HAMPTON INN PURCHASE CONTRACT by and between HHLP Duo One Associates, LLC, as Buyer and Metro Eleven Hotel LLC, as Seller dated as of November, 11 2009
Exhibit
99.2
HAMPTON
INN
by
and between
HHLP
Duo One Associates, LLC, as Buyer
and
Metro
Eleven Hotel LLC, as Seller
dated
as of
November, 11
2009
HAMPTON
INN
This
PURCHASE CONTRACT (this “Contract”) is made
and entered into as of November 11, 2009, by and between METRO ELEVEN HOTEL LLC, a New York limited
liability company, with its principal office at 000 Xxxxx Xxxx Xxxx, Xxxxx Xxxx,
Xxx Xxxx (“Seller”), and HHLP DUO ONE ASSOCIATES, LLC a
New York limited liability company, with its principal office at 00 Xxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (“Buyer”).
WHEREAS, Seller is
the fee simple owner of the land located at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx and more particularly described in Exhibit A attached
hereto and incorporated herein by reference. Seller has constructed a
hotel on such land containing 184 rooms, a lobby and other public rooms and
areas.
WHEREAS, Buyer desires to
purchase and Seller desires to sell such land and the hotel constructed thereon,
for the purchase price and upon terms and conditions hereinafter set
forth.
WHEREAS, Simultaneously
herewith, Buyer, as buyer, and Seller, as seller, have entered into
the Candlewood Suites Contract (the “Candlewood Suites
Contract”) and this Contract, collectively, the “Hotel Contracts”)
with the intent that Closing under all of the Hotel Contracts will occur on the
Closing Date.
ARTICLE
I
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1.1
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Definitions. The
following capitalized terms when used in this Contract shall have the
meanings set forth below unless the context otherwise
requires:
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“AAA” means the
American Arbitration Association or any successor organization.
“Accounts Payable”
shall have the meaning set forth in Section 12.1(g).
“Additional Deposit”
shall have the meaning set forth in Section 2.5(a).
“Affiliate” shall
mean, with respect to Seller or Buyer, any other person or entity directly or
indirectly controlling (including but not limited to all directors and
officers), controlled by or under direct or indirect common control with Seller
or Buyer, as applicable. For purposes of the foregoing, a person or
entity shall be deemed to control another person or entity if it possesses,
directly or indirectly, the power to direct or cause direction of the management
and policies of such other person or entity, whether through the ownership of
voting securities, by contract or otherwise.
2
“Apportionment Date”
shall have the meaning set forth in Section 12.1.
“Approval Letter”
shall mean the approval of Franchisor to issue a New Franchise License on the
form previously approved by Buyer contingent only upon execution of the New
Franchise License to be effective on or after the Closing Date.
“Approved Lien” shall
have the meaning set forth in Section 4.3.
“Appurtenances” shall
mean all rights, titles, and interests of Seller appurtenant to the Land and the
Hotel, including, but not limited to, (i) all easements, including the
Candlewood/Hampton Easement, rights of way, rights of ingress and egress,
tenements, hereditaments, privileges, and all other rights and interests
appurtenant in any way belonging to the Land or the Hotel, (ii) any land lying
in the bed of any alley, highway, street, road or avenue, open or proposed, in
front of or abutting or adjoining the Land, (iii) any strips or gores of real
estate adjacent to the Land, and (iv) the use of all alleys, easements and
rights-of-way, if any, abutting, adjacent, contiguous to or adjoining the
Land.
“Architect” shall mean
the architect for the Hotel, Xxxx Xxxxxxx Architect, P.C., its successor and/or
assigns, provided that any such successors and/or assigns are only permitted to
the extent that there is no release of the obligations of the current entities
without the prior written consent of Buyer.
“Brand” shall mean the
Hampton Inn brand with the Hilton Hotels Corporation.
“Brand Standards”
shall mean (i) the Hotel is furnished, fitted, equipped, open and operating
under the Brand in accordance with Seller’s Franchise Agreement and (ii) the
Franchisor has approved the completion, furnishing and equipping of the Hotel in
writing, and (iii) the Franchisor has approved the opening and operation of the
Hotel under the Brand in accordance with Seller’s Franchise
Agreement.
“Bulk Room Agreement”
shall mean any bulk room or group rate agreement entered into by Seller’s
Manager on terms consistent with the prevailing market for the occupancy of the
Hotel.
“Bulk Sale Survival
Period” shall have the meaning set forth in Section 7.3(b).
