Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date: 4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available); 4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date; 4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts; 4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited; 4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement; 4.4.6 assignable license and permit fees; 4.4.7 accrued and unpaid tour and travel agent commissions; 4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows: (a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and (b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser; 4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor; 4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller; 4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller; 4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement; 4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser); 4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and 4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing.
Appears in 1 contract
Samples: Real Estate Purchase and Sale Agreement (American Realty Capital Hospitality Trust, Inc.)
Closing Prorations and Adjustments. With respect to each Each of the First Pool Closing and following provisions shall survive the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. :
(i) The following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)close of business on the Closing Date, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date on such day and Purchaser shall be deemed to be the owner of the applicable Property on and following as of the applicable day after the Closing Date:
4.4.1 (a) real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated on the basis of the most recent available Tax bxxx ascertainable tax xxxx if the current bxxx xxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which (b) the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on "minimum" or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments "base" rent payable by tenants under the Leases assigned Leases; provided, however, that rent and all other sums which are due and payable to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of Seller by any rent or other revenue item which is overdue tenant but uncollected as of the applicable Closing Date until shall not be adjusted or prorated, but Purchaser shall cause the rent and other sums for the period prior to Closing to be remitted to Seller if, as and when collected. At Closing, Seller shall deliver to Purchaser a schedule of all such past due but uncollected rent and other sums owed by tenants. Purchaser shall include the amount of such rent and other sums in the first bills thereafter submitted to the tenants in question after the Closing, and shall continue to do so for twelve (12) months thereafter. During such twelve (12) month period, Purchaser shall promptly deliver to Seller a copy of each such xxxx submitted to tenants. Purchaser shall promptly remit to Seller any such rent or other revenue item sums paid by scheduled tenants, but only if a deficiency in the then current rent is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreementnot thereby created. To the extent Purchaser receives rents not set forth on said schedule, reimbursement of real estate taxes payable, common area maintenance, utility charges, water and sewer charges, insurance and association dues and assessments and all other charges to or contributions by tenants under the Leases shall be prorated in the same manner as provided for "minimum" or "base" rent;
(including operating expensec) with respect to tenant improvement costs or leasing commissions relating to Leases, Tax and insurance charges payable by tenants) or any modification, amendment, restatement or renewal thereto, executed on or after October 16, 1997 (referred to as a "New Lease"), Seller and Purchaser agree that such costs and commissions shall be prorated over the applicable term of any New Lease with Seller being responsible for a portion of such costs and commissions based on the ratio of base rent payments received by Seller through the Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs the total base rent payable over the term of collection, the particular New Lease;
(d) the amount of security deposits paid under the Leases and unapplied at Closing shall be applied first toward the payment in full of all rents and other amounts due a credit to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 (e) water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that and any deposits with utility companies shall remain (to the property of the applicable Seller and shall not extent possible, utility prorations will be prorated or credited;
4.4.5 amounts due and payable handled by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel meter readings on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:Date);
(af) amounts paid or payable under the Service Contracts;
(g) assignable license and permit fees; and
(h) other similar items of income and expenses of operation.
(ii) Notwithstanding the foregoing, Seller shall in all room revenue posted events be entitled to retain amounts paid by tenants (referred to herein as "Tenant Reimbursements") for all days preceding real estate taxes and assessments, and common area and operating expenses (collectively, "Tenant Reimbursable Expenses") as of the applicable Closing Date shall belong to the applicable extent not in excess of the actual amount of such Tenant Reimbursable Expenses paid by Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding period prior to the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes the reconciliation with tenants of Tenant Reimbursements and franchise fees Tenant Reimbursable Expenses for all guest charges preceding the calendar year 1997. Purchaser agrees to cooperate with Seller in providing any information required to complete such reconciliation.
(a) if and to the extent that the amount of Tenant Reimbursements collected by Seller for 1997 is less than the amount of Tenant Reimbursable Expenses paid by Seller with respect to 1997 and for which Seller is entitled to recover under the terms of the Leases, Purchaser shall: (1) to the extent such amounts have already been collected by Purchaser from the tenants with respect to any period prior to Closing, promptly remit such amounts to Seller but only if the applicable Closing Date, except tenant is otherwise current in the payment of all obligations due for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser period following Closing; and one-half (2) to the applicable extent such amounts have not yet been collected from tenants, Purchaser shall promptly xxxx the tenants for such amounts and continue to xxxx such tenants for such amounts each month for six (6) months thereafter, and, promptly upon receipt thereof, pay such amounts to Seller; and
(b) all room revenue posted if and to the extent that the amount of Tenant Reimbursements collected by Seller for all days on and after 1997 exceeds the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable amount of Tenant Reimbursable Expenses paid by Seller with respect to a Hotel accruing prior 1997 and for which Seller is entitled to 11:59 local time recover under the terms of the Leases, Seller shall remit such excess amounts to Purchaser, provided, that:
(with respect 1) Purchaser shall be thereafter obligated to promptly remit the applicable portion to the applicable Hotelparticular tenants, if any, entitled thereto; and
(2) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred Purchaser shall indemnify, defend and hold Seller, its beneficiaries, their partners, and their respective directors, officers, employees and agents, and each of them, harmless from and against any losses, claims, damages and liabilities, including, without limitation, reasonable attorneys' fees and expenses incurred in connection therewith, arising out of or resulting from Purchaser's failure to Purchaser at remit any such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver amounts to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first tenants in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;provisions hereof.
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) For purposes of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”this Section 4(C), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 expense credited by one party to the other shall survive each applicable Closingbe deemed an expense paid by that party.
Appears in 1 contract
Samples: Purchase and Sale Agreement (First Capital Institutional Real Estate LTD 3)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. (i) The following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)Closing Date, it being understood that for purposes of prorations and adjustments, Purchaser shall be deemed the applicable owner of the Property as of 12:00 a.m. on the Closing Date and Seller shall be deemed the owner of the Property as of 11:59 p.m. on the day prior to the Closing Date; provided, however, that in the event that Seller and Seller's mortgage lender receive the net funds from the Escrowee after 1 PM (Denver, Colorado time) on the Closing Date, then the Closing Date shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date following business day and Purchaser all prorations and adjustments shall be recalculated with the Purchaser deemed to be the owner of the applicable Property on as of the new Closing Date and following Seller deemed the applicable owner of the Property as of the day before the new Closing Date:
4.4.1 real (a) Real estate and personal property Taxes taxes and assessments, in each case, with assessments (initially on the applicable Seller responsible for Taxes attributable basis of the tax xxxx applying to the portion of the Tax year which period through Closing, or if such tax xxxx is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated not available, on the basis of the most recent available Tax bxxx if ascertainable tax xxxx). Notwithstanding any local custom regarding the current bxxx is not then available)proration of taxes and assessments, taxes and assessments shall be deemed to apply to the fiscal year(s) described on the most recent tax xxxx, regardless of when such taxes and assessments are due and payable;
4.4.2 sales(b) Base rent ("Base Rent") and any other amounts (including without limitation charges for operating expenses) due under the Leases paid for the billing period in progress on the Closing Date. "Receivables," as used in this Agreement, occupancymeans all rental payments, room, telecommunications, beverage expense reimbursements and similar Taxes to which the operations other monetary obligations of any Hotel is subject kind due and owing or to become due and owing by tenants to Seller with respect to any period prior to the Closing Date under the Leases. At Closing, the Closing Statement shall contain a schedule (the Taxes in this Section 4.4.2, “Hotel Taxes”"Closing Delinquency Schedule") of all uncollected Receivables. Purchaser shall undertake reasonable efforts on behalf of Seller to collect all Receivables for a period of four (4) months from the Closing Date (which shall include the submission of monthly invoices and follow-up invoices), in each case, with it being agreed that any monies received by Purchaser from and after the applicable Seller responsible Closing Date from any person liable for Hotel Taxes attributable to the any portion of the Tax Receivables (including, without limitation, payments by tenants for operating expenses in excess of their estimated payments) shall be applied as follows: first to any current sums and arrearages owed to Purchaser (relating to billing periods after the billing period which is prior in progress as of the Closing Date), second to the applicable Closing Date payment of monies owed to Seller and Purchaser responsible for Hotel Taxes attributable the billing period in progress on the Closing Date, and last to the portion balance of the Tax period on or Receivables. All monies received by Purchaser which are to be applied pursuant to the preceding sentence shall be held in trust by Purchaser for the benefit of the party entitled thereto and remitted to such party promptly after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser receipt in accordance with the terms preceding sentence. Notwithstanding the foregoing, Seller shall retain the sole right to collect (in such manner as it shall deem appropriate) Receivables due from tenants who have vacated the Property prior to the Closing Date, and Purchaser shall not be required to undertake any collection efforts with respect to those Receivables. If, within four (4) months following the Closing Date, any of this Agreement; provided that no proration the Receivables to be collected by Purchaser have not been collected and paid to Seller, then Seller may undertake its own efforts to collect those Receivables, including the commencement of litigation and other proceedings (but Seller shall not seek to evict any tenant or terminate any Lease), and all sums collected by Seller as a result of such litigation (after payment of all costs and expenses) shall be made of any rent or other revenue item which is overdue as applied in full satisfaction of the applicable Closing Date until such rent Receivables. Purchaser and Seller shall reasonably cooperate with each other in the collection of Receivables and shall execute any documents reasonably requested by the other to collect those Receivables.
(c) with respect to tenant improvement costs and/or allowances or other revenue item is actually receivedleasing commissions relating to (1) any new leases, at which time it shall be prorated or any modification, amendment, restatement or renewal of existing Leases (each, a "New Lease", and paid to Purchaser or collectively, the applicable Seller "New Leases") executed in accordance with the terms provisions contained in Section 10(L) below between the date of this AgreementAgreement and prior to the expiration of the Inspection Period, and (2) New Leases executed during the period between the expiration of the Inspection Period and Closing with the consent of Purchaser granted (or deemed to be granted) in accordance with Section 10(L) below, Seller and Purchaser agree that such tenant improvement costs, allowances and leasing commissions shall be prorated over the initial term of any such New Lease with Seller being responsible for a portion of such tenant improvement costs, allowances and leasing commissions based on the ratio of Base Rent payments payable to Seller through 11:59 PM of the day before the Closing Date to the total Base Rent payable over the initial term of the particular New Lease and, in the event that Seller has paid such tenant improvement costs, allowances and/or leasing commissions prior to Closing, Purchaser shall reimburse Seller at Closing for the amount of any such tenant improvement costs, allowances and/or leasing commissions paid by Seller, based on the above-described proration. To Seller and Purchaser agree that (i) Seller shall be responsible for all tenant improvement costs and/or allowances or leasing commissions set forth on EXHIBIT S attached hereto, (ii) in the event that any amounts due under EXHIBIT S are unpaid as of Closing, Seller shall credit Purchaser at Closing for any such unpaid amounts, and (iii) Purchaser shall be responsible for paying all tenant improvement costs, allowances and/or leasing commissions for which it receives a credit at Closing up to the amount of the credit.
(d) the amount of the Security Deposits held by Seller as of the Closing Date, if any, with Purchaser receiving a credit at Closing against the Purchase Price in the amount of such Security Deposits plus interest earned thereon, if such interest must be paid to tenants under the Leases or applicable law (and Seller shall transfer to Purchaser at Closing, to the extent Purchaser receives rents (including operating expensetransferable, Tax and insurance charges payable any Security Deposit held by tenants) on or after Seller as of the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs in the form of collection, shall be applied first toward the payment in full a letter of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountscredit);
4.4.4 (e) water, sewer, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, fees and on or afteruse charges, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that and any deposits with utility companies shall remain (to the property of the applicable Seller and shall not extent possible, utility prorations will be prorated or credited;
4.4.5 amounts due and payable handled by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel meter readings on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:Date);
(af) all room revenue posted for all days preceding amounts paid or payable under the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as Service Contracts;
(g) assignable license and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Sellerpermit fees; and
(bi) other similar items and expenses of operation.
(ii) Notwithstanding the foregoing, and subject to Sections 4(C)(iii), Seller shall in all room revenue posted events be entitled to retain amounts paid by tenants for reimbursement of real estate taxes and assessments, common area maintenance, mall maintenance, utility charges, water and sewer charges, insurance and merchant's association dues and assessments and all days on other charges to or contributions by tenants under the Leases other than Base Rent (such assessments, costs, expenses, dues and after charges being referred to herein as the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time ("Tenant Reimbursable Expenses", and the amounts payable by tenants under the Leases with respect to the applicable HotelTenant Reimbursable Expenses being referred to herein as the "Tenant Reimbursements") on as of the day immediately preceding the applicable Closing Date Closing.
(“Accounts Receivable”iii) will not be transferred to Purchaser at such As soon as practical after Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller in no event later than sixty (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller60) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable days after Closing (except for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (taxes and assessments and Tenant Reimbursable Expenses, which shall be reprorated not later than April 30, 2000), Seller and Purchaser shall, with respect to any such amounts prorated or adjusted at Closing pursuant to Section 4(C)(i) above based on estimates or formulae, as applicable, jointly determine and reapportion such amounts in accordance with Section 4(C)(i) above upon the issuance determination of the actual bills), any proration which must be estimated costs or expenses with respect thereto. In the event that the amount credited to Purchaser by Seller at Closing exceeds the applicable Closing shall be reprorated and finally adjusted on amount of the date credit that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing DatePurchaser should have received had such actual amounts been available at Closing, Purchaser shall prepare promptly remit such excess amount to Seller. Purchaser shall be responsible for the reconciliation with tenants of Tenant Reimbursements and deliver Tenant Reimbursable Expenses for the calendar year 1999. In the event that the amount credited to Sellers a final Seller by Purchaser at Closing Statement exceeds the amount of the credit that Seller should have received at Closing had such actual amounts been available at Closing, Seller shall promptly remit such excess amount to Purchaser. In the event that, after such reapportionment: (1) the amount of Tenant Reimbursements retained by Seller as provided in Section 4(C)(ii) above is less than the amount of Tenant Reimburseable Expenses paid by Seller (whether by direct payment by Seller or by proration as provided in Section 4(C)(i) above) with respect to 1999 and the landlord under the Leases is entitled to recover such Closing; provided that if difference under the terms of Leases, then Purchaser shall fail xxxx such tenants, provide Seller with copies of such bills upon issuance, and collect such amounts on behalf of Seller and, upon receipt, remit such collected amounts to deliver Seller; and (2) the amount of Tenant Reimbursements collected by Seller for 1999 and retained by Seller as provided in Section 4(C)(ii) above exceeds the amount of Tenant Reimburseable Expenses paid by Seller (whether by direct payment by Seller or by proration as provided in Section 4(C)(i) above) with respect to 1999 then Seller shall promptly remit such final Closing Statement within excess amounts to the Purchaser; provided, that to the extent any such 350-day periodexcess amounts are otherwise payable to a tenant owing Receivables, Sellers Seller may prepare and deliver such statement offset the amount otherwise payable to Purchaser for such tenant against Receivables owing to Seller by such tenant, remitting any remaining amount to Purchaser. Purchaser shall be obligated to promptly remit all amounts received from Seller to the particular tenants in question (and Purchaser shall cooperate fully with Sellers’ efforts indemnify, defend and hold Seller, its beneficiaries, their partners, and their respective directors, officers, employees and agents, and each of them, harmless from and against any losses, claims, damages and liabilities [including, without limitation, reasonable attorneys' fees and expenses incurred in connection therewith] arising out of or resulting from Purchaser's failure to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as remit such amounts to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser tenants in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing4(C)(iii).
Appears in 1 contract
Samples: Real Estate Sale Agreement (First Capital Income & Growth Fund Series Xii)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Seller shall prepare a separate the Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days two (2) business days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, adjusted or credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)close of business on the Closing Date, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including on the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and as of the date following the applicable Closing Date:: 4.
4.4.1 4.1 real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes assessments attributable to the portion of year in which the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year occurs (which prorations shall be calculated on the basis of the most recent available Tax bxxx tax xxxx if the current bxxx xxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage it being understood by the parties hereto that all special assessments assessed against the Property and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is due and payable prior to the applicable Closing Date shall be the sole responsibility of Seller; 4.
4.2 the rent and other sums (other than as set forth in Section 4.4.3 below) payable by tenants under the Leases; provided, however, that rent and all other sums which are due and payable to Seller by any tenant but uncollected as of the Closing (collectively, the “Delinquent Amounts”) shall not be adjusted, but Purchaser responsible for Hotel Taxes attributable shall cause such Delinquent Amounts to be remitted to Seller if, as and when collected. At Closing, Seller shall deliver to Purchaser a schedule of all such Delinquent Amounts. In the event any Delinquent Amount is inadvertently omitted from such schedule, Seller shall not be deemed to have waived its rights to such Delinquent Amount. Purchaser shall include any and all Delinquent Amounts in the first bills submitted to the portion of the Tax period on or tenants in question after the applicable Closing Date;Closing, and shall continue to do so for six (6) months thereafter. Purchaser shall promptly remit to Seller any Delinquent Amounts provided that a deficiency in the total rent due Purchaser is not created thereby; 4.
4.4.3 monthly rents 4.3 the amount of unapplied refundable security and other fixed periodic payments pet deposits held by Seller under the Leases assigned to Purchaser in accordance together with any interest required by applicable law or required by the terms of this AgreementLeases; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;4.
4.4.4 4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that any deposits with utility companies shall remain 22043518.5 -7- the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable credited (to the extent possible, utility prorations will be handled by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel meter readings on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing.
Appears in 1 contract
Samples: Real Estate Sale Agreement
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Xxxxxxxx shall prepare a separate the draft Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days two (2) business days prior to the applicable Closing Date, which . Seller shall prepare a schedule of the prorations and adjustments and submit it to Purchaser for Purchaser’s approval two (2) business days prior to the Closing Statement must be reasonably acceptable to PurchaserDate together with invoices and documents supporting the prorations and adjustments. The following items are to be prorated, adjusted, adjusted or credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)close of business on the Closing Date and shall appear on the final Closing Statement, it being understood that for purposes of prorations and adjustments, Purchaser shall be deemed to be the applicable owner of the Property on the Closing Date, so long as all of Purchaser’s closing obligations, including but not limited to transmittal of funds representing the Purchase Price to Escrowee on or prior to the Closing Time, otherwise the Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated on the basis of the most recent available Tax bxxx ascertainable tax bill if the current bxxx bill is not then available);
4.4.2 salesall paid rents and prepaid rents, occupancyif any, roomas and when collected. Rent and all other sums which are due and payable to Seller by any tenant but uncollected as of the Closing (collectively, telecommunicationsthe “Delinquent Amounts”) shall not be prorated, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2but Purchaser shall, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable after first applying Delinquent Amounts to the portion obligations owing Purchaser for its period of ownership, cause such Delinquent Amounts to be remitted to Seller if, as and when collected. At Closing, Seller shall deliver to Purchaser a schedule of all such Delinquent Amounts. In the Tax period which event any Delinquent Amount is prior inadvertently omitted from such schedule, Seller shall not be deemed to have waived its rights to such Delinquent Amounts. Purchaser shall promptly remit to Seller any Delinquent Amounts provided that a deficiency in the applicable Closing Date and total rent due Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Dateis not created thereby;
4.4.3 monthly rents and other fixed periodic payments the amount of unapplied refundable security deposits held by Seller under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid credited to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone telephone, trash collection and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or creditedcredited (to the extent possible, utility prorations will be handled by meter readings on the day immediately preceding the Closing Date);
4.4.5 amounts due and payable by the applicable Seller under the assumed Service Contracts assigned but excluding any lump sum or up front payments paid with respect thereto for Service Contracts entered into prior to Purchaser at the applicable Closing in accordance with the terms regardless of this Agreementwhether such up front payments are made pre or post Closing;
4.4.6 assignable license and permit fees;
4.4.7 accrued on or before the Closing Date, Seller shall pay in full all leasing commissions and unpaid tour locator’s and travel agent commissionsfinder’s fees due to leasing or other agents for each residential lease entered into prior to the Closing Date for which Seller has received invoices prior to the Closing Date;
4.4.8 reimbursements due and payable by tenants after the balance (less any contested charges) Closing with respect to costs incurred by Seller prior to Closing for the provision of gas, electricity, water sewer and trash collection to the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date Property shall be assigned to adjusted and prorated on a post closing basis; and
4.4.9 other similar items of income and expenses of operation, excluding all Seller employee costs through the Closing Date. Purchaser and Seller shall undertake to re-adjust any item prorated between the applicable Seller and Purchaser as follows:
at Closing (or any item omitted therefrom) which proves to be inaccurate; provided, however, that neither party shall have any obligation to re-adjust any items (a) all room revenue posted for all after the expiration of 180 days preceding the applicable after Closing Date (except as to real estate taxes, as to which taxes a readjustment shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
occur within 30 days after actual taxes are ascertained) or (b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect subject to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as time limitations set forth in Section 4.7. Except with respect to general real estate and personal property Taxes clause (which shall be reprorated upon the issuance of the actual billsa), any proration which must be estimated at unless such items exceed $5,000.00 in the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closingaggregate.
