COVENANTS PRIOR TO CLOSING 37 7.1 Access and Cooperation; Due Diligence...........................37 7.2 Conduct of Business Pending Closing.............................38 7.3
Seller Covenants Seller covenants and agrees as follows:
Termination Prior to Closing Notwithstanding the foregoing, the parties will be relieved of the obligation to consummate the Closing and purchase or sell the Assets:
(a) By the mutual written consent of the Buyer and the Seller;
(b) By the Seller in writing, without liability, if the Buyer (i) fails to perform in any material respect its agreements contained herein required to be performed by it on or prior to the Closing Date, or (ii) materially breaches any of its representations, warranties or covenants contained herein, which in either case is not cured within ten (10) days after the Seller has notified the Buyer of its intent to terminate this Agreement pursuant to this subparagraph;
(c) By the Buyer in writing, without liability, if the Seller (i) fails to perform in any material respect its agreements contained herein required to be performed by them on or prior to the Closing Date, or (ii) materially breaches any of its representations, warranties or covenants contained herein, which in either case is not cured within ten (10) days after the Buyer has notified the Seller of its intent to terminate this Agreement pursuant to this subparagraph;
(d) Subject to Section 5.5 hereof, by either the Seller or the Buyer in writing, without liability, if there is issued any order, writ, injunction or decree of any court or governmental or regulatory agency binding on the Buyer or the Seller which prohibits or materially restrains the Buyer or the Seller from consummating the transactions contemplated hereby; provided that the Buyer and the Seller have used their reasonable, good faith efforts to have any such order, writ, injunction or decree lifted and the same has not been lifted within sixty (60) days after entry, by any such court or governmental or regulatory agency;
(e) By the Buyer in writing, without liability, if Buyer elects to terminate pursuant to Section 6.1 or Section 6.2 hereof;
(f) By either the Seller or the Buyer in writing, without liability, if for any reason the Closing has not occurred by March 31, 1999 other than as a result of the breach of this Agreement by the party attempting to terminate this Agreement;
(g) By Seller in writing, without liability, upon a "Change of Control" of Buyer (for purposes of this Agreement, a "Change of Control" means (i) the acquisition by any individual, corporation, company, association, joint venture or other entity, of beneficial ownership of 25% or more of the voting securities of the Buyer; or (ii) individuals who, as of the date of this Agreement, constitute the Board of Directors of the Buyer cease for any reason to constitute at least a majority of the Board of Directors of the Buyer; or (iii) the consummation by the Buyer of a reorganization, merger or consolidation, or exchange of shares or sale or other disposition of all or substantially all of the assets of the Buyer, if immediately after giving effect to such transaction the individuals or entities who beneficially own voting securities immediately prior to such transaction beneficially own
Further Covenants OPCO and Issuer hereby covenant and agree that:
(a) Except upon prior written notice to the Placement Agent, neither OPCO nor Issuer shall, at any time prior to the Final Closing, knowingly take any action which would cause any of the representations and warranties made by it in this Agreement not to be complete and correct in all material respects on and as of the date of each Closing with the same force and effect as if such representations and warranties had been made on and as of each such date (except to the extent any representation or warranty relates to an earlier date).
(b) If, at any time prior to the Final Closing, any event shall occur that causes (i) an OPCO Material Adverse Effect or (ii) an Issuer Material Adverse Effect, either of which as a result it becomes necessary to amend or supplement the Memorandum so that the representations and warranties herein remain true and correct in all material respects, or in case it shall be necessary to amend or supplement the Memorandum to comply with Regulation D or any other applicable securities laws or regulations, either OPCO or Issuer, as applicable, will promptly notify the Placement Agent and shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request for delivery by the Placement Agent to potential subscribers. Neither OPCO nor Issuer will at any time before the Final Closing prepare or use any amendment or supplement to the Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or which is not in compliance in all material respects with the Act and other applicable securities laws. As soon as OPCO or Issuer is advised thereof, OPCO or Issuer, as applicable, will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Memorandum, or the suspension of any exemption for such qualification or registration thereof for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and OPCO and Issuer, as applicable, will use their reasonable best efforts to prevent the issuance of any such order and, if issued, to obtain as soon as reasonably possible the lifting thereof.
