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Exhibit 10.1
LLC MEMBERSHIP INTERESTS
PURCHASE AGREEMENT
dated as of February __, 2005
between
XXXXXX X. XXXXXXX
BHARTI X. XXXXX
MALAY X. XXXXXXX
KUSH X. XXXXXXX
XXXX X. XXXXX
XXXXX X. XXXXX
as Sellers,
and
HERSHA HOSPITALITY LIMITED PARTNERSHIP
as Purchaser
IN CONNECTION WITH THE SALE AND PURCHASE OF
MEMBERSHIP INTERESTS IN LTD ASSOCIATES ONE, LLC, OWNER OF SPRINGHILL
SUITES WILLIAMSBURG, WILLIAMSBURG, VIRGINIA
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LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT
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THIS LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT, dated as of the ______
day of February, 2005, (the "Agreement") between XXXXXX X. XXXXXXX, BHARTI X.
XXXXX, MALAY X. XXXXXXX, KUSH X. XXXXXXX, XXXX X. XXXXX and XXXXX X. XXXXX,
members of LTD Associates One, LLC, on the one hand (collectively, each a
"Sellers, and collectively, the "Sellers"), and HERSHA HOSPITALITY LIMITED
PARTNERSHIP, a Virginia limited partnership (the "Purchaser"), provides:
ARTICLE I
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DEFINITIONS; RULES OF CONSTRUCTION
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1.1 Definitions. The following terms shall have the indicated
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meanings:
"Act of Bankruptcy" shall mean if a party hereto or any member or
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general partner thereof shall (a) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (b) admit in writing its
inability to pay its debts as they become due, (c) make a general assignment for
the benefit of its creditors, (d) file a voluntary petition or commence a
voluntary case or proceeding under the Federal Bankruptcy Code (as now or
hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
(g) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case or proceeding
under the Federal Bankruptcy Code (as now or hereafter in effect), or (h) take
any corporate or limited liability company action for the purpose of effecting
any of the foregoing; or if a proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner thereof, in any
court of competent jurisdiction seeking (1) the liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of debts, of such
party or general partner, (2) the appointment of a receiver, custodian, trustee
or liquidator or such party or general partner or all or any substantial part of
its assets, or (3) other similar relief under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
and such proceeding or case shall continue undismissed; or an order (including
an order for relief entered in an involuntary case under the Federal Bankruptcy
Code, as now or hereafter in effect) judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in effect, for a
period of 60 consecutive days.
"Articles of Organization" shall mean the Articles of Organization of
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the LLC filed with the Commonwealth of Virginia State Corporation Commission,
true and correct copies of which are attached hereto as Exhibit F.
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"Assignment and Assumption Agreement" shall mean any and all
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Assignment and Assumption Agreements, dated as of the Closing Date by and
between Sellers and Purchaser.
"Authorizations" shall mean all licenses, permits and approvals
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required by any governmental or quasi-governmental agency, body or officer for
the ownership, operation and use of the Property or any part thereof.
"Closing" shall mean the closing of the sale and purchase of the
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Interests pursuant to this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
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"Consideration" shall be determined by subtracting the outstanding
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principal balance of the Existing Financing as of Closing from the LLC
Valuation, and multiplying the balance by 75%
"Continuing Liabilities" shall include liabilities arising under the
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Existing Financing (defined in Section 3.10) and the Operating Agreements
(defined hereafter) on and subsequent to the Closing Date, or proration credits
at Closing, but shall exclude any liabilities arising from any other
arrangement, agreement, loan agreements, hotel management agreement, or pending
litigation.
"Contributed Equity" shall mean the equity contribution that each
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party shall be deemed to have made on the Closing Date and throughout the
investment period. As a matter of example, Purchaser's preferred equity
contribution shall include the Consideration and Purchaser's contribution toward
the FF&E reserve and any other additional contribution made on the Closing Date
and throughout the investment period.
"Deposit" shall mean the amount of Two Hundred Thousand and No/100
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($200,000.00) Dollars.
"Employment Agreements" shall mean any and all employment agreements,
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written or oral, between the LLC or its managing agent and the persons employed
with respect to the Property. A schedule indicating all pertinent information
with respect to each Employment Agreement in effect as of the date hereof, name
of employee, social security number, wage or salary, accrued vacation benefits,
other fringe benefits, etc., is attached hereto as Exhibit B.
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"Escrow Agent" shall mean Equity Title Company, with an address of 200
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Golden Xxx Xxxxx, Xxxxx 000X, Xxxxxxxx Xxxxx, XX 00000.
"Existing Financing" shall have the meaning set forth in Section 3.10.
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"FIRPTA Certificate" shall mean the affidavit of the Sellers under
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Section 1445 of the Internal Revenue Code certifying that such Sellers are not a
foreign corporation, foreign partnership, foreign limited liability company,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Internal Revenue Code and the Income Tax Regulations), in form and substance
satisfactory to the Purchaser for each Seller who is not a foreign corporation,
foreign partnership, foreign limited liability company, foreign trust, foreign
estate or foreign person.
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"Governmental Body" shall mean any federal, state, municipal or other
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governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
"Gross Revenues" shall mean all room revenues from Hotel operations,
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including, but not limited to, room revenues, revenues from food and beverage,
revenues from telecommunication service, and revenues from other operated
departments, rentals, and other business activities.
"Hotel" shall mean the 000-xxxx XxxxxxXxxx Xxxxxx Xxxxxxxxxxxx hotel
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and related amenities located on the Land.
"Improvements" shall mean the Hotel and all other buildings,
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improvements, fixtures and other items of real estate located on the Land.
"Insurance Policies" shall mean those certain policies of insurance
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described on Exhibit C attached hereto.
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"Intangible Personal Property" shall mean all intangible personal
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property owned or possessed by the Sellers and used in connection with the
ownership, operation, leasing, occupancy or maintenance of the Property,
including, without limitation, the Authorizations, general intangibles, business
records, plans and specifications, surveys and title insurance policies
pertaining to the real property and the personal property, all other licenses
which are transferable, permits and approvals with respect to the construction,
ownership, operation, leasing, occupancy or maintenance of the Property, any
unpaid award for taking by condemnation or any damage to the Land by reason of a
change of grade or location of or access to any street or highway.
"Interests" shall mean 75% of all right, title and interest in the
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Xxxxxx Interest, Bharti Interest, Malay Interest, Kush Interest, Xxxx Interest,
and Xxxxx Interest, consisting, in the aggregate, of a 75% limited liability
company interest in the LLC.
"Xxxxxx Interest" shall mean all right, title and interest of Xxxxxx
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X. Xxxxxxx in the LLC, consisting of a 10% limited liability interest in the
LLC.
"Bharti Interest" shall mean all right, title and interest of Bharti
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X. Xxxxx in the LLC, consisting of a 10% limited liability interest in the LLC.
"Malay Interest" shall mean all right, title and interest of Malay H.
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Xxxxxxx in the LLC, consisting of a 20% limited liability interest in the LLC.
"Kush Interest" shall mean all right, title and interest of Kush H.
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Xxxxxxx in the LLC, consisting of a 20% limited liability interest in the LLC.
"Xxxx Interest" shall mean all right, title and interest of Xxxx X.
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Xxxxx in the LLC, consisting of a 20% limited liability interest in the LLC.
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"Xxxxx Interest" shall mean all right, title and interest of Xxxxx X.
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Xxxxx in the LLC, consisting of a 20% limited liability interest in the LLC.
"Inventory" shall mean all inventory located at the Hotel, including
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without limitation, all mattresses, pillows, bed linens, towels, paper goods,
soaps, cleaning supplies and other such supplies.
"Knowledge" shall mean the actual knowledge of the Sellers.
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"Land" shall mean that certain parcel of real estate lying and being
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in the City of Williamsburg, Virginia, with an address of 0000 Xxxxxxxx Xxxx,
Xxxxxxxxxxxx, XX 00000, as more particularly described on Exhibit A attached
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hereto, together with all easements, rights, privileges, remainders, reversions
and appurtenances thereunto belonging or in any way appertaining, and all of the
estate, right, title, interest, claim or demand whatsoever of the Sellers
therein, in the streets and ways adjacent thereto and in the beds thereof,
either at law or in equity, in possession or expectancy, now or hereafter
acquired.
"LLC" shall mean LTD Associates One, LLC, a Virginia limited liability
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company that owns, as its only assets, land and hotel improvements consisting of
a 000-xxxx XxxxxxXxxx Xxxxxx Xxxxxxxxxxxx situated in the City of Williamsburg,
Virginia.
"LLC Operating Agreement" shall mean the current operating agreement,
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and any amendments and modifications thereto, of the LLC, a true and correct
copy of which is attached hereto as Exhibit D.
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"LLC Valuation" shall mean a valuation of $14,500,000.00 for all of
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the LLC including the Hotel, Intangible Personal Property, Tangible Personal
Property, and Real Property, and any other assets in connection with the Hotel.
