Exhibit 2
SALE - PURCHASE AGREEMENT
-------------------------
Between
THE PORT AUTHORITY OF
NEW YORK AND NEW JERSEY,
SELLER,
and
HOST MARRIOTT CORPORATION,
PURCHASER.
As of November 2, 1995
TABLE OF CONTENTS
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Paragraph Page
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1. Hotel Assets; Agreement to Grant and Acquire.............. -1-
2. Payment of the Purchase Price............................. -4-
3. Representations of Seller and Purchaser................... -13-
4. Due Diligence Period-Status of Title to the Real Property. -21-
5. Closing Place and Date.................................... -27-
6. Title to the Real Property-Title Insurance................ -27-
7. Apportionments and Adjustments............................ -28-
8. Health Insurance Reserve.................................. -33-
9. Employees................................................. -33-
10. Future Operations......................................... -39-
11. Damage and Destruction.................................... -41-
12. Eminent Domain............................................ -42-
13. Documents to Be Delivered by Seller and Purchaser......... -43-
14 Recording Charges and Transfer Taxes...................... -46-
15. Property of Guests........................................ -47-
16. Default................................................... -48-
17. Notices................................................... -49-
18. Entire Agreement.......................................... -50-
19. Amendments................................................ -50-
20. Waiver.................................................... -50-
21. Partial Invalidity........................................ -51-
22. Headings.................................................. -51-
23. Governing Law............................................. -51-
24. Recording................................................. -51-
25. Assignment................................................ -51-
26. Parties Bound............................................. -52-
27. Counterparts.............................................. -52-
28. Confidentiality........................................... -52-
29. Brokers................................................... -53-
30. Post-Closing Access to Files.............................. -54-
31. Third Party Rights........................................ -54-
32. Bulk Sales Laws........................................... -54-
33. Public Announcements...................................... -55-
34. Conditions to Closing..................................... -55-
35. Rule of Construction...................................... -57-
36. Approval of Governing Bodies.............................. -57-
37. Miscellaneous............................................. -58-
SALE - PURCHASE AGREEMENT
THIS AGREEMENT, made as of the 2nd day of November, 1995, by and
between THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, a body corporate and
politic created by compact between the States of New York and New Jersey with
the consent of the Congress of the United States of America, having an office
address at Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 ("Seller"), and
HOST MARRIOTT CORPORATION, a Delaware corporation, having an office address at
00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx, 00000-0000 ("Purchaser"),
WITNESSETH:
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WHEREAS, Seller is the owner of certain real property and improvements
thereon known as the "Vista International Hotel" (the "Hotel") and having an
address at Three World Trade Center, New York, New York; and
WHEREAS, Seller desires to lease the Hotel to Purchaser, and Purchaser
desires to lease the Hotel from Seller and to acquire from Seller certain
personal property used in connection with the operation of the Hotel, on the
terms and conditions more specifically set forth herein; and
WHEREAS, Seller and Purchaser desire to provide for the terms and
conditions pursuant to which the closing of the transactions contemplated hereby
(the "Closing") will occur;
NOW, THEREFORE, in consideration of the covenants and mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as
follows:
1. Hotel Assets; Agreement to Grant and Acquire.
A. Hotel Assets. As used herein, the term "Hotel Assets" shall mean
(1) the leasehold estate and other rights and interests (the "Leasehold Estate")
which will be created by the execution by Seller as landlord and Purchaser as
lessee of the lease agreement which, in accordance with the provisions of
subparagraph (h) of Paragraph 4 hereof, is to be attached hereto, hereby made a
part hereof, and marked "Exhibit A" (the "Lease") covering (1) the Hotel,
including the "Building", together with all improvements, fixtures, machinery,
apparatus, and fittings affixed thereto which are considered real property by
operation of law and as shall be described in the Lease, the "Liberty Room" and
the "Appurtenances", as such terms will be defined in the Lease, (the Building,
the Liberty Room, and the Appurtenances being hereinafter referred to
collectively as the "Real Property"); (2) all other machinery, apparatus,
equipment, furniture, fittings, and fixtures, including portable electric,
heating, plumbing, lighting, cooling, communication, and ventilation equipment,
and all other personal property including advertising and promotional
literature, upholstery material, carpet and rugs, all furniture, furnishings,
hotel equipment, beds, bureaus, chiffonniers, chairs, chests, desks, bookcases,
tables, curtains, hangings, pictures, divans, couches, ornaments, bars, bar
fixtures, safes, stoves, ranges, refrigerators, radios, televisions, and other
appliances, lamps, mirrors, portable generators, ice machines, portable fire
prevention and extinguishing apparatus, laundry machines, individual motor
drives for machines, computer hardware and software, computer data on tapes,
portable exhaust fans, and all similar and related articles of personal property
of every kind and nature whatsoever, to be identified on the schedule which, in
accordance with the provisions of subparagraph (d) of Paragraph 4 of this
Agreement is to be annexed hereto, hereby made a part hereof, and marked
Schedule "A", and all of Seller's right, title, and interest in and to all
tangible personal property of every kind and nature not identified on "Schedule
A", wherever located, being held by or on behalf of Seller in connection with
the operation of the Hotel except for such tangible personal property , if any,
Interstate Hotels Corporation, the Seller's current hotel operator (the
"Operator") is entitled to remove pursuant to the provisions of the existing
management agreement (the "Management Agreement") currently in effect between
Seller and the Operator which property is to be identified and listed on the
schedule attached hereto, hereby made a part hereof, and marked Schedule "A-1"
in accordance with the provisions of subparagraph (d) of Paragraph 4 of this
Agreement. The personal property to be identified on Schedule A, and all such
tangible personal property of every kind and nature not identified on Schedule
"A", wherever located, being held by or on behalf of Seller in connection with
the operation of the Hotel, other than such items of tangible personal property
to be listed on Schedule A-1 are hereinafter collectively referred to as the
"FF&E and Personalty"; (3) all inventories of supplies used in connection with
the operation of the Hotel and located on the Real Property (collectively, the
"Inventory"), including, but not limited to, paper goods, brochures, office
supplies, stationery, chinaware, consumable goods, food, beverage, liquors, menu
stock, glassware, kitchen utensils, linens, blankets, soap, toiletry, and other
operational and guest supplies except for those items identified in Schedule
"A-1"; (4) all of Seller's estate, right, title and interest in and to all those
assignable equipment leases identified in the schedule attached hereto, hereby
made a part hereof, and marked Schedule "B" and all such equipment leases
hereafter made in accordance with the terms of this Agreement (collectively, the
"Equipment Leases"); (5) all of Seller's estate, right, title and interest in
and to all those assignable service, maintenance, and other agreements
pertaining to the operation and maintenance of the Hotel, other than the
Management Agreement, and identified in the schedule attached to this Agreement,
hereby made a part hereof, and marked Schedule "C" and all such agreements
hereafter made in accordance with the terms of this Agreement (collectively, the
"Hotel Contracts"); (6) all of Seller's estate, right, title and interest in and
to all assignable occupancy agreements and leases of non-transient tenants and
occupants, commercial
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and residential, relating to space in the Hotel or the use of the facilities of
the Hotel, including booking arrangements, and to assignable permits relating to
the exercise of privileges in the Hotel, as identified in the schedule attached
to this Agreement, hereby made a part hereof, and marked Schedule "D", and all
such occupancy agreements and leases hereafter made in accordance with the terms
of this Agreement (the "Tenant Leases"); (7) all house banks, till money, FF&E
reserve accounts, operating accounts, payroll accounts, and working capital
accounts maintained in connection with the operation of the Hotel, subject to
the provisions of subparagraph B of Paragraph 7 of this Agreement (the "Cash
Accounts"), and, subject to and in accordance with the provisions of Paragraph 8
of this Agreement, the health insurance reserve described therein; (8) all
books, records, (including work papers, and tax, accounting, and other
information relating to the period prior to the Closing, files, and any customer
or "frequent user" lists maintained and used in the operation of the Hotel
excluding intra-corporate records maintained by Seller or the Operator
(collectively, the "Books"); (9) tenant deposits, service contract deposits,
equipment lease deposits, and reservation deposits relating to the operation of
the Hotel; (10) to the extent assignable, all those licenses and permits listed
in the schedule attached to this Agreement, hereby made a part hereof, and
marked Schedule "E" and all renewals thereof hereafter issued to Seller or to
the Operator (collectively, the "Licenses"); (11) all Hotel accounts receivable
and other Hotel current assets as described and provided for in Paragraph 7
hereof; (12) all Seller's right, title, and interest in and to (i) all
assignable contract rights, including warranties and/or guaranties relating to
the Building, the Liberty Room, or the FF&E and Personalty, (ii) orders for
equipment and other property not yet delivered to the Hotel, and (iii) plans and
specifications relating to construction work performed at the Hotel, including,
without limitation, Seller's pending claim against Supreme Building Maintenance
Corporation ("Supreme") for damage to the glass surface and aluminum curtain
wall of the Hotel as the result of cleaning operations performed by Supreme,
which claim is the subject of an action in the Supreme Court of the State of New
York entitled Inhilco, Inc. v. Supreme Building Maintenance Corporation (Index
No. 10600/92), it being understood that Seller makes no representation as to the
validity of such action, or the likelihood that Purchaser will either obtain a
favorable judgement therein, or if one is received, can obtain satisfaction
thereof, and (13) all Seller's right, title, and interest in and to all other
intangible property relating to the Hotel, except that Purchaser is not
acquiring, and shall have no interest in and to the name "Vista International",
"New York Vista", or any other name used in connection with the operation of the
Hotel, except as provided in the Lease, whether or not such names are registered
as trademarks, tradenames, or otherwise.
B. Agreement to Grant and Acquire. Subject to the terms and
conditions set forth herein, on the Closing Date, as hereinafter defined, Seller
and Purchaser agree to enter into the Lease granting to Purchaser the rights in
and to the Real Property set forth therein, and Seller agrees to transfer to
Purchaser the FF&E
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and Personalty, the Inventory, the Equipment Leases, the Hotel Contracts, the
Tenant Leases, the Cash Accounts, the Books, the Licenses, and the other Hotel
Assets described in subdivisions (2) through (13) of subparagraph A of this
Paragraph (the FF&E and Personalty, the Inventory, the Equipment Leases, the
Hotel Contracts, the Tenant Leases, the Cash Accounts, the Books, the Licenses,
and the other Hotel Assets described in subdivisions (2) through (13) of
subparagraph A of this Paragraph being hereinafter referred to as the "Purchased
Hotel Assets"). During the period from the execution of this Agreement until the
expiration of the Due Diligence Period, as hereinafter defined, or the earlier
termination of this Agreement, and thereafter until the Closing, unless this
Agreement is terminated prior thereto, Seller agrees, and agrees to instruct its
agents, to refrain from discussing offers or proposals respecting the Hotel with
any person, firm, or corporation other than Purchaser.
2. Payment of the Purchase Price.
A. Purchase Price. In consideration of Seller's agreements as
described in Paragraph 1B of this Agreement, the granting to Purchaser of the
Leasehold Estate, and the sale of the Purchased Hotel Assets (the
"Transaction"), Purchaser shall pay to Seller a purchase price (the "Purchase
Price") equal to One Hundred Forty-one Million Five Hundred Thousand Dollars
($141,500,000.00) as follows:
(i) Contemporaneously with the execution of this Agreement, Purchaser
shall deposit the sum of Five Million Dollars ($5,000,000.00) (the "Down
Payment") with the title insurance company chosen by Purchaser to issue the
title report described in Paragraph 4 of this Agreement (the "Escrow Agent") by
wire transfer of immediately available funds to an interest bearing account
designated in writing by Escrow Agent. The Down Payment, and any interest or
other income, or monies generated by the Down Payment or which the Down Payment
may earn from time to time (the "Interest") shall be held subject to the
provisions of this Paragraph; and
(ii) At the Closing, Purchaser shall pay to Seller the difference
between Seventy-six Million Five Hundred Thousand Dollars ($76,500,000.00) and
the sum of (x) the Down Payment and (y) fifty percent (50%) of the Interest, by
wire transfer of immediately available funds to such account or accounts as
Seller shall specify by written notice to Purchaser given not less than two (2)
business days before the Closing, and Seller shall receive the Down Payment, and
the Interest, it being agreed that Purchaser is receiving a credit against the
Purchase Price equal to fifty percent (50%) of the Interest, as described in
clause (y) of this subdivision;
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(iii) Purchaser shall pay to Seller the sum of Sixty-five Million
Dollars and No Cents ($65,000,000.00) at the time, in the manner, and subject to
the provisions of subparagraph (O) of this Paragraph.
B. The Purchase Price shall be allocated among the Hotel Assets in
such manner as is determined by Purchaser and reasonably approved by Seller no
less than two (2) business days' prior to the Closing Date and if the parties
fail to agree Purchaser shall retain, at its sole cost and expense, Hotel
Valuation Services (HVS), American Appraisal Associates, or another independent
valuation/appraisal firm reasonably acceptable to Seller for a final and binding
determination of such allocation.
C. Upon receipt of the Down Payment Escrow Agent shall immediately
(but in no event later than the end of Escrow Agent's next business day after
such receipt) invest and reinvest the Down Payment daily in United States
Treasury Bills. The Down Payment shall be held by Escrow Agent in a separate
account (the "Escrow Account") and shall be disbursed only in accordance with
the provisions of this Agreement. The Interest shall be credited by Escrow Agent
to the Escrow Account, and shall be held by Escrow Agent in such account for the
benefit of the party entitled to receive the Down Payment in accordance with the
provisions of this Agreement. Subject to the provisions of subparagraph A of
this Paragraph, the Interest shall remain the property of the party entitled to
receive the Down Payment and shall be transmitted to such party simultaneously
with the disbursement of the Down Payment. The Down Payment and the Interest
shall be held by Escrow Agent separate and apart from other funds of Escrow
Agent, Seller, or Purchaser for the benefit of the persons or parties entitled
to such monies pursuant to the terms of this Agreement. The Tax Identification
Numbers of Purchaser and Seller shall be furnished to Escrow Agent upon request.
D. In the event that Purchaser elects to terminate this Agreement
prior to the expiration of the Due Diligence Period, Escrow Agent, upon the
receipt of a written demand therefor from Purchaser, and subject to and in
accordance with the provisions of this Paragraph, shall deliver the Down Payment
to Purchaser, together with the Interest, whereupon this Agreement shall be
deemed cancelled and of no further force and effect. Purchaser shall also
deliver to Seller copies of all surveys, title or engineering reports, and other
written reports relating to the Hotel obtained by Purchaser from third parties
during the Due Diligence Period.
E. At the Closing, upon consummation of the Transaction, Escrow Agent
shall pay the Down Payment to Seller together with all of the Interest.
F. If Escrow Agent shall receive a written demand from Seller for the
Down Payment, together with the Interest, stating that Purchaser has defaulted
in the performance of its obligations hereunder after the expiration of the Due
Diligence
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Period, and briefly stating the facts and circumstances constituting such
default ("Seller's Demand"), Escrow Agent shall pay the Down Payment to Seller,
together with the Interest, provided, however, that Escrow Agent shall not honor
such demand until ten (10) business days after Purchaser shall have received a
copy of such demand by mail from Escrow Agent, nor thereafter if Escrow Agent
shall have received a written notice of objection from Purchaser in accordance
with the provisions of this Paragraph ("Purchaser's Objection").
G. If Escrow Agent shall receive a written demand from Purchaser for
the Down Payment, together with the Interest, stating that this Agreement has
been terminated in accordance with the provisions hereof and that Purchaser is
entitled to a return of the Down Payment, together with the Interest, or stating
that Seller has defaulted in the performance of its obligations hereunder after
the expiration of the Due Diligence Period, and briefly stating the facts and
circumstances constituting such default ("Purchaser's Demand") Escrow Agent
shall pay the Down Payment to Purchaser, together with the Interest, provided,
however, that Escrow Agent shall not honor such demand until ten (10) business
days after Seller shall have received a copy of such demand by mail from Escrow
Agent, nor thereafter if Escrow Agent shall have received written notice of
objection from Seller in accordance with the provisions of this Paragraph
("Seller's Objection").