(c) OPCO and Issuer shall comply with the Act, the Exchange Act and the rules and regulations thereunder, all applicable state securities laws and the rules and regulations thereunder in the states in which OPCO’s Blue Sky counsel has advised the Placement Agent, OPCO and/or Issuer that the Units are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the Units, and will file or cause to be filed with the SEC, and shall promptly thereafter forward or cause to be forwarded to the Placement Agent, any and all reports on Form D as are required.
(d) Issuer shall use best efforts to qualify the Units for sale under the securities laws of such jurisdictions in the United States as may be mutually agreed to by OPCO, Issuer and the Placement Agent, and Issuer will make or cause to be made such applications and furnish information as may be required for such purposes, provided that Issuer will not be required to qualify as a foreign corporation in any jurisdiction or execute a general consent to service of process. Issuer will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request with respect to the Offering.
(e) The Issuer shall place a legend on the certificates representing the Shares, the Preferred Shares, the Conversion Shares, the Exchange Warrants and the Agent Warrants that the securities evidenced thereby have not been registered under the Act or applicable state securities laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(f) The Company shall apply the net proceeds from the sale of the Units for the purposes substantially as described under the “Use of Proceeds” section of the Memorandum. Except as set forth in the Memorandum, the Company shall not use any of the net proceeds of the Offering to repay indebtedness to officers (other than accrued salaries incurred in the ordinary course of business), directors or stockholders of the Company without the prior written consent of the Placement Agent.
(g) During the Offering Period OPCO or Issuer, as applicable, shall afford each prospective purchaser of Units the opportunity to ask questions of and receive answers from an officer of OPCO or Issuer concerning the terms and conditions of the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Memorandum to the extent OPCO or Issuer possesses such information or can acquire it without unreasonable expense.
(h) Except with the prior written consent of Aegis, which consent shall not be unreasonably withheld, OPCO and Issuer shall not, at any time prior to the earlier of the Final Closing or the Termination Date, except as contemplated by the Memorandum (i) engage in or commit to engage in any transaction outside the ordinary course of business as described in the Memorandum, (ii) issue, agree to issue or set aside for issuance any securities (debt or equity) or any rights to acquire any such securities; provided that the Company shall be permitted to issue stock options and/or restricted stock units to officers, directors and employees of the Company as described in the Memorandum; and it being acknowledged and agreed that after the Final Closing or Termination Date, the Issuer may issue, in its sole discretion, a number of stock options and/or restricted units in the aggregate in an amount of up to 15% of the fully diluted outstanding shares of the Issuer pursuant to the Issuer’s 2016 Equity Incentive Plan (the “Plan”), (iii) incur, outside the ordinary course of business, any material indebtedness, (iv) dispose of any material assets, (v) make any acquisition or (vi) change its business or operations.
(i) OPCO or the Issuer, as applicable, shall pay all reasonable expenses incurred in connection with the preparation and printing of all necessary offering documents and instruments related to the Offering and the issuance of the Shares, the Preferred Shares, the Conversion Shares, the Exchange Warrants and the Agent Warrants and will also pay OPCO’s and the Issuer’s own expenses for accounting fees, legal fees and other costs involved with the Offering (provided that OPCO shall not be responsible for the legal fees of Issuer for the period prior to the First Closing other than the $25,000 previously paid to the Placement Agent’s counsel). OPCO will provide at its own expense such quantities of the Memorandum and other documents and instruments relating to the Offering as the Placement Agent may reasonably request. All Blue Sky filings related to this Offering shall be prepared by OPCO’s counsel, on behalf of the Issuer, at OPCO’s expense, with copies of all filings to be promptly forwarded to the Placement Agent. Further, as promptly as practicable after the Final Closing, the Company shall prepare, at its own expense, velobound “closing binders” relating to the Offering and will distribute one such binder to each of the Placement Agent and its counsel.