"Operating Agreements" shall mean the management agreements, service
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contracts, supply contracts, leases and other agreements, if any, in effect
with respect to the construction, ownership, operation, occupancy or maintenance
of the Property. All of the Operating Agreements in force and effect as of the
date hereof are listed on Exhibit E attached hereto.
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"Owner's Title Policy" shall mean an owner's policy of title insurance
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or the applicable endorsement issued to the LLC, pursuant to which the LLC's
ownership of fee simple title to the Real Property is insured (including the
marketability thereof) subject only to Permitted Title Exceptions. The Owner's
Title Policy shall be acceptable in form and substance to the Purchaser, and, in
the event such Owner's Title Policy is not acceptable to Purchaser, Purchaser,
at its sole discretion, may obtain a new owner's policy of title insurance at
its own cost and expense. The description of the Land in the Owner's Title
Policy shall be by courses and distances and shall be identical to the
description shown on a survey provided by the Sellers to
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the Purchaser.
"Permitted Title Exceptions" shall mean those exceptions to title to
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the Real Property that are satisfactory to the Purchaser as determined pursuant
to Section 2.2.
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"Property" shall mean collectively the Land, Improvements, the
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Inventory, the Reservation System, the Tangible Personal Property and the
Intangible Personal Property.
"Real Property" shall mean the Land and the Improvements.
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"Reservation System" shall mean the Sellers' Reservation Terminal and
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Reservation System equipment and software (other than the LTD Management
proprietary system), if any.
"Study Period" shall mean the period commencing at 9:00 a.m. on the
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date hereof, and continuing through 5:00 p.m. on March 15, 2005.
"Tangible Personal Property" shall mean the items of tangible personal
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Property, consisting of all furniture, fixtures and equipment situated on,
attached to, or used in the operation of the Hotel, and all furniture,
furnishings, equipment, machinery, and other personal property of every kind
located on or used in the operation of the Hotel and owned by the Sellers and/or
the LLC.
"Title Company" shall mean All American Abstract Company, Inc., with
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an address at 0000 Xxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000.
"Tray Ledger" shall mean the final night's room revenue (revenue from
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rooms occupied as of 12:01 a.m. on the Closing Date, exclusive of food,
beverage, telephone and similar charges which shall be retained by the Sellers,
including any sales taxes, room taxes or other taxes thereon.
"Utilities" shall mean public sanitary and storm sewers, natural gas,
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telephone, public water facilities, electrical facilities and all other utility
facilities and services necessary for the operation and occupancy of the
Property as a hotel.
1.2 Rules of Construction. The following rules shall apply to the
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construction and interpretation of this Agreement:
(a) Singular words shall connote the plural number as well as the
singular and vice versa, and the masculine shall include the feminine and the
neuter.
(b) All references herein to particular articles, sections,
subsections, clauses or exhibits are references to articles, sections,
subsections, clauses or exhibits of this Agreement.
(c) Headings contained herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
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(d) Each party hereto and its counsel have reviewed and revised
(or requested revisions of) this Agreement, and therefore any usual rules of
construction requiring that ambiguities are to be resolved against a particular
party shall not be applicable in the construction and interpretation of this
Agreement or any exhibits hereto.
ARTICLE II
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PURCHASE AND SALE; STUDY PERIOD;
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PAYMENT OF CONSIDERATION
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2.1 Purchase and Sale. Each of the Sellers agrees to sell, assign and
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transfer its respective Interests, in aggregate, to the Purchaser and the
Purchaser agrees to purchase the Sellers' Interests in exchange for the
Consideration and in accordance with the other terms and conditions set forth
herein.
(a) The Consideration shall be paid as follows:
(i) Upon the execution and delivery of this Agreement, Purchaser
shall deposit the Deposit in an interest bearing account, which is and
shall be fully refundable in accordance with the provisions with
respect to the refund thereof as set forth in this Agreement,
including, without limitation, unsatisfactory results of Study Period,
in Purchaser's sole discretion, and/or default by any Sellers
hereunder; and
(ii) The balance of the Consideration, subject to adjustment as
provided in this Agreement, shall be paid by the Purchaser by wire
transfer to the Sellers or such payee as the Sellers may direct at the
Closing. The Sellers shall provide Purchaser on or before the Closing
with Sellers wiring instructions for the payment of the Consideration.
(b) The Consideration shall be held by Equity Title Company to be released
to Sellers upon delivery of the certificates, documents, instruments,
agreements and other closing deliveries required by this Agreement.
2.2 Study Period. (a) The Purchaser shall have the right, until the
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end of the Study Period, to enter upon the Real Property and to perform, at the
Purchaser's expense, such economic, surveying, engineering, environmental,
topographic and marketing tests, studies and investigations as the Purchaser may
deem appropriate provided Purchaser gives Sellers at least twenty-four (24)
hours notice prior to entering on the Real Property. The Purchaser shall
investigate the Property and the LLC, including, without limitation, a full
environmental due diligence audit and investigation of the Property and UCC,
lien, litigation, judgment and bankruptcy searches on the LLC. Promptly
following the signing of the Agreement by both parties, Sellers shall provide to
Purchaser access to all information in connection with the Property and the LLC
as required by Purchaser. Information shall include tax returns, books,
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accounts, records, contracts, financial reports and statements, organizational
documents of the LLC including all amendments thereto, if any, and other
relevant documents for completing the transactions contemplated in this
Agreement. If such tests, studies and investigations warrant, in the
Purchaser's sole, absolute and unbelievable discretion, the purchase of the
Interests for the purposes contemplated by the Purchaser, then the Purchaser may
elect to proceed to Closing and shall so notify the Sellers prior to the
expiration of the Study Period. If for any reason the Purchaser does not so
notify the Sellers of its determination to proceed to Closing prior to the
expiration of the Study Period, or if the Purchaser notifies the Sellers, in
writing, prior to the expiration of the Study Period that it has determined, for
any reason, and in Purchaser's sole, absolute and unbelievable discretion, not
to proceed to Closing, this Agreement automatically shall terminate, and the
Purchaser shall be released from any further liability or obligation under this
Agreement other than Purchaser's indemnification obligations given pursuant to
this paragraph which shall survive termination of this Agreement, and the
Deposit together with interest accrued thereon shall be immediately refunded to
Purchaser. Purchaser shall indemnify Sellers' and the LLC for any loss, damage
or liabilities arising our of activities relating to the Study Period and
Purchaser shall obtain an insurance policy, in amounts and with a company,
satisfactory to Sellers naming the LLC as an additional insured prior to entry
upon the Property.
(b) During the Study Period, the Sellers shall make available to the
Purchaser, its agents, auditors, engineers, attorneys and other designees, for
inspection copies of all existing architectural and engineering studies,
surveys, title insurance policies, zoning and site plan materials,
correspondence, environmental audits, environmental report, zoning compliance,
financial reports from the date of commencement of hotel operations, franchise
agreement, existing management agreement, deed and operating and services
contracts, and all of the organizational documents of the LLC including all
amendments thereto, if any, and other related materials or information if any,
relating to the Property and the LLC.
(c) During the Study Period, the Purchaser, at its expense, may cause
an examination of title to the Property to be made, and, prior to the expiration
of the Study Period, shall notify the Sellers of any defects in title shown by
such examination that the Purchaser is unwilling to accept. The Sellers shall
notify the Purchaser whether the Sellers are willing to cure such defects.
Sellers may cure, but shall not be obligated to cure such defects. If the
Sellers are unwilling or unable to cure any such defects by Closing, the
Purchaser shall elect (1) to waive such defects and proceed to Closing without
any abatement in the Consideration or (2) to terminate this Agreement and
receive a return of the Deposit with interest thereon. The Sellers shall not,
after the date of this Agreement and until termination of this Agreement,
subject the Property to and shall take all reasonable best efforts to prevent
the Property from being subjected to any liens, encumbrances, covenants,
conditions, restrictions, easements or other title matters or seek any zoning
changes or take any other action which may affect or modify the status of title
without the Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed. All title matters revealed by the Purchaser's
title examination and not cured by the Sellers as provided above shall be deemed
Permitted Title Exceptions. If Purchaser shall fail to examine title and notify
the Sellers of any such title objections by the end of the Study Period, all
such title exceptions (other than those rendering title unmarketable and those
that are to be paid
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at Closing as provided above and other than any title exceptions first appearing
after the date of Purchaser's title examination) shall be deemed Permitted Title
Exceptions.
(d) Within ten (10) days of the signing of the this Agreement by both
parties, Sellers shall provide Purchaser with copies of existing franchise
agreement, roof warranties, existing mortgage and loan documents, audited
financial statements, and HVAC service records and warranties, an as-built ALTA
survey, the existing owner's title policy, any existing mortgage policy,
environmental report, zoning compliance, financial reports from the date of the
opening of the Hotel, existing management agreement, deed and operating and
services contracts, and all of the organizational documents of the LLC including
all amendments thereto, if any. In the event that the environmental report is
more than one year old, Purchaser may order a new environmental report and any
cost and expense in connection with such new environmental report shall be borne
by the LLC in the event the Closing occurs.
(e) During the Study Period, at Purchaser's sole costs and expense,
Purchaser may cause a property condition assessment to be performed on the
Property ("Property Condition Assessment").