H. Demands and Objections. Upon receipt of Seller's Demand or
Purchaser's Demand (a "Demand") for the Down Payment, together with the
Interest, as the case may be, Escrow Agent shall give notice of such Demand to
the other party (the "Other Party") in the manner specified for notices to such
party as provided herein. The Other Party shall have the right to object to the
release of the Down Payment, together with the Interest, by Escrow Agent by
giving notice of its Seller's Objection or Purchaser's Objection, as the case
may be ("Objection") to Escrow Agent in the manner specified for notices to such
party as provided herein at any time prior to the expiration of ten (10)
business days after the Other Party's receipt of the copy of the Demand from
Escrow Agent. For purposes of this Paragraph, the ten (10) business day notice
period provided for herein shall be deemed to expire at midnight on the tenth
(10th) business day following (but not including) the date of the deemed receipt
of such copy of the Demand by the Other Party in accordance with the provisions
of Paragraph 17 of this Agreement. Notwithstanding the foregoing, Escrow Agent
may provide the Other Party, as an accommodation, with an advance copy of such
Demand by personal delivery and/or telefax, but such advance notice shall not
affect the notice period provided for herein. Any Objection shall set forth the
basis for the Other Party's objection to the release of the Down Payment,
together with the Interest, by Escrow Agent. Upon receipt of such Objection,
Escrow Agent shall promptly give notice thereof to the Demanding Party.
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I. Description of Purported Default or Objection. The description of
the facts and circumstances of any alleged default as set forth in any Demand,
and the statement of the basis of any objection raised in any Objection, shall
not be considered by Escrow Agent in the performance of its duties hereunder,
but are only for the information of the Other Party.
J. Escrow Agent's Rights in the Event of the Receipt of an
Objection. In the event Escrow Agent shall have received an Objection within
the time period prescribed in this Paragraph, Escrow Agent shall continue to
hold the Down Payment, together with the Interest, until (i) Escrow Agent
receives written notice from both Seller and Purchaser directing the delivery
thereof, in which case Escrow Agent shall then deliver the Down Payment,
together with the Interest, in accordance with such direction, or (ii) in the
event of litigation between Seller and Purchaser, Escrow Agent deposits the Down
Payment, together with the Interest, with the Clerk of the Court in which such
litigation is pending, or (iii) Escrow Agent takes affirmative steps as Escrow
Agent may, at Escrow Agent's option, elect in order to terminate Escrow Agent's
duties, including without limitation, depositing the Down Payment, together with
the Interest, in a court having jurisdiction in an action for interpleader.
K. Escrow Agent's Right to Rely. Escrow Agent may act upon any
instrument or other writing believed by it in good faith to be genuine and to be
executed and presented by the proper party, and shall not be liable in
connection with the performance of any duty imposed upon Escrow Agent pursuant
to the terms of this Agreement, except for Escrow Agent's own gross negligence
or willful misconduct. Escrow Agent shall have no duties or responsibilities
other than as expressly set forth herein. Escrow Agent shall not be bound by any
modification of this Agreement, unless such modification is in writing and
signed by Purchaser and Seller (and, if Escrow Agent's duties hereunder are
affected, by Escrow Agent), and a fully executed counterpart thereof is
delivered to Escrow Agent. In the event that Escrow Agent shall be uncertain as
to Escrow Agent's rights and obligations hereunder, or shall receive
instructions from Purchaser or Seller which, in Escrow Agent's sole opinion, are
in conflict with any of the provisions hereof, Escrow Agent shall be entitled to
hold and apply the Down Payment and the Interest pursuant to subparagraph J of
this Paragraph and may decline to take any further action.
L. Resignation of Escrow Agent. Escrow Agent may resign and be
discharged from its duties or obligations hereunder by giving notice in writing
to Purchaser and Seller of such resignation specifying a date when such
resignation shall take effect, provided that upon such resignation Escrow Agent
shall either turn over the Down Payment and the Interest to a successor agreed
to by Seller and Purchaser, or, in the alternative, file an interpleader action
and/or deposit the Down Payment and the Interest with a court having
jurisdiction in an action for interpleader as set forth in subparagraph J of
this Paragraph.
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M. Indemnification. Purchaser and Seller hereby agree, jointly and
severally, to indemnify and hold Escrow Agent harmless from and against any
loss, liability or expense incurred without gross negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection with
this Agreement and carrying out its duties hereunder, including, without
limitation, reasonable attorneys' fees to itself and/or outside counsel and/or
the reasonable costs and expense of defending itself against any claim or
liability.
N. Internal Revenue Service Form W-9. Notwithstanding anything
contained herein to the contrary, Escrow Agent shall not be required to disburse
the Down Payment and the Interest to either party until Escrow Agent has
received an Internal Revenue Service Form W-9 ("Payer's Request for Taxpayer's
Identification Number") from such party.
O. Payment of the Facility Amount to the Port Authority
(1) For the purposes of this subparagraph (O)and for all other
purposes under this Agreement the following terms shall have the respective
meanings provided below:
(i) "Annual Period" shall mean, as the context requires, the
twelve month period commencing with the Closing Date and each of the twelve
month periods thereafter occurring during the term of the letting under the
Lease commencing on each anniversary of the Closing Date thereafter
occurring during the term of the letting under the Lease provided, however,
that if the Closing Date shall occur on a day other than the first day of a
calendar month, the first Annual Period shall include the portion of the
month in which the Closing Date shall occur following such date plus the
succeeding twelve calendar months, and each subsequent Annual Period shall
commence on the anniversary of the first day of the first full calendar
month following the calendar month in which the Closing Date shall occur,
provided, further, however, that the last Annual Period shall expire in any
event on the expiration date of the term of the letting under the Lease,
and the last installment of interest payable pursuant to sub-subparagraph
(2) or (3), as the case may be, of this subparagraph, shall be prorated
accordingly.
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(ii) "Quarterly Period" shall mean, as the context requires,
the three month period commencing with the Closing Date and each of the
three month periods thereafter occurring during the term of the letting
under the Lease commencing on each anniversary of the Closing Date
thereafter occurring during the term of the letting under the Lease
provided, however, that if the Closing Date shall occur on a day other than
the first day of a calendar month, the first Quarterly Period shall include
the portion of the month in which the Closing Date shall occur following
such date plus the succeeding three calendar months, and each subsequent
Quarterly Period shall commence on the anniversary of the first day of the
first full calendar month following the calendar month in which the Closing
Date shall occur, provided, further, however, that the last Quarterly
Period shall expire in any event on the expiration date of the term of the
letting under the Lease, and the last installment of interest payable
pursuant to sub-subparagraph (2) or (3), as the case may be, of this
subparagraph, shall be prorated accordingly.
(iii) "Facility Amount" shall mean the sum of Sixty-five Million
Dollars and No Cents ($65,000,000.00) .
(iv) "Initial Facility Amount Payment Period" shall mean the
period from the Closing Date to the last day of the seventh Annual Period,
both dates inclusive.
(v) "Extended Facility Amount Payment Period" shall mean the
period from the commencement of the eighth Annual Period to the last day of
that Annual Period, both dates inclusive.
(vi) "Reference Rate" shall mean the seven year treasury note
rate on a specified date as determined by reference to the Federal Reserve
Statistical Release H.15 (519) published by the Board of Governors of the
Federal Reserve System for such date, or its successor publication. In the
event that the Board of Governors of the Federal Reserve System shall cease
to publish the Federal Reserve Statistical Release H.15 (519), or any
successor publication, or the United States government shall cease to issue
seven year treasury notes, a comparable substitute for determining the
Reference Rate shall be mutually agreed upon in writing by Purchaser and
Seller within thirty (30) days after notice from one party to the other of
such discontinuance. In the event that Purchaser and Seller shall fail to
agree upon a substitute within the time hereinabove specified then upon
notice of either party such dispute shall be disposed of by arbitration in
accordance with the then existing rules of the American Arbitration
Association or any successor association. One half of the cost of said
arbitration shall be borne by Purchaser and the other half of said cost
shall be borne by Seller.
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(vii) "Base Rate" shall mean five and ninety-five one
hundredths percent (5.95%) per annum.
(viii) "Differential Rate" shall mean the Reference Rate on a
specified date.
(ix) "Initial Interest Rate" shall mean the Base Rate plus sixty-
five (65) basis points.
(x) "Subsequent Interest Rate" shall mean the Reference Rate on
the expiration date of the Initial Facility Amount Payment Period plus one
hundred seventy-five basis points.
(2) During the Initial Facility Amount Payment Period, Purchaser shall
pay to Seller interest on the Facility Amount at a rate equivalent to the
Initial Interest Rate in twenty-eight (28) consecutive quarterly installments
due and payable in arrears on the last day of the Quarterly Period in which the
Closing Date shall occur, and on the last day of each Quarterly Period
thereafter occurring during the Initial Facility Amount Payment Period,
provided, however, that if the first day of the Initial Facility Amount Payment
Period shall occur on a day other than the first day of a calendar month the
first interest payment payable shall be a sum equal to the amount of the full
quarterly interest payment prorated by multiplying the amount of such payment by
a fraction the numerator of which is the number of days in the first Quarterly
Period and the denominator of which is 90, and in the event that the last
Quarterly Period to fall within the Initial Facility Amount Payment Period
occurs on a day other than the last day of a calendar month the last interest
payment shall be a sum equal to the full quarterly payment thereof prorated by
multiplying the amount of such payment by a fraction the numerator of which is
the number of days in the last Quarterly Period and the denominator of which is
90. On the last day of the Initial Facility Amount Payment Period, unless such
period is extended as provided in sub-subparagraph (3) of this subparagraph,
Purchaser shall pay to Seller the Facility Amount, in full, together with any
accrued and unpaid interest thereon.
(3) Purchaser shall have the right to extend the Initial Facility
Amount Payment Period for one (1) additional Annual Period effective upon the
expiration date of the Initial Facility Amount Payment Period provided, however,
that Purchaser shall give unconditional written notice to Seller of Purchaser's
election so to do subscribed by an executive officer thereof not later than six
(6) months prior to the expiration date of the Initial Facility Amount Payment
Period and provided, further, however, that on the date of the giving of said
notice and on the intended effective date thereof Purchaser has made all of the
interest payments due as of such dates pursuant to the provisions of sub-
subparagraph (2) of this subparagraph, and has not been served with a notice of
default as to any Event of Default specified in the Lease, has
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not been served with a notice of termination thereunder by Seller, and that on
both such dates the letting under the Lease is then in full force and effect.
During the Extended Facility Amount Payment Period Purchaser agrees to pay to
Seller interest on the Facility Amount at a rate equivalent to the Subsequent
Interest Rate in four (4) consecutive quarterly installments due and payable in
arrears on the last day of the Quarterly Period in which the first day of
Extended Facility Amount Payment Period shall occur, and on the last day of each
Quarterly Period thereafter occurring during such period. On the last day of the
Extended Facility Amount Payment Period, Purchaser shall pay to Seller the
Facility Amount, in full, together with any accrued and unpaid interest thereon.
(4) Purchaser shall have the right to prepay the Facility Amount in
its entirety at any time during either the Initial Facility Amount Payment
Period, or the Extended Facility Payment Period provided, that in the event that
such pre-payment occurs prior to the first day of the sixth calendar month
immediately preceding the expiration of the Initial Facility Amount Payment
Period, and at the time of such pre-payment the Differential Rate is less than
the Base Rate, Purchaser shall pay to Seller simultaneously with the tender of
such pre-payment a pre-payment fee in an amount equivalent to the product
obtained by multiplying (x) the product obtained by multiplying (i) fifty
percent (50%) of the difference between the Base Rate and the Differential Rate
at the time of such pre-payment and (ii) the Facility Amount by (y) the number
of years, or portions thereof, remaining in the Initial Facility Amount Payment
Period. For example, if the difference between the Base Rate and the
Differential Rate at the time of such pre-payment is one percent (1%), and at
the time of such pre-payment there are six years left in the Initial Facility
Amount Payment Period then the amount of the pre-payment fee payable by
Purchaser is .005 x $65,000,000.00 x 6=$1,950,000.00.
(5) Neither the interest payments described in sub-subparagraphs (2)
and (3) of this subparagraph, nor the payment of the Facility Amount, shall be
subject to abatement or suspension or reduction for any reason whatsoever, and
Purchaser's obligation to make such payments shall be unaffected by any
termination of the term of the letting under the Lease during either the Initial
Facility Amount Payment Period or the Extended Facility Amount Payment Period.
Upon any such termination, or upon a default in the payment of any one of the
interest payments described in sub-subparagraph (2) or (3) of this subparagraph
which continues for a period of fifteen (15) days after notice of such default
from Seller to Purchaser, or upon a default in the payment of the Facility
Amount, then, at the election of Seller, by notice to Purchaser, the entire
Facility Amount plus the pre-payment fee, if any, due pursuant to the provisions
of sub-subparagraph (4) of this subparagraph shall thereupon become immediately
due and payable to Seller together with any accrued and unpaid interest thereon,
and further, the failure of Purchaser to pay any interest installment described
-11-
in sub-subparagraph (2) or (3) of this subparagraph, or the failure of Purchaser
to pay the Facility Amount at the time and in the manner set forth in this
subparagraph, notwithstanding any such election by the Port Authority, shall
constitute a default under the Lease. Any payment due pursuant to the provisions
of this subparagraph not paid on its specified due date shall bear interest at
the default rate set forth in the Lease from the time such payment was due until
the time such payment is made, but nothing herein shall, or shall be deemed to
affect the Port Authority's right to exercise the rights and remedies set forth
herein upon the failure to make such payment, as described above in this
subparagraph.
(6) On the Closing Date, Purchaser agrees to execute a security
agreement (which security agreement is hereinafter referred to as the "Security
Agreement") in the form attached hereto, marked Exhibit "B" and hereby made a
part hereof creating a lien on and a security interest in the Purchased Hotel
Assets (the "Collateral") for the benefit of Seller and as security for the due
and punctual payment of the interest payments and the Facility Amount pursuant
to this subparagraph. In connection therewith, and from time to time, and
without limiting the provisions of said Security Agreement, at the request of
Seller, Purchaser will execute appropriate financing statements and continuation
statements in form for filing in accordance with the provisions of the Uniform
Commercial Code of the State of New York. Purchaser shall have such obligations
regarding the Collateral as is set forth in the Security Agreement. The
Security Agreement may be executed either on the form attached hereto as Exhibit
B or on a separate copy thereof. The existence of the Security Agreement shall
not limit or alter any other rights or remedies of Seller under the Lease or
this Agreement in the event Purchaser fails to pay any amount due Seller
pursuant to this subparagraph, and Seller may from time to time and at any time
elect to pursue (or not to pursue) its rights under the Security Agreement
without thereby limiting, voiding or relinquishing any of its other rights or
remedies under the Lease or this Agreement in the event of such non-payment.
(7) The provisions of`this subparagraph shall survive the Closing Date
and shall continue in full force and effect throughout the Initial Facility
Payment Period and the Extended Facility Payment Period, unless the Facility
Amount is pre-paid prior to the end of such period or periods.
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3. Representations of Seller and Purchaser.
A. Seller's Representations. Seller represents to Purchaser as
follows:
(i) Seller is a body corporate and politic created by compact
between the States of New York and New Jersey with the consent of the
Congress of the United States of America, and Seller further represents to
Purchaser that whenever the issue has arisen in the Federal District Courts
for the State of New York, the United States Court of Appeals for the
Second Circuit, and the Federal District Court and Court of Appeals for the
District of Columbia, Seller has been held to be a "political subdivision"
of a state; the parties acknowledge that a staff attorney in the Pre-Merger
Notification Office of the Federal Trade Commission has advised Seller's
and Purchaser's counsel (in an informal opinion given by telephone) that
transactions by Seller do not require compliance with the notification and
waiting period requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the regulations promulgated thereunder (the
"HSR Act"). Accordingly, Seller does not intend to make any filing under
the HSR Act;
(ii) The execution, delivery and performance of this Agreement
(including the execution and delivery of the Lease) are within Seller's
power and on the Closing Date will have been duly authorized by all
necessary or proper corporate and governmental action;
(iii) This Agreement has been duly executed and delivered by
Seller and upon receipt of all necessary or proper corporate and
governmental action will constitute the valid and binding obligation of
Seller enforceable against it in accordance with its terms, and the Lease,
when executed by Seller and delivered to Purchaser, will have been duly
executed and delivered by Seller and will constitute the valid and binding
obligation of Seller enforceable against it in accordance with its terms.
