EXHIBIT 10.1
CONTRIBUTION AGREEMENT
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THIS CONTRIBUTION AGREEMENT, dated as of the ___ day of ________ 1999,
between SHREE ASSOCIATES ("Shree"), JSK II ASSOCIATES ("JSK II"), DEVI
ASSOCIATES (Devi"), XXXXXXX ASSOCIATES ("Xxxxxxx"), KUNJ ASSOCIATES ("Kunj"),
SHANTI III ASSOCIATES ("Shanti III"), all Pennsylvania limited partnerships,
XXXX X. XXXX ("Xxxx"), XXXXX X. XXXXXX ("Xxxxxx"), XXXXXX X. XXXXX ("Patni")AND
XXXXXXXXXXX XXXXXXXXXXXX, LTD., a Pennsylvania corporation ("SEL") (individually
and collectively the "Contributor"), and HERSHA HOSPITALITY LIMITED PARTNERSHIP,
a Virginia limited partnership and/or its assignee (the "Acquiror"), provides:
ARTICLE 1
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DEFINITIONS; RULES OF CONSTRUCTION
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1.1 Definitions. The following terms shall have the indicated meanings:
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"Act of Bankruptcy" shall mean if a party hereto or any general
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partner thereof shall (a) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (b) admit in writing its
inability to pay its debts as they become due, (c) make a general assignment for
the benefit of its creditors, (d) file a voluntary petition or commence a
voluntary case or proceeding under the Federal Bankruptcy Code (as now or
hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
(g) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case or proceeding
under the Federal Bankruptcy Code (as now or hereafter in effect), or (h) take
any corporate or partnership action for the purpose of effecting any of the
foregoing; or if a proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner thereof, in any
court of competent jurisdiction seeking (1) the liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of debts, of such
party or general partner, (2) the appointment of a receiver, custodian, trustee
or liquidator or such party or general partner or all or any substantial part of
its assets, or (3) other similar relief under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
and such proceeding or case shall continue undismissed; or an order (including
an order for relief entered in an involuntary case under the Federal Bankruptcy
Code, as now or hereafter in effect) judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in effect, for a
period of 60 consecutive days.
"Shree Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Shree assigns and the Acquiror
assumes the Shree Interest.
"JSK II Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby JSK assigns and the Acquiror assumes
the JSK II Interest.
"Devi Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Devi assigns and the Acquiror
assumes the Devi Interest.
"Xxxxxxx Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Xxxxxxx assigns and the Acquiror
assumes the Xxxxxxx Interest.
"Kunj Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Kunj assigns and the Acquiror
assumes the Kunj Interest.
"Shanti III Assignment and Assumption Agreement" shall mean that
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certain assignment and assumption agreement whereby Shanti assigns and the
Acquiror assumes the Shanti III Interest.
"Shah Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Shah assigns and the Acquiror
assumes the Shah Interest.
"Desfor Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Desfor assigns and the Acquiror
assumes the Desfor Interest.
"Patni Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby Patni assigns and the Acquiror
assumes the Patni Interest.
"SEL Assignment and Assumption Agreement" shall mean that certain
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assignment and assumption agreement whereby SEL assigns and the Acquiror assumes
the SEL Interest.
"Assignment and Assumption Agreements" shall mean the Shree Assignment
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and Assumption Agreement, JSK II Assignment and Assumption Agreement, the Devi
Assignment and Assumption Agreement, the Xxxxxxx Assignment and Assumption
Agreement, the Kunj Assignment and Assumption Agreement, the Shanti III
Assignment and Assumption Agreement, the Shah Assignment and Assumption
Agreement, the Desfor Assignment and Assumption Agreement, the Patni Assignment
and Assumption Agreement and the SEL Assignment and Assumption Agreement.
"Authorizations" shall mean all licenses, permits and approvals
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required by any governmental or quasi-governmental agency, body or officer for
the ownership, operation and use of the Property or any part thereof.
"Xxxx of Sale - Personal Property" shall mean that certain xxxx of
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sale conveying title to the Tangible Personal Property, Intangible Personal
Property and the Reservation System from the Contributor to the Acquiror's
property manager, lessee or designee.
"Closing" shall mean the closing of the contribution and acquisition
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of the Property.
"Closing Date" shall mean the date on which the Closing occurs.
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"Consideration" shall mean Five Million and Five Hundred Thousand
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Dollars($5,500,000).
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"Contributor's Financial Information" shall mean that certain
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financial information relative to the Contributor and the Property, including
income and expense statements for the Property for period commencing on the
August 11, 1999, copies of which are attached in Exhibit D.
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"Deed" shall mean that certain deed conveying title to the Real
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Property with general warranty covenants of title from the Contributor to the
Acquiror, subject only to Permitted Title Exceptions. If there is any
difference between the description of the Land, as shown on Exhibit A atatched
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hereto and the description of the Land as shown on the Survey, the description
of the Land to be contained in the Deed and the description of the Land set
forth in the Title Commitment shall conform to the description shown on the
Survey.
"Deposit" shall mean all amounts, if any, deposited from time to time
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with the Escrow Agent by the Acquiror pursuant to Sections 2.2 and 6.1, plus all
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interest accrued thereon. The Deposit, if any, shall be held by the Escrow Agent
in an interest-bearing account of a federally-insured bank or banks, and shall
be held and disbursed by the Escrow Agent in strict accordance with the terms
and provisions of this Agreement.
"Escrow Agent" shall mean the Sentinel Agency, 0000 Xxxxx Xxxxxx
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Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Telephone: 717/000-0000, Fax:
717/000-0000.
"FIRPTA Certifcate" shall mean the affidavit of the Contributor
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certifying (i) that the Contributor is not a foreign corporation, foreign
partnership, foreign trust, foreign estate or foreign person (as those terms are
defined in the Internal Revenue Code and the Income Tax Regulations) under
Section 1445 of the Internal Revenue Code, (ii) the information to complete IRS
Form 1099S, and (iii) the information to complete any required state income or
recordation tax reporting requirement, prepared by counsel to the Acquiror and
in form and substance reasonably acceptable to the Acquiror.
"Governmental Body" means any federal, state, municipal or other
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governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
"Guest Ledger" shall mean that certain guest ledger dated as of
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Closing Date, certified by the Contributor, a copy of which is attached hereto
as Exhibit C. The Guest Ledger shall be updated and recertified as of the
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Closing Date.
"Hotel" shall mean the hotel and related amenities located on the
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Land.
"Improvements" shall mean the Hotel and all other buildings,
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improvements, fixtures and other items of real estate located on the Land.
"Shree Interest" shall mean all right, title and interest of Shree in
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the Partnership, consisting of a 2% limited partnership interest in the
Partnership.
"JSK II Interest" shall mean all right, title and interest of JSKII in
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the Partnership, consisting of a 15% limited partnership interest in the
Partnership.
"Devi Interest" shall mean all right, title and interest of Devi in
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the Partnership, consisting of a 2% limited partnership interest in the
Partnership.
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"Xxxxxxx Interest" shall mean all right, title and interest of Xxxxxxx
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in the Partnership, consisting of a 10% limited partnership interest in the
Partnership.
"Kunj Interest" shall mean all right, title and interest of Kunj in
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the Partnership, consisting of a 7% limited partnership interest in the
Partnership.
"Shanti III Interest" shall mean all right, title and interest of
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Shanti III in the Partnership, consisting of a 15% limited partnership interest
in the Partnership.
"Shah Interest" shall mean all right, title and interest of Shah in
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the Partnership, consisting of a 15% limited partnership interest in the
Partnership.
"Desfor Interest" shall mean all right, title and interest of Desfor
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in the Partnership, consisting of a 3% limited partnership interest in the
Partnership.
"Patni Interest" shall mean all right, title and interest of Patni in
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the Partnership, consisting of a 30% limited partnership interest in the
Partnership.