(f) During the Study Period, Purchaser shall have an absolute right to
complete its investigation of the Property and the LLC to its absolute
satisfaction, and in the event, the results of the investigation are
unsatisfactory in any respect to Purchaser, then Purchaser shall have the option
to terminate the Agreement without liability, and the Deposit shall be
immediately refunded in full to Purchaser.
(g) During the Study Period, Purchaser and Sellers shall contact the
Licensor, and obtain tentative approval of the transfer of the franchise license
to the Lessee (defined hereafter in Section 3.25), and Sellers and Purchaser
shall use diligent efforts to cooperate with Licensor to obtain such approval.
(h) Purchaser and Sellers agree that, in the event any of the Sellers
intend to sell any of their respective membership interests in the LLC after the
Closing Date, Purchaser shall have the first right of refusal and, in the event
Purchaser intends to sell any of its membership interests in the LLC after the
Closing Date, Sellers shall have the first right of refusal. Such buy-sell
provisions shall be incorporated in an Amended and Restated Operating Agreement
for the LLC (the "JV Agreements") to be entered into by the Purchaser and
Sellers at Closing, and such JV Agreements shall incorporate all essential terms
of this Agreement.
(i) During the Study Period, Purchaser shall make available to Sellers
and Sellers' attorney copies of Purchaser's organizational documents, including
all amendments thereto.
(j) During the Study Period, Purchaser shall have the right, at its
expense, to audit the books, records, and financial control procedures of the
LLC with respect to the Hotel.
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ARTICLE III
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SELLERS' REPRESENTATIONS, WARRANTIES AND COVENANTS
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To induce the Purchaser to enter into this Agreement and to purchase
the Property, the Sellers hereby jointly and severally make the following
representations, warranties and covenants, upon each of which each of the
Sellers acknowledges and agrees that the Purchaser is entitled to rely and has
relied upon:
3.1 Identity and Power. Each of the Sellers is and has all requisite
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powers and all governmental licenses, authorizations, consents and approvals
necessary to carry on his or her respective business as now conducted, to own,
lease and operate his or her respective membership interest and Interests in the
LLC, to execute and deliver this Agreement and any document or instrument
required to be executed and delivered on behalf of the Sellers hereunder, to
perform his obligations under this Agreement and any such other documents or
instruments and to consummate the transactions contemplated hereby; and
3.2 Authorization, No Violations and Notices.
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(a) The execution, delivery and performance of this Agreement by
each of the Sellers, and the consummation of the transactions contemplated
hereby have been duly authorized, adopted and approved by the Sellers as
necessary. No other proceedings are necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed by
each Sellers and is a valid and binding obligation enforceable against each and
every Sellers in accordance with its terms.
(b) Neither the execution, delivery, or performance by any Sellers
of this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by any Sellers with any of the provisions hereof, will,
(i) except for the terms of the LLC's Existing Financing
Documents (as defined in Section 3.10), the License (as defined in
Section 3.25) and the LLC's liquor license, violate, conflict with,
result in a breach of any provision of, constitute a default (or an
event that, which, with or lapse of time or both, would constitute a
default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or
acceleration, or the creation of any lien, security interest, charge,
or encumbrance upon any of the Property or assets of the LLC, under
any of the terms, conditions, or provisions of, the Articles of
Organization of such Sellers (if applicable), the LLC Operating
Agreement, license, lease, agreement, or other instrument, or
obligation to which the LLC is a party, or by which the LLC may be
bound, or to which the LLC or the Property or assets may be subject;
or
(ii) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule, or regulation applicable to the LLC or its
Property or assets that would not be violated by the execution,
delivery or performance of this Agreement or the
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transactions contemplated hereby by the Sellers or compliance by the
Sellers with any of the provisions hereof.
3.3 Litigation with respect to Sellers. There is no action, suit,
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claim or proceeding pending or to Sellers' knowledge, threatened against or
affecting any of the Sellers or any of the Sellers' assets in any court, before
any arbitrator or before or by any governmental body or other regulatory
authority (i) that would adversely affect such Sellers or their respective
Interests, (ii) that seeks restraint, prohibition, damages or other relief in
connection with this Agreement or the transactions contemplated hereby, or (iii)
would delay the consummation of any of the transactions contemplated hereby.
None of the Sellers is subject to any judgment, decree, injunction, rule or
order of any court relating to such Seller's participation in the transactions
contemplated by this Agreement.
3.4 Interests and Property.
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(a) The Interests will be on the Closing Date, free and clear of
all liens and encumbrances and each of the Sellers has good, marketable title
thereto and the right to convey same in accordance with the terms of this
Agreement. Upon delivery of the Sellers' Assignment and Assumption Agreement to
the Purchaser at Closing, good valid and marketable title to each and every
Sellers' respective Interests, free and clear of all liens and encumbrances,
will pass to the Purchaser. The Interests and Sellers' remaining 25% interests
in the LLC constitute the only outstanding securities of the LLC. On the Closing
Date, there shall be no pledge, lien or encumbrance on any of the membership
interests in the LLC.
(b) The Property will be on the Closing Date, free and clear of
all liens and encumbrances, except for the Permitted Title Exceptions and the
lien of the existing deed of trust, and the LLC has good, marketable title
thereto and the right to convey same. The LLC is the fee simple owner of the
Real Property and the sole owner of the Property.
3.5 Bankruptcy with Respect to Sellers. No Act of Bankruptcy has
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occurred with respect to the Sellers.
3.6 Brokerage Commission. The Sellers have engaged the services of
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Xxxx Xxxxxx of CB Xxxxxxx Xxxxx as its broker and will be solely responsible for
any brokerage or finder's fee, commission or other amount due to said broker.
3.7 The LLC.
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(a) The LLC is a limited liability company duly formed, validly
existing and in good standing under the laws of the Commonwealth of Virginia and
has all requisite powers necessary to carry on its business as now conducted, to
own, lease and operate its properties and is in Good Standing in the
Commonwealth of Virginia.
(b) Neither the execution, delivery, or performance by the Sellers
of this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by the Sellers or the LLC with any of the provisions hereof,
will:
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(i) except for the terms of the LLC's Existing Financing
Documents, the License and the LLC's liquor license, violate, conflict
with, result in a breach of any provision of, constitute a default (or
an event that, with notice or lapse of time or both, would constitute
a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or
acceleration, or the creation of any lien, security interest, charge,
or encumbrance upon any of the Property or other assets of the LLC,
under any of the terms, conditions, or provisions of, the Articles of
Organization of the LLC or LLC Operating Agreement, or any note, ,
license, lease, agreement, or other instrument or obligation to which
the LLC is a party, or by which the LLC may be bound, or to which the
LLC or its properties or assets may be subject; or
(ii) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule, or regulation applicable to the LLC or any of
the LLC's properties or assets.
(c) Except for the Sellers, no party has any interest in the LLC
or the Property or any portion thereof, or the right or option to acquire any
interest in the LLC or the Property or any portion thereof. The LLC has no
subsidiaries and does not directly or indirectly own any securities of or
interest in any other entity, including, without limitation, any LLC or joint
venture.
(d) The LLC has conducted no business other than the ownership and
operation of the Property.
3.8 Liabilities, Debts and Obligations. Except for the Continuing
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Liabilities on the Closing Date, the LLC will have no liabilities, debts or
obligations which have not been assumed by Sellers.
3.9 Tax Matters with respect to LLC.
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(a) The Sellers have caused the LLC to file, and shall cause the
LLC to file all income tax information returns on IRS Form 1065 (including K-1s
for each member) and applicable state and local income tax forms required to be
filed with the United States Government and with all states and political
subdivisions thereof where any such returns are required to be filed and where
the failure to file such return or report would subject the LLC or its sole
member the Sellers, to any material liability or penalty. All taxes (other than
sale taxes, rental taxes or the equivalent and real property taxes) imposed by
the United States, or by any foreign country, or by any state, municipality,
subdivision, or instrumentality of the United States or of any foreign country
or by any other taxing authority, which are due and payable by the LLC have been
paid in full or adequately provided for by reserves shown in their records and
books of account and in the LLC's financial information. The LLC has not
obtained or received any extension of time (beyond the Closing Date) for the
assessment of deficiencies for any years or waived or extended the statute of
limitations for the determination or collection of any tax. To the Sellers'
Knowledge, no unassessed tax deficiency is proposed or threatened against the
LLC.
11
(b) All taxes, rental taxes or the equivalent, and all interest
and penalties due thereon, required to be paid or collected by the LLC in
connection with the operation of the Property as of the Closing Date will have
been collected and/or paid to the appropriate governmental authorities, as
required or such amounts shall be pro-rated as of the Closing Date. The Sellers
shall cause the LLC to file, all necessary returns and petitions required to be
filed through the Closing Date. The Sellers shall cause the LLC to prepare and
file all federal and state income tax returns for the tax period ending on the
Closing Date, which shall reflect the termination for tax purposes of the LLC.