The execution, delivery and performance by Seller of this Agreement and the
Lease will not (a) conflict with, or result in any breach or violation of
or default (or give rise to any right of termination, cancellation or
acceleration) under any note, bond, mortgage, indenture, lease, license,
permit, agreement or other instrument or obligation to which Seller is a
party or by which Seller is or may be bound, except (1) that the Management
Agreement will expire on the Closing Date, and no representation is made
that the Tenant Leases, Equipment Leases, Hotel Contracts, Licenses, and
Union Contracts (as herein defined) will continue in full force and effect
subsequent to the Closing, and (2) as otherwise set forth on the schedule
attached to this Agreement, hereby made a part hereof, and marked "Schedule
G", or (b) violate any law, order, rule, regulation, judgment, order,
-13-
decree, writ or injunction applicable to Seller. All consents or approvals
by any governmental authorities or governmental persons required in
connection with the execution, delivery and performance of this Agreement
and the Lease by Seller have been obtained, or will be obtained prior to
Closing, and are not subject to revocation, or will not be subject to
revocation on the Closing Date;
(iv) Seller has not assigned, mortgaged, pledged, hypothecated or
otherwise encumbered the (a) the Real Property, or (b) the Purchased Hotel
Assets, and has not consented in writing to any such assignment, mortgage,
pledge, hypothecation or other encumbrance by the operator of the Hotel,
except for the Tenant Leases, Hotel Contracts, Equipment Leases and other
Permitted Exceptions (as hereinafter defined);
(v) To the best of Seller's knowledge, there are no written
Equipment Leases in effect as of the date hereof other than those set forth
in Schedule "B" attached hereto, true, correct, and complete copies of
which will be delivered to Purchaser during the Due Diligence Period, as
hereinafter defined, and to the best of Seller's knowledge neither Seller
nor the Operator has either given or received written notice of any default
with respect to the Equipment Leases which remains uncured;
(vi) To the best of Seller's knowledge, there are no written
Hotel Contracts in effect as of the date hereof other than those set forth
in Schedule "C" attached hereto, true, correct, and complete copies of
which will be delivered to Purchaser during the Due Diligence Period, as
hereinafter defined, and to the best of Seller's knowledge, neither Seller
nor the Operator has either given or received written notice of any default
with respect to the Hotel Contracts which remains uncured;
(vii) To the best of Seller's knowledge, there are no written
Tenant Leases in effect as of the date hereof other than those set forth in
Schedule "D" attached hereto, true, correct, and complete copies of which
will be delivered to Purchaser during the Due Diligence Period, as
hereinafter defined, and to the best of Seller's knowledge, neither Seller
nor the Operator has either give nor received written notice of any default
with respect to the Tenant Leases which remains uncured;
(viii) To the best of Seller's knowledge, there are no union
contracts in effect as of the date hereof affecting the employees at the
Hotel other than those set forth in Schedule "H" attached hereto (the
"Union Contracts") true, correct, and complete copies of which will be
delivered to Purchaser during the Due Diligence Period, as hereinafter
defined;
-14-
(ix) To the best of Seller's knowledge, there are no employees
involved in the operation of the Hotel as of the date hereof other than
hourly employees covered by the Union Contracts, and those other employees
set forth in Schedule "I" attached hereto and made a part hereof
(collectively, together with all other employees hereafter engaged by the
Operator at the Hotel in accordance with the terms of the Management
Agreement, the "Employees"), and to the best of Seller's knowledge,
Schedule "I" accurately sets forth, with respect to each such Employee, his
or her name; position; date employed and wages or salary;
(x) To the best of Seller's knowledge, Seller has not received,
and Seller has no knowledge of the receipt by the Operator of, any written
notice of violation of law or ordinances, orders, licenses, requirements,
or regulations of, or agreements with, any Federal, State, County,
municipal, or other governmental or quasi-governmental department, agency,
or authority relating to the Hotel which remains uncured, or any notices of
the presence or release of any hazardous substance (as defined under
environmental laws) or of any polychlorinated biphenyls, asbestos, or
asbestos containing materials that constitutes a violation of environmental
laws which remains uncured, and to the best of Seller's knowledge, neither
Seller nor the Operator has received written notice from any such
governmental authority of (a) the existence of any liens under any
environmental laws, or (b) of the taking of any governmental action that
could reasonably be expected to subject the Real Property to any such
liens, except as set forth in Schedule "J" attached hereto and made a part
hereof; true, correct, and complete copies of any agreements currently in
effect between Seller or the Operator and any Federal, State, County,
municipal, or other governmental or quasi-governmental department, agency,
or authority relating to the Hotel shall be delivered to Purchaser during
the Due Diligence Period;
(xi) To the best of Seller's knowledge, there is no litigation or
proceeding pending against, and no Notice of Claim as required under
Section 7107 of the Unconsolidated Laws of the State of New York has been
filed with, Seller relating to Seller in respect of the Hotel and/or the
Hotel Assets, and to the best of Seller's knowledge there is no such
litigation or proceeding pending against the Operator in respect of the
Hotel, and/or the Hotel Assets, which puts at issue the validity of this
Agreement, or any action to be taken by Seller pursuant hereto, or which,
if determined adversely to Seller, the Hotel Assets, and/or the Operator,
with respect to the Hotel, would reasonably be expected, individually or in
the aggregate, giving effect to current insurance coverage, to materially
adversely affect the Hotel Assets, except as set forth in Schedule "K"
attached hereto and made a part hereof;
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(xii) To the best of Seller's knowledge, Schedule "L" attached
hereto and made a part hereof sets forth the insurance maintained by
Seller, or by the operator on behalf of Seller, in connection with the
Hotel;
(xiii) To the best of Seller's knowledge, Seller has not received
any written notice of any taking or threatened taking of all or any portion
of the Real Property by condemnation or eminent domain, and Seller has no
knowledge of any such notice being received by its operator;
(xiv) To the best of Seller's knowledge, there are no employee
benefit plans, including but not limited to "employee benefit plans" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended, ("ERISA"), whether formal or informal, written or
unwritten, for any Employee which could result in any liability or
obligation to Purchaser, on or after the Closing Date (as hereinafter
defined) except for those set forth in Schedule "M" attached hereto and
made a part hereof. Seller is not aware of any condition or circumstances
under which Purchaser will have any liability or be subject to any lien
under ERISA or the Internal Revenue Code of 1986, as amended, and the
regulations thereunder (the Code"), for any employee benefit plan
maintained, or required to be contributed to, by any entity, including the
current employer of the Employees, which is under common control or
affiliated with the current employer of the Employees within the meaning of
Section 4001 of ERISA and the regulations thereunder and/or Section 414 of
the Code, except for those plans covering the Employees or former employees
at the Hotel and listed on Schedule "M";
(xv) To the best of Seller's knowledge, no fact or condition
exists which would prevent or impair Seller's ability to provide to the
Real Property the utilities Seller has agreed to provide pursuant to the
Lease; and
(xvi) To the best of Seller's knowledge, the Building is
structurally sound except as set forth in the schedule attached hereto,
hereby made a part of this Agreement and marked Schedule "O", and there are
no material defects to the utility, fire, life safety, health and other
systems exclusively serving the Hotel, other than those that may be set
forth in an engineering survey currently being conducted by Inspection and
Valuation International under contract with Xxxxxx X. Xxxxxx & Associates
at the request of Seller, it being understood that, unless waived by
Purchaser, such engineering survey and the report of Claris Engineering
referred to in Paragraph 4(g) of this Agreement shall be received by
Purchaser within the Due Diligence Period, as such period may be extended
pursuant to the provisions of Paragraph 4(g).
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B. Limitation of Seller's Representations.
Subject to the provisions of subparagraph C of this Paragraph, all of
the representations made by Seller are true and correct as of the date hereof,
and will be true and correct as of the Closing Date, but shall not survive the
Closing, except as hereinafter set forth. The representations and warranties set
forth in subdivisions (i), (ii), and (iii) of subparagraph A of this Paragraph
shall survive the Closing without limitation. The representations and warranties
set forth in subdivision (iv)(a) of this Paragraph, as it relates only to the
Real Property, the representations and warranties set forth in subdivision (x),
as it relates only to the Building, and the representations and warranties set
forth in subdivision (xiii) of this Paragraph shall not survive the Closing, All
other representations and warranties set forth in this Paragraph are continuing
representations and shall survive the Closing for a period of twelve (12) months
subject to and in accordance with the provisions of subparagraph C of this
Paragraph. Purchaser acknowledges that the Hotel is currently operated by the
Operator under the Management Agreement, and that all information and
representations given or made with respect to the operation of the Hotel during
the term of the Management Agreement are made solely on the basis of information
provided by the Operator to the employees of Seller hereinafter named in this
Paragraph. Prior to the Closing Date, Seller shall promptly notify Purchaser of
any modifications to such representations which are required, as the result of
additional information coming to the knowledge of Seller or the operation and
management of the Hotel between the date hereof and the Closing, in order to
make such representations true as of the Closing Date. Notwithstanding anything
to the contrary contained herein, where a representation made herein is
qualified by reference to Seller's knowledge, or is made to the best of Seller's
knowledge, or on the basis of the receipt by Seller of a written notice, such
representation shall be deemed made solely on the basis of the actual knowledge
of, or receipt of notice by, Xxxxxxx Xxxxxxx, Seller's representative with
respect to the operation of the Hotel, or Xxxxxxx X. Xxxxxxx, Director of the
World Trade Department of Seller. No knowledge of any other employee or
representative of the Port Authority shall be imputed to Seller for the purposes
of the representations and warranties herein made unless Xxxxxxx Xxxxxxx or
Xxxxxxx X. Xxxxxxx shall have received actual knowledge thereof prior to the
execution of this Agreement by both parties hereto.
With respect to each of the representations set forth in subparagraph
A of this Paragraph relating to the Hotel, other than the representation as to
structural integrity and material defects set forth in subdivision (xvi) of
subparagraph A of this Paragraph, Xxxxxxx Xxxxxxx or Xxxxxxx X. Xxxxxxx has made
inquiry of the general manager of the Hotel, the comptroller of the Hotel, the
Hotel's engineer, and Xxxxxx X. Xxxxxxxx, Deputy Chief, Commercial Leases
Division of the Port Authority Law Department, with respect to the
representations falling within the purview of their respective functions
relating to the Hotel, and has requested these designated
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individuals to inform Seller if they have knowledge that any such representation
is untrue. Furthermore, with respect to any representation which provides that
Seller has not received any notice of the occurrence of a specified event,
Xxxxxxx Xxxxxxx or Xxxxxxx X. Xxxxxxx has inquired of each of the designated
individuals as to whether they have received any such notice. With respect to
that portion of the representation set forth in subdivision (xvi) of
subparagraph A of this Paragraph relating to "structural integrity" only, the
representation as to Seller's knowledge is limited to the actual knowledge of
Xxxxxxx Xxxxxxx or Xxxxxxx X. Xxxxxxx after inquiry has been made by them of the
Chief Engineer of the Port Authority, and as to that portion of the
representation set forth in subdivision (xvi) of subparagraph A of this
Paragraph relating to "material defects" only the representation as to Seller's
knowledge is limited solely to the contents of the engineering report described
therein. Each representation as to Seller's knowledge, or which is made as to
the best of Seller's knowledge, other than that portion of the representation
set forth in subdivision (xvi) of subparagraph A of this Paragraph relating to
"material defects" only, shall include a representation that neither Xxxxxxx
Xxxxxxx nor Xxxxxxx X. Xxxxxxx have received a written affirmative response
from any of the designated individuals, except as may be indicated on an
applicable schedule attached to this Agreement, and Seller shall promptly notify
Purchaser in writing of any affirmative response the receipt of which was not so
noted. Until the Closing Date, Xxxxxxx Xxxxxxx and Xxxxxxx X. Xxxxxxx shall make
periodic inquiry of the designated individuals regarding the representations.
Seller shall use reasonable efforts to obtain from the Operator appropriate
certifications regarding the representations within its purview, it being
understood that the Operator is under no obligation to provide such
certifications. Seller shall have no obligation to spend any monies to obtain
such certification, and shall have no liability if it is unable to obtain such
certifications.
C. Purchaser's Rights in the Event of Seller's Misrepresentations.
If Purchaser shall discover on or before the Closing Date that any of
the representations made by Seller in subparagraph A is or are inaccurate to
such an extent that such misrepresentation or misrepresentations would result,
or could reasonably be expected to result, in losses or damages to Purchaser in
an aggregate present value amount in excess of Five Hundred Thousand Dollars
($500,000.00) (collectively referred to as a "Material Misrepresentation"), and
Seller elects not to cause such misrepresentation or misrepresentations to no
longer be a Material Misrepresentation on or before the Closing Date, then
Purchaser, as its sole remedy on account of such misrepresentation or
misrepresentations, may elect within five (5) days (but in any event prior to
Closing) after receipt of notice from Seller of its election or the delivery of
notice thereof by Purchaser to Seller as hereinafter provided, as the case may
be, to either (i) waive such Material Misrepresentations and consummate the
Transaction without abatement of the Purchase Price, or (ii) terminate this
Agreement, in which event the Down Payment, together with the Interest, shall be
delivered to
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Purchaser, whereupon neither Seller nor Purchaser shall thereafter have any
rights against or obligations to the other arising out of this Agreement.
Nothing contained herein shall or shall be deemed to obligate Seller to spend
any monies to cure any such misrepresentation. In the event that prior to the
Closing Purchaser learns of any misrepresentation(s), Purchaser shall notify
Seller thereof within five (5) days (but in any event prior to Closing) after
discovery of each such misrepresentation, and failure to do so as to any such
misrepresentation shall be deemed a waiver of such misrepresentation by
Purchaser, except as set forth in the following Paragraph.
In the event that during the twelve (12) month period following the
Closing Date Purchaser discovers misrepresentations it was not aware of prior to
the Closing Date, and if such misrepresentations are of such a nature that
pursuant to the terms of this Agreement are to survive the Closing, and the
aggregate present value amount of losses or damages to Purchaser that would or
could reasonably be expected to result from such misrepresentations, together
with any such misrepresentations that Purchaser was aware of prior to the
Closing Date, would or could reasonably be expected to exceed in the aggregate a
present value amount in excess of Five Hundred Thousand Dollars ($500,000.00),
and Purchaser notifies Seller of that fact not later than five (5) days after
the expiration of such twelve (12) month period, Purchaser shall be entitled to
all rights and remedies available to Purchaser at law as the result of such
misrepresentations, and Seller shall indemnify Purchaser and hold Purchaser
harmless against any loss, damage, expense, or liability incurred by Purchaser
as a result of such misrepresentations, except that in no event shall Purchaser
be entitled to a right of rescission or any consequential, special, or punitive
damages arising out of such misrepresentations, and Seller's indemnity shall not
extend to or cover any such damages. Seller shall have no liability for any
Material Misrepresentation unless Seller has received notice thereof not later
than five (5) days after the expiration of such twelve month period. Except as
set forth in subparagraph B and this subparagraph, no representation made by
Seller in subparagraph A shall survive the Closing.
Without limiting the generality of the foregoing, Purchaser agrees
that it shall be deemed to have waived any of Seller's misrepresentations,
whether discovered on, before, or after the Closing Date, which are not
Material Misrepresentations, i.e. the aggregate present value amount of damages
to Purchaser that would or could reasonably be expected to result from such
misrepresentations does not exceed Five Hundred Thousand Dollars ($500,000.00).
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D. Purchaser's Representations. Purchaser represents to Seller as
follows:
(i) Purchaser is a corporation duly organized and validly
existing under the laws of the State of Delaware and as of the Closing will
be qualified to do business and in good standing in the State of New York.
Purchaser has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted;
(ii) The execution, delivery and performance of this Agreement
(including the execution and delivery of the Lease) are within Purchaser's
power and as of the Closing Date will have been duly authorized by all
necessary or proper corporate action. This Agreement has been validly
executed and delivered by Purchaser and upon receipt of all necessary or
proper corporate action will constitute the valid and binding obligation of
Purchaser enforceable against it in accordance with its terms, and the
Lease, when executed by Purchaser will have been duly executed and will
constitute the valid and binding obligation of Purchaser enforceable
against it in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application affecting the rights of creditors. The
execution, delivery and performance by Purchaser of this Agreement will not
(a) conflict with, or result in any breach or violation of or default under
its certificate of incorporation or by-laws, or (b) violate any law, order,
rule, regulation, judgment, order, decree, writ or injunction applicable to
Purchaser. Except as provided in Paragraph 36 hereof, no consent or
approval by any governmental authority or governmental person is required
(or, if required, has been obtained) in connection with the execution,
delivery and performance of this Agreement by Purchaser (including the
execution and delivery of the Lease);
(iii) The execution, delivery, and performance by Purchaser of
this Agreement will not conflict with, or result in any breach or violation
of or default (or give rise to any right of termination, cancellation or
acceleration) under any note, bond, mortgage, lease, other instrument or
obligation indenture, license, permit, agreement or other instrument to
which Purchaser is a party or by which it is or may be bound;
-20-
(iv) Schedule "N" attached hereto and made a part hereof sets
forth the names and residence addresses as of the date hereof of the Chief
Executive Officer, Chairman of`the Board, President, Chief Financial
Officer, and each general partner of Purchaser, and of each person, firm or
corporation having an outright or beneficial interest in twenty percent
(20%) or more of the stock ownership in Purchaser. Neither Purchaser nor
any person, firm or corporation listed on Schedule "N" has been convicted
of or under current indictment for any crime and is not currently involved
in criminal anti-trust or fraud litigation, or is under a conflict of
interest as defined under the laws of the State of New York with any
Commissioner of Seller;
(v) Purchaser is not aware of any litigation or proceeding
pending against or relating to Purchaser which, if determined adversely to
Purchaser, would reasonably be expected, individually or in the aggregate,
giving effect to current insurance coverage, to materially adversely affect
the execution, delivery and performance of this Agreement by Purchaser.