"SEL Interest" shall mean all right, title and interest of SEL in the
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Partnership, consisting of a 1% general partnership interest in the Partnership.
"Intangible Personal Property" shall mean all intangible personal
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property owned or possessed by the Contributor and used in connection with the
ownership, operation, leasing, occupancy or maintenance of the Property,
including, without limitation, the right to use any trade name associated with
the Real Property and all variations thereof, all of the Leases and any future
leases of space in the Property, all Operating Agreements, Authorizations,
escrow accounts, insurance policies, general intangibles, business records,
plans and specifications, surveys and title insurance polices pertaining to the
Real Property, the Tangible Personal Property and intangible personal property,
all licenses, permits and approvals with respect to the construction, ownership,
operation, leasing, occupancy or maintenance of the Property and any unpaid
award for taking by condemnation or any damage to the Land by reason of a change
of grade or location of or access to any street or highway, and the share of the
Tray Ledger determined under Section 6.5, but excluding (i) any of the aforesaid
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rights the Acquiror elects not to acquire and (ii) the Contributor's cash on
hand, in bank accounts and invested with financial institutions, and (iii) the
accounts receivable except for the above described share of the Tray Ledger.
"Interests" shall mean the Shree Interest, JSK II Interest, the Devi
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Interest, the Xxxxxxx Interest, the Kunj Interest, the Shanti III Interest, the
Shah Interest, the Desfor Interest, and the SEL Interest.
"Inventory" shall mean all "inventories of merchandise" and
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"inventories of supplies", as such terms are defined in the Uniform System of
Accounts for Hotels [8th Revised Edition, 1986] as published by the Hotel
Association of New York City, Inc., as revised, and similar consumable supplies.
"Land" shall mean that certain parcel of real estate lying and being
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located at 144-44 153rd Lane, Springfield Gardens, New York, Queens County, New
York, more commonly known
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as the JFK Comfor Inn, as more particularly described on Exhibit A attached
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hereto, together with all easements, rights, privileges, remainders, reversions
and appurtenances thereunto belonging or in any way appertaining, and all of the
estate, right, title, interest, claim or demand whatsoever of the Contributor
therein, in the streets and ways adjacent thereto and in the beds thereof,
either at law or in equity, in possession or expectancy, now or hereafter
acquired.
"Leases" shall mean all of the leases, if any, now in effect with
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respect to the Property or any portion thereof, under which the Contributor is
either a landlord or tenant, and all addenda, modifications or amendments
thereto, certified true copies of which have been delivered by the Contributor
to the Acquiror.
"Operating Agreements" shall mean the management agreements, service
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contracts and other agreements, if any, in effect with respect to the
construction, ownership, operation, leasing, occupancy or maintenance of the
Property. All of the Operating Agreements in force and effect as of the date
hereof are listed on Exhibit B attached hereto.
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"Organizational Documents" shall mean the current partnership
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agreement and certificate of limited partnership of each of the limited
partnership Contributors, true and correct copies of which are attached hereto
as Exhibits F and G and Articles of Incorporation and Bylaws of SEL, true and
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correct copies of which are attached hereto as Exhibits O and P.
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"Shree's Organizational Documents" shall mean the current partnership
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agreement and certificate of limited partnership of Shree, true and correct
copies of which are attached hereto as Exhibits F and G.
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"JSK II's Organizational Documents" shall mean the current partnership
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agreement and certificate of limited partnership of JSK, true and correct copies
of which are attached hereto as Exhibits F and G.
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"Devi's Organizational Documents" shall mean the current partnership
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agreement and certificate of limited partnership of Devi, true and correct
copies of which are attached hereto as Exhibits F and G.
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"Xxxxxxx'x Organizational Documents" shall mean the current
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partnership agreement and certificate of limited partnership of Xxxxxxx, true
and correct copies of which are attached hereto as Exhibits F and G.
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"Kunj's Organizational Documents" shall mean the current partnership
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agreement and certificate of limited partnership of Kunj, true and correct
copies of which are attached hereto as Exhibits F and G.
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"Shanti III's Organizational Documents" shall mean the current
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partnership agreement and certificate of limited partnership of Shanti, true and
correct copies of which are attached hereto as Exhibits F and G.
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"SEL's Organizational Documents" shall mean the current Articles of
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Incorporation and Bylaws of SEL, true and correct copies of which are attached
hereto as Exhibits O and P.
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"Owner's Title Policy" shall mean an owner's policy of title insurance
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(ALTA Form B-1970) issued to the Acquiror by the Title Company, pursuant to
which the Title Company insures the Acquiror's ownership of fee simple title to
the Real Property (including the marketability thereof), subject only to
Permitted Title Exceptions (which shall exclude all preprinted, standard,
general or similar exceptions), and which provides such affirmative coverages
and endorsements reasonably requested by the Acquiror. The Owner's Title Policy
shall insure the Acquiror in the amount of the Purchase Price and shall be
acceptable in form and substance to the Acquiror. The description of the Land in
the Owner's Title Policy shall be by courses and distances and shall be
identical to the description shown on the Survey.
"Partnership" shall mean 3744 Associates, a Pennsylvania limited
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partnership that owns as its sole assets hotel improvements and land located in
Xxxxxxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxx.
"Permitted Title Exceptions" shall mean those exceptions to title to
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the Real Property set forth in the Title Commitment (a) which do not require or
secure the payment of money and (b) to which Acquiror makes no objection under
Section 2.3(d).
"Property" shall mean collectively the Real Property, the Inventory,
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the Tangible Personal Property and the Intangible Personal Property.
"Real Property" shall mean the Land and the Improvements.
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"Reservation System" shall mean the Contributor's Reservation Terminal
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and Reservation System equipment and software, if any.
"Study Period" shall mean the period commencing at 9:00 a.m. on the
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date Contributor certifies that it has delivered all of the items required by
Section 2.3(b), and continuing through 5:00 p.m. on the date that is thirty (30)
days from such date if applicable. The time periods herein referred to shall
mean the time periods a in effect, from time to time, at the place where the
Real Property is located:
"Survey" shall mean the survey to be delivered pursuant to Section
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5.4.
"Tangible Personal Property" shall mean the Inventory and all other
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items of personal property owned by the Contributor, used in connection with the
Property, including, without limitation, those items listed on Exhibit E
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hereto.
"Title Commitment" shall mean the commitment by the Title Company to
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issue the owner's Title Policy.
"Title Company" shall mean a title insurance company selected by the
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Acquiror.
"Tray Ledger" shall mean the final night's room revenue (revenue from
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rooms occupied as of 12:01 a.m. on the Closing Date, exclusive of food,
beverage, telephone and "similar charges which accrue prior to Closing),
including any sales taxes, room taxes or other taxes thereon.
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"Utilities" shall mean public sanitary and storm sewers, natural gas,
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telephone, public water facilities, electrical facilities, cable television
facilities and all other utility facilities and services necessary for the
operation and occupancy of the Property.
1.2 Rules of Construction. The following rules shall apply to the
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construction and interpretation of this Agreement:
(a) Singular words shall connote the plural number as well as the
singular and vice versa, and the masculine shall include the feminine and the
neuter.
(b) All references herein to particular articles, sections or
subsections, subsections or clauses are references to articles, sections,
subsections or clauses of this Agreement.
(c) The headings contained herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(d) Each party hereto and/or its counsel have reviewed and revised (or
requested revisions of) this Agreement, and therefore any usual rules of
construction requiring that ambiguities are to be resolved against a particular
party shall not be applicable in the construction and interpretation of this
Agreement or any exhibits hereto or amendments hereof.
ARTICLE 2
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ACQUISITION AND CONTRIBUTION; ACCESS; STUDY PERIOD;
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PAYMENT OF CONSIDERATION
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2.1 Acquisition and Contribution. The Contributor agrees to contribute
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and the Acquiror agrees to acquire the Property for the Consideraation and in
accordance with the other terms and conditions set forth herein.