3.10 Contracts and Agreements. There is no loan agreement, guarantee,
-------------------------
note, bond, indenture and other debt instrument, lease and other contract to
which the LLC is a party or by which its assets are bound other than Permitted
Title Exceptions, the Operating Agreements, and the loan documents respecting
that certain financing by and among the LLC and the lender with the existing
mortgage on the Property (the "Lender") with an outstanding balance of
approximately $6,000,000.00 (the "Existing Financing Documents" and the
"Existing Financing", respectively), and such Existing Financing shall continue
to be the debt of the LLC after the Closing with the consent of the Lender.
3.11 No Special Taxes. The Sellers have no Knowledge of, nor have they
----------------
received any written notice of, any special taxes or assessments relating to the
LLC or Property or any part thereof or any planned public improvements that may
result in a special tax or assessment against the Property.
3.12 Compliance with Existing Laws. The LLC possesses all
--------------------------------
Authorizations, each of which is valid and in full force and effect, and, to
Sellers' Knowledge, no provision, condition or limitation of any of the
Authorizations has been breached or violated. The LLC has not misrepresented
or failed to disclose any relevant fact in obtaining all Authorizations, and the
Sellers have no Knowledge of any change in the circumstances under which those
Authorizations were obtained that result in their termination, suspension,
modification or limitation other than the LLC's liquor license. The Sellers have
no Knowledge, nor have they received written notice within the past three years,
of any existing violation of any provision of any applicable building, zoning,
subdivision, environmental or other governmental ordinance, resolution, statute,
rule, order or regulation, including but not limited to those of environmental
agencies or insurance boards of underwriters, with respect to the ownership,
operation, use, maintenance or condition of the Property or any part thereof, or
requiring any repairs or alterations other than those that have been made prior
to the date hereof.
3.13 Operating Agreements. The LLC has performed all of its
---------------------
obligations under each of the Operating Agreements and no fact or circumstance
has occurred which, by itself or with the passage of time or the giving of
notice or both, would constitute a material default under any of the Operating
Agreements. Without the prior written consent of the Purchaser, which consent
will not be unreasonably withheld or delayed, the Sellers shall cause the LLC
not to enter into any new management agreement, maintenance or repair contract,
supply contract, lease in which it is lessee or other agreements with respect to
the Property, nor shall the Sellers cause the LLC to enter into any agreements
modifying the Operating Agreements.
12
3.14 Warranties and Guaranties. The Sellers shall cause the LLC not to
-------------------------
release or modify any warranties or guarantees, if any, of manufacturers,
suppliers and installers relating to the Improvements and the Tangible Personal
Property or any part thereof, except with the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld or delayed. A
complete list of all such warranties and guaranties in effect as of the date of
this Agreement is attached hereto as Exhibit G.
----------
3.15 Insurance. All of the LLC's Insurance Policies are valid and in
---------
full force and effect, all premiums for such policies were paid when due and the
Sellers shall cause the LLC to pay all future premiums for such policies up to
the Closing Date (and any replacements thereof) on or before the due date
therefor. The Sellers shall cause the LLC to pay all premiums on, and shall
cause the LLC not to cancel or allow to expire, any of the LLC's Insurance
Policies prior to the Closing Date unless such policy is replaced, without any
lapse of coverage, by another policy or policies providing coverage at least as
extensive as the policy or policies being replaced.
3.16 Condemnation Proceedings; Roadways. The LLC has received no
------------------------------------
written notice of any condemnation or eminent domain proceeding pending or
threatened against the Property or any part thereof. The Sellers have no
Knowledge of any change or proposed change in the route, grade or width of, or
otherwise affecting, any street or road adjacent to or serving the Real
Property.
3.17 Litigation with respect to LLC. Except as set forth on Exhibit H
------------------------------- ---------
there is no action, suit or proceeding pending or known to be threatened against
or affecting the LLC or any part of or interest in the Property in any court,
before any arbitrator or before or by any governmental agency which (a) in any
manner raises any question affecting the validity or enforceability of this
Agreement or any other material agreement or instrument to which the LLC is a
party or by which it is bound and that is or is to be used in connection with,
or is contemplated by, this Agreement, (b) could materially and adversely affect
the business, financial position or results of operations of the LLC, (c) could
materially and adversely affect the ability of the LLC to perform its
obligations hereunder, or under any document to be delivered pursuant hereto,
(d) could create a lien on the Property, any part thereof or any interest
therein, or (e) could otherwise materially and adversely affect the Property,
any part thereof or any interest therein or the use, operation, condition or
occupancy thereof.
3.18 Labor Disputes and Agreements. There are not currently any labor
------------------------------
disputes pending or, to Sellers' knowledge, threatened as to the operation or
maintenance of the Property or any part thereof. The LLC is not a party to any
union or other collective bargaining agreement with employees employed in
connection with the ownership, operation or maintenance of the Property. The
employees of the LLC are at will employees.
3.19 Financial Information. To the Sellers' Knowledge, except as
----------------------
otherwise disclosed in writing to the Purchaser prior to the end of the Study
Period, for each of the LLC's accounting years, when a given year is taken as a
whole, all of the LLC's financial information previously delivered or to be
delivered to the Purchaser is and shall be correct and complete in all material
respects and presents accurately the financial condition of the LLC and results
of the operations of the Property for the periods indicated, except that such
statements do not have footnotes or
13
schedules that may otherwise be required by GAAP. If requested by the
Purchaser, the Sellers shall cause the LLC to deliver promptly all four-week
period ending financial information available to the LLC. The LLC's financial
information is prepared based on books and records maintained by the LLC in
accordance with the LLC's accounting system. The LLC's financial information
has been provided to the Purchaser without any changes or alteration thereto.
To the best of Sellers' Knowledge, since the date of the last financial
statement included in the LLC's financial information, there has been no
material adverse change in the financial condition or in the operations of the
Property.
3.20 Organizational Documents. The LLC's Organizational Documents are
-------------------------
in full force and effect and have not been modified or supplemented, and no fact
or circumstance has occurred that, by itself or with the giving of notice or the
passage of time or both, would constitute a default thereunder.
3.21 Operation of Property. The Sellers covenant that between the date
---------------------
hereof and the date of Closing Sellers shall cause the LLC to (a) operate the
Property only in the usual, regular and ordinary manner consistent with the
LLC's prior practice, (b) maintain the books of account and records in the
usual, regular and ordinary manner, in accordance with sound accounting
principles applied on a basis consistent with the basis used in keeping its
books in prior years, and (c) use all reasonable efforts to preserve intact the
present business organization, keep available the services of the present
officers and employees and preserve their relationships with suppliers and
others having business dealings with them. The Sellers shall cause the LLC to
continue to make good faith efforts to take guest room reservations and to book
functions and meetings and otherwise to promote the business of the Property in
generally the same manner as the LLC did prior to the execution of this
Agreement. Except as otherwise permitted hereby, from the date hereof until
Closing, the Sellers shall use their good faith efforts to ensure that the LLC
shall not take any action or fail to take action the result of which (i) would
have a material adverse effect on the Property or the Purchaser's ability to
continue the operation thereof after the Closing Date in substantially the same
manner as presently conducted, (ii) reduce or cause to be reduced any room rents
or any other charges over which Sellers or their affiliates have operational
control, unless such reduction are made in the usual, regular and ordinary
manner consistent with the Licensor's requirements and standards or are related
to per diems for bids on government contracts, or (iii) would cause any of the
representations and warranties contained in this Article III to be untrue as of
-----------
Closing.
3.22 Bankruptcy with respect to LLC. No Act of Bankruptcy has occurred
------------------------------
with respect to the LLC.
3.23 Hazardous Substances. Except for matters in LLC's or Purchaser's
---------------------
environmental reports and except for cleaning supplies and the like used in the
ordinary course of Seller's Business, Sellers have no Knowledge: (a) of the
presence of any "Hazardous Substances" (as defined below) on the Property, or
any portion thereof, or, (b) of any spills, releases, discharges, or disposal of
Hazardous Substances that have occurred or are presently occurring on or onto
the Property, or any portion thereof, or (c) of the presence of any PCB
transformers serving, or stored on, the Property, or any portion thereof, and
Sellers have no Knowledge of any failure to comply with any applicable local,
state and federal environmental laws, regulations, ordinances and
14
administrative and judicial orders relating to the generation, recycling, reuse,
sale, storage, handling, transport and disposal of any Hazardous Substances (as
used herein, "Hazardous Substances" shall mean any substance or material whose
presence, nature, quantity or intensity of existence, use, manufacture,
disposal, transportation, spill, release or effect, either by itself or in
combination with other materials is either: (1) potentially injurious to the
public health, safety or welfare, the environment or the Property, (2)
regulated, monitored or defined as a hazardous or toxic substance or waste by
any Governmental Body, or (3) a basis for liability of the owner of the Property
to any Governmental Body or third party, and Hazardous Substances shall include,
but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any
products, by-products or components thereof, and asbestos and toxic mold.