Appears in 1 contract
Samples: Real Estate Sale Agreement
Closing Prorations and Adjustments. With respect to each The following shall be prorated and adjusted between Seller and the Purchaser as of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, except as otherwise specified:
(a) The cost of the Title Insurance, and Survey, and the documentary state, county and local transfer taxes relating to the instruments of conveyance contemplated herein shall be paid by Purchaser;
(b) Amounts paid or payable under Contracts relating to the business, if any, shall be prorated as set forth below;
(c) All assessments, general or special, which Closing Statement must are due and payable and/or levied due and payable prior to Closing, shall be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited or paid directly by Seller prior to Closing;
(d) All documentary state, county and local transfer taxes relating to the instruments of conveyance contemplated herein shall be paid by Seller; all general real estate taxes shall be prorated at the time of closing based on the most recently ascertainable real estate tax bill xxx be prorated as set forth below;
(e) All general real estate taxes shall be prorated at the time of closing based on the most recently ascertainable real estate tax bill xxx reported as set forth below;
(f) Resident rents relative to the Purchased Assets shall be prorated as set forth below;
(g) A $15,000 Payment shall be made by Seller to Purchaser and accounted for as a Purchase Price adjustment credit in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 favor of the Code)Purchaser for the upgrade of the fire protection systems at the Facilities as required by the Department of Health and Family Services for community-based residential care licenses issued after January 1, it being understood 1997; and
(h) Such other items agreed to in writing between the parties or that for are customarily prorated in transactions of this nature shall be ratably prorated. For purposes of prorations and adjustmentscalculating prorations, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable title to the portion of Facilities for the Tax year entire day upon which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which occurs. All such prorations shall be calculated made on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations actual number of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion days of the Tax period year and month which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue have elapsed as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this AgreementDate. To the extent Purchaser receives rents (including operating expensenot ascertainable at the Closing Date, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, amount of such payments, less reasonable costs of collection, prorations shall be applied first toward adjusted in cash after Closing as and when complete and accurate information becomes available but only in the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of event that such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who proration is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable greater than $250. Seller and Purchaser as follows:
(a) all room revenue posted for all agree to cooperate and use their diligent and good faith efforts to make such adjustments no later than 30 days preceding after the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as Closing. Items of income and when actually collected (less reasonable administrative and collection costs), except expense for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing period prior to 11:59 local time (with respect to and including the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with for the invoice account of Seller and items of income and expense for the period after the Closing Date will be for the account of Purchaser, all as determined by the accrual method of accounting. Bills received after Closing which the payment is invoiced (including any designation included in an invoice from internet travel providers relate to expenses incurred, services performed or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable allocable to the period prior to and also owe amounts on an account payable for goods or services rendered on or after including the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall will be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable ClosingSeller.
Appears in 1 contract
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. (i) The following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)Closing Date, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including on the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable day after the Closing Date:
4.4.1 (a) real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated on the basis of the most recent available Tax bxxx ascertainable tax xxxx if the current bxxx xxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage (b) with respect to tenant improvement costs and/or allowances or leasing commissions relating to (1) "New Leases" (as hereinafter defined) executed after the date of this Agreement and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion end of the Tax Review Period, and (2) New Leases executed during the period on between the expiration of the Review Period and Closing with the consent of Purchaser granted (or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned deemed to Purchaser be granted) in accordance with the terms of this Agreement; provided Section 10(L) below, Seller and Purchaser agree that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually receivedcosts, at which time it allowances and commissions shall be prorated over the term of any such New Lease with Seller being responsible for a portion of such costs, allowances and paid to Purchaser or commissions based on the applicable ratio of Base Rent payments received by Seller in accordance with through the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date to the total Base Rent payable over the term of the particular New Lease and, in the event that are not included as accounts receivable subject Seller has paid such costs, allowances and/or commissions prior to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated Purchaser shall reimburse Seller at Closing for the month amount of any such costs, allowances and/or commissions paid by Seller, based on the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellersabove-described proration.
(c) water, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 watersewer, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, fees and on or afteruse charges, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that and any deposits with utility companies shall remain (to the property of the applicable Seller and shall not extent possible, utility prorations will be prorated or credited;
4.4.5 amounts due and payable handled by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel meter readings on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between Date); Seller will not remove any utility deposit for five (5) days after the applicable Seller and Purchaser as follows:Closing;
(ad) all room revenue posted for all days preceding amounts due and prepayments under the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as Service Contracts;
(e) assignable license and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Sellerpermit fees; and
(bf) all room revenue posted for all days on other similar items of income and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms expenses of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced operation (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactionsrents, if any). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts .
(i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction ofii) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all All prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination unless otherwise agreed by the Independent Accountants, as set forth parties in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closingwriting.
Appears in 1 contract
Samples: Real Estate Sale Agreement (First Capital Institutional Real Estate LTD 1)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be proratedadjusted and prorated between Seller and Buyer as of 11:59 P.M. on the day preceding the Closing Date (the "Apportionment Date"), adjustedand the net amount thereof shall be added to (if such net amount is in Seller's favor) or deducted from (if such net amount is in Buyer's favor) the payment required pursuant to Section 2:
(a) Personal property taxes, credited assessments, water and sewer rents and charges, utility fees and charges, and all other fees, taxes and charges relating to or paid directly by Seller payable in cash (as the applicable Seller determines to be appropriate to comply connection with the applicable Tax rules governing transactions qualifying under Section 1031 use, occupancy, repair and maintenance, ownership and operation of the Code)Project, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date adjusted and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated prorated on the basis of the fiscal year for which assessed, or the fiscal period covered by the appropriate invoice, xxxx or statement, or based on the most recent recently available Tax bxxx if meter reading therefor. Metered utility charges for the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which period from the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is last reading date prior to the applicable Closing Date through the day before the Closing Date shall be apportioned on the basis of such last reading, but shall be reapportioned according to actual charges promptly after the first reading following the Closing Date. Unmetered water charges shall be apportioned on the basis of the charges therefor for the same period in the preceding calendar year, but applying the current rate thereto.
(b) Rents and Purchaser responsible for Hotel Taxes attributable other sums and charges (collectively, "Rents") paid or payable by Tenants under the Tenant Leases shall be adjusted and prorated to the portion extent paid by said tenants as of the Tax Closing Date. Any amount collected by Buyer or Seller after the Closing from tenants who owed Rents for periods prior to the Closing shall be applied (i) first in payment of Rents due for the period on or after the applicable Closing Date;
4.4.3 , and (ii) second, in payment of Rents due for the period before the Closing Date. Each such amount, less any costs of collection (including reasonable counsel fees) reasonably allocable thereto, shall be adjusted and prorated as provided above, and the party who receives such amount shall promptly pay over to the other party the portion thereof to which it is so entitled. Buyer shall use commercially reasonable efforts to collect all such past due Rents from tenants, and shall xxxx tenants, who owe Rents for periods prior to the Closing, on a monthly rents basis following the Closing Date until amounts due are paid or such earlier date on which Buyer ceases all xxxxxxxx to the tenant in question due to the expiration or early termination of the subject Tenant Lease. Seller shall notify Buyer promptly after a Seller receives any payment of Rents after the Closing. Any payment by a tenant in an amount less than the full amount of Rents then due and other fixed periodic payments under payable by such tenant shall be applied to Rents collectively in the Leases assigned same order of priority as to Purchaser time periods as is set forth in accordance this section (c). Based upon Buyer's review of the Rent Roll and the list of delinquent tenants, Buyer shall inform Seller prior to the expiration of the Due Diligence Period which tenants, if any, Seller shall be required to evict prior to Closing. Notwithstanding anything contained herein to the contrary, provided the lease between Seller and Xxxxx Xxxxxxx and/or South Florida Yachts is in good standing as of the Closing Date and continues to be in good standing thereafter with no late rent payments, Seller shall have the right to collect up to $100,000 in past due rent directly from said tenant. Seller shall collect the past due rent at its sole risk and shall not have any right to enforce the terms of this Agreementthe lease (i.e. eviction rights) against said tenant after Closing.
(c) Any Lease Security held by a Seller, together with accrued interest thereon wherever interest is provided for in the applicable Tenant Leases or by law; provided provided, that no proration any transferable non-cash security deposits made by tenants shall be made delivered to Buyer at the Closing, together with such instruments of transfer as may be necessary to enable Buyer to succeed to Seller's rights thereunder. Buyer shall indemnify and hold Seller harmless from and against all claims by, and liabilities to, any tenants pertaining to the application or return of the Lease Security paid over to Buyer or for which Buyer receives a credit against the Purchase Price.
(d) Charges and transferable deposits under transferable assumed Operating Contracts. Buyer shall pay the termination fee for any Operating Contracts it elects not to assume if such agreements contain commercially reasonable terms or if such agreements are with non-affiliates of any rent Seller or of their respective principals. Seller shall pay any termination fees for any Operating Contracts not assumed by Buyer that contain commercially unreasonable terms or are with affiliates of any Seller or of their respective principals.
(e) The Purchase Price includes all food, beverages, cleaning and other revenue item which is overdue as of restaurant supplies located at the applicable Closing Date until such rent or other revenue item is actually received, Project at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreementno additional charge. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after that the applicable inventory is insufficient as of the Closing Date that are not included to continue the routine operations of the Raw Bar Space without interruption, Seller shall reimburse the Buyer for all inventory costs incurred by Buyer to achieve such level as of the Closing Date.
(f) Any funds remaining in vending and telephone machines shall be cleared by Seller prior to the Closing and such amounts retained by Seller. Seller shall retain all accounts receivable subject to Section 4.4.9, such payments, less reasonable costs and accounts payable as of collection, the Closing Date. Seller shall be applied first toward also remove all cash from any cash registers and safes at the payment in full of all rents Project on the Closing Date.
(g) All closing and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but transaction costs shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable follows: Seller shall be responsible for the payment of: (i) all Taxes documentary stamp taxes and franchise surtaxes due if any, (ii) the cost of the Survey to Buyer, (iii) the cost to record any title curative instruments, and (iv) all of Seller's attorneys fees for all guest charges preceding the applicable Closing Date, except and costs. Buyer shall be responsible for the day immediately preceding payment of: (i)the cost of recording the applicable Closing DateAssignment of the Master Lease Documents or Memoranda with respect thereto, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(bii) all room revenue posted for all days on costs associated with Buyer's due diligence regarding the Project, (iii) any documentary stamp taxes and after intangible taxes associated with any financing of the applicable Purchase Price, (iv) Buyer's attorneys fees and costs, and (v) the cost of any title insurance policy. To expedite the closing process, the parties may use the last day of the month immediately prior to Closing Date to calculate the estimated apportionment of certain items and within 60 days after Closing the parties shall be allocated to Purchaser;
4.4.9 re-prorate such items as of the Apportionment Date and pay any accounts receivable with respect to necessary adjustments. Any income received or expense incurred by a Hotel accruing prior to 11:59 local time (Seller or Buyer with respect to the applicable HotelProject after the Closing shall be promptly allocated in the manner described herein, and the parties shall promptly pay or reimburse any amount due. Within ten (10) on days after a request by either party, made not later than one year after the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained accompanied by the applicable Seller. Purchaser will deliver to the applicable Seller a statement in reasonable detail establishing (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both based on an Account Receivable and on an account payable for goods or services rendered on or information becoming available after the applicable Closing Date will be applied first in accordance with or the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf discovery of any Seller in connection with any reservation at a Hotel, errors in the form of a credit against (i.e., a reduction ofprorations made at Closing) the applicable Purchase Price payable to that such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer party is entitled to a credit under this Section 9 that was not accounted for at Closing, the other party shall pay such credit (whether in a specified dollar amount or for a specified item, net of any such as a room night or mealcredit to which such other party may then be entitled) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable requesting party pursuant to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as payment obligations set forth in this Section 4.79. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance The provisions of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 9 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Purchase and Sale Agreement (HMG Courtland Properties Inc)
Closing Prorations and Adjustments. With respect to each (i) A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required shall be prepared by Acquiror in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 Business Days Contributor for review not less than three (3) business days prior to the applicable Closing Date. For purposes of prorations, which Acquiror shall be deemed the owner of the Properties on the Closing Statement must Date. In addition to prorations and adjustments that may otherwise be reasonably acceptable to Purchaser. The provided for in this Agreement, the following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case requires) as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 (a) the full amount of the security and other deposits paid under the Leases, together with interest thereon if required by law or under the Leases, shall be credited to Acquiror;
(b) To the extent such charges are not billed directly to Tenants, water, electricity, sewer, gas, telephone and other utility charges shall be prorated based, to the extent practicable, on final meter readings and final invoices, or, in the event final readings and invoices are not available, based on the most currently available billing information, and reprorated upon issuance of final utility bills;
(c) Amounts paid or payable under any Service Contracts being assigned to Acquiror shall be prorated based, to the extent practicable, on final invoices or, in the event final invoices are not available, based on the most currently available billing information, and reprorated upon issuance of final invoices;
(d) All real estate, personal property and ad valorem taxes applicable to the Properties and levied with respect to calendar year 1998 shall be prorated on an accrual basis, as of the Closing Date, utilizing the actual final Tax Bills for the Properties for 1997 (or 1998 if available) adjusted for any announced changes in rates of taxation. Prior to or at Closing, Contributor shall pay or have paid all Tax Bills that are due and payable prior to or on the Closing Date and shall furnish evidence of such payment to Acquiror and the Title Company. Each party's respective obligations to reprorate real estate taxes shall survive the Closing and personal property Taxes shall not merge into any instrument of conveyance delivered at Closing. The taxes to be prorated (i.e., county, school, city) for each Property and the billing and accrual schedule for each such tax are set forth in Exhibit J;
(e) All assessments, in each casegeneral or special, with shall be prorated as of the applicable Seller Closing Date on a "due date" basis such that the Contributor shall be responsible for Taxes attributable to the portion any installments of the Tax year assessments which is are first due or payable prior to the applicable Closing Date and Purchaser Acquiror shall be responsible for Taxes attributable to the remainder any installments of the Tax year (assessments which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period are first due or payable on or after the applicable Closing Date;
4.4.3 monthly rents (f) Commissions of leasing and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of rental agents for any rent or other revenue item which is overdue Lease entered into as of or prior to the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject due and payable at or prior to Section 4.4.9the Closing Date, such paymentswhether with respect to base lease term, less reasonable costs of collectionfuture expansions, renewals, or otherwise, shall be applied first toward the payment paid in full of all rents at or prior to Closing by the Contributor, without contribution or proration from Acquiror;
(g) All Base Rents (as defined below) and other amounts due charges actually received, including, without limitation, all Additional Rent (as defined below), shall be prorated at Closing. At the time(s) of final calculation and collection from tenants of Additional Rent for 1998, there shall be a re-proration between Acquiror and the Contributor as to Purchaser with respect Additional Rent adjustments, which re-proration shall be paid upon Acquiror's presentation of its final accounting to periods following the applicable Contributor, certified as to accuracy by Acquiror. The party's respective obligations to reprorate Additional Rent shall survive the Closing and shall not merge into any instrument of conveyance delivered at Closing. At the Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent no "Delinquent Rents" (rents or other amounts charges which are due and owing as of the Closing) shall be prorated in favor of the Contributor. Notwithstanding the foregoing, Acquiror shall use reasonable efforts after the Closing Date to collect any Delinquent Rents due to Sellersthe Contributor from tenants. Further, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or afterClosing Date, the applicable Contributor shall continue to have the right, enforceable at its sole expense, to pursue legal action against any tenant (and any guarantors) who have defaulted, prior to the Closing Date) and fuel on hand (at cost plus sales Tax), under a Lease; provided, however, that the Contributor gives Acquiror advance written notice of its intent to pursue such action and further provided that the Contributor shall have no right to terminate any deposits with utility companies shall remain Lease (or any right to dispossess any tenant thereunder). All rents and other charges received from any tenant after the property Closing by and for the benefit of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date Acquiror shall be assigned to Purchaser applied, first, against current and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs)past due rental obligations owed to, except or for the day immediately preceding the applicable Closing Datebenefit of, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable Acquiror with respect to a Hotel those rental obligations accruing subsequent to the Closing Date (including, but not limited to, obligations to replenish any security deposit withdrawal by the Contributor or Acquiror), or any obligations accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will that the Contributor does not be transferred to Purchaser pay or for which Acquiror does not receive a credit at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property managersecond, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied delivered to the Contributor, but only to the extent of Delinquent Rents owed to, and for the benefit of, the Contributor for the period prior to the Closing Date (in no event, however, shall any other Accounts Receivable from that payorsums be paid to the Contributor to the extent it has been previously reimbursed for such default out of any security deposit);
4.4.10 (h) The Contributor and Acquiror acknowledge that various of the Properties may contain certain vacancies as of the date of this Agreement and all such current vacancies are reflected on the Rent Roll (the "Vacancies"). If a new lease for any outstanding deposits or advance payments received such Vacancy ("Vacancy Lease") is executed prior to Closing and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at such Vacancy Lease have been approved by Acquiror, then the applicable Contributor and Acquiror shall each Hotelbear a pro rata share, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable tenant improvement costs and brokerage commission attributable to the Seller Vacancy Lease (the "Vacancy Lease Costs"). The Contributor's proportionate share of the Vacancy Lease Costs shall be based on that owns portion of the applicable Hotel (Sellers Vacancy Lease's term that elapses prior to Closing and Acquiror's proportionate share shall perform, or cause to be performed, based on that portion of the Vacancy Lease's term that remains unexpired as of the Closing Date. The Contributor shall pay all Vacancy Lease Costs and Acquiror shall reimburse the Contributor for its proportionate share of such Vacancy Lease Costs by way of an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) adjustment in the presence Contribution Consideration. In the event that this Agreement is terminated prior to Closing, then Acquiror shall have no liability or obligation with respect to any Vacancy Lease or any Vacancy Lease Costs.
(i) Such other items that are customarily prorated in transactions of a representative this nature shall be ratably prorated.
(ii) For purposes of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel calculating prorations, Acquiror shall be deemed to have been sold be in title to Purchaser the Properties, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire Closing Date. All such prorations shall become be made on the property of Purchaser and the amount basis of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers actual number of hotel properties in the location days of the applicable Real Property. The Purchase Price year and month that shall be further adjusted at each have elapsed as of the Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7Date. Except with respect to general real estate and personal property Taxes (which shall taxes that are to be reprorated upon the issuance of the actual bills)as aforesaid, any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 within ninety (90) days after the applicable Closing Date; otherwise, otherwise all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery The provisions of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 sentence shall survive each applicable the Closing.