“Business Day” shall
mean any day other than a Saturday, Sunday or a legal holiday in the State of
New York.
“Buyer’s Terms” shall
mean, following the termination of this Contract, that (i) the Xxxxxxx Money
Deposit shall be immediately returned to Buyer by Escrow Agent, and (ii) upon
receipt of the amounts set forth in clause (i) above, Seller and Buyer shall be
relieved of all other rights, obligations and liabilities hereunder except as to
any provision specifically deemed to survive termination of this
Contract.
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“Buyer’s Franchise Agreement
Termination Fee” shall have the meaning set forth in Section
5.1(d).
“Buyer’s Manager”
shall mean an entity controlled by Hersha Hospitality Management LP engaged by
Buyer to operate the Hotel following Closing.
“Buyer’s Punch List”
shall have the meaning set forth in Section 8.10(a).
“Buyer’s Punch List Claim
Notice” shall have the meaning set forth in Section 8.10(b).
“Buyer’s Punch List
Escrow” shall have the meaning set forth in Section 8.10(a).
“Buyer’s Reply Notice”
shall have the meaning set forth in Section 10.1(c)(i).
“Candlewood/Hampton
Easement” shall mean
the Easement Agreement made by Buyer and the buyer of the other hotel pursuant
to the Other Hotel Contract to be executed and recorded on or prior to Closing
attached hereto as Exhibit L, subject to
de minimis changes by the Department of Building of the City of New
York.
“Candlewood Suites
Contract” shall mean the related contract by and between Seller, as
seller, and HHLP Duo Two Associates, LLC, as buyer, for the purchase and sale of
the premises located at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, dated as of the date hereof.
“Cash Amount” shall
have the meaning set forth in Section 2.2(b)(ii).
“Casualty/Condemnation
Notice” shall have the meaning set forth in Section 13.1.
“Certificate of
Occupancy” shall mean the certificate of occupancy issued by the
Department of Buildings of the City of New York permitting the use and occupancy
of the Real Property as a Hotel, which certificate shall not be considered or
termed a Temporary Certificate of Occupancy.
“Closing” shall have
the meaning set forth in Section 10.1.
“Closing Date” shall
have the meaning set forth in Section 10.1.
“Construction Manager”
shall mean CNY Builders, its successor and/or assigns, provided that any such
successors and/or assigns are only permitted to the extent that there is no
release of the obligations of the current entities without the prior written
consent of Buyer.
“Construction
Warranty” shall mean the warranty from Contractor to Buyer in the form
attached hereto as Exhibit
G.
“Contractor” shall
mean Tritel Construction Group and its successors and/or assigns, provided that
any such successors and/or assigns are only permitted to the extent that there
is no release of the obligations of the current entities without the prior
written consent of Buyer.
“Deed” shall have the
meaning set forth in Section 10.2(a).
4
“Due Diligence” shall
have the meaning set forth in Section 7.1(s).
“Due Diligence Delivery
Date” shall have the meaning set forth in Section 3.1(a).
“Due Diligence
Examination” shall have the meaning set forth in Section
3.1(d).
“Xxxxxxx Money
Deposit” shall have the meaning set forth in Section 2.5(a).
“Employee Plan” shall
mean any deferred compensation and incentive compensation, “welfare” plan, fund
or program (within the meaning of Section 3(1) of ERISA); “pension” plan, fund
or program (within the meaning of Section 3(2) of ERISA); any termination or
severance agreement, and any other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by Seller or by any trade or
business, whether or not incorporated (an “ERISA Affiliate”), that together with
Seller would be deemed a “single employer” within the meaning of Section 4001(b)
of ERISA, or to which the Seller, employer or an ERISA Affiliate is a party,
whether written or oral, for the benefit of any employee or former employee of
Seller or any subsidiary.
“Employees” shall have
the meaning set forth in Section 12.1(k).
“Employment Laws”
shall mean all applicable federal or state employment laws, including, without
limitation, applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, employment
discrimination, disability rights or benefits, equal opportunity, plant closure
issues, affirmative action, workers’ compensation, employee benefits, severance
payments, labor relations, employee leave issues, wage and hour standards,
occupational safety and health requirements, unemployment insurance and related
xxxxxx, and the collection and payment of withholding or social security taxes
and any similar tax, including, without limitation, the Immigration Reform and
Control Act, the WARN Act, the Consolidated Omnibus Budget Reconciliation Act
(COBRA), the Health Insurance Portability and Accountability Act of 1996
(HIPAA), the Employee Retirement Income Security Act of 1974 (ERISA), the Family
and Medical Leave Act of 1993 (FMLA), the Fair Labor Standards Act (FLSA), and
the Occupational Safety and Health Act (OSHA).