All of the representations made by Purchaser are true and correct in
all material respects as of the date made, and will be true and correct in all
material respects as of the Closing Date, except as otherwise disclosed to
Seller. The representations made by Purchaser in this subparagraph shall survive
the Closing.
4. Due Diligence Period-Status of Title to the Real Property.
(a) Subject to Purchaser's right of extension as provided for in
subparagraph (b) of this Paragraph, Purchaser shall have until 3:00 P.M. on
November 22, 1995 to perform, at its sole cost and expense, all due diligence as
it deems necessary with respect to the Hotel Assets (the "Due Diligence
Period"). Seller agrees to cooperate with Purchaser, and to direct the Operator
to cooperate with Purchaser, to facilitate the completion of Purchaser's due
diligence within the Due Diligence Period. Promptly after the execution of this
Agreement, upon the request of Purchaser, Seller shall deliver to Purchaser the
Management Agreement, the existing Tenant Leases, Hotel Contracts, Equipment
Leases, Licenses, and any title documents and surveys relating to the Hotel
Assets which Seller is aware of and has in its possession, and any
environmental, zoning, and structural permits, reports, assessments, or
agreements with governmental authorities pertaining to the Hotel Assets which
Seller is aware of and has in its possession, and shall request the Operator to
deliver any such documents in its possession, and to furnish to Purchaser and
its authorized representatives such additional financial and operating data and
other information as Purchaser may reasonably request, to the extent that such
access and disclosure would not violate the terms of any agreement to which
Seller is bound or any applicable law or regulation, provided that the
confidentiality of any data or information so acquired shall be maintained by
Purchaser and its representatives in accordance with
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the provisions of this Agreement. Seller shall direct the Operator to provide
the services and expertise of its employees and its supervisory and management
personnel in connection with the Transaction, and, subject to the provisions of
the Management Agreement, such employees and personnel shall be available at the
Hotel.
(b) Purchaser acknowledges that all information supplied to it by
Seller, whether written or oral, including, without limitation, inspection
reports, engineering and environmental studies, statements of income and
expenses, other financial data and records, other documents relating to the use
and occupancy of the Hotel, and all other matters relating to the condition,
suitability, integrity, marketability, or other attributes of the Hotel Assets
are being furnished to Purchaser as a courtesy only, and that as of the Closing
Date Purchaser will have made such independent investigations as it deems
necessary with respect to the Hotel Assets. Purchaser represents that as of the
Closing Date it will be thoroughly familiar with the physical condition of the
Hotel Assets, and neither Seller nor any of its employees, agents, accountants,
attorneys, or representatives have made, nor does Seller make, and Seller is
unwilling to make, any verbal or written representations or warranties
whatsoever as to (i) the physical condition, the manner, construction,
condition, and state of repair of the Hotel Assets, the quality, fitness or
quantity thereof, or the uses which can be made thereof, (ii) the zoning,
environmental and other laws, regulations and rules applicable to the Hotel
Assets or the compliance by the Hotel Assets therewith, or (iii) any other
matter or thing affecting or related to the Hotel Assets, and Purchaser has not
relied and will not rely on any such representations and hereby expressly
acknowledges that no such representations have been made, except as otherwise
expressly set forth in this Agreement. Purchaser further acknowledges that it
has inspected, or will inspect, the Hotel Assets and agrees to acquire and
accept the Hotel Assets on an "AS IS" "WHERE IS" basis as of the date hereof,
subject to reasonable wear, tear, and deterioration and, subject to Paragraph 11
hereof, damage or destruction between the date hereof and the Closing Date.
EXCEPT AS HEREIN SPECIFICALLY SET FORTH, SELLER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION LAW, OR OTHERWISE,
INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY, OR FITNESS FOR PARTICULAR PURPOSE OF THE HOTEL ASSETS. Seller
shall not be liable for or bound by any verbal or written statements,
representations, real estate broker's "setups" or information pertaining to the
Hotel furnished by any real estate broker, agent, employee, servant or any other
person, including, without limitation, Eastdil Realty Company L.L.C. or Xxxxxx,
Xxxxx & Xxxxxx International, unless the same are specifically set forth herein.
(c) Purchaser represents that it has requested Commonwealth Land
Title Insurance Company (the "Title Company"), to issue a title insurance report
relating to the Real Property during the Due Diligence Period. Purchaser
understands that
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Seller has requested Xxxxxx X. Xxxxxx & Associates, Inc. to contract with
Inspection and Valuation International to prepare a current engineering survey
of the Real Property during the Due Diligence Period, and Purchaser represents
that it has requested Claris Engineering to confirm the results of such
engineering survey and to provide a report to Purchaser. Purchaser shall arrange
for copies of the title insurance report and the report on the engineering
survey to be delivered to Seller Attention: Xxxxxx X. Xxxxxxxx, Deputy Chief,
Commercial Leases Division. During the Due Diligence Period, Purchaser shall
arrange for the Title Company to issue a commitment (with appropriate back-up)
to issue a title policy, insuring, at premium rates consistent with the rates
for comparable insurance in the Borough of Manhattan, Purchaser's interests in
the Real Property in an amount not to exceed the Purchase Price, subject only to
the Permitted Exceptions, as hereinafter defined, (the "Title Policy").
(d) During the Due Diligence Period Purchaser may, during the hours 9
a.m. to 5 p.m., and upon reasonable advance notice to Seller, at Purchaser's
sole expense, cause the Hotel Assets and all utility and service systems, to be
inspected by such engineers, architects and others acting on behalf of
Purchaser, as Purchaser may designate. Promptly after the execution of this
Agreement, Seller and Purchaser shall jointly cause a full or partial physical
count of the FF&E and Personalty or the Inventory to be made and shall prepare
and agree upon a schedule thereof to be annexed to this Agreement, made a part
hereof, and marked Schedule "A", and shall agree on such additions to Schedule
A-1 as may be required to indicate items which may be removed from the Hotel by
the Operator pursuant to the Management Agreement. Purchaser may affix temporary
identification tape to such items for the purpose of conducting such inventory.
Subject to the provisions of Paragraph 10 of this Agreement title to all of the
FF&E and Personalty and Inventory so counted and scheduled, together with title
to the other Purchased Hotel Assets shall be conveyed to Purchaser on the
Closing Date. Such inspection and count shall be conducted in a manner and at
such times as shall not interfere with the use and occupancy of the Hotel by any
guests, tenants, employees or occupants. Purchaser hereby agrees to indemnify
and hold Seller harmless from and against any and all claims, losses,
liabilities, costs and expenses, including reasonable attorneys' fees, arising
in connection with such inspections, except for such claims, losses,
liabilities, costs and expenses arising solely as a result of Seller's
affirmative acts, or the affirmative acts of the Operator.
(e) AT ANY TIME PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD,
BY NOTICE TO SELLER GIVEN PRIOR TO SUCH EXPIRATION, PURCHASER MAY TERMINATE THIS
AGREEMENT WITH OR WITHOUT CAUSE IN WHICH EVENT THE DOWN PAYMENT AND THE INTEREST
SHALL BE DELIVERED TO PURCHASER WHEREUPON NEITHER SELLER NOR PURCHASER SHALL
HAVE ANY FURTHER OBLIGATION TO THE OTHER, OR ANY RIGHTS AGAINST THE OTHER
ARISING OUT OF THIS AGREEMENT EXCEPTING ONLY PURCHASER'S OBLIGATION TO INDEMNIFY
SELLER AGAINST CLAIMS,
-23-
LOSSES, LIABILITIES, COSTS, AND EXPENSES ARISING OUT OF THE EXERCISE BY
PURCHASER OF ITS DUE DILIGENCE ACTIVITIES, WHICH OBLIGATIONS SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT. TIME IS OF THE ESSENCE REGARDING THE TIME PERIOD
SET FORTH IN THIS PARAGRAPH SUBJECT TO ITS BEING EXTENDED IN ACCORDANCE WITH THE
PROVISIONS OF THIS PARAGRAPH.
(f) Without limiting the generality of the foregoing, or Purchaser's
right to terminate this Agreement during the Due Diligence Period, Purchaser
understands that on the Closing Date, the Hotel Assets shall be conveyed subject
only to the following (collectively, the "Permitted Exceptions"):
(i) the Tenant Leases, transient occupancies, and advance
bookings shown on the applicable schedules annexed to this Agreement,
or entered into in accordance with the provisions of Paragraph 10
hereof; and
(ii) all of the following to the extent, if any, they affect
the Hotel Assets:
(1) all those covenants, easements, agreements, restrictions,
liens, and other matters set forth in the schedule attached hereto, hereby
made a part hereof, and marked Schedule "P";
(2) any state of facts a current and accurate survey of the Real
Property would show, including, without limitation, possible projections,
affixations, and/or encroachments, if any, of the Building, Building walls,
foundations, retaining walls, party walls, stoops, areas, steps, xxxxx,
trim, cornices, canopies, standpipes, fire escapes, coal chutes, casings,
ledgers, water tables, lintels, porticos, bay windows, xxxxxx, cellar
doors, keystones, sidewalk elevators, fences, beams, and the like on, under
or above any streets or premises adjoining the Real Property, or within any
set-back areas, and similar encroachments of adjoining premises, and the
variations between the lines of record title and fences, retaining walls,
hedges, and the like;
(3) all building, zoning, environmental and other laws,
resolutions, codes, restrictions, ordinances, regulations and any
amendments thereof or additions thereto now or hereafter enacted by any
governmental authority having jurisdiction over the Real Property or any
part thereof;
-24-
(4) any financing statements, chattel mortgages, conditional
bills of sale or other forms of security interests (i) against personalty
not owned by Seller but in which Seller has an interest which is being
conveyed as part of the Transaction, reflecting the permitted ownership or
pledge of such personalty by a third party, or (ii) which has been removed
from the Real Property prior to the execution of this Agreement and is not
being conveyed as part of the Transaction, or (iii) filed more than five
(5) years prior to the Closing Date and not continued;
(5) those violations of law, regulations, ordinances, orders or
requirements listed in Schedule "J", and any violations notice of which is
given during the period between the expiration of the Due Diligence Period
and the Closing Date to the extent the cost of curing such violations does
not exceed $500,000.00;
(6) possible variations between the actual description of all or
any portion of the Real Property and the tax lot designation;
(7) any and all levies of assessments of federal, state and/or
municipal authorities or installments thereof becoming liens or payable
subsequent to the date hereof or adjusted for as provided in Paragraph 7
hereof;
(8) liens for taxes and water and sewer charges not yet due and
payable or adjusted for as provided in Paragraph 7 hereof; and
(9) the Hotel Contracts, Equipment Leases and Union Contracts.
-25-
(g) Subsequent to the expiration of the Due Diligence Period, Seller
shall and does hereby grant to Purchaser a right of entry, at reasonable times,
at Purchaser's sole cost and expense, to continue to perform such acts as
Purchaser may deem necessary to perform in connection with the closing of the
transactions described in this Agreement, subject to and in accordance with the
provisions of this Paragraph, including, without limitation, Purchaser's
indemnity obligations as set forth herein. Subject to the provisions of
Xxxxxxxxx 0X hereof, Purchaser's obligation to close hereunder shall in no way
be affected by any activities or inspections occurring after the expiration of
the Due Diligence Period, such activities and inspections being for Purchaser's
information only, and, without limiting the generality of the foregoing,
Purchaser shall have no right to terminate this Agreement subsequent to the
expiration of the Due Diligence Period, subject to the provisions of Xxxxxxxxx
0X hereof.
(h) Seller and Purchaser shall endeavor in good faith as expeditiously
as possible but in no event later than November 22, 1995 to negotiate and
finalize the form of lease to be attached as Exhibit "A" hereto containing the
basic terms set forth in the schedule annexed hereto, hereby made a part hereof,
and marked Schedule "F". If the parties have not agreed on the form of lease by
such date, either party may terminate this Agreement, in which event the Down
Payment and the Interest, shall be delivered to Purchaser whereupon neither
Seller nor Purchaser shall have any further obligation to the other, or any
rights against the other arising out of this Agreement. In the event of such
termination, Purchaser shall deliver to Seller copies of all surveys, title or
engineering reports, and other written reports relating to the Hotel obtained by
Purchaser from third parties during the Due Diligence Period.
-26-
5. Closing Place and Date. The closing of the transactions
contemplated herein (the "Closing") shall take place at the offices of the Port
Authority, Xxx Xxxxx Xxxxx Xxxxxx, 00X, Xxx Xxxx, Xxx Xxxx, 00000, at 10:00
o'clock a.m. (New York time) on or about December 6, 1995 (the "Closing Date").
Either Seller or Purchaser shall have the right to adjourn the Closing Date on
one or more occasions exercisable by two (2) days notice to the other provided,
however, that any adjournment beyond December 29, 1995 shall only be for a
reasonable period of time, and in the event either party shall adjourn the
Closing Date beyond December 29,1995 the other party shall have the right to
make TIME OF THE ESSENCE WITH RESPECT TO THE ADJOURNING PARTY'S OBLIGATION TO
CLOSE ON THE ADJOURNED DATE.
A pre-closing of the transactions contemplated herein shall take place
at the offices of the Port Authority, Xxx Xxxxx Xxxxx Xxxxxx, 00X, Xxx Xxxx, Xxx
Xxxx, 00000, two business days prior to the Closing Date, as such date may be
adjourned by Seller or Purchaser.
6. Title to the Real Property-Title Insurance.
(a) Within five (5) days after the receipt of the title insurance
report provided to Purchaser by the Title Company, as provided for in Paragraph
4 of this Agreement, Purchaser shall deliver to Seller written notice of any
defects, encumbrances or objections to title other than the Permitted Exceptions
which are revealed in such report and which Purchaser is not willing to waive
("Title Objections"). Additional Title Objections relating only to any state of
facts an accurate survey of the Real Property would show may be raised within
two (2) days after Purchaser's receipt of the survey contemplated in Paragraph 4
hereof. If any Title Objections or Additional Title Objections shall exist,
Seller may elect, at its option, by written notice to Purchaser given within
five (5) days after receipt of notice of such Title Objection or Additional
Title Objection from Purchaser, either to remove and satisfy the same, in which
case the Closing Date shall be adjourned (but not beyond December 29, 1995) if
requested by Seller, in order to effect such removal and satisfaction, or to
terminate this Agreement, in which event the Down Payment, and the Interest,
shall be delivered to Purchaser whereupon neither Seller nor Purchaser shall
have any further obligation to the other, or any rights against the other
arising out of this Agreement. Nothing herein contained shall require Seller to
bring any title action or proceeding or to take any other action or incur any
expense in order to eliminate any such Title Objection, except that Seller shall
be required to remove liens or encumbrances constituting Title Objections which
can be removed by the payment of a sum certain not in excess of Five Hundred
Thousand Dollars ($500,000.00) in the aggregate, or which was voluntarily placed
upon the Real Property by Seller after the execution of this Agreement. In the
event Seller elects not to remove any Title Objection it is not required to
remove, or if any Title Objection is not removed or satisfied by the adjourned
Closing Date, Purchaser, as its sole remedy, may elect either to (i) accept the
Real Property subject to such Title
-27-
Objections, without reduction of the Purchase Price or any credit allowance
against the same and without any other liability on the part of Seller, or (ii)
to terminate this Agreement, in which event the Down Payment, and the Interest,
shall be delivered to Purchaser whereupon neither Seller nor Purchaser shall
have any further obligation to the other, or any rights against the other
arising out of this Agreement. Purchaser shall notify Seller of its election
within five (5) days of its receipt of notice from Seller of its decision not to
remove any such Title Objection, or of its inability to do so. If Seller elects
by written notice to Purchaser not to remove any Title Objection which Seller is
not required to remove, or fails to remove any such Title Objection prior to the
adjourned Closing Date, and Purchaser fails to notify Seller of Purchaser's
election to accept the Real Property subject to such Title Objection, without
reduction of the Purchase Price or any credit allowance against the same and
without any other liability on the part of Seller, within five (5) business days
after receipt of notice from Seller of Seller's decision not to remove any such
Title Objection, or of its inability to do so, Purchaser shall be deemed to have
elected to terminate this Agreement, in which event the Down Payment, and the
Interest, shall be delivered to Purchaser whereupon neither Seller nor Purchaser
shall have any further obligation to the other, or any rights against the other
arising out of this Agreement. If on the Closing Date there are any liens or
encumbrances affecting the Real Property which constitute Title Objections,
Seller may, as an alternative to causing such liens or encumbrances to be
satisfied of record, and provided only that the Title Company agrees to remove
such liens or encumbrances as exceptions to title: (1) bond or cause to be
bonded such liens or encumbrances, (2) deliver or cause to be delivered to
Purchaser or Title Company, on the Closing Date, instruments in recordable form
and sufficient to satisfy such liens and encumbrances of record, together with
the cost of recording or filing such instruments, or (3) deposit or cause to be
deposited with the Title Company sufficient monies, acceptable to and reasonably
required by it to insure the obtaining and the recording of such satisfaction.