3.24 Room Furnishings. All public spaces, lobbies, meeting rooms, and
-----------------
each room in the Hotel available for guest rental is furnished in accordance
with Licensor's standards for the Hotel and room type. The LLC is obligated to
update the rooms of the Hotel and FF&E in accordance with the LLC's current
franchise agreement with the Licensor. The cost of such updates shall be borne
by Purchaser and Sellers in accordance with Section 5.22 hereof.
3.25 License.
-------
(a) The license from Marriott International, Inc. (the "Licensor") with
respect to the Hotel (the "License") is, and at Closing will be, valid and in
full force and effect, and on the Closing Date none of the Sellers nor the LLC
will be in default with respect thereto (with or without the giving of any
required notice and/or lapse of time); however, the License will not be
transferable without Licensor's consent.
(b) Subject to Purchaser obtaining Licensor's consent, neither the
execution, delivery, or performance by the Sellers of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance by the
Sellers or the LLC with any of the provisions hereof, will violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in a right of termination under any of the terms, conditions, or provisions of,
the License.
3.26 Access to Financial Information. Sellers shall provide access by
--------------------------------
Purchaser's representatives, to all financial and other information relating to
the Property and the LLC.
3.27 Intentionally Deleted.
----------------------
3.28 Sufficiency of Certain Items. The Property contains not less
-------------------------------
than:
(a) a sufficient amount of furniture, furnishings, color
television sets, carpets, drapes, rugs, floor coverings, mattresses, pillows,
bedspreads and the like, to furnish each guest room, so that each such guest
room is, in fact, fully furnished; and
(b) a sufficient amount of towels, washcloths and bed linens, so
that there are three sets of towels, washcloths and linens for each guest room
(one on the beds, one on the shelves, and one in the laundry), together with a
sufficient supply of paper goods, soaps, cleaning
15
supplies and other such supplies and materials, as are reasonably adequate for
the current operation of the Hotel.
3.29 Environmental Matters. To the best of Sellers' actual knowledge,
-----------------------
there are no violations of any environmental laws relating to Hazardous
Substances respecting the Property or the Hotel. In addition, without limiting
the generality of the foregoing, there are no instances and there have not at
any time been any instances of toxic mold at the Property or the Hotel.
3.30 Noncontravention. The execution and delivery of, and the
----------------
performance by the Sellers of their respective obligations under this Agreement
do not and will not contravene, or constitute a default under, any provision of
applicable law or regulation, or any agreement, judgment, injunction, order,
decree or other instrument binding upon the Sellers, or result in the creation
of any lien or other encumbrance on any asset of the Sellers. There are no
outstanding agreements (written or oral) pursuant to which the Sellers (or any
predecessor to or representative of the Sellers) has agreed to sell or has
granted an option or right of first refusal to acquire the Interests or the
Property or any part thereof. Prior to the consummation of the transactions
contemplated herein, the Existing Financing Documents require consent from the
Lender and the License agreement with Licensor requires consent from Licensor,
which consents shall be sought in accordance with the provisions of Article V
---------
and the obtaining of such consent shall be a condition precedent to Sellers'
obligations to close.
3.31 Third Party Beneficiary. Each of the representations, warranties
------------------------
and covenants contained in this Article III and its various subparagraphs are
-----------
intended for the benefit of the Purchaser and may be waived in whole or in part,
by the Purchaser, but only by an instrument in writing signed by the Purchaser.
Each of said representations, warranties and covenants shall survive the closing
of the transaction contemplated hereby for one (1) year.
3.32 Third Party Consents. Sellers shall use best efforts to obtain
----------------------
Lender's approval and consent to Purchaser's purchase of the Interests in the
LLC and to obtain Licensor's consent to the transfer of the License to the
Lessee.
ARTICLE IV
----------
PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------------------
To induce the Sellers to enter into this Agreement and to sell the
Interests, the Purchaser hereby makes the following representations, warranties
and covenants with respect to the Property, upon each of which the Purchaser
acknowledges and agrees that the Sellers are entitled to rely and have relied
upon:
4.1 Organization and Power. The Purchaser is a limited partnership
------------------------
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, and has all partnership powers and all governmental
licenses, authorizations, consents and approvals to carry on its business as now
conducted and to enter into and perform its obligations under this Agreement and
any document or instrument required to be executed and delivered on behalf of
the Purchaser hereunder.
16
4.2 Noncontravention. The execution and delivery of this Agreement and
----------------
the performance by the Purchaser of its obligations hereunder do not and will
not contravene, or constitute a default under, any provisions of applicable law
or regulation, the Purchaser's partnership agreement or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Purchaser or
result in the creation of any lien or other encumbrance on any asset of the
Purchaser. Any and all liens on the Interests shall be released at Closing.
4.3 Litigation. There is no action, suit or proceeding, pending or
----------
known to be threatened, against or affecting the Purchaser in any court or
before any arbitrator or before any Governmental Body which (a) in any manner
raises any question affecting the validity or enforceability of this Agreement
or any other agreement or instrument to which the Purchaser is a party or by
which it is bound and that is to be used in connection with, or is contemplated
by, this Agreement, (b) could materially and adversely affect the ability of the
Purchaser to perform its obligations hereunder, or under any document to be
delivered pursuant hereto.
4.4 Bankruptcy. No Act of Bankruptcy has occurred with respect to the
----------
Purchaser.
4.5 No Brokers. The Purchaser has not engaged the services of, nor is
-----------
it or will it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder's fee, commission or other
amount with respect to the transaction described herein.
ARTICLE V
---------
CONDITIONS AND ADDITIONAL COVENANTS
-----------------------------------
The Purchaser's obligations hereunder are subject to the satisfaction
of the following conditions precedent and the compliance by the Sellers with the
following covenants:
5.1 Sellers' Deliveries. The Sellers shall have delivered to the
--------------------
Escrow Agent or the Purchaser, as the case may be, on or before the Closing
Date, all of the documents and other information required of Sellers pursuant to
Section 6.2.
-----------
5.2 Representations, Warranties and Covenants; Obligations of Sellers;
-------------------------------------------------------------------
Certificate. All of the Sellers' representations and warranties made in this
-----------
Agreement shall be true and correct as of the date hereof and as of the Closing
Date as if then made, there shall have occurred no material adverse change in
the financial condition of the Property or the LLC since the date hereof, the
Sellers shall have performed all of their material covenants and other
obligations under this Agreement and the Sellers shall have executed and
delivered to the Purchaser at Closing a certificate to the foregoing effect.
5.3 Title Insurance. The LLC shall hold good and indefeasible fee
----------------
simple title to the Real Property and the Real Property shall be insurable as
such.
5.4 Condition of Improvements. The Improvements and the Tangible
---------------------------
Personal Property (including but not limited to the mechanical systems,
plumbing, electrical, wiring, appliances, fixtures, heating, air conditioning
and ventilating equipment, elevators, boilers,
17
equipment, roofs, structural members and furnaces) shall be in the same
condition at Closing as they are as of the date hereof, reasonable wear and tear
excepted. Prior to Closing, the Sellers shall not have diminished the quality
or quantity of maintenance and upkeep services heretofore provided to the Real
Property and the Tangible Personal Property and the Sellers shall not have
diminished the Inventory. The Sellers shall not have removed or caused or
permitted to be removed any part or portion of the Real Property or the Tangible
Personal Property unless the same is replaced, prior to Closing, with similar
items of at least equal quality and acceptable to the Purchaser.
5.5 Utilities. All of the Utilities shall be installed in and
---------
operating at the Property, and service shall be available for the removal of
garbage and other waste from the Property.
5.6 License. From the date hereof to and including the Closing Date,
-------
Sellers shall comply with and perform all of the duties and obligations of
licensee under the License.
5.7 Interests. From the date hereof to and including the earlier of
---------
the Closing Date or the date of termination of this Agreement, Sellers shall not
sell, assign, pledge, hypothecate or otherwise transfer the Interests or any of
Sellers' interests in the LLC, except as contemplated by this Agreement, nor
shall the Sellers cause or permit the LLC to issue any securities to any person
or to sell, pledge, transfer or otherwise dispose of the Property or any
interest therein.
5.8 Audits. For one year following the Closing Date, Purchaser shall
------
have the right, at its expense, to audit the 2003 and 2004 books, records,
financials, and financial control procedures of the LLC with respect to the
Hotel.
5.9 Franchise License Contingency. As a condition to Closing, Licensor
------------------------------
(as defined in Section 3.25) will approve the transfer of the franchise to the
Lessee (defined hereafter in Section 5.17). The LLC shall cause the franchise
license with Licensor respecting the Hotel to be transferred to the Lessee, and
Purchaser and Sellers shall cause the Lessee to obtain a franchise license with
Licensor. Purchaser and Sellers shall use diligent efforts and shall fully
cooperate with each other in pursuit of such franchise license with Licensor.
Sellers shall contact Licensor and use best efforts to cause Licensor to waive,
or at least reduce, the franchise transfer fees and costs. The LLC shall be
responsible for all costs and expenses associated with the transfer of the
franchise license to the Lessee. In the event that Licensor does not approve
the transfer of the franchise license to the Lessee on or before the Closing
Date, then either (i) the parties hereto may agree to extend the Closing Date or
(ii) Purchaser, at Purchaser's sole option, may elect to terminate this
Agreement and receive a refund of the Deposit with interest thereon.