2.2 Deposit. Intentionally Ommitted.
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2.3 Study Period. Intentionally Ommitted.
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2.4 Inspection of Books and Records; Access. Intentioanlly Ommitted.
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2.5 Payment of the Consideration. The consideration shall be paid to the
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Contributor in the following manner:
(a) The Acquiror shall receive a credit against the Consideration in an
amount equal to the Contributor's closing costs assumed and paid for by the
Acquiror pursuant to Section 6.4 hereof.
(b) The Acquiror shall receive a credit against the Consideration in an
amount equal to the outstanding balance (principal, interest, fees and the
like), as of the date of Closing, of the existing mortgage loan encumbering the
property as such balance is evidenced by a letter from the lender, which loan
the Acquiror shall take subject to or, if requested, assume.
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(c) The Acquiror shall pay the balance of the Consideration, if any,
as adjusted by the prorations pursuant to Section 6.5 hereof, in the form of
units of limited partnership interest in the Acquiror (the "LP Units") or in the
lawful money of the United States or in any combination thereof as acceptable to
the Contributor.
The parties agree that the transfer of the assets to the Acquiror
pursuant to this Agreement shall be treated for federal income tax purposes as a
contribution of such assets solely in exchange for a partnership interest in
Acquiror that qualifies as a tax-free contribution under Section 721 of the
Internal revenue Code of 1986, as amended.
2.6 Allocation of Consideration. The parties agree that the
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Consideration shall be allocated among the various components of the Property in
the manner indicated by the Acquiror at Closing.
2.7 Consideration Contingency.
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The Contributor shall value the Hotel on December 31, 2001. The value
of the Hotel shall be computed by applying a 12% capitalization rate to the
audited trailing 12 months net operating income, adjusted for a 4% of revenue
management fee and a 4% of revenue furniture, fixture and equipment reserve.
If the then current value of the Hotel exceeds the consideration paid
by Acquiror hereunder, the Acquiror will issue additional Partnership Units at
$6.00 per Unit or in the lawful money of the United States equal to the
difference between the then current value and the consideration paid hereunder
and all distributions paid on those units since Closing Date.
If the then current value of the Hotel is less than the Consideration
paid by the Acquiror hereunder, the Contributor will return to the Acquirer
Partnership Units at $6.00 per Unit or any lawful money of the United States, if
any, equal to the difference between the then current value of the Hotel and the
Consideration paid hereunder and all distributions paid on those units since the
Closing Date.
2.8 Confidentiality. Except as hereinafter provided, from and after
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the execution of this Agreement, the Acquiror and the Contributor shall keep the
terms, conditions and provisions of this Agreement confidential and neither
shall make any public announcements hereof unless the other first approves of
same in writing, nor shall either disclose the terms, conditions and provisions
hereof, except to persons who "need to know", such as their respective
attorneys, accountants, engineers, surveyors, financiers and bankers.
Notwithstanding the foregoing, it is acknowledged that the general partner of
the Acquiror has elected to be a real estate investment trust ("REIT") and that
the REIT has sold shares and may seek to sell additional shares to the general
public and that in connection therewith, the Acquiror will have the absolute and
unbridled right to market such securities and prepare and file all necessary or
reasonably required registration statements, disclosure statements, and other
papers, documents and instruments necessary or reasonably required in the
Acquiror's judgment and that of its attorneys and underwriters with respect to
the REIT's shares with the U.S. Securities and Exchange Commission and/or
similar state authorities and to cause same to become effective and to disclose
therein and thus to its underwriters, to the U.S. Securities and Exchange
Commission and/or to similar state authorities and to the public all of the
terms, conditions and provisions of this Agreement.
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ARTICLE 3
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CONTRIBUTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
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To induce the Acquiror to enter into this Agreement and to Acquisition the
Property, and to pay the Purchase Price therefor, the Contributor hereby makes
the following representations, warranties and covenants with respect to the
Property, upon each of which the Contributor acknowledges and agrees that the
Acquiror is entitled to rely and has relied:
3.1 Organization and Power. The Contributor is an entity duly formed and
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validly existing and in good standing under the laws of the State of its
organization and has all requisite powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations hereunder and under any document
or instrument required to be executed and delivered on behalf of the Contributor
/hereunder.
3.2 Authorization and Execution. This Agreement has been duly authorized
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by all necessary action on the part of the Contributor, has been duly executed
and delivered by the Contributor, constitutes the valid and binding agreement of
the Contributor and is enforceable in accordance with its terms.
3.3 Noncontravention. The execution and delivery of, and the performance
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by the Contributor of its obligations under this Agreement do not and will not
contravene, or constitute a default under, any provision of applicable Law or
regulation, the Contributor's organizational documents or any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Contributor, or result in the creation of any lien or other encumbrance on any
asset of the Contributor. There are no outstanding agreements (written or oral)
pursuant to which the Contributor (or any predecessor to or representative of
the Contributor) has agreed to sell or has granted an option to Acquisition the
Property (or any part thereof).
3.4 No Special Taxes. The Contributor has no knowledge of, nor has it
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received any notice of, any special taxes or assessments relating to the
Property or any part thereof or any planned public improvements that may result
in a special tax or assessment against the Property.
3.5 Compliance with Existing Laws. The Contributor possesses all
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Authorizations, each of which is valid and in full force and effect, and no
provision, condition or limitation of any of the Authorizations has been
breached or violated. The Contributor has not represented or failed to disclose
any relevant fact in obtaining all Authorizations, and the Contributor has no
knowledge of any change in the circumstances under which those Authorizations
were obtained that could result in their termination, suspension, modification
or limitation. The current use and occupancy of the Property as a hotel are
permitted as a principal use under all laws applicable thereto without the
necessity of resort to any grandfathered or nonconforming use status, or any
special use permit, special exception or other special permit, permission or
consent. The Contributor has no knowledge, nor has it received notice within the
past three years, of any existing or threatened violation of any provision of
any applicable building, zoning, subdivision, environmental or other
governmental ordinance, resolution, statute, rule, order or regulation,
including but not limited to those of environmental agencies or insurance boards
of underwriters, with respect to the ownership, operation, use, maintenance or
condition of the Property or any part thereof, or requiring any repairs or
alterations other than those that have been made prior to the date hereof.
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3.6 Personal Property. All of the Tangible Personal Property and
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Intangible Personal Property are owned and will be conveyed by the Contributor
free and clear of all liens and encumbrances. The Contributor has good,
merchantable title thereto and the right to convey same in accordance with the
terms of this Agreement .
3.7 Title and Survey Matters. The Contributor is the sole owner of full
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legal, equitable and beneficial title to the Property and no consent of or
joinder by any other person is required for the Contributor to convey the full
legal, equitable and beneficial title to and ownership of the Property to the
Acquiror in accordance with this Agreement. Except to the extent such
obligations may be inconsistent herewith, the Contributor shall perform all of
its obligations under all documents affecting title to all or any part of the
Property and shall not permit or allow to continue any defaults thereunder. The
Contributor shall not, after the date of this Agreement, subject the Property to
any liens, encumbrances, covenants, conditions, restrictions, easements or other
title matters or seek any zoning or other land use changes or take any other
action which may affect or modify the status of title to or the permitted uses
of the Property without the Acquiror's prior express written consent.
3.8 Status off Leases. Each of the Leases is valid and in full force and
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effect, have not been further modified or amended and is assignable to Acquiror
without the consent of the other party thereto. There are no defaults under any
of the Leases by the Contributor or, to the best of the Contributor's knowledge,
by the other party thereunder, and no fact or circumstance has occurred that, by
itself or with the giving of notice or the passage of time or both, would
constitute such a default by the Contributor or, to the best of the
Contributor's knowledge, by the other party thereunder. The Contributor has the
sole right to collect the rent under the Leases and neither such right nor any
of the Leases has been assigned, pledged, hypothecated or otherwise encumbered.
