AGREEMENT OF SALE
Exhibit
10.1
THIS
AGREEMENT OF SALE (this “Agreement”) is made this 24th
day of
October, 2005, by and between XXXXXXXX XXXXXXXX, an adult individual with an
address of 0000 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, LANGHORNE COURTYARD,
INC., a Pennsylvania corporation with an address of 0000 Xxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000, MT. LAUREL FFI, INC., a New Jersey corporation with an
address of 0000 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 and BETHLEHEM FFI,
INC.,
a Pennsylvania corporation with an address of 0000 Xxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter collectively called “Seller”) and HERSHA
HOSPITALITY TRUST, a Maryland real estate investment trust with an address
of
000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter
called “Buyer”).
W
I T N E S S E T H :
For
and
in consideration of the mutual undertakings contained herein and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
1.
Definitions.
The
following terms shall have the following definitions.
“Accounts
Receivable” means all amounts which Seller is entitled to receive from the
operation of the Hotel which are not paid as of the Settlement, including,
without limitation, charges for the use or occupancy of any guest, conference,
meeting or banquet rooms or other facilities at the Hotel, any restaurant,
bar
or banquet services, or any other goods or services provided by or on behalf
of
Seller at the Hotel, but expressly excluding any credit card charges and checks
which Seller has submitted for payment as of the Settlement.
“Accrued
Vacation Pay” means the Compensation which the Employees are entitled to receive
for any vacation days accrued by such Employees as of the time in question
(computed at the rate of Compensation earned by such Rehired Employees as of
the
time in question).
“Appurtenances”
shall mean all appurtenances, hereditaments, easements and other rights and
privileges in any way pertaining or beneficial to the Land or the
Improvements.
“Asset
Manager” shall have the meaning set forth in Section 12(a).
“Bethlehem
Fairfield” shall mean the 103 room Fairfield Inn and Suites currently operated
by Seller on the Bethlehem Fairfield Property.
“Bethlehem
Fairfield Property” shall mean the real property located at 0000 Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxx, upon which Seller currently operates the Bethlehem
Fairfield, the legal description of which is attached hereto as Exhibit
A.
“Books
and Records” shall mean all books and records located at the Hotel or in the
Newtown, Pennsylvania, offices of Xxxxx, Inc., which relate exclusively to
the
Hotel, but expressly excluding all documents and other materials which (i)
are
legally privileged or constitute attorney work product, (ii) are subject to
a
confidentiality agreement prohibiting their disclosure by Seller, or (iii)
constitute confidential internal assessments, reports, studies, memoranda,
notes
or other correspondence, prepared by or on behalf of any officer or employee
of
Seller or Manager, including, without limitation, all (A) internal financial
analyses, appraisals, tax returns, financial statements, (B) corporate or other
entity governance records, (C) Employee personnel files, (D) any work papers,
memoranda, analysis, correspondence and similar documents and materials prepared
by or for Seller or Manager in connection with the transaction described in
this
Agreement.
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“Bookings”
shall mean all bookings and reservations for guest, conference, meeting rooms
or
other facilities at the Hotel, together with all deposits held by Seller with
respect thereto.
“Buyer
Indemnified Parties” shall mean Buyer, Asset Manager and their partners,
officers, directors, parents, affiliates and employees, and each of their
respective heirs, executors, administrators, successors and
assigns.
“Capital
Transaction” shall mean a transaction pursuant to which (i) the Buyer finances
or refinances the Property or any portion thereof, (ii) all or any portion
of
the Property sold, condemned, exchanged or otherwise disposed of, (iii)
insurance proceeds or other damages in respect of the Property are recovered
by
the Buyer, or (iv) any other transaction that, in accordance with generally
accepted accounting principles, is considered capital in nature.
“Cash”
shall mean all cash on hand or on deposit in any house bank, operating account
or other account maintained in connection with the ownership or operation of
the
Hotel, including Xxxxxxxx Xxxxxxxx’x personal bank, money market or other
similar depository accounts.
“Compensation”
means all salaries and wages which the employees are entitled to receive at
the
time in question, together with all employment taxes with respect thereto,
including, without limitation, any withholding or employer contributions under
the Federal Insurance Contribution Act and Federal Unemployment Taxes Act,
but
expressly excluding all other compensation accrued or payable to the Employees,
including, without limitation, any (i) bonus or incentive compensation; (ii)
accrued vacation days, sick days and personal days; and (iii) any health,
welfare and other benefits provided to the Employees under the Seller Employee
Plans, and employer contributions to, and amounts paid or accrued under, the
Seller Employee Plans or Seller XXX Plan for the benefit of the
Employees.
“Confidential
Information” has the meaning set forth in Section 10 of this
Agreement.
“Contracts”
shall mean the contracts listed on the attached Schedule 1-1.
“Cut-Off
Time” shall mean 11:59 p.m. on the day preceding the Settlement Date, or such
other time expressly provided in this Agreement.
“Deeds”
shall collectively mean (i) with respect to the Pennsylvania Property, special
warranty deeds wherein Seller shall convey title to each property comprising
the
Pennsylvania Property, subject to the Permitted Exceptions that are applicable
to the respective Pennsylvania Property and (ii) with respect to the New Jersey
Property, a bargain and sale deed with covenants against grantor’s acts wherein
Seller shall convey to Buyer title to the New Jersey Property subject to the
Permitted Exceptions that are applicable to the New Jersey Property.
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“Due
Diligence Period” shall mean the period commencing on Tuesday, October 25, 2005,
and ending at 5:00 p.m. on November 25, 2005, provided that the Due Diligence
Period may be extended, at Buyer’s sole option, for the Extended Due Diligence
Period.
“Employees”
means all employees of Seller or Manager, or any of their affiliates, who are
employed full-time or part-time at the Hotels at the time in question.
“Employer”
means the Seller, Manager or any of their affiliates which employs the
Employees.
“Escrow
Holder” shall mean Buyer’s Title Company.
“Excluded
Property” shall mean the property, assets, rights and interests set forth on
Schedule 1-2, which are not included in the Property and are not being sold
to
Buyer.
“Extended
Due Diligence Period” shall mean a fifteen (15) day extension of the Due
Diligence Period, ending at 5:00 p.m. on December 10, 2005. Buyer shall have
the
right to extend the Due Diligence Period for the Extended Due Diligence Period
by giving Seller written notice thereof prior to the end of the Due Diligence
Period.
“Guest
Ledger” means any and all charges accrued to the open accounts of any guests or
customers at the Hotel as of the Cut-Off Time for the use and occupancy of
any
guest, conference, meeting or banquet rooms or other facilities at the Hotel,
any restaurant, bar or banquet services, or any other goods or services provided
by or on behalf of Seller.
“Hazardous
Substances” shall mean
any
substance or material whose presence, nature, quantity or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials is either:
(1) potentially injurious to the public health, safety or welfare, the
environment or the Property, (2) regulated, monitored or defined as a
hazardous or toxic substance or waste by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (“Governmental
Body”),
or
(3) a basis for liability of the owner of the Property to any Governmental
Body or third party, and shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil, or any products, by-products or components
thereof, and asbestos and mold.
“Hotel”
or “Hotels” shall mean the hotel businesses operated by Seller on the Real
Property.
“Improvements”
shall mean the buildings (including all mechanical and utility systems and
fixtures) and improvements constructed on the Real Property.
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“Land”
shall mean collectively the New Jersey Property and the Pennsylvania
Property.
“Langhorne
Courtyard” shall mean the 118 room Courtyard by Marriott currently operated by
Seller on the Langhorne Courtyard Property.
“Langhorne
Courtyard Property” shall mean the real property located at 0 X. Xxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx, upon which Seller currently operates the
Langhorne Courtyard, the legal description of which is attached hereto as
Exhibit A-1.
“Licenses,
Permits and Approvals” shall mean all certificates, licenses (including, without
limitation, any and all liquor licenses for the Hotels, if any), permits,
authorizations and approvals issued for or with respect to the Personal Property
or the Real Property by governmental and quasi-governmental authorities having
jurisdiction, to the extent transferable.
“Manager”
shall mean collectively the affiliates of Seller that have been engaged by
Seller to manage the Hotels. For purposes of this Agreement, Xxxxx, Inc. is
not
a Manager.
“Management
Agreement” shall have the meaning set forth in Section 12(a).
“Marriott”
shall mean Marriott International, Inc. or its affiliate.
“Mt.
Xxxxxx Xxxxxxxxx” shall mean the 118 room Fairfield Inn and Suites which is
currently operated by Seller on the New Jersey Property.
“NOI”
shall mean, solely for purposes of the earn-out set forth in Section 12(g),
for
any period, Operating Revenues less (i) Operating Expenses; (ii) 4% of revenues
for the management fees (notwithstanding the fact that Buyer will be paying
a
3.5% management fee to Seller or its affiliate under the Management Agreement
and a 1% management fee to Asset Manager under the Asset Management Agreement);
(iii) 3% of revenues for furniture, fixtures and equipment (“FF&E”)
reserves; (iv) real property and personal property taxes, assessments and other
taxes levied in connection with the Property and FF&E; (v) insurance
premiums and deductibles and (vi) scheduled lease payments under the Van Lease.
“New
Jersey Property” shall mean the real property located at 000 Xxxxxxx Xxxxxxx,
Xx. Xxxxxx, Xxx Xxxxxx, upon which Seller currently operates the Mt. Xxxxxx
Xxxxxxxxx, the legal description of which is attached hereto as Exhibit A-2.
“Operating
Expenses” shall mean, for any period, the current obligations of the Buyer or
its affiliates with respect to the Property for such period, determined in
accordance with an accounting system agreed upon by Buyer and Seller during
the
Due Diligence Period, or Extended Due Diligence Period, if properly extended,
consistently applied, for operating expenses of the Property, but specifically
excluding items (ii), (iii), (iv) and (v) within the definition of “NOI” above
and also excluding depreciation and principal and interest payments, rents
or
other similar payments in connection with any financing of real property,
personal property or improvements.
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“Operating
Revenues” shall mean, for any period, the gross revenues of Buyer arising from
the ownership of the Property during such period determined in accordance with
an accounting system agreed upon by Buyer and Seller during the Due Diligence
Period, or Extended Due Diligence Period, if properly extended, but specifically
excluding the proceeds of Capital Transactions and capital contribution by
the
Buyer or its affiliates.
“Permitted
Exceptions” shall have the meaning set forth in Section 4(a) below.