(j) Until the earlier of the Termination Date or the Final Closing, neither OPCO nor Issuer nor any person or entity acting on such persons’ behalf will negotiate with any other placement agent or underwriter with respect to a private offering of such entity’s debt or equity securities. Neither OPCO nor Issuer nor anyone acting on such persons’ behalf will, until the earlier of the Termination Date or the Final Closing, without the prior written consent of the Placement Agent, offer for sale to, or solicit offers to subscribe for Units from, or otherwise approach or negotiate in respect thereof with, any other person.
Other Covenants The Sub-Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the Securities and Exchange Commission in performance of its duties as sub-investment adviser for the Series and, in addition, will conduct its activities under this Agreement in accordance with other applicable federal and state law;
(b) review and analyze on a periodic basis the Series' portfolio holdings and transactions in order to determine their appropriateness in light of such Series' shareholder base;
(c) provide, or cause to be provided, to the Board of Directors of the Fund such reports, statistical data and economic information as may be reasonably requested in connection with the Sub-Adviser's services hereunder;
(d) use the same skill and care in providing such services as it uses in providing services to fiduciary accounts for which it has investment responsibilities;
(e) place orders pursuant to its investment determinations for the Series either directly with the issuer or with any broker or dealer. In executing portfolio transactions and selecting brokers or dealers, the Sub- Adviser will use its best efforts to seek on behalf of the Series the best overall terms available. In assessing the best overall terms available for any transaction, the Sub-Adviser shall consider all factors that it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In evaluating the best overall terms available, and in selecting the broker-dealer to execute a particular transaction, the Sub-Adviser may also consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Series and other accounts over which the Sub-Adviser or an affiliate of the Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized, subject to the prior approval of the Adviser and the Fund's Board of Directors, to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for any of the Series which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Sub-Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer as viewed in terms of that particular transaction or in terms of the overall responsibilities of the Sub-Adviser to the Series. In addition, the Sub-Adviser is authorized to take into account the sale of the Fund's shares in allocating purchase and sale orders for portfolio securities to brokers or dealers (including brokers and dealers that are affiliated with the Adviser, Sub-Adviser or the Fund's principal underwriter), provided that the Sub-Adviser believes that the quality of the execution and the commission are comparable to what they would be with other qualified firms. In no instance, however, will portfolio securities be purchased from or sold to the Adviser, Sub-Adviser, the Fund's principal underwriter or any affiliated person of any of the Fund, the Adviser, Sub-Adviser, or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the Securities and Exchange Commission and other applicable federal and state laws and regulations;
(f) maintain historical tax lots for each portfolio security held by the Series;
(g) transmit trades to the Fund's custodian for proper settlement; and
(h) prepare a quarterly broker security transaction summary and monthly security transaction listing for each Series.
Actions Prior to Closing From the date hereof until the Closing Date, Contributor shall not take any action or fail to take any action the result of which could (1) have a material adverse effect on the Contributed Interests or the Operating Partnership’s ownership thereof, or any Material Adverse Effect on any Contributed Entity or Property after the Closing Date or (2) cause any of the representations and warranties contained in this Section 2.2 to be untrue as of the Closing Date.
Other Covenants and Agreements (a) The Shareholder hereby agrees that, notwithstanding anything to the contrary in any such agreement, with respect to each such agreement to which the Shareholder is a party (i) each of the agreements set forth on Schedule B hereto shall be automatically terminated and of no further force and effect (including any provisions of any such agreement that, by its terms, survive such termination) effective as of, and subject to and conditioned upon the occurrence of, the Closing and (ii) upon such termination none of the Shareholder, the Company nor any of their respective Affiliates (including, from and after the Effective Time, Parent and its Affiliates) shall have any further obligations or liabilities under each such agreement. Without limiting the generality of the foregoing, each of the Parties hereby agrees to promptly execute and deliver all additional agreements, documents and instruments and take, or cause to be taken, all actions necessary or reasonably advisable in order to achieve the purpose of the preceding sentence.