From the date hereof through and including the date of Closing, the Contributor
shall not modify any of the Leases in any material manner. The Contributor shall
perform all of its obligations under the Leases from the date hereof through and
including the date of Closing.
3.9 Operating Agreements and Other Agreements. Each of the Operating
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Agreements may be terminated by the Contributor or the Acquiror upon not more
than 30 days' prior written notice and without the payment of any penalty, fee,
premium or other amount. The Contributor has performed all of its obligations
under each of the Operating Agreements and no fact or circumstance has occurred
which, by itself or with the passage of time or the giving of notice or both,
would constitute a default under any of the Operating Agreements. The
Contributor shall not enter into any new management agreement, maintenance or
repair contract, supply contract, lease (as lessor or lessee) or other
agreements with respect to the Property, nor shall the Contributor enter into
any agreements modifying the Operating Agreements, unless (a) any such agreement
or modification will not bind the Acquiror or the Property after the Closing
Date or (b) the Contributor has obtained the express prior written consent of
the Acquiror to such agreement or modification. The Contributor agrees to cancel
and terminate all of the Operating Agreements as of the Closing unless the
Acquiror requests in writing prior to Closing that one or more remain in effect
after Closing. The Acquiror hereby agrees to assume all other agreements and
non-operating agreements to which the Contributor and /or 2844 Associates, a
Pennsylvania limited partnership, is a party.
3.10 Warranties and Guaranties. The Contributor shall not before or after
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Closing, release or modify any warranties or guarantees, if any, of
manufacturers, suppliers and installers relating to
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Improvements and the Tangible Personal Property and Intangible Personal Property
or any part thereof, except with the prior written consent of the Acquiror.
3.11 Insurance. All of the Contributor's insurance policies are valid
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and in full force and effect, all premiums for such policies were paid when due
and all future premiums for such policies (and any replacements thereof) shall
be paid by the Contributor on or before the due date therefor. The Contributor
shall pay all premiums on, and shall not- cancel or voluntarily allow to expire,
any of the Contributor's insurance policies 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 Contributor
shall name the Acquiror as an additional insured on each of the Contributor's
insurance's policies. The Contributor agrees to transfer any such policies as of
the Closing Date upon the written request of the Acquiror and the premiums on
any of such policies that the Acquiror elects to have assigned to it shall be
allocated between the Contributor and the Acquiror as of the Closing Date.
3.12 Condemnation Proceedings; Roadways. The Contributor has not received
----------------------------------
notice of any condemnation or eminent domain proceeding pending or threatened
against the Property or any part thereof. The Contributor has no knowledge of
any change or proposed change in the route, grade or width of, or otherwise
affecting, any street or road adjacent to or serving the Real Property.
3.13 Litigation. There is no action, suit or proceeding pending or known to
----------
be threatened against or affecting the Contributor or any principal, subsidiary
or affiliate of the Contributor in any court, before any arbitrator or before or
by any Governmental Body which (a) in any manner raises any question affecting
the validity or enforceability of this Agreement or any other agreement or
instrument to which the Contributor is a party or by which it is bound and that
is or is to be used in connection with, or is contemplated by, this Agreement,
(b) could materially and adversely affect the business, financial position or
results of operations of the Contributor or any principal, subsidiary or
affiliate of the Contributor, (c) could adversely affect the ability of the
Contributor to perform its obligations hereunder, or under any document to be
delivered pursuant hereto, (d) could create a lien on the Property, any part
thereof or any interest therein, (e) the subject matter of which concerns any
past or present employee of the Contributor or its managing agent or (f) could
otherwise adversely affect the Property, any part thereof or any interest
therein or the use, operation, condition or occupancy thereof.
3.14 Labor and Employment Agreements. There are no labor disputes pending
-------------------------------
or, to the best of the Contributor's knowledge, threatened as to the operation
or maintenance of the Property or any part thereof. The Contributor is not a
party to any union or other collective bargaining agreement with employees
employed in connection with the ownership, operation or maintenance of the
Property. The Contributor is not a party to any employment contracts or
agreements, written or oral, with any persons employed with respect to the
Property that will be binding on the Acquiror on or after the Closing. Neither
the Contributor nor its managing agent (if any) will, between the date hereof
and the Closing Date, enter into any new employment contracts or agreements or
hire any new employees that will be binding on the Acquiror on or after the
Closing. The Acquiror will not be obligated to give or pay any amount to any
employee of the Contributor or the Contributor's managing agent. The Acquiror
shall not have any liability under any pension or profit sharing plan that the
Contributor or its managing agent may have established with respect to the
Property or their or its employees.
11
3.15 Financial Information. All of the Contributor's Financial Information
---------------------
is correct and complete in all respects and presents accurately the results of
the operations of the Property for the period commencing on the 11/th/ of
August, 1999. Since the date of the last financial statement included in the
Contributor's Financial Information, there has been no material adverse change
in the financial condition or in the operations of the Property. The Contributor
will provide access by Acquiror's representatives, to all financial and other
information relating to the Property, and such representatives shall determine
that such information is sufficient to enable them to prepare audited financial
statements in conformity with Regulation S-X of the Securities and Exchange
Commission and any registration statement, report or disclosure statement filed
with and any rule issued by, the Securities and Exchange Commission. The
Contributor will provide a signed representation letter as prescribed by
Generally Accepted Auditing Standards as promulgated by the Aud1ting Standards
Division of the American Institute of Public Accountants which representation is
required to enable an independent public accountant to render an opinion on such
financial statements.
3.16 Organizational Documents. The Contributor's Organizational Documents
------------------------
are in full force and effect and have not been modified or supplemented, and no
fact or circumstance has occurred that, by itself or with the giving of notice
or the passage of time or both, would constitute a default thereunder.
3.17 Excluded Liabilities.
--------------------
(i) The Acquiror is not assuming or undertaking to assume and shall
have no responsibility for any expenses, debts, obligations, liabilities,
claims, demands, fines or penalties, whether fixed or contingent, past, present
or future, or direct for indirect, arising out of or in connection with the
conduct by the Contributor of its business or the ownership and use of the
Property prior to the Closing (the "Excluded Liabilities"), including without
limitation, any of the Excluded Liabilities arising out of or in connection with
the failure by the Contributor to comply with any applicable Environmental Laws
including, without limitation any Environmental Laws regarding pollution
control, underground storage tanks, asbestos or other environmental matters
applicable to the Property.
(ii) The Contributor agrees to defend, indemnify and hold harmless the
Acquiror from and against any of the Excluded Liabilities and any other damages,
losses, costs, expenses, claims or demands (including fines, penalties,
diminution in value of the Property, court costs and reasonable attorneys' fees)
that may be incurred by or imposed on the Acquiror as a result of (i) the
conduct by the Contributor of its business in connection with the Property prior
to the Closing and (ii) any material breach by the Contributor of any
representation or warranty of the Contributor contained herein applicable to the
Property.
3.18 Historical Districts. Neither the Property, nor any portion thereof,
--------------------
is (a) listed, or eligible to be listed, in any national, state or local
register of historic places or areas, or (b) located within any designated
district or area in which the permitted uses of land located therein are
restricted by regulations, rules or laws other than those specified under local
zoning ordinances.
3.19 Brokerage Commission. The Contributor has not engaged the services of,
--------------------
nor is it or will it become liable to, any real estate agent, broker, finder or
any other person or entity for any
12
brokerage or finder's fee, commission or other amount with respect to the
transactions described herein.