“Personal
Property” shall mean (i) all fixtures (other then those which constitute
Improvements), furniture, furnishings, equipment, machinery, appliances, art
work and other items of tangible personal property which are located at one
of
the Hotels and used exclusively in the operation of the Hotels, or ordered
for
future use at one of the Hotels as of the Settlement; (ii) all linens, uniforms,
engineering, maintenance, cleaning and housekeeping supplies, matches and
ashtrays, soap and other toiletries, stationery, menus and other printed
materials, and all other similar materials and supplies, which are located
at
one of the Hotels or ordered for future use at one of the Hotels as of the
Settlement; (iii) any trademarks, trade names, service marks and other
intellectual property rights set forth in Schedule 1-3; (iv) warranties and
guaranties held by Seller pursuant to any Contracts or with respect to any
Improvements or Personal Property; (v) direct dial telephone numbers for the
Hotels; (vi) all hardware and software computer and information technology
systems at the Hotels; (vii) Books and Records and (viii) any other tangible
or
intangible personal property located at one of the Hotels which is owned by
Seller and used exclusively in the operation of one of the Hotels, but
specifically excluding (A) Cash, (B) Accounts Receivable, (C) the Excluded
Property, (D) the Third Party Property, (E) refundable escrows, such as township
escrows, held by any governmental entity with jurisdiction over the Property
and
(F) all assets of Xxxxx, Inc. located at Xxxxx’x corporate offices in Newtown,
Pennsylvania.
“Prepaid
Expenses” shall mean all prepaid expenses to the extent Seller receives a credit
for such prepaid expenses at Settlement as set forth in Section
7(e).
“Property”
shall mean collectively the Real Property, the Personal Property, the Hotels
and
the Improvements.
“Pennsylvania
Property” shall mean collectively (i) the Bethlehem Fairfield Property and (ii)
the Langhorne Courtyard Property.
“Real
Property” shall mean collectively the New Jersey Property, the Pennsylvania
Property, the Improvements constructed on the New Jersey Property and the
Pennsylvania Property and the Appurtenances relating thereto.
“Seller
XXX Plan” shall mean the XXX Plan maintained by Seller, Manager or an affiliate
thereof for the benefit of the Employees.
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“Seller
Employee Plans” shall mean all plans and programs maintained by or on behalf of
Seller for the health, welfare or benefit of any Employees and/or their spouses,
dependents or other qualified beneficiaries.
“Seller
Indemnified Parties” shall have the meaning set forth in Section
13(b).
“Settlement”
shall have the meaning set forth in Section 7(a).
“Settlement
Date” shall have the meaning set forth in Section 7(a).
“Termination
Date” shall have the meaning set forth in Section 21.
“Third-Party
Property” shall mean any fixtures or personal property owned by (i) the lessor
under the Van Lease, (ii) the supplier or vendor providing vending equipment
such as soda or candy machines in connection with the sale of such supplier
or
vendor’s products, (iii) Marriott, (iv) any Employees, or (vi) any guests or
customers of the Hotel.
“Van
Lease” shall mean the lease for the passenger van currently utilized by Seller
in connection with the Langhorne Courtyard.
“WARN
Act” means the Worker’s Adjustment and Retraining Notification Act of 1988, 29
U.S.C. Section 2102, et
seq.,
and any
similar state and local applicable law, as amended from time to time, and any
regulations, rules and guidance issued pursuant thereto.
2.
Agreement
to Sell.
Subject
to the terms and conditions set forth in this Agreement, Seller hereby agrees
to
sell and convey the Property to Buyer, and Buyer hereby agrees to purchase
the
Property from Seller.
3.
Purchase
Price.
(a) The
total
consideration and purchase price (the “Purchase Price”), which Buyer agrees to
pay to Seller and which Seller agrees to accept for the Property is Forty
Million Five Hundred Thousand U.S. Dollars ($40,500,000.00), subject to the
prorations and adjustments described herein, payable as follows:
Federal
wire transfer at signing of this Agreement (the “Deposit”)
|
$100,000.00
|
|
Federally
wired funds at Settlement
|
$40,400,000.00
|
|
TOTAL
|
$40,500,000.00
|
(b) The
Deposit shall be paid to Buyer’s Title Company (defined below) (“Escrow Holder”)
and shall be placed by Escrow Holder in an interest bearing escrow account
pending Settlement (as hereinafter defined). All interest earned on the Deposit
shall be considered part of the Deposit. The Deposit will be credited against
the Purchase Price at Settlement. If Settlement does not occur hereunder, the
Deposit shall be paid to party entitled thereto in accordance with this
Agreement.
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(c) Seller
and Buyer hereby agree that the Purchase Price shall be allocated among the
Land, Improvements and Personal Property as set forth in Schedule 3(c) for
federal, state and local tax purposes. Seller and Buyer acknowledge and agree
that the allocation set forth in Schedule 3(c) represents an arm’s length
agreement based on the Parties’ best judgment as to the fair market value of the
Property. Seller and Buyer shall file all federal, state and local tax returns
and related tax documents consistent with the allocation set forth in Schedule
3(c), and shall not make any statement or take any position in connection with
any tax return, refund claim, audit, litigation or otherwise, which is
inconsistent with such allocation. This Section 3(c) shall survive the
Settlement.
4. Title.
(a) At
Settlement, Seller shall convey to Buyer good and marketable title to the Real
Property, insurable at regular rates by a reputable title insurance company
licensed to do business in the Commonwealth of Pennsylvania and the State of
New
Jersey (the “Title Company”), free and clear of all liens, encumbrances, and
restrictions other than the following (the “Permitted Exceptions”): (i) the lien
of real estate taxes, water rent and sewer charges that are not due and payable
on the Settlement Date, (ii) all easements, restrictions, or covenants of record
that do not restrict or prohibit the use and operation of the Property or the
use of the Property, or any portion thereof, as a hotel , (iii) special
assessments which have become a lien on the Real Property as of the Settlement
Date (but only for installments due after the Settlement Date), (iv) rights
of
the public and adjoining land owners in highways, streets, roads and lanes
bounding the Real Property, (v) retaining walls and other walls, bushes, trees,
xxxxxx, fences and the like extending from or onto the Real Property and any
portion of the Real Property lying in the bed of any public street, (vi)
standard conditions and exceptions to title insurance contained in the ALTA
1992
Owner’s Standard Form B Title Insurance Policy, (vii) such state of facts as a
current and accurate survey and/or physical inspection of the Real Property
might disclose, provided that such state of facts shall not include facts that
restrict or prohibit, in any way, the current use and operation of the Property
or that in any way violate any local, state or federal law, regulation, code
or
ordinance, including without limitation, those pertaining to zoning, (viii)
subsurface conditions affecting the Real Property not disclosed by any
instrument recorded in the land records of the county in which the applicable
Real Property is located and to which seller has no notice or knowledge, and
(ix) any other encumbrances and restrictions appearing on the Title Commitment
(defined below) that are deemed to be Permitted Exceptions by virtue of Section
4(b) below.
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(b) Upon
the
full execution of this Agreement, Buyer shall order from the Title Company
and
promptly deliver to Seller, when received by Buyer, a commitment to issue an
owner’s policy of title insurance reflecting the status of title to the Real
Property (the “Title Commitment”). Buyer shall have until the expiration of the
Due Diligence Period or the Extended Due Diligence Period, if properly extended,
such time being strictly of the essence, to notify Seller in writing of any
objection which Buyer may have as a result of any exception reported in the
Title Commitment or any matter depicted on its survey of the Property, which
exception or matter is not a Permitted Exception. Solely to the extent that
Seller receives written notice from Buyer of any such objection on or before
the
expiration of the Due Diligence Period or the Extended Due Diligence Period,
if
properly extended, said objection shall be deemed a “Title Objection”. To the
extent that Seller does not receive notice from Buyer of any such objection
on
or before the expiration of the Due Diligence Period, or the Extended Due
Diligence Period, if properly extended, said objection and the exception or
matter to which said objection relates shall be deemed a Permitted Exception
and
Buyer shall take title to the Real Property subject thereto. Seller shall have
no obligation whatsoever to eliminate any objection, exception or matter, which
is so deemed a Permitted Exception. Notwithstanding the forgoing, if between
the
end of the Due Diligence Period, or the Extended Due Diligence Period, if
properly extended, and the Settlement Date, Buyer obtains a bring down search
from its Title Company and such search discloses any title defect objectionable
to Buyer, other than a Permitted Exception, which was not set forth in the
Title
Commitment (a “Subsequent Defect”), Buyer shall provide Seller with a copy of
such bring down search and a legible copy of the Subsequent Defect within five
(5) days following Buyer’s receipt of such bring down search and such Subsequent
Defect shall be deemed a Title Objection for purposes of this Section 4(b),
and
the Settlement Date shall be extended by the times set forth in Section 4(c)
if
necessary in order to allow Seller to determine whether to eliminate such Title
Objection and to actually eliminate such Title Objection if so elected by
Seller.
(c) Seller
may, at its sole option, elect to eliminate from Buyer’s final title policy any
particular Title Objection. Seller shall make said election by written notice
to
Buyer given within five (5) days of Seller’s receipt of timely written notice of
said particular Title Objection. If Seller elects to eliminate any such Title
Objection, and the elimination of such Title Objection requires additional
time
to eliminate such Title Objection, then and in either of those events, Seller
may extend the Settlement Date for an additional reasonable period of time,
not
to exceed thirty (30) days. Such extension of the Settlement Date by Seller
shall not diminish Seller’s or Buyer’s rights under the remaining provisions of
this Section 4(c). If Seller is unable or does not desire to eliminate any
one
or more particular Title Objections, Seller shall so notify Buyer in writing
within ten (10) days of Seller’s receipt of timely written notice of said
particular Title Objections. With respect to Title Objections which Seller
has
initially elected to eliminate, if, despite Seller’s good faith efforts, Seller
reasonably determines that it will be unable to eliminate any such Title
Objection on or before the Settlement Date or any extension thereof, Seller
shall so notify Buyer in writing within ten (10) business days of said
determination. Upon receipt of either of the notices referred to in the two
immediately preceding sentences hereof, Buyer shall have the option to either
waive such Title Objections in writing and consummate the transaction
contemplated herein without abatement of the Purchase Price or terminate this
Agreement at any time within ten (10) business days after receipt of Seller’s
notice, such ten (10) business day period being strictly of the essence. If
no
election to terminate is made in writing by Buyer within such ten (10) business
day period, Buyer shall automatically and conclusively be deemed to have
irrevocably waived all such Title Objections and shall take title to the Real
Property subject thereto without any adjustment or abatement of the Purchase
Price.
