California Bank & Trust v. Shilo Inn Moses Lake Inc et al

Filing 225

ORDER RE: SALE OF SHILO INN, MOSES LAKE, INC. granting 224 Motion for Order of Sale. Signed by Senior Judge Lonny R. Suko. (AY, Case Administrator)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON

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ZB, N.A., dba California Bank & Trust,
successor by merger to California Bank
& Trust, a California banking
corporation,

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Plaintiff,

Case No. 2:12-CV-00161 LRS

ORDER RE: SALE OF SHILO INN,
MOSES LAKE, INC.

v.
SHILO INN, MOSES LAKE, INC., a
Washington corporation; MOSES
LAKE FOOD MART, INC., a
Washington corporation; and KOHLI
INVESTMENT, INC., d/b/a Sunval
Express, a Washington corporation,

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Defendants.

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Having read and considered the Stipulation (ECF No. 224) regarding Sale of

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Shilo Inn, Moses Lake, Inc. submitted by Defendant Shilo Inn, Moses Lake, Inc., a

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Washington corporation (“Shilo Moses Lake” or “Shilo”); Plaintiff ZB, N.A., dba

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California Bank & Trust, successor by merger to California Bank & Trust, a
California banking corporation, (“CB&T” or “Plaintiff”) (Shilo Moses Lake, and
Plaintiff shall be referred to collectively as the “Parties”); by and through their

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respective counsel of record, and the Court-appointed receiver, Trigild, Inc. (the
ORDER - 1

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“Receiver”), the Court hereby makes the following Order.
For purposes of this Order, the following terms are defined: that certain real

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property located in Moses Lake, Washington, and more particularly described in
Exhibit A, attached hereto (the “Moses Lake Property”); cross-collateralized with a
loan to Shilo Inn Seaside East LLC, (the “Seaside Loan”); the secured revolving line

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of credit loan to Mark S. Hemstreet (“Hemstreet”) in the original principal amount

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not to exceed $5,000,000 (“Hemstreet Loan”); Somnath Motel, LLC, an arms-length

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third party buyer (“Buyer”); $2,650,000.00 (“Purchase Price”); loan to Shilo Inn
Seaside East LLC, (the “Seaside Loan”); loan to Shilo Moses Lake, Inc. (the “Moses
Lake Loan”); and the Stipulation Regarding Sale of Shilo Inn Seaside East Property,

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a copy of which is attached as Exhibit B (“Seaside Sale Stipulation”).

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ORDER

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1. The Moses Lake Property shall be sold to Buyer for the Purchase Price
pursuant to the Purchase Agreement attached as Exhibit C.

The Receiver is

authorized to, and shall, execute any and all documents and take all actions that may

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be necessary and appropriate to effectuate and consummate the sale of the Moses

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Lake Property to Buyer.

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2. The Net Proceeds and the Net Receivership Funds (as defined below) shall
be paid to Plaintiff and applied as follows: (a) first to the total indebtedness on the
Moses Lake Property, and (b) any remainder to be applied as a partial payment of

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ORDER - 2

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the total amount due and owning under the applicable loan documents for the Seaside

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Loan, Moses Lake Loan, Hemstreet Loan, and the Seaside Sale Stipulation.

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3. The Net Sales Proceeds shall constitute the reasonable and fair market
value of the Moses Lake Property for the purposes of determining the deficiency
judgment owed to Plaintiff in this case, and Defendants hereby consent to, and waive

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any and all defenses to, entry of such subsequent deficiency judgment, which shall

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be calculated as (A) the total indebtedness owing under the Moses Lake Loan and

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(B) the total amount due and owing under the applicable loan documents for the
Seaside Loan, Moses Lake Loan, and the Hemstreet Loan in accordance with the
Seaside Sale Stipulation, less the Net Receivership Proceeds and any other payments

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received by Plaintiff on account of such liens before entry of such deficiency

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judgment.

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4. Upon the recording of the warranty deed conveying title to Buyer, the
Receiver shall relinquish possession of the Moses Lake Property to Buyer per the
terms of this Court’s Order Appointing Receiver.

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5.

As soon as practicable after completion of the Proposed Sale, the

Receiver shall bring a Motion for an Order Approving Receiver’s Final Report and

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Accounting. Upon approval of the Receiver’s Final Accounting, the Receiver shall
pay to Plaintiff all net receivership funds after payment of all authorized Receiver
fees and expenses (the “Net Receivership Funds”). Defendants hereby waive any

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and all claims they may have to the Net Receivership Funds.
ORDER - 3

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6. If the Proposed Sale is not consummated for any reason, Plaintiff is entitled

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to pursue and enforce any and all of its rights and remedies under the applicable

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Loan Documents, Guarantees, court orders and judgments, and applicable law as
referenced above.
7.

This case shall remain open after the completion of Proposed Sale

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pending entry of final judgment on Plaintiff’s claims for deficiency judgments

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against the defendants in this action.

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8.

The parties Stipulated Motion for Order of Sale of Shilo Inn, Moses

Lake, Inc. (ECF No. 224) is GRANTED.
IT IS SO ORDERED.

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DATED this 26th day of September, 2016.

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s/Lonny R. Suko
___________________________________
LONNY R. SUKO
Senior United States District Court Judge

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ORDER - 4

EXHIBIT A

Exhibit A

Exhibit A

Exhibit A

EXHIBIT B

Exhibit B

Case 3:12-cv-00506-HZ

Document 158

Filed 06/03/16

Page 1 of 10

Joseph A.G. Sakay, OSB #021734
Eric D. Lansverk, OSB #144700
(Admitted Pro Hac Vice)
HILLIS CLARK MARTIN & PETERSON P.S.
1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]
Hal Mark Mersel, CSB #130382
(Admitted Pro Hac Vice)
Ren R. Hayhurst, CSB #142528
(Admitted Pro Hac Vice)
BRYAN CAVE LLP
3161 Michelson Drive, Suite 1500
Irvine, CA 92612
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiff California Bank & Trust
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
CALIFORNIA BANK & TRUST, as assignee
of the Federal Deposit Insurance Corporation,
as receiver for Vineyard Bank, a California
banking corporation,

Case No. 3:12-CV-00506-HZ (Lead
Case)
3:12-CV-00508-HZ (Trailing Case)
3:12-CV-00509-HZ (Trailing Case)

Plaintiff,
STIPULATION REGARDING SALE OF
SHILO INN SEASIDE EAST PROPERTY

v.
SHILO INN, SEASIDE EAST, LLC, an
Oregon limited liability company; and MARK
S. HEMSTREET, an Oregon resident,
Defendants.

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 1

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Document 158

Filed 06/03/16

Page 2 of 10

INTRODUCTION
Defendant Shilo Inn, Seaside East, LLC, an Oregon limited liability company (“Shilo”);
Defendant Mark S. Hemstreet, an Oregon resident (“Hemstreet”) (collectively the “Borrowers”
or “Defendants”); Plaintiff California Bank & Trust as assignee of the Federal Deposit Insurance
Corporation, as receiver for Vineyard Bank, a California banking corporation, (“CB&T” or
“Plaintiff”) (Shilo, Hemstreet, and Plaintiff shall be referred to collectively as the “Parties”); by
and through their respective counsel of record, and the Court-appointed receiver, Trigild, Inc.
(the “Receiver”) hereby stipulate to a sale of the Seaside Property pursuant to the terms below.
RECITALS
A.

On or about August 3, 2005, Plaintiff provided financing to Shilo in the original

principal amount of $2,000,000 (“Seaside Loan”). The Seaside Loan is evidenced, in part, by the
following documents:
(1)

A Promissory Note, dated August 3, 2005, executed by Shilo, payable to Plaintiff,

in the original principal amount of $2,000,000 (“Seaside Promissory Note”);
(2)

A first lien Deed of Trust dated August 3, 2005, recorded August 10, 2005, as

Instrument No. 200509541 in the official records of Clatsop County, Oregon (“Seaside First
Deed of Trust”), against certain real property located in Seaside Oregon, and more particularly
described in Exhibit A, attached hereto (the “Seaside Property”);
(3)

A first Amended Deed of Trust, dated November 4, 2010, recorded

November 17, 2010 as Instrument No. 201009901, in the official records of Clatsop County,
Oregon against the Seaside Property (“Seaside First Amendment”);
(4)

A Forbearance and Second Amended Deed of Trust dated as of June 30, 2011

(“Seaside Second Amendment”); AND

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 2

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

(5)

Document 158

Filed 06/03/16

Page 3 of 10

All of the documents evidencing the Seaside Loan, the “Moses Lake Loan” (as

defined below), and such other agreements described herein (including without limitation the
“2013 Agreement” and the “2015 Agreement” (both as defined below) are all expressly entered
into pursuant to the laws of California, which law applies to the enforcement and interpretation
of all rights, obligations, duties and remedies of the Parties thereto, except as otherwise set forth
in the applicable deeds of trust.
B.

Per the terms of the Seaside Loan, the Seaside Loan is cross-defaulted and cross-

collateralized with a loan to Shilo Inn Moses Lake, Inc (“Shilo Moses Lake”) in the original
principal amount of $3,000,000 (“Moses Lake Loan”). Accordingly, the Moses Lake Loan also
encumbers the Seaside Property.
C.

Separate and apart from the Seaside Loan and Moses Lake Loan, on or about

April 19, 2005, Plaintiff made an unsecured revolving line of credit loan to Hemstreet in the
original principal amount not to exceed $5,000,000 (“Hemstreet Loan”). The Hemstreet Loan is
evidenced, in part, by a Promissory Note, dated April 19, 2005, executed by Hemstreet, payable
to Plaintiff, in the original principal balance not to exceed $5,000,000 (“Hemstreet Promissory
Note”), as amended by a Loan Modification Agreement, dated November 4, 2010 (“First
Hemstreet Amendment”), and by a Forbearance and Second Amendment to Deeds of Trust and
Other Loan Documents, dated June 30, 2011, (“Second Hemstreet Amendment”) and secured by
a second lien Deed of Trust and Absolute Assignment of Rents and Leases and Security
Agreement (and Fixture Filing) on the Seaside Property, recorded on November 17, 2010, as
instrument number 201009902, and re-recorded December 17, 2010, as Instrument
No. 201010771, both in the official records of Clatsop County, Oregon (“Hemstreet Deed of
Trust”).