“Environmental
Reports” shall have the meaning set forth in Section 7.1(e).
“Environmental
Requirements” shall have the meaning set forth in Section
7.1(e).
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agent” shall
mean First American Title Insurance Company of New York in its capacity as
Escrow Agent.
“Existing Contracts”
shall mean those Service Contracts in effect as of the date hereof as set forth
on Exhibit P and copies of which were provided to Buyer as part of the Due
Diligence.
“Finance Provider”
shall mean any lender financing Buyer’s purchase of the Property under this
Contract.
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“FF&E” shall mean,
collectively, all furniture, fixtures and equipment required to operate the
Hotel as the Brand under Seller’s Franchise Agreement, a list of which is set
forth on Exhibit B. All FF&E shall be owned by Seller at closing
and not leased.
“Franchisor” shall
mean Hilton Hotels Corporation.
“General Assignment”
shall have the meaning set forth in Section 10.2(c) and attached hereto as Exhibit
H.
“Greenhouse” shall
mean the greenhouse located in the Hotel as set forth in the Candlewood/Hampton
Easement.
“Hazardous Materials”
shall have the meaning set forth in Section 7.1(e).
“Health Permit
Receipt” shall mean a health permit receipt from the New York City Health
Department to be obtained by Seller prior to Closing.
“Hotel” shall mean the
hotel constructed on the Land, including all buildings, structures, fixtures,
and other improvements now existing or to be constructed on the Land, and all
related facilities and Personal Property associated therewith, including the
number of rooms and the amenities referred to in the Recitals
Section.
“Hotel Contracts”
shall collectively mean the Candlewood Suites Contract and this
Contract.
“House Banks” shall
have the meaning set forth in Section 12.1(f).
“Indemnified Party”
shall have the meaning set forth in Section 8.14(c)(i).
“Indemnifying Party”
shall have the meaning set forth in Section 8.14(c)(i).
“Initial Deposit”
shall have the meaning set forth in Section 2.5.
“Intangible Property”
shall mean all Service Contracts, Permits and Licenses, Intellectual Property
and all other assignable intangible property connected to the
property.
“Intellectual
Property” shall mean trademarks, trade names, and any goodwill associated
with the Hotel or other Property which is assignable from Seller to Buyer at
Closing.
“Joinder” shall have the meaning set
forth in Section 2.2(c)(iv).
“Land” shall mean,
collectively, a fee simple absolute interest in the real property more fully
described in Exhibit
A, which is attached hereto and incorporated herein by reference,
together with all rights (including without limitation all air rights, mineral
rights and development rights), alleys, streets, strips, gores, waters,
privileges, Appurtenances, advantages and easements belonging thereto or in any
way appertaining thereto.
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“Leases” shall mean
all leases or other agreements providing for the use or occupancy of the Hotel
or otherwise similarly affecting or relating to the use or occupancy of the
Hotel or Land, together with all amendments, modifications, renewals and
extensions thereof, and all guaranties by third parties of the obligations of
the tenants, licensees, concessionaires or other entities
thereunder.
“Legal Action” shall
have the meaning set forth in Section 8.14(c)(ii).
“Legal Requirements”
shall mean any and all local statutes, laws, ordinances, zoning and other codes,
rules, regulations and requirements of any governmental authority applicable to
the Property.
“Lienable
Claims” shall mean any Seller Liens and any other amounts which have not
been paid to any architect, engineer, contractor, subcontractor,
sub-subcontractor or supplier in connection with the design, development and
construction of the Property and any amounts in dispute with respect to the
same.
“New Contracts” shall
mean those Service Contracts entered into by Seller or Seller’s Manager between
the date hereof and Closing in accordance with Section 8.7(h), but shall
specifically not include Bulk Room Agreements.
“New Franchise
License” shall mean any franchise agreement and/or franchise license,
including riders thereto, to be entered into between Buyer and the Franchisor
prior to Closing to operate the Hotel under the Brand and effective on the
Closing Date.
“OP” shall have the
meaning set forth in Section 2.2(a).
“OS&E” shall mean
all items included within the category “Property and Equipment” under the
Uniform System and other items commonly referred to in the hotel industry as
operating equipment and supplies.
“Other Hotel Contract” shall have
the meaning set forth in Section 6.1.