Nothing contained in this Paragraph shall, or shall be deemed, to limit
Purchaser's right to terminate this Agreement during the Due Diligence Period
pursuant to the provisions of Paragraph 4 hereof.
(b) Seller shall cause the judgements and mechanics' liens listed in
the title report dated August 1, 1995 issued by Royal Abstract Corporation (to
the extent such judgements and mechanics' liens appear in the Title Report
issued by the Title Company, or any co-insurer) to be removed as an exception to
title by delivering to the Title Company, or any co-insurer, such affidavits and
indemnities as they may reasonably request.
7. Apportionments and Adjustments.
A. Subject to the provisions of subparagraph B of this Paragraph,
Seller shall bear all responsibility arising out of, resulting from, or in
connection with, the operation of the Hotel prior to the Closing Date, and
Purchaser will bear all such
-28-
liabilities accruing from and after the Closing Date. Subject to the provisions
of subparagraph B of this Paragraph, the following matters and items pertaining
to the Hotel Assets and the operation of the Hotel shall be apportioned between
Seller and Purchaser, or, where applicable, credited to either Seller or
Purchaser: (i) Hotel account receivables and payables (ii) Taxes and
assessments, (iii) Tenant Lease deposits, Hotel Contract deposits, Equipment
Lease deposits, and security deposits and payments made pursuant to telephone,
telex, and contracts for the supply of utilities, (iv) Tenant Leases, (v) Hotel
Contracts, (vi) Equipment Leases, (vii) Deposits on advance bookings, (viii) the
Cash Accounts, (ix) the inventories and supplies referred to in subparagraph B,
(x) Employee salaries and benefits, and (xi) such other items as are normally
prorated and adjusted in similar transactions of this type in respect of a hotel
in New York City. Net credits in favor of Purchaser shall be credited against
the Purchase Price at the Closing, and net credits in favor of Seller shall be
paid by Purchaser to Seller at the Closing, in addition to the Purchase Price.
Seller and Purchaser shall make such joint inventories, examinations, and audits
of the Hotel, and of the books and records thereof, as are deemed necessary to
make the adjustments and prorations described herein. Based upon such
inventories, examinations, and audits Seller shall cause to be prepared and
delivered to Purchaser no later than two (2) business days prior to the Closing
a statement (the "Closing Statement") showing Seller's best estimate of the
amount of the adjustments and prorations to be made at the Closing.
B. In making the apportionments described in subparagraph A of this
Paragraph, Purchaser shall be entitled to receive without adjustment to the
Purchase Price (1) the Cash Accounts to the extent the aggregate amount therein
does not exceed One Million Five Hundred Thousand Dollars and No Cents
($1,500,000.00) on the Closing Date, and (2) all inventories of unopened
containers of food and (subject to the regulations of the State Liquor
Authority) liquor and all new and unused inventories of china, glassware,
silverware, linens, and other consumable supplies in unbroken packages on the
Closing Date. Seller shall leave the sum of One Million Five Hundred Thousand
Dollars and No Cents ($1,500,000.00) in the Cash Accounts on the Closing Date,
and all cash in the Cash Accounts in excess of One Million Five Hundred Thousand
Dollars and No Cents ($1,500,000.00) shall be removed by Seller on or before the
Closing Date. On the Closing Date Seller and Purchaser shall jointly perform or
cause to be performed an accounting of the Cash Accounts.
-29-
The following items shall be adjusted between Purchaser and Seller as
of 12:01 A.M. (unless another time is specified below) on the Closing Date:
(i) Purchaser shall receive a credit for all deposits from tenants, guests
of the Hotel or group or banquet customers (including interest earned thereon to
the extent payable or creditable to such tenants, guests or customers) in the
possession of Seller or the Operator (collectively "Guest Deposits") which
represent advance payment for rooms and services to be provided on or after the
Closing Date, and Seller shall retain all such deposits.
(ii) Purchaser shall collect all guest room, food, beverage and other
revenues of the Hotel payable by guests listed on the current "guest ledger" at
the Hotel on the Closing Date and Seller shall at the Closing receive a credit
for all amounts owing by such guests, as shown on such ledger (less 5% of non-
credit card receivables for bad debt allowance) for the period up to and
including the night immediately prior to the Closing Date.
(iii) All fixed rents, escalation charges, percentage rents and additional
rents ("Rents") under Tenant Leases and Hotel Contracts shall be prorated as of
the Closing Date. If any tenant is in arrears in the payment of Rent on the
Closing Date, Rent received from such tenant after such Closing shall be
received in trust by Purchaser and shall be applied in the following order of
priority: (a) first to the month in which the Closing Date occurs (subject to
adjustments as herein provided); (b) then to the month preceding the month in
which the Closing Date occurs; (3) then to any amounts remaining due to
Purchaser from such tenant; and (d) then to any amounts due to Seller from such
tenant in respect of any months prior to the month preceding the month in which
such Closing occurs. Seller shall provide Purchaser with a statement listing
each tenant that is in arrears, and setting forth the amount of such arrears.
Notwithstanding anything to the contrary set forth in this subdivision, Rents
which relate to a period or periods occurring prior to and after the Closing
Date but which are not due, by the terms of the applicable Tenant Lease or Hotel
Contract pursuant to which such Rents are payable, until after the Closing Date
(such as rents based on a percentage of gross income of the tenant)
(collectively, "Delayed Rent Payments"), shall be prorated, as and when
received, as of the Closing Date based upon the respective portions of such
period or periods occurring before and after the Closing Date, and shall not be
applied in the priority set forth in the immediately preceding sentence. If all
or any portion of a payment of Rents received by Seller or Purchaser after the
Closing Date are payable to the other party pursuant to the provisions of this
subdivision, the appropriate sum, less a proportionate share of reasonable
attorneys' fees and other reasonable collection charges, shall be promptly paid
to the other party. Seller shall have the right to use any legal process
proceedings against any tenant to collect delinquent Rents for the period prior
to the month preceding the month in which the Closing Date occurs, provided,
however, that Seller shall not have the right to
-30-
commence eviction or summary dispossess proceedings against such delinquent
tenants. Upon request Purchaser shall, and shall direct its hotel operator to,
execute and deliver to Seller an assignment evidencing such right of Seller.
Without limiting the generality of Seller's right to post-closing access to the
books and files of the Hotel in accordance with the provisions of Paragraph 30
hereof, Seller shall have the right to examine and audit the books and records
of the Hotel with respect to the collection of such Rents.
(iv) Wages, salaries, payroll taxes, contributions due in respect of
Federal Social Security tax and other fringe benefits for all the Employees
shall be apportioned as of the beginning of the "day shift" on the Closing Date
and Purchaser shall cause all such amounts which accrue for services rendered
after the Closing Date to be paid.
(v) Hotel utility charges shall be prorated as of the Closing Date with
Seller responsible for utility charges up to the Closing Date and Purchaser
responsible for the period on and after the Closing Date. Seller shall endeavor
to obtain final meter readings on the Closing Date and shall pay all amounts
shown on the final bills rendered in connecting with such final readings. Any
unfixed utility charges shall be apportioned on the basis of the rate of
consumption indicated by the most recent applicable xxxx, with a reapportionment
as soon as the actual xxxx(s) become available.
(vi) All amounts payable to the Operator by Seller under the Management
Agreement shall be paid by Seller, including, without limitation, any costs
relating to the termination of the Management Agreement.
(vii) All Hotel Accounts Receivable, as hereinafter defined, (other than
Rents which shall be treated as provided in subdivision (iii) of this
subparagraph, and room revenue and food, beverage and other revenues included in
the current "guest ledger", which shall be treated as provided in subdivision
(ii) of this subparagraph, and all other ordinary and customary items of income
(including, without limitation, all vending machine receipts and all monies
received in connection with catering, banquet, bar and restaurant services at
the Hotel) originating prior to 12:01 A.M. on the Closing Date (or, as to
restaurant and bar income, as of the closing time of each such bar and
restaurant, if such closing time is later than 12:01 A.M.) shall belong to
Seller. Purchaser shall take all reasonable steps to collect such Accounts
Receivable for the account of Seller, but Purchaser shall not be required to
commence legal proceedings to do so. Seller shall be responsible for all Hotel
Accounts Payable incurred prior to the Closing Date and shall cause the same to
be paid in accordance with its historical payment practices and procedures.
-31-
C. The provisions of this Paragraph may not specify all adjustments
properly to be made in connection with the Transaction. Representatives of
Purchaser and Seller shall perform all of the adjustments through the Closing
Date and any and all other adjustments not specifically referred to herein which
are appropriate and usual. The adjustments hereunder shall be calculated or
paid in an amount based upon a fair and reasonable estimated accounting
performed and agreed to by representatives of Seller and Purchaser on the
Closing Date. Subsequent final adjustments and payments (including the bad debt
allowance referred to in subdivision (ii) of subparagraph B of this Paragraph,
which shall be adjusted based upon the actual amount of bad debt experience on
account of all amounts owing by guests listed on the guest ledger) shall be
made in cash or other immediately available funds as soon as practicable after
the Closing Date, but in any event within ninety (90) days after such Closing
Date, except for adjustments and payments relating to Delayed Rent Payments and
Rents which are in arrears, each of which shall be treated in the manner
provided for elsewhere in this Paragraph, but in any event within ninety (90)
days after such Closing Date, based upon an agreed accounting performed by
representatives of Seller and Purchaser. In the event the parties have not
agreed with respect to the adjustments required to be made pursuant to this
Paragraph within such 90-day period, upon application by either party, the
parties shall submit the issue to the accounting firm of Price Waterhouse for
determination. The parties shall share the costs and expenses of the accountant.
D. The provisions of this Paragraph, and the obligations of Seller
and Purchaser with respect to closing adjustments shall survive the Closing.
E. As used herein:
(i) "Hotel Accounts Payable" shall mean all items of expense and
payables and all items of expense under maintenance contracts, service
contracts, personal property leases, rental contracts or equipment or
telephone contracts, advertising contracts, trade association dues, travel
agency commissions and cleaning contracts which are outstanding and due and
payable by Seller.
(ii) "Hotel Accounts Receivable" shall mean any and all rents,
deposits, guest, room and other sums and charges owing to Seller that are
in any way attributable to the Hotel, including, without limitation, (a)
amounts receivable in connection with the letting of rooms, use of banquet
services and facilities, use of conference facilities or meeting rooms or
the provision of other services by Seller, or by current operator, at the
Hotel, (b) credit card charges, whether or not they have been submitted to
the applicable credit card company, and (c) rents and/or license fees due
from tenants, licensees or concessionaires at the Hotel.
-32-
8. Health Insurance Reserve Purchaser acknowledges that a reserve has
been established relating to health insurance claims which are pending but
unpaid. Upon settlement or final resolution of all such insurance claims
reserved against, if the amount reserved with respect to such claims exceeds the
amount of liability as determined by such settlement or resolution, Purchaser
agrees to pay Seller an amount equal to such excess. If the amount of any such
liability exceeds the amount of the reserve created with respect thereto, then,
to the extent not covered by insurance, Seller agrees to pay the amount of such
excess to the extent any such excess is paid out of Hotel revenues or is paid by
Purchaser. Such reserve shall be transferred to Purchaser at Closing without
adjustment to the Purchase Price, and to the extent of such reserve Purchaser
shall assume the liabilities relating to the health claims which are the subject
thereof. The provisions of this Paragraph, and the obligations of Seller and
Purchaser with respect to closing adjustments shall survive the Closing Date.
9. Employees.
(a) On the Closing Date Seller shall cause to be transferred, conveyed
and assigned to Purchaser's designated management company, and Purchaser shall
cause its designated management company to purchase, all of the shares (the
"Shares") of the common stock, par value One Dollar ($1.00) per share, of
Weststock Corporation (formerly known as Vista International, New York, Inc.,
and hereafter referred to as "Weststock"), a corporation organized and existing
under and by virtue of the laws of the State of Delaware, which is currently the
employer of the Employees, free and clear of any lien, claim or encumbrance of
any nature whatsoever. The purchase price for the Shares is one hundred dollars
and no cents ($100.00) in cash. Simultaneously therewith Seller shall cause to
be delivered to Purchaser's designated management company stock powers in blank
relating to the Shares, with signature guaranteed, the original corporate
records of Weststock, and a copy of its certificate of incorporation and by-
laws, all of which shall be complete, true and accurate, and duly executed
resignations of all the officers and directors of Weststock (the "Weststock
Documents"). Seller shall use reasonable efforts to cause the Operator, the
current beneficial owner of the Shares, and the affiliates of the Operator which
have legal title to the Shares to execute such agreements, certificates and
other instruments, and take such actions, as Purchaser's designated management
company may reasonably request in order to effectuate the transfer contemplated
by this Paragraph. All reference in this Paragraph to the Operator shall be and
be deemed to include those affiliates of the Operator which have legal title to
the Shares, as well as the Operator. Seller and Purchaser shall take all such
action as is necessary and appropriate to effectuate the transfer of the Shares,
and Purchaser shall use all reasonable efforts to cause its designated
management company to take all such actions, and neither Seller nor Purchaser
shall engage in any action that is inconsistent with the transfer, and Purchaser
shall not cause its designated management company to engage in any such action.
Following the Closing Date, Westock shall remain bound
-33-
by the Union Contracts and effective as of the Closing Date, Seller shall, and
shall cause Weststock and the Operator, to take all action necessary to
terminate all employee benefit plans that covered employees at the Hotel other
than those to which Weststock is required to contribute pursuant to the Union
Contracts. From and after the Closing Date, Purchaser shall cause Purchaser's
designated management company to direct Weststock to provide employee benefits
to the employees that are in the aggregate substantially similar to other
similarly situated employees of Purchaser's designated management company.
Without limiting the generality of the foregoing, Purchaser shall cause its
designated management company to (A) provide the Employees with past service
credit for their period of employment at the Hotel prior to the Closing Date for
purposes of participation in a 401(k) plan of the designated management company
and (B) provide employees the opportunity to participate in Purchaser's
designated management company's medical plans without imposing any waiting
periods or pre-existing condition exclusions as long as such Employees were
participating in a Seller's or Operator's sponsored medical plan on the Closing
Date. If Purchaser, and Purchaser's designated management company, and Seller
mutually and reasonably agree about the terms and conditions of a severance plan
for non-union Employees and such terms and conditions are incorporated into the
plan by Weststock or the Operator prior to November 22, 1995, then for a period
of three (3) months from the Closing Date, Purchaser shall cause its designated
management company to provide Employees who are terminated "without cause"
during such three month period with severance benefits under such plan. Seller
agrees to and shall reimburse Purchaser, Weststock, or the designated management
company, as the case may be, for the cost of such severance benefits actually
paid to Employees. On and after the Closing Date, Purchaser, or its designated
management company, shall be responsible for any claims of or liabilities to
affected Employees under the Worker Adjustment and Retraining Notification Act
(WARN), and shall indemnify Seller against any liability under WARN that may be
imposed upon Seller as a result of the actions of Purchaser subsequent to the
Closing Date.