3.20 Environmental.
-------------
(i) The Contributor, and any person or entity for whose conduct the
Contributor is liable, has no liability under, has never materially violated,
and is presently in material compliance with, all federal, state and local
environmental or health and safety-related laws, rules, regulations and
ordinances (together, Environmental Laws) applicable to the Property.
(ii) There exist no environmental conditions with respect to the
Property that could or do result in any damage, loss, cost, expense or liability
to or against the Contributor or the Acquiror.
(iii) Other than those hazardous or toxic substances commonly used in
the operation of a hotel, which hazardous or toxic substances are stored in
accordance with all applicable Environmental Laws, the Contributor, and any
other person or entity for whose conduct Contributor is liable, has not
generated, transported, stored, handled or disposed of any hazardous or toxic
substances at the Property, and has no knowledge of any release or threatened
release of any hazardous or toxic substance at the Property or in the vicinity
of the Property.
(iv) No lien has been imposed on the Property by any federal, state
or local governmental agency in connection with the presence at or near the
Property of any hazardous or toxic substance.
(v) The Contributor, and any person or entity for whose conduct the
Contributor is responsible, has not (i) entered into or been the subject of any
order or decree with respect to environmental matters with respect to the
Property, (ii) received notice under the citizen suit provisions of any
Environmental Law in connection with the Property, (iii) received any request
for information, notice, demand letter, administrative inquiry or formal or
informal complaint or claim in respect of any environmental condition relating
to the Property, or (iv) been subject to or threatened with any governmental or
citizen enforcement action with respect to the Property; and the Contributor,
and any other person for whose conduct the Contributor is liable, has no reason
to believe that any of the foregoing will be forthcoming.
(vi) The Contributor has all licenses, permits or approvals, if any,
required for the activities and operations conducted at the Property and for any
past or ongoing alterations or improvements on the Property.
3.21 Sufficiency of Certain Items. The Property contains not less than:
----------------------------
(a) a sufficient amount of kitchen equipment, bar equipment,
refrigeration equipment, silverware, glassware, china, dishes, "small goods",
napkins, tablecloths, paper goods and other such personal property to
efficiently operate each of the restaurants, bars and lounges, located upon or
within the Improvements;
13
(b) a sufficient amount of furniture, furnishings, color television
sets, carpets, drapes, rugs, floor coverings, mattresses, pillows, bedspreads
and the like, to furnish each guest room, so that each such guest room is, in
fact, fully furnished; and
(c) a sufficient amount of towels, washcloths and bed linens, so that
there are two and one-half sets of towels, washcloths and linens for each guest
room (one on the beds, one on the shelves, and one-half in the laundry),
together with a sufficient supply of paper goods' soaps, cleaning supplies and
other such supplies and materials, as are reasonably adequate for the current
operation of the Hotel.
3.22 Operation of Property Prior to Closing. Between the date of this
--------------------------------------
Agreement and the Closing Date, Contributor shall operate the Property in
compliance with all laws and in the same manner in which Contributor operated
the Property prior to the execution of this Agreement, so as to keep the
Property in good condition, reasonable wear and tear excepted, and so as to
maintain the existing caliber of the Hotel operations conducted at the Property
and the reasonable good will of the tenants, the Hotel guests, the employees and
other customers of the Hotel. The Contributor shall continue to use its best
efforts to take guest room reservations and to book functions and meetings and
otherwise to promote the business of the Property in generally the same manner
as the Contributor did prior to the execution of this Agreement. All advance
room bookings and reservations and all meetings and function bookings shall be
booked at rates, prices and charges heretofore customarily charged by the
Contributor for such purposes, and in accordance with Contributor's published
rate schedules. From and after the execution and delivery of this Agreement, the
Contributor shall not (i) make any agreements which shall be binding upon the
Acquiror with respect to the Property, or (ii) reduce or cause to be reduced any
room rents or any other charges over which Contributor has operational control.
Between the date hereof and the Closing Date, the Contributor shall deliver to
the Acquiror monthly reports (or for the partial monthly period up to the
Closing Date) showing the income and expenses of the Hotel and all departments
thereof, together with such periodic information with respect to room
reservations and other bookings, as the Contributor customarily keeps internally
for its own use. The Contributor agrees that it will operate the Property and
the Hotel in accordance with the provisions of this section between the date
hereof and the Closing Date.
3.23 Utilities. All Utilities required for the operation of the Property
---------
either enter the Property through adjoining streets, or they pass through
adjoining land, do so in accordance with valid public easements or private
easements, and all of said Utilities are installed and operating and all
installation and connection charges therefor have been paid in full.
3.24 Curb Cuts. All curb cut street opening permits or licenses required
---------
for vehicular access to and from the Real Property from any adjoining public
street have been obtained and paid for and are in full force and effect. The
Real Property has a right of unrestricted access to a public street.
3.25 Room Furnishings. Each room in the Hotel available for guest rental is
----------------
and at Closing will be furnished in accordance with Licensor's standards for the
Hotel and room type.
3.26 Franchise Agreement. The franchise agreement with respect to the
-------------------
Hotel is, and at Closing will be, valid and in full force and effect, and
Contributor is not and will not be in default with respect thereto (with or
without the giving of any required notice and/or lapse of time).
14
ARTICLE 4
---------
ACQUIROR'S REPRESENTATIONS; WARRANTIES AND COVENANTS
----------------------------------------------------
To induce the Contributor to enter into this Agreement and to contribute
the Property, the Acquiror hereby makes the following representations,
warranties and covenants with respect to the Property, upon each of which the
Acquiror acknowledges and agrees that the Contributor is entitled to rely and
has relied:
4.1 Power. The Acquiror has all powers and all governmental licenses,
-----
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations under this Agreement and any
document or instrument required to be executed and delivered on behalf of the
Acquiror hereunder.
4.2 Execution. This Agreement has been executed and delivered by the
---------
Acquiror, constitutes the valid and binding agreement of the Acquiror and is
enforceable in accordance with its terms.
4.3 Noncontravention. The execution and delivery of and the performance by
----------------
the Acquiror of its obligations hereunder do not and will not contravene, or
constitute a default under, any provisions of applicable law or regulation, or
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Acquiror or result in the creation of any lien or other encumbrance on
any asset of the Acquiror.
4.4 Litigation. There is no action, suit or proceeding, pending or known to
----------
be threatened, against or affecting the Acquiror or any principal, subsidiary or
affiliate of the Acquiror in any court or before any arbitrator or before any
Governmental Body which (a) in any manner raises any question affecting the
validity or enforceability of this Agreement or any other agreement or
instrument to which the Acquiror is a party or by which it is bound and that is
to be used in connection with, or is contemplated by, this Agreement, (b) could
materially and adversely affect the business, financial position or results of
operations of the Acquiror or any principal, subsidiary or affiliate of the
Acquiror, (c) could adversely affect the ability of the Acquiror to perform its
obligations hereunder, or under any document to be delivered pursuant hereto,
(d) could create a lien on the Property, any part thereof or any interest
therein or (e) could adversely affect the Property, any part thereof or any
interest therein or the use, operation, condition or occupancy thereof.
4.5 Bankruptcy. No Act of Bankruptcy has occurred with respect to the
----------
Acquiror.
4.6 Brokerage Commission. The Acquiror has not engaged the services of, nor
--------------------
is it or will it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder's fee, commission or other
amount with respect to the transaction described herein.
ARTICLE 5
---------
CONDITIONS AND ADDITIONAL COVENANTS
-----------------------------------
The Acquiror's obligations hereunder are subject to the satisfaction of the
following conditions precedent and the compliance by the Contributor with the
following covenants:
15
5.1 Contributor's Deliveries. The Contributor shall have delivered to the
------------------------
Acquiror, on or before the Closing Date, all of the documents and other
information required of Contributor pursuant to Section 6.2.