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(d) In
the
event of proper termination under this Section 4, this Agreement shall be deemed
null and void, and the Deposit, and interest earned thereon, shall be returned
to Buyer and the parties hereto shall have no further objections to or recourse
against each other with regard to the matters provided for in this Agreement,
except as specifically set forth herein and except for rights and objections
which expressly survive the termination hereof.
5. Representations
and Warranties.
(a)
Seller
hereby makes the following representations and warranties to Buyer for the
purpose of inducing Buyer to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement, each of which
representations and warranties is true and correct on the date of this Agreement
and shall be true and correct as of the Settlement Date:
(i) Seller
has full legal and equitable title to the Personal Property and Seller has
full
legal and equitable fee simple title to the Real Property and the legal power
to
convey all right, title and interest in and to the Property to Buyer in
accordance with this Agreement. There is no existing agreement, commitment,
option or right with, in or to any person or entity to acquire the Real Property
or any interest therein.
(ii) To
the
best of Seller’s knowledge, Seller has not received any notices of violation of
law or ordinance with respect to the Property that are outstanding. Seller
has
not received any notice of special tax or public assessment against the Property
for public improvements that will remain unpaid at Settlement.
(iii) Seller
is
an adult individual who has the sole legal capacity and authority to execute,
deliver and perform this Agreement.
(iv) Seller
is
not legally prohibited from (i) executing or delivering this Agreement, (ii)
complying with or performing the terms of this Agreement, or (iii) consummating
the transactions contemplated by this Agreement. The execution and performance
by Seller of this Agreement will not be in violation of or cause a default
under
any applicable law, agreement, instrument, covenant, condition, restriction,
judgment, order or decree.
(v) No
further consent, waiver, approval, or authorization of, or filing, registration,
or qualification with, or notice to, any governmental authority or any other
entity or person is required to be made, obtained, or given by Seller in
connection with the execution, delivery, and performance of this Agreement,
other than the consent of Marriott as more particularly described in Section
7(f)(iv) below.
(vi)
There
are
no leases or other occupancy agreements for all or any portion of the Real
Property, and there are no operating, equipment or capital leases other than
the
Van Lease.
(vii)
Seller
is
a “United States person” within the meaning of Sections 1445(f)(3) and
7701(a)(30) of the Internal Revenue Code of 1986, as amended.
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(viii)
There
are
no lawsuits, actions, suits, claims or proceedings pending against or affecting
Seller or the Property or any part of or interest in the Property. To Seller’s
knowledge, there are no other lawsuits, actions, suits, claims or proceedings
threatened in writing against or affecting Seller or the Property or any part
of
or interest in the Property, except for a possible lawsuit against Seller by
a
former housekeeper at the Langhorne Courtyard alleging improper termination
(the
“Langhorne Courtyard Claim”). Seller shall indemnify,
defend and hold the Buyer Indemnified Parties harmless from and against any
and
all claims, costs, penalties, damages, losses, liabilities and expenses that
any
of the Buyer Indemnified Parties may at any time incur as a result of the
Langhorne Courtyard Claim.
(ix) The
“Contract Schedule” set forth on Schedule 1-1 contains a complete and accurate
list of all contracts affecting the Property. During the Due Diligence Period,
Seller will deliver to Buyer true and complete copies of each of the Contracts
listed on the Contract Schedule.
(x) The
names
of all Employees and the salary of each employee, and whether each employee
is a
full or part-time employee, are set forth on Schedule 5(a)(x). Seller is not
a
party to any written employment or compensation agreements with any of the
Employees. Seller is not a party to any collective bargaining agreement with
any
labor union. Seller has not received notice of efforts to organize a collecting
bargaining group among all of or any of the Employees.
(xi) Neither
the execution, delivery, or performance by Seller of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance by Seller
with any of the provisions hereof, will violate
any judgment, ruling, order, writ, injunction, decree, statute, rule, regulation
or agreement applicable to the Seller or the Property.
(xii) There
is
no loan agreement, guarantee, note, bond, indenture and other debt instrument,
lease and other contract to which the Seller is a party or by which the Property
is bound other than the Permitted Exceptions or such other documents that will
be satisfied at or prior to Settlement.
(xiii)
All
of
the Seller’s and Manager’s insurance policies for the Property (“Insurance
Policies”) are valid and in full force and effect and the Seller shall pay all
future premiums for such policies up to the Settlement Date (and any
replacements thereof) on or before the due date therefor. The Seller shall
pay
all premiums on, and shall not cancel or allow to expire, any of the Insurance
Policies prior to the Settlement Date unless such policy is replaced, without
any lapse of coverage, by another policy or policies providing coverage at
least
as extensive as the policy or policies being replaced. The Insurance Policies
are attached hereto as Schedule 5(a)(xiii).
(xiv)
To
the
Seller’s knowledge, except as otherwise disclosed in writing to the Buyer prior
to the end of the Due Diligence Period, for each of the accounting years, when
a
given year is taken as a whole, all of the Seller’s and the Property’s financial
information and financial statements and reports previously delivered or to
be
delivered to the Buyer is and shall be correct and complete in all material
respects. Buyer acknowledges that Seller does not prepare or have prepared
compiled, reviewed or audited financial statements so the foregoing
representation is not based on Seller’s review of compiled, reviewed or audited
financial statements.
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(xv)
Except
for matters in Buyer's environmental reports and statements, and matters
in
Seller’s environmental reports that are delivered to Buyer during the Due
Diligence Period, and except for cleaning supplies and the like used in the
ordinary course of the operations of the Hotels, Seller has no knowledge
(a) of the presence of any Hazardous Substances on the Property, or any
portion thereof, or, (b) of any spills, releases, discharges, or disposal
of Hazardous Substances that have occurred or are presently occurring on
or onto
the Property, and or any portion thereof, or (c) of the presence of any PCB
transformers serving, or stored on, the Property, or any portion thereof,
and
Seller has no knowledge of any failure to comply with any applicable local,
state and federal environmental laws, regulations, ordinances and administrative
and judicial orders relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Substances.
(xvi)
The
franchise licenses from Marriott with respect to each Hotel (each a “Franchise
License”) are valid and in full force and effect, and on the Settlement Date
Seller will not be in default with respect thereto (with or without the giving
of any required notice and/or lapse of time). Subject to Buyer obtaining
Marriott Approval, neither the execution, delivery, or performance by the Seller
of this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by the Seller with any of the provisions hereof, will violate,
conflict with, result in a breach of any provision of, constitute a default
(or
an event that, with notice or lapse of time or both, would constitute a default)
under, result in the termination of, or result in a right of termination under
any of the terms, conditions, or provisions of, any Franchise
License.
(xvii)
To
Seller’s knowledge, there are no violations of any environmental laws or
regulations relating to Hazardous Substances respecting the Property or the
Hotels.
(xviii)
To
the
best of Seller’s knowledge, Seller possesses all licenses
(including, without limitation, the liquor license for the Langhorne Courtyard),
permits and approvals required by any governmental or quasi-governmental agency,
body or officer for the ownership, operation and use of the Property or any
part
thereof (collectively “Authorizations”),
each of which is valid and in full force and effect, and, to the best of
Seller’s knowledge, no provision, condition or limitation of any of the
Authorizations has been breached or violated. To the best of Seller’s
knowledge, the Seller has not misrepresented or failed to disclose any relevant
fact in obtaining all Authorizations, and the Seller has no knowledge of any
change in the circumstances under which those Authorizations were obtained
that
result in their termination, suspension, modification or limitation other than
the Seller’s liquor license, if any.
(xviii)
The
provisions of this Section 5(a) shall survive Settlement for the period set
forth in Section 21 below.
(b) Buyer,
to
induce Seller to enter into this Agreement and to complete Settlement, makes
the
following representations and warranties to Seller, which representations and
warranties are true and correct as of the date of this Agreement, and shall
be
true and correct at and as of the Settlement Date in all respects as though
such
representations and warranties were made both at and as of the date of this
Agreement, and at and as of the Settlement Date.
11
(i) Buyer
is
a real estate investment trust, duly organized, qualified to do business and
in
good standing under the laws of the State of Maryland. The execution and
delivery of this Agreement by the signatories hereto on behalf of Buyer and
the
performance of this Agreement by Buyer have been duly authorized by Buyer.
Buyer
has the legal capacity and authority to execute, deliver and perform this
Agreement. Buyer shall have the right to assign this Agreement to an entity
in
which it will be a member or partner, either directly or indirectly, and which
entity shall have the requisite power, authority and financial ability required
of Buyer under this Agreement, but such assignment shall not relieve Buyer
from
liability under this Agreement.
(ii) Buyer
is
not prohibited from (i) executing or delivering this Agreement, (ii) complying
with or performing the terms of this Agreement, or (iii) consummating the
transactions contemplated by this Agreement. Execution and performance by Buyer
of this Agreement will not be in violation or cause a default under any
applicable law, agreement, instrument, covenant, condition, restriction,
judgment, order or decree.
(iii)
No
further consent, waiver, approval, or authorization of, or filing, registration,
or qualification with, or notice to, any governmental authority or any other
entity or person is required to be made, obtained, or given by Buyer in
connection with the execution, delivery, and performance of this
Agreement.
(iv) Buyer,
or
its assignee, has or will have, at the Settlement Date, all necessary funds,
or
commitments for necessary funds, to complete the purchase contemplated by this
Agreement.
(v) The
provisions of this Section 5(b) shall survive Settlement for the period set
forth in Section 21 below.
6. Due
Diligence.
(a) Subject
to Section 10 below, Buyer shall have the right during the Due Diligence Period
to review the Van Lease, Licenses, Permits and Approvals, Contracts, Books
and
Records, Bookings and legal compliance of the Property and to go in, on or
over
the Property for the purpose of conducting building surveys, inspections, soil
tests, environmental testing, feasibility studies and any and all other studies,
tests and examinations thereof as Buyer may desire. Subject to Section 10 below,
Seller shall permit Buyer and its agents reasonable access to the Property,
upon
forty-eight hours advance notice to Seller, to enable Buyer to conduct such
inspections. Buyer shall repair any and all damage by reason of any such testing
and shall indemnify and save Seller harmless for any liability in connection
therewith. In the exercise of its rights pursuant to this Section 6, Buyer
shall
comply fully with its obligations under Section 10 below and shall not interfere
with the conduct of Seller's operations being conducted on the Property and
shall give Seller reasonable advance notice of any such activities Buyer plans
to conduct on the Property. Before entering upon the Property, Buyer shall
deliver to Seller a certificate of insurance evidencing Buyer’s maintenance of
general liability insurance having a single combined limit of not less than
$1,000,000.00 and naming Seller and its Manager as additional insured.