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 3

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

D.

Document 158

Filed 06/03/16

Page 4 of 10

The Seaside Loan, Moses Lake Loan and Hemstreet Loan shall be collectively

referred to as the “Loans.”
E.

Defendants defaulted on the Loans.

F.

In 2012, Plaintiff filed this action seeking full repayment of the Loans and, among

other things, to judicially foreclose on the Seaside Property.
G.

On January 28, 2013, the Parties entered into an Agreement which provided for,

among other things, a discounted payoff of the Loans on or before April 30, 2013 (the
“2013 Agreement”).
H.

Defendants did not perform under the 2013 Agreement and on May 1, 2013 filed

for Chapter 11 Bankruptcy. This action was dismissed without prejudice in the meantime,
subject to reopening.
I.

After Defendants failed to confirm any plans of reorganization, the action was

reopened to complete foreclosure.
J.

Shortly thereafter, the Parties entered into a May 5, 2015 Agreement (the

“2015 Agreement”). The Agreement provided that this action would be dismissed without
prejudice, subject to Shilo and Hemstreet making various payments to Plaintiff by
March 31, 2016. The 2015 Agreement also provided that if those payments were not made on or
before March 31, 2016, that Plaintiff could immediately, and without first providing notice to
Defendants, reopen the action through a pre-executed stipulation and complete the judicial
foreclosure process.
K.

Per the May 2015 Agreement, in June 2015, this action was dismissed without

prejudice subject to reopening.

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 4

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

L.

Document 158

Filed 06/03/16

Page 5 of 10

On December 31, 2015, CB&T merged its banking charter with the charters of all

other banks owned by its parent company, Zions Bancorporation. The consolidated bank is
known as ZB, N.A. but continues to operate in California as CB&T, as a division of ZB, N.A.
under the following designation: “ZB, N.A., dba California Bank & Trust, successor by merger
to California Bank & Trust, a California banking corporation.”
M.

Defendants breached the 2015 Agreement by failing to make the payments due on

March 31, 2016.
N.

As a result, on April 4, 2016, pursuant to the 2015 Agreement, Plaintiff

commenced the reopening of this action to complete judicial foreclosure.
O.

On April 11, 2016, this action was reopened. According to the terms of the 2015

Agreement and pre-executed stipulations, on April 13, 2016, the Court also appointed Trigild,
Inc. of San Diego, California (“Receiver”) as receiver.
P.

Defendants have been marketing the Seaside Property for sale at least since the

May 1, 2015 Agreement was executed. Defendants have now negotiated a proposed sale (the
“Proposed Sale”) of the Seaside Property to Seaside Param, LLC, an arms-length third party
buyer (“Buyer”), for the total purchase price of $3,700,000.00 (“Purchase Price”), and have
sought the approval of the Plaintiff and the Receiver to consummate the sale. The Parties agree
that the net sale proceeds will be approximately $3,457,005.60, subject to adjustments to tax
prorations depending on the actual date of closing reflected on the final approved settlement
statement (the “Net Proceeds”), and the Parties and the Receiver agree that the gross sales price
represents the fair market value for the Seaside Property.

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 5

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Document 158

Filed 06/03/16

Page 6 of 10

AGREEMENT
1.

Defendants agree that the total debt owing to Plaintiff and secured by the Seaside

Property is comprised of the aggregate of the total debt owed to Plaintiff on the Seaside Loan,
the Hemstreet Loan, and the cross-collateralized Moses Lake Loan, each of which encumber the
Seaside Property.
2.

The Seaside Property will be sold to Buyer for the Purchase Price pursuant to the

Purchase Agreement attached as Exhibit B. The Parties agree that the Receiver is authorized to,
and shall, execute any and all documents and take all actions that may be necessary and
appropriate to effectuate and consummate the sale of the Seaside Property to Buyer.
3.

The Parties agree that all of the Net Proceeds will be paid to Plaintiff and applied

as follows: (a) first to pay in full the total indebtedness on the Seaside Loan, and (b) any
remainder to be applied as a partial payment of the Moses Lake Loan. The Parties agree that the
Net Sales Proceeds shall constitute the fair market value of the Seaside Property for the purposes
of determining the deficiency judgment owed to Plaintiff in this case, and Defendants hereby
consent to, and waive any and all defenses to, entry of such subsequent deficiency judgment,
which shall be calculated as the total indebtedness under the Seaside Loan, Moses Lake Loan
and Hemstreet Loan, less the Net Receivership Proceeds and any other payments received by
Plaintiff on account of such liens before entry of such deficiency judgment.
4.

Upon the recording of the warranty deed conveying title to Buyer, the Receiver

will relinquish possession of the Seaside Property to Buyer per the terms of this Court’s Order
Appointing Receiver.
5.

As soon as practicable after completion of the Proposed Sale, the Receiver will

bring a Motion for an Order Approving Receiver’s Final Report and Accounting. Upon approval

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 6

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Document 158

Filed 06/03/16

Page 7 of 10

of the Receiver’s Final Accounting, the Receiver shall pay to Plaintiff all net receivership funds
after payment of all authorized Receiver fees and expenses (the “Net Receivership Funds”).
Defendants hereby waive any and all claims they may have to the Net Receivership Funds.
6.

Except as set forth in this Stipulation, the Parties do not waive, relinquish, release,

amend, or modify any of their rights or remedies under the loan documents relating to the
Seaside Loan, Moses Lake Loan, Hemstreet Loan, any of the other loans in the related Shilo Inn
cases in the federal courts of Oregon, Washington, and Idaho (the “Shilo Inn Cases”) 1, or any
rights and remedies conferred by applicable law or prior court orders.
7.

The Parties expressly acknowledge and agree that the consummation of the

Proposed Sale or any other provision of this Stipulation shall (i) constitute voluntary payments to
the extent the payments are deemed to be made under the Loan Documents, and (ii) all such
payments shall be credited against the total sum due and owing under the Loan Documents and
this Stipulation in the manner provided in this Stipulation and the Loan Documents. Any
payments made as a result of the Proposed Sale or any other provision of this Stipulation are
voluntarily made by Defendants to reduce the balance due and owing Plaintiff under the Loans
and this Stipulation and are not the result of any “action” by Plaintiff as may be contemplated
under California Code of Civil Procedure section 726, or any other equivalent statute in any
other jurisdiction. Such payments shall not (a) constitute a waiver of any of Plaintiff’s rights and
remedies under the Loan Documents; (b) prevent or prohibit Plaintiff from pursuing such rights
and remedies in a manner consistent with the terms of the Loan Documents; (c) cure or excuse

1

1) CB&T v. Shilo Inn, Moses Lake, Inc. (USDC of Washington Case No. 2:12-CV-00161); 2) CB&T v. Shilo Inn,
Nampa Blvd, LLC (USDC of Idaho Case No. 1:12-cv-00142); 3) CB&T v. Shilo Inn, Twin Falls, LLC (USDC of
Idaho Case No. 1:12-cv00143); 4) CB&T v. Shilo Inn, Newberg, LLC (USDC of Oregon Case No. 3:12-cv-508-hz);
5) CB&T v. Shilo Inn, Rose Garden, LLC (USDC of Oregon Case No. 3:12-CV-509-hz); 6) CB&T v. Shilo Inn
Boise, LLC (USDC of Idaho Case No. 1:12-cv00141)
HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 7

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Document 158

Filed 06/03/16

Page 8 of 10

Defendants’ defaults under the Loans; (d) be deemed or constitute a waiver or violation of any
party’s rights and remedies under California Code of Civil Procedure sections 580a, 580b, 580c,
580d and/or 726, or their equivalent statutes in other jurisdictions; or (e) be deemed or constitute
an “action” for purposes of California Code of Civil Procedure section 726, or its equivalent
statute in any other jurisdiction.
8.

If the Proposed Sale is not consummated for any reason, Plaintiff is entitled to

pursue and enforce any and all of its rights and remedies under the applicable Loan Documents,
Guarantees, court orders and judgments, and applicable law as referenced above.
9.

To reflect the recent change in Plaintiff’s corporate structure, and for all future

pleadings and orders related to this action and the Shilo Inn Cases, the Parties agree Plaintiff’s
new name shall be “ZB, N.A., dba California Bank & Trust, successor by merger to California
Bank & Trust, a California banking corporation.”
10.

In order to maintain the pending related actions, if the current Lead Case (3:12-

CV-00506-HZ) is completed, removed, or dismissed, then the current Trailing Case under cause
number 3:12-CV-00509-HZ will automatically become the Lead Case.
Dated: June 3, 2016

TRIGILD, INC.

By:

s/Bill Hoffman
Bill Hoffman
Court-Appointed Receiver

Dated: June 3, 2016

GREENE & MARKLEY, P.C.
By:

s/Charles R. Markley
Charles R. Markley
Attorneys for Defendants,
SHILO INN SEASIDE EAST, LLC and MARK
S. HEMSTREET
HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 8

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Dated: June 3, 2016

Document 158

Filed 06/03/16

Page 9 of 10

BRYAN CAVE LLP

By:

s/H. Mark Mersel
H. Mark Mersel
Attorneys for Plaintiff
CALIFORNIA BANK & TRUST
PRESENTED BY:

HILLIS CLARK MARTIN & PETERSON P.S.
By: s/Eric D. Lansverk

.

Joseph A.G. Sakay, OSB #021734
Eric D. Lansverk, OSB #144700
1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Attorneys for Plaintiff
CALIFORNIA BANK & TRUST

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 9

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Document 158

Filed 06/03/16

Page 10 of 10

CERTIFICATE OF SERVICE
I hereby certify that on this 3rd day of May, 2016, I electronically filed the foregoing
with the Clerk of the Court using the CM/ECF system which will send notification of such filing
to the following:
Charles R. Markley

[e-mail];
[e-mail]

Sherri Martinelli

[e-mail];
[e-mail]

Christian Boenisch

[e-mail]

DATED this 3rd day of May, 2016 at Seattle, Washington.

s/Eric D.Lansverk
Joseph A.G. Sakay, OSB #021734
Eric D. Lansverk, OSB #144700
HILLIS CLARK MARTIN & PETERSON, P.S.
1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiff

HILLIS CLARK MARTIN & PETERSON P.S.