Appears in 1 contract
Samples: Contribution Agreement (American Real Estate Investment Corp)
Closing Prorations and Adjustments. With respect to each Statements of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and other adjustments required shall be prepared by Seller in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 Business Days for review and approval not less than three (3) business days prior to the applicable Closing Date. For purposes of prorations, which Purchaser shall be deemed the owner of the Property on the Closing Statement must Date. In addition to prorations and other adjustments that may otherwise be reasonably acceptable to Purchaser. The provided for in this Agreement, the following items are to be prorated, prorated or adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case may require, as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 (i) If not paid by the Tenant pursuant to the Lease, real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated initially prorated on the basis of the most recent available Tax bxxx if ascertainable xxxx, but subject to reproration upon issuance of the current bxxx is not then availableactual xxxx therefor to effectuate the actual proration), provided that Seller shall pay prior to Closing or give Purchaser a credit at Closing for, the amount of all installments of special assessments levied prior to Closing and which are payable after Closing;
4.4.2 sales(ii) Seller and Purchaser shall prorate the rent, occupancycharges and other amounts payable by Tenant to Seller for the month of Closing, roomincluding expense “pass-throughs” which are due for the month of Closing. With respect to rent, telecommunications, beverage charges and similar Taxes other amounts payable by Tenant to which Seller (including expense “pass-throughs”) for months prior to the operations month of any Hotel is subject Closing (the Taxes in this Section 4.4.2, “Hotel TaxesDelinquent Amounts”), Purchaser shall make a commercially reasonable good faith effort to collect such Delinquent Amounts for a period of three months following Closing), but Purchaser shall not be required to take legal action with respect to Delinquent Amounts. At Closing, Seller shall deliver to Purchaser a schedule of all Delinquent Amounts. Notwithstanding the foregoing or any direction from Tenant to the contrary, rental and other payments received by Purchaser from Tenant shall first be applied toward Purchaser’s actual out-of-pocket costs of collection, then toward the payment of rent and other charges owed to Purchaser for periods after the Closing, and any excess monies received shall be applied toward the payment of Delinquent Amounts. Purchaser may not waive any Delinquent Amounts or modify a Lease so as to reduce amounts or charges owed under Lease for any period in each casewhich Seller is entitled to receive a share of charges or amounts, with without first obtaining the applicable written consent of Seller responsible and Seller shall have the right to collect same after Closing. Purchaser shall make year-end reconciliations of reimbursements owed by Tenant under the Lease to the landlord thereunder of the Tenant’s share of property taxes and assessments, insurance premiums, common area maintenance and other expenses related to the operation of the Property for Hotel Taxes attributable the calendar year 2015 (collectively, “Reimbursable Tenant Expenses”). In order to enable Purchaser to make any year-end reconciliations of Reimbursable Tenant Expenses for calendar year 2015, Seller shall deliver to Purchaser, in writing, within sixty (60) days after the Closing Date, the Reimbursable Tenant Expenses actually paid or incurred by Seller for the portion of the Tax calendar year 2015 during which Seller owned the Property (“Seller’s Actual Reimbursable Tenant Expenses”) and the Tenant reimbursements for such Reimbursable Tenant Expenses actually paid to Seller by Tenant for the portion of the calendar year 2015 during which Seller owned the Property (“Seller’s Actual Tenant Reimbursements”). On or before March 31, 2016, Purchaser shall deliver to Seller a reconciliation statement (the “Reconciliation Statement”) setting forth (i) the Actual Reimbursable Tenant Expenses paid or incurred during calendar year 2015, (ii) the Actual Tenant Reimbursements actually paid in calendar year 2015, and (iii) a calculation of the difference between the two (i.e., establishing that the Actual Reimbursable Tenant Expenses were either more or less than the Actual Tenant Reimbursements for the calendar year 2015), with Purchaser utilizing the information delivered to Purchaser by Seller related to the period of the calendar year 2015 which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable Date. Any amount due Seller pursuant to the portion of foregoing calculation (in the Tax event Seller’s Actual Tenant Reimbursements for the period on January 1 to the date prior to Closing are less than Seller’s Actual Reimbursable Tenant Expenses for the same period) or after Purchaser (in the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under event the Leases assigned to Purchaser in accordance with Actual Tenant Reimbursements are more than the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue Actual Reimbursable Tenant Expenses), as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collectioncase may be, shall be applied first toward the payment in full of all rents and other amounts due to paid by Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five fourteen (14) business days after Purchaser has collected such sums from any tenant who owes same, or if Seller owes Purchaser for any such sum, Seller shall pay to Purchaser within fourteen (14) business days after delivery of the Reconciliation Statement to Seller, all such sums owed by Seller to Purchaser. If Purchaser is paid any such amount by Seller, Purchaser thereafter shall be obligated to promptly remit the applicable portion to the Tenant entitled thereto. If Purchaser has transferred its interest in the Property to a successor-in-interest or assignee prior to such date, then, on or before the transfer of its interest in the Property, Purchaser shall (i) in writing expressly obligate such successor-in-interest or assignee to be bound by the provisions of this Section, and (ii) deliver written notice of such transfer to Seller, and thereafter Seller shall make the deliveries specified above to Purchaser’s receipt successor-in-interest or assignee. Seller’s Reconciliation Statement shall be final and binding for purposes of such amountsthis Contract;
4.4.4 (iii) the full amount of the security deposit, paid under the Lease, if any, and not theretofore applied, together with interest thereon to the extent any interest is required by law or otherwise to be paid to the Tenant, shall be delivered by Seller to Purchaser on the date of Closing. Prior to the Closing, Seller shall not apply the security deposit;
(iv) water, electric, telephone and all other utility and fuel charges (not paid by the Tenant under the Lease shall be prorated ratably on the basis of the number of days in each applicable bxxx occurring prior to, last ascertainable bills (and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property reprorated upon receipt of the applicable actual bills or invoices) unless final meter readings and final invoices can be obtained. To the extent practicable, if Tenant does not pay the water, electric, telephone and other utility charges pursuant to the Lease, Seller and shall cause meters for utilities to be read not be prorated or creditedmore than one (1) business day prior to the date of Closing;
4.4.5 (v) amounts due and payable by the applicable Seller paid or owing under the any Assumed Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this AgreementContracts, if any;
4.4.6 (vi) assignable license and permit fees;
4.4.7 accrued (vii) other expenses of operation and unpaid tour and travel agent commissionssimilar items;
4.4.8 the balance (less any contested chargesviii) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes leasing commissions and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser other leasing costs due and one-half payable prior to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Effective Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on Lease. Purchaser shall be responsible for all leasing commissions and other leasing costs attributable to the day immediately preceding Lease or the applicable Closing Date (“Accounts Receivable”) renewal, extension or expansion of the Lease due and payable after the Effective Date. If Seller has, prior to the Closing, paid any leasing commissions or other leasing costs which are Purchaser’s responsibility hereunder, Seller will not be transferred to receive a credit for same from Purchaser at such the Closing, but rather will be retained by the applicable Seller. Purchaser will deliver shall have no obligation to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of pay for any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller leasing commissions in connection with any reservation at a Hotel, in the form initial terms of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such SellerLease. This subsection shall survive Closing;
4.4.11 any gift certificate (ix) The cost of all Tenant improvement work owed or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, owed in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance connection with the terms current term of this Agreement;
4.4.13 all cash on hand the Lease existing as of the date hereof (collectively “Seller TI Work Payable”) shall be the responsibility of Seller, and shall be paid in full by Seller at each Hotelor prior to Closing. To the extent not completed prior to Closing, with Purchaser shall agree to complete such cash retained by Purchaser Seller TI Work Payable, and to pay the cost of such Tenant improvement work, and the amount of the same increasing the applicable Purchase Price payable due Seller hereunder shall be reduced by the cost of such Seller TI Work Payable. In the event the costs of any portion of the Seller TI Work Payable is not determinable as of the Closing Date, the amount of the Purchase Price otherwise to be paid hereunder shall be reduced by Purchaser and Seller making a reasonable estimate of the costs of such Seller TI Work Payable (the “Holdback”). To the extent the final costs paid by Purchaser for Seller TI Work Payable is more or less than the Holdback, Purchaser and Seller agree that the Purchase Price will be increased or decreased, as the case may be, and Seller shall pay Purchaser the amount by which the sum of the Holdback is less than the actual cost of the Seller TI Work Payable and Purchaser will pay Seller the amount by which the Holdback is more than the actual cost of the TI Work Payable; and
(x) All obligations to pay Tenant improvement work owed or to be owed in connection with extension or renewal terms of the Lease shall be paid by Purchaser when due after the Closing Date without an adjustment to the Seller that owns Purchase Price. Notwithstanding the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money andforegoing, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect portion of the operation term of a Hotel the Lease for which Purchaser shall be deemed pay the Tenant improvement cost in connection therewith occurs prior to have been sold to Purchaser and shall become the property of Purchaser and Closing Date, the amount of the same increasing the applicable Purchase Price will be reduced by a pro rata share of such cost based upon the percentage of such term (exclusive of any renewal options) which occurs prior to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7Date. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), and expense “pass throughs” (which shall be trued up within the sixty (60) day period set forth above) any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing Date; otherwiseDate with any refunds payable to Seller or Purchaser to be made as soon as practicable after such amounts are determined, otherwise all prorations shall be final. No later than 350 Amounts on deposit with utility companies shall be disclosed to Purchaser within ten (10) days after each Closing Datethe Effective Date and shall not be prorated; provided, however, that promptly following the Closing, Purchaser shall prepare and deliver to Sellers a final Closing Statement substitute its own deposit for any amounts on deposit with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents utility companies and shall be afforded the opportunity refund to present to the Independent Accountants Seller any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination portion of Seller’s deposit which is refunded by the Independent Accountantsutility company. The rights, as set forth covenants and obligations contained in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iiithis Paragraph 5(c) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Purchase and Sale Agreement
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Seller shall prepare a separate Closing Statement statement of the prorations and adjustments required by this Agreement with respect to(the “Closing Statement”), as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser for approval at least 10 Business Days ten (10) business days prior to the applicable Closing Date. Except as otherwise provided below, which Closing Statement must be reasonably acceptable to Purchaser. The following the items listed below are to be prorated, adjusted, credited equitably prorated or paid directly by Seller in cash (adjusted as of 12:01 a.m. local time at the applicable Seller determines to be appropriate to comply with Real Property on the applicable Tax rules governing transactions qualifying under Section 1031 of the Code)Closing Date, it being understood that for purposes of prorations and adjustments, Purchaser shall be deemed the applicable owner of the Property on such day and Seller shall be deemed to be the owner of the applicable Property prior to but not including such day. The provisions of this Section 4.3 that contemplate post-Closing adjustments shall survive Closing for the applicable period of time set forth in this Section 4.3.
4.3.1 Real estate and personal property taxes and assessments and other state, county and municipal taxes (other than conveyance or other transfer taxes), charges and assessments, as well as any assessments by private covenant constituting a lien or charge on the Property (collectively, “Real Estate Taxes”) shall be prorated at Closing for the then-current fiscal year of the applicable taxing authority in which the Closing Date occurs (the “Current Tax Year”), such that Seller shall be responsible for all Real Estate Taxes that are attributable to the period prior to the Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for all Real Estate Taxes that are attributable to the period from and after the Closing Date. Notwithstanding the foregoing, in the event and to the extent that the tenants under the Leases have paid, shall pay or are required to pay any portion of the Tax year which is prior Real Estate Taxes directly to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 salesrelevant taxing authority or authorities, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the such portion of the Tax period Real Estate Taxes shall not be prorated. Notwithstanding anything contained herein, any refunds or rebates of Real Estate Taxes which is prior to accrued before the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of Seller, and Seller shall have the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned right to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less pursue any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong appeals filed prior to the applicable Seller but shall be paid over Effective Date of Real Estate Taxes attributable to such Seller only as and when actually collected Seller’s period of ownership of ImanageDB:4161238.11 the Property (less reasonable administrative and collection costs), except including any appeal of Real Estate Taxes for the day immediately preceding year in which Closing occurs) with respect to tax assessments for the applicable Property. Seller may also file appeals for the 2018-2019 Real Property Tax year if the deadlines for such appeals fall before the Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable provided that upon Closing Seller shall be responsible upon Purchaser’s request either dismiss such appeals or cooperate with Purchaser’s substitution for all Taxes and franchise fees for all guest charges preceding Seller in the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Sellerappeals. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance cooperate with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation such appeal at a Hotelno out of pocket cost to Purchaser. If Seller is successful in any such tax appeal related to the fiscal tax period in which Closing occurs, any rebates or refunds shall be apportioned between the parties in the form same proportion as the proration of a credit against (i.e.Real Estate Taxes set forth on the Closing Statement executed by the parties at Closing. Seller will also calculate and refund to the Tenants’ accounts credits and charges if and where applicable. Seller will provide copies of this calculation, a reduction of) along with copies of the applicable Purchase Price payable statements, to such Purchaser, along with any balance due to Purchaser. If Purchaser is successful in any appeal of Real Estate Taxes which accrued during Seller;
4.4.11 ’s period of ownership of the Property, any gift certificate rebates or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles refunds shall be apportioned between the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, parties in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues proportion as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more proration of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which Estate Taxes set forth on the Closing Statement executed by the parties at Closing. Purchaser will also calculate and apply credits and charges to Tenant’s accounts, where applicable. Purchaser will provide copies of such this calculation, along with copies of the statements, to Seller, together with any balance due to Seller. Either party that is successful in any appeal of Real Properties occurs (such periodsEstate Taxes contemplated by this Section 4.3.1 shall be able to deduct its actual, “Purchaser’s Period”)documented, but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense costs paid to Sellersnon-affiliated third parties in connection with the tax appeal from the rebates or refunds received before apportionment of the balance thereof. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with The provisions of this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 4.3.1 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Alexander & Baldwin, Inc.)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Seller shall prepare a separate Closing Statement statement of the prorations and adjustments required by this Agreement with respect to(the “Closing Statement”), as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser for approval at least 10 Business Days ten (10) business days prior to the applicable Closing Date. Except as otherwise provided below, which Closing Statement must be reasonably acceptable to Purchaser. The following the items listed below are to be prorated, adjusted, credited equitably prorated or paid directly by Seller in cash (adjusted as of 12:01 a.m. local time at the applicable Seller determines to be appropriate to comply with Real Property on the applicable Tax rules governing transactions qualifying under Section 1031 of the Code)Closing Date, it being understood that for purposes of prorations and adjustments, Purchaser shall be deemed the applicable owner of the Property on such day and Seller shall be deemed to be the owner of the applicable Property prior to but not including such day. The provisions of this Section 4.3 that contemplate post-Closing adjustments shall survive Closing for the applicable period of time set forth in this Section 4.3.
1. Real estate and personal property taxes and assessments and other state, county and municipal taxes (other than conveyance or other transfer taxes), charges and assessments, as well as any assessments by private covenant constituting a lien or charge on the Property (collectively, “Real Estate Taxes”) shall be prorated at Closing for the then-current fiscal year of the applicable taxing authority in which the Closing Date occurs (the “Current Tax Year”), such that Seller shall be responsible for all Real Estate Taxes that are attributable to the period prior to the Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for all Real Estate Taxes that are attributable to the period from and after the Closing Date. Notwithstanding the foregoing, in the event and to the extent that the tenants under the Leases have paid, shall pay or are required to pay any portion of the Tax year which is prior Real Estate Taxes directly to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 salesrelevant taxing authority or authorities, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the such portion of the Tax period Real Estate Taxes shall not be prorated. Notwithstanding anything contained herein, any refunds or rebates of Real Estate Taxes which is prior to accrued before the applicable Closing 1379426.v9 ImanageDB:4161238.11 Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of Seller, and Seller shall have the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by right to pursue any appeals filed prior to the applicable Seller under the Service Contracts assigned Effective Date of Real Estate Taxes attributable to Purchaser at the applicable Closing in accordance with the terms Seller’s period of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) ownership of the open and unpaid account Property (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except including any appeal of Real Estate Taxes for the day immediately preceding year in which Closing occurs) with respect to tax assessments for the applicable Property. Seller may also file appeals for the 2018-2019 Real Property Tax year if the deadlines for such appeals fall before the Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable provided that upon Closing Seller shall be responsible upon Purchaser’s request either dismiss such appeals or cooperate with Purchaser’s substitution for all Taxes and franchise fees for all guest charges preceding Seller in the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Sellerappeals. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance cooperate with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation such appeal at a Hotelno out of pocket cost to Purchaser. If Seller is successful in any such tax appeal related to the fiscal tax period in which Closing occurs, any rebates or refunds shall be apportioned between the parties in the form same proportion as the proration of a credit against (i.e.Real Estate Taxes set forth on the Closing Statement executed by the parties at Closing. Seller will also calculate and refund to the Tenants’ accounts credits and charges if and where applicable. Seller will provide copies of this calculation, a reduction of) along with copies of the applicable Purchase Price payable statements, to such Purchaser, along with any balance due to Purchaser. If Purchaser is successful in any appeal of Real Estate Taxes which accrued during Seller;
4.4.11 ’s period of ownership of the Property, any gift certificate rebates or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles refunds shall be apportioned between the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, parties in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues proportion as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more proration of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which Estate Taxes set forth on the Closing Statement executed by the parties at Closing. Purchaser will also calculate and apply credits and charges to Tenant’s accounts, where applicable. Purchaser will provide copies of such this calculation, along with copies of the statements, to Seller, together with any balance due to Seller. Either party that is successful in any appeal of Real Properties occurs (such periodsEstate Taxes contemplated by this Section 4.3.1 shall be able to deduct its actual, “Purchaser’s Period”)documented, but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense costs paid to Sellersnon-affiliated third parties in connection with the tax appeal from the rebates or refunds received before apportionment of the balance thereof. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with The provisions of this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 4.3.1 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Alexander & Baldwin, Inc.)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Seller shall prepare a separate the Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days one (1) business day prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, adjusted or credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)close of business on the Closing Date, it being understood that for purposes of prorations and adjustments, Purchaser shall be deemed to be the applicable owner of the Property as of 12:00 a.m. on the Closing Date and Seller shall be deemed to be the owner of the applicable Property prior to but not including through 11:59 p.m. on the applicable Closing Date and Purchaser shall be deemed to be day preceding the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated on the basis of the most recent available Tax bxxx tax xxxx if the current bxxx xxxx is not then available, and in any case, calculated taking into account the 4% discount available for payment of real estate taxes prior to December; provided, however, in the event the Closing takes place after the period of time for the 4% discount has expired, the discount shall be applied only in the event Seller took advantage of such discount when it paid the real estate taxes);
4.4.2 salesthe rent payable by tenants under the Leases; provided, occupancyhowever, roomthat rent and all other sums which are due and payable to Seller by any tenant but uncollected as of the Closing (collectively, telecommunicationsthe “Delinquent Amounts”) shall not be adjusted, beverage but Purchaser shall cause such Delinquent Amounts to be remitted to Seller if, as and similar Taxes when collected. At Closing, Seller shall deliver to which Purchaser a schedule of all such Delinquent Amounts. In the operations of event any Hotel Delinquent Amount is subject (inadvertently omitted from such schedule, Seller shall not be deemed to have waived its rights to such Delinquent Amount. Purchaser shall include any and all Delinquent Amounts in the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable first bills submitted to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or tenants in question after the applicable Closing DateClosing, and shall continue to do so for twelve (12) months thereafter. Purchaser shall promptly remit to Seller any Delinquent Amounts provided that a deficiency in the total rent due Purchaser is not created thereby;
4.4.3 monthly rents and other fixed periodic payments the amount of unapplied refundable security deposits held by Seller under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountsLeases;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or creditedcredited (to the extent possible, utility prorations will be handled by meter readings on the day immediately preceding the Closing Date);
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned but excluding any lump sum or up front payments paid to Purchaser at the applicable Closing in accordance Seller with the terms of this Agreementrespect thereto;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on 4.4.7 other similar items of income and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms expenses of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7operation. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing Date; otherwise, subject to the provisions of Section 4.4.2 above, all prorations shall be final. No later than 350 days after each Closing DateIn addition, Purchaser notwithstanding anything to the contrary contained in this Section 4, Seller reserves the right (i) to meet with governmental officials and to contest any reassessment governing or affecting Seller’s obligations under Section 4.4.1 above, and (ii) to contest any assessment of the Property or any portion thereof and to attempt to obtain a refund for any taxes previously paid. Seller shall prepare and deliver to Sellers a final Closing Statement retain all rights with respect to such Closing; provided that if Purchaser shall fail any refund of taxes applicable to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as any period prior to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions . The obligations of Purchaser and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Seller under Section 4.4 of this Agreement shall survive each applicable the Closing.
Appears in 1 contract
Samples: Real Estate Sale Agreement (Paladin Realty Income Properties Inc)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. (i) The following items are to be prorated, adjusted, credited prorated or paid directly adjusted by Seller in cash the parties (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)Closing Date, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including on the applicable day preceding the Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on the Closing Date; provided, however, that if Seller receives the Purchase Price in immediately available funds after 2:00 p.m., Chicago time on the Closing Date, then, for purposes of prorations and following adjustments, Seller shall be deemed the applicable owner of the Property on the Closing Date and Purchaser shall be deemed the owner of the Property on the day after the Closing Date:
4.4.1 (a) real estate and personal property taxes and assessments ("Taxes") assessed for 1998 and payable in 1999 shall be paid by Seller at or prior to Closing or credited to Purchaser. Taxes assessed for 1999 and assessmentspayable in 2000 shall be prorated based on the most recent ascertainable tax xxxx if the current xxxx is not then available and, in each caseall events, with subject to reproration as described in Section 4.C.[iv] upon receipt of the final xxxx;
(b) the "minimum" or "base" rent payable by tenants under the Leases ("Base Rent") and Operating Expense Reimbursements (as defined in Section 4(c)(ii)) payable by tenants under the Leases; provided, however, that rent and all other sums which are due and payable to Seller as of Closing but uncollected as of the Closing shall not be adjusted, but Purchaser shall cause the rent and other sums for the period prior to Closing to be remitted to Seller if, as and when collected, subject, however, to the remaining provisions of this Section 4.C.(i)(b). At Closing, Seller shall deliver to Purchaser a schedule (the "Closing Delinquency Schedule") of all such past due but uncollected rent and other sums owed by tenants, (collectively, the "Past Due Rents"). Purchaser shall promptly remit to Seller any such Past Due Rents paid by tenants set forth on the Closing Delinquency Schedule, but only if the applicable Seller responsible tenants are otherwise current in the payment of all obligations due for Taxes the period following Closing. The amount of any Past Due Rents to be paid by any tenant shall be paid in accordance with such tenant's Lease as now existing (Purchaser hereby covenanting and agreeing not to modify the Leases after Closing to change the date and/or method for payment of amounts attributable to the portion period prior to Closing). Seller shall not be permitted (during the six month period following Closing) to institute or continue any collection actions against any tenants whose Lease has not terminated or any tenants that are still in possession of the Tax year which is prior premises demised under their Lease.
(c) Percentage rent shall be prorated as follows: to the applicable extent not set forth on the Closing Date Delinquency Schedule, "percentage" or "overage" rent, shall be prorated as follows: percentage rent as and Purchaser responsible for Taxes attributable to the remainder when collected shall be prorated based upon each party's pro rata share of the Tax sales for the Tenant's fiscal year (for determination of sales under the Lease) in which prorations Closing occurs. Prorations shall be calculated on the basis of a per diem (number of days) method of allocation. Upon receipt by Purchaser, Purchaser shall furnish to Seller copies of all sales reports from tenants relative to the most recent percentage rent, including, without limitation, all sales reports with respect to any tenants whose lease years have expired as of the Closing but whose sales reports were not available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage on Closing and similar Taxes to which the operations sales reports of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or tenants whose lease years expire after the applicable Closing Date;
4.4.3 monthly rents Closing, and other fixed periodic payments under the Leases assigned to Purchaser amount of any percentage rent shall be paid in accordance with such tenant's Lease as now existing, and Purchaser shall pay to Seller a pro rata portion of such percentage rent, calculated in the terms manner provided above, promptly after the date when such rent is received from the tenant.