Seller
shall cooperate with Buyer in good faith to permit Buyer to expeditiously
conduct due diligence on the Property in accordance with this
Agreement.
12
Promptly
following the commencement of the Due Diligence Period, Seller shall provide
the
Buyer access to all records and information concerning the Property to the
extent in Seller’s possession, and the
Seller shall make available to the Buyer, its auditors, engineers, attorneys
for
inspection at the offices of Xxxxx, Inc. in Newtown, Pennsylvania or at the
individual Hotels, depending on where the applicable records are currently
located, copies of all existing architectural and engineering studies, ALTA
surveys, existing title insurance policies, zoning and site plan materials,
environmental audits,
environmental reports, zoning compliance letters,
real and
personal property tax records, STAR reports, Seller’s internally-prepared
financial reports and statements for the past three years (including a year
to
date statement of net income if available), existing franchise
agreements, current franchise property improvement plans, the current deed,
historical reports on capital expenditures, forward-looking capital budget,
permits, licenses, operating and services contracts, and
all
other materials or information, if any, relating to the Property to the extent
same are in Seller’s possession. Seller shall also deliver relevant portions of
Seller’s income tax returns solely to the extent that such portions relate
solely to the operations of the Hotels. Buyer acknowledges that Xxxxxxxx
Xxxxxxxx shall not be required to deliver full copies of her personal income
tax
returns. Except as otherwise set forth in Section 5(a) above, Seller makes
no
representation or warranty concerning the accuracy or authenticity of any
information contained in such materials other than the accuracy of the
historical reports on capital expenditures and the forward-looking budget
prepared by Seller and, subject to the limitations contained in Section
5(a)(xiv), Seller’s financial statements.
(b) Buyer
shall have the right to terminate this Agreement for any reason or no reason
whatsoever by delivering written notice thereof to Seller at any time prior
to
5:00 p.m. on the last day of the Due Diligence Period or the Extended Due
Diligence Period, if applicable (SAID TIME AND DATE BEING STRICTLY OF THE
ESSENCE). The failure of Buyer to terminate this Agreement as aforesaid shall
constitute a waiver of Buyer’s right to terminate this Agreement pursuant to
this Section 6.
(c) BUYER
ACKNOWLEDGES THAT IT HAS BEEN AFFORDED AND/OR SHALL BE AFFORDED THE OPPORTUNITY
FOR ITSELF AND ITS ENGINEERS, CONTRACTORS, ACCOUNTANTS AND OTHER REPRESENTATIVES
OF ITS CHOOSING, TO INSPECT THE PROPERTY. BUYER EXPRESSLY ACKNOWLEDGES THAT,
EXCEPT FOR SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5(a), IT
IS BUYING THE PROPERTY IN ITS “AS IS” CONDITION ON THE DATE HEREOF, SUBJECT TO
REASONABLE USE, WEAR AND TEAR AND NORMAL DEPRECIATION BETWEEN THE DATE HEREOF
AND SETTLEMENT. EXCEPT FOR MATTERS RELATED TO SELLER’S REPRESENTATIONS AND
WARRANTIES SET FORTH IN SECTION 5(a), BUYER RELEASES SELLER FROM ALL
RESPONSIBILITY AND LIABILITY REGARDING THE CONDITION OR UTILITY OF THE PROPERTY.
13
(d) BUYER
AFFIRMS THAT SELLER HAS NOT MADE, NOR HAS BUYER RELIED UPON, ANY REPRESENTATION,
EXPRESS OR IMPLIED, OR PROMISE MADE BY SELLER, OR ANY OF ITS EMPLOYEES OR
AGENTS, OR ANY BROKER, WITH RESPECT TO THE PROPERTY OR ITS OPERATION, EXCEPT
AS
SPECIFICALLY SET FORTH IN SECTION 5(a) OR ELSEWHERE IN THIS AGREEMENT, IF ANY.
EXCEPT AS SET FORTH IN SECTION 5(a), SELLER HEREBY EXPRESSLY DISCLAIMS ANY
AND
ALL WARRANTIES, EXPRESS OR IMPLIED, RELATING IN ANY WAY TO THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY PROVIDED FOR UNDER STATUTORY OR
COMMON LAW OR THE UNIFORM COMMERCIAL CODE, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. BOTH BUYER
AND SELLER ARE ACTING AT ARM’S LENGTH TO PROTECT THEIR OWN INTERESTS, AND BOTH
BUYER AND SELLER SHALL USE THEIR OWN INDEPENDENT BUSINESS JUDGMENT CONCERNING
THE SALE AND PURCHASE OF THE PROPERTY. BUYER HAS COMPLETED OR PRIOR TO
SETTLEMENT SHALL HAVE COMPLETED TO ITS SATISFACTION, ALL INVESTIGATIONS,
INSPECTIONS AND TESTS WHICH BUYER DEEMS NECESSARY IN ITS SOLE DISCRETION TO
DETERMINE, AMONG OTHER THINGS: (i) THE CONDITION OF THE PROPERTY, INCLUDING,
BUT
NOT LIMITED TO, THE SOIL CONDITION OF THE PROPERTY, THE EXISTENCE OF ANY
ENVIRONMENTAL CONDITION, AND THE EXISTENCE OF PATENT OR LATENT DEFECTS IN
CONSTRUCTION OF THE IMPROVEMENTS ON THE REAL PROPERTY; (ii) THE CONDITION OF
TITLE TO THE REAL PROPERTY; AND (iii) THE STATUS OF ALL BUILDING CODE, ZONING
AND OTHER APPLICABLE GOVERNMENTAL REQUIREMENTS OF WHATEVER KIND REGARDING THE
REAL PROPERTY OR ANY INTENDED USE OF THE REAL PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE STATUS OF ANY PERMIT, APPLICATION, LICENSE, APPROVAL,
CERTIFICATE OR OTHER INTANGIBLE RIGHT OF WHATEVER KIND REGARDING THE REAL
PROPERTY AND THE HOTELS, AND (iv) THE
STATUS AND EFFECT OF ALL RECORDED CONVENANTS AND RESTRICTIONS RELATING TO THE
PROPERTY, IT BEING AGREED AS SET FORTH ABOVE THAT SELLER SHALL GIVE NO WARRANTY
AND MAKE NO REPRESENTATION, EXCEPT FOR THOSE SET FORTH IN SECTION 5(a),
REGARDING SUCH MATTERS. BUYER ACKNOWLEDGES THAT, EXCEPT FOR MATTERS RELATED
TO
SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5(a), IT AGREES TO
ACCEPT CONVEYANCE OF THE REAL PROPERTY AT SETTLEMENT IN ITS “AS-IS, WHERE-IS”
PHYSICAL CONDITION AS OF THE SETTLEMENT DATE, SOLELY BASED UPON ITS RELIANCE
ON
ITS OWN INVESTIGATIONS, INSPECTIONS AND JUDGMENT.
(e) If
this
Agreement is properly terminated in accordance with Section 6(b) above, the
Deposit shall be returned to Buyer and the parties hereto shall have no further
objections to or recourse against each other with regard to the matters provided
for in this Agreement, except as specifically set forth herein and except for
rights and objections which expressly survive the termination
hereof.
14
(f) During
the Due Diligence Period, or the Extended Due Diligence Period, if properly
extended, the parties shall use their diligent good faith efforts to agree
upon
the accounting system to be used to determine Operating Revenues and Operating
Expenses. The agreed-upon accounting system shall be documented in a writing
to
be signed by Buyer and Seller at Settlement.
7. Settlement.
(a) Settlement
of the conveyance of the Property to Buyer shall be made on the fifteenth
(15th)
day
following the expiration of the Due Diligence Period or the Extended Due
Diligence Period, if properly extended, or the next business day if such
fifteenth (15th)
day is
not a business day (“Settlement Date”), commencing at 10:00 a.m. (prevailing
time) at the offices of Sirlin Xxxxxxxx & Lesser, P.C., 0000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, the Center City Philadelphia
offices of Buyer’s Title Company or the Center City Philadelphia offices of
counsel to Buyer’s mortgagee (“Settlement”). The date and time of Settlement are
hereby agreed to be of the essence of this Agreement.
(b) Real
estate taxes; rents; water and sewer rentals; gas, telephone, electric and
other
utility charges; any other governmental tax or charge levied or assessed against
the Property; and any other items or charges which are properly apportionable
under local law or custom shall be apportioned on a per diem basis as of the
Settlement Date, with Buyer being considered the owner on the Settlement Date.
(c) Buyer
and
Seller shall evenly divide and evenly pay all state and local realty transfer
taxes or transfer fees applicable to the sale set forth in this Agreement.
(d) Possession
of the Real Property is to be delivered by delivery of an executed Deed and
all
keys to the Real Property in Seller’s possession (which keys may either be
delivered to the Settlement or left at the respective Real Property).
(e) The
items
of revenue and expense with respect to the Hotel set forth in this Section
7(e)
shall be prorated between Seller and Buyer as of the Cut-Off Time, so that
the
Settlement Date is a day of income and expense for Buyer. Buyer shall receive
a
credit for items of expense in this Section 7(e) to the extent the same are
accrued or due and payable but unpaid as of the Cut-Off Time in which case
Buyer
shall be obligated to pay such expense, and Seller shall receive a credit for
any of the items of expense in this Section 7(e) which have been paid prior
to
or at the Settlement or will be paid by Seller after the Settlement to the
extent such payment related to any period of time after the Cut-Off
Time.
(i) Buyer
shall receive a credit for all prepaid deposits for Bookings scheduled for
accommodations or events on or after the Settlement Date which Buyer is
obligated to honor pursuant to this Agreement, except to the extent such
deposits are transferred to Buyer.
(ii) Seller
shall remove all monies from all vending machines, laundry machines, pay
telephones and other coin-operated equipment as of the Cut-Off Time and shall
retain all monies collected therefrom as of the Cut-Off Time, and Buyer shall
be
entitled to any monies collected therefrom after the Cut-Off
Time.
