gent upon the consummation of the Sale. In the event the
Sale has not been consummated on or before March 31,
1997, this Agreement shall terminate and be of no further
force or effect. Borrower, Holdings and Lehman Lending
each hereby agrees that this Agreement does not consti-
tute a modification of the Lehman Lending Note or the
Holdings Note within the meaning of Treasury Regulation
section 1.1001-3.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Release Agreement as of the date and
year first above written.
UNION SQUARE HOTEL PARTNERS,
L.P., a Delaware limited part-
nership
By: Union Square/GP Corp., its
general partner
By: s/Jeffrey C. Carter
__________________
Name: Jeffrey C. Carter
Title: President
LEHMAN BROTHERS HOLDINGS INC., a
Delaware corporation
By: s/Karen Muller
___________________
Name: Karen Muller
Title: Vice President
LEHMAN LENDING CORP., a Delaware
corporation
By: s/Karen Muller
___________________
Name: Karen Muller
Title: Vice President
EXHIBIT A
CAPGROWTH ALLOCATION AGREEMENT