5.2 Representations, Warranties and Covenants; Obligations of Contributor;
----------------------------------------------------------------------
Certificate. All of the Contributor's representations and warranties made in
-----------
this Agreement shall be true and correct as of the Closing Date as if then made,
there shall have occurred no material adverse change in the financial condition
of the Contributor or the physical or financial condition of the Property since
the date hereof, the Contributor shall have performed all of its covenants and
other obligations under this Agreement and the Contributor shall have executed
and delivered to the Acquiror at Closing a Certificate to the foregoing effect.
5.3 Title Matters. Acquiror shall have received from Contributor a copy of
-------------
Contributor's Owner's Title Policy. The Acquiror shall have determined that the
Contributor is the sole owner of good and marketable fee simple title to the
Real Property free and clear of all liens, encumbrances, restrictions,
conditions and agreements except for Permitted Title Exceptions. The Contributor
shall not have taken any action from the date hereof and through and including
the Closing Date that would adversely affect the status of title to the Real
Property. Fee simple title to the Real Property shall be insurable as such by
the Title Company at or below its regularly scheduled rates subject only to
Permitted Title Exceptions.
5.4 Survey. The Acquiror shall have received the most recent Survey of the
------
Land obtained by or in the possession of Contributor. The Survey provided by the
Contributor (or a survey obtained by Acquiror if Contributor's Survey was
prepared more than one year earlier) shall be adequate for the Title Company to
delete any exception for survey in the Owner's Title Policy.
5.5 Condition of Improvements and the Tangible Personal Property. The
------------------------------------------------------------
Improvements and the Tangible Personal Property (including but not limited to
the mechanical systems, plumbing, electrical, wiring, appliances, fixtures,
heating, air conditioning and ventilating equipment, elevators, boilers,
equipment, roofs, structural members and furnaces) shall be in good condition
and working order and shall have no material defects, structural or otherwise,
and there shall be no deferred maintenance with respect to the Real Property,
the Tangible Personal Property or any part thereof, and the Contributor shall
not have diminished the Inventory. The Contributor, at its expense, shall have
maintained the Real Property and the Tangible Personal Property in compliance
with all applicable laws and in at least as good condition as they are in as of
the date hereof, normal wear and tear excepted. The Contributor shall not have
diminished the quality or quantity of maintenance and upkeep services heretofore
provided to the Real Property and the Tangible Personal Property. The
Contributor shall not have removed or caused or permitted to be removed any part
or portion of the Real Property or the Tangible Personal Property unless the
same is replaced, prior to Closing, with similar items of at least equal
quality and acceptable to the Acquiror.
5.6 Utilities. All of the Utilities shall be installed in and operating at
---------
the Property, and service shall be available for the removal of garbage and
other waste from the Property. Between the date hereof and the Closing Date, the
Contributor shall not have received notice of any extraordinary or material
increase or proposed increase in the rates charged for the Utilities from the
rates in effect as of the date hereof.
16
5.7 Land Use. The current use and occupancy of the Property as a hotel
--------
and for hotel-related purposes are permitted as a principal use under all laws
applicable thereto without the necessity of resort to any grandfathered or
permitted nonconforming use status, or any special use permit, special exception
or other special permit, permission or consent.
5.8 Lease Estoppel Certificates. The Acquiror shall have received an
---------------------------
estoppel certificate for each of the Leases, if any, as provided herein and, if
required by the Acquiror's lender, subordination, attornment and nondisturbance
agreements acceptable to such lender, all in form and substance reasonably
acceptable to the Acquiror. The Contributor, at its expense, shall request and
use Contributor's best efforts to obtain a lease estoppel certificate from all
of third parties under all of the Leases prior to Closing Date.
5.9 Franchise. The Acquiror or its designee shall have received, at the
---------
Acquiror's option and expense, an assignment or transfer of any existing
franchise agreement currently applicable to the Hotel or a new franchise
agreement from Choice Hotels International (the "Franchisor"), together with an
estoppel certificate from the existing Franchisor in form and substance
acceptable to the Acquiror, which the Contributor agrees to use its best efforts
to obtain.
5.10 Operational Licenses. Acquiror shall have obtained all permits,
--------------------
licenses, approvals and Authorizations necessary or desirable to operate the
Hotel and all restaurants, bars and lounges presently located in the Hotel,
including, without limitation, liquor licenses or alcoholic beverage licenses.
To that end, the Contributor and the Acquiror shall have cooperated with each
other, and each shall have executed such transfer forms, license applications
and other documents as may be necessary or desirable for Acquiror to obtain such
permits, licenses, approvals and Authorizations.
5.11 Securities Compliance. Contributor shall cooperate with Acquiror to
---------------------
provide all information and execute all documents necessary for Acquiror to
comply with all applicable state and federal securities laws.
5.12 First Right of Refusal. Contributor or any of its officers or
----------------------
affiliates shall have right to acquire, develop, manage, lease, operate, or have
any interest in any hotel or lodging establishment in any location within any
distance from the Property (JFK Comfort Inn). However, the Acquiror shall have
a first right of refusal to acquire such a hotel or lodging establishment within
a fifteen (15) mile radius of the Property during a period of five (5) years
from the Closing Date. This provision shall survive the Closing Date.
Each of the conditions and additional covenants contained in this Section
are intended for the benefit of the Acquiror and may be waived in whole or in
part, by the Acquiror, but only by an instrument in writing signed by the
Acquiror.
ARTICLE 6
--------
CLOSING
-------
6.1 Closing. Closing shall be held at the offices of the Acquiror or its
-------
counsel on August 11, 1999, upon notice from Acquiror to Contributor commencing
at 9:00 AM local time unless otherwise agreed by the Acquiror and the
Contributor. The Acquiror shall have the right, but not the obligation, to
extend the Closing Date, one or more times, but not beyond, 1999, by written
17
notice thereof to the Contributor. Possession of the Property shall be delivered
to the Acquiror at Closing, subject only to Permitted Title Exceptions.
6.2 Contributor's Deliveries.
------------------------
(a) At Closing, the Contributor shall deliver to Acquiror all of
the following instruments, each of which shall have been duly executed and,
where applicable, acknowledged on behalf of the Contributor and shall be dated
as of the Closing Date:
(i) The certificate required by Section 5.2.
-----------
(ii) An Assignment of Leases, if applicable
(iii) Lease Estoppel Certificates, if applicable.
(iv) The FIRPTA Certificate.
(v) The Assignment and Assumption Agreement.
(vi) Settlement Sheet.
(vii) Xxxx of Sale for all Tangible Personal Property.
(viii) Deed.
(ix) Opinion of counsel or other evidence (such as
organization documents including certificates and authorizing resolutions)
satisfactory to Acquiror as to Contributor's authority to enter into and
consummate this Agreement.
(x) Such agreements, affidavits or other documents as
may be required by the Title Company to issue the Owner's Title Policy.
(b) At Closing, the Contributor shall also deliver or cause to
be delivered to the Acquiror the following:
(i) The originals of any Leases or true, correct and
complete copies thereof certified by the Contributor.
(ii) A valid, final and unconditional certificate of
occupancy as to the Real Property issued by the: appropriate governmental
authority.
(iii) If part of the Tangible Personal Property consists
of a motor vehicle titled under state law, a duly executed and delivered
document transferring title pursuant to applicable state law and related
documents.
(iv) True, correct and complete copies of all plans,
specifications, guaranties and warranties, if any, of contractors,
subcontractors, manufacturers, suppliers and installers possessed by the
Contributor and relating to the Improvements and the Tangible Personal Property
and Intangible Personal Property, or any-part thereof.
(v) Copies of all correspondence, files, documents,
records and data relating the operation of the Property for the period
commencing on January1, 1999 until Closing.
(vi) A11 keys for the Property.
18
(vii) A complete list of all advance room reservations,
functions and the like, including all deposits thereon, in reasonable detail
specified by the Acquiror.