15
(iii) Except
to
the extent an adjustment or proration is made under another subsection of this
Section, (i) Seller shall pay in full prior to the Settlement all amounts
payable to vendors or other suppliers of good or services to the Hotel (the
“Trade
Payables”)
which
are due and payable as of the Settlement Date for which goods or services have
been delivered to the Hotel prior to Settlement, and (ii) Buyer shall receive
a
credit for the amount of such Trade Payables which have accrued, but are not
yet
due and payable as of the Settlement Date, and Buyer shall pay all such Trade
Payables accrued as of the Settlement Date when such Trade Payables becomes
due
and payable; provided, however, Seller and Buyer shall reprorate the amount
of
credit for any Trade Payables and pay any deficiency in the original proration
to the other Party promptly upon receipt of the actual xxxx for such goods
or
services. Seller shall receive a credit for all advance payments or deposits
made with respect to goods and services ordered in the ordinary course of
business, but not delivered to the Hotel prior to the Settlement Date, and
Buyer
shall pay the amounts which become due and payable for such goods and services
which were ordered prior to Settlement but not delivered to the Hotel prior
to
the Settlement Date. Notwithstanding the foregoing, Seller shall pay for (x)
the
upgraded linen and bedding package required by Marriott and (y) the chairs
for
the Langhorne Courtyard lounge, both of which have already been ordered by
Seller but may not be delivered until after Settlement. The re-proration
obligations in this Section 7(e)(iii) shall survive the Settlement.
(iv) At
Settlement, Seller shall receive a credit in an amount equal to: (i) all amounts
charged to the Guest Ledger for all room nights up to and including the night
during which the Cut-Off time occurs, and Buyer shall be entitled to retain
all
deposits made and amounts collected for such Guest Ledger.
(v) At
Settlement, Seller shall receive a credit for all Accounts Receivable (other
than the Guest Ledger which is addressed in subparagraph iv above) in an amount
equal to the Accounts Receivable which are unpaid for not more than ninety
(90)
days, and Buyer shall be entitled to all amounts collected for such Accounts
Receivable.
(vi) No
later
than the day prior to Settlement, Seller and Buyer, through their respective
employees, agents or representatives, jointly shall make such examinations,
audits and inventories of the Hotel as may be necessary to make the adjustment
and prorations to the Purchase Price as set forth herein. Based upon such
examinations, audits and inventories, Seller and Buyer jointly shall prepare
prior to Settlement a settlement statement (“Settlement
Statement”),
which
shall set forth Seller’s and Buyer’s best estimate of the amounts of the items
to be adjusted and prorated under this Agreement. The Settlement Statement
shall
be approved and executed by Seller and Buyer, and such adjustments and
prorations shall be final with respect to the items set forth in the Settlement
Statement, except to the extent any such items shall be reprorated after the
Settlement as expressly set forth in Section 7(e)(iii).
16
(f) Without
limitation to other conditions set forth in this Agreement, and notwithstanding
anything contained herein to the contrary, Buyer's obligation to close hereunder
is expressly contingent upon the satisfaction, or the express written waiver,
of
the following conditions:
(i) As
of the
Settlement, title to the Real Property shall be as required by Section 4 of
this
Agreement;
(ii) All
representations and warranties made by Seller in this Agreement shall be true,
complete and accurate as of the Settlement Date
and
Seller shall have executed and delivered to the Buyer at Settlement a
certificate to the foregoing effect;
(iii) Seller
shall have performed, observed and complied with all agreements, covenants
and
obligations to be performed by Seller under this Agreement, including without
limitation, the execution and/or delivery of all documents required to be
executed and/or delivered by or on behalf of Seller hereunder;
(iv) Marriott
shall have consented in writing to the sale of the Property to Buyer as
contemplated in this Agreement and shall have approved in writing the granting
of a new franchise license for each Hotel to Buyer or an affiliate of Buyer
(collectively, “Marriott Approval”). Buyer
shall use diligent efforts to obtain Marriott Approval, and Seller shall use
diligent efforts in assisting Buyer in obtaining Marriott Approval and shall
fully cooperate with Buyer's application and pursuit of the same. In the event
that Buyer is unable to obtain Marriott Approval on or before the Settlement
Date, then either (i) the parties hereto shall agree to extend the Settlement
Date, or (ii) Buyer, at Buyer's sole option, may elect to terminate this
Agreement and immediately receive a full refund of the Deposit with interest
thereon;
(v) From
the
date hereof to and including the Settlement Date, Seller shall comply with
and
perform all of the duties and obligations of the licensee under the franchise
license for each Hotel and Seller shall not be in default under any such
franchise license; and
(vi) On
the
Settlement Date, Seller shall terminate its existing management agreement,
if
any, for each Hotel, and Seller shall be responsible for all fees and costs
associated with such terminations. On the Settlement Date, following the
termination of the existing management agreements, Seller, or one or more
affiliates of Seller, shall enter into the Management Agreement and Asset
Management Agreement (as each is defined in Section 12) for each
Hotel.
(vii) On
or
before the Settlement Date, Buyer and Seller shall have executed the agreements
referred to in Sections 6(f), 11(m) and 11(n).
If
the
conditions precedent in this Section 7(f) above are not satisfied as of the
Settlement Date, Buyer may exercise any of the remedies set forth in this
Agreement, as applicable, or waive such conditions in whole or in part and
proceed to Settlement. Notwithstanding the foregoing, if the condition set
forth
in Section 7(f)(i) above is not satisfied, Buyer’s sole remedy shall be to
exercise the remedies set forth in Section 4 above, and if the condition set
forth in Section 7(f)(iv) above is not satisfied, Buyer’s sole remedy shall be
to exercise the remedies set forth in Section 7(f)(iv) above.
17
(g) Without
limitation to other conditions set forth in this Agreement, and notwithstanding
anything contained herein to the contrary, Seller's obligation to close
hereunder is expressly contingent upon the satisfaction, or the express written
waiver, of the following conditions:
(i) All
representations and warranties made by Buyer in this Agreement shall be true,
complete and accurate in all material respects as of the Settlement Date;
(ii) Buyer
shall have performed, observed and complied with all agreements, covenants
and
obligations to be performed by Buyer under this Agreement, including without
limitation, the payment of the balance of the Purchase Price and the execution
and/or delivery of all documents required to be executed and/or delivered by
or
on behalf of Buyer hereunder;
(iii)
Marriott
shall have provided Marriott Approval; and
(iv) On
the
Settlement Date, following the termination of the existing management agreements
by Seller, Buyer or one or more of its affiliates, shall enter into the
Management Agreement and Asset Management Agreement (as each is defined in
Section 12) for each Hotel.
(v) On
or
before the Settlement Date, Buyer and Seller shall have executed the agreements
referred to in Sections 6(f), 11(m) and 11(n).
If
the
conditions precedent in this Section 7(g) above are not satisfied as of the
Settlement Date, Seller may exercise any of the remedies set forth in this
Agreement, as applicable, or waive such conditions in whole or in part and
proceed to Settlement. Notwithstanding the foregoing, the condition set forth
in
Section 7(g)(iii) above is not satisfied, Buyer’s sole remedy shall be to
exercise the remedies set forth in Section 7(f)(iv) above.
(h) Without
limiting the generality of any provision of this Section 7, Seller shall be
liable for the payment of all sales, use and personal property taxes owed by
Seller as of the Settlement Date. Seller shall pay all sales, use and personal
property taxes for the last billing cycle ending before Settlement on or before
the due date for such billing cycle, and shall pay all sales, use and personal
property taxes for the billing cycle in which the Settlement Date occurs on
or
before the due date for such billing cycle (provided that Seller’s obligation
for such taxes shall end as of the Cut-Off Time). Seller shall indemnify, defend
and hold Buyer Indemnified Parties harmless from any and all liability, claims,
fines, costs, liens or damages as a result of or in connection with any taxes,
whether or not settled, assessed or determined as of the Settlement Date, owed
by Seller for the period prior to and including the Cut-Off Time, including,
without limitation, those taxes owed by Seller under the New Jersey Sales and
Use Tax Act and the Business Personal Property Tax Act. The provisions of this
Section 7(h) shall survive Settlement.
18
8. Settlement
Documents.
(a) At
the
time and place of Settlement, Seller shall deliver or cause to be delivered
to
Buyer the following:
(i) the
Deeds;
(ii) a
xxxx of
sale whereby Seller shall convey to Buyer its interest in the Personal Property
(the “Xxxx of Sale”);
(iii)
an
assignment whereby Seller will assign and Buyer shall assume all of Seller's
right, title, and interest, including all the obligations of Seller, in, to
and
under the Van Lease and any warranties, Licenses, Permits and Approvals
-(hereinafter referred to as the "Assign-ment");
(iv) an
affidavit pursuant to the Foreign Investment in Real Property Act stating that
Seller is not a foreign person;
(v) a
Seller's title affidavit and such other documents as may be reasonably requested
by the Title Company or Buyer’s attorney relating to the conveyance of the
Property;
(vi) all
Licenses, including without limitation a final certificate of occupancy for
the
Hotels, and as many signed originals (or true and correct copies of same) of
the
other items covered by the Assignment as are in Seller's possession (all of
which shall be left in the respective Real Property if currently located there);
(vii)
all
equipment operating manuals and all equipment warranties and equipment
guarantees, if any, in Seller's possession (all of which shall be left in the
respective Real Property if currently located there);
(viii)
all
master and duplicate keys to all locks for the Real Property which are in
Seller's possession (all of which shall be left in the respective Real Property
if currently located there);
(ix) the
Management Agreement and Asset Management Agreement;
(x) The
certificate required under Section 7(f)(ii);
(xi) A
set of
all guest registration cards, guest transcripts, guest histories, and all other
available guest information;
(xii) A
list of
advance room reservations, functions and the like, in reasonable detail so
as to
enable Buyer to honor the Seller’s advance room reservations;
19
(xiii)
To
the
extent not previously delivered to Buyer during the Due Diligence Period, all
books, records, operating reports, appraisal reports, files, real estate and
personal property tax bills, and other materials relating to the Hotels in
the
Seller’s possession or control;
(xiv)
such
other documents as may be reasonably requested by Buyer to carry out the intent
of this Agreement or by the Title Company.
(b) At
the
time and place of Settlement, Buyer shall deliver or cause to be delivered
to
Seller the following:
(i)
the
balance of the Purchase Price;
(ii) a
counterpart of the Assignment;
(iii) the
Management Agreement and Asset Management Agreement; and
(iv) such
other documents as may be reasonably requested by Seller to carry out the intent
of this Agreement or by the Title Company.
9. Risk
of Loss.