(b) The Shareholder shall be bound by and subject to (i) Section 6.4(a) and (b) (Confidentiality; Public Announcements) of the Merger Agreement to the same extent as such provisions apply to the parties to the Merger Agreement, as if the Shareholder is directly party thereto; provided that, the foregoing shall bind and subject the Shareholder only to the confidentiality and non-use obligations of the Confidentiality Agreement (as defined in the Merger Agreement), and shall not bind nor subject the Shareholder to any other provisions thereof; provided further that, notwithstanding Section 6.4(b) of the Merger Agreement, the Shareholder shall be permitted to make a public announcement to the extent that such announcement is required by applicable stock exchange rule, (ii) the first sentence of Section 6.10(a) (No Solicitation) of the Merger Agreement and (iii) Section 6.7 (No Claim Against Trust Account) of the Merger Agreement to the same extent as such provisions apply to the Company, in each case, mutatis mutandis, as if the Shareholder is directly party thereto. Notwithstanding anything in this Agreement to the contrary, (x) the Shareholder shall not be responsible for the actions of the Company or the board of directors of the Company (or any committee thereof) or any officers, directors (in their capacity as such), employees and professional advisors of any of the foregoing (the “Company Related Parties”), including with respect to any of the matters contemplated by this Section 2(b) (y) the Shareholder is not making any representations or warranties with respect to the actions of any of the Company Related Parties, and (z) any breach by the Company of its obligations under the Merger Agreement shall not be considered a breach of this Section 2(b) (it being understood for the avoidance of doubt that the Shareholder shall remain responsible for any breach by it of this Section 2(b)).
(c) The Shareholder acknowledges and agrees that Parent and the other Parent Parties are entering into the Merger Agreement in reliance upon the Shareholder entering into this Agreement and agreeing to be bound by, and perform, or otherwise comply with, as applicable, the agreements, covenants and obligations contained in this Agreement and but for the Shareholder entering into this Agreement and agreeing to be bound by, and perform, or otherwise comply with, as applicable, the agreements, covenants and obligations contained in this Agreement, Parent and Merger Sub would not have entered into or agreed to consummate the transactions contemplated by the Merger Agreement.
(d) The Shareholder hereby waives any rights of appraisal, including under Section 262 of the DGCL, or any other rights to dissent from the Merger that the Shareholder may have under applicable Legal Requirements.
(e) At or prior to the Closing, the Shareholder shall duly execute and deliver to the Company and Parent the Eighth Amended and Restated Investor Rights Agreement of the Company, dated as of the date hereof, by and among the Company, the Shareholder and the other parties thereto substantially in the form attached hereto as Exhibit A.
Other Covenants of the Parties The parties agree that, prior to the Closing:
Operations Prior to Closing (a) Seller agrees to operate the Property between the Execution Date and the Closing Date in the same general manner as Seller has operated the Property during the immediately preceding six (6) month period, paying all costs and expenses as they come due, and in any event prior to Closing, and maintaining all insurance coverage currently in force.
(b) Seller shall comply with all of the obligations of landlord under the Leases and all other agreements and contractual arrangements affecting the Real Property by which Seller is bound or to which the Real Property, or any of them, are subject, and which will be binding upon Buyer or a lien upon such Real Property, after the Closing.
(c) Seller shall notify Buyer promptly of Seller's receipt of any notice from any party alleging that Seller is in default of its obligations under any of the Leases or any Permit or agreement affecting the Real Property, or any portion or portions thereof.
(d) No contract for or on behalf of or affecting the Real Property shall be negotiated or entered into which cannot be terminated by Seller upon the Closing without the payment of a specific charge, cost, penalty or premium for such termination.
(e) Except with the prior written consent of Buyer, which Buyer agrees it shall not unreasonably withhold, condition or delay, Seller shall not enter into any new leases for any portion of the Real Property. Any new lease shall be on Buyer's customary form (which may vary to reflect customary negotiated revisions thereto), or such other form which is reasonably acceptable to Buyer. Further, except with the prior written consent of Buyer, which Buyer agrees it shall not unreasonably withhold, condition or delay, or as set forth above, Seller shall not amend, extend (except where required under the terms of the Lease in question), terminate (except by reason of a tenant's default), accept surrender of, or permit any assignments or subleases of, any of the Leases (except as may be required under such Lease), nor accept any rental more than one (1) month in advance (exclusive of any security deposit).