(viii) Updated Guest Ledger.
(ix) Any other document, instrument, information or item
reasonably requested by the Acquiror or required hereby.
6.3 Acquiror's Deliveries. At Closing, the Acquiror shall pay, deliver or
---------------------
cause to be delivered to the Contributor, as appropriate, the following:
(a) The Purchase Price in the manner set forth in Section 2.5
hereof.
(b) The Assignment and Assumption Agreement.
(c) Any other document or instrument reasonably requested by the
Contributor or required hereby.
6.4 Closing Costs. The Contributor shall pay (i) all applicable sales and
-------------
use taxes (if any) levied on the transfer of the Tangible or Intangible Personal
Property, (ii) any expenses incurred by or on behalf of the Contributor. The
Acquiror shall pay (i) all Title Company charges, (ii) all of the recording
taxes and fees, (iii) all costs of the transfer of franchise and mortgage
secured on the Property, and (iv) any expenses incurred by or on behalf of the
Acquiror. Each party hereto shall pay its own legal fees and expenses.
6.5 Income and Expense Allocations.
------------------------------
(a) At Closing, all income and expenses with respect to the
Property, and applicable to the period of time before and after Closing,
determined in accordance with generally accepted accounting principles
consistently applied, shall be allocated between the Contributor and the
Acquiror as of the Closing Date. The Contributor shall be entitled to all
income, including the Tray Ledger, and responsible for all expenses for the
period of time up to but not including the Closing Date, and the Acquiror shall
be entitled to all income and responsible for all expenses for the period of
time from, after and including the Closing Date. Without limiting the generality
of the foregoing, Contributor shall pay to Acquiror or Acquiror shall pay to
Contributor at Closing, or there shall be an appropriate Closing adjustment for,
the net cash payable to the Acquiror or Contributor, as appropriate, based on
the allocation set forth above. All adjustments shall be shown on the settlement
statement or may be done outside the settlement statement (with such supporting
documentation as the parties may reasonably require being attached as exhibits
to the settlement statements or submit to the parties as appropriate) and if on
the settlement statement shall increase or decrease (as the case may be) the
balance of the Purchase Price payable by the Acquiror at Closing. The
Contributor shall pay at Closing all special assessments and taxes applicable to
the Property and relating to the period prior to Closing.
(b) If accurate allocations cannot be made at Closing because
current bills are not obtainable (as, for example, in the case of utility
bills), the parties shall allocate such income or expenses at Closing on the
best available information, subject to adjustment upon receipt of the final xxxx
or other evidence of the applicable income or expense. Any expense paid by the
19
Contributor or the Acquiror with respect to the Property after the Closing Date
shall be promptly allocated in the manner described herein and the parties shall
promptly pay or reimburse any amount due.
(c) Acquiror shall have no obligation to collect any accounts
receivable allocable to the period prior to Closing. All income attributable to
the Property collected by the Acquiror after the Closing Date shall be first
applied against accounts receivable and other obligations allocable to the
period after the Closing Date. The Contributor shall not xxx an obligor with
respect to the Property that maintains a contractual relationship with the
Acquiror after the Closing Date.
ARTICLE 7
--------
CONDEMNATION: RISK OF LOSS
--------------------------
7.1 Condemnation. In the event of any actual or threatened taking,
------------
pursuant to the power of eminent domain, of all or any portion of the Real
Property, or any proposed sale in lieu thereof, the Contributor shall give
written notice thereof to the Acquiror promptly after the Contributor learns or
receives notice thereof. If all or any part of the Real Property is, or is to
be, so condemned or sold, the Acquiror shall have the right to terminate this
Agreement pursuant to Section 8.3. If the Acquiror elects not to terminate this
-----------
Agreement, all proceeds, awards and other payments arising out of such
condemnation or sale (actual or threatened) shall be paid to the Acquiror at
Closing.
7.2 Risk of Loss. The risk of any loss or damage to the Property prior to
------------
the Closing shall remain upon the Contributor. If any such loss or damage occurs
prior to Closing, the Acquiror shall have the right to terminate this Agreement
pursuant to Section 3.3. If the Acquiror elects not to terminate this Agreement,
-----------
it may choose to restore the Property itself, in which event Contributor shall
assign or pay, or cause to be paid, to Acquiror all insurance proceeds payable
on account of such loss or damage and the Contributor shall not be responsible
to the Acquiror for any additional sums required to restore the Property.
ARTICLE 8
---------
LIABILITY OF ACQUIROR; INDEMNIFICATION BY CONTRIBUTOR;
------------------------------------------------------
TERMINATION RIGHTS
------------------
8.1 Liability of Acquiror. Except for any obligation expressly assumed or
---------------------
agreed to be assumed by the Acquiror hereunder, the Acquiror does not assume any
obligation of the Contributor or any liability for claims arising out of any
occurrence prior to Closing.
8.2 Indemnification.
---------------
(a) The Contributor hereby indemnifies and holds the Acquiror
harmless from and against any and all claims, costs, penalties, damages, losses,
liabilities and expenses (including reasonable attorneys' fees) that may at any
time be incurred by the Acquiror, whether before or after Closing, as a result
of any material breach by the Contributor of any of Contributor's
representations, warranties, covenants or obligations set forth herein or in any
other document delivered by the Contributor under this Agreement, or as a result
of acts or events occurring prior to the Closing Date.
20
(b) The Acquiror hereby indemnifies and holds the Contributor harmless
from and against any and all claims, costs, penalties, damages, losses,
liabilities and expenses (including reasonable attorneys' fees) that may at any
time be incurred by the Contributor, whether before or after Closing, as a
result of any material breach by the Acquiror of any of Acquiror's
representations, warranties, covenants or obligations set forth herein or in any
other document delivered by the Acquiror under this Agreement, or as a result of
acts or events occurring after the Closing Date.
8.3 Termination by Acquiror. If any condition set forth herein cannot or
-----------------------
will not be satisfied prior to Closing, or upon the occurrence of any other
event that would entitle the Acquiror to terminate this Agreement and its
obligations hereunder, the Acquiror, at its option, may elect either (a) to
terminate this Agreement and all other rights and obligations of the Contributor
and the Acquiror hereunder shall terminate immediately and the Deposit, if any,
shall be returned to the Acquiror or (b) to waive its right to terminate and to
proceed to Closing. If the Acquiror terminates this Agreement as a consequence
of a material misrepresentation or breach of a warranty or covenant by the
Contributor, or a failure by the Contributor to perform its obligations
hereunder, the Acquiror shall have all remedies available hereunder or at law or
in equity, including but not limited to the right to specific performance of
this Agreement.
8.4 Termination by Contributor. If, prior to Closing, the Acquiror defaults
--------------------------
in performing any of its obligations under this Agreement (including its
obligation to Acquisition the Property), the Contributor's sole remedy for such
default shall be to terminate this Agreement and receive the Deposit, if any.
The Contributor and the Acquiror agree that, in the event of such a default, the
damages that the Contributor would sustain as a result thereof would be
difficult if not impossible to ascertain. The Contributor hereby waives and
releases any and all other rights and remedies for a default by the Acquiror.
Therefore, the Contributor and the Acquiror agree that, the Contributor shall
retain the Deposit, if any, as full and complete liquidated damages and as the
Contributor's sole remedy.
ARTICLE 9
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MISCELLANEOUS PROVISIONS
------------------------
9.1 Completeness; Modification. This Agreement constitutes the entire
--------------------------
agreement among the parties hereto with respect to the transactions contemplated
hereby and supersedes all prior discussions, understandings, agreements and
negotiations between the parties hereto. The provisions of the prior sentence
reflects the true intent of the Contributor and the Acquiror and is intended to
be enforceable, notwithstanding any existing or further case law to the
contrary. This Agreement may be modified only by a written instrument duly
executed by the parties hereto.