(d) With respect to tenant improvement costs and/or allowances or leasing commissions relating to "New Leases" (as hereinafter defined) for space which is vacant as of the date of this Agreement; provided , Seller and Purchaser agree that no proration such costs, rent abatements, allowances and commissions shall be made prorated over the term of any such New Lease with Seller being responsible for a portion of such costs, rent abatements, allowances and commissions based on the ratio of Base Rent payments received by Seller through the Closing Date to the total Base Rent payable over the term of the particular New Lease and, in the event that Seller has paid or other revenue item which is overdue incurred such costs, rent abatements, allowances and/or commissions prior to Closing, Purchaser shall reimburse Seller at Closing for the amount of any such costs, allowances and/or commissions paid by Seller, based on the above- described proration;
(e) the amount of the Security Deposits held by Seller as of the applicable Closing Date until such rent or other revenue item is actually receivedDate, if any, with Purchaser receiving a credit at which time it shall be prorated and paid to Purchaser or Closing against the applicable Seller Purchase Price in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month amount of the applicable Security Deposits held by Seller as of the Closing and thereafter the balance applied to delinquent rents or other amounts due to SellersDate, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountsif any;
4.4.4 (f) water, sewer, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, fees and on or afteruse charges, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that tax) and any deposits with utility companies shall remain (to the property of the applicable Seller and shall not extent possible, utility prorations will be prorated or credited;
4.4.5 amounts due and payable handled by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel meter readings on the day immediately preceding the applicable Closing Date shall be assigned Date);
(g) amounts due and prepayments under the Service Contracts and the Maintenance Agreement;
(h) assignable license and permit fees; and
(i) other similar items of income and expenses of operation (including but not limited to Purchaser amounts receivable or due under any reciprocal easement or similar agreement).
(ii) For purposes hereof, real estate taxes, common area maintenance, utility charges, water and prorated between sewer charges, insurance, and all other expenses for which charges are made to tenants or contributions are made by tenants under the applicable Seller Leases are referred to as "Operating Expenses", and Purchaser the amount reimbursable by tenants under the Leases for Operating Expenses are referred to as follows:"Operating Expense Reimbursements".
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller As soon as practical after Closing, but shall be paid over to such Seller only as and when actually collected in no event later than May 1, 2000 (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such ClosingTaxes, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual billsfinal xxxx for 1999 when issued in 2000), Seller and Purchaser shall, with respect to any proration which must be estimated amounts paid, prorated or adjusted at Closing pursuant to Section 4.C.(i) above based on estimates or formulae, as applicable, jointly determine and reapportion such amounts in accordance with Section 4.C.(i) above upon determination of the applicable actual costs or expenses with respect thereto. In the event that the amount credited to Purchaser by Seller at Closing shall be reprorated and finally adjusted on exceeds the date amount of the credit that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing DatePurchaser should have received had such actual amounts been available at Closing, Purchaser shall prepare and deliver promptly remit such excess amount to Sellers Seller. In the event that the amount credited to Seller by Purchaser at Closing exceeds the amount of the credit that Seller should have received, Seller shall promptly remit such excess to Purchaser. If any payment required under this Section is not made within 30 days of final calculation, such amount will thereafter bear interest at a final rate per annum equal to 4% above the then current "prime rate" announced by Bank One, Chicago, Illinois.
(b) In the event that the amount of Operating Expense Reimbursements retained by Seller as of Closing Statement with respect (net of credits to such Closing; provided that if Purchaser) is less than the amount of Operating 9 Expense Reimbursements to which Seller is entitled after calculation of Seller's share of actual Operating Expenses for the period prior to closing, Purchaser shall fail promptly remit such amounts to deliver Seller. In the event that the amount of the Operating Expense Reimbursements retained by Seller as of Closing (net of credits to Purchaser) exceeds the amount of the Operating Expense Reimbursements that Seller should have retained at Closing had the actual amounts of Operating Expenses for the period prior to Closing been available at Closing, Seller shall remit such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement excess amounts (net of amounts due Seller from the particular tenant as to which the Operating Expense applies) to Purchaser and Purchaser shall be thereafter obligated to promptly remit the applicable portion to the particular tenants entitled thereto (and Purchaser shall indemnify, defend and hold Seller, its beneficiaries, their partners, and their respective directors, officers, employees and agents, and each of them, harmless from and against any losses, claims, damages and liabilities [including, without limitation, reasonable attorneys' fees and expenses incurred in connection therewith] arising out of or resulting from Purchaser's failure to remit any amounts to tenants that Purchaser is obligated to so remit in accordance with this Section 4.C.[iii]).
(iv) If Seller has not received all Past Due Rents or other amounts owed to Seller within six months after the Closing Date, Seller, at its sole cost and expense, shall be entitled at any time after such date to commence such actions or proceedings not affecting possession or resulting in termination of the Lease in question as Seller shall desire to collect any such Past Due Rents or other amounts owed to Seller by Tenants, and Purchaser shall cooperate fully with Sellers’ efforts Seller in any such action at no cost to do Purchaser.
(v) For purposes of this Section 4.C., the same)amount of any expense credited by one party to the other shall be deemed an expense paid by that party. If within 10 days following The terms and provisions of this Section 4.C. shall survive Closing and the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations Deed.
(which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”vi) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser Seller shall have the exclusive right to seek adjustments file and prosecute and/or appeal (or to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more continue any of the Real Properties (foregoing to the extent currently in existence) any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following tax complaint for the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion and prior years. All refunds and other sums payable by reason of any such Tax tax complaint shall be the property of Seller (except to the extent relating to taxes assessed for the year of Closing, which refund applicable shall be prorated on a per diem basis). Buyer assigns to periods occurring entirely prior Seller all rights which Buyer may have to Purchaser’s Period file a tax complaint or pursue an appeal for such years. Buyer shall incur no cost or expense in connection with Seller's actions under this clause (vi). In the event Seller receives any refund or other amounts which are due to tenants of the Property in accordance with their leases, Seller shall promptly 10 remit such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating amounts to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced tenants upon receipt by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect theretoSeller. This Section 4.4 provision shall survive each applicable Closing.
Appears in 1 contract
Samples: Real Estate Sale Agreement (First Capital Institutional Real Estate LTD 4)
Closing Prorations and Adjustments. With respect to each Statements of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and other adjustments required shall be prepared by Seller in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 Business Days for review and approval not less than three (3) business days prior to the applicable Closing Date. For purposes of prorations, which Purchaser shall be deemed the owner of the Property on the Closing Statement must Date. In addition to prorations and other adjustments that may otherwise be reasonably acceptable to Purchaser. The provided for in this Agreement, the following items are to be prorated, prorated or adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case may require, as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 (i) If not paid by the Tenant pursuant to the Lease, real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated initially prorated on the basis of the most recent available Tax ascertainable bxxx, but subject to reproration upon issuance of the actual bxxx if therefor to effectuate the current bxxx is not then availableactual proration), provided that Seller shall pay prior to Closing or give Purchaser a credit at Closing for, the amount of all installments of special assessments levied prior to Closing and which are payable after Closing;
4.4.2 sales(ii) Seller and Purchaser shall prorate the rent, occupancycharges and other amounts payable by Tenant to Seller for the month of Closing, roomincluding expense “pass-throughs” which are due for the month of Closing. With respect to rent, telecommunications, beverage charges and similar Taxes other amounts payable by Tenant to which Seller (including expense “pass-throughs”) for months prior to the operations month of any Hotel is subject Closing (the Taxes in this Section 4.4.2, “Hotel TaxesDelinquent Amounts”), Purchaser shall make a commercially reasonable good faith effort to collect such Delinquent Amounts for a period of three months following Closing), but Purchaser shall not be required to take legal action with respect to Delinquent Amounts. At Closing, Seller shall deliver to Purchaser a schedule of all Delinquent Amounts. Notwithstanding the foregoing or any direction from Tenant to the contrary, rental and other payments received by Purchaser from Tenant shall first be applied toward Purchaser’s actual out-of-pocket costs of collection, then toward the payment of rent and other charges owed to Purchaser for periods after the Closing, and any excess monies received shall be applied toward the payment of Delinquent Amounts. Purchaser may not waive any Delinquent Amounts or modify a Lease so as to reduce amounts or charges owed under Lease for any period in each casewhich Seller is entitled to receive a share of charges or amounts, with without first obtaining the applicable written consent of Seller responsible and Seller shall have the right to collect same after Closing. Purchaser shall make year-end reconciliations of reimbursements owed by Tenant under the Lease to the landlord thereunder of the Tenant’s share of property taxes and assessments, insurance premiums, common area maintenance and other expenses related to the operation of the Property for Hotel Taxes attributable the calendar year 2015 (collectively, “Reimbursable Tenant Expenses”). In order to enable Purchaser to make any year-end reconciliations of Reimbursable Tenant Expenses for calendar year 2015, Seller shall deliver to Purchaser, in writing, within sixty (60) days after the Closing Date, the Reimbursable Tenant Expenses actually paid or incurred by Seller for the portion of the Tax calendar year 2015 during which Seller owned the Property (“Seller’s Actual Reimbursable Tenant Expenses”) and the Tenant reimbursements for such Reimbursable Tenant Expenses actually paid to Seller by Tenant for the portion of the calendar year 2015 during which Seller owned the Property (“Seller’s Actual Tenant Reimbursements”). On or before March 31, 2016, Purchaser shall deliver to Seller a reconciliation statement (the “Reconciliation Statement”) setting forth (i) the Actual Reimbursable Tenant Expenses paid or incurred during calendar year 2015, (ii) the Actual Tenant Reimbursements actually paid in calendar year 2015, and (iii) a calculation of the difference between the two (i.e., establishing that the Actual Reimbursable Tenant Expenses were either more or less than the Actual Tenant Reimbursements for the calendar year 2015), with Purchaser utilizing the information delivered to Purchaser by Seller related to the period of the calendar year 2015 which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable Date. Any amount due Seller pursuant to the portion of foregoing calculation (in the Tax event Seller’s Actual Tenant Reimbursements for the period on January 1 to the date prior to Closing are less than Seller’s Actual Reimbursable Tenant Expenses for the same period) or after Purchaser (in the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under event the Leases assigned to Purchaser in accordance with Actual Tenant Reimbursements are more than the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue Actual Reimbursable Tenant Expenses), as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collectioncase may be, shall be applied first toward the payment in full of all rents and other amounts due to paid by Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five fourteen (14) business days after Purchaser has collected such sums from any tenant who owes same, or if Seller owes Purchaser for any such sum, Seller shall pay to Purchaser within fourteen (14) business days after delivery of the Reconciliation Statement to Seller, all such sums owed by Seller to Purchaser. If Purchaser is paid any such amount by Seller, Purchaser thereafter shall be obligated to promptly remit the applicable portion to the Tenant entitled thereto. If Purchaser has transferred its interest in the Property to a successor-in-interest or assignee prior to such date, then, on or before the transfer of its interest in the Property, Purchaser shall (i) in writing expressly obligate such successor-in-interest or assignee to be bound by the provisions of this Section, and (ii) deliver written notice of such transfer to Seller, and thereafter Seller shall make the deliveries specified above to Purchaser’s receipt successor-in-interest or assignee. Seller’s Reconciliation Statement shall be final and binding for purposes of such amountsthis Contract;
4.4.4 (iii) the full amount of the security deposit, paid under the Lease, if any, and not theretofore applied, together with interest thereon to the extent any interest is required by law or otherwise to be paid to the Tenant, shall be delivered by Seller to Purchaser on the date of Closing. Prior to the Closing, Seller shall not apply the security deposit;
(iv) water, electric, telephone and all other utility and fuel charges (not paid by the Tenant under the Lease shall be prorated ratably on the basis of the number of days in each applicable bxxx occurring prior to, last ascertainable bills (and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property reprorated upon receipt of the applicable actual bills or invoices) unless final meter readings and final invoices can be obtained. To the extent practicable, if Tenant does not pay the water, electric, telephone and other utility charges pursuant to the Lease, Seller and shall cause meters for utilities to be read not be prorated or creditedmore than one (1) business day prior to the date of Closing;
4.4.5 (v) amounts due and payable by the applicable Seller paid or owing under the any Assumed Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this AgreementContracts, if any;
4.4.6 (vi) assignable license and permit fees;
4.4.7 accrued (vii) other expenses of operation and unpaid tour and travel agent commissionssimilar items;
4.4.8 the balance (less any contested chargesviii) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes leasing commissions and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser other leasing costs due and one-half payable prior to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Effective Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on Lease. Purchaser shall be responsible for all leasing commissions and other leasing costs attributable to the day immediately preceding Lease or the applicable Closing Date (“Accounts Receivable”) renewal, extension or expansion of the Lease due and payable after the Effective Date. If Seller has, prior to the Closing, paid any leasing commissions or other leasing costs which are Purchaser’s responsibility hereunder, Seller will not be transferred to receive a credit for same from Purchaser at such the Closing, but rather will be retained by the applicable Seller. Purchaser will deliver shall have no obligation to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of pay for any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller leasing commissions in connection with any reservation at a Hotel, in the form initial terms of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such SellerLease. This subsection shall survive Closing;
4.4.11 any gift certificate (ix) The cost of all Tenant improvement work owed or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, owed in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance connection with the terms current term of this Agreement;
4.4.13 all cash on hand the Lease existing as of the date hereof (collectively “Seller TI Work Payable”) shall be the responsibility of Seller, and shall be paid in full by Seller at each Hotelor prior to Closing. To the extent not completed prior to Closing, with Purchaser shall agree to complete such cash retained by Purchaser Seller TI Work Payable, and to pay the cost of such Tenant improvement work, and the amount of the same increasing the applicable Purchase Price payable due Seller hereunder shall be reduced by the cost of such Seller TI Work Payable. In the event the costs of any portion of the Seller TI Work Payable is not determinable as of the Closing Date, the amount of the Purchase Price otherwise to be paid hereunder shall be reduced by Purchaser and Seller making a reasonable estimate of the costs of such Seller TI Work Payable (the “Holdback”). To the extent the final costs paid by Purchaser for Seller TI Work Payable is more or less than the Holdback, Purchaser and Seller agree that the Purchase Price will be increased or decreased, as the case may be, and Seller shall pay Purchaser the amount by which the sum of the Holdback is less than the actual cost of the Seller TI Work Payable and Purchaser will pay Seller the amount by which the Holdback is more than the actual cost of the TI Work Payable; and
(x) All obligations to pay Tenant improvement work owed or to be owed in connection with extension or renewal terms of the Lease shall be paid by Purchaser when due after the Closing Date without an adjustment to the Seller that owns Purchase Price. Notwithstanding the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money andforegoing, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect portion of the operation term of a Hotel the Lease for which Purchaser shall be deemed pay the Tenant improvement cost in connection therewith occurs prior to have been sold to Purchaser and shall become the property of Purchaser and Closing Date, the amount of the same increasing the applicable Purchase Price will be reduced by a pro rata share of such cost based upon the percentage of such term (exclusive of any renewal options) which occurs prior to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7Date. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), and expense “pass throughs” (which shall be trued up within the sixty (60) day period set forth above) any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing Date; otherwiseDate with any refunds payable to Seller or Purchaser to be made as soon as practicable after such amounts are determined, otherwise all prorations shall be final. No later than 350 Amounts on deposit with utility companies shall be disclosed to Purchaser within ten (10) days after each Closing Datethe Effective Date and shall not be prorated; provided, however, that promptly following the Closing, Purchaser shall prepare and deliver to Sellers a final Closing Statement substitute its own deposit for any amounts on deposit with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents utility companies and shall be afforded the opportunity refund to present to the Independent Accountants Seller any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination portion of Seller’s deposit which is refunded by the Independent Accountantsutility company. The rights, as set forth covenants and obligations contained in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iiithis Paragraph 5(c) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Purchase and Sale Agreement (United Realty Trust Inc)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate the Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 three (3) Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, adjusted or credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Codeappropriate), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable portion of the Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable portion of the Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes taxes attributable to the portion of the Tax tax year which is prior to the applicable Closing Date and the Purchaser responsible for Taxes taxes attributable to the remainder of the Tax tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx tax xxxx if the current bxxx xxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes taxes to which the operations of any Hotel is subject (the Taxes taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes taxes attributable to the portion of the Tax tax period which is prior to the applicable Closing Date and the Purchaser responsible for Hotel Taxes taxes attributable to the portion of the Tax tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this AgreementLeases; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9Date, such payments, less reasonable costs of collection, payments shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five (5) days after Purchaser’s receipt of such amounts;
4.4.4 if the Debt Assumption is consummated, interest and other charges (other than principal) under the Assumed Debt that have accrued with respect to periods prior to the Closing Date shall be the responsibility of the applicable Sellers of the Encumbered Hotel Assets, and interest and other charges under the Assumed Debt in respect of any period after and including the Closing Date shall be the responsibility of Purchaser;
4.4.5 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx xxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 4.4.6 amounts due and payable by the applicable Seller under the Assumable Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms and any unamortized portion of this Agreementany lump sum or up-front payments paid by such Seller under Assumable Service Contracts;
4.4.6 4.4.7 assignable license and permit fees;
4.4.7 4.4.8 rents and other periodic charges under Ground Leases;
4.4.9 accrued and unpaid tour and travel agent commissions;
4.4.8 4.4.10 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller (but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 4.4.11 any accounts receivable outstanding as of Closing shall be assigned to Purchaser, and the amount of the same increasing the Purchase Price payable to the Seller to which such accounts receivable relate; provided, however, that the increase in the Purchase Price with respect to a Hotel accruing prior to 11:59 local time accounts receivable which are (with respect to the applicable Hotela) on the day immediately preceding the applicable outstanding for thirty (30) days or less at Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first one hundred percent (100%) of such receivables, (b) outstanding for a period between thirty-one (31) to current amounts sixty (i.e., payments not 60) days at Closing shall be ninety percent (90%) of such receivables; and (c) outstanding for a period between sixty-one (61) to ninety (90) days at Closing shall be seventy-five percent (75%) of such receivables; and there shall be no increase in the Purchase Price for any accounts receivable which are more than 60 ninety (90) days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payoroutstanding at Closing;
4.4.10 4.4.12 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 4.4.13 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 4.4.14 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this AgreementLeases;
4.4.13 4.4.15 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx xxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);; and
4.4.14 any utility deposits with any utility 4.4.16 if the Debt Assumption is consummated, all cash and cash equivalents held in respect of the operation of a Assumed Debt and not released to the Sellers owning the Encumbered Hotel shall be deemed Assets at or prior to have been sold the Closing (such as escrows and reserves for taxes, insurance, FF&E reserves, etc.) (but the rights with respect to Purchaser and shall become which are assigned to the property of Purchaser Purchaser) and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns applicable Sellers owning the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7Encumbered Hotel Assets. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills)), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 ninety (90) days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 eighty-five (85) days after each the Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such ClosingStatement; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350eighty-five (85) day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 Within ten (10) days following of the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to and Purchaser shall agree on the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), and such amount shall be paid over to Sellers Purchaser or PurchaserSellers, as applicable, within three (3) Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days As of the applicable party’s receipt of such written objection noticeEffective Date, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to may be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek seeking adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) ). Sellers retain the right to commence additional Tax Appeals with respect only to periods occurring following entirely prior to the Tax Closing Date (other than the tax year in which the Closing occurs) (such period, the “Sellers’ Period”); provided, however, that with respect to any such Tax Appeals undertaken after the Effective Date, Seller shall provide Purchaser with prior written notice thereof. Seller reserves the right to meet with government officials and to contest any assessment or reassessment governing or affecting the Real Properties’ real estate ad valorem and/or personal property taxes solely for any Sellers’ Period and to attempt to obtain a refund for any taxes previously paid (and, if the applicable taxing authority issues any credit to Purchaser on such tax bills in connection therewith, Purchaser shall pay over any such amounts to the applicable Sellers within three (3) Business Days of Purchaser’s receipt of such Real Properties amounts). Purchaser shall have the exclusive right to commence Tax Appeals with respect to periods after the Closing Date and with respect to periods in which the Closing Date occurs (such periods, the “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “the Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall (a) Purchaser will take all actions and execute and deliver all documents Sellers reasonably request in order to enable Sellers to continue to pursue the Tax Appeals solely with respect to the Sellers’ Period at no out of pocket expense to Purchaser, and (b) Sellers will take all such actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to the Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Purchaser and Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser Sellers or Purchaser, as applicable, in accordance with this paragraph and collecting the amount of any Tax tax refund with respect thereto. This Section 4.4 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Real Estate Sale Agreement (American Realty Capital Hospitality Trust, Inc.)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Seller shall prepare a separate the Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days two (2) business days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, adjusted or credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)close of business on the Closing Date, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including on the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and as of the date following the applicable Closing Date:
4.4.1 real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes assessments attributable to the portion of year in which the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year occurs (which prorations shall be calculated on the basis of the most recent available Tax bxxx tax xxxx if the current bxxx xxxx is not then available), it being understood by the parties hereto that all special assessments assessed against the Property and due and payable prior to the Closing Date shall be the sole responsibility of Seller;
4.4.2 salesthe rent and other sums (other than as set forth in Section 4.4.3 below) payable by tenants under the Leases; provided, occupancyhowever, roomthat rent and all other sums which are due and payable to Seller by any tenant but uncollected as of the Closing (collectively, telecommunicationsthe “Delinquent Amounts”) shall not be adjusted, beverage but Purchaser shall cause such Delinquent Amounts to be remitted to Seller if, as and similar Taxes when collected. At Closing, Seller shall deliver to which Purchaser a schedule of all such Delinquent Amounts. In the operations of event any Hotel Delinquent Amount is subject (inadvertently omitted from such schedule, Seller shall not be deemed to have waived its rights to such Delinquent Amount. Purchaser shall include any and all Delinquent Amounts in the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable first bills submitted to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or tenants in question after the applicable Closing DateClosing, and shall continue to do so for six (6) months thereafter. Purchaser shall promptly remit to Seller any Delinquent Amounts provided that a deficiency in the total rent due Purchaser is not created thereby;
4.4.3 monthly rents the amount of unapplied refundable security and other fixed periodic payments pet deposits held by Seller under the Leases assigned to Purchaser in accordance together with any interest required by applicable law or required by the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountsLeases;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Taxtax); provided, however, that any deposits with utility companies shall remain 22043518.5 -7- the property of the applicable Seller and shall not be prorated or creditedcredited (to the extent possible, utility prorations will be handled by meter readings on the day immediately preceding the Closing Date);
4.4.5 prepayments and amounts due and payable by the applicable Seller under the Service Contracts assigned but excluding any lump sum or up front payments paid to Purchaser at the applicable Closing in accordance Seller with the terms of this Agreementrespect thereto;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on 4.4.7 other similar items of income and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (expenses of operation with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on as soon as practicable after the date that is 365 Closing Date but in no event later than ninety (90) days after the applicable Closing Dateoccurs; otherwise, subject to the provisions of Section 4.4.2 above, all prorations shall be final. No later than 350 days after each Closing DateIn addition, Purchaser notwithstanding anything to the contrary contained in this Section 4, Seller reserves the right (i) to meet with governmental officials and to contest any reassessment governing or affecting Seller’s obligations under Section 4.4.1 above, and (ii) to contest any assessment of the Property or any portion thereof and to attempt to obtain a refund for any taxes previously paid. Seller shall prepare and deliver to Sellers a final Closing Statement retain all rights with respect to such Closing; provided that if Purchaser shall fail any refund of taxes applicable to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as any period prior to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions . The obligations of Purchaser and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Seller under Section 4.4 of this Agreement shall survive each applicable the Closing.