All
risk
of loss shall be on Seller prior to Settlement. Except as set forth in the
next
sentence, in the event that there is a casualty or condemnation of all or any
portion of the Property, Buyer may, at its sole discretion, either (i) continue
to Settlement without an abatement in Purchase Price, in which event Seller
shall and/or shall cause Manager to assign all insurance proceeds and rights
to
insurance proceeds for such casualty or all condemnation awards for such
condemnation, as applicable, to Buyer or (ii) terminate this Agreement, in
which
event the Deposit, plus all accrued interest, shall be promptly delivered to
Buyer and this Agreement shall be null and void and of no force or effect and
all copies shall be canceled. Notwithstanding the foregoing, in the event that
the Property is damaged by fire or other casualty and the estimated cost to
repair such damage is less than $500,000.00 and such damage is fully insured,
Buyer shall not have the right to terminate the Agreement provided that Seller
shall either (i) continue to Settlement without an abatement in Purchase Price,
and Seller shall assign and/or cause Manager to assign all insurance proceeds
and rights to insurance proceeds for such casualty to Buyer, or (ii) repair
such
damaged portion of the Property to the condition that existed prior to such
damage, in which case Settlement shall be extended for such reasonable period
of
time, not to exceed sixty (60) days, if such repair or restoration cannot be
reasonably completed prior to Settlement; and in the event Seller has not fully
completed restoration of the damaged Property within such 60-day period, Buyer
shall have the right to terminate this Agreement and receive a full refund
of
the Deposit and interest thereon. Notwithstanding anything herein to the
contrary, in the event a casualty or condemnation is uninsured or underinsured,
Buyer shall have the right to terminate this Agreement and receive a full refund
of the Deposit and interest thereon.
20
10. Confidentiality
(a) Seller
and Buyer shall keep confidential and not make any public announcement or
disclose any terms of this Agreement, any information disclosed by Buyer’s due
diligence inspections or in any due diligence materials delivered to Buyer,
and
any other documents, materials, data or other information with respect to the
Hotel which is not generally known to the public (the “Confidential
Information”); provided, however, that Seller and Buyer shall be permitted to
(i) disclose any Confidential Information to the extent required by court order
or under applicable law, (ii) make a public announcement regarding the
transaction contemplated in this Agreement, provided that Seller and Buyer
shall
approve the form and substance of any such public announcement, which approval
shall not be unreasonably withheld, conditioned or delayed, or (iii) disclose
any Confidential Information to any person on a “need-to-know” basis, such as
their respective directors, officers, partners, members, employees, attorneys,
accountants, consultants, engineers, surveyors, lenders, investors, managers,
franchisors and such other persons whose assistance is required to consummate
the transactions contemplated in this Agreement; provided, however, that Seller
or Buyer (as the case may be) shall (a) advise such person of the confidential
nature of such Confidential Information, and (b) use commercially reasonable
efforts to cause such person to maintain the confidentiality of such
information. This Section 10(a) shall survive the termination of this Agreement
and Settlement. Notwithstanding anything in this Section 10(a) to the contrary,
Buyer shall have the right to refer to this Agreement and the transactions
contemplated hereby in any filing pursuant to any state or federal securities
law or regulation and in the filing of a Form 8-K.
(b) Buyer
shall not, through its employees, agents, representatives or any other person,
directly or indirectly, initiate or pursue any communication with any Employees
or any person representing any Employees involving any matter whatsoever,
including with respect to the Hotel, the Real Property, the Employees or this
Agreement, without Seller’s prior written consent, which consent may be withheld
in Seller’s sole reasonable discretion, unless such communication is arranged by
Seller. Without limiting the generality of the foregoing, the foregoing
prohibition shall be applicable to Buyer and its agents, employees and
representatives while conducting all due diligence investigations and if
addressed by an Employee during the course of due diligence investigations,
Buyer and its agents, employees and representatives shall not disclose the
nature of their activities. All communications with Seller regarding the Hotels,
the Real Property or any other matter covered by this Agreement shall be
addressed to Seller either in writing as set forth in Section 15 below or by
cell phone or email at the phone number or email address set forth on Schedule
10(b) attached hereto. Notwithstanding the foregoing, Buyer shall have the
right
to interview the Senior Personnel (defined below) during the Due Diligence
Period and thereafter; provided, however, that Buyer shall give Seller at least
2 business days prior notice to Seller, and Xxxxxxxx Xxxxxxxx shall have the
right to be present for any such interview or shall have consented in writing
to
such interview without her presence.
Seller
shall cooperate with Buyer in good faith to permit Buyer to expeditiously
conduct due diligence on the Property in accordance with this Agreement.
Notwithstanding anything in this Agreement to the contrary, upon at least two
(2) business days notice to Seller, Buyer and its representatives may,
during
the Due Diligence Period and thereafter,
during
normal business hours, communicate with the general manager of the Hotels and
the senior marketing managers for the Hotels (collectively, the “Senior
Personnel”) with Xxxxxxxx Xxxxxxxx present for such communication.
Subject
to Buyer’s compliance with its obligations under this Section 10, Seller shall
direct the Senior Personnel to cooperate with Buyer and its representatives
in
conducting its due diligence.
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11. Operations
Pending Settlement.
(a) Seller
shall not sell, mortgage or voluntarily encumber the Real Property.
(b) Seller
will promptly furnish Buyer with copies of all notices received by Seller
relating to the Real Property.
(c) Seller
agrees that until the Settlement Date, Seller will not, without the prior
written approval of Buyer, enter into any lease for space in nor grant any
other
right of possession, use or occupancy of all or any portion of the Real Property
for a term extending beyond the date of Settlement.
(d) Seller
shall, at its expense, maintain the Property in its present order and condition,
make all necessary repairs and deliver the Property on the Settlement Date
in
the same condition it is in on the date hereof, reasonable wear and tear
excepted.
(e) Seller
shall notify Buyer in writing, promptly after Seller acquires knowledge thereof,
of any facts or events that would cause any of Seller’s representations and
warranties to be untrue or incorrect in any material respect.
(f) Seller
shall maintain in full force and effect all applicable Licenses, Permits and
Approvals and timely apply for renewals of all such Licenses, Permits and
Approvals which will expire before the Settlement Date.
(g) From
the
date of this Agreement until the Settlement or termination of this Agreement,
Seller and Buyer shall use commercially reasonable efforts to take, or cause
to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate the transaction contemplated in this
Agreement, including, without limitation, (i) obtaining all necessary consents,
approvals and authorizations required to be obtained from any governmental
authority or other person under this Agreement or applicable law, and (ii)
effecting all registrations and filings required under this Agreement or
applicable law. After the Settlement, Seller and Buyer shall use commercially
reasonable efforts (at no cost or expense to such party, other than any de
minimus cost or expense or any cost or expense which the requesting party agrees
in writing to reimburse) to further effect the transaction contemplated in
this
Agreement. This Section 11(g) shall survive the Settlement.
(h) On
or
prior to the Settlement Date, Seller shall pay directly to its Employees all
Compensation due such Employees through the date immediately prior to the
Settlement Date, and Buyer shall not receive a credit for any Compensation.
In
addition, on or prior to the Settlement Date, Seller shall pay the 2005 year-end
bonuses that are due to the managers of each of the three (3) Hotels and to
Xxxxxxx Xxxxxx.
22
(i) Seller
shall pay directly to the Employees all Accrued Vacation Pay due to such
Employees through the date immediately prior to the Settlement Date on Seller’s
first payroll date on or after the Settlement Date, and Buyer shall not receive
a credit for any Accrued Vacation Pay.
(j) Buyer
shall be responsible for obtaining any consents from (i) Marriott in connection
with Marriott Approval, (ii) any licensor, vendor or supplier of any computer
hardware or software which will remain at the Hotel and (iii) the lessor under
the Van Lease, provided that promptly after the execution of this Agreement
Seller contacts Marriott and informs Marriott of the transaction contemplated
herein and authorizes Marriott to communicate with Buyer, and Seller uses
reasonable efforts to cooperate with Buyer in obtaining Marriott Approval and
any and all of the aforementioned consents. Buyer shall pay any fees or expenses
charged by any of the foregoing parties in respect of such assignments or
transfer of new licenses (as the case may be).
(k) If
and to
the extent required by applicable law, Seller shall apply for a tax clearance
certificate from the New Jersey Department of Treasury concerning the sale
and
transfer of the Property, but the receipt of such certificate shall not be
a
condition to Settlement.
(l)
If
and to
the extent required by applicable law, Seller shall apply for a bulk sales
clearance certificate from the Pennsylvania Department of Revenue concerning
the
sale and transfer of the Property,
but the
receipt of such certificate shall not be a condition to Settlement.
(m)
During
the Due Diligence Period, Buyer and Seller shall use their diligent good faith
efforts to negotiate an agreement of sale for the Langhorne Residence Inn
currently being developed by Seller at 00 Xxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx.
(n) During
the Due Diligence Period, Buyer and Seller shall use their diligent good faith
efforts to negotiate an agreement relating to joint future development of hotel
deals by Buyer and Seller within a ten (10) mile radius of each of the Bethlehem
Fairfield Property, the New Jersey Property and the Langhorne Residence
Property.
12.
Operations/Obligations
After Settlement
(a) At
Settlement, Buyer or one of its affiliates, and Seller or Xxxxx, Inc. or one
or
more other affiliates of Seller as determined by Seller, shall enter into a
management agreement pursuant to which Seller or Seller’s affiliate shall manage
the Hotels on behalf of Buyer for a period of one (1) year from the Settlement
Date (the “Management Agreement”). The Management Agreement shall provide that
Seller or its affiliate will be paid a management fee equal to three and one
half percent (3.5%) of all gross revenues derived from the operations of the
Hotels, such fee to be paid in arrears on a monthly basis within fifteen (15)
days following the end of each calendar month. Buyer and Seller shall use their
best efforts to agree on the form and substance of the Management Agreement
during the Due Diligence Period. Notwithstanding the one (1) year term of the
Management Agreement, Seller or its affiliate executing the Management Agreement
shall have the right to terminate the Management Agreement and turn over
management responsibilities to Buyer at any time upon at least thirty (30)
days
advance written notice, provided that the actual early termination of the
Management Agreement shall not be effective until Buyer has received consent
for
such termination from Marriott and Buyer’s mortgagee, provided further that
Buyer shall promptly request such consent and diligently use its best efforts
to
obtain such consent within the thirty (30) day period and Buyer shall request
that its mortgagee include a provision in its loan documents permitting the
early termination of the Management Agreement so long as an affiliate of Buyer
is hired to perform the management of the Hotels. At Settlement, Buyer or one
of
its affiliates and Hersha Hospitality Management, LP (“Asset Manager”) shall
enter into an asset management agreement (the “Asset Management Agreement”),
pursuant to which Asset Manager will provide accounting and support services
for
the Hotels for a period of one (1) year from the Settlement Date, and for such
services Asset Manager shall earn an asset management fee of 1% of all gross
revenues derived from the operations of the Hotels.