(b) Seller shall be responsible for all Employee Claims, as
hereinafter defined, and for all losses, costs, liabilities, damages and
expenses relating to the Employees or prior employees, and for any Employee
Claims that relate to or are connected with Seller's, the Operator's, or
Weststock's management and operation of the Hotel, including Seller's
termination of the Management Agreement, which solely arise out of the
Transaction or accrued or were incurred during the time period up to and
including the Closing Date (subject to subparagraph B (iv) of Paragraph 7), and
shall indemnify and hold Weststock, Purchaser, and Purchaser's operating or
management company harmless from and against any such Employee Claims, losses,
costs, liabilities, damages and expenses which are asserted against Weststock,
Purchaser, or Purchaser's designated management company. Purchaser shall be
responsible for all Employee Claims, and for all losses, costs, liabilities,
damages and expenses relating to the Employees, and for any Employee Claims that
relate to or are
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connected with the management and operation of the Hotel after the Closing by or
on behalf of Purchaser, including Employee Claims related to any termination by
Purchaser of its management contract, which accrued or were incurred during the
time period after the Closing Date (which do not arise solely out of the
Transaction), except as provided for otherwise in this Paragraph, and Purchaser
shall indemnify and hold Seller and the Operator harmless from and against any
such Employee Claims, losses, costs, liabilities, damages and expenses which are
asserted against Seller or the Operator. As used herein, "Employee Claims"
shall mean and include any claim by or on behalf of an Employee or prior
employee relating to employment, compensation, or conditions of employment or
termination of employment (including, but not limited to, vacation, severance,
and sick leave), claims under any Union Contract, claims under any employee,
pension, health or welfare or other employee benefit plan (including, without
limitation withdrawal liability or claims therefor under any multi-employer
pension plan under ERISA), and claims of unlawful discrimination, wrongful
termination, and claims for worker's compensation, unemployment compensation or
statutory or contractual severance. As of the Closing Date, as to the employee
benefit, pension, health or welfare or other employee benefit plans listed on
Schedule M, Seller will direct the Operator to cause Weststock to make (or
Purchaser shall receive an adjustment to the Purchase Price for) all
contributions, payments, and statutory filings and participant communications
required to be made in connection with such plans through the Closing Date so
that as of the Closing Date all such contributions, payments, filings and
communications due, incurred, or relating to the time period prior to the
Closing Date have been made or the Purchase Price appropriately adjusted.
(c) Seller represents and warrants that it has not made and will not
make, and will direct the Operator not to make, any statements or promises to
any persons or Employees providing services at the Hotel, or to any labor
organization representing Employees at the Hotel, regarding continued employment
or future employment with Purchaser, Weststock, or Purchaser's designated
management company without the prior written approval of Purchaser. Subject to
all of the applicable provisions of this Agreement, the decision as to what
Employees will be employed after the Closing Date shall be solely that of
Weststock, Purchaser, or its designated management company.
(d) During the Due Diligence Period and thereafter until the Closing
Date, Purchaser and its designated management company shall be provided access
to the Hotel to review employment records and employee plans and policies and to
meet with and interview the Employees at reasonable times and places, upon
notification to Seller and the Operator.
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(e) In addition to the representations made by Seller in Paragraph 3
hereof, Seller represents to Purchaser with respect to Weststock, as follows:
(i) Weststock is a corporation duly organized and validly existing
under the laws of the State of Delaware, is duly qualified to do business and is
in good standing in the State of New York, and in each jurisdiction where such
qualification is necessary, and has all requisite corporate power and authority
to own its properties, and all requisite corporate power and authority and
governmental licenses, authorizations, permits, consents, and approvals to
operate and carry on its business as now being conducted;
(ii) There is no claim, litigation, proceeding, arbitration, order,
injunction, decree, or governmental investigation in effect, or pending against
Weststock affecting or relating to the Employees or prior employees except as
set forth in Schedule K, and no written notices of violation of law or
ordinances, orders, requirements or regulations of any Federal, State, County,
municipal or other governmental or quasi-governmental department, agency or
authority relating to the Employees have been received by Seller, the Operator,
or Weststock except for those notices of violations set forth in Schedule "J".
To the best of Seller's knowledge, neither Seller, the Operator, nor Weststock
has received written notice of the occurrence of any event which could lead to
future claims, litigation, proceedings, arbitrations, orders, injunctions,
decrees, or governmental investigations with respect to the Employees or prior
employees, or received written notice that it is in default with respect to any
judgment, writ, injunction, decree, law, rule or regulation of any court or
governmental department, commission, bureau, instrumentality or agency relating
to or affecting the Employees, except as set forth on Schedules J and K.
(iii) Except as set forth in Schedule J, Weststock has duly and timely
filed all tax reports and returns required to be filed by it in connection with
the operation of the Hotel and all of such were, when filed, true, correct and
complete in all respects and prepared in conformity with all applicable legal
requirements. Except as set forth in Schedule J, Weststock has paid all taxes,
estimated taxes, interest, penalties, assessments and deficiencies that have
become due pursuant to such reports and returns, and all proposed deficiencies
or assessments, including penalties and interest, which arise from an
examination of any such tax report or return for any of the former owners of the
Shares or the tax reports or returns of an affiliated group of entities filing
consolidated or combined returns, if any such entity was or is a member, have
been paid or settled. Weststock is not a party to any pending inquiry, action,
suit, audit or proceeding with respect to any tax required to be paid by it, and
no claim for assessment or collection of any such tax has been asserted against
Weststock that has not been paid, except as set forth in Schedules J and K.
There is no valid basis for any assessment, deficiency notice, 30-day letter or
similar intention to be issued to Weststock by any taxing authority to assess
any tax;
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(iv) Prior to the Closing Date Weststock has conducted no activities
other than as employer of the Employees or former employees at the Hotel, and
as of the Closing Date Weststock owns no assets other than those required to
fulfill its payroll and employee benefit obligations to the Employees, has
entered into no contracts other than the Union Contracts and other than the
employee benefit plans listed on Schedule M, and has no liabilities other than
those incurred under the Union Contracts and under the employee benefit plans
listed on Schedule M.
(v) The Operator is not a "foreign person" as defined in Section 1445
(f) of the Internal Revenue Code of 1986, as amended ("the Code"), and is not
subject to withholding requirements imposed by Section 1445 (a) of the Code on
the consummation of the Transaction, and the United States taxpayer
identification numbers of the affiliates of the Operator which have legal title
to the Shares is: IHC Member Corp.-25-1770158 and IHC Services Corp,
L.L.C.-25-1770160. This representation is made for the purpose of securing an
exemption from the withholding of tax imposed by Section 1445 (a) of the Code in
connection with the transfer of the Shares knowing that Purchaser is relying
upon the facts set forth herein, and Seller understands that these
representations may be disclosed to the Internal Revenue Service by Purchaser
and that any false statement contained herein could be punished by fine,
imprisonment, or both.
(vi) Except as identified in Schedule M, none of Seller, the Operator
or Weststock are now or have ever been participants in or obligated to or under
any multi-employer plan.
As a condition to Closing, Seller shall direct the Operator, the
current beneficial owner of the Shares, to provide to Purchaser a certificate
running in favor of Purchaser and Weststock representing to Purchaser and
Weststock that neither Weststock, nor the Operator, nor any affiliate of the
Operator has done or suffered anything to be done during the period when the
Operator beneficially owned the Shares to cause the Weststock Representations to
be inaccurate or untrue as a result of any acts of the Operator, any affiliate
thereof, or Weststock, and representing that the Operator as beneficial owner,
and the affiliates of the Operator which have legal title to the Shares have
full right and power to transfer the Shares to Purchaser as part of the
Transaction, that such transfer has been duly authorized by all necessary or
proper corporate action of the Operator, as beneficial owner of the Shares, and
the affiliates of the Operator which have legal title to the Shares and will not
conflict with, result in any breach or violation of or default (or give rise to
any right of termination, cancellation or acceleration, or require any notice,
filing, or further consent under (a) the certificate of incorporation or by-laws
of the Operator, (b) any statute, law, order, rule, regulation, judgment, award,
writ, injunction, or other decree of any court or governmental authority
applicable to the Operator, or (c) any note, bond, mortgage, indenture, lease,
license, permit, instrument, or other agreement or obligation to which
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the Operator is a party or by which it may be bound, nor result in any lien,
claim, or encumbrance on the shares of capital stock of the Operator. Such
certificate will also set forth (aa) that no filing, consent, waiver, approval
or authorization of or by any governmental authority or any other third party is
required (or, if required, has been obtained) in connection with the such
transfer by the Operator, (bb) that during the period when the Operator owned
the Shares neither the Operator nor any affiliate thereof: (x) has transferred
or purported to transfer any right, title, or interest in and to the Shares, (y)
has assigned, mortgaged, pledged, hypothecated or otherwise encumbered such
shares, (z) has or will do or suffer anything to be done whereby the Shares are
assigned, mortgaged, pledged, hypothecated or otherwise encumbered as of the
Closing Date in any way whatsoever, and (cc) that as of the Closing Date the
Operator is the record and beneficial owner of the Shares and the same are free
and clear of all liens and encumbrances of whatsoever nature, and any other
limitations or restrictions (including any restriction on the right to vote,
sell, or otherwise dispose of the Shares), and the Operator will transfer and
deliver to Purchaser on the Closing Date valid title to the Shares free and
clear of any such liens, encumbrances, limitations or restrictions; and (dd) the
Shares are all of the authorized Share, issued, and outstanding capital stock of
Weststock, and have been duly and validly issued, and are fully paid and non-
assessable.
The representations made herein or in the Operator certificate with
respect to Weststock or the Shares (the "Weststock Representations") shall
survive the Closing for a thirty-six (36) month period following the Closing
Date. In the event that Purchaser discovers that any of the Weststock
Representations are inaccurate or untrue, either as a result of any action taken
by the Operator, or by any former owner of the Shares, or otherwise, during the
thirty-six (36) month period following the Closing Date, and Purchaser notifies
Seller of that fact within five (5) days following the end of such period,
Seller shall indemnify and hold Purchaser harmless for all such losses and
damages incurred by Purchaser as a result of any such misrepresentations in
excess of an aggregate present value amount of Five Hundred Thousand Dollars and
No Cents ($500,000.00) but not in excess of an aggregate present value amount of
One Million Five Hundred Thousand Dollars and No Cents ($1,500,000,00). Any
such losses or damages incurred by Purchaser as a result of any such
misrepresentation in excess of an aggregate present value amount of One Million
Five Hundred Thousand Dollars and No Cents ($1,500,000,00) shall be shared
equally by Purchaser and Seller, on a pari-passu basis. Without limiting the
generality of the foregoing, any misrepresentation with respect to the Weststock
Representations shall also be deemed a misrepresentation for the purposes of
Paragraph 3B of this Agreement, all references therein to "representations made
by Seller" shall be deemed to include the Weststock Representations, and any
loss or damage incurred by Purchaser because any of the Weststock
Representations are inaccurate or untrue shall be included for the purpose of
calculating the Five Hundred Thousand Dollar limitation referred to in Xxxxxxxxx
0X of this Agreement, subject to and in accordance with the provisions thereof.
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10. Future Operations.
A. Operations Consistent with Past Practices. Between the date of
execution of this Agreement and the Closing Date, subject only to conditions
beyond its control and the provisions of this Paragraph, Seller shall cause the
Hotel to be operated in usual and ordinary course of business consistent with
past practices and the Hotel budget in effect at the time of the execution
of`this Agreement, including the maintenance of historical levels of inventory.
Seller shall maintain the insurance presently maintained by Seller, as described
in Schedule "L" hereto, in full force and effect through the Closing Date.
During the period between the expiration date of the Due Diligence Period and
the Closing Date Seller agrees, subject to the provisions of the Management
Agreement, to comply with all reasonable requests made by Purchaser regarding
changes in the current operations at the Hotel, provided (i) such changes will
not result in a default under any agreement between Seller and any third party,
and (ii) such changes could not, in the reasonable opinion of Seller, result in
a cost to Seller unless Purchaser agrees to indemnify Seller against such cost
in the event the Closing fails to occur. Subject to Seller's obligation to
operate the Hotel in accordance with the provisions of the first sentence of
this subparagraph, Seller further agrees to review and consult with Purchaser
regarding any changes to the budgets, or changes in the current operations at
the Hotel submitted or suggested by the Operator, and to refrain from
implementing any such changes on its own initiative without first consulting
with Purchaser. During such period, Seller shall neither sell or dispose, nor
shall consent to the sale and disposal by the Operator of any capital assets
without obtaining the consent of Purchaser, except for assets which are worn out
or obsolete and are replaced with a comparable asset. During such period, Seller
shall not do any thing or take any action, and shall not consent to the doing of
anything or the taking of any action by the Operator which will cause a material
breach of any contract, lease, commitment, or obligation relating to the
operation of the Hotel which is to be assigned to Purchaser hereunder. Nothing
contained herein shall, or shall be deemed to, impose any liability upon Seller
for any actions of the Operator to which Seller has not consented in writing, or
upon Purchaser for any actions of the Operator which are not taken in the usual
and ordinary course of business and are not consistent with past practices and
the Hotel budget in effect at the time of the execution of this Agreement, or
for any actions of the Operator which pursuant to the provisions hereof are
expressly made subject to Purchaser's consent, and to which Purchaser has not
consented in writing.
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B. New Tenant Leases. During the period from the expiration date of
the Due Diligence Period to the Closing Date Seller shall not consent (i) to any
new Tenant Lease (including any advance booking arrangement which can not be
cancelled upon thirty days' notice or less ), or (ii) to a renewal or extension
of any Tenant Lease, except renewals required by the terms of such Tenant
Leases. If between the execution of this Agreement and the Closing Date, Seller
or the Operator shall enter into any new contract or agreement relating to the
ownership, construction, or operation of the Hotel, shall amend any document now
or hereafter in effect, or shall discover that a contract or agreement exists
which is not set forth on the applicable schedule relating thereto, whether
material or not, Seller shall promptly deliver a true and complete copy thereof
to Purchaser.
C. Financial Condition of the Hotel.
(a) Except as expressly set forth herein neither Seller nor any of its
employees, agents, accountants, attorneys or representatives have made, nor does
Seller make, and Seller is unwilling to make, any verbal or written
representations or warranties whatsoever as to the financial condition of the
Hotel or the history of financial operations of the Hotel, and Purchaser has not
relied and will not rely on any such representations and hereby expressly
acknowledges that no such representations have been made. Purchaser will have
access to the Hotel books and records for purposes of review, inspection, and,
if Purchaser elects, at its own cost and expense, audit by Purchaser's
accountants. Without limiting the generality of the foregoing, Seller and
Purchaser each acknowledge that as between themselves, Seller and Purchaser
shall each bear their own risk as to the accuracy of the Hotel's financial
statements, and each shall be deemed to have released the other from and against
any claim arising out of any error contained in or omission from any such
financial statements, except for any error or omission which resulted from
either party's willful provision of incorrect information to the accountants or
willful concealment of facts necessary to make such financial statement
correct.
(b) Upon request by Purchaser, Seller agrees to (1) either (i) provide
or direct the Operator to provide the latest audited financial statements for
the Hotel which Seller is aware of and has in its possession, and which have
been prepared in accordance with the Uniform System of Accounts and the rules
and regulations of the Securities and Exchange Commission or (ii) cooperate and
direct the Operator to cooperate with Purchaser and Purchaser's independent
public accountants in preparing and auditing such financial statements, at
Purchaser's sole cost and expense, and (2) cause Seller's independent public
accountants and counsel to
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cooperate, as reasonably necessary, with Purchaser and its independent public
accountants, at no cost or expense to Seller, in the process of providing or
preparing such financial statements. Purchaser will make such request in the
event Purchaser (or one of its affiliates) must provide such financial
statements in connection with any filing with the Securities and Exchange
Commission, or in any information statement.
11. Damage and Destruction. If, prior to the Closing Date, all or
part of the Real Property, or the World Trade Center, is damaged by fire or
other casualty, the following shall apply:
A. Material Damage or Destruction. If there is damage or
destruction by fire or other casualty of a material part of the Real Property,
or a material part of any other portion of the World Trade Center required for
access to or support of the Hotel, or which contains equipment providing utility
services to the Hotel, Seller shall notify Purchaser of such fact and Purchaser
shall have the option to terminate this Agreement upon written notice to Seller
given not later than five (5) days after the date of Seller's notice. If this
Agreement is terminated as aforesaid, the Down Payment, together with the
Interest, shall be returned to Purchaser whereupon neither Seller nor Purchaser
shall have any rights against or obligations to the other arising out of this
Agreement. If Purchaser does not elect to terminate this Agreement as provided
herein, the parties shall consummate the Closing in accordance with the terms
hereof, without any abatement of the Purchase Price, and any and all casualty
insurance proceeds collected by Seller on account of such physical damage or
destruction to the Real Property (net the cost of collection and deductibles)
which has not been applied to restoration, and any right to receive and retain
same, shall be paid to or assigned to Purchaser at the Closing. For purposes
hereof, a "material part" shall be deemed to mean any damage or destruction
the aggregate cost of repair or replacement of which shall exceed One Hundred
Thousand Dollars ($100,000.00). Purchaser shall assume all of Seller's
liabilities and obligations under any construction contracts entered into with
respect to such repairs of the Real Property which remain unfulfilled as of the
Closing Date. Purchaser shall have the right to approve the terms of such
contracts, such approval not to be unreasonably withheld or delayed.