Stipulation for Sale of Shilo Inn Seaside, East - 10

1221 Second Avenue, Suite 500
Seattle, Washington 98101-2925
Telephone: [phone]
Facsimile: [phone]

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-1

Filed 06/03/16

Page 1 of 2

EXHIBIT A

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-1

Filed 06/03/16

Page 2 of 2

EX!liBIT "A11
LEGAL DESCRIPTION

PARCEL NO.1:
Beginning at a point in the county road leading from Skipanon Landing to Seaside i 1.48
chains· west of the quarter Section post on the East line of Section 21, Township 6 North,
Range 10 West of the Willamelte Meridian;
·
thence South along the center line of said county road a distance of 558.43 feet;
thence West to the West line of said county road to a point which is the Northeast
comer of that certain tract of real estate conveyed by A.M. Smith and Anna F. Smith to Nettie
C. Allen and N.C. Allen by Deed recorded in Book i04, page 637, Cla\sop County Records, ·
which said point is the point of beginning of the tract of land herein conveyed;
thence West along the North line of said N. C. Allen and Nettie Allen tract a distance of
100 feet;
thence running North and parallel to said county road a distance of 50 feet;
thence running East along the South line of that certain tract conveyed by A. M. Smith
and Anna F. Smith to Annie Plummer by Deed recorded in Book 108, page 174, CJatsop
County Records, to the West line of said county road;
thence running South along the West line of said county road to said Northeast corner
of said Neltie C. Allen and N. C. Alien tract, the point of beginning of the land herein conveyed,
in Section 21, Township 6 North, Range 10 West of the Wlllamette Meridian, in the City of
Seaside, County of C\atsop, State of Oregon.
PARCEL NO.2:
That part of the Euzabeth Lallie Donation Land Ctaim described as folloWs:
Beginning at a point in the county road leading from Skipanon landing to Seaside
. 11.23 chains West of the quarter Section post on the East line of Section 21, Township 6
North, Range 10 West, Willamette Meridian (run at angle to the East line of said Section 21);.
thence South 2-1/2° West 558.43 feet;
thence West to the West line of said county road which is the Northeast corner of the
tract of land described and conveyed ~erein;
thence West 5.87 chains to low water mark of the Necanicum River;
thence South along low water mark of said river 108 feet to the Northwest comer of
tract of land conveyed by A. M. Smith to George Lapay;
thence East along the North line of said tract conveyed by A. M. Smith to George
La pay to the Northeast corner thereof, which point is a point on the West line of said county
road 108 feet South of the point of beginning for the description of the tract herein conveyed;
thence North along the West line of said county road a distance of 108 feet to the place
of beginning, the said tract being 108 feet North and South and running from the county road
to low water mark of the Necanicum River and adjoining said George La pay tract on the North,
the said George La pay tract being described in that certain Deed recorded in Book 95, page
450, Clatsop County Records, situated in the County of C!atsop, State of Oregon.

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 1 of 28

EXHIBIT B

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 2 of 28

SHILO INN SEASIDE EAST
PURCHASE AND SALES AGREEMENT
DATE:

December 11, 2015 ("Effective Date")

SELLER:

Shilo Inn, Seaside East, LLC, an Oregon limited liability company
11600 SW Shilo Lane
Portland, Oregon 97225

BUYER;

Ganesh Sonpatki

Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller the real property
and improvements, and related personal property, described below on the terms and
conditions set forth in this Shilo Inn Seaside East Purchase and Sales Agreement (the "PSA"):
1.

The Hotel. The property to be sold under this PSA is as follows :

1.1
A parcel of real property and the improvements located on the real property
commonly known as the SHILO INN SEASIDE EAST, consisting of approximately 59 hotel units
located at 900 S Holladay, Seaside, Oregon 97138. The legal description of the real property is
attached as Exhibit 1.1 (the "Land"). Seller is also selling to Buyer certain personal property as
described in Section 1.2.2 below. The land, improvements and the FF&E (as defined below) is
collectively referred to as the "Hotel".
With respect to the Hotel, the Purchase Price {as defined in section 3 below)
1.2
includes the following (subject to the exclusions set forth in Section 2):
1.2.1 The Land on which the Hotel is situated together with the buildings and
other improvements located on the land.
1.2.2 The furniture, fixtures, and equipment (the " FF&E") owned by Seller used
in the operation of the Hotel on hand at Closing (defined in section 12 below), AS IS WHERE IS,
consisting primarily of guest room furniture, furnishings and electronics, lobby and public area
furniture and furnishings, office computers and equipment, housekeeping and maintenance
equipment and supplies, pool equipment and supplies, and the like.
1.2.3 All supplies and consumables on hand at the Hotel at Closing consisting
primarily of sheets, pillow cases, towels, toilet paper, and cleaning supplies.
1.2.4. All vendor or supplier contracts related to the operation of the Hotel, and
all highway or other off-premises advertising signs advertising the Hotel, which will be assumed
by Buyer. Buyer will be obligated to assume all contracts relating to the operation of the Hotel,
unless Buyer agrees to pay any termination fee or liquid ated damages incurred by Seller if the

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Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 3 of 28

contract is not assumed. Seller will provide Buyer with a list of contracts applicable to the
operation of the Hotel during the Due Diligence Period (defined in Section 5).
1.2.5. All existing guest reservations, group bookings, or other commitments for
future guest lodging relating to the Hotel existing as of Closing, which Buyer agrees to honor.
1.2.6 To the extent assignable, Seller's rights to telephone numbers solely
servicing the Hotel.
1.3
transaction:

Seller and Buyer agree to the following special provisions relating to this

1.3.1 The shuttle van currently located at the Hotel is owned by Shilo
Management Corporation and not the Seller. The van is a 2004 GMC Safari van valued at
$3,000. Buyer may elect to purchase the van from Shilo Management Corporation as a part of
this transaction. The purchase price of the van is not a part of the Purchase Price.
1.3.2 At Closing, Buyer will be entitled to a credit of Seventy Five Thousand
Dollars ($75,000) against the Purchase Price ("Buye r Closing Credit").
2.
Purchase Price Exclusions. The Purchase Price for the Hotel EXCLUDES, and Buyer will
obtain no interest in, any of the following:
2.1
The Shilo Inn~ name, including all derivatives thereof ("Shilo Service Mark" or
collectively the "Shilo Service Marks").
2.2
Any and all signage containing a Shilo Service Mark. Unless otherwise agreed to
by the parties In writing after the execut ion of this PSA Buyer will, at Buyer's cost: (i) remove all
signage from the interior and exterior of the Hotel containing a Shilo Service Mark; and (If)
remove all personal property containing a Shllo Service Mark; within thirty (30) days after
Closing and make the same available to Seller, or, if Buyer elects to enter Into an agreement
with SFI (as defined in Section 4 below) to continue to operate the Hotel as a Shilo Inn, then
Buyer will remove the signage and personal property referenced above and make it available to
Seller within thirty (30) days after termination of such agreement. This provision will survive the
Closing. Seller shall have the right to inspect the Hotel, on 24-hour written notice, after the 30day period to ensure all Shilo Service Marks have been fully removed.
2.3
Any brochures, soap, shampoo, ice buckets, faucet handles or other items of
equipment, fixtures, consumables or supplies on which the Shilo Service Marks are printed or
affixed. If Buyer elects to enter into an agreement with SFI to continue to operate the Hotel as a
Shilo Inn after Closing, Buyer may continue to use such items of equipment, fixtures,
consumables or supplies while that agreement is in effect.

Page 2. Shilo Inn Seaside East Purchase and Sales Agreement

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Case 3:12-cv-00506-HZ

Document 158-2

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2.4
The Hotel property management system or software used by, or licensed to,
Seller in connection with its operation of the Hotel.

2.5
All manuals, corporate records and other private Shilo Inn documents, emails,
and related information.
2.6
Any of the data capture equipment, credit card processing machines, and any
computer software to which the Seller has no transferable rights or which are tied to Shilo Inn
systems and servers.

3.
Purchase Price. The purchase price for the Hotel is Three Million Seven Hundred
Thousand Dollars ($3,700,000.00) ("Purchase Price"). The Purchase Price is firm, non-negotiable
and is payable in U.S. currency at Closing. The Purchase Price will be allocated as follows:

$

Land
Improvements
FF&E
Total

900,000
$2,675,000
$ 125,000
$3,700,000

4.
Assumption of Franchise Agreement. On or before January 31, 2016, Buyer may elect to
continue to operate the Hotel as a Shilo Inn on a month-to-month basis pursuant to an
assumption of the existing franchise agreement (the "Assignment''). The Assignment will be a
separate written agreement to be executed and delivered at Closing. The Assignment will
provide that during the period after Closing, provided that Buyer maintains Shllo hotel
standards of cleanliness and customer service and otherwise complies with the terms of the
assignment and franchise agreement, Buyer may continue to use the Shilo Service Marks and
an affiliate of Seller, Shilo Franchise International, LLC r'SFI") will continue to take reservations
(through all SFI portals including telephone, website, and online booking services) for the Hotel
while operated under the Shilo Inn name. The Assignment will also provide: (i) for no initiation
or application fee; (ii) a monthly franchise fee equal to 5% of gross room revenue for up to 2
years, 6% of gross room revenue for years 3 and 4, and 7% of gross room revenue for years 510; (iii) for Buyer reimbursement of all commissions and booking fees incurred by SFI relating to
bookings for the Hotel while the agreement is in effect; (iv) that it is terminable without penalty
by either party on 30 days' prior written notice; and (iv) that If the period operating under the
Shilo Inns brand extends beyond 3 months from Closing, a reasonable, agreed upon property
improvement plan (PIP) will be imp lemented to assure that the Hotel continues to meet the
Shilo Inn facility standards. If the parties are unable to agree to the terms of the Assignment,
Buyer will immediately discontinue operating the Hotel as a Shilo Inn at Closing, and at Buyer's
sole cost and expense will comply with removal of any slgnage and personal property bearing
any Shilo Service Mark. Buyer understands and agrees that the failure to remove the items
bearing a Shilo Service Mark if no use agreement exists with SFI will result in damage to SFI, and
Buyer agrees to work in good faith to immediately remove such items. Buyer's removal of any
signage bearing a Shilo Service Mark must be done in a commercially reasonable manner and
Buyer and Seller will work together to create a punch list of "Shilo Inn" items that Seller wishes
Page 3. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 5 of 28

to salvage, in Seller's sole discretion, and which Buyer will remove at Buyer's cost by means to
minimize any damage to the salvaged items. Seller will have thirty (30) days from the date
Buyer notifies Seller that the salvaged items (including both signage and miscellaneous personal
property branded with Shilo Service Marks) are ready for pick-up to retrieve any such salvaged
items from the Hotel, at Seller's cost. If Seller fails to pick up the salvaged items within the
thirty (30) day period, they will be deemed abandoned and Buyer may discard them. The
provisions in this section regarding the removal and retrieval of items bearing the Shilo Service
Marks will survive Closing.
5.