Appears in 1 contract
Samples: Real Estate Sale Agreement (Resource Real Estate Opportunity REIT II, Inc.)
Closing Prorations and Adjustments. With respect to each A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and other adjustments required (the “Closing Statement”) shall be prepared by Escrow Holder in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 Business Days and Seller for review and approval not less than three (3) business days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. .
(a) The following items are to be prorated, prorated or adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case may require, as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate (1) The rents under the Phase I Leases and personal property Taxes and assessments, in each case, any other sums owing by tenants thereunder with the applicable Seller responsible for Taxes attributable respect to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it Phase I Property shall be prorated and paid for the month in which the Closing occurs on a per diem basis. On or before the Closing, Seller shall deliver to Purchaser or the applicable Seller in accordance with the terms a schedule of this Agreement. To the extent Purchaser receives rents (including operating expenseall rents, Tax charges and insurance charges other amounts, if any, payable by tenants) tenants of the Phase I Property before the Closing under the Phase I Leases which are unpaid on or after the applicable Closing Date that (such amounts are not included collectively referred to herein as accounts receivable subject the “Delinquent Amounts”). Notwithstanding the foregoing or any direction from such tenants to Section 4.4.9the contrary, rental and other payments received by Purchaser or Seller from such payments, less reasonable tenants shall first be applied toward the actual out-of-pocket costs of collection, then toward the payment of current rent and other charges owed to Purchaser or Seller for periods after the Closing, and any excess monies received shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with Delinquent Amounts. With respect to periods following the applicable Closing, then allocated for the month Delinquent Amounts owed by tenants of the applicable Closing Phase I Property, Purchaser shall reasonably cooperate (including, without limitation, permitting Seller, through its counsel, to file claims and thereafter institute suits if the balance applied parties have reasonably exhausted all other efforts for collection), at no expense to delinquent rents or other amounts due to SellersPurchaser, with Sellers’ share thereof being delivered to Seller within five days after Purchaserin Seller’s receipt collection of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax)Delinquent Amounts; provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated entitled to exercise any right to terminate any leases or credited;
4.4.5 amounts due to evict any tenant of the Phase I Property, and payable all such collection efforts by Seller must cease by the applicable six (6) month anniversary of the Closing Date. Purchaser and Seller shall reasonably cooperate in reconciling any operating expenses, taxes or other assessments reimbursable by the tenants of the Phase I Property under the Service Contracts Phase I Leases for the periods of their respective ownership (or deemed ownership).
(2) The full amount of security deposits paid under the Phase I Leases, if any, and not theretofore applied, together with interest thereon to the extent any interest is required by law or otherwise to be paid to tenants thereunder, shall be delivered or credited by Seller to Purchaser on the Closing Date (and any letters of credit, if any, shall be delivered to, and assigned to to, Purchaser at the applicable Closing in accordance with the terms of this Agreementat Seller’s expense);
4.4.6 assignable license (3) All other items of income and permit fees;
4.4.7 accrued all items of expense related to the Phase I Property that are customarily prorated, including real estate taxes, personal property taxes and unpaid tour assessments, funds on hand in operating accounts, operating expenses, and travel agent commissions;
4.4.8 Phase I Contracts payments (under Phase I Contracts not terminated by Purchaser pursuant to Section 5.2.3), shall be prorated through Escrow with all items of income and expense allocated (i) to Seller for the balance period up to the Close of Escrow, and (less any contested chargesii) to Purchaser for the period from and after the Close of Escrow. If Closing occurs before the current year's tax or assessment bills are available, an estimated proration shall be made based on the most recent assessed value and the current tax or assessment rates. Within thirty (30) days after receipt of the open and unpaid account (“Guest Ledger Account”) for each person who is current year’s tax or assessment bxxx, Purchaser shall deliver a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned copy to Purchaser and prorated between the applicable Seller and Purchaser as follows:shall refund to Seller any amount overpaid by Seller, or and Seller shall pay to Purchaser the amount of any deficiency in the proration. If an estimated proration was made, the provisions of this subsection 12.1(a)(3) shall survive the Closing for a period of thirty (30) days following issuance of the current year’s tax or assessment bxxx.
(a4) all room revenue posted Interest under the Existing Loan will be prorated between Seller and Purchaser such that Seller is responsible for all days preceding interest due and payable, or accruing, prior to the applicable Closing Date shall belong (including interest accruing through the day prior to the applicable Seller but shall be paid over Closing Date as to such Seller only as and when actually collected (less reasonable administrative and collection costs), except interest accruing for the day immediately preceding month in which the applicable Closing Date, which shall be allocated one-half to Date occurs) and Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on interest thereunder from and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions)Date. Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing DateDate with any refunds payable to Seller or Purchaser to be made as soon as practicable; otherwise, otherwise all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver To the extent any prorations are subject to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do reimbursement from the same). If within 10 days following the delivery tenants of the final Closing Statement Phase I Property under their respective leases, the parties shall adjust such amounts upon receipt and such reimbursement shall be paid to either Sellers Seller or Purchaser, as applicable, Sellers or Purchaseras soon as practicable. The terms of this Section 12.1 shall expressly survive Closing.
(b) At Closing, as applicable, have/has not given the other written notice of its objection as Seller shall assign to Purchaser (if and to the amount of final prorations extent assignable) and receive a credit for the then current balances, if any, held in escrow for taxes, insurance, replacement reserves, operating deficits and/or working capital reserves in connection with the Existing Loan (unless such reserves have been returned to Seller by Existing Lender, in which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount case no credit shall be paid over given at Closing).
(c) Amounts on deposit, if any, with utility companies or under any Phase I Contracts shall be returned to Sellers or PurchaserSeller, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young make separate arrangements with such utility companies or service providers.
(the “Independent Accountants”d) for resolution. If issues are submitted to the Independent Accountants for resolutionSeller shall place, (i) Sellers and Purchaser shall furnish or cause to be furnished placed, any units at the Phase I Property that are vacated at least five (5) business days prior to Closing in “rent ready condition,” failing which Purchaser shall receive a credit at Closing equal to the Independent Accountants sum of $750.00 per unit that is not in such work papers rent ready condition. A representative of Seller and Purchaser shall walk the vacant units two (2) days before the Close of Escrow to determine which vacant units are not rent ready, if any. For the purposes of this Section 12.1(d), “rent ready condition” shall mean: interior carpets have been cleaned or replaced where necessary, freshly painted interior walls, working kitchen and other documents appliances (and information relating water heaters and HVAC to the disputed issues as extent such items serve only the Independent Accountants may request individual vacant unit(s)), and are available to that party or its agents and shall be afforded the opportunity to present no material damage to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountantsdoors, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in disputewalls, shall be finalceilings, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for floors or windows inside such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closingvacant units.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Bluerock Residential Growth REIT, Inc.)
Closing Prorations and Adjustments. With respect to each (i) A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required shall be prepared by Purchaser in conformity with the provisions of this Agreement with respect to, as applicable, and submitted to the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days applicable Seller for each Individual Property for review not less than three (3) days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for For purposes of prorations and adjustmentsprorations, the applicable Seller Purchaser shall be deemed to be the owner of the applicable Individual Property prior on the Closing Date. In addition to but not including prorations and adjustments that may otherwise be provided for in this Agreement, the applicable Closing Date and Purchaser following items shall be deemed prorated or adjusted (as the case requires) with respect to be the owner Individual Property as of the applicable Property on and following the applicable Closing Date:
4.4.1 (a) real estate and personal property Taxes taxes and assessmentsassessments (if the amount of taxes or assessments for the year in question is not known, in each case, with then the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations same shall be calculated prorated on the basis of the most recent available Tax bxxx if the current bxxx is not then availableascertainable xxxx(s);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to (b) rents paid under the Individual Property Leases for the calendar month during which the operations Closing occurs, and the amount of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior rents paid to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable Property Owner which are applicable to the portion of period subsequent to the Tax period on or after calendar month during which the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that occurs. However, no proration prorations shall be made of any rent for delinquent lot rental amounts or other revenue item which is overdue charges existing as of the Closing. Rents and other charges which at the Closing are unpaid or past due (hereinafter "Delinquent Rents") shall not be prorated. The applicable Closing Date until Property Owner shall not take any action against tenants to collect Delinquent Rents. For ninety (90) days after the Closing, Purchaser shall use reasonable efforts to collect Delinquent Rents, but such rent undertaking shall not be deemed to obligate Purchaser to expend any funds or institute any legal proceedings of any nature. Rents and other revenue item is actually received, at which time it shall be prorated and paid to amounts received by Purchaser or the applicable Seller in accordance Property Owner after the Closing from a tenant owing Delinquent Rents shall be applied, on a tenant by tenant basis: (i) first, to all of Purchaser's costs of collection incurred with the terms of this Agreement. To the extent Purchaser receives rents respect to Delinquent Rents (including operating expensereasonable attorneys' fees and costs); (ii) second, Tax and insurance charges payable to rents due for the month in which such payment is received by tenantsPurchaser; (iii) on or third, to rents attributable to any period after the applicable Closing Date which are past due on the date of receipt; and (iv) fourth, to Delinquent Rents. For the purpose of the foregoing application of rents, rents received from tenants that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, delinquent shall not be applied first toward to or commingled with Delinquent Rents. The applicable Property Owner shall promptly remit to Purchaser any sums received by such party from tenants after the payment Closing for application (if applicable) to Delinquent Rents by Purchaser in the manner provided above. Purchaser shall promptly remit to the applicable Property Owner any amounts due such party on account of Delinquent Rents after application of rents in the manner provided above;
(c) the full amount of all rents the security and other amounts due to Purchaser deposits paid under the Individual Property Leases, together with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents interest thereon if required by law or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountsotherwise;
4.4.4 (d) water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that tax) and any deposits with utility companies (to the extent possible, utility prorations shall remain be handled by meter readings on the property of the applicable Seller and shall not be prorated or creditedClosing Date);
4.4.5 (e) amounts due and payable by the applicable Seller prepayments under the Individual Property Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreementbeing assumed by Purchaser;
4.4.6 (f) assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(bg) all room revenue posted for all days on other expenses of operation and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions)similar items. Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing (including real estate taxes and personal property taxes) shall be reprorated and finally adjusted on the date that is 365 within ninety (90) days after the Closing Date (or, with respect to the real estate and personal property taxes, within thirty (30) days after receipt of the applicable Closing Date; otherwisetax xxxx), otherwise all prorations shall be final.
(ii) Notwithstanding anything to the contrary contained in this Agreement, each Seller shall be responsible for, or shall cause the applicable Property Owner or Diversified to be responsible for, and, at or prior to the Closing, shall pay all amounts due through the Closing for employees' salaries, vacation pay, withholding and payroll taxes, and other compensation and benefits, and any management fee affecting the Individual Property. No later than 350 days after each Closing DateIf and to the extent such Seller has not paid or caused to be paid all such amounts as of the Closing, Purchaser shall prepare and deliver to Sellers receive a final credit against the Cash Balance payable at the Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as in an amount equal to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, not so paid. If and as applicable), such amount shall be paid over to Sellers or requested by Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser each Seller shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish terminate or cause to be furnished terminated as of the Closing the employment of all employees who work at the Individual Property. The Sellers shall indemnify and hold Purchaser harmless from and against any and all obligations and other matters relative to any terminated employees and, with respect to any employees not terminated, applicable to the Independent Accountants such work papers and other documents and information relating period prior to the disputed issues as Closing, including attorneys' fees incurred by Purchaser in connection therewith.
(iii) Purchaser shall receive a credit against the Independent Accountants may request Purchase Price for each dollar of "New Cactus Gardens Value" not generated by the Fee Seller of the Cactus Gardens Property from the date hereof through the Closing Date for such property. "New Cactus Gardens Value" shall mean (a) the number of new rental agreements executed at the Cactus Gardens Property from and are available to that party or its agents after the date hereof for a term encompassing the entire season at the Cactus Gardens Property (which number of new agreements shall not exceed five (5) and shall be afforded the opportunity to present reduced on an agreement-for-agreement basis to the Independent Accountants extent any material relating of the 277 rental agreements which are in full force and effect for the entire season at the Cactus Gardens Property as of the date hereof is no longer in full force and effect or a viable tenancy as a result of the tenant not arriving at the property to honor such rental agreement as of the disputed issues and to discuss the issues with the Independent Accountants; Closing Date), (iib) the determination multiplied by the Independent Accountantsnet rental income provided for in such rental agreement, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute(c) divided by 0.0762; provided, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”)however, in each case after deducting any expenses incurred relating to the applicable Tax Appealno event shall New Cactus Gardens Value exceed $103,346. From and after the applicable Closing DateFor example, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting if the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable ClosingNew Cactus Gardens Value equals $100,000, Purchaser would receive a credit equal to $3,346.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Manufactured Home Communities Inc)
Closing Prorations and Adjustments. With respect to each All normal and customary proratable items, including by way of illustration and not limitation, real estate taxes and assessments, collected rents, operating expenses, personal property taxes and other operating expenses and fees, shall be prorated as of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be proratedthe Seller being charged or credited, adjustedas appropriate, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 for all of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes same attributable to the portion of the Tax year which is prior period up to the applicable Closing Date (and Purchaser responsible credited for Taxes any amounts paid by the Seller attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;, if assumed by the Purchaser) and the Purchaser being responsible for, and credited or charged, as the case may be, for all of the same attributable to the period on and after the Closing Date. Such adjustments shall be paid by the Purchaser to the Seller (if the prorations result in a net credit to the Seller) or by the Seller to the Purchaser (if the prorations result in a net credit to the Purchaser) by increasing or reducing the cash to be paid by the Purchaser at Closing.
4.4.3 monthly rents A. All real and other fixed periodic payments personal property taxes and assessments (general or special) which have become due and payable; all charges for improvements or services already made to, or which benefit the Property, which have not yet become due and payable; and all assessments (general or special) arising out of or in connection with any assessment district created or confirmed prior to the Closing Date shall be paid in full by the Seller at the Closing whether due in installments or otherwise. All real and personal property taxes (“Current Taxes”) levied against any portion of the Property during the calendar year in which the Closing Date occurs shall be prorated and adjusted as of the Closing Date such that the Seller is responsible for that portion of the Current Taxes allocable to the period from the beginning of such calendar year to the Closing Date, and the Purchaser is responsible for that portion of the Current Taxes allocable to the period from the Closing Date through the end of the calendar year. If the tax bills for the Current Taxes have not been issued as of the Closing Date, the Seller and the Purchaser agree to use the amount of the taxes for the calendar year immediately preceding the calendar year in which the Closing Date occurs for the purpose of computing prorations under this paragraph and such prorations shall be adjusted between the Leases assigned Seller and the Purchaser upon presentation of written evidence that the actual taxes due and payable during the calendar year in which the Closing Date occurs differ from the amounts used at Closing.
B. In the event the Property has been assessed for property tax purposes at such rates as would result in reassessment (i.e., “escape assessment” or “roll-back taxes”) based upon the change in land usage or ownership of the Property on or after the Closing Date, the Purchaser hereby agrees to pay all such taxes and to indemnify and save the Seller harmless from and against all liabilities for such taxes. In the event the Property has been assessed for property tax purposes at such rates as would result in reassessment (i.e., “escape assessment” or “roll-back taxes”) based upon the change in land usage or ownership of the Property prior to the Closing Date, the Seller hereby agrees to pay all such taxes and to indemnify and save the Purchaser harmless from and against all liabilities for such taxes. Such indemnities shall survive the Closing and not be merged therein.
C. The final readings and final xxxxxxxx for utilities will be made, if possible, as of the Closing Date, in accordance with which case the terms Seller shall pay all such bills as of this Agreement; provided that the Closing Date and no proration shall be made at the Closing with respect to utility bills. Otherwise, a proration shall be made based upon the parties’ reasonable good faith estimate and a readjustment made within 30 days after the Closing or upon receipt of the applicable bills, if necessary. The Seller shall be entitled to the return of any rent or other revenue item which is overdue deposit(s) posted by it with any utility company, and the Seller shall notify each utility company serving the Property to terminate the Seller’s account, effective as of noon on the Closing Date.
D. If applicable, charges under any ongoing Property Contracts that are assigned by the Seller to the Purchaser, pursuant to the Purchaser’s request, shall be adjusted and prorated between the Seller and the Purchaser as of the applicable Closing Date until such Date.
E. All collected rent (whether fixed monthly rentals, additional rentals, escalation rentals, retroactive rentals, operating cost pass-throughs or other revenue item is actually receivedsums and charges payable by Tenants under the Leases), at which time it income and expenses from any portion of the Property shall be prorated as of the Closing Date (prorated for any partial month). The Purchaser shall receive all collected rent and paid income attributable to dates from and after the Closing Date. The Seller shall receive all collected rent and income attributable to dates prior to the Closing Date. Notwithstanding the foregoing, no prorations shall be made in relation to either (i) non-delinquent rents which have not been collected as of the Closing Date, or (ii) delinquent rents existing, if any, as of the Closing Date (the foregoing (i) and (ii) referred to herein as the “Uncollected Rents”). In adjusting for Uncollected Rents, no adjustments shall be made in the Seller’s favor for rents which have accrued and are unpaid as of the Closing, but the Purchaser shall pay the Seller such accrued Uncollected Rents as and when collected by the Purchaser. The Purchaser agrees to xxxx tenants of the Property for all Uncollected Rents and to take reasonable actions to collect Uncollected Rents, provided, however, that the Purchaser’s obligation pursuant to this sentence shall not obligate the Purchaser to terminate any Tenant Lease with an existing tenant, evict any existing tenant from the Property or commence a lawsuit. To the applicable extent that the Purchaser subsequently collects any Uncollected Rents or revenues allocable to the period prior to the Closing Date, the Purchaser shall remit the same to the Seller; however, except as specifically provided herein, the Purchaser is assuming no obligation whatsoever for the collection of such Uncollected Rents or revenues, and all Uncollected Rents and revenues collected subsequent to the Closing Date shall always, in the first instance, be applied first to current rentals and revenues, if any, then due under the leases or otherwise. Notwithstanding the forgoing, if the Purchaser collects rents from a tenant, which has accrued Uncollected Rents, such collections will first be applied to current rents of the tenant, then to satisfy any outstanding delinquencies of the tenant attributable to post-closing obligations, and then to cover any outstanding delinquencies to Seller attributable to Uncollected Rents.
F. To the extent permitted in the Tenant Leases affecting the Property, and to the extent same has not been completed by the Seller prior to the Closing Date, the Purchaser shall, with the Seller’s cooperation, invoice all tenants for common area maintenance charges, taxes, insurance and other “additional rent” charges which tenants are required to pay under said Tenant Leases, and attributable to calendar year 2007. The Purchaser shall use its best efforts to collect such revenues and to the extent the Purchaser collects such revenues allocable to the period prior to the Closing Date, the Purchaser shall remit the same to the Seller; provided, however, the Purchaser is assuming no obligation whatsoever for the collection of such revenues, and all revenues collected subsequent to the Closing Date shall always, in the first instance, be applied first to current revenues, if any, then due under the leases. At such time as the Purchaser invoices tenants for common area maintenance charges, taxes, insurance and other “additional rent” charges which tenants are required to pay under said leases and attributable to calendar year 2006, to the extent the Purchaser collects such revenues allocable to the period prior to the Closing Date, the Purchaser shall remit the same to the Seller in accordance with the foregoing terms and conditions.
G. All accrued wages, social security, payroll taxes, unemployment compensation, worker’s compensation, vacation pay, fringe benefits and items of a similar nature due persons employed in connection with the operation and maintenance of the Property shall be paid by the Seller through the Closing Date.