23
(b) Seller
shall cause its affiliate executing the Management Agreement to continue
employing the Employees at their then-current job descriptions and then-current
rate of Compensation during the term of the Management Agreement, as such rate
of Compensation is scheduled to be increased in 2006 as set forth on Schedule
5(a)(x). Seller or Employer shall not increase the salaries of the salaried
Employees beyond the 2006 levels without first obtaining Buyer’s prior written
consent, but Seller shall have the right to increase the wages of the hourly
Employees in accordance with Seller’s historic compensation practices. Upon the
expiration or sooner termination of the Management Agreement, Seller shall
terminate (or shall cause Employer to) terminate the employment of all Employees
effective as of the termination date of the Management Agreement (other than
Xxxx Xxxxxxxxx, who shall continue to be employed by Xxxxx, Inc.), and Buyer
shall offer employment to all of such Employees for such Employee’s current job
description and at such Employee’s rate of Compensation and level of seniority
enjoyed by such Employees prior to Settlement. In addition, upon the expiration
or sooner termination of the Management Agreement, Buyer shall offer employment
to Xxxxxxx Xxxxxx for his then-current job description and at his then-current
rate of Compensation (i.e., the Compensation for 2006 as set forth on Schedule
5(a)(x)), which shall not be materially increased by Seller during the term
of
the Management Agreement without Buyer’s prior written consent. The terminated
Employees who accept such offers of employment are referred to collectively
herein as the “Rehired Employees”. Buyer shall indemnify and hold harmless the
Seller and the Employers under the WARN Act with respect to the Employees as
a
result of the failure of Buyer to employ a sufficient number of the individuals
previously employed by Seller and offer such terms of employment as required
to
comply with the provisions of the WARN Act; provided that Seller has complied
with its obligations to notify Buyer of the termination of any Employees as
set
forth in this Section. Seller and Buyer shall agree on the form, substance
and
manner of delivery of any announcement or communication to the Employees
regarding their employment or termination of employment at the Hotel.
(c) Buyer
shall honor all Bookings made prior to the Settlement Date for any period on
or
after the Settlement Date.
(d) Seller
and Buyer shall use commercially reasonable efforts to cooperate with each
other
(at no cost or expense to the party whose cooperation is requested, other than
any de minimis cost or expense or any cost or expense which the requesting
party
agreed in writing to reimburse) to provide written notice to any person under
any Contracts, Licenses, Permits and Approvals, and to effect any registrations
or filings with any governmental authority or other person, regarding the change
in ownership or operating of the Hotel.
24
(e) After
the
Settlement, Buyer shall provide reasonable access to Seller and its officers,
employees, agents and representatives to (i) the Books and Records pertaining
only to the operations of the Hotel for any purpose deemed reasonably necessary
or advisable by Seller, including, without limitation, to facilitate the
preparation of any documents required to be filed by Seller under applicable
law
or the resolution of any audit, litigation or other proceeding, claim or charge
made by any person or insurance claim involving Seller or any of its affiliates
(the foregoing shall apply only to the Books and Records delivered by Seller
to
Buyer under this Agreement and any books and records applicable to the period
covered by the Management Agreement and not to any books, records, reports
or
other information of Buyer or regarding the Hotel regardless of the source
of
such information); and (ii) the employees of Buyer whose assistance or testimony
is deemed necessary or advisable by Seller to assist Seller in evaluating or
defending any audit, litigation or other proceeding, claim or charge made by
any
Person or insurance claim involving any Seller or any of its affiliates;
provided, however, that (A) Seller shall provide a written request to Buyer
for
such access, which shall be scheduled at the convenience of Buyer, and not
less
than two (2) business days after delivery of such request; (B) Buyer shall
not
be required to provide such access during non-business hours; (C) Buyer shall
have the right to accompany the officer, employees, agents or representatives
of
Seller or its affiliate in providing access to its books and records, the
Property or the employees of Buyer (or Buyer’s manager) as provided in this
Section; and (D) Buyer shall incur no cost or expense, other than any de minimis
cost or expense, or any cost or expense which Seller shall promptly reimburse
Buyer for, in connection with providing access to information pursuant to this
Section. Buyer, at its cost and expense, shall retain all Books and Records
with
respect to the Hotel for period of three (3) years after the Settlement. The
provisions of this Section 12(e) shall survive Settlement for a period of three
(3) years.
(f) Seller
and Buyer agree that, in the event Seller or its affiliates intends to complete
closing under the existing agreement of sale with Civic Center Corporation
regarding a portion of Bucks County Parcel No. 22-57-12 (the “Lot”), Seller
shall give Buyer written notice thereof at least forty-five (45) days prior
to
the scheduled closing date, and Buyer shall have the right to acquire a
non-controlling interest in the entity that will take title to Lot (the “Lot
Entity”). Seller shall have the sole right to determine the form of entity used
to acquire the Lot. Buyer shall exercise this right by giving Seller written
notice of its acceptance no later than fifteen (15) days following the date
on
which Buyer received Seller’s notice. Seller and Buyer agree to negotiate and
agree to the specific terms of the organizational documents governing the Lot
Entity during the period between Buyer’s acceptance of Seller’s offer and the
closing under the agreement of sale for the Lot. The provisions of this Section
12(f) shall survive Settlement for as long as the agreement of sale for the
Lot
remains in full force and effect.
25
(g) Earn-Out:
The Seller shall value the Bethlehem Fairfield, Langhorne Courtyard and Mt.
Xxxxxx Xxxxxxxxx (the “Stabilized Properties”) on June 30, 2007. The value of
the Stabilized Properties shall be computed by applying a 9% capitalization
rate
to the audited (by Buyer’s auditors) trailing 12 months’ (July 1, 2006 to June
30, 2007) NOI for the Stabilized Properties. If the then current value of the
Stabilized Properties exceeds $40,500,000.00, the Buyer will pay Seller on
or
before September 30, 2007, lawful money of the United States equal to the
difference between the then current value of the Stabilized Properties and
$40,500,000.00, but in no event shall such earn-out payments exceed
$3,000,000.00 in aggregate for the Stabilized Properties. In the event that
prior to June 30, 2007, one or more of the Stabilized Properties is sold,
condemned, conveyed in lieu of condemnation or substantially destroyed by fire
or other casualty and is not reconstructed prior to June 30, 2007, the “value”
of such property for purposes of this Section 12(g) shall be computed by
applying a 9% capitalization rate to the trailing 12 months’ (i.e., the last 12
full calendar months preceding the closing date of such sale or transfer by
condemnation or deed in lieu thereof or the date of such casualty) NOI for
the
applicable property (which NOI shall be based on Buyer’s audited financial
statements for any period following the Settlement Date and based on Seller’s
unaudited financial statements for any period prior to the Settlement Date),
but
the earn-out payment for such property for purposes of this sentence only shall
not exceed $1,550,000.00 for the Langhorne Courtyard, $800,000 for the Mt.
Xxxxxx Xxxxxxxxx and $650,000.00 for the Bethlehem Fairfield, and the “value” of
the other property or properties shall be determined in accordance with the
formula set forth in the second sentence of this Section 12(g). Seller shall
have the right to audit Buyer’s Books and Records relating to the Stabilized
Properties in order to verify the amount of the earn-out payment. The provisions
of this Section 12(g) shall survive Settlement and the Termination Date. In
the
event that Buyer fails to pay the foregoing earn-out when due, Seller shall
have
the right to bring appropriate legal or equitable proceedings to enforce this
provision.
(h) Seller
shall cooperate with Buyer and Asset Manager
to have
the liquor licenses for the Hotels, if any, transferred to their name; provided,
however, that (i) final Pennsylvania Liquor Control Board (“PLCB”) approval of
the transfer of the liquor license to Buyer and/or Asset Manager shall not
be a
condition to Settlement, and (ii) if PLCB approval has not been granted prior
to
the Settlement Date (A) Settlement will be held without transfer of the liquor
license or any withholding of any portion of the Purchase Price, (B) the parties
will continue to pursue PLCB approval after Settlement, (C) the liquor license
shall continue to be titled in the name of Seller’s Manager until PLCB approval
has been issued, and (D) no alcohol shall be sold at the applicable Hotel until
the license transfer has been approved by the PLCB but Manager may give alcohol
away if permitted by applicable law. If required by the PLCB, the parties shall
execute a separate agreement of sale for the liquor license.
(i) The
provisions of this Section 12 shall survive Settlement for the longer of (i)
the
period specifically provided in the applicable subsection of this Section 12
or
(ii) the period set forth in Section 21.
13.
Indemnification.
(a) Seller
shall indemnify and hold harmless the Buyer Indemnified Parties and their
officers, directors, shareholders, trustees, agents, employees, successors
and
assigns from and against any and all losses, claims,
costs, penalties, damages, liabilities and expenses incurred
by any of the Buyer Indemnified Parties after the Settlement to the extent
resulting from (i) subject to Section 21, the breach by Seller of any of its
covenants, obligations, representations and/or warranties under this Agreement
which expressly survive the Settlement, or (ii) any taxes owed by Seller to
any
taxing authority for periods prior to the Cut-off Time, or (iii) the operations
of the Hotels by Seller and/or Manager prior to the Settlement Date, except
to
the extent that any of the foregoing are caused by any of the Buyer Indemnified
Parties.
26
(b) Buyer
shall indemnify and hold harmless Seller and its Manager and their respective
officers, directors, shareholders, trustees, agents, employees, successors
and
assigns (“Seller Indemnified Parties”) from and against any and all losses,
claims, costs, penalties, damages, liabilities and expenses incurred by the
Seller Indemnified Parties after the Settlement to the extent resulting from
(i)
subject to Section 21, the breach by Buyer of any of its covenants, obligations,
representations and/or warranties under this Agreement which expressly survive
the Settlement, or (ii) the operation of the Hotels by Buyer after the
Settlement Date, except to the extent that any of the foregoing are caused
by
the Seller Indemnified Parties.