Contingencies.
5.11 Buyer Contingencies. The obligation of the Buyer to purchase the Hotel is subject
to the fulfillment of each of the following conditions, which are for the benefit of the Buyer:

5.1.1 Due Diligence.
(a) Buyer will have a period ending on December 22, 2015 to conduct all of Buyer's due
diligence on the Hotel ("Due Diligence Period"). During the Due Diligence Period Buyer will
have the right to perform such tests, inspections, and feasibility studies on the Hotel as Buyer
may deem necessary; provided, however, that Buyer will not conduct any environmental
assessment that would require soils analysis, groundwater testing, or other studies commonly
associated with a Phase II environmental site assessment without the prior written consent of
Seller in each instance, which consent may be withheld or conditioned in Seller's sole
discretion. Seller will, within five (5) business days after the execution of this Agreement, make
available to Buyer information regarding the Hotel that Seller has in its possession or that Seller
can reasonably obtain. Seller will also permit and, to the extent reasonably required by Buyer,
assist Buyer in providing access to the Hotel in connection with Buyer's review of the Hotel.
Such grant of access to the Hotel by Seller to Buyer will be very discreet and will minimize
contact with the Hotel's staff, and will not disclose that the Hotel potentially may be sold to any
third party. Buyer agrees not to contact Seller's lender or any vendor of Seller without prior
written consent of Seller, which may be withheld in Seller's sole discretion. Buyer will schedule
and coordinate all inspections, including, without limitation, any environmental tests, with
Seller and will give Seller at least two (2) business days prior written notice thereof. Seller will
be entitled to have a representative present at all times during each such inspection. All costs
and expenses of Buyer's tests, inspections, and studies must be paid by Buyer when due,
regardless of whether this transaction closes. Buyer will indemnify, defend, and hold harmless
Seller from and against any and all costs, losses, damages, expenses, liabilities, actions, liens, or
claims arising from or related to any activities on or about the Hotel by Buyer or any agent,
employee, contractor, or invitee of Buyer. This agreement to indemnify, defend, and hold
harmless Seller will survive Closing or any termination of the Agreement.
(b) If, by the expiration of the Due Diligence Period, Buyer has notified Seller in writing
that Buyer does not wish to proceed, then this Agreement will terminate, whereupon the
Earnest Money (as defined in Section 10 below) will be refunded to Buyer. This Agreement
thereafter will be null and void, and neither party will have any obligation to the other, except
as otherwise provided herein. If Buyer does not provide a timely notice of rejection, the due
Page 4. Shilo Inn Seaside East Purchase and Sales Agreement

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Case 3:12-cv-00506-HZ

Document 158-2

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Page 6 of 28

diligence contingency under this Section 5.1.1 will be deemed waived and this Agreement will
continue to be binding on Buyer.
5.1.2 Financing Contingency.
(a) Buyer will have a period ending on February 8, 2016 to investigate financing and
satisfy itself of Buyer's ability to obtain suitable financing for the purchase ("Financing
Contingency Period"). If, by the expiration of the Financing Contingency Period, Buyer has not
satisfied itself as to the availability of financing, Buyer may, by written notice to Seller
("Financing Failure Notice11 ) elect to terminate this Agreement, whereupon the Earnest Money
will be refunded to Buyer. This Agreement thereafter will be null and void, and neither party
will have any obligation to the other, except as otherwise provided herein. Unless a Financing
Failure Notice is given by Buyer prior to the expiration of the Financing Contingency Period, the
financing contingency under this Section 5.1.2 will be deemed waived and this Agreement will
be binding on Buyer.
(b) If at the expiration of the Financing Contingency Period the Buyer has not provided a
Financing Failure Notice, then and in that event the Earnest Money will become nonrefundable
(except in the case of a breach of this Agreement by Seller or a title defect as provided for in
Section 6) and be released to Seller without further instruction to Escrow Holder (or if Escrow
Holder requires a signed release of Earnest Money then Buyer will within 24-hours of request
sign it so that the Earnest Money can be released to Seller).
5.2
Buyer's Closing Efforts. Within five (5) business days from the date of execution
of this PSA, Buyer will provide Seller with a written disclosure of Buyer's proposed financing
source(s), a copy of the fully completed and submitted loan application(s) to its lender(s), along
with copies of all other documents and correspondence relating to Buyer's financing of a
portion of the purchase price. Buyer will submit to Seller weekly (beginning with the first Friday
after the expiration of 10 days after the execution of this PSA and on Friday of each following
week through the expiration of the Financing Contingency Period) updates regarding the status
of its financing application(s), and provide copies of correspondence with the lender regarding
the status of loan approval. Upon receipt of any written lending commitment, Buyer will
provide Seller a copy.
5.3 Seller's Contingency. If at any time prior to the expiration of the Financing
Contingency Period Buyer fails to make a Friday report described in Section 5.2 or has not, in
the exercise of Seller's reasonable discretion, made sufficient progress towards obtaining a
lending commitment, or Is not proceeding with diligence to obtain such financing, Seller may by
written notice to Buyer {"Seller's Termination Notice") elect to terminate this PSA, unless Buyer
agrees to make the Earnest Money nonrefundable and released to the Seller without further
instruction to Escrow Holder (or if Escrow Holder requires a signed release of Earnest Money
then Buyer will within 24-hours of request sign it so that the Earnest Money can be released to
Seller). If Buyer declines to make the Earnest Money nonrefundable and released to Seller, the
Seller's Termination Notice will terminate the PSA, the Earnest Money will be refunded to

Page 5. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 7 of 28

Buyer, and neither party will have any further obligation to the other, except for those
obligations which expressly survive a termination of this PSA.

6.

Condition of Title/Insurance.

6.1
Title Report. Seller will cause Title Company (as defined below) to furnish to
Buyer a preliminary title report for the Land (the "Title Report''), together with copies of all
underlying title documentation which are referred to as exceptions in the Title Report. Not
later than five (5) business days after delivery of the Title Report, Buyer will notify Seller and
Escrow Holder in writing of any objections it may have to any t itle matters (other than the
Permitted Exceptions, as defined below, which are deemed approved by Buyer under this PSA)
which materially and adversely affect the Land in its current use. Buyer's failure to notify Seller
and Escrow Holder in writing within such time period of its disapproval of the condition of title
of the Land as provided above shall constitute Buyer's unconditional and irrevocable approva l
of the title condition of t he Land . In the event Buyer provides such notification of t itle
objection, Seller will have five (5) business days to notify Buyer of its intent to cure or cause the
removal of any title objection . Seller may, but will not be obligated to, cure or cause the
removal of a title objection . If Seller is unable or unwilling to cure or cause the removal of a title
objection of Buyer, Buyer may, by making a written election within five (5) business days of
Seller's notice, elect to waive the title objection and proceed to Closing, or notify Seller that it
elects to terminate the PSA, whereupon the Earnest Money will be refunded to Buyer and
neither party will have any further obligation to the other, except as otherwise provided in this
PSA. If Buyer fails to make an election based on Seller's notice within the five business day
period, Buyer will be deemed to have waived the title objection and elected to proceed to
Closing. The following t itle matters are hereby approved by Buyer and will be deemed
permitted title exceptions at Closing (collectively, the " Permitted Exceptions"):
Real or personal property tax liens and assessments that will be paid or as
(a)
applicable prorated at Closing;
(b)
All preprinted or standard exceptions on the Title Report;
(c)
Matters (including matters shown in the Tit le Report) which are approved
or deemed approved by Buyer as provided in this Section 6 ;
(d)
Any matters created or caused by Buyer (including any matters related to
the loan obtained by Buyer to acquire the Hotel); and
(e)
Such other matters, if any, as may be approved in writing by Buyer.
Notwithstanding the foregoing, Seller, at its sole cost, agrees to remove any trust deed liens,
UCC liens, mechanic's liens, judgment liens and all other financial encumbrances created or
caused by Seller and attaching to the Land or the FFE. Seller will also provide the Title Company
with an Owner's Affidavit on a form acceptable to Title Company to enable Title Company to
remove the standard exceptions for parties in possession and mechanic's liens for work
performed during the ninety {90) day period preceding the Closing.

6.2 Title Policy. At Closing, Title Company will cause to be issued to Buyer a standard
1
form owner S policy of title insurance with respect to the Land (the "Title Policy") dated as of
Page 6. Shilo Inn Seaside East Purchase and Sales Agreement

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Case 3:12-cv-00506-HZ

Document 158-2

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Page 8 of 28

the date of Closing Date, insuring title to the Land vested in Buyer subject to the Permitted
Exceptions, with liability in an amount equal to the value of the Land and improvements (as
determined by Seller in good faith). If Buyer desires any endorsements to the Title Policy or an
extended ALTA policy of title insurance, Buyer will pay the entire cost of such endorsements
and the increased cost of the extended ALTA Title Policy over the cost of the Title Policy and the
cost of any survey prepared to obtain an extended ALTA Title Policy, provided that the issuance
of any endorsement or an extended ALTA policy will not be a condition to Buyer's obligations
hereunder.
7.
that:

Seller Representations and Warranties. Seller represents, to the best of its knowledge,

7.1 Financial Information. All financial information Seller provided to Buyer, or may
provide to Buyer through Closing, is materially complete, fairly represents the results of
operations of the Hotel for the periods specified, and has been prepared in accordance with the
books of account and records of Seller kept in the ordinary course of business.
7.2 No Condemnation. There is no pending or threatened condemnation or similar
proceeding affecting the Hotel nor is any such proceeding contemplated by any governmental
authority.
7.3 No Notice of Violation. Seller has not received notice from any municipal, county,
state or federal governmental agency that the Hotel is in violation of any laws, ordinances,
statutes or regulations.
7.4 No Litigation. There is no litigation, arbitration, or admin istrative hearing before any
governmental authority concerning or affecting the Hotel, or any part thereof, nor is any such
proceeding threatened as of the date hereof.
7.5 No Construction Liens. Seller has not performed, or caused to be performed, any
work on the Hotel, or any part thereof, that will not be paid for that could cause a construction
lien to be filed against the Hotel.
7.6 No Breach. Execution and consummation of this PSA, and the execution and delivery
of the documents contemplated herein, will not be a breach of any other contract affecting the
subject matter of this PSA.
7.7 Seller Not ~ Foreign Person. Seller is not a foreign national within the meaning of
Section 1445 of the Internal Revenue Code of 1986. The Seller will sign an affidavit to this
effect to be delivered to Buyer at Closiog, to include Seller's tax id~ntification number.
As used in this section, Seller's knowledge means the actual personal knowledge of Mark
Hemstreet, without a duty to inquire or investigate.