H. At Closing, the Purchaser shall receive a credit against the Purchase Price in an amount equal to the received and unapplied balance of all cash (or cash equivalent) tenant deposits, including, but not limited to, security, damage or other refundable deposits or required to be paid by any of the tenants to secure their respective obligations under the Tenant Leases, together, in all cases, with any interest payable to the tenants thereunder as may be required by their respective tenant lease or state law (the “Tenant Security Deposit Balance”). Any cash (or cash equivalents) held by the Seller which constitute the Tenant Security Deposit Balance shall be retained by the Seller in exchange for the foregoing credit against the Purchase Price and shall not be transferred by the Seller pursuant to this Agreement (or any of the documents delivered at Closing), but the obligation with respect to the Tenant Security Deposit Balance nonetheless shall be assumed by the Purchaser.
I. Seller shall be responsible for paying all deed transfer, revenue or similar taxes with respect to the sale of the Property to Purchaser, and for the cost of recording any documents clearing title to the Property.
J. In general, and except as provided in this Agreement or the closing documents, the Seller shall be entitled to all income, and shall pay all expenses, relating to the operation of the Property for the period prior to the Closing Date and the Purchaser shall be entitled to all income, and shall pay all expenses, relating to the operation of the Property for the period commencing on and after the Closing Date. The Purchaser or the Seller may request that the Purchaser and the Seller undertake to re-adjust any item which has been prorated in accordance with the provisions of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that neither party shall have any deposits with utility companies shall remain obligation to re-adjust any items after the property expiration of ninety (90) calendar days after Closing unless such items exceed $1,000.00 in magnitude (either individually or in the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms aggregate). The provisions of this Agreement;
4.4.6 assignable license paragraph shall survive the Closing and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as Deed to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing.
Appears in 1 contract
Samples: Real Estate Purchase Agreement (NNN Healthcare/Office REIT, Inc.)
Closing Prorations and Adjustments. With respect to each (i) A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required shall be prepared by Purchaser in conformity with the provisions of this Agreement with respect to, as applicable, and submitted to the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days applicable Seller for each Individual Property for review not less than three (3) days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for For purposes of prorations and adjustmentsprorations, the applicable Seller Purchaser shall be deemed to be the owner of the applicable Individual Property prior on the Closing Date. In addition to but not including prorations and adjustments that may otherwise be provided for in this Agreement, the applicable Closing Date and Purchaser following items shall be deemed prorated or adjusted (as the case requires) with respect to be the owner Individual Property as of the applicable Property on and following the applicable Closing Date:
4.4.1 : (a) real estate and personal property Taxes taxes and assessmentsassessments (if the amount of taxes or assessments for the year in question is not known, in each case, with then the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations same shall be calculated prorated on the basis of the most recent available Tax bxxx if ascertainable xxxx(s); (b) rents paid under the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to Individual Property Leases for the calendar month during which the operations Closing occurs, and the amount of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior rents paid to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable Property Owner which are applicable to the portion of period subsequent to the Tax period on or after calendar month during which the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that occurs. However, no proration prorations shall be made of any rent for delinquent lot rental amounts or other revenue item which is overdue charges existing as of the Closing. Rents and other charges which at the Closing are unpaid or past due (hereinafter "Delinquent Rents") shall not be prorated. The applicable Closing Date until Property Owner shall not take any action against tenants to collect Delinquent Rents. For ninety (90) days after the Closing, Purchaser shall use reasonable efforts to collect Delinquent Rents, but such rent undertaking shall not be deemed to obligate Purchaser to expend any funds or institute any legal proceedings of any nature. Rents and other revenue item is actually received, at which time it shall be prorated and paid to 14 <PAGE> amounts received by Purchaser or the applicable Seller in accordance Property Owner after the Closing from a tenant owing Delinquent Rents shall be applied, on a tenant by tenant basis: (i) first, to all of Purchaser's costs of collection incurred with the terms of this Agreement. To the extent Purchaser receives rents respect to Delinquent Rents (including operating expensereasonable attorneys' fees and costs); (ii) second, Tax and insurance charges payable to rents due for the month in which such payment is received by tenantsPurchaser; (iii) on or third, to rents attributable to any period after the applicable Closing Date which are past due on the date of receipt; and (iv) fourth, to Delinquent Rents. For the purpose of the foregoing application of rents, rents received from tenants that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, delinquent shall not be applied first toward to or commingled with Delinquent Rents. The applicable Property Owner shall promptly remit to Purchaser any sums received by such party from tenants after the payment Closing for application (if applicable) to Delinquent Rents by Purchaser in the manner provided above. Purchaser shall promptly remit to the applicable Property Owner any amounts due such party on account of Delinquent Rents after application of rents in the manner provided above; (c) the full amount of all rents the security and other amounts due to Purchaser deposits paid under the Individual Property Leases, together with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents interest thereon if required by law or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 otherwise; (d) water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that tax) and any deposits with utility companies (to the extent possible, utility prorations shall remain be handled by meter readings on the property of the applicable Seller and shall not be prorated or credited;
4.4.5 Closing Date); (e) amounts due and payable by the applicable Seller prepayments under the Individual Property Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 being assumed by Purchaser; (f) assignable license and permit fees;
4.4.7 accrued ; and unpaid tour (g) other expenses of operation and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions)similar items. Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing (including real estate taxes and personal property taxes) shall be reprorated and finally adjusted on the date that is 365 within ninety (90) days after the Closing Date (or, with respect to the real estate and personal property taxes, within thirty (30) days after receipt of the applicable Closing Date; otherwisetax xxxx), otherwise all prorations shall be final.
(ii) Notwithstanding anything to the contrary contained in this Agreement, each Seller shall be responsible for, or shall cause the applicable Property Owner or Diversified to be responsible for, and, at or prior to the Closing, shall pay all amounts due through the Closing for employees' salaries, vacation pay, withholding and payroll taxes, and other compensation and benefits, and any management fee affecting the Individual Property. No later than 350 days after each Closing DateIf and to the extent such Seller has not paid or caused to be paid all such amounts as of the Closing, Purchaser shall prepare and deliver to Sellers receive a final credit against the Cash Balance payable at the Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as in an amount equal to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, not so paid. If and as applicable), such amount shall be paid over to Sellers or requested by Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser each Seller shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish terminate or cause to be furnished terminated as of the Closing the 15 <PAGE> employment of all employees who work at the Individual Property. The Sellers shall indemnify and hold Purchaser harmless from and against any and all obligations and other matters relative to any terminated employees and, with respect to any employees not terminated, applicable to the Independent Accountants such work papers and other documents and information relating period prior to the disputed issues as Closing, including attorneys' fees incurred by Purchaser in connection therewith. (iii) Purchaser shall receive a credit against the Independent Accountants may request Purchase Price for each dollar of "New Cactus Gardens Value" not generated by the Fee Seller of the Cactus Gardens Property from the date hereof through the Closing Date for such property. "New Cactus Gardens Value" shall mean (a) the number of new rental agreements executed at the Cactus Gardens Property from and are available to that party or its agents after the date hereof for a term encompassing the entire season at the Cactus Gardens Property (which number of new agreements shall not exceed five (5) and shall be afforded the opportunity to present reduced on an agreement-for-agreement basis to the Independent Accountants extent any material relating of the 277 rental agreements which are in full force and effect for the entire season at the Cactus Gardens Property as of the date hereof is no longer in full force and effect or a viable tenancy as a result of the tenant not arriving at the property to honor such rental agreement as of the disputed issues and to discuss the issues with the Independent Accountants; Closing Date), (iib) the determination multiplied by the Independent Accountantsnet rental income provided for in such rental agreement, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute(c) divided by 0.0762; provided, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”)however, in each case after deducting any expenses incurred relating to the applicable Tax Appealno event shall New Cactus Gardens Value exceed $103,346. From and after the applicable Closing DateFor example, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting if the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable ClosingNew Cactus Gardens Value equals $100,000, Purchaser would receive a credit equal to $3,346.
Appears in 1 contract
Samples: Purchase and Sale Agreement
Closing Prorations and Adjustments. With respect to each (i) A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required shall be prepared by Acquiror in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 Business Days Contributor for review not less than three (3) business days prior to the applicable Closing Date. For purposes of prorations, which Acquiror shall be deemed the owner of the Properties on the Closing Statement must Date. In addition to prorations and adjustments that may otherwise be reasonably acceptable to Purchaser. The provided for in this Agreement, the following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case requires) as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 (a) the full amount of the security and other deposits paid under the Leases, together with interest thereon if required by law or under the Leases, shall be credited to Acquiror;
(b) To the extent such charges are not billed directly to Tenants, water, electricity, sewer, gas, telephone and other utility charges shall be prorated based, to the extent practicable, on final meter readings and final invoices, or, in the event final readings and invoices are not available, based on the most currently available billing information, and reprorated upon issuance of final utility bills;
(c) Amounts paid or payable under any Service Contracts being assigned to Acquiror shall be prorated based, to the extent practicable, on final invoices or, in the event final invoices are not available, based on the most currently available billing information, and reprorated upon issuance of final invoices;
(d) All real estate, personal property and ad valorem taxes applicable to the Properties and levied with respect to calendar year 1998 shall be prorated on an accrual basis, as of the Closing Date, utilizing the actual final Tax Bills for the Properties for 1997 (or 1998 if available) adjusted for any announced changes in rates of taxation. Prior to or at Closing, Contributor shall pay or have paid all Tax Bills that are due and payable prior to or on the Closing Date and shall furnish evidence of such payment to Acquiror and the Title Company. Each party's respective obligations to reprorate real estate taxes shall survive the Closing and personal property Taxes shall not merge into any instrument of conveyance delivered at Closing. The taxes to be prorated (i.e., county, school, city) for each Property and the billing and accrual schedule for each such tax are set forth in Exhibit K;
(e) All assessments, in each casegeneral or special, with shall be prorated as of the applicable Seller Closing Date on a "due date" basis such that the Contributor shall be responsible for Taxes attributable to the portion any installments of the Tax year assessments which is are first due or payable prior to the applicable Closing Date and Purchaser Acquiror shall be responsible for Taxes attributable to the remainder any installments of the Tax year (assessments which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period are first due or payable on or after the applicable Closing Date;
4.4.3 monthly rents (f) Commissions of leasing and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of rental agents for any rent or other revenue item which is overdue Lease entered into as of or prior to the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject due and payable at or prior to Section 4.4.9the Closing Date, such paymentswhether with respect to base lease term, less reasonable costs of collectionfuture expansions, renewals, or otherwise, shall be applied first toward the payment paid in full of all rents at or prior to Closing by the Contributor, without contribution or proration from Acquiror;
(g) All Base Rents (as defined below) and other amounts due charges actually received, including, without limitation, all Additional Rent (as defined below), shall be prorated at Closing. At the time(s) of final calculation and collection from tenants of Additional Rent for 1998, there shall be a re-proration between Acquiror and the Contributor as to Purchaser with respect Additional Rent adjustments, which re-proration shall be paid upon Acquiror's presentation of its final accounting to periods following the applicable Contributor, certified as to accuracy by Acquiror. The party's respective obligations to reprorate Additional Rent shall survive the Closing and shall not merge into any instrument of conveyance delivered at Closing. At the Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent no "Delinquent Rents" (rents or other amounts charges which are due and owing as of the Closing) shall be prorated in favor of the Contributor. Notwithstanding the foregoing, Acquiror shall use reasonable efforts after the Closing Date to collect any Delinquent Rents due to Sellersthe Contributor from tenants. Further, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or afterClosing Date, the applicable Contributor shall continue to have the right, enforceable at its sole expense, to pursue legal action against any tenant (and any guarantors) who have defaulted, prior to the Closing Date) and fuel on hand (at cost plus sales Tax), under a Lease; provided, however, that the Contributor gives Acquiror advance written notice of its intent to pursue such action and further provided that the Contributor shall have no right to terminate any deposits with utility companies shall remain Lease (or any right to dispossess any tenant thereunder). All rents and other charges received from any tenant after the property Closing by and for the benefit of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date Acquiror shall be assigned to Purchaser applied, first, against current and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs)past due rental obligations owed to, except or for the day immediately preceding the applicable Closing Datebenefit of, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable Acquiror with respect to a Hotel those rental obligations accruing subsequent to the Closing Date (including, but not limited to, obligations to replenish any security deposit withdrawal by the Contributor or Acquiror), or any obligations accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will that the Contributor does not be transferred to Purchaser pay or for which Acquiror does not receive a credit at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property managersecond, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied delivered to the Contributor, but only to the extent of Delinquent Rents owed to, and for the benefit of, the Contributor for the period prior to the Closing Date (in no event, however, shall any other Accounts Receivable from that payorsums be paid to the Contributor to the extent it has been previously reimbursed for such default out of any security deposit);
4.4.10 (h) The Contributor and Acquiror acknowledge that various of the Properties may contain certain vacancies as of the date of this Agreement and all such current vacancies are reflected on the Rent Roll (the "Vacancies"). If a new lease for any outstanding deposits or advance payments received such Vacancy ("Vacancy Lease") is executed prior to Closing and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at such Vacancy Lease have been approved by Acquiror, then the applicable Contributor and Acquiror shall each Hotelbear a pro rata share, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable tenant improvement costs and brokerage commission attributable to the Seller Vacancy Lease (the "Vacancy Lease Costs"). The Contributor's proportionate share of the Vacancy Lease Costs shall be based on that owns portion of the applicable Hotel (Sellers Vacancy Lease's term that elapses prior to Closing and Acquiror's proportionate share shall perform, or cause to be performed, based on that portion of the Vacancy Lease's term that remains unexpired as of the Closing Date. The Contributor shall pay all Vacancy Lease Costs and Acquiror shall reimburse the Contributor for its proportionate share of such Vacancy Lease Costs by way of an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) Adjustment in the presence Contribution Consideration. In the event that this Agreement is terminated prior to Closing, then Acquiror shall have no liability or obligation with respect to any Vacancy Lease or any Vacancy Lease Costs.
(i) Such other items that are customarily prorated in transactions of a representative this nature shall be ratably prorated.
(ii) For purposes of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel calculating prorations, Acquiror shall be deemed to have been sold be in title to Purchaser the Properties, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire Closing Date. All such prorations shall become be made on the property of Purchaser and the amount basis of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers actual number of hotel properties in the location days of the applicable Real Property. The Purchase Price year and month that shall be further adjusted at each have elapsed as of the Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7Date. Except with respect to general real estate and personal property Taxes (which shall taxes that are to be reprorated upon the issuance of the actual bills)as aforesaid, any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 within ninety (90) days after the applicable Closing Date; otherwise, otherwise all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery The provisions of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 sentence shall survive each applicable the Closing.
Appears in 1 contract
Samples: Contribution Agreement (American Real Estate Investment Corp)
Closing Prorations and Adjustments. With respect to each A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and other adjustments required shall be prepared by Seller (for each Property being conveyed at a Closing) in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 for review and approval not less than five (5) Business Days prior to the applicable Initial Closing Date, which Date and three (3) Business Days prior to any Subsequent Closing Statement must be reasonably acceptable to PurchaserDate (the “Closing Statement”). The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for For purposes of prorations and adjustmentsprorations, the applicable Seller Purchaser shall be deemed to be the owner of the respective Property on the Closing Date. In addition to other adjustments that may be provided for in this Agreement, the following items with respect to each Property are to be prorated or adjusted, as the case may require, for each Property as of the Closing Date for such Property:
(a) real estate taxes and assessments (initially prorated on the basis of 100% of the most recent ascertainable bxxx, but subject to reproration upon issuance of the actual bills therefor to effectuate the actual proration); to the extent that Seller has escrowed any real estate taxes with the Landlord under a Lease, Seller shall assign all rights under such escrow to Purchaser and, provided the amount so escrowed is confirmed by such Landlord in writing or is confirmed by other reasonably satisfactory substantiation, Seller shall be credited accordingly in connection with the proration of taxes or assessments. Real estate taxes shall be apportioned on the basis of the fiscal period for which assessed. If as of the applicable Property Closing Date any of the Properties or any portion thereof shall be affected by any special or general assessments which are or may become payable in installments of which the first installment is then a lien and has become payable, Seller shall be responsible to pay the unpaid installments of such assessments which are due prior to but not including the applicable Closing Date and Purchaser shall be deemed responsible to be pay the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year installments which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) are due on or after the applicable Closing Date and Purchaser or Seller shall make a payment to the other to the extent necessary so that are not included the total amount of such special or general assessment is apportioned as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward provided above;
(b) the payment in full of all rents rent and other amounts due to Purchaser sums, including, without limitation, monthly installments payable by Seller on account of operating costs and taxes, payable by Seller under the Leases. Any percentage rent owed under any Lease with respect to periods following any time period prior to the applicable Closing shall be paid by Seller. To the extent that Seller has paid to or escrowed with the Landlord under any Lease any monthly estimate of taxes or other operating expenses, and the Landlord refunds or credits to Purchaser or its designee (after the applicable Closing) a portion of such estimated or escrowed payments resulting from a reconciliation of the actual expenses or taxes for the period prior to such Closing, Purchaser shall deliver to Seller its pro-rata share of such refund within twenty (20) days of receipt of said refund. In the event that a Landlord is owed any additional funds as a result of any deficiency shown in such reconciliation for the period of time prior to the applicable Closing, then allocated Seller shall deliver to Purchaser the deficient funds within twenty (20) days of receipt of notice from Purchaser, subject to any rights of the tenant under the Lease to contest such determination by the Landlord (which rights shall be retained and shall be exercisable by Seller) with respect to any reconciliation for the month period of time prior to the applicable Closing. Seller shall retain, subsequent to any Closing with respect to a Leased Property, any other rights, claims and remedies against the Landlord with respect to any refunds, rebates or credits due from the Landlord to Seller (as a tenant under the Lease) with respect to any periods prior to the Closing Date (including, without limitation, audit rights and rights to claim adjustments from the Landlord for overcharged amounts of additional rent under the Lease), and Purchaser shall promptly pay to Seller any such amounts received by (or credited for the benefit of) Purchaser after the Closing Date and attributable to periods prior to the Closing Date;
(c) security deposits paid under the Leases, and not theretofore applied, shall be credited by Purchaser to Seller on the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountsDate;
4.4.4 (d) water, electric, telephone and all other utility and fuel charges (shall be prorated ratably on the basis of the number last ascertainable bills (and reprorated upon receipt of days in each applicable bxxx occurring the actual bills or invoices) unless final meter readings and final invoices can be obtained. To the extent practicable, Seller shall cause meters for utilities to be read not more than ten (10) Business Days prior to, and on or after, to the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 (e) assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less f) deposits made by Seller with utility companies, Governmental Entities or any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date other person, which deposits shall be assigned to Purchaser at Closing and prorated between shall be credited to Seller, provided, however, that Seller shall have received written notice from the applicable party holding such deposits confirming the amount of such deposits and stating that no default has occurred by Seller and no other condition has occurred which would prohibit all or any portion of such deposit from being refunded (or such other substantiation of the foregoing facts reasonably satisfactory to Purchaser). If Seller is unable to obtain such a notice or provide such other substantiation, amounts on deposit with utility companies shall not be prorated; provided, however, that prior to Closing, Purchaser as follows:shall substitute its own deposit for any amounts on deposit with utility companies and Seller shall be entitled to arrange for a refund of Seller’s deposit from such utility companies;
(ag) all room revenue posted for all days preceding the applicable Closing Date shall belong rent and other sums, including, without limitation, monthly installments payable by subtenants on account of operating costs and taxes payable under the Approved Subleases, subject to Section 4.5 below;
(h) security deposits paid under the applicable Seller but Approved Subleases, and not theretofore applied, shall be paid over credited by Seller to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding Purchaser on the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(bi) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser operating expenses and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7apportioned items. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), any proration which must be estimated at the applicable a Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing DateClosing, with any refunds payable to Seller or Purchaser to be made as soon as practicable; otherwise, otherwise all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery The provisions of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 4.3 shall survive each applicable Closingthe Closings.
Appears in 1 contract
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers Seller shall prepare a separate the Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser for Purchaser’s review and approval at least 10 Business Days four (4) business days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 appropriate) as of the Code)close of business on the Closing Date, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date such day and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable if Purchaser’s funds are not received by Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned prior to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance 5:00 p.m. (less any contested chargesEastern Standard Time) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable then Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding deemed the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount owner of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash Property on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines such day and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel Purchaser shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount owner of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items Property as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each day after the Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general Date:
5.4.1 Current real estate and personal property Taxes (which taxes and assessments shall be reprorated upon prorated in accordance with Section 5.6 hereof;
5.4.2 all rents, including without limitation all basic rent, additional rent, percentage rent, CAM charges, tenant real estate tax reimbursements and all amounts actually collected by Seller prior to Closing from tenants under the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser Leases (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax AppealsRents”) with respect to periods occurring following ), shall be prorated and adjusted as of the Tax year Closing Date based upon the number of days in the month in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From with Rents from and after the applicable date of Closing Dateallocated to Purchaser; provided, however Rents that are due and payable to Seller by any tenant but uncollected as of the Closing (collectively, “Delinquent Amounts”) shall not be adjusted, but Purchaser shall cause such Delinquent Amounts to be remitted to Seller if, as and when collected subject to this Section 5.4.2. At Closing, Seller shall deliver to Purchaser a schedule of all such Delinquent Amounts (provided, however, that in the foregoing qualificationsevent any Delinquent Amount is inadvertently omitted from such schedule, Sellers Seller shall take all actions not be deemed to have waived its rights to such Delinquent Amounts). Any amounts collected by Purchaser after Closing from tenants that had Delinquent Amounts shall be applied as follows: (i) first, in payment of current Rents at the time of receipt, (ii) second, to Delinquent Amounts, if any, which became due on or after Closing, (iii) third, in payment of Rents owed by such tenant for the month in which the Closing occurs, and execute and deliver all documents Purchaser reasonably requests in order (iv) then, to enable Purchaser Delinquent Amounts, if any, which became due prior to pursue any Tax Appeal solely with respect the Closing. Any prepaid Rents attributable to the Closing Date or later shall be credited to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting ;
5.4.3 the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each unapplied security deposits held by Seller under the Leases (including all interest earned thereon if required by applicable Closing.law) will be credited to Purchaser;
Appears in 1 contract
Samples: Real Estate Purchase and Sale Agreement (Phillips Edison Grocery Center REIT III, Inc.)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx xxxx if the current bxxx xxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx xxxx occurring prior to, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx xxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing.