5.10. Existing Financing. The Existing Financing shall continue to be
-------------------
the obligation of the LLC after the Closing. Any and all costs and fees
associated with assignment and assumption of the Existing Financing shall be
borne by the LLC and Sellers shall use best efforts to cause the Lender to
waive, or at least reduce, any such costs and fees.
5.11. Existing Hotel Management Agreement. LLC shall cause the existing
-----------------------------------
hotel management agreement for the Hotel, if any, to be terminated, and Sellers
shall be responsible for all fees and costs associated with such termination.
18
5.12. Non-Competition. At Closing, Sellers shall enter into a
---------------
non-competition agreement with Purchaser, pursuant to which Sellers shall agree
that neither of the Sellers nor any of the Sellers' affiliates or family members
shall directly or indirectly develop, construct, operate or acquire any hotel,
other than a Fairfield Inn on Richmond Road in Williamsburg, Virginia, and a
Holiday Inn Express on Richmond Road in Williamsburg, Virginia, within a 2-mile
radius of the Hotel for a 3-year period from the Closing Date.
5.13. Non-Interference. Neither of the Sellers nor any of the
----------------
Sellers' affiliates or family members shall hire or solicit any employee of the
Hotel at any time. Notwithstanding the foregoing as long as LTD Management is
operating the Hotel, LTD Management may transfer any employee of the Hotel to
other hotels managed by LTD Management.
5.14. Third Party Consents. To the extent required by any service
----------------------
contract or agreement to which the LLC is a party, Sellers will obtain all
necessary consents to the transfer of the Interests. Sellers shall obtain
Licensor's consent in accordance with Section 5.9 and shall obtain the consent
of the Lender on or before the Closing Date. Any and all costs and expenses
associated with obtaining such third-party consents shall be borne by the LLC.
In the event that Lender does not approve the transfer of the LLC Interests to
the Purchaser on or before the Closing Date, then either (i) the parties hereto
may agree to extend the Closing Date or (ii) Purchaser or Seller may elect to
terminate this Agreement. In the event of such termination, Purchaser shall
receive a refund of the Deposit with interest thereon.
5.15. Cash Flow Participation. Purchaser shall, during the term of its
------------------------
investment and its membership in the LLC, beginning from the Closing Date, be
entitled to receive on an annual basis first (i) an eight percent (8.0%)
preferred return for year one, (ii) a ten percent (10.0%) preferred return for
year two, and (iii) a twelve percent (12.0%) preferred return for year three and
thereafter on its Contributed Equity from the net operating cash flows from the
cash available for distribution of the LLC, which net operating cash flows are
defined as Gross Operating Profit less the debt service payments, management
fee, asset management fee (as set forth in the Asset Management Agreement
(defined in Section 5.18)), property taxes, insurance premiums, lease payments
(if any) and funds in the amount of four percent (4.0%) set aside in the FF&E
replacement reserve. Sellers then on an annual basis shall be entitled to
receive (i) an eight percent (8.0%) return for year one, (ii) a ten percent
(10.0%) return for year two, and (iii) a twelve percent (12.0%) return for year
three and thereafter on their Contributed Equity from the net operating cash
flows (as defined above) from cash available for distribution of the LLC.
Remaining cash flows from cash available for distribution ("Excess Cash") will
be apportioned pro-rata based upon Sellers' and Purchaser's respective equity
ownership in the LLC. The amount of Purchaser and Sellers' respective
Contributed Equity as of the Closing Date shall be set forth in the Amended and
Restated Operating Agreement of the LLC to be entered into between the parties
as of the Closing Date.
5.16. Liquidation. Proceeds (after payment of all outstanding debts,
------------
obligations and liabilities of the LLC) received from a sale, liquidation,
refinancing or other capital event of the
19
LLC (individually and collectively, "Event of Liquidation") shall be distributed
as follows: First, the Purchaser shall receive the total amount of its
Contributed Equity and Sellers shall receive second the total amount of their
respective Contributed Equity, and then any remaining proceeds shall be divided
pro-rata to Purchaser and Sellers based upon their respective equity ownership
in the LLC. In the event there has been no third party offer to buy the LLC,
prior to an Event of Liquidation occurring, Sellers shall have a right of first
refusal based on a valuation of the LLC determined by three independent
appraisers mutually approved by Purchaser and Sellers. Upon receipt of the
three appraisals, Sellers shall have 30 days to make an offer to buy for the
amount equal to the average of the three appraised valuations. In the event no
such offer is made by Sellers in such 30-day period, Sellers' first refusal
right shall be deemed waived. In the event Sellers elect to buy the Purchaser's
membership interests within such 30-day period pursuant hereto, closing of the
sale of such membership interests shall occur within 60 days of Sellers'
election to buy.
5.17. Lessee. On or before the Closing Date, Sellers and Purchaser, at
-------
the sole cost and expense of the LLC, shall take all required actions to cause
HT LTD Williamsburg, LLC, a Virginia limited liability company ("Lessee") to be
formed and owned by Purchaser or its affiliate with 75% interest in the Lessee
and the Sellers, collectively, with 25% interest in the Lessee.
5.18. Percentage Lease and New Hotel Management Agreement. Purchaser
-----------------------------------------------------
and Sellers shall cause the Lessee to enter into a percentage lease with LLC and
LLC shall enter into such lease with Lessee. Purchaser and Sellers shall cause
the Lessee to enter into a new management agreement for operation of the Hotel
with LTD Management Company, LLC (the "Manager") (as amended, modified, and
restated, the "Management Agreement"), which Management Agreement shall be
negotiated between the parties during the Study Period. Under the Management
Agreement, Manager shall be responsible for the day-to-day operation of the
Property. The management fee to Manager for the operation of the Hotel shall be
3% of Gross Revenues of the Hotel. Purchaser and Sellers shall cause the Lessee
to enter into an asset management agreement with Hersha Hospitality Management,
L.P. ("HHMLP") (the "Asset Management Agreement"), and pursuant to the Asset
Management Agreement, HHMLP will act as Asset Manager, providing overall sales
and management support to Lessee, and all accounting functions for the LLC, and
HHMLP shall earn an asset management fee of 1% of the Gross Revenues. In the
event Sellers sell their remaining 25% interests in the LLC, the Management
Agreement shall terminate.
5.19. LLC Manager. Sellers and Purchaser agree that Xxx X. Xxxx, or
------------
any other officer of Purchaser or its affiliates, shall be the new Manager of
the LLC and appointment of this new Manager shall be effective on and after the
Closing Date. Any sale, refinance, or liquidation of the LLC shall require the
unanimous consent of all the members of the LLC.
5.20. Buy-Sell Provisions. Purchaser and Sellers agree that, in the
--------------------
event any of the Sellers intend to sell any of their respective membership
interests in the LLC after the Closing Date, Purchaser shall have the first
right of refusal and, in the event Purchaser intends to sell any
20
of its membership interests in the LLC after the Closing Date, Sellers shall
have the first right of refusal. The non-offering party shall have 30 days to
respond to an offer to sell by the other party and exercise its first right of
refusal. In the event the non-offering party elects to purchase the membership
interests being offered for sale within the 30-day response period, closing of
the sale of such membership interests shall occur within 60 days of the
non-offering party's election to buy. In the event the non-offering party does
not accept the offer and does not elect to buy the membership interests offered
for sale within the 30-day response period, the non-offering party's first right
of refusal shall be deemed waived; provided that, if the non-offering party does
not elect to buy the membership interests, the offering party shall have a
period of 90 days (beginning the day after the expiration of the 30-day response
period) to sell the membership interests on the same terms and conditions
contained in the right of refusal. In the event such a sale is not consummated
within the 90-day period, then the non-offering party's right of first refusal
shall continue to be applicable to any future proposed sales of the membership
interests. Such buy-sell provisions shall be incorporated in the JV Agreements
(as defined in Section 2.2(h)) to be entered into by the Purchaser and Sellers
at Closing, and such JV Agreements shall incorporate all essential terms of this
Agreement.
5.21. Hotel Manager's Employees. The Manager may use its employees
---------------------------
who are not specifically assigned to the Hotel to perform services for the
Hotel, and the pro-rata cost of their salaries, payroll taxes and employee
benefits with respect to such services provided for the Hotel shall be
reimbursed to Manager as an operating expense to the extent such costs are set
forth in the budget approved by the Lessee. The provisions set forth in this
Section 5.21 shall be substantially incorporated in the Management Agreement to
be entered into between the Lessee and the Manager. Furthermore, the Manager
shall be reimbursed for the pro-rata cost of the salaries, payroll taxes and
employee benefits of the Manager's Revenue Manager, Independent Maintenance
Group and Marketing Personnel together with a pro-rata share of the expense
incurred by such individuals to the extent such costs and expenses are set forth
in the approved budget in accordance with the Management Agreement, provided
that to the extent such expenses incurred by the Independent Maintenance Group
are for repairs necessary for the maintenance and operation of the Hotel, the
expenses will be paid for as an operating expense even if not set forth in the
approved budget. For purposes of this provision, the pro-rata share shall be
determined by a fraction the numerator of which shall be one (1) and the
denominator will be the number of hotels/motels to which an individual is
providing services.