Page 7. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

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Page 9 of 28

8. Hotel Sold As Is.
8.1
No Warranty. Buyer acknowledges that Buyer has assessed, or has had the
opportunity to assess, the size, configuration, utility service, environmentally sensitive areas,
means of access, permitted uses, status of title, value, condition, feasibility, and all other
material aspects of the Hotel. Except as specifically stated in Section 7, Buyer is not relying on,
nor has Buyer been influenced by, any statement or representation of Seller or any agent or
representative of Seller regarding any of such items. Except for any actionable breaches of
Seller's representations and warranties described in Section 7, Buyer's acceptance of the Hotel
will be evidenced solely by the closing of th is transaction and without any other act or
confirmation by Buyer. Buyer does not have the option to close this transaction without
accepting the Hotel in its then current condition, and Buyer acknowledges that Buyer is
acquiring the Hot.~l "AS IS, WHERE IS" in its current condition existing as of the date o.f Closing,
without any representation or warranty of any kind or nature by Seller except as set forth in
Section 7. Seller makes no representation or warranty, express or implied, including any
warranty of merchantability or fitness for a particular purpose, with the respect to the FF&E, all
of which is sold AS IS, WHERE IS, WITH All FAULTS.
8.2
Release . As part of the consideration for this PSA, Buyer agrees that
except for any breach by Seller of an express representation or warranty set forth in Section 7
of this PSA, Seller has no liability, and Buyer hereby waives any claims and releases Seller for all
liability, for any title, physical condition, or any other aspect of the Hotel, whether direct or
indirect, absolute or contingent, foreseen or unforeseen, and known or unknown. The waiver
and release extends to Seller and Seller's affiliates, successors, members, officers, employees,
and agents, and their respective heirs, successors, and assigns. Without limiting the generality
of the foregoing, Buyer waives all rights to contribution, offsets, and damages that in any
manner relate to the compliance of the Hotel with any law or regulation applicable thereto,
includ ing, withou~ lim itation, the Americans with Disabilities Act, 42 USC §§12101-12213; the
Fair Housing Act, 42 USC §§3601-3631; the Comprehensive Environmental Response,
Compensation, and liability Act, 42 USC §§9601- 9675; the Resource Conservation and
Recovery Act, 42 USC §§6901-6992k; the Clean Water Act, 33 USC §§1251-1387; the Safe
Drinking Water Act, 42 USC §§300f-300j-26; the Hazardous Materials Transportation Act, 49
USC §§5101-5128; the Toxic Substances Control Act, 15 USC §§2601-2692; and any and all
othe r federal, state, and local personal disabilities and environmental laws or regulations.
9.
Risk of Loss and Condemnation. If after the Effective Date but prior to Closing either
any portion of the land is taken pursuant to eminent domain proceedings, or any of the
improvements are damaged or destroyed by any casualty, the transaction will proceed to
Closing and Seller will not have any obligation to repair or replace any such damage or
destruction, but Seller will be required to give Buyer written notice of the same (the
"Casualty/Condemnation Notice") within three (3) business days after Seller learns of the same.
Seller will also deliver and assign to Buyer, upon consummation of the transaction
contemplated by this PSA (except to the extent any condemnation proceeds or insurance
proceeds are attributable to lost rents or revenues or other items appl icable to any period prior
to the Closing), all claims of Seller respecting any condemnation or casualty insurance coverage,
Page 8. Shilo Inn Seaside East Purchase and Sales Agreement

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Case 3:12-cv-00506-HZ

Document 158-2

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Page 10 of 28

as applicable, and all condemnation proceeds, or proceeds from any such casualty insurance
received by Seller on account of any casualty (except to t he extent required for collection costs
or repairs by Seller prior to the date of Closing}, as applica ble. There will be no reduction of the
Purchase Price on account of any casua lty or condemnation (except that in connection with a
casualty covered by insurance, Buyer wil l be cred ited with the lesser of the remaining cost to
repair the damage or destruction caused by such casualty or the amount of the deductible
under Seller's casualty insurance policy {except to the extent an amount equal to or greater
than such deductible was expended by Seller to commence repair of the resulting damage or
safeguard the Hotel from further damage and is not covered by any applicable casua lty
insurance]). Notwithstanding the above, in the event the condemnation award or the cost of
repair of damage to the Hotel on account of a casualty, as applicable, will exceed ten percent
(10%) of the Purchase Price, Buyer may, at its option, terminate this PSA by notice to Seller,
given on or before five (5) business days after the delivery of the Casualty/ Condemnation
Notice, in which event the Earnest Money will be returned to Buyer and neither party will have
any further obligation under this PSA except for those obligations which expressly survive a
termination of this PSA.
10.
Escrow and Earnest Money. Escrow has been opened with Ticer Title Insurance
Company, 111 SW Columbia, Suite 1000, Portland, Oregon 97201 Attn : candice Weischedel
("Escrow Holder") and Escrow Holder and its affiliate title company(ies) will administer Closing
{''Title Company''). Buyer has deposited Fifty Thousand Dollars ($50,000.00) ( 11 Earnest Money")
with the Title Company. Buyer will receive credit for the Earnest Money on the Purchase Price
at Closing.
11.
Default. If the sale of the Hotel is not consummated due to any default or breach by
Buyer or for any other reason other than a material default by Seller or the failure of any of the
conditions set forth herein, the Earnest Money will constitute liquidated damages and the
Seller agrees this is Seller's sole and exclusive remedy, it being agreed between the parties
hereto that the actual damages to Seller in the event of such failure are impractical to ascerta in
and the amount of the Earnest Money is a reasonable estimate thereof. BY SIGNING THIS PSA
THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A
FAILURE BY BUYER TO CLOSE WHEN OBLIGATED TO DO SO UNDER THIS PSA. THE PARTIES
ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY.
If the sale of the Hotel is not consummated due to any materia l default or breach by
Seller, Buyer may terminate this PSA and w ill be entitled to a return of the Earnest Money, but
in no event will there be a right to sue for specific performance, damages, or other similar legal
or equitable claim.
12.
Closing. Closing will take place through Escrow Holder's title office on or before March
7, 2016 (the "Closing" or uclosing Date").
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Case 3:12-cv-00506-HZ

Document 158-2

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Page 11 of 28

12.1 At Closing, Seller will be responsible for: fees of its own legal counsel; the
premium for the Title Policy; recording fees, if any, relating to the release of Seller's mortgage;
the facilitator's fee referred to in Section 14.13 and one-half of escrow fees. At Closing, Buyer
will be responsible for: fees of its own legal counsel; all due diligence costs; the survey, if one is
required; the premium of any extended title insurance and any endorsements; recording fees, if
any, relating to the deed; any transfer or excise tax relating to the transaction; and one-half of
escrow fees. Also at Closing, Buyer will be entitled to the Buyer's Closing Credit (see Section
1.3.2)
12.2 At Closing, Seller will transfer title to the Land to Buyer by Warranty Deed, free
and clear of liens and encumbrances, save and except Permitted Exceptions, the new financing
that may be obtained by Buyer, if applicable, the current year's property taxes prorated to
Closing, and any liens or encumbrances created by or through Buyer.
12.3

At Closing, Seller will transfer title to the FF&E to Buyer by bill of sale "AS IS".

12.4 Buyer will obtain, at Buyer's own expense, property and liability insurance at or
before Closing, insuring Buyer's interest in the Hotel as of the Closing Date.
12.5 At Closing, prorations and the closing procedure relating to Hotel operations will
take place as set forth on Exhibit 12.5.
12.6 Seller's Closing Obligations. At the Closing, Seller will deliver the following or
cause the following to be delivered to Escrow Holder or to Buyer, as indicated:
12.6.1
To Buyer, possession of the Hotel, including, without limitation, all keys,
codes and passwords necessary to fully operate the Hotel;
12.6.2

To Escrow Holder, for delivery to Buyer, the following documents:

a.
A Warranty Deed {"Deed"), in a commercially reasonable form
provided by the Title Company that is mutually acceptable to Buyer and Seller, conveying to
Buyer title to the Land, subject only to the Permitted Exceptions, executed by Seller and
acknowledged;

b.

A Bill of Sale ("Bill of Sale") executed by Seller conveying to Buyer the

FF&E;
c.
An affidavit of Seller conforming with the requirements of Section
1445 of the Internal Revenue Code, the Patriot Act, or any other law, statute or regulation
affecting the Land or the transactions contemplated by this PSA;
d.
executed by Seller;

An ALTA Statement, on Escrow Agent's standard form, rf required,

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Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 12 of 28

e.
Such other documents and information as the Title Company
reasonably requires to issue the Title Policy with any requested endorsements;
f.
Escrow Holder's escrow instructions with Escrow Holder's
commercially reasonab le standard provisions and requiring Escrow Holder to comply with the
provisions of this PSA and record and deliver the documents set forth in, and as contemplated
by, this PSA, signed by Seller;
g.

A Closing Statement executed by Seller;

h.
The Assignment, if Buyer elects to operate the Hotel as a Shilo Inn after
Closing, signed by an affiliate of Seller;
i.