(f) Seller shall not make or permit to be made any capital improvements or additions to the Real Property, or any portion thereof, without the prior written consent of Buyer, except those made by Seller pursuant to the express requirements of this Agreement, those made by tenants pursuant to the right to do so under their Leases, or by Seller if required by applicable law or ordinance, or as required under any Lease.
(g) Seller shall timely xxxx all tenants for all rent billable under Leases, and use commercially reasonable efforts to collect any rent in arrears.
(h) Seller shall notify Buyer of any tax assessment disputes (pending or threatened) prior to Closing, and from and after the Due Diligence Expiration Date, Seller not agree to any changes in the real estate tax assessment, nor settle, withdraw or otherwise compromise any pending claims with respect to tax assessments relating to the current or any subsequent year, without Buyer's prior written consent, which shall not be unreasonably withheld, delayed or conditioned. If any proceedings shall result in any reduction of assessment and/or tax for the tax year in which the Closing occurs, it is agreed that the amount of tax savings or refund for such tax year, less the reasonable fees and disbursements in connection with such proceedings, shall be apportioned between the parties as of the date real estate taxes are apportioned under this Agreement. All refunds relating to any tax year prior to the Closing shall be the sole property of Seller, and all refunds relating to any year subsequent to the year in which Closing occurs shall be the sole property of Buyer. Each party agrees to promptly remit to the other any refund received by it which is the property of the other.
(i) Seller shall notify Buyer promptly of the occurrence of any of the following:
(i) Receipt of notice from any governmental or quasi-governmental agency or authority or insurance underwriter relating to the condition, use or occupancy of the Real Property, or any portion thereof;
(ii) Receipt of any notice of default from any tenant or from the holder of any lien or security interest in or encumbering the Real Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation against Seller or affecting or relating to the Real Property, or any portion thereof which may materially and adversely affect the Real Property or Seller's ability to consummate the transactions contemplated by this Agreement; and
(iv) Vacancy of any demised Property by a tenant, other than in accordance with a scheduled lease termination.
Prior to Closing As used herein, “Compensation” shall mean the direct salaries and wages and other aggregate compensation paid to or accrued for the benefit of any employee together with all fringe benefits payable to or accrued for the benefit of such employee as to which the employer is responsible, including, without limitation, employer contributions under F.I.C.A., fringe benefits, annual bonuses, unemployment compensation or other employment taxes, pension fund contributions, vacation pay, sick leave, worker’s compensation, group life and accidental and health premiums, and pension or profit sharing, retirement, disability and other similar benefits. Purchaser shall be responsible for and shall pay (i) all Compensation with respect to the operations of the Property on and after the date of Closing and (ii) all Compensation which is accrued but not payable as of the Closing and for which Purchaser is credited at Closing. For these purposes, vacation benefits, sick leave, annual bonuses and related payroll expenses of Hotel Employees (the “Supplemental Employee Expenses”) as of the Closing shall be treated as accrued and subject to proration solely (A) if vested and not subject to expiration if not used or termination in the event of the employee’s departure or (B) to the extent of 70% of any such accrued Supplemental Employee Expenses subject to later vesting or expiration if not used or termination in the event of the employee’s departure. With respect to accrued bonuses for 2006, Seller’s pro-rated share at Closing shall be based upon Operator’s reasonable estimate of the bonuses to be paid to such Hotel Employees for 2006. No later than March 31, 2007, or earlier upon the mutual agreement of the parties, the parties shall adjust Seller’s pro-rated share of the bonuses paid to the Hotel Employees for 2006 based upon the actual amounts of such bonuses (as shown by such supporting documentation as may be reasonably required by either party), and Purchaser or Seller, as the case may be, shall make such additional payment or refund as shall be required by such adjustment. Purchaser acknowledges that the New HMA shall initially afford the Hotel Employees continuation of all rights under Operator’s existing Section 401(k) plans and health care plans, as previously afforded under the Current HMA.