Appears in 1 contract
Samples: Real Estate Purchase and Sale Agreement (Summit Hotel Properties, Inc.)
Closing Prorations and Adjustments. With respect to each Statements of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and other adjustments required shall be prepared by Seller in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 Business Days for review and approval not less than three (3) business days prior to the applicable Closing Date. For purposes of prorations, which Purchaser shall be deemed the owner of the Property on the Closing Statement must Date. In addition to prorations and other adjustments that may otherwise be reasonably acceptable to Purchaser. The provided for in this Agreement, the following items are to be prorated, prorated or adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case may require, as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 (i) If not paid by the Tenants pursuant to the Leases (the “Tenants”), real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated initially prorated on the basis of the most recent available Tax bxxx if ascertainable xxxx, but subject to reproration upon issuance of the current bxxx is not then availableactual xxxx therefor to effectuate the actual proration), provided that Seller shall pay prior to Closing or give Purchaser a credit at Closing for, the amount of all installments of special assessments levied prior to Closing and which are payable after Closing;
4.4.2 sales(ii) Seller and Purchaser shall prorate the rent, occupancycharges and other amounts payable by Tenants to Seller for the month of Closing, roomincluding expense “pass-throughs” which are due for the month of Closing. With respect to rent, telecommunications, beverage charges and similar Taxes other amounts payable by Tenants to which Seller (including expense “pass-throughs”) for months prior to the operations month of any Hotel is subject Closing (the Taxes in this Section 4.4.2, “Hotel TaxesDelinquent Amounts”), Purchaser shall make a commercially reasonable good faith effort to collect such Delinquent Amounts for a period of three months following Closing), but Purchaser shall not be required to take legal action with respect to Delinquent Amounts. At Closing, Seller shall deliver to Purchaser a schedule of all Delinquent Amounts. Notwithstanding the foregoing or any direction from Tenants to the contrary, rental and other payments received by Purchaser from Tenants shall first be applied toward Purchaser’s actual out-of-pocket costs of collection, then toward the payment of rent and other charges owed to Purchaser for periods after the Closing, and any excess monies received shall be applied toward the payment of Delinquent Amounts. Purchaser may not waive any Delinquent Amounts or modify any Lease so as to reduce amounts or charges owed under any such Lease for any period in each casewhich Seller is entitled to receive a share of charges or amounts, with without first obtaining the applicable written consent of Seller responsible and Seller shall have the right to collect same after Closing. Purchaser shall make year-end reconciliations of reimbursements owed by Tenants under the Leases to the landlord thereunder of the Tenants’ share of property taxes and assessments, insurance premiums, common area maintenance and other expenses related to the operation of the Property for Hotel Taxes attributable the calendar year 2016 (collectively, “Reimbursable Tenant Expenses”). In order to enable Purchaser to make any year-end reconciliations of Reimbursable Tenant Expenses for calendar year 2016, Seller shall deliver to Purchaser, in writing, within sixty (60) days after the Closing Date, the Reimbursable Tenant Expenses actually paid or incurred by Seller for the portion of the Tax calendar year 2016 during which Seller owned the Property (“Seller’s Actual Reimbursable Tenant Expenses”) and the Tenants’ reimbursements for such Reimbursable Tenant Expenses actually paid to Seller by Tenants for the portion of the calendar year 2016 during which Seller owned the Property (“Seller’s Actual Tenant Reimbursements”). On or before March 31, 2017, Purchaser shall deliver to Seller a reconciliation statement (the “Reconciliation Statement”) setting forth (i) the Actual Reimbursable Tenant Expenses paid or incurred during calendar year 2016, (ii) the Actual Tenant Reimbursements actually paid in calendar year 2016, and (iii) a calculation of the difference between the two (i.e., establishing that the Actual Reimbursable Tenant Expenses were either more or less than the Actual Tenant Reimbursements for the calendar year 2016), with Purchaser utilizing the information delivered to Purchaser by Seller related to the period of the calendar year 2016 which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable Date. Any amount due Seller pursuant to the portion of foregoing calculation (in the Tax event Seller’s Actual Tenant Reimbursements for the period on January 1 to the date prior to Closing are less than Seller’s Actual Reimbursable Tenant Expenses for the same period) or after Purchaser (in the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under event the Leases assigned to Purchaser in accordance with Actual Tenant Reimbursements are more than the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue Actual Reimbursable Tenant Expenses), as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collectioncase may be, shall be applied first toward the payment in full of all rents and other amounts due to paid by Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five fourteen (14) business days after Purchaser has collected such sums from any tenant who owes same, or if Seller owes Purchaser for any such sum, Seller shall pay to Purchaser within fourteen (14) business days after delivery of the Reconciliation Statement to Seller, all such sums owed by Seller to Purchaser. If Purchaser is paid any such amount by Seller, Purchaser thereafter shall be obligated to promptly remit the applicable portion to the Tenants entitled thereto. If Purchaser has transferred its interest in the Property to a successor-in-interest or assignee prior to such date, then, on or before the transfer of its interest in the Property, Purchaser shall (i) in writing expressly obligate such successor-in-interest or assignee to be bound by the provisions of this Section, and (ii) deliver written notice of such transfer to Seller, and thereafter Seller shall make the deliveries specified above to Purchaser’s receipt successor-in-interest or assignee. Seller’s Reconciliation Statement shall be final and binding for purposes of such amountsthis Contract;
4.4.4 (iii) the full amount of the security deposits, paid under the Leases, if any, and not theretofore applied, together with interest thereon to the extent any interest is required by law or otherwise to be paid to the Tenants, shall be delivered by Seller to Purchaser on the date of Closing. Prior to the Closing, Seller shall not apply the security deposit;
(iv) water, electric, telephone and all other utility and fuel charges (not paid by the Tenants under the Leases shall be prorated ratably on the basis of the number of days in each applicable bxxx occurring prior to, last ascertainable bills (and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property reprorated upon receipt of the applicable actual bills or invoices) unless final meter readings and final invoices can be obtained. To the extent practicable, if Tenants do not pay the water, electric, telephone and other utility charges pursuant to the Leases, Seller and shall cause meters for utilities to be read not be prorated or creditedmore than one (1) business day prior to the date of Closing;
4.4.5 (v) amounts due and payable by the applicable Seller paid or owing under the any Assumed Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this AgreementContracts, if any;
4.4.6 (vi) assignable license and permit fees;
4.4.7 accrued (vii) other expenses of operation and unpaid tour and travel agent commissionssimilar items;
4.4.8 the balance (less any contested chargesviii) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes leasing commissions and franchise fees other leasing costs due and payable prior to the Effective Date with respect to the Leases. Purchaser shall be responsible for all guest charges preceding leasing commissions and other leasing costs attributable to the applicable Closing Leases or the renewal, extension or expansion of the Leases due and payable after the Effective Date. If Seller has, except prior to the Closing, paid any leasing commissions or other leasing costs which are Purchaser’s responsibility hereunder, Seller will receive a credit for same from Purchaser at the Closing. Purchaser shall have no obligation to pay for any leasing commissions in connection with the initial terms of the Leases. This subsection shall survive Closing;
(ix) The scheduled improvements to the elevators located in the building (the “Elevator Work”) shall be the responsibility of Seller. Purchaser and Seller acknowledge and agree that the estimated cost of the Elevator Work is Eighty-Six Thousand and 00/100 Dollars ($86,000.00) and that the Elevator Work will not be complete by the date of Closing. Irrespective of the actual cost and timing of the Elevator Work, Seller is solely responsible for contracting and paying for the day immediately preceding Elevator Work. At Closing, Escrowee shall retain Eighty-Six Thousand and 00/100 Dollars ($86,000.00) of the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half Cash Balance (the “Holdback”) in escrow pursuant to the applicable Escrow Agreement attached hereto as Exhibit E until Seller’s architect or engineer, duly certified and licensed by the State of North Carolina, delivers to Escrowee (copied to Buyer) a certification that the Elevator Work is complete. Upon receipt of said certification, Escrowee shall release the Holdback to Seller; and
(bx) all room revenue posted for all days on and after the applicable Closing Date shall be allocated All obligations to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all pay Tenant improvement work owed or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller owed in connection with any reservation at a Hotel, in the form extension or renewal terms of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained shall be paid by Purchaser and when due after the Closing Date without an adjustment to the Purchase Price. Notwithstanding the foregoing, to the extent any portion of the term of the Leases for which Purchaser shall pay the Tenant improvement cost in connection therewith occurs prior to the Closing Date, the amount of the same increasing the applicable Purchase Price payable will be reduced by a pro rata share of such cost based upon the percentage of such term (exclusive of any renewal options) which occurs prior to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7Date. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), and expense “pass throughs” (which shall be trued up within the sixty (60) day period set forth above) any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing Date; otherwiseDate with any refunds payable to Seller or Purchaser to be made as soon as practicable after such amounts are determined, otherwise all prorations shall be final. No later than 350 Amounts on deposit with utility companies shall be disclosed to Purchaser within ten (10) days after each Closing Datethe Effective Date and shall not be prorated; provided, however, that promptly following the Closing, Purchaser shall prepare and deliver to Sellers a final Closing Statement substitute its own deposit for any amounts on deposit with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents utility companies and shall be afforded the opportunity refund to present to the Independent Accountants Seller any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination portion of Seller’s deposit which is refunded by the Independent Accountantsutility company. The rights, as set forth covenants and obligations contained in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iiithis Paragraph 5(c) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable the Closing.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Highwoods Realty LTD Partnership)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. (i) The following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as appropriate) (the applicable Seller determines “Proration Items”) as of 11:59 p.m. Central Time on the day before the Closing Date and reprorated (if necessary) pursuant to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code)4.D(ii) below, it being understood that for purposes of prorations and adjustments, the applicable Seller each Owner shall be deemed to be the owner of the applicable Property prior to but not including Company on the applicable day before the Closing Date Date, and Purchaser Xxxxx shall be deemed to be the owner of the applicable Surviving Companies on the Closing Date, so that all income and expense attributable to any particular portion of the Property on and following allocable (a) to the period prior to the Closing Date shall be borne or credited to the applicable Owners (being CPLLC with respect to the Southdale Property and the Mervyn’s Property, BRE/Southridge Mall with respect to the Southridge Property and BRE/Southridge Mall Reit with respect to the Younkers Property, and as used in this Section 4.D, “Owners” shall refer to the applicable Owner or Owners), and (b) to the period on or after the Closing Date shall be borne or credited to Xxxxx or the applicable Surviving Company as hereinafter provided. Preliminary estimates of the Proration Items shall be set forth on a preliminary closing statement prepared by the Owners and submitted to Xxxxx for Xxxxx’ reasonable approval at least three (3) Business Days prior to the Closing Date:.
4.4.1 real (a) Real estate and personal property Taxes taxes and assessments, current installments of assessments affecting the Property which are payable by the Companies in each case, with the applicable Seller responsible for Taxes attributable to the portion of the calendar year in which Closing occurs (“Current Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations Year”) shall be calculated prorated (on the basis of the most recent available Tax bxxx ascertainable assessment if the current bxxx xxxx is not then available);
4.4.2 sales, occupancyas of the Closing Date, roomon a cash basis, telecommunicationsregardless of the year for which such taxes or assessments are assessed, beverage and similar Taxes to which the operations of except that (I) Xxxxx shall not receive a credit for any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Current Tax period Year real estate taxes levied against the Property for which any of the REA Parties or Anchors is prior responsible to pay the entity directly imposing the same as specified in any REA Document or Lease to which such REA Party or Anchor is a party and remains unpaid, and Xxxxx shall look solely to the applicable Closing Date REA Parties and Purchaser responsible Anchors for Hotel Taxes attributable to reimbursement of such unpaid portions when the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents same become due and other fixed periodic payments under the Leases assigned to Purchaser payable in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually receivedsaid respective agreements, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenantsII) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable ClosingSouthridge Real Property and Younkers Real Property, then allocated for prior to January 31, 2005, Southridge Company or BRE/Grange, as applicable, shall pay the month first installment of the applicable Closing 2004 Real Estate Property Tax bills and thereafter Xxxxx and the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on appropriate Surviving Company shall pay the basis remaining installments of the number of days in each applicable bxxx occurring prior to2004 Real Estate Property Tax bills and notwithstanding anything set forth herein to the contrary, such real estate taxes with respect to the Southridge Real Property and on the Younkers Property shall not be reprorated or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax)further adjusted; provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount portion of the same increasing first installment of the applicable Purchase Price payable to 2004 Real Estate Property Tax xxxx for the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Younkers Real Property (i.e., in house banks, pxxxx cash, including till money andpaid by BRE/Grange, to the extent the same relates to the parking field, such amounts shall be included as an Expense recovery under Section 4.D(i)(d) hereof for the benefit of BRE/Southridge. Taxes and assessments accrued to Closing but not payable during the calendar year in which Closing occurs shall not be prorated and shall be assumed and paid by Xxxxx and the Surviving Companies.
(b) The “minimum” or “base” rent and estimated payments of “Percentage Rent” (hereinafter defined) payable by Tenants; provided, however, that rent and all other sums which are due and payable to the property of Sellers, vending machines and pay telephones) in Owners or the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect Companies as of the operation Closing Date by any Tenant but uncollected as of a Hotel the Closing Date shall not be adjusted, but Xxxxx shall cause (or cause the Surviving Companies to cause) the rent and other sums for the period prior to the Closing Date to be remitted to the Owners if, as and when collected (subject to the following sentence, including any penalties and interest permitted by the applicable Lease to be charged to the Tenant for late payment). All payments from Tenants on account of rent or otherwise received after the Closing Date by the Owners, Xxxxx or the Surviving Companies shall be deemed applied as specified in writing by the Tenant or if not specified (i) first, in payment of rents for the month in which the Closing Date occurs (the “Closing Month”), (ii) second, in payment of rents for the month following the Closing Month if then due and payable, (iii) third, in payment of rents in arrears as of the Closing Date for the month preceding the Closing Month, (iv) fourth, in payment of rents for the period following the Closing Month if then due and payable and (v) fifth, in payment of rents in arrears as of the Closing Month that have not been paid pursuant to have been sold clause (iii) above. At Closing, the Owners shall deliver to Purchaser Xxxxx a schedule of all such past due but uncollected rent and other sums owed by Tenants (the “Delinquency Schedule”). Xxxxx shall become cause the property of Purchaser and Surviving Companies to include the amount of such rent and other sums in the bills thereafter submitted to the Tenants in question after the Closing. Xxxxx shall cause the Surviving Companies to use commercially reasonable efforts to collect such past due sums, but the Surviving Companies shall not be obligated to commence a law suit to collect any such sums or to evict any Tenant for the failure to pay any such sums, and Xxxxx shall deliver such past due sums to the Owners as the same increasing are collected by Xxxxx or the applicable Purchase Price Surviving Companies, net of commercially reasonable out of pocket third party costs of collection approved in advance by the Owners (which approval shall not be unreasonably withheld), and which third party costs shall be charged against amounts collected and charged to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties parties hereto in the location proportion in which each is entitled to the proceeds of the applicable Real Propertysuch collections. The Purchase Price Owners shall be further adjusted at each Closing in respect of property improvement plans required in connection with retain the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect right to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days commence a lawsuit after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare to collect any such sums and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as amounts owed to the amount of final prorations Owners (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding any Company with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted period prior to the Independent Accountants for resolution, (iClosing Date) Sellers and Purchaser shall furnish in accordance with rights previously retained by Owners or cause to be furnished pursuant to the Independent Accountants such work papers and other documents and information relating Rent Agreement, provided the Owners may not seek to the disputed issues as the Independent Accountants may request and are available to that party terminate any Lease or its agents evict any Tenant and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (not commence any such actions being collectively referred to suit until at least ninety (90) days following the Closing Date. Rents prorated under this Section 4.D(i)(b) shall include amounts characterized as “Tax Appeals”) rent under those certain agreements with Store Financial dated September 2, 2004 (with respect to periods occurring following Southridge and Southdale).
(c) To the Tax extent not set forth on the schedule of uncollected rent described in Section 4.D(i)(b) above, “percentage” or “overage” rent (“Percentage Rent”) that is (I) attributable to any Percentage Rent lease year in which the Closing Date falls and (II) not yet determinable as of such Real Properties occurs the Closing Date (such periodscollectively, “Purchaser’s PeriodCurrent Year Percentage Rent”), shall be prorated as follows: promptly upon receipt by Xxxxx or the Surviving Companies, Xxxxx shall furnish (or cause the Surviving Companies to furnish) to the Owners copies of all sales reports from Tenants relative to Current Year Percentage Rent, including, without limitation, all sales reports with respect to any Tenants whose Percentage Rent lease years have expired as of the Closing but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating whose sales reports were not delivered to the applicable Tax Appeal. From Owner or Company as of the Closing Date and sales reports of any Tenants whose Percentage Rent lease years expire after the applicable Closing, and the amount of any Current Year Percentage Rent shall be payable in accordance with such Tenant’s Lease as existing as of the Closing Date, subject and Xxxxx shall (to the foregoing qualificationsextent not paid to the Owners by way of estimated payments prior to Closing) pay (or cause the Surviving Companies to pay) to the Owners, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue net of any Tax Appeal solely with respect to Purchaser’s Period at no commercially reasonable out-of-pocket expense to Sellers. Subject third party costs of collection approved in advance by the Owners (which approval shall not be unreasonably withheld), a portion of such Percentage Rent based upon the apportionment being made as of the Closing Date (in proportion to the foregoing qualificationsrelative number of days in the subject Percentage Rent lease year occurring prior and subsequent to the Closing Date), Sellers hereby agree promptly after reconciliation with the applicable Tenant at the end of the subject Percentage Rent lease year. The Owners shall retain any Current Year Percentage Rent for the period prior to execute all consentsthe Closing Date already collected from Tenants under the Leases prior to Closing, receiptsand Xxxxx shall promptly pay to the Owners any Current Year Percentage Rent collected by Xxxxx or the Surviving Companies in the month in which Closing occurs; provided, instruments however, the Owners shall make any necessary adjusting payment to Xxxxx, due to any over-collection by the Owners of the Current Year Percentage Rent, within fifteen (15) days after presentment to, and documents approval by, the Owners (which may reasonably approval shall not be requested in order unreasonably withheld or delayed) of Xxxxx’ calculation and Xxxxx shall make any necessary adjusting payment to facilitate settling the Owners, due to any Tax Appeal proceeding commenced under-collection by Purchaser in accordance with this paragraph the Owners, within fifteen (15) days after presentment to, and collecting approval by, the amount Owners (which approval shall not be unreasonably withheld or delayed) of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing.Xxxxx’
Appears in 1 contract
Samples: Merger Agreement (Mills Corp)
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall will be prorated and paid to Purchaser or adjusted as of 12:01 a.m. on the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included (as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior to, and on or after, the applicable Closing Datedefined below) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding Seller will credit Purchaser at Closing real estate taxes, charges and assessments affecting the applicable Property based upon 100% of the last ascertainable tax xxxx(s). Any such taxes prorated on an estimated basis on the Closing Date shall belong will be reprorated by the parties when and as the actual amount of such taxes becomes known. Any adjustment due to the applicable Seller but shall reproration of taxes will be paid over not later than thirty (30) days following the final determination of the amount of such taxes and delivery of the demand by the party to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Sellerwhom payment is due. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding reproration obligations of the applicable Closing Date, except for parties will survive the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; andClosing.
(b) Seller will pay all room revenue posted for all days on expenses necessary to repair, operate and after maintain the applicable Property in its current condition accrued up to and including the Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to Date. Any such expenses which are prepaid as of the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with credited to Seller, and Purchaser will be responsible to pay such expenses accruing subsequent to the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions)Closing Date. Any payments from payors expenses that owe amounts on Accounts Receivable have accrued up to and also owe amounts on an account payable for goods or services rendered on or after including the applicable Closing Date but have not been billed to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed or paid by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money andClosing Date will, to the extent possible, be paid by Seller (with such payment evidenced to Purchaser) at the same are the property time of SellersClosing, vending machines and pay telephones) in the presence of a representative of or, if not so payable, at Purchaser);
4.4.14 any utility deposits with any utility in respect ’s option, will be credited to Purchaser, provided that such credit will not release Seller of the operation of a Hotel shall obligation to make full payment if the credit is insufficient for any reason. Utility meters for utility services payable by Seller will be deemed read on or immediately prior to have been sold to Purchaser and shall become the property of Purchaser Closing Date, if possible, and the amount amounts due as disclosed by such readings will be paid by Seller or credited to Purchaser. Otherwise all utility charges and xxxxxxxx will be prorated using the prior month’s xxxx as of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually Closing Date and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall will be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers actual bills for the period in question.