(c) The
provisions of this Section 13(a)(i) and 13(b)(i) shall survive Settlement until
the Termination Date, subject to the provisions of Section 21. Notwithstanding
anything to the contrary contained in this Agreement, the remaining provisions
of Section 13(a) and 13(b) shall survive both the Settlement Date and the
Termination Date.
14.
Default.
(a) If
Buyer’s representations and warranties contained herein are false or misleading
in any material respect or if Buyer defaults in performing any of its material
obligations hereunder and Buyer does not cure such default within five (5)
days
of receipt of notice from Seller of such default, then Seller shall have the
right, as its sole and exclusive remedy, to terminate this Agreement and to
be
paid the Deposit and all interest earned thereon as liquidated damages for
such
breach. Notwithstanding the foregoing, if Seller elects to terminate this
Agreement as a result of Buyer’s material default and Buyer refuses to give the
Title Company authorization to release the Deposit to Seller and a court of
competent jurisdiction determines that Seller properly terminated the Agreement
of Sale, Seller shall be entitled to collect from Buyer, in addition to the
Deposit, Seller’s actual damages suffered or incurred directly as a result of
Buyer’s refusal to authorize the release of the Deposit, including, without
limitation, legal costs as set forth in Section 14(c) below.
(b) If
Seller’s representations and warranties contained herein are false or misleading
in any material respect or if Seller shall fail or refuse to complete Settlement
for reasons other than Buyer's default or a failure of a condition precedent
to
Settlement or if Seller defaults in performing any of its material obligations
hereunder and Seller does not cure such default within five (5) days of receipt
of notice from Buyer of such default, Buyer shall have the right, as its sole
and exclusive remedy, to either seek specific performance of this Agreement
or
to terminate this Agreement and recover the Deposit and interest earned thereon.
(c) In
any
litigation brought by the parties to enforce their respective remedies under
Sections 14(a) or 14(b) above, the prevailing party in such litigation shall
be
entitled to recover its reasonable legal fees from the non-prevailing party
as
part of the relief granted in such action.
27
(d) Tender
at
the time of Settlement of an executed Deed by Seller and the balance of the
Purchase Price by Buyer are hereby mutually waived, but nothing herein contained
shall be construed as to relieve Seller from the obligation to deliver the
Deeds
or to relieve Buyer from the concurrent obligation to pay the balance of the
Purchase Price.
15.
Notices. In addition to the provisions of Section 10(b) above, all
notices to be given to Seller and/or to Buyer shall be mailed by registered
or
certified mail, return receipt requested or an overnight service with receipt,
to the addresses set forth in the preamble to this Agreement. All notices to
Seller shall be copied to Seller’s counsel, Xxxx X. Xxxxxx, Esquire, Sirlin
Xxxxxxxx & Lesser, P.C., 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000; Telephone: 000-000-0000; Facsimile: 215-864-9669 and to
Buyer’s counsel, Lok Mohapatra, Esquire, Shah & Xxxxx, LLP, Penn Mutual
Towers, 000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, XX 00000; Telephone:
000-000-0000; Facsimile: 000-000-0000. Any notice required hereunder may be
given on behalf of a party by that party’s legal counsel. Any notice shall be
deemed received when actually received or refused by the party to whom such
notice was directed.
16.
Status
of Escrow Holder.
It is
expressly understood, covenanted and agreed that:
(a) The
duties of Escrow Holder are only as herein specifically provided, and are purely
ministerial in nature, and Escrow Holder shall incur no liability whatever
except for willful misconduct or gross negligence, as long as Escrow Holder
has
acted in good faith.
(b) Seller
and Buyer each hereby release and indemnify Escrow Holder from and against
any
act done or omitted to be done by Escrow Holder in good faith in the performance
of its duties hereunder, except to the extent such act constitutes willful
misconduct or gross negligence.
(c) Escrow
Holder is acting as a stakeholder only with respect to the Deposit. If there
is
any dispute as to whether Escrow Holder is obligated to deliver the Deposit
or
as to whom the Deposit is to be delivered, Escrow Holder shall not be required
to make any delivery, but in such event Escrow Holder may hold the same until
receipt by Escrow Holder of an authorization in writing, signed by all of the
parties having any interest in such dispute, directing the disposition of the
Deposit and any interest accrued thereon or until the final determination of
the
rights of the parties in an appropriate proceeding. If such written
authorization is not given, or proceedings for such determination are not begun
within thirty (30) days after Settlement was to have occurred, Escrow Holder
may, but is not required to, bring an appropriate action or proceeding for
leave
to deposit the Deposit in court pending such determination. Escrow Holder shall
be reimbursed for all costs and expenses of such action or proceeding by Seller
and Buyer including, without limitation, reasonable attorneys' fees and
disbursements. Upon making delivery of the Deposit in the manner provided in
this Agreement, Escrow Holder shall have no further liability hereunder or
to
Buyer or Seller.
28
17. Broker.
Buyer
and Seller each represent to the other that they have not dealt with any broker,
agent or other finder in connection with the sale of the Property and agree
to
indemnify the other against any claim for a commission brought by any other
broker, agent or other finder claiming to have worked for the respective party.
18. Entire
Agreement.
This
Agreement sets forth all the agreements, promises, warranties, representations,
understandings and promises between the parties hereto, and the parties are
not
bound by any agreements, undertakings or conditions except as expressly set
forth herein. All additions, variations or modifications to this Agreement
shall
be void and ineffective unless in writing and signed by the
parties.
19. Assignment;
Successors and Assigns.
Buyer
shall have the right to assign its right to take title to the Property to an
entity in which Buyer is the direct or indirect owner of a majority of the
ownership interests. In the event of any permitted assignment, Buyer and the
assignee shall remain jointly and severally liable for the performance of all
of
Buyer’s obligations under this Agreement. This Agreement shall extend to, be
binding upon, and inure to the benefit of the heirs, executors, administrators
and successors of the parties hereto.
20. Governing
Law.
This
Agreement shall be construed and interpreted in accordance with the laws of
the
Commonwealth of Pennsylvania.
21. Merger.
The
representations and warranties set forth in this Agreement shall survive
Settlement until the one hundred eightieth (180th)
day
following the expiration or sooner termination of the Management Agreement
(the
“Termination Date”). All of the covenants and agreements of the Seller and the
Buyer made in, or pursuant to, this Agreement that expressly survive Settlement
shall survive until the Termination Date, except as otherwise expressly provided
in this Agreement. On the Termination Date, all representations, warranties,
covenants and agreements that are to terminate on that date shall terminate
unless either party shall have given the other party written notice that such
party has a claim for a breach of a specific representation, warranty, covenant
or agreement specified in such notice (the “Specified Claim”), in which case the
party claiming such Specified Claim shall have one (1) year to bring suit
against the other party on account of such Specified Claim. Except for the
representations, warranties, covenants and agreements that survive Settlement
pursuant to this Section 21, all other representations, warranties, covenants
and agreements shall merge into the Deeds or any other document or instrument
executed and delivered in connection herewith.
22. No
Recording.
This
Agreement shall not be recorded in any governmental recording office without
the
express written consent of Seller.
23. Tax
Deferred Exchange.
Buyer
understands that Seller may desire to exchange the Real Property for other
property of like kind and qualifying use within the meaning of Section 1031
of
the Internal Revenue Code. Towards that end, Buyer hereby grants Seller the
right to assign its rights, but not its obligations, under this Agreement to
a
qualified intermediary as provided in Treasury Regulation Section
1.1031(k)-1(g)(4) at any time prior to Settlement. Buyer agrees to cooperate
with Seller to facilitate the like kind exchange as long as Buyer shall not
incur any additional liabilities, costs, or expenses as a result of such
cooperation and, in addition, Buyer shall not be required to adversely change
any of the terms and conditions of this Agreement, nor to take title to, nor
enter into an acquisition agreement for any other property.
29
24. No
Partnership.
This
Agreement does not and shall not be construed to create a partnership, joint
venture or any other relationship between the parties hereto except the
relationship of Seller and Buyer specifically established hereby.
25. Counterparts. To
facilitate execution, this Agreement may be executed in as many counterparts
as
may be required. It shall not be necessary that the signature on behalf of
both
parties hereto appear on each counterpart hereof. All counterparts hereof shall
collectively constitute a single agreement.
26. Seller.
Buyer
acknowledges that the Property is not owned jointly by each of the parties
comprising Seller, but that certain portions of the Property are owned by
Xxxxxxxx Xxxxxxxx, other portions by Langhorne Courtyard, Inc., other portions
by Mt. Laurel FFI, Inc. and other portions by Bethlehem FFI, Inc. Any
representation, warranty or covenant made by “Seller” with respect to the
“Property” or the “Real Property” shall be deemed to have been made, and shall
be required to be performed only, by the party owning such Property or Real
Property with respect to the individual portions of the Property that each
person or entity owns itself and not with respect to the individual portions
of
the Property that the other person or entities owns. For example, and without
limiting the generality of the foregoing, Xxxxxxxx Xxxxxxxx shall not be liable
for any breach of a representation, warranty or covenant made by Langhorne
Courtyard, Inc. with respect to the portion of the Property owned individually
by Langhorne Courtyard, Inc.
27. Schedules.
Buyer
and Seller shall use their best efforts to agree on the Schedules to be attached
to this Agreement no later than October 28, 2005. If the parties have not agreed
to the Schedules by 5:00 p.m. on October 28, 2005, either party may terminate
this Agreement at any time until the parties have agreed on the Schedules.
[Signature
Page Follows]
30
IN
WITNESS WHEREOF, the parties hereto have caused these presents to be duly
executed and their corporate seal to be duly attached by their proper officials
thereunto duly authorized, the day and year first above written.
SELLER:
|
||||
Witness
|
XXXXXXXX
XXXXXXXX
|
|||
LANGHORNE
COURTYARD, INC.
|
||||
By:
|
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Witness
|
XXXXXXXX
XXXXXXXX, President
|
|||
MT.
LAUREL FFI, INC.
|
||||
By:
|
||||
Witness
|
XXXXXXXX
XXXXXXXX, President
|
|||
BETHLEHEM
FFI, INC.
|
||||
By:
|
||||
Witness
|
XXXXXXXX
XXXXXXXX, President
|
|||
BUYER:
|
||||
By:
|
||||
Witness
|
Name:
|
|||
Title:
|
31
The
undersigned is joining in this Agreement for the sole purpose of agreeing to
be
bound by the provisions of this Agreement insofar as such provisions relate
to
the duties of Escrow Holder and the holding and distribution of the
Deposit.
[TITLE
COMPANY]
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By:
|
32