5.22. Reserves and FF&E Improvements. At Closing, Purchaser shall
---------------------------------
reimburse Sellers an amount equal to 75% of all reserves/escrows held by Lender
(including FF&E reserves and tax reserves), which amount will be determined at
Closing, and such reimbursement shall be added to the total amount of
Contributed Equity of Purchaser. Additionally, the Sellers shall receive credit
as a capital contribution in the amount of 25% of the existing reserves/escrows
held with the Lender which amount shall be added to the total amount of the
Contributed Equity of Sellers.
5.23. Removal of Pledges/Liens. As of the Closing Date, any and all
--------------------------
pledges of the LLC membership interests, if any, shall be released, and there
shall be no pledge, lien, or encumbrance on any of the membership interests in
the LLC as of the Closing Date.
21
ARTICLE VI
----------
CLOSING
-------
6.1 Closing. Closing shall be held at a location that is mutually
-------
acceptable to the parties, on or before March 31, 2005.
6.2 Sellers' Deliveries. At Closing, the Sellers shall deliver to
--------------------
Purchaser all of the following instruments, each of which shall have been duly
executed and, where applicable, acknowledged on behalf of the Sellers and shall
be dated as of the date of Closing:
(a) Assignments of the Interests.
(b) The certificate required by Section 5.2.
------------
(c) The Assignment and Assumption Agreement.
(d) Intentionally Deleted.
(e) Such agreements, affidavits or other documents as may be
reasonably required by the Title Company to issue an endorsement to the existing
Owner's Title Policy with affirmative coverage over mechanics' and materialmen's
liens.
(f) The FIRPTA Certificate for the Sellers who are eligible to
execute such certificate.
(g) True, correct and complete copies of all warranties, if any,
of manufacturers, suppliers and installers possessed by the Sellers and relating
to the Improvements and the Personal Property, or any part thereof.
(h) Certified copies of the LLC's Organizational Documents.
(i) Certified copies of any entity Sellers' Organizational
Documents.
(j) Appropriate consent of the LLC, authorizing (A) the execution
of any documents to be executed and delivered by the LLC prior to, at or
otherwise in connection with Closing and in connection with the transactions
contemplated by this Agreement, and (B) the performance by the LLC of its
obligations hereunder and under such documents.
(k) Valid, final and unconditional certificate(s) of occupancy for
the Real Property and Improvements, issued by the appropriate Governmental Body.
(l) Intentionally Deleted.
(m) All current real estate and personal property tax bills in the
Sellers' or the LLC's possession or under its control.
22
(n) A complete set of all guest registration cards, guest
transcripts, guest histories, and all other available guest information.
(o) An updated schedule of employees of the LLC, showing salaries
and duties with a statement of the length of service of each such employee,
brought current to a date not more than 48 hours prior to the Closing.
(p) A complete list of all advance room reservations, functions
and the like, in reasonable detail so as to enable the Purchaser to honor the
LLC's commitments in that regard.
(q) A list of the LLC's outstanding accounts receivable as of
midnight on the date prior to the Closing, specifying the name of each account
and the amount due the Sellers.
(r) All keys for the Property.
(s) All books, records, operating reports, appraisal reports,
files and other materials in the Sellers' possession or control which are
necessary in the Purchaser's discretion to maintain continuity of operation of
the Property.
(t) An assignment of all warranties and guarantees from all
contractors and subcontractors, manufacturers, and suppliers in effect with
respect to the Improvements.
(u) Complete set of "as-built" drawings for the Improvements.
(v) Such proof, reasonably acceptable to the Sellers evidencing
the payment by Purchaser of all transfer taxes if any, incurred in connection
with the transactions contemplated by this Agreement.
(w) Counsel opinion letter. During the Study Period, Sellers and
Buyer will agree upon the form of Sellers' Counsel opinion letters satisfactory
to both parties. In the event the parties do not agree upon the form of opinion
letter, either party can terminate this Agreement.
(x) A written instrument executed by the Sellers, conveying and
transferring to the Purchaser all of the Sellers' right, title and interest in
any telephone numbers and facsimile numbers relating to the Property, and, if
the Sellers maintains a post office box, conveying to the Purchaser all of its
interest in and to such post office box and the number associated therewith, so
as to assure a continuity in operation and communication.
(y) Any other document reasonably required by Purchaser in order
to consummate the transaction.
6.3 Purchaser's Deliveries. At Closing, the Purchaser shall pay or
-----------------------
deliver to the Sellers the following:
(a) The Consideration.
23
(b) The Assignment and Assumption Agreement.
(c) Any other document or instrument reasonably requested by the
Sellers or required hereby.
(d) Counsel opinion letter. During the Study Period, Sellers and
Purchaser will agree upon the form of Purchaser's Counsel opinion letter
satisfactory to both parties. In the event the parties do not agree upon the
form of opinion letter, either party can terminate this Agreement.
6.4 Closing Costs. Real estate transfer taxes, if any, and to the
--------------
extent they are due and payable, shall be paid as customary in the Commonwealth
of Virginia. All filing fees, recording or other similar taxes due with respect
to the transfer of the Interests and all charges for title insurance premiums
shall be paid by the LLC. LLC shall pay for any costs and expenses associated
with obtaining of the consent from the Lender for the assumption of the Existing
Financing and any cost and expenses associated with the transfer of the
franchise to Lessee as well as any other costs and expenses in connection with
any necessary third party reports related thereto.
6.5 Income and Expense Allocations. All income and expenses with
---------------------------------
respect to the Property, determined in accordance with United States generally
accepted accounting principles consistently applied, shall be allocated between
the Sellers and the LLC. The Sellers shall be entitled to all income and
responsible for all expenses for the period of time up to but not including
12:01 a.m. on the Closing Date, and the LLC shall be entitled to all income for
the period of time from, after and including 12:01 a.m. on the Closing Date as
per Section 5.15 of this Agreement. All adjustments shall be made by separate
agreement between the parties and shall be payable by check or wire transfer
directly between the parties. Without limiting the generality of the foregoing,
the following items of income and expense shall be allocated as of the Closing
Date:
(a) Current and prepaid rents, including, without limitation,
prepaid room receipts, function receipts and other reservation receipts.
(b) Real estate and personal property taxes.
(c) Amounts under the Operating Agreements.
(d) Utility charges (including but not limited to charges for
water, sewer and electricity).
(e) Wages, vacation pay, pension and welfare benefits and other
fringe benefits of all persons employed at the Property who the Purchaser elects
to employ.
(f) All prepaid reservations and contracts for rooms confirmed by
Sellers prior to the Closing Date for dates after the Closing Date, all of which
Purchaser shall honor.
The Sellers shall be required to pay all sales taxes and similar
impositions on
24
revenues generated from the Hotelup to the Closing Date.
The LLC shall not be obligated to collect any accounts receivable or
revenues accrued prior to the Closing Date for Sellers, but if the LLC collects
same, such amounts will be promptly remitted to Sellers in the form received.
If accurate allocations cannot be made at Closing because current
bills are not obtainable (as, for example, in the case of utility bills or tax
bills), the parties shall allocate such income or expenses at Closing on the
best available information, subject to adjustment upon receipt of the final xxxx
or other evidence of the applicable income or expense. Any income received or
expense incurred by the Sellers or the LLC with respect to the Property after
the date of Closing shall be promptly allocated in the manner described herein
and the parties shall promptly pay or reimburse any amount due. The Sellers
shall pay at Closing all special assessments and taxes applicable to the
Property which are due on or before the Closing.
The assignment of membership interest transferring the Sellers
ownership of the Interests will be dated as of the Closing Date, and the Sellers
will be entitled to any distributions thereon on and before the Closing Date.
ARTICLE VII
-----------
CONDEMNATION; RISK OF LOSS
--------------------------
7.1 Condemnation. In the event of any actual or threatened taking,
------------
pursuant to the power of eminent domain, of all or any portion of the Real
Property, or any proposed sale in lieu thereof, the Sellers shall give written
notice thereof to the Purchaser promptly after the Sellers learn or receive
notice thereof. If all or any part of the Real Property is, or is to be, so
condemned or sold such that the Hotel cannot be operated in the manner in which
it currently is operated, the Purchaser shall have the right to terminate this
Agreement and receive a refund of the Deposit with interest thereon. If the
Purchaser elects not to terminate this Agreement, all proceeds, awards and other
payments arising out of such condemnation or sale (actual or threatened) shall
be paid or assigned, as applicable, to the Purchaser at Closing.
7.2 Risk of Loss. The risk of any loss or damage to the Property prior
------------
to the Closing shall remain upon the Sellers. If any such loss or damage to
more than twenty five percent (25%) of the value of the Improvements occurs
prior to Closing, the Purchaser shall have the right to terminate this Agreement
and receive a refund of the Deposit with interest thereon. If the Purchaser
elects not to terminate this Agreement, all insurance proceeds and rights to
proceeds arising out of such loss or damage shall be paid or assigned, as
applicable, to the LLC at Closing.