An Assignment and Assumption of Contracts, signed by Seller; and

j.
A certificate of title for the van referenced in Section 1.3.1, if Buyer elects
to purchase, endorsed by an affiliate of Seller; and
k.
A Management Agreement if Buyer elects t o contract with Shilo
Management Corporation to continue managing the Hotel.
12.7

Buyer's Closing Obligations. At the Closing, Buyer will deliver to Escrow: Holder:

12.7.1 By wire transfer, the Purchase Price (subject to any credit for the
Earnest Money deposited and any credit from prorations);
12.7.2 Escrow Holder's escrow instructions with Escrow Holder's commercially
reasonable standard provisions and requiring Escrow Holder to comply with the provisions of
this PSA and record and deliver the documents set forth in, and as contemplated by, this PSA,
signed by Buyer;
12.7.3 A closing statement setting forth all of the payments and prorations to
be made in the consummation of the sale hereunder in accordance with the provisions of this
PSA executed by Buyer;
The Assignment, if Buyer elects to operate the Hotel as a Shilo Inn after
12.7.4
Closing, signed by Buyer; and
12.7.5

An Assignment and Assumption of Contracts, signed by Buyer; and

12.7.6 A Management Agreement, signed by Buyer, if Buyer elects to contract
with Shilo Management Corporation to continue managing the Hotel.
13.
Indemnity. Each of the Seller and the Buyer will indemnify and defend the other party,
to include attorneys' fees and costs, for any and all claims, costs, losses or damages, whether in
contract or in tort, arising or alleged to arise during the period for which each party is
responsible.

Page 11. Shilo Inn Seaside East Purchase and Sales Agreement

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Document 158-2

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Page 13 of 28

13.1 The Seller will be responsible for all claims, costs, losses or damages incurred
with respect to the Hotel prior to the date of Closing. Without limiting the generality of the
foregoing, Seller will be responsible for all wages, fringe benefits, and other employment costs
of all Hotel employees to the date of Closing. Seller, at its sole cost , will terminate the existing
management agreement for the continuing management of the Hotel with Shilo Management
Corporation at Closing (unless Buyer elects to assume the agreement).
13.2 Buyer will be responsible for all cla ims, costs, losses or damages incurred on or
after the date of Closing. Buyer will accept and pay for any goods and services necessary for
the reasonable ope ration of the Hotel, which were ordered prior to Closing but delivered or
rendered after Closing. Seller agrees to minimize such orders and to coordinate such orders
with Buyer as reasonably possible. In addition, Buyer will be solely responsible for any lien,
claim or amount related to any third party vendor retained by Buyer or Buyer's representative
related to this PSA whether or not Closing occurs.
14.

Additional Covenants of the Parties.

14.1 Pend ing Closing, Seller will operate the Hotel in the ordinary course of business
and will maintain reasonable levels of inventory.
14.2 This PSA is binding upon and inures to the benefit of the parties' heirs,
successors, and permitted assigns. Buyer may, upon written notice to Seller, assign its rights
under this PSA, without the prior written consent of Seller, to an affiliated entity: which is
owned or controlled by Buyer. Except as provided for in the preceding sentence, Buyer may not
assign or otherwise transfer this PSA or any interest herein, voluntarily, involuntarily, or by
operation of law, without the prior written consent of Seller in each instance.

I

14.3 The covenants of each party contained in this PSA will survive Closing and will
1
not merge into any document delivered at Closing.
14.4 This PSA constitutes the entire agreement of the parties with respect to the sale
of the Hotel and supersedes and replaces all written and oral agreements previously made or
existing between the parties, including any letter of intent.
14.5 If any provision of this PSA is declared unenforceable by a cour:t having
jurisd iction, the provision is ineffective only to the extent declared unenforceable. The
rema inder of the provision and all other provisions of this PSA will continue in full force and
effect, so long as the basic purpose of the PSA can be fulf illed.
14.6

Any notices to Buyer and Seller will be sent to the following addresses:
To Buyer:
Ganesh Sonpatki

Page 12. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 14 of 28

To Seller:
Sh ilo Inn, Seaside East, LLC
Attn: legal Department
11600 S.W. Shilo Lane
Portland, Oregon 97225
Notices by any party pursuant to this PSA may be made by hand delivery; certified or registered
mail (with return receipt); private carrier (such as, for example, Federal Express) with delivery
confirmation. Notices by hand delivery will be deemed received when delivered to the
addressee 's address; notices by certified or registered mail will be deemed received forty-eight
(48) hours after mailing; and notices sent by private carrier will be deemed received when
actually delivered.
14.7 Unless otherwise provided herein, where any notice by any party is to be given
by a specified date, or on or within a stated number of days after a stated event, the notice will
be given on or before 5:00 P.M. Pacific Standard Time on the required date. If the required
date is a Saturday, Sunday, or not a regular business day, the notice will be given not later than
the next business day. All references to 'business days' in this PSA will mean a day otHer than a
Saturday, Sunday or a federal banking holiday.
14.8
Buyer agrees to keep confidential the fact that it is purchasing the Hotel as well
as any information or data received or discovered in its review and inspections rega rding the
Hotel.
Each of the parties hereto have been represented by legal counsel of their
14.9
choice in respect to this transaction, and each of the parties will be responsible for their own
attorney fees incurred in negotiating this PSA. This PSA has been negotiated with each party
having the opportunity to consult with legal counsel and will be construed without regard to
which party drafted all or any part of this PSA. The captions of the sections and paragraphs in
this PSA are used solely for convenience and are not intended to limit or otherwise modify the
provisions of this PSA.
14.10 Failure of either party at any time to require performance of any provision of
this PSA will not limit such party's right to enforce such provision, nor will any waiver of any
breach of any provision of this PSA constitute a waiver of any succeeding breach of such
provision or waiver of such provision itself.
14.11 This PSA may be executed simultaneously or in counterparts, each of which will
be deemed an original, but all of which together will constitute one and the same contract.

Page 13. Shilo Inn Seaside East Purchase and Sales Agreement

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Document 158-2

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Either party may rely on facsimile or digitally transmitted copies of this PSA to the same extent
as the originals.
14.12 The parties acknowledge that this PSA has been negotiated and is entered into in
the State of Oregon. The parties expressly agree that this PSA will be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of Oregon.
14.13 Seller will pay a facilitator's fee of One Hundred Fifteen Thousand Dollars
($115,000) at the Closing of the transaction to Clear Wave Enterprises, LLC. Each party warrants
to the other party that no broker or agent was consulted or engaged in connection with th is
transaction, and each party will indemnify, defend, and hold harmless the other from and
against all claims, losses, and liabilities made or imposed for any commission to any broker or
agent (other than the facilitator's fee referenced above) and arising out of the actions of such
party.
Each party will cooperate with the other in a property exchange under IRC
14.14
I
§1031 in connection with this sale as long as in doing so It incurs no additiona l liability or
expense, it is not required to hold title to any other property, the Closing Date is not affected,
and the entire amount owed to Seller hereunder is paid in the manner stated in this PSA.
Neither party will have any responsibility for the ultimate characterization of this transaction
for the other party's tax purposes. This sale is not conditioned on and may not be rescinded as
a result of such characterization or either party's ability to effect an exchange.
14.15 During the Due Diligence Period, Seller will advise Buyer of all supplier or
vendor contracts involving the provision of supplies or services to the Hotel (including billboard
or advertising contracts relating solely to the Hotel) and provide copies of the same where
available. In the event certain services are provided to Hotel through a multi-property
agreement with the Shilo Inn group of hotels, Seller will use commercially reasonable efforts to
cause the vendor to separate the Hotel from the multi-property agreement and make the
service available on a stand-alone basis to Hotel.
14.16
If any arbitration, suit, or action is instituted to interpret or enforce the
provisions of this PSA, to rescind this PSA, or otherwise with respect to the subject matter of
this PSA, the party prevailing on an issue will be entitled to recover with respect to such issue,
in addition to costs, reasonable attorney fees incurred in the preparation, prosecution, or
defense of such arbitration, suit, or action as determined by the arbitrator or trial court, and, if
any appeal is taken from such decision, reasonable attorney fees as determined on appeal.
14.17 All baggage of guests who are still in the Hotel on the Closing Date, which has
been checked with or left in the care of Seller will be inventoried, sealed, and tagged jointly by
Seller and Buyer on the Closing Date. From and after the Closing Date, Buyer will save, defend,
indemnify and hold harmless Seller and its agents, employees, affiliates and representatives
from and against any claims, liabilities, losses, damages, costs and expenses in connection with
such baggage arising out of the acts of omissions of Buyer or its affiliates (or any of their
Page 14. Shilo Inn Seaside East Purchase and Sales Agreement

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Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 16 of 28

employees or agents) from and after the Closing Date. From and after the Closing Date, Seller
will indemnify and defend Buyer and its agents, employees, affiliates and representatives from
and against any claims, liabilities, losses, damages, costs and expenses in connection with such
baggage arising out of the acts of omissions of Seller or its affiliates (or any of their employees
or agents) prior to the Closing Date.
14.18 At any time after the expiration of the Financing Contingency Period (assuming
Buyer has not elected to terminate the PSA), but not before, upon request from Buyer, Seller
will cause Shilo Management Corporation to consent and allow Buyer to contact and negotiate
with the existing Hotel manager and any other "key staff" as identified by Buyer to become
employed by Buyer at the Hotel after the Closing. Seller encourages the Buyer to consider, at
Buyer's sole discretion and risk, retaining the existing, loyal Shilo staff currently working at the
Hotel.
14.19 Time is of the essence for each and every provision of this PSA.
14.20 By providing an unexecuted copy of this PSA to any person, neither party is
deemed to have made an offer to sell or purchase or otherwise indicated its willingness to
enter into any transaction with respect to the Hotel, and this PSA will not be binding on any
party unless and until it has been fully executed and delivered by Seller and Buyer.