B. Immaterial Damage or Destruction. If there is damage to or
destruction by fire or other casualty of any immaterial part of the Real
Property, or to any other portion of the World Trade Center other than a
material part thereof required for access to or support of the Hotel, or which
contains equipment providing utility services to the Hotel, neither party shall
have the right to terminate this Agreement and the parties shall nonetheless
consummate this Closing in accordance with this Agreement, without abatement of
any the Purchase Price or any liability or obligation on the part of Seller by
reason of such destruction provided, however, that (i) if requested by
Purchaser, Seller shall proceed to repair the damage, but Seller's obligations
with respect to such repairs shall terminate at the Closing, and (ii) any and
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all casualty insurance proceeds collected by Seller on account of such physical
damage or destruction to the Real Property which have not been applied to
restoration and the right to receive and settle the same shall be paid to or
assigned to Purchaser at the Closing. Purchaser shall assume all of Seller's
liabilities and obligations under any construction contracts entered into with
respect to such repairs of the Real Property which remain unfulfilled as of the
Closing Date. Purchaser shall have the right to approve the terms of such
contracts, such approval not to be unreasonably withheld or delayed.
C. The parties waive the provisions of Section 5-1311 of the General
Obligations Law, which shall not apply to this Agreement, and agree that their
respective rights in case of damage or destruction shall be governed by the
provisions of this Paragraph 11.
12. Eminent Domain. If, prior to the Closing Date all or any portion
of the Real Property is taken by eminent domain or in the event of a change of
legal grade caused by an act of governmental authority, Seller shall promptly
give Purchaser written notice thereof, and the following shall apply:
A. Material Taking - Election to Terminate.
If a material part of the Real Property is taken, Purchaser may,
within five (5) days after the date of Seller's notice, by written notice to
Seller, elect to terminate this Agreement, and the Down Payment, together with
the Interest, shall be returned to Purchaser whereupon neither Seller nor
Purchaser shall have any rights against or further obligations to the other
arising out of this Agreement.
B. Material Taking - No Election to Terminate; Immaterial Taking.
If a material part of the Real Property is taken but Purchaser does
not elect to terminate this Agreement pursuant to Paragraph 12 A above; or if
an immaterial part of the Real Property is taken or in the event of a change of
legal grade caused by an act of governmental authority; in either of which
events neither party shall have any right to terminate this Agreement; the
parties shall nonetheless proceed to the Closing in accordance with this
Agreement without any abatement of the Purchase Price or any liability or
obligation on the part of Seller by reason of such taking, provided, however,
that the net proceeds of any award or other proceeds of such taking which may
have been collected by Seller as a result of such taking, less that portion
thereof as has been applied to the cost of restoration, or the right to receive
and settle such award, less any expenses incurred by Seller to restore the Real
Property or otherwise by reason of such taking, shall be paid to or assigned to
Purchaser at Closing.
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C. Definition of Material Part. For the purposes of this Paragraph
12, a "material part" shall be deemed to mean any taking which materially
interferes with the present use and operation of the Building.
D. The parties waive the provisions of Section 5-1311 of the General
Obligations Law, which shall not apply to this Agreement, and agree that their
respective rights in case of condemnation or taking by eminent domain shall be
governed by the provisions of this Paragraph 12.
13. Documents to Be Delivered by Seller and Purchaser.
A. Seller's Documents: Seller shall deliver or cause to be delivered
to Purchaser at the Closing the following documents in form reasonably
satisfactory to Purchaser:
(i) Copies of Seller's By-Laws and certified Resolutions of Seller's
Board of Commissioners authorizing the Transaction, and certification from the
Secretary of Seller that the period during which the Governors of the State of
New York and the State of New Jersey can veto any action of the Board of
Commissioners with respect to the Transaction has expired without such veto
having been exercised;
(ii) The Lease, duly executed and acknowledged by Seller; if
Purchaser shall deliver a memorandum thereof reasonably satisfactory to Seller
and Purchaser, in proper form for recording, Seller shall duly execute and
deliver a counterpart thereof.
(iii) A duly executed xxxx of sale conveying and transferring all of
Seller's right, title, and interest in and to the FF&E and Personalty and the
Inventory to Purchaser, with warranty of title, free and clear of all liens,
encumbrances and security interests except as indicated herein, but with no
other expressed or implied representation or warranty.
(iv) A duly executed non-recourse assignment and assumption of all
Seller's interest in the Tenant Leases, Hotel Contracts, Equipment Leases and
Licenses, and all security deposits thereunder (the "Assignment and Assumption
of Tenant Leases, Etc.").
(v) A duly executed non-recourse assignment of all plans,
specifications, guarantees, and warranties, if any, relating to work performed
on or equipment installed in the Building (the "Assignment of Guarantees and
Warranties").
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(vi) The originals of the Equipment Leases, Hotel Contracts, Tenant
Leases, Licenses, certificates of occupancy, and plans, specifications,
guaranties and warranties relating to work performed on or equipment installed
in the Building, to the extent in Seller's possession, or which Seller is aware
is in the possession of the Operator.
(vii) Such documents as are reasonably required to transfer the Cash
Accounts to Purchaser including, without limitation, signature cards, and duly
executed assignments.
(viii) An updated schedule of reservations for transient occupancy at
the Building, conventions, meetings and other commitments for the Building
(collectively, the "Reservations"), together with frequent user and similar
customer lists, and the Books and Records of the Hotel, including all guest room
keys, the keys and the combinations to all safes, keys to safe deposit boxes not
in use at the Closing, a complete list of safe deposit boxes in use setting
forth the name and room number of each depositor, and all receipts and
agreements relating to such safe deposit boxes.
(ix) Those estoppel letters received by Seller prior to the Closing
Date from tenants under the Tenant Leases. Seller shall request from the tenants
under each Tenant Lease designated on Schedule "D" estoppel letters in form and
substance reasonably satisfactory to Purchaser, and shall use reasonable efforts
to obtain such estoppel letters prior to Closing, provided, however, that the
receipt of estoppel letters from all or any of such tenants shall not be a
condition to the Closing.
(x) Letters to all third parties under the Tenant Leases, Equipment
Leases, Hotel Contracts, advising such parties of the Transaction;
(xi) The Shares, and the Weststock Documents;
(xii) An affidavit sworn to by an officer of Seller to the effect
that it is not a "foreign person" as that term is defined in Section 1445 of the
Code;
(xiii) An opinion of Seller's in house counsel in form reasonably
satisfactory to Purchaser as to the due authorization, valid execution, and
binding nature of this Agreement and the Lease, and as to the conformance of the
execution thereof with all laws pursuant to which Seller was organized, and with
all applicable agreements to which Seller may be a party, and as to the non-
applicability of municipal laws, rules, and regulations to the construction of,
or construction work, in the Hotel;
(xiv) All instruments, bills of sale, assignments, or applications
which the Operator is required to give to Seller or its designee under Section
8(c) of the Management Agreement; and
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(xv) Such other documents as may be reasonably required to consummate
the Transaction.
B. Purchaser's Documents: In addition to the Purchase Price and any
other amounts due Seller hereunder, Purchaser shall deliver or cause to be
delivered to Seller on the Closing Date the following documents:
(i) Copies of Purchaser's Articles of Incorporation and By-Laws,
certified Resolutions of Purchaser's Board of Directors authorizing the
transaction contemplated herein, and current (not later than fifteen (15) days
prior to the Closing) good standing certificates issued by the Secretary of
State of the State of New York and the Secretary of State of Purchaser's state
of incorporation, in form reasonably satisfactory to the Title Company;
(ii) A duly executed and acknowledged counterpart of the Lease, and,
if Purchaser shall so desire, a memorandum thereof reasonably satisfactory to
Seller and Purchaser, in proper form for recording which, in addition to the
demised premises refers to Purchaser's rights and interests in and to, and
Seller's obligations to Purchaser with respect to, other property at the World
Trade Center;
(iii) Duly executed and acknowledged counterparts of the Assignment
and Assumption of Tenant Leases, Etc. wherein Purchaser shall assume all
Seller's obligations under the Tenant Leases, Hotel Contracts, Equipment Leases
and Licenses, from and after the Closing Date, it being understood that
Purchaser is not assuming any written or oral leases, agreements, or licenses
unless the same are listed in a schedule to this Agreement or have been entered
into in the ordinary course of business in accordance with the provisions of
Paragraph 10 hereof, provided that Purchaser shall not be required to assume any
such lease, agreement, or license which pursuant to the provisions of Paragraph
10 are explicitly made subject to Purchaser's consent unless the same have been
consented to by Purchaser in writing.
(iv) A duly executed assumption of all those accounts payable and
other liabilities described in Paragraph 7 hereof to be incurred by Purchaser in
accordance with this Agreement (the "Assumption of Liabilities");
(v) The Security Agreement duly executed;
(vi) A certified copy of a resolution of the Board of Directors of
Purchaser authorizing the Transaction, and certification from the Secretary of
Purchaser that such resolution remains in full force and effect on the Closing
Date, and has not been rescinded or modified in any way.
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(vii) An opinion of Purchaser's counsel in form reasonably
satisfactory to Seller as to the due authorization and valid execution of this
Agreement and the Lease, and as to the conformance of the execution thereof with
all applicable laws of the jurisdiction wherein Purchaser was organized, and
with all applicable agreements to which Purchaser may be a party, and if the
Agreement is assigned pursuant to the terms hereof an opinion of the assignee's
counsel in form reasonably satisfactory to Seller as to the due authorization
and valid execution of the assignment documents and the binding nature thereof,
and as to the conformance of the execution thereof with all applicable laws of
the jurisdiction wherein the assignee was organized, and with all applicable
agreements to which the assignee may be a party; and
(viii) Such other documents as may be reasonably required to
consummate the Transaction.
14. Recording Charges and Transfer Taxes.
A. Transfer and Sales Taxes. Purchaser acknowledges that Seller is
exempt from the payment of transfer taxes in connection with the granting of the
Leasehold Estate, in connection with the conveyance of certain of the Purchased
Hotel Assets including, but not limited to, the New York State Transfer Tax
imposed by Article 31 of the Tax Law of the State of New York, the New York
State Real Property Transfer Gains Tax imposed by Article 31-B of the Tax Law
of the State of New York, and the New York City Real Estate Transfer Tax imposed
by Title II of Chapter 46 of the Administrative Code of the City of New York. In
the event that by operation of law any such taxes which are normally payable by
a seller are levied or imposed on, or are otherwise payable by, Purchaser in
connection with this transaction as a result of Seller's tax exempt status,
Purchaser shall pay such taxes without adjustment to the Purchase Price.
Purchaser shall prepare and complete all the Transferee and Transferor forms
required pursuant to Article 31-B of the Tax Law of the State of New York.
Seller agrees to execute the Transferor Questionnaire, so as to enable Purchaser
to file all such forms, together with all necessary supporting documentation,
with the New York State Department of Taxation and Finance (the "Department").
If the Department requests any supplemental documentation or information, or
requires any modification or addition to the submission, Seller and/or Purchaser
shall promptly comply with the Department's request, and shall promptly deliver
to the other party a copy of such request and the response thereto. At the
Closing, Seller shall deliver to the Title Company a tentative assessment
showing no tax due or a Statement of No Tax Due, as the case may be, issued by
the Department in respect to the Transaction.
B. Title Insurance and Attorneys' Fees. All title insurance
premiums and other charges for any title insurance policy issued to Purchaser at
the Closing shall be paid by Purchaser. Each party shall pay its own attorneys'
and consultants' fees.
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15. Property of Guests.
A. Hotel Safe Deposit Boxes and Guest Luggage. On the Closing Date,
Seller shall cause the Operator to give notice to all persons who have deposited
items in such safe deposit boxes and safes, advising them of the transactions
contemplated by this Agreement, and requesting the removal of such items, or the
verification of the contents of the safe deposit boxes and safes into which they
have deposited such items. All such removals or verifications shall be performed
on the Closing Date under the supervision of the respective agents of Seller and
Purchaser. All items remaining in such safe deposit boxes and safes shall be
recorded by the respective agents of Seller and Purchaser. Items belonging to
guests who have not responded to written notice to remove or verify the contents
of such safe deposit boxes and safes by the end of the Closing Date shall be
recorded by the respective agents of Seller and Purchaser. The contents of such
safe deposit boxes and safes which have been verified and recorded and which
remain under the supervision and control of Purchaser shall be the
responsibility of Purchaser. Seller shall indemnify Purchaser and hold Purchaser
harmless from any and all loss, cost, liability, damage, and expense, including
reasonable attorney's fees arising from the claims of guests for any loss of the
contents of such safe deposit boxes and safes which have not been recorded on
the Closing Date as provided for herein.
B. On the Closing Date, representatives of Seller and Purchaser shall
take an inventory of all baggage, valises, and trunks checked or left in the
care of Seller's Operator. From and after the Closing Date Purchaser shall be
responsible for all such baggage, valises, and trunks listed in such inventory.
Purchaser shall not be liable for any negligence or misfeasance with respect to
such baggage, valises, and trunks which occurred prior to the Closing Date, or
for any claimed omissions from the inventory, and Seller shall indemnify and
hold Purchaser harmless from any and all loss, cost, liability, damage, and
expense, including reasonable attorney's fees arising therefrom.
C. Survival. The provisions of this Paragraph 15 shall survive the
Closing.
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16. Default.
A. Default by Purchaser. In the event Purchaser fails to consummate
the Transaction in accordance with the terms of this Agreement, and pay to
Seller the Purchase Price and all other amounts due Seller hereunder after
performance or tender of performance by Seller of all of its obligations
hereunder, it is agreed that inasmuch damages resulting from such default are
impossible to calculate due to the nature of the Transaction, Seller shall be
entitled, as its sole remedy, to receive and retain the Down Payment, and the
Interest, as liquidated damages and not as a penalty, whereupon neither Seller
nor Purchaser shall have any rights against or obligations to the other arising
out of this Agreement.
B. Default by Seller. In the event Seller fails to consummate the
Transaction in accordance with the terms of this Agreement as the result of
Seller's willful default, and Purchaser is ready, willing, and able to enter
into the Lease and to complete the other components of the Transaction, and to
tender the Purchase Price to Seller, together with all other monies due Seller
under this Agreement, and has established that Seller's default was willful, it
is agreed that inasmuch as damages resulting from such default are impossible to
calculate due to the nature of the Transaction, Purchaser shall be entitled, as
its sole remedy, to receive and retain the sum of Five Million Dollars and No
Cents ($5,000,000.00), as liquidated damages and not as a penalty, whereupon
neither Seller nor Purchaser shall have any rights against or obligations to the
other arising out of this Agreement.
C. Other Failure of Seller to Close. In the event Seller is unable
to consummate the transactions herein contemplated by reasons of circumstances
other than Seller's willful default, Purchaser's sole remedy shall be to
terminate this Agreement, in which event the Down Payment, and the Interest,
shall be returned to Purchaser whereupon neither Seller nor Purchaser shall have
any rights against or obligations to the other arising out of this Agreement.
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17. Notices. All notices, requests and other communications to any
party hereunder, or to Escrow Agent, shall be in writing and, unless expressly
provided otherwise, shall be given by overnight courier, telecopy, personal
delivery or by certified or registered mail, return receipt requested (postage
prepaid) and addressed as follows:
If to Seller: The Port Authority of New York and New Jersey
Xxx Xxxxx Xxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: 000-000-0000
With a copy to: The Port Authority of New York and New Jersey
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
With a copy to: The Port Authority of New York and New Jersey
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: 000-000-0000
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If to Purchaser: Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx, 00000-0000
Att: Xxxxxxx Xxxxxx
Fax: 000-000-0000
With a copy to: Xxxxx X. XxXxxxxx, Esq.
Xxxxx, Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Fax: 000-000-0000
With a copy to: Xxxxx X. Xxxxxxx, Esq.
Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx, 00000-0000
Fax: 000-000-0000
If to Escrow Agent: Xxxxx Xxxxxx
Commonwealth Land Title Insurance Co.
0 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xx., 00000
Fax: 000-000-0000
or such other address as such party may hereafter specify for such purpose by
notice to the other party hereto. Each such notice, request or other
communication shall be effective on the earliest of (i) the date personally
delivered or sent by telecopy; (ii) the day after delivery thereof to an
overnight courier; or (iii) three (3) days after mailing by certified or
registered mail, as the case may be.
18. Entire Agreement. This Agreement contains all of the terms
agreed upon between the parties with respect to the subject matter hereof, and
supersedes any and all prior agreements and understandings.
19. Amendments. This Agreement may not be changed, modified or
terminated, except by an instrument executed by the parties hereto who are or
will be affected by the terms of such instrument.
20. Waiver. Failure by any party hereto to insist upon or enforce
any of its rights hereunder shall not constitute a waiver thereof.
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21. Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law in order to carry out the intent of this
Agreement as fully as possible.