9.2 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the parties hereto and their respective successors and assigns.
9.3 Days. If any action is required to be performed, or if any notice,
----
consent or other communication is given, on a day that is a Saturday or Sunday
or a legal holiday in the jurisdiction in which the action is required to be
performed or in which is located the intended recipient of such notice, consent
or other communication, such performance shall be deemed to be required, and
such notice, consent or other communication shall be deemed to be given, on the
first business day
21
following such Saturday, Sunday or legal holiday. Unless otherwise specified
herein, all references herein to a "day" or "days" shall refer to calendar days
and not business days.
9.4 Governing Law. This Agreement and all documents referred to herein shall
-------------
be governed by and construed and interpreted in accordance with the laws of the
state wherein the Property is located.
9.5 Counterparts. To facilitate execution, this Agreement may be executed in
------------
as many counterparts as may be required. It shall not be necessary that the
signature on behalf of both parties hereto appear on each counterpart hereof.
All counterparts hereof shall collectively constitute a single agreement.
9.6 Severability. If any term, covenant or condition of this Agreement, or
------------
the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term, covenant or condition to other persons or circumstances, shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law and shall be
construed so as to give effect to the intent of the parties.
9.7 Costs. Regardless of whether Closing occurs hereunder, and except as
-----
otherwise expressly provided herein, each party hereto shall be responsible for
its own costs in connection with this Agreement and the transactions
contemplated hereby, including without limitation fees of attorneys, engineers
and accountants.
9.8 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be delivered by hand, by telecopy,
overnight delivery service, or by the United States mail, certified, postage
prepaid, return receipt requested, at the addresses and with such copies as
designated below. Any notice, request, demand or other communication delivered
or sent in the manner aforesaid shall be deemed given or made (as the case may
be) when actually delivered to the intended recipient.
If to the Contributor: Xxxxx X. Xxxxx
----------------------
Hersha Enterprises, Ltd.
000 Xxxxxxxx Xxxxx, Xxx X
Xxx Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to: Xxx X. Xxxx, Esquire
---------------
The Shah Law Frim
The Lafayette Building
000 Xxxxxxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000)000-0000
If to the Acquiror: Xxxx X. Xxxx
-------------------
22
Hersha Hospitality Limited Partnership
000 Xxxxxxxx Xxxxx, Xxx X
Xxx Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to: Xxx X. Xxxx, Esquire
--------------
The Shah Law Frim
The Lafayette Building
000 Xxxxxxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Any party hereto may change its address or designate different or
other persons or entities to receive copies by notifying the other party in a
manner described in this Section.
9.9 Escrow Agent. The Escrow Agent referred to in the definition
------------
thereof contained in Paragraph 1.1 hereof has agreed to act as such for the
convenience of the parties without fee or other charges for such services as
Escrow Agent. The Escrow Agent shall not be liable: (a) to any of the parties
for any act or omission to act except for its own willful misconduct; (b) for
any legal effect, insufficiency, or undesirability of any instrument deposited
with or delivered by Escrow Agent or exchange by the parties hereunder, whether
or not Escrow Agent prepared such instrument; (c) for any loss or impairment of
funds that have been deposited in escrow while those funds are in the course of
collection, or while those funds are on deposit in a financial institution, if
such loss or impairment results from the failure, insolvency or suspension of a
financial institution; (d) for the expiration of any time limit or other
consequence of delay, unless a properly executed written instruction, accepted
by Escrow Agent, has instructed the Escrow Agent to comply with said time limit;
(e) for the default, error, action or omission of either party to the escrow.
The Escrow Agent shall be entitled to rely on any document or paper received by
it, believed by such Escrow Agent, in good faith, to be bona fide and genuine.
It is agreed that the Escrow Agent shall not be disqualified from representing
either party in connection with any litigation which might arise out or in
connection with this Agreement, merely by virtue of the fact that such Escrow
Agent has agreed to act as Escrow Agent hereunder. Further, in that event of any
dispute as to the disposition of the Deposit, if any, or any other monies held
in escrow, the Escrow Agent may, if such Escrow Agent so elects, interplead the
parties by filing an interpleader action in any court having subject matter
jurisdiction of such a matter (to the personal jurisdiction of which both
parties do hereby consent), and pay into the registry of the court the Deposit,
if any, and any other monies held in escrow, including all interest earned
thereon, whereupon such Escrow Agent shall be relieved and released from any
further liability as Escrow Agent hereunder. In the event of such interpleader
action, the Escrow Agent shall not be disabled from representing a party hereto.
Escrow Agent shall not be liable for Escrow Agent's compliance with any legal
process, subpoena, writs, orders, judgments and decree of any court, whether
issued with or without jurisdiction, and whether or not subsequently vacated,
modified, set aside or reversed.
9.10 Incorporation by Reference. All of the Exhibits attached hereto
--------------------------
are by this reference incorporated herein and made a part hereof.
23
9.11 Survival. All of the representations, warranties, covenants and
--------
agreements of the Contributor and the Acquiror made in, or pursuant to, this
Agreement shall survive Closing and shall not merge into any document or
instrument executed and delivered in connection herewith.
9.12 Further Assurances. The Contributor and the Acquiror each covenant and
------------------
agree to sign, execute and deliver, or cause to be signed, executed and
delivered, and to do or make, or cause to be done or made, upon the written
request of the other party, any and all agreements, instruments, papers, deeds,
acts or things, supplemental, confirmatory or otherwise, as may be reasonably
required by either party hereto for the purpose of or in connection with
consummating the transactions described herein.
9.13 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 Contributor and Acquiror specifically
established hereby.
IN WITNESS WHEREOF, the Contributor and the Acquiror have caused this
Agreement to be executed in their names by their respective duly-authorized
representatives as a sealed instrument.
CONTRIBUTORS:
------------
SHREE ASSOCIATES, a Pennsylvania limited partenrship
By: ____________________________________
Xxxx X. Xxxx, General Partner
JSK II ASSOCIATES, a Pennsylvania limited partenrship
By: ____________________________________
Xxx X. Xxxx, General Partner
DEVI ASSOCIATES, a Pennsylvania limited partnership
By: ____________________________________
Xxxxxx X. Xxxxx, General Partner
XXXXXXX ASSOCIATES a Pennsylvania limited partnership
By: ____________________________________
Xxxxxxxx X. Xxxxxx, General Partner
KUNJ ASSOCIATES a Pennsylvania limited partnership
By: ____________________________________
Xxxxx X. Xxxxx, General Partner
24
SHANTI III ASSOCIATES a Pennsylvania limited
partnership
By: ____________________________________
X. X. Xxxxx, General Partner
XXXX X. XXXX, individully
By: ____________________________________
Xxxx X. Xxxx
XXXXX X. XXXXXX, individually
By: ____________________________________
Xxxxx X. Xxxxxx
XXXXXX X. XXXXX, individully
By: ____________________________________
Xxxxxx X. Xxxxx
XXXXXXXXXXX XXXXXXXXXXXX, LTD., a Pennsylvania
corporation
By: ____________________________________
Xxxxx X. Xxxxx, Secretary
ACQUIROR:
--------
HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia
limited partnership
By: HERSHA HOSPITALITY TRUST, a Maryland business
trust, its sole general partner
By: __________________________________________
Xxxx X. Xxxx, President
25
LIST OF EXHIBITS
Exhibit A Deed
Exhibit B Operating Agreements and other Agreements
Exhibit C Guest Ledger
Exhibit D Contributor's Financial Information
Exhibit E Tangible Personal Properties
26
EXHIBIT A
---------
Deed
27
EXHIBIT B
---------
Operating Agreements
28
EXHIBIT C
---------
Guest Ledger
29
EXHIBIT D
---------
Contributor's Financial Information
30
EXHIBIT E
---------
Tangible Personal Property
31