14.21 On or before January 31, 2016, Buyer may elect {if an election is also made to
assume the franchise agreement), by giving notice to Seller, to have Shilo Management
Corporation continue to operate the Hotel as its manager. In such event Buyer and Shilo
Management Corporation will make a good faith effort to enter into a Management Agreement
for operation of the Hotel post-closing. Any such agreement will provide for a management fee
of four percent (4%) of gross Hotel revenue, and be cancelable by either party without penalty
on thirty (30) days prior written notice.
SELLER:

Shilo Inn, Seaside East, LLC
By: Shilo Seaside East Corp
Its manager

Mark Hemstreet, Secretary
BUYER:

Page 15. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 17 of 28

Referenced Exhibits:
Exhibit 1.1
Exhibit 12.5

Legal Description of Land
Proration and Closing Procedure

Exhibit 1.1

LEGAL DESCRIPTION:

PARCEL NO.1:
Beginning at a point in the county road leading from Skipanon Landing to Seaside 11.48 chains
West of the quarter Section post on the East line of Section 21, Township 6 North, Ranke 10
West of the Willamette Meridian; thence South along the centerline of said county road a
distance of 558.43 feet; thence West to the West line of said county road to a point which is the
Northeast corner of that certain tract of real estate conveyed by A.M. Smith and Anna F. Smith
to Nettie C. Allen and N.C. Allen by Deed recorded in Book 104, page 637, Clatsop County
Record, which point is the point of beginning of the tract of land hereby conveyed; thence West
along the North line of said N.C. Allen and Nettie Allen tract a distance of 100 feet; thence
North and parallel to said county road a distance of 50 feet; thence East along the South line of
that certa in tract conveyed by A.M. Smith and Anna F. Smith to Annie Plummer by Deed
recorded in Book 108, page 174, Clatsop County Records, to the West line of said county road;
thence South along the West line of said county road to said Northeast corner of said Nettie C.
Allen and N.C. Allen tract, the point of beginning of the land herein conveyed, in Section 21,
Township 6 North, Range 10 West, Willamette Meridian, in the City of Seaside, County of
Clatsop, State of Oregon.
PARCEL NO. 2:
That part of the Elizabeth Lattle Donation Land Claim described as follows:
Beginning at a point in the county road leading from Skipanon Landing to Seaside 11.28 chains
West of the quarter Section post on the East line of Section 21, Township 6 North, Range 10
West, Willamette Meridian (run at angle to the East line of said Section 21); thence South 2Page 16. Shilo Inn Seaside East Purchase and Sales Agreement

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Document 158-2

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Page 18 of 28

1/2° West 558.43 feet; thence West to the West line of said county road which is the Northeast
corner of the tract of land described and conveyed herein; thence West 5.87 chains to low
water mark of the Necanicum River; thence South along low water mark of said river 108 feet
to the Northwest corner of tract of land conveyed by A.M. Smith to George La pay; thence East
along the North line of said tract conveyed by A. M . Smith to George La pay to the Northeast
corner thereof, which point is a point on the West line of said county road 108 feet South of the
point of beginning for the description of the tract herein conveyed; thence North along the
West line of said county road a distance of 108 feet to the place of beginning, the said tract
being 108 feet North and South and running from the county road to low water mark of the
Necanicum River, and adjoining said George La pay tract on the North, the said George Lapay
tract being described in that certain Deed recorded in Book 95, page 450, Clatsop County
Records, situated in the City of Seaside, County of Clatsop, State of Oregon.

Exhibit 12.5
Proration and Closing Procedure

1.1
Adjustments, Allocations and Prorations. The following provisions will
govern the adjustments and prorations that will be made at Closing and the allocation of
income and expenses from the Hotel between Seller and Buyer. Except as expressly provided
to the contrary in this Section 1.1, all items of revenue, cost and expense of the Hotel, with
respect to the period prior to 11:59 P.M. (the "Cut-Off Time") on the day prior to the Closing
Date, will be for the account of Seller and all items of revenue, cost and expense of the Hotel,
with respect to the period after the Cut-Off Time on the day prior to the Closing Date, will be
for the account of Buyer. Any net adjustment in favor of Buyer will be credited against the
Purchase Price at the Closing. Any net adjustment in favor of Seller will be paid in cash or cash
equivalent at the Closing by Buyer to Seller.
Real Property Taxes, Personal Property Taxes, Impositions
1.1.1
and Other Assessments. Real property taxes, personal property taxes, impositions, and other
assessments imposed upon or assessed against the Hotel will be prorated as of the Closing
Date. Such proration will be done in accordance with the following provisions:
(a)
Allocation of Real Property Taxes, Personal Property Taxes,
Impositions and Other Assessments. With respect to the Hotel, Seller will be responsible for all
real property taxes, personal property taxes, regardless of when payable and when billed,
impositions and other assessments that are attributable to the period prior to the Closing Date,
and Buyer will be responsible for all real property taxes, personal property taxes, regardless of
when payable and when billed, impositions and other assessments that are attributable to the
period from and after the Closing Date.
{b)
Adjustment of Tax Rate or Assessment.
If the real
property tax rate, personal property tax rate or any assessment has not been set for the fiscal
year in which the Closing occurs, then the proration of such real property tax, personal property

Page 17. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

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Page 19 of 28

tax or assessment will be based upon the rate of the assessment for the preceding fiscal year
for such tax or assessment which has not been set for the fiscal year in which the Closing
occurs, and such proration will be adjusted between Seller and Buyer upon presentation of
written evidence of the amount of the actual taxes. Any returns due to outstanding real
property tax appeals initiated by Seller will be Seller's sole property and must be immediately
remitted to Seller. In addition, any tax appeals by Seller for any time period prior to Closing will
belong solely to Seller.
1.1.2

Hotel Reservations and Revenues.

(a)
Reservations. Buyer will honor (and will cause its manager
to honor) all reservations at the Hotel that are made by Seller in the ordinary course of business
on or prior to the Closing Date and pertaining to periods on or after the Closing Date. Any
down payments and advance deposits that are (i) received by Seller prior to the Closing Date;
and (ii) made with respect to confirmed reservations for dates on or after the Closing Date, will
be credited at Closing to Buyer.
(b)
Guest Revenues. Revenues from guest rooms in the Hotel
occupied on the night containing the Cut-Off Time, including any sales taxes, room taxes and
other taxes charged to guests in such rooms, all telephone, facsimile and data communications,
in-room movie, laundry, and other service charges allocated to such rooms with respect to the
night containing the Cut-Off Time will be divided evenly between Seller and Buyer. All other
revenues will be allocated based on whether the same accrued before or after the Cut-Off Time
and Seller and Buyer will separately record sales occurring before and after the Cut-Off Time.
1.1.3
Petty Cash and Cash on Hand. The aggregate amount of
petty cash and cash on hand at the Hotel as of the Closing Date will be referred to as the
"Aggregate Cash Amount." The Aggregate Cash Amount will belong to Buyer; provided,
however, that Seller will receive a credit for the same at Closing. Buyer and Seller will have
representatives that count such cash together on the morning of the Closing Date. All
transferable deposits of Seller made for utilities, maintenance or service contracts, licenses, or
otherwise, with respect to the Hotel will be credited to Seller at Closing.
1.1.4
Hotel Receivables. All receivables existing as of the Closing
Date will remain the property of Seller. Buyer will remit the receivables to Seller as and when
received (for example, a guest group that stays before Closing, but sends payment to the Hotel
post-closing). Buyer will have the absolute and unconditional obligation to immediately
forward to Seller any funds received by Buyer after Closing representing any revenues for
guests stays or rebates earned on or prior to Closing.
1.1.5
Operational Taxes. The parties acknowledge that certain
taxes accrue and are payable to the various governmental authorities by any business entity
operating a hotel and its related facilities. Included in those taxes may be business and
occupation taxes, retail sales and use taxes, gross receipts taxes, and other special lodging or
hotel taxes. For purpose of this PSA, all of such taxes (expressly excluding taxes and
Page 18. Shflo Inn Seaside East Purchase and Sales Agreement

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assessments covered by Section 1.1.1, corporate franchise taxes, and federal, state, and local
income taxes) {hereinafter referred to as "Operational Taxes") will be allocated between Seller
and Buyer such that those attributable to the period prior to the Cut-Off Time will be allocable
to Seller and those attributable to the period from and after the Cut-Off Time will be allocable
to Buyer {with the attribution of such taxes hereunder to be done in a manner consistent with
the attribution under this PSA of the applicable revenues on which such taxes may be based).
Buyer will receive a credit for any Operational Taxes attributable to the period prior to the CutOff Time which Seller has not paid and which Buyer is obligated to pay. Except for the
Operational Taxes for which Buyer has received a credit under this Section 1.1.5, Selle,r will be
responsible for payment of the Operational Taxes with respect to the period prior to the CutOff Time, and Buyer will be solely responsible for payment of such Operational Taxes with
respect to the period from and after the Cut-Off Time. Seller will apply for a tax clearance
certificate with respect to the operation of the Improvements (to be issued by Closing) through
the Closing Date.
1.1.6
Wages and Other Employee Compensation. Seller will
terminate all of the Hotel's employees effective as of the Closing Date. Seller will pay to all of
the Hotel's employees the wages, salaries, benefits, accrued and unused vacation pay, accrued
and unused sick pay, and all other employment related expenses, including payroll taxes
(collectively, "Employee Compensation") payable to them as of the Closing Date. Seller will be
solely responsible for all Employee Compensation, which accrues on or before the Closing Date.
Seller will indemnify and hold Buyer harmless for, from and against any claim by any employee
for Seller's failure to pay (a) any severance payment, if any, due such employee, regardless of
the period to which the severance entitlement applies, and (b) Employee Compensation which
accrues on or before the Closing Date, and Buyer will indemnify, hold harmless and defend
Seller for similar amounts for which Buyer or Buyer's agents are responsible on or after Closing
Date.
1.1.7
Permits; Contracts; Rebates. With respect to the Hotel,
permit and license fees of assignable permits and licenses, if any, will be prorated as of the
Closing Date. Payments due under any service agreements and equipment leases, if any and

provided Buyer assumes same, will be prorated as of the Closing Date.
1.1.8
Other Hotel Operating Expenses. With respect to the Hotel,
operating expenses and utility charges (subject to this Section 1.1.8 and Section 1.1.10 below)
and expenses under any reciprocal easement, shared use, or operating agreements (if any) with
respect to private roadways, parking, recreational, or other facilities (to the extent any such
expenses or charges are not allocated under the foregoing provisions of this Section 1.1) will be
prorated between Seller and Buyer by allocating to Seller those expenses attributable to the
period prior to the Closing Date, and allocating to Buyer those expenses attributable to the
period from and after the Closing Date. To the extent that the amount of actual consumption
of any utility services is not determined prior to the Closing Date, as provided in Section 1.1.10
below, a proration will be made at Closing based on the last available reading, and post-closing
adjustments between Buyer and Seller will be made as part of the post-Closing reconciliation