25
ARTICLE VIII
------------
LIABILITY OF PURCHASER; INDEMNIFICATION BY SELLERS;
---------------------------------------------------
TERMINATION RIGHTS; RIGHTS OF PURCHASER
---------------------------------------
8.1 Liability of Purchaser. Except for any obligation expressly
------------------------
assumed or agreed to be assumed by the Purchaser hereunder and in the Assignment
and Assumption Agreement, the Purchaser does not assume any obligation of the
Sellers or any liability for claims arising out of any occurrence prior to
Closing.
8.2 Indemnification by Sellers. The Sellers hereby, jointly and
----------------------------
severally, indemnify and hold the Purchaser harmless from and against any and
all claims, costs, penalties, damages, losses, liabilities and expenses, subject
to Section 9.11, that may at any time be incurred by the Purchaser, whether
-------------
before or after Closing, as a result of any breach by the Sellers of any of
their representations, warranties, covenants or obligations set forth herein or
in any other document delivered by the Sellers pursuant hereto.
8.3 Specific Performance and Remedies. Sellers agree that in the event
----------------------------------
of any breach or threatened breach by Sellers of any covenant, obligation or
other provision contained in this Agreement, Purchaser shall be entitled (as its
sole remedy), to the extent permitted by applicable law, to seek (a) a decree or
order of specific performance to enforce the observance and performance of such
covenant, obligation or other provision and (b) an injunction restraining such
breach or threatened breach. If any legal action or other legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
is brought against any party to this Agreement, the prevailing party shall be
entitled to recover reasonable attorney's fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
8.4 Termination by Sellers. If, prior to Closing, the Purchaser
------------------------
defaults in performing any of its obligations under this Agreement and the
Purchaser fails to cure any such default within ten (10) days after notice
thereof from the Sellers, then the Sellers' sole remedy for such default shall
be to terminate this Agreement. Upon such termination, Sellers shall be
entitled to receive the Deposit as LIQUIDATED DAMAGES in full and complete
satisfaction of any and all damages incurred by Sellers on account of such
default, it being acknowledged and agreed that in the event of any such default
it would be difficult or impossible to ascertain the precise amount of such
damages and the amount of the Deposit are fair and reasonable estimates of the
amount of such damages. Upon notice to the Escrow Agent of Purchaser's default,
the Escrow Agent shall transfer the Deposit to Sellers.
ARTICLE IX
----------
MISCELLANEOUS PROVISIONS
------------------------
9.1 Completeness; Modification. This Agreement constitutes the entire
---------------------------
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto.
26
This Agreement may be modified only by a written instrument duly executed by the
parties hereto.
9.2 Assignments. The Purchaser may assign its rights hereunder to any
-----------
affiliate of Purchaser without the consent of the Sellers. No such assignment
shall relieve the Purchaser of any of its obligations and liabilities hereunder.
9.3 Successors and Assigns. The benefits and burdens of this Agreement
----------------------
shall inure to the benefit of and bind the Purchaser and the Sellers and their
respective party hereto.
9.4 Days. If any action is required to be performed, or if any notice,
----
consent or other communication is given, on a day that is a Saturday or Sunday
or a legal holiday in the jurisdiction in which the action is required to be
performed or in which is located the intended recipient of such notice, consent
or other communication, such performance shall be deemed to be required, and
such notice, consent or other communication shall be deemed to be given, on the
first business day following such Saturday, Sunday or legal holiday. Unless
otherwise specified herein, all references herein to a "day" or "days" shall
refer to calendar days and not business days.
9.5 Governing Law. This Agreement and all documents referred to herein
-------------
shall be governed by and construed and interpreted in accordance with the laws
of the Commonwealth of Virginia.
9.6 Counterparts. To facilitate execution, this Agreement may be
------------
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear on each counterpart
hereof. All counterparts hereof shall collectively constitute a single
agreement.
9.7 Severability. If any term, covenant or condition of this
------------
Agreement, or the application thereof to any person or circumstance, shall to
any extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to other persons or
circumstances, shall not be affected thereby provided the parties realize the
material benefits of this Agreement, and each term, covenant or condition of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
9.8 Costs. Regardless of whether Closing occurs hereunder, and except
-----
as otherwise expressly provided herein, each party hereto shall be responsible
for its own costs in connection with this Agreement and the transactions
contemplated hereby, including without limitation fees of attorneys, engineers
and accountants.
9.9 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be delivered by hand, transmitted by
facsimile transmission, sent prepaid by Federal Express (or a comparable
overnight delivery service) or sent by the United States mail, certified,
postage prepaid, return receipt requested, at the addresses and with such copies
as designated below. Any notice, request, demand or other communication
delivered or
27
sent in the manner aforesaid shall be deemed given or made (as the case may be)
when actually delivered to the intended recipient.
If to the Sellers: X. X. Xxxxxxx, as Authorized
---------------------
Agent for the Sellers
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
With a copy to: Xxxx X. Xxxxxxx, Esquire
-----------------
Xxxxxxx & Xxxxxxx, P.C.
000 Xxxxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
If to the Purchaser: Hersha Hospitality Limited Partnership
----------------------
000 Xxxxxxxx Xxxxx, Xxx X
Xxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Shah & Xxxxx LLP
-----------------
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Lok Mohapatra, Esquire
Telephone: 000-000-0000
Facsimile: 000-000-0000
Or to such other address as the intended recipient may have specified in a
notice to the other party. Any party hereto may change its address or designate
different or other persons or entities to receive copies by notifying the other
party and the Escrow Agent in a manner described in this Section.
9.10 Incorporation by Reference. All of the exhibits attached hereto
----------------------------
are by this reference incorporated herein and made a part hereof.
9.11 Survival. All of the representations, warranties, covenants and
--------
agreements of the Sellers and the Purchaser made in, or pursuant to, this
Agreement shall survive for a period of twelve (12) months following Closing and
shall not merge into the Deed or any other document or instrument executed and
delivered in connection herewith.
9.12 Further Assurances. The Sellers and the Purchaser each covenant
-------------------
and agree to sign, execute and deliver, or cause to be signed, executed and
delivered, and to do or make, or
28
cause to be done or made, upon the written request of the other party, any and
all agreements, instruments, papers, deeds, acts or things, supplemental,
confirmatory or otherwise, as may be reasonably required by either party hereto
for the purpose of or in connection with consummating the transactions described
herein.
9.13 Preferred Member. Pursuant to this Agreement, Purchaser shall be
-----------------
a preferred investor and member in the LLC, and as such shall receive a
preferred return on its Contributed Equity from the distributed cash flow of the
LLC as per Section 5.15.
9.14 Time of Essence. Time is of the essence with respect to every
-----------------
provision hereof.
9.15 Confidentiality. Purchaser and Sellers and their representatives,
----------------
including any professionals representing the Purchaser and Sellers, shall keep
the existence and terms of this Agreement strictly confidential, except to the
extent disclosure is compelled by law, and then only to the extent of such
compulsion.
9.16 Publicity. The parties agree that no party shall contact or
---------
conduct negotiations with public officials, make any public pronouncements,
issue press releases or otherwise furnish information regarding this Agreement
and/or the transactions contemplated by this Agreement to a third party without
obtaining the prior written consent of all parties. No party, or its employees
with knowledge of the transactions contemplated herein, shall trade in the
securities of any affiliate of Purchaser until a public announcement of the
transactions contemplated by this Agreement has been made public.
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed in their names by their respective duly-authorized
representatives.
SELLERS:
--------
_____________________________
By: Xxxxxx X. Xxxxxxx
_____________________________
By: Bharti X. Xxxxx
_____________________________
By: Malay X. Xxxxxxx
_____________________________
By: Kush X. Xxxxxxx
29
_____________________________
By: Xxxx X. Xxxxx
_____________________________
By: Xxxxx X. Xxxxx
PURCHASER:
----------
Hersha Hospitality Limited Partnership, a
Virginia limited partnership
By: Hersha Hospitality Trust, a Maryland
business trust, its sole general partner
By: __________________________
Xxx X. Xxxx, President & COO
THE LLC:
--------
LTD ASSOCIATES ONE, LLC, a Virginia
limited liability company
By: _________________________
___________________, Manager
30
EXHIBIT A
---------
LEGAL DESCRIPTION OF LAND
-------------------------
EXHIBIT B
---------
EMPLOYMENT AGREEMENTS
---------------------
EXHIBIT C
---------
INSURANCE POLICIES
------------------
EXHIBIT D
---------
LLC OPERATING AGREEMENT
-----------------------
EXHIBIT E
---------
OPERATING AGREEMENTS
--------------------
EXHIBIT F
---------
LLC ARTICLES OF ORGANIZATION
----------------------------
EXHIBIT G
---------
SELLERS' WARRANTIES AND GUARANTIES
----------------------------------
EXHIBIT H
---------
LITIGATION SCHEDULE
-------------------