22. Headings. The headings of the various Paragraphs of this
Agreement have been inserted only for the purposes of convenience, and are not
part of this Agreement and shall not be deemed in any manner to modify, explain,
expand or restrict any of the provisions of this Agreement.
23. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York.
24. Recording. Neither this Agreement nor a memorandum thereof may
not be recorded by Purchaser and any attempt to do so shall constitute a
material default hereunder entitling Seller to all of its remedies as herein
provided.
25. Assignment. Purchaser shall not assign its interest under this
Agreement in whole or in part, except that Purchaser shall have the right to
assign its interest under this Agreement in its entirety to a Related Entity, as
hereinafter defined without the consent of Seller. Upon such assignment, the
assignee shall assume the obligation to perform all of Purchaser's obligations
under this Agreement, including, without limitation, Purchaser's indemnity
obligations hereunder, and the obligation to pay the Purchase Price and the
Facility Amount, as if the assignee were an original signatory to this
Agreement. Purchaser shall give Seller notice of the occurrence of such
assignment, and shall provide Seller with a true copy thereof promptly after the
full execution and delivery thereof. The transfer, passage, or devolvement, by
operation of law, or otherwise, (including, without limitation, the sale or
creation of capital stock, or the issuance of treasury stock) of this Agreement
or the interest of Purchaser to any person, firm, or corporation shall be deemed
an assignment within the meaning of this Paragraph provided, however, that if
Purchaser is a publicly held corporation, the trading of the stock of Purchaser
on the New York or American Stock Exchange, or on the NASDAQ National Market by
persons other than "insiders" within the meaning of the Securities Exchange Act
of 1934, or any successor or substitute therefor, shall not be deemed an
assignment for the purposes of this Paragraph. As used herein "Related Entity"
shall mean a corporation, partnership, limited liability company, or other
business entity which is and continues to be controlled by Purchaser, or which
controls Purchaser, or which is under common control with Purchaser. With
respect to a corporation, "control" shall mean legal or beneficial ownership by
one person, firm, or
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corporation, or a group acting in concert, of a sufficient amount of the capital
stock and voting rights (with power to exercise such voting rights) of another
corporation sufficient to enable the owner to direct the management and policies
of such corporation. With respect to a person or firm other than a corporation
"control" shall mean the power to direct the management and policies of such
person or firm whether by legal or beneficial ownership, or otherwise. As used
herein, "publicly held" shall mean a corporation that has any class of
securities subject to the registration requirements of the Securities Exchange
Act of 1934, or any successor or substitute therefor. Purchaser agrees that no
such assignment shall affect or impair the liability of Purchaser to perform all
of the terms and provisions of this Agreement (other than its obligation to pay
the Facility Amount) including, without limitation, Purchaser's indemnity
obligations hereunder, and the obligation to pay the Purchase Price, subject to
the provisions of Paragraph 16A hereof, on the part of Purchaser to be performed
hereunder, and that Purchaser shall continue to be liable for the performance of
all of the terms and provisions of this Agreement (other than its obligation to
pay the Facility Amount) including, without limitation, Purchaser's indemnity
obligations hereunder, and the obligation to pay the Purchase Price, subject to
the provisions of Paragraph 16A hereof, on the part of Purchaser to be performed
hereunder. Purchaser's liability hereunder shall survive any assignment, and
shall continue in full force and effect as if such assignment had not occurred.
The liability of Purchaser hereunder shall not in any way be affected by the
release or discharge of the assignee in any creditors', receivership,
bankruptcy, or similar proceeding, or the impairment, limitation, or
modification of the liability of the assignee or its estate in bankruptcy, or
any remedy for the enforcement of the assignee's said liability under this
Agreement resulting from the present or future provision of the Bankruptcy Code
or any other statute or from the decision of any court having jurisdiction over
the assignee or its estate, or the rejection or disaffirmance of this Agreement
in any creditors', receivership, bankruptcy, or similar proceeding.
26. Parties Bound. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, if any.
27. Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute the same instrument.
28. Confidentiality. Seller and Purchaser agree that, except as
otherwise required by law or Seller's existing regulations, or, to comply with
any legislation which may be applicable to the Transaction, Seller and Purchaser
shall keep the business terms of this Agreement and any information related
thereto confidential, and further agree that no publicity or press release to
the general public with respect to this transaction shall be made by Seller or
Purchaser without the prior written consent of the other. Notwithstanding the
foregoing, either party hereto may disclose the
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business terms of this Agreement to any third party who, by virtue of law, or
the charter or by-laws of either Purchaser or Seller, or by virtue of an
ownership interest in Purchaser, has the right to approve or disapprove the
execution of this Agreement, and the actions contemplated hereby to be taken by
either Purchaser or Seller. Furthermore, Purchaser may disclose the contents of
this Agreement to Marriott International, Inc. and Seller may disclose to the
Operator the contents of this Agreement in furtherance of the Transaction,
provided Marriott International, Inc. or the Operator, as the case may be,
agrees to be bound by the provisions of this Paragraph 28. In addition,
Purchaser hereby acknowledges that all documents, reports and other information
delivered hereunder to Purchaser are intended solely for the use of Purchaser in
connection with its examination of the Hotel Assets, and Purchaser agrees to
treat the same confidentially and not to give copies or otherwise reveal any
such information to any third parties (except to consultants, attorneys, agents,
or other professionals advising Purchaser in connection with the Transaction or
assisting Purchaser with its due diligence review) without Seller's prior
written approval.
29. Brokers.
A. Purchaser's Representation. Purchaser represents and warrants that
it has had no contacts, dealings, or conversations with any broker, investment
banker, finder or other intermediary or person regarding this transaction other
than Eastdil Realty Company L.L.C. ("Eastdil"), a limited liability company
organized and existing under and by virtue of the laws of the State of New York
with an office and place of business at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, and Xxxxxx, Xxxxx & Xxxxxx International ("KFR"), a general partnership
organized and existing under and by virtue of the laws of the United Kingdom of
Great Britain and Northern Ireland with an office and place of business at 00
Xxxxxxx Xxxxxx, Xxxxxx X0X OAH, England, jointly and severally, and that there
is no broker, investment banker, finder or other intermediary or person who is
or may be entitled to be paid a commission in connection with this transaction
based upon Purchaser's acts or omissions except Eastdil and KFR. Purchaser shall
indemnify and save harmless Seller from any claims for commission or brokerage
made by any and all persons, firms, or corporations whatsoever for services in
connection with the negotiation and execution of this Agreement or in connection
with the transactions contemplated hereunder arising out of any contacts,
dealings, or conversations of Purchaser, or based upon the acts or omissions of
Purchaser, except for a claim by Eastdil and KFR. It is also agreed that
Purchaser's indemnity obligations hereunder shall not extend to any claim for
brokerage or commission which may be made by Interbank Xxxxxx Brokerage
Services, Inc. (Interbank), a corporation organized and existing under and by
virtue of the laws of the State of New York with an office and place of business
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000.
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B. Seller's Representation. Seller represents and warrants that it
has had no contacts, dealings, or conversations with any broker, investment
banker, finder or other intermediary or person regarding this transaction other
than Eastdil and KFR, and that there is no broker, investment banker, finder or
other intermediary or person who is or may be entitled to be paid a commission
in connection therewith based upon Seller's acts or omissions except Eastdil and
KFR. Seller shall indemnify and save harmless Purchaser from any claims for
commission or brokerage made by any and all persons, firms, or corporations
whatsoever for services in connection with the negotiation and execution of this
Agreement or in connection with the transactions contemplated hereunder arising
out of any contacts, dealings, or conversations of Seller, or based upon the
acts or omissions of Seller, including, without limitation, a claim by Eastdil
and KFR. Seller shall indemnify and save harmless Purchaser from any claims for
commission or brokerage made by any and all persons, firms, or corporations
whatsoever for services in connection with the negotiation and execution of this
Agreement or in connection with the transactions contemplated hereunder arising
out of any contacts, dealings, or conversations of Seller with Interbank.
C. Survival. The provisions of this Paragraph 29 shall survive the
Closing.
30. Post-Closing Access to Files. Purchaser agrees that it shall
maintain, or cause its operator to maintain, all Hotel files and records
relating to the period prior to the Closing Date, for a period of five (5) years
following the last day of the year to which such files and records relate.
Purchaser shall permit Seller, or shall cause its operator to permit Seller,
access to such records for review and copying from time to time during normal
business hours upon reasonable advance notice from Seller.
31. Third Party Rights. This Agreement is intended for the sole
benefit of, and shall be enforceable only by the parties hereto and their
respective successors and permitted assigns, if any, and no right, remedy, or
benefit of any nature, including, without limitation, any right, claim, or right
of action against Seller and its Commissioners, officers, agents, and employees,
is intended to be conferred upon any other person, including, without
limitation, any Employee, by reason of the execution of this Agreement.
32. Bulk Sales Laws. Purchaser and Seller each hereby waive
compliance with the provisions of the "bulk sales", "bulk transfer' or similar
laws of New York. Seller agrees to indemnify Purchaser and hold Purchaser
harmless against any and all claims, losses, damages, liabilities, costs, and
expenses incurred by Purchaser as a result of non-compliance with such laws.
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33. Public Announcements. Between the date hereof and the Closing
Date, Seller and Purchaser shall consult with each other before issuing any
press release or otherwise making any public statement with respect to this
Agreement and the transactions contemplated hereby. Neither party shall make any
such statement or issue any such release that the other reasonably objects to.
34. Conditions to Closing.
(a) The obligation of Purchaser to pay the Purchase Price and close
the transactions contemplated herein is subject to the satisfaction of the
following conditions ("Purchaser's Conditions"):
(i) The Title Company shall be committed to issue the Title
Policy upon payment of the applicable premiums by Purchaser;
(ii) The expiration or valid termination of the Management
Agreement.
(iii) If the HSR Act is applicable, Purchaser shall have received
clearance for this transaction under the HSR Act, or the waiting period
thereunder shall have expired. If required, Purchaser and, if applicable,
Seller shall file with the appropriate governmental authorities the
notification and report forms for the transactions contemplated hereby and
all supplemental information which may be requested, which reports, forms,
and information shall comply in all material respects with the requirements
of the HSR Act. Seller shall cooperate with Purchaser in completing and
filing all required forms. Purchaser and, if applicable, Seller, shall make
a request for an early termination of the waiting period requirements under
the HSR Act.
(iv) All documents Seller is required to deliver to Purchaser
under this Agreement, including, without limitation, the Shares and the
Weststock Documents, have been delivered, and Seller shall have performed
all of the other obligations imposed upon it pursuant to this Agreement.
(v) There shall be no Material Misrepresentation which remain
unwaived by Purchaser.
(vi) The Operator shall have duly renewed the liquor license
relating to the operation of the Hotel and shall have surrendered the same
to Purchaser in full force and effect, and Purchaser shall have obtained a
liquor license relating to the operation of the Hotel, or shall have
arranged with the Operator to operate the Hotel as the Hotel was operated
prior to the Closing. Promptly after the execution of this Agreement,
Purchaser shall prepare or
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caused to be prepared, and shall submit all filings and applications, and
pay all fees and deposits, required to obtain such license, and shall
diligently pursue the necessary procedures to obtain such license prior to
the Closing Date. In the event Purchaser is unable to obtain such license,
or to enter into an arrangement with the Operator reasonably satisfactory
to Purchaser by the Closing Date, Purchaser shall be permitted to postpone
the Closing Date as set forth in Paragraph 5 until such license is issued
or such arrangement is entered into, provided that during the period of
such postponement Purchaser shall diligently pursue the issuance of such
license, or the entering into of such arrangement, and provided, further
that in no event shall the period of postponement extend beyond December
29, 1995, on which date the Closing shall proceed despite the absence of
such license or arrangement.
(vii) Seller and Purchaser shall have entered into an agreement
covering the granting by Seller to Purchaser of permission to use the
artwork listed in Schedule A-1, such list to be finalized prior to the
expiration of the Due Diligence Period be for a period of three years from
the Closing Date with no obligation on Purchaser's part to pay any fee, or
make any other payment with respect to such artwork, other than the
obligation to include such artwork in its insurance coverage, and to
indemnify Seller against any loss, damage, expense, or liability incurred
by Seller as a result of the use of such artwork by Purchaser. Purchaser
shall be obligated display such artwork in the public areas of the Hotel
only, and Seller shall have the right from time to time to inspect and
replace such artwork with comparable items from its collection.
(b) The obligation of Seller to close the Transaction and deliver the
documents it is required to deliver pursuant to the terms of this Agreement is
subject to the satisfaction of the following conditions ("Seller's Conditions"):
(i) There shall be no material breach of any of Purchaser's
representations which remains unwaived by Seller.
(ii) Purchaser shall tender the payments it is required to make
hereunder, shall have performed all of the other obligations imposed upon
it pursuant to this Agreement, and shall have delivered all documents
Purchaser is required to deliver to Seller.
Purchaser's Conditions are for the benefit of Purchaser only, and may
be waived only by Purchaser. Seller's Conditions are for the benefit of Seller
only, and may be waived only by Seller. Any such waiver shall be in writing and
shall delivered to Purchaser or Seller, as the case may be, in the manner
prescribed in Paragraph 17 hereof. Neither Purchaser nor Seller shall act, or
fail to act, for a purpose and in a manner designed to permit or cause
Purchaser's or Seller's Conditions, as the
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case may be, to fail. If any of Purchaser's or Seller's Conditions has not been
satisfied, and has not been waived by Purchaser or Seller, as the case may be,
prior to the Closing Date, Purchaser or Seller, as the case may be, shall notify
the other party in writing of such failure in the manner prescribed in Paragraph
17 hereof. The notice shall specify the condition which has not been fulfilled
and the other party shall be entitled to postpone the Closing, as provided in
Paragraph 5 hereof, for the purpose of attempting to satisfy the condition.
Nothing contained herein shall require either Purchaser or Seller to bring any
suit or proceeding, or to spend any sum to obtain such satisfaction, except as
otherwise expressly provided for in this Agreement.
35. Rule of Construction. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.
36. Approval of Governing Bodies. Seller and Purchaser each
acknowledge and understand that this Agreement is, and can not be, binding upon
either party hereto, and neither party can consummate the Transaction unless
and until each party shall have received authorization to enter into this
Agreement and to consummate the Transaction from its governing body in
accordance with the law of the jurisdiction in or under which such party has
been organized, and the terms of the charter and by-laws applicable to such
party. Purchaser represents that the governing body from which it is required to
obtain such authorization is its Board of Directors. Purchaser shall submit this
transaction to its Board of Directors for authorization at the Board of
Directors meeting scheduled for November 2, 1995, and shall use reasonable
efforts to obtain such authorization. Purchaser shall notify Seller promptly
after such meeting whether such authorization has been obtained. Seller
represents that authorization for it to consummate the Transaction must be
obtained from its Board of Commissioners, and that the Governors of the State of
New York and the State of New Jersey can veto any action of the Board of
Commissioners. Seller shall submit this transaction to its Board of
Commissioners for authorization at the Board of Commissioners meeting scheduled
for November 9, 1995, and shall use reasonable efforts to obtain such
authorization. Seller shall notify Purchaser promptly after such meeting whether
such authorization has been obtained, and, if obtained, shall promptly notify
Purchaser when the period during which the action of the Board of Commissioners
regarding the granting of such authorization can be vetoed shall have expired
without such veto having been exercised, or promptly after such veto has been
exercised, as the case may be. In the event that either Purchaser of Seller
shall not have obtained the requisite authorization to enter into this
Agreement, or if any authorization obtained by Seller is vetoed, then this
Agreement shall be, and be deemed, null and void, and of no force and effect. In
such event, the Down Payment, and the Interest, shall be returned to Purchaser,
whereupon neither party shall have
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any rights, obligations, or liabilities hereunder, and, without limiting the
foregoing, Purchaser shall have no interest in the Real Property, and Seller
shall retain title to the Purchased Hotel Assets as if this Agreement had never
been executed by either party.
37. Miscellaneous.
(a) Except as otherwise expressly set forth in this Agreement, Seller
shall have no right to terminate this Agreement during the Due Diligence Period.
(b) Whenever in this Agreement the date upon which the performance of
any act is required to take place shall occur on a non-business day, the date
for such performance shall be moved to the business day immediately following
such date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
SELLER:
THE PORT AUTHORITY OF NEW YORK AND
NEW JERSEY
/s/ Xxxxxxx X. Xxxxxxx
By:_________________________________
PURCHASER:
HOST MARRIOTT CORPORATION
/s/ Xxxxxxxxxxx X. Xxxxxxxx
By:_________________________________
Accepted for Escrow Agent as to the applicable provisions of Paragraph 2 hereof:
COMMONWEALTH LAND TITLE INSURANCE CO., INC.
/s/ Xxxxxx X. Xxxx
By_________________________
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