Page 19. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

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Page 21 of 28

pursuant to Section 1.1.11, which obligation w ill survive the Closing and not be merged therein.
Any tour agents' and travel agents' commissions will be prorated as of the Closing Date.
1.1.9
Payment of Credited Amounts. In any case in which Buyer
receives a credit at Closing on account of any obligation of Seller hereunder, Seller will have no
further liability for such obligation to the extent of the credit so given, and Buyer will pay and
discharge the same, together with any penalties, fines, fees, interest and other charges thereon
or related thereto imposed by third parties or by law in connection with Buyer's non-payment
of such items, and any legal fees incurred by Seller to enforce the provisions of this Section
1.1.9.
Items for Which There Will Not be a Proration. Seller and
1.1.10
Buyer agree that (a) none of the insurance policies relating to the Hotel will be assigned to
Buyer, and Buyer will be responsible for arranging for its own insurance as of the Closing Date;
and (b) utilities, including telephone, electricity, water and gas, will be read on the Closing Date
and Buyer will be responsible for all the necessary actions needed to arrange for utilities
(including telecommunications such as television and internet) to be transferred to the name of
Buyer beginning 12:01 A.M. on the Closing Date, including the posting of any required deposits
and cooperation with Seller to get Seller's return of any deposits Seller current has at Closing.
Accordingly, the re will be no prorations for insurance or utilities, unless a meter reading is
unavailable for any particu lar utility, then such utility will be prorated in the manner provided in
Section 1.1.8 above. To the extent reasonably possible, Buyer and Seller will cooperate to
arrange for utility and other service providers to separately bill each party for their respective
periods of ownership, in which event no credit and no proration will be necessary. Seller will be
entitled to receive and be returned any deposits Seller may have with any utility companies, or
will receive a credit at Closing from Buyer to the extent such deposits may be transferred to
Buyer's account.
1.1.11
Closing Statement; Post-Closing Reconciliation.
The
prorations and credits hereunder at the Closing will be made based on a closing statement (the
"Closing Statement'') prepared by Escrow Holder and adjusted as aforesaid and approved in
writing by the parties {which approval will not be unreasonably withheld) prior to the Closing,
based on actual figures to the extent available provided by the parties to the Escrow Holder. If
any of the prorations cannot be calculated based on actual figures, then they will be calculated
based on the parties' good faith estimates, which will be subject to Seller's and Buyer's
reasonable approval. As soon as reasonably practicable after the Closing but in no event later
than thirty (30) days after the Closing, Seller and Buyer, acting reasonably and in good faith, will
reconcile between themselves the amounts to be prorated pursuant to this PSA, using any
updated information with respect to such matters then available. Each party will provide the
other reasonable access to the books, records, computer runs and other documents relating to
the Hotel which contain information relevant to completing the final reconciliation. If the final
reconciliation of prorations, as agreed to between Seller and Buyer, shows any amount due
from Seller to Buyer, or vice versa, the party owing such amount will pay such amount (in

Page 20. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

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Page 22 of 28

immediately available funds) within five (5) Business Days after reaching agreement on the final
reconciliation.

1.1.12
Survival of Section 1.1. The obl igations and rights of the
parties under this Exhibit 12.5 will survive the Closing.

Page 21. Shilo Inn Seaside East Purchase and Sales Agreement

Exhibit B

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FIRST AMENDMENT TO
SHILO INN SE
ASIDE E
AST
PURCHASE AND SALES AGREEMENT
SELLER:

Shilo Inn, Seaside East, LLC, an Oregon limited liability company

PURCHASER:

Ganesh Sonpatki
RECITALS

A.
Purchaser and Seller are parties to that certain Shilo Inn Seaside East Purchase and
Sales Agreement dated effective December 11, 2015 ("Sales Agreement") in respect of the real
property commonly known as the Shi lo Inn located at 900 S. Holladay, Seaside, Oregon 97138,
which Property is more particularly described in the Sales Agreement.
B.
Purchaser and Seller wish to amend the Sales Agreement in respect of the
Financing Contingency Period. All capitalized terms used in this First Amendment that are not
otherwise defined will have the same meanings given them in the Sales Agreement.
NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby
affirmed, Purchaser and Seller agree as follows:
AGREEMENTS
1.

Extension of Financing Contingency Period.

Section 5.1.2(a) of the Sales

Agreement is hereby amended such that Financing Contingency Period is extended to and shall
end on February 15, 2016.
2.

No Other Modification .

Except as specifically set forth herein, the Sales

Agreement is unmodified and is hereby ratified and remains in full force and effect.

Counterparts: Electronic Signatures. Th is First Amendment may be executed in
3.
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 First Amendment had executed the same counterpart. Electronically
delivered signatures shall operate as originals for all purposes under this First Amendment.

First Amendment to Shilo Inn Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 24 of 28

IN W ITNESS WHEREOF, the parties have executed this First Amendment effective as of
this 8th day of February, 2016.

SELLER:

Sh ilo Inn, Seaside East, LLC
By: Shilo Seaside East Corp
its manager

By:~~,yt(~
Mark Hemstreet, Secretary

PURCHASER:
esh Sonpatki

First Amendment t o Shilo Inn Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 25 of 28

SECOND AMENDMENT TO
SHILO INN SEASIDE EAST
PURCHASEANDSALESAGREEMENT
SELLER:

Shilo Inn, Seaside East, LLC, an Oregon limited liability company

PURCHASER:

Ganesh Sonpatki
RECITALS

A.
Purchaser and Seller are parties to that certain Shilo Inn Seaside East Purchase and
Sales Agreement dated effective December 11,2015, as amended by that certain First Amendment
to Shilo Inn Seaside East Purchase and Sales Agreement dated February 8, 2016 (collectively, the
"Sales Agreement") in respect of the real property commonly known as the Shilo Inn located at
900 S. Holladay, Seaside, Oregon 97138, which Property is more particularly described in the
Sales Agreement.

B.

Purchaser and Seller wish to further amend the Sales Agreement on the terms and
conditions set forth herein. All capitalized terms used in this Second Amendment that are not
otherwise defined will have the same meanings given them in the Sales Agreement.
NOW THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby affirmed, Purchaser and Seller agree as follows:
AGREEMENTS

Release of Portion of Earnest Money. In consideration of Seller granting the
extensions contained in this Second Amendment, $10,000 of the Earnest Money shall be
immediately released to Seller by Escrow Holder, and such amount shall be for all purposes nonrefundable to Purchaser, but still applied to the Purchase Price at Closing. Full execution of this
Second Amendment by the parties shall also serve as express written instructions to Escrow Holder
to immediately release the $10,000 to Seller.
1.

2.
Extension of Financing Contingency Period. Section 5.1.2(a) of the Sales
Agreement is hereby amended such that the Financing Contingency Period is extended to and shall
end on March 21, 2016. The parties acknowledge and agree that any further extension of the
Financing Contingency Period shall be on terms mutually agreed upon by the parties, and if any
further extension is granted by Seller beyond March 21,2016, the remaining $40,000 of the Earnest
Money held by Escrow Holder shall be immediately released to Seller and shall be for all purposes
non-refundable to Purchaser. Purchaser agrees to immediately submit applications for financing
to (at a minimum) two (2) other lenders in addition to Wells Fargo. Purchaser shall continue to
provide the financing progress reports and documents required in Section 5.2 of the Sales
Agreement.

Second Amendment to Shilo Inn Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 26 of 28

3.
Closing Date. The parties shall agree upon a mutually acceptable Closing Date
prior to the expiration of the Financing Contingency Period (or any further extension thereof).
4.
No Other Modification. Except as specifically set forth herein, the Sales
Agreement is unmodified and is hereby ratified and remains in full force and effect.
5.
Counterparts: Electronic Signatures.
This Second Amendment 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 Second Amendment had executed the same counterpart.
Electronically delivered signatures shall operate as originals for all purposes under this Second
Amendment.

IN WITNESS WHEREOF, the parties have executed this Second Amendment effective as
of this 15th day of February, 2016.

SELLER:

Shilo Inn, Seaside East, LLC
By: Shilo Seaside East Corp
its manager

By: ~~/~
Mark Hemstreet, Secretary

PURCHASER:
esh Sonpatki

2

Second Amendment to Shilo Lnn Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 27 of 28

THIRD AMENDMENT TO
SHILO INN SEASIDE EAST
PURCHASE AND SALES AGREEMENT
SELLER:

Shilo Inn, Seaside East, LLC, an Oregon limited liability company

PURCHASER:

Ganesh Sonpatki
RECITALS

A.
Purchaser and Seller are parties to that certain Shilo Inn Seaside East Purchase and
Sales Agreement dated effective December 11, 2015, as amended by that certain First Amendment
to Shilo Inn Seaside East Purchase and Sales Agreement dated February 8, 2016, and that certain
Second Amendment to Shilo Inn Seaside East Purchase and Sales Agreement dated February 15,
2016 (collectively, the "Sales Agreement") in respect of the real property commonly known as the
Shilo Inn located at 900 S. Holladay, Seaside, Oregon 97138, which Property is more particularly
described in the Sales Agreement.

B.
Purchaser and Seller wish to further amend the Sales Agreement on the tenns and
conditions set forth herein. All capitalized tenns used in this Third Amendment that arc not
otherwise defined will have the same meanings given them in the Sales Agreement.
NOW THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby affirmed, Purchaser and Seller agree as follows:
AGREEMENTS
1.

Closing Date. The Closing Date shall be on or before June 1, 2016.

2.
No Other Modification. Except as specifically set forth herein, the Sales
Agreement is unmodified and is hereby ratified and remains in full force and effect.
3.
Counterparts: Electronic Signatures. This Third Amendment 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 Third Amendment had executed the same counterpart. Electronically
delivered signatures shall operate as originals for all purposes under this Third Amendment.

Third Amendment to Shilo Inn Sales Agreement

Exhibit B

Case 3:12-cv-00506-HZ

Document 158-2

Filed 06/03/16

Page 28 of 28

IN WITNESS WHEREOF, the parties have executed this Third Amendment effective as

of March 23, 2016.
SELLER:

Shilo Inn, Seaside East, LLC
By: Shilo Seaside East Corp
its manager

By:~tfd/~
Mark Hemstreet, Secretary

PURCHASER:

2
Third Amendment to Shilo Inn Sales Agreement

Exhibit B

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