(c) Any and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish all other items customarily prorated or cause required by any other provision of this Agreement to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party prorated or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closingadjusted.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Innovative Food Holdings Inc)
Closing Prorations and Adjustments. With respect to each A statement of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and other adjustments required shall be prepared by Seller (for each Property being conveyed at a Closing) in conformity with the provisions of this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it submitted to Purchaser at least 10 for review and approval not less than five (5) Business Days prior to the applicable Initial Closing Date, which Date and three (3) Business Days prior to any Subsequent Closing Statement must be reasonably acceptable to PurchaserDate (the "CLOSING STATEMENT"). The following items are to be prorated, adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code), it being understood that for For purposes of prorations and adjustmentsprorations, the applicable Seller Purchaser shall be deemed to be the owner of the respective Property on the Closing Date. In addition to other adjustments that may be provided for in this Agreement, the following items with respect to each Property are to be prorated or adjusted, as the case may require, for each Property as of the Closing Date for such Property:
(a) real estate taxes and assessments (initially prorated on the basis of 100% of the most recent ascertainable xxxx, but subject to reproration upon issuance of the actual bills therefor to effectuate the actual proration); to the extent that Seller has escrowed any real estate taxes with the Landlord under a Lease, Seller shall assign all rights under such escrow to Purchaser and, provided the amount so escrowed is confirmed by such Landlord in writing or is confirmed by other reasonably satisfactory substantiation, Seller shall be credited accordingly in connection with the proration of taxes or assessments. Real estate taxes shall be apportioned on the basis of the fiscal period for which assessed. If as of the applicable Property Closing Date any of the Properties or any portion thereof shall be affected by any special or general assessments which are or may become payable in installments of which the first installment is then a lien and has become payable, Seller shall be responsible to pay the unpaid installments of such assessments which are due prior to but not including the applicable Closing Date and Purchaser shall be deemed responsible to be pay the owner of the applicable Property on and following the applicable Closing Date:
4.4.1 real estate and personal property Taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year installments which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year (which prorations shall be calculated on the basis of the most recent available Tax bxxx if the current bxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue as of the applicable Closing Date until such rent or other revenue item is actually received, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) are due on or after the applicable Closing Date and Purchaser or Seller shall make a payment to the other to the extent necessary so that are not included the total amount of such special or general assessment is apportioned as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward provided above;
(b) the payment in full of all rents rent and other amounts due to Purchaser sums, including, without limitation, monthly installments payable by Seller on account of operating costs and taxes, payable by Seller under the Leases. Any percentage rent owed under any Lease with respect to periods following any time period prior to the applicable Closing shall be paid by Seller. To the extent that Seller has paid to or escrowed with the Landlord under any Lease any monthly estimate of taxes or other operating expenses, and the Landlord refunds or credits to Purchaser or its designee (after the applicable Closing) a portion of such estimated or escrowed payments resulting from a reconciliation of the actual expenses or taxes for the period prior to such Closing, Purchaser shall deliver to Seller its pro-rata share of such refund within twenty (20) days of receipt of said refund. In the event that a Landlord is owed any additional funds as a result of any deficiency shown in such reconciliation for the period of time prior to the applicable Closing, then allocated Seller shall deliver to Purchaser the deficient funds within twenty (20) days of receipt of notice from Purchaser, subject to any rights of the tenant under the Lease to contest such determination by the Landlord (which rights shall be retained and shall be exercisable by Seller) with respect to any reconciliation for the month period of time prior to the applicable Closing. Seller shall retain, subsequent to any Closing with respect to a Leased Property, any other rights, claims and remedies against the Landlord with respect to any refunds, rebates or credits due from the Landlord to Seller (as a tenant under the Lease) with respect to any periods prior to the Closing Date (including, without limitation, audit rights and rights to claim adjustments from the Landlord for overcharged amounts of additional rent under the Lease), and Purchaser shall promptly pay to Seller any such amounts received by (or credited for the benefit of) Purchaser after the Closing Date and attributable to periods prior to the Closing Date;
(c) security deposits paid under the Leases, and not theretofore applied, shall be credited by Purchaser to Seller on the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountsDate;
4.4.4 (d) water, electric, telephone and all other utility and fuel charges (shall be prorated ratably on the basis of the number last ascertainable bills (and reprorated upon receipt of days in each applicable bxxx occurring the actual bills or invoices) unless final meter readings and final invoices can be obtained. To the extent practicable, Seller shall cause meters for utilities to be read not more than ten (10) Business Days prior to, and on or after, to the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any deposits with utility companies shall remain the property of the applicable Seller and shall not be prorated or credited;
4.4.5 amounts due and payable by the applicable Seller under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 (e) assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less f) deposits made by Seller with utility companies, Governmental Entities or any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date other person, which deposits shall be assigned to Purchaser at Closing and prorated between shall be credited to Seller, provided, however, that Seller shall have received written notice from the applicable party holding such deposits confirming the amount of such deposits and stating that no default has occurred by Seller and no other condition has occurred which would prohibit all or any portion of such deposit from being refunded (or such other substantiation of the foregoing facts reasonably satisfactory to Purchaser). If Seller is unable to obtain such a notice or provide such other substantiation, amounts on deposit with utility companies shall not be prorated; provided, however, that prior to Closing, Purchaser as follows:shall substitute its own deposit for any amounts on deposit with utility companies and Seller shall be entitled to arrange for a refund of Seller's deposit from such utility companies;
(ag) all room revenue posted for all days preceding the applicable Closing Date shall belong rent and other sums, including, without limitation, monthly installments payable by subtenants on account of operating costs and taxes payable under the Approved Subleases, subject to Section 4.5 below;
(h) security deposits paid under the applicable Seller but Approved Subleases, and not theretofore applied, shall be paid over credited by Seller to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding Purchaser on the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(bi) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser operating expenses and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7apportioned items. Except with respect to general real estate and personal property Taxes taxes (which shall be reprorated upon the issuance of the actual bills, if necessary), any proration which must be estimated at the applicable a Closing shall be reprorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing DateClosing, with any refunds payable to Seller or Purchaser to be made as soon as practicable; otherwise, otherwise all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery The provisions of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 4.3 shall survive each applicable Closingthe Closings.
Appears in 1 contract
Closing Prorations and Adjustments. With respect to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days prior to the applicable Closing Date, which Closing Statement must be reasonably acceptable to Purchaser. (i) The following items are to be prorated, adjusted, credited prorated or paid directly by Seller in cash adjusted (as appropriate) as of 11:59 p.m. Central Time on the applicable Seller determines day before the Closing Date and reprorated (if necessary) pursuant to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 of the Code)4.C(ii) hereof, it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including on the applicable day before the Closing Date Date, and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Date, so that all income and expense attributable to the Property and allocable (a) to the period prior to the Closing Date shall be borne or credited to Seller and (b) to the period on or after the Closing Date shall be borne or credited to Purchaser:
4.4.1 (a) real estate (including, without limitation, property taxes and school taxes) and personal property Taxes taxes and assessments, current installments of assessments affecting the Property which are payable by Seller in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax calendar year in which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year occurs (which prorations shall be calculated on the basis of the most recent available Tax bxxx ascertainable assessment if the current bxxx xxxx is not then available);
4.4.2 sales, occupancy, room, telecommunications, beverage and similar Taxes to which the operations of any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion of the Tax period which is prior to the applicable Closing Date and Purchaser responsible for Hotel Taxes attributable to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration ) shall be made of any rent or other revenue item which is overdue prorated as of the applicable Closing Date until such rent or other revenue item is actually receivedon an accrual basis based upon the period of assessment, at which time it shall be prorated and paid to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents (including operating expense, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month regardless of the applicable Closing and thereafter year for which such taxes or assessments are assessed. Attached hereto as EXHIBIT T is a schedule that shows the balance applied to delinquent rents or other amounts due to Sellersreal estate taxes payable in calendar 2004, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amounts;
4.4.4 water, electric, telephone and all other utility and fuel charges (on the basis of assessment and an illustration of the number proration of days in each applicable bxxx occurring prior to, such real estate taxes.
(b) the "minimum" or "base" rent and on or after, the applicable Closing Dateestimated payments of "Percentage Rent" (hereinafter defined) and fuel on hand (at cost plus sales Tax)payable by Tenants; provided, however, that any deposits with utility companies shall remain the property rent and all other sums which are due and payable to Seller as of the applicable Seller and Closing Date by any Tenant but uncollected as of the Closing Date shall not be prorated or credited;
4.4.5 amounts due adjusted, but Purchaser shall cause the rent and payable other sums for the period prior to the Closing Date to be remitted to Seller if, as and when collected (including any penalties and interest permitted by the applicable Lease to be charged to the Tenant for late payment). All payments from Tenants on account of rent received after the Closing Date whether by Seller or Purchaser shall first be applied to the current monthly rent or other sums currently due under the Service Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.6 assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissions;
4.4.8 the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller shall be responsible for all Taxes and franchise fees for all guest charges preceding the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such Closing, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable)Lease, then to delinquent rentals and other delinquent sums due under the applicable Lease, if any, due Purchaser and then to be applied to amounts owing delinquent rentals and other delinquent sums due Seller. At Closing, Seller shall deliver to Purchaser and any excess shall be applied to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance schedule of all security deposits under the Leases assigned to such past due but uncollected rent and other sums owed by Tenants. Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and shall include the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines such rent and pay telephones) other sums in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required in connection with the Replacement Franchise Agreements as set forth in Section 4.7. Except with respect to general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration which must be estimated at the applicable Closing shall be reprorated and finally adjusted on the date that is 365 days after the applicable Closing Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are bills thereafter submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to Tenants in question after the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determinationClosing. Purchaser shall have use commercially reasonable efforts to collect such past due sums, but Purchaser shall not be obligated to commence a lawsuit to collect any such sums or to evict any Tenant for the exclusive failure to pay any such sums. Seller shall retain the right to seek adjustments commence a lawsuit to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (collect any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and sums after the applicable Closing DateClosing, subject provided Seller may not seek to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue terminate any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling Lease or evict any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable ClosingTenant.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Feldman Mall Properties, Inc.)
Closing Prorations and Adjustments. With respect (a) A rent roll (updated to each of the First Pool Closing and the Second Pool Closing, Sellers shall prepare a separate Closing Statement of the prorations and adjustments required by this Agreement with respect to, as applicable, the First Pool Assets and the Second Pool Assets and submit it to Purchaser at least 10 Business Days within 15 days prior to the applicable Closing Distribution Date) and a proposed statement of prorations and other adjustments shall be prepared by Merry Land Properties in conformity with the provisions of this Agreement not less than three (3) business days prior to the Distribution Date. For purposes of prorations, which Closing Statement must the Transfer shall be reasonably acceptable deemed to Purchaserhave occurred as of 12:01 a.m. on the Distribution Date. The following items are to be prorated, prorated or adjusted, credited or paid directly by Seller in cash (as the applicable Seller determines to be appropriate to comply with the applicable Tax rules governing transactions qualifying under Section 1031 case may require, as of the Code), it being understood that for purposes of prorations and adjustments, the applicable Seller shall be deemed to be the owner of the applicable Property prior to but not including the applicable Closing Date and Purchaser shall be deemed to be the owner of the applicable Property on and following the applicable Closing Distribution Date:
4.4.1 A. real estate and personal property Taxes taxes and assessments, in each case, with the applicable Seller responsible for Taxes attributable to the portion of the Tax year which is prior to the applicable Closing Date and Purchaser responsible for Taxes attributable to the remainder of the Tax year assessments (which prorations shall be calculated prorated on the basis of the most recent available Tax bxxx if amount of real estate tax liabilities for the current bxxx Transferred Properties that is not then availablereflected on Merry Land's balance sheet as of the Distribution Date);
4.4.2 salesB. the rent payable by tenants under the Tenant Leases; provided, occupancyhowever, room, telecommunications, beverage that rent and similar Taxes all other sums which are due and payable to which the operations of Merry Land by any Hotel is subject (the Taxes in this Section 4.4.2, “Hotel Taxes”), in each case, with the applicable Seller responsible for Hotel Taxes attributable to the portion tenant but uncollected as of the Tax Distribution Date shall not be adjusted, but Merry Land Properties shall use diligent efforts to collect said past-due rents and shall cause the rent and other sums for the period which is prior to the applicable Closing Distribution Date to be remitted to Merry Land if, as and Purchaser responsible for Hotel Taxes attributable when collected. On the Distribution Date, Merry Land shall deliver to the portion of the Tax period on or after the applicable Closing Date;
4.4.3 monthly rents and other fixed periodic payments under the Leases assigned to Purchaser in accordance with the terms of this Agreement; provided that no proration shall be made of any rent or other revenue item which is overdue Merry Land Properties a schedule (prepared by Merry Land as of the applicable Closing Date until most recent date available) of all such past due but uncollected rent and other sums owed by tenants. Merry Land Properties shall promptly remit to Merry Land any such rent or other revenue item sums paid by scheduled tenants, but only if a deficiency in the then current rent is actually receivednot thereby created. Merry Land Properties shall xxxx tenants who owe rent for periods prior to the Distribution Date on a monthly basis for six consecutive months following the Distribution Date. For amounts due Merry Land not collected within thirty (30) days after the Distribution Date, at which time it Merry Land shall be prorated have the right to xxx to collect same (and Merry Land shall have the right to continue any eviction action in process as of said Distribution Date), but in no event may Merry Land seek to evict any tenant or terminate any Tenant Lease.;
C. the full amount of security deposits paid under the Tenant Leases, to Purchaser or the applicable Seller in accordance with the terms of this Agreement. To the extent Purchaser receives rents unapplied, together with interest thereon if required by law or otherwise; provided that (including operating expenseto the extent permitted by applicable law) Merry Land shall have the right to apply security deposits, Tax and insurance charges payable by tenants) on or after the applicable Closing Date that are not included as accounts receivable subject to Section 4.4.9if any, such payments, less reasonable costs of collection, shall be applied first toward the payment in full of all against delinquent rents and other amounts due to Purchaser with respect to periods following the applicable Closing, then allocated for the month obligations of the applicable Closing and thereafter the balance applied to delinquent rents or other amounts due to Sellers, with Sellers’ share thereof being delivered to Seller within five days after Purchaser’s receipt of such amountstenants;
4.4.4 D. water, electric, telephone and all other utility and fuel charges (on the basis of the number of days in each applicable bxxx occurring prior tocharges, and on or after, the applicable Closing Date) and fuel on hand (at cost plus sales Tax); provided, however, that any assignable deposits with utility companies shall remain (said assignable deposits being credited to Merry Land) (to the property of extent possible, utility prorations will be handled by meter readings on the applicable Seller and shall not be prorated or creditedDistribution Date);
4.4.5 E. amounts due and payable by the applicable Seller prepayments under the Service Other Contracts assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreementor Equipment Leases;
4.4.6 F. assignable license and permit fees;
4.4.7 accrued and unpaid tour and travel agent commissionsG. amounts payable in connection with the Clay Contracts;
4.4.8 H. other expenses of operation and similar items customarily prorated in connection with real estate closings for similar properties in the balance (less any contested charges) of the open and unpaid account (“Guest Ledger Account”) for each person who is a guest at a Hotel on the day immediately preceding the applicable Closing Date shall be assigned to Purchaser and prorated between the applicable Seller and Purchaser as follows:locality in question; and
(a) all room revenue posted for all days preceding the applicable Closing Date shall belong to the applicable Seller but shall be paid over to such Seller only as and when actually collected (less reasonable administrative and collection costs), except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half to the applicable Seller. The applicable Seller I. Merry Land shall be responsible for paying all Taxes premiums, fees and franchise fees for all guest charges preceding other costs associated with the applicable Closing Date, except for the day immediately preceding the applicable Closing Date, which shall be allocated one-half to Purchaser and one-half maintenance or termination of any insurance policies maintained by Merry Land prior to the applicable Seller; and
(b) all room revenue posted for all days on and after the applicable Closing Distribution Date shall be allocated to Purchaser;
4.4.9 any accounts receivable with respect to a Hotel accruing prior to 11:59 local time (with respect to the applicable Hotel) on the day immediately preceding the applicable Closing Date (“Accounts Receivable”) will not be transferred to Purchaser at such ClosingProperties, but rather will be retained by the applicable Seller. Purchaser will deliver to the applicable Seller (and shall promptly instruct the applicable property manager, as its agent, to deliver to the applicable Seller) all checks and other forms of payments received by Purchaser at such Hotel that constitute payment of all or part of any Account Receivable. Payments received from payors owing payment both on an Account Receivable and on an account payable for goods or services rendered on or after the applicable Closing Date will be applied first in accordance with the invoice for which the payment is invoiced (including any designation included in an invoice from internet travel providers or other vendors covering multiple transactions). Any payments from payors that owe amounts on Accounts Receivable and also owe amounts on an account payable for goods or services rendered on or after the applicable Closing Date to Purchaser which do not include such a designation shall be applied first to current amounts (i.e., payments not more than 60 days past due and not being disputed by the payee on Accounts Receivable), then to Purchaser to be applied to amounts owing to Purchaser and any excess shall be applied entitled to any other Accounts Receivable from that payor;
4.4.10 any outstanding deposits or advance payments received and retained by or on behalf of any Seller in connection with any reservation at a Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price payable to such Seller;
4.4.11 any gift certificate or other writing (other than trade agreements and food and beverage discount coupons) issued by any Seller or manager of a Hotel which entitles the holder or bearer to a credit (whether in a specified dollar amount or for a specified item, such as a room night or meal) to be applied against the usual charge for rooms, meals and/or other goods or services at any Hotel, in the form of a credit against (i.e., a reduction of) the applicable Purchase Price to such Seller;
4.4.12 the outstanding balance of all security deposits under the Leases assigned to Purchaser at the applicable Closing in accordance with the terms of this Agreement;
4.4.13 all cash on hand at each Hotel, with such cash retained by Purchaser and the amount of the same increasing the applicable Purchase Price payable to the Seller that owns the applicable Hotel (Sellers shall perform, or cause to be performed, an accounting of cash on hand at the Property (i.e., in house banks, pxxxx cash, including till money and, to the extent the same are the property of Sellers, vending machines and pay telephones) in the presence of a representative of Purchaser);
4.4.14 any utility deposits with any utility in respect of the operation of a Hotel shall be deemed to have been sold to Purchaser and shall become the property of Purchaser and the amount of the same increasing the applicable Purchase Price to the Seller that owns the applicable Hotel; and
4.4.15 such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the location of the applicable Real Property. The Purchase Price shall be further adjusted at each Closing in respect of property improvement plans required refunds in connection with the Replacement Franchise Agreements termination of said policies. The net amount of any prorations shall be paid in cash on the Distribution Date to Merry Land or Merry Land Properties, as set forth in Section 4.7the case may be, by the other party. Except with respect to Any proration (other than general real estate and personal property Taxes (which shall be reprorated upon the issuance of the actual bills), any proration taxes) which must be estimated at on the applicable Closing Distribution Date shall be reprorated re-prorated and finally adjusted on the date that is 365 days as soon as practicable after the applicable Closing Distribution Date; otherwise, all prorations shall be final. No later than 350 days after each Closing Date, Purchaser shall prepare and deliver to Sellers a final Closing Statement with respect to such Closing; provided that if Purchaser shall fail to deliver such final Closing Statement within such 350-day period, Sellers may prepare and deliver such statement to Purchaser (and Purchaser shall cooperate fully with Sellers’ efforts to do the same). If within 10 days following the delivery of the final Closing Statement to either Sellers or Purchaser, as applicable, Sellers or Purchaser, as applicable, have/has not given the other written notice of its objection as to the amount of final prorations (which notice shall state the basis of Sellers’ or Purchaser’s objection, as applicable), such amount shall be paid over to Sellers or Purchaser, as applicable, within three Business Days thereof. If Sellers or Purchaser, as applicable, duly give/gives the other such written objection notice, and if Sellers and Purchaser fail to resolve in good faith the issues outstanding with respect to the amount of final prorations within thirty 30 days of the applicable party’s receipt of such written objection notice, Sellers and Purchaser shall submit the issues remaining in dispute to Ernst & Young (the “Independent Accountants”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Purchaser within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties; and (iii) Sellers and Purchaser will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination. Purchaser shall have the exclusive right to seek adjustments to real estate, ad valorem and/or personal property Tax rates imposed upon and/or assessed values ascribed to one or more of the Real Properties (any such actions being collectively referred to as “Tax Appeals”) with respect to periods occurring following the Tax year in which the Closing of such Real Properties occurs (such periods, “Purchaser’s Period”), but shall promptly pay over to Sellers the portion of any such Tax refund applicable to periods occurring entirely prior to Purchaser’s Period (such periods, “Sellers’ Period”), in each case after deducting any expenses incurred relating to the applicable Tax Appeal. From and after the applicable Closing Date, subject to the foregoing qualifications, Sellers shall take all actions and execute and deliver all documents Purchaser reasonably requests in order to enable Purchaser to pursue any Tax Appeal solely with respect to Purchaser’s Period at no out-of-pocket expense to Sellers. Subject to the foregoing qualifications, Sellers hereby agree to execute all consents, receipts, instruments and documents which may reasonably be requested in order to facilitate settling any Tax Appeal proceeding commenced by Purchaser in accordance with this paragraph and collecting the amount of any Tax refund with respect thereto. This Section 4.4 shall survive each applicable Closing.
Appears in 1 contract
Samples: Asset Exchange Agreement (Merry Land Properties Inc)