“Outstanding Buyer’s Punch
List Claim Amount” shall have the meaning set forth in Section
8.10(b).
“Partnership
Agreement” shall have the meaning set forth in Section
2.2(c).
“Permits and Licenses”
shall mean all permits, licenses, approvals, franchise, license agreements,
utility reservations, Certificate of Occupancy, Temporary Certificate of
Occupancy, and other documents issued by any federal, state, or municipal
authority or by any private party related to the development, construction, use,
occupancy, operation or maintenance of the Hotel, including, without limitation,
Health Permit Receipt and all licenses, approvals and rights necessary or
appropriate for the opening of the Hotel under the Brand in accordance with
Legal Requirements and Seller’s Franchise Agreement; provided, however,
notwithstanding the foregoing, the New Franchise License shall not be a
“License”.
“Permitted Exceptions”
shall have the meaning set forth in Section 4.3.
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“Person” shall mean
any person or entity.
“Personal Property”
shall mean, collectively, the Tangible Personal Property, the Intangible
Personal Property, the Intellectual Property, the FF&E, the OS&E and all
other items of personal property used in connection with the
operation of the Hotel.
“Plans” shall mean,
collectively, the most recent complete version of the plans and specifications
provided by Seller on or prior to Closing.
“Property” shall mean,
collectively, the Real Property and Personal Property, including FF&E,
OS&E, Leases, Records, Warranties, Permits and Licenses, Tradenames, utility
reservations, Intangible Property, as well as all other real or personal or
property of Seller related to any of the foregoing.
“Punch List Period”
shall have the meaning set forth in Section 8.10(a).
“Purchase Price” shall
have the meaning set forth in Section 2.2(b).
“Real Property” shall
mean, collectively, all Land, the Hotel and Appurtenances with respect to the
Hotel, but excluding the Personal Property.
“Recorded Documents”
shall have the meaning set forth in Section 7.1(i).
“Records” shall mean,
to the extent existing, all books, records, guest ledgers, promotional material,
(other than any such information owned exclusively by the Franchisor), marketing
and leasing material and forms located at the Hotel.
“Release” shall have
the meaning set forth in Section 7.1(e).
“Review Period” shall
have the meaning set forth in Section 3.1(a).
“Right of First Offer
Agreement” shall mean the agreement memorializing Buyer’s right to make a
first offer to purchase the Holiday Inn Express Times Square South located at
000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx as set forth in Exhibit K and that is a condition to
Closing.
“Seller’s 1031
Exchange” shall have the meaning set forth in Section 16.13.
“Seller’s Bulk Sale
Covenant” shall have the meaning set forth in Section
7.1(n).
“Seller’s Employee
Payment” shall have the meaning set forth in Section
12.1(k).
“Seller’s Existing Finance
Provider” shall mean CW Capital LLC, its successor and/or
assigns.
“Seller’s Existing
Mortgage” shall mean Seller’s existing mortgage(s) and/or consolidated
mortgages dated May 16, 2007, between Seller’s Existing Finance Provider and
Seller and as set forth in the Title Commitment.
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“Seller Lien Escrow”
shall have the meaning set forth in Section 4.3.
“Seller Liens” shall
have the meaning set forth in Section 4.3.
“Seller’s Franchise
Agreement” shall have the meaning set forth in Section
5.1(a).
“Seller’s Management
Agreement” shall mean the management agreement and/or pre-opening
agreement previously entered into between Seller and Seller’s Manager for the
opening and management of the Hotel prior to Closing.
“Seller’s Manager”
shall mean an entity controlled by Hersha Hospitality Management LP engaged by
Seller to pre-open, open and operate the Hotel prior to Closing pursuant to
Seller’s Management Agreement.
“Seller’s Post Closing
Escrow” shall have the meaning set forth in Section 8.12(c).
“Service Contracts”
shall mean the Existing Contracts and New Contracts consisting of the contracts
or agreements relating to the operation and maintenance of the Property, such as
maintenance, supply, service or utility contracts.
“Settlement Statement”
shall have the meaning set forth in Section 10.2(j).
“Survey” shall have
the meaning set forth in Section 4.1.
“Survival Period”
shall have the meaning set forth in Section 7.3.
“Tangible Personal
Property” shall have the meaning determined by the New York State
Department of Finance as used on the Notification of Sale, Transfer, or
Assignment in Bulk Form AU-196.10.
“Temporary Certificate of
Occupancy” shall mean a temporary certificate of occupancy issued by the
Department of Buildings, New York, permitting the use and occupancy of the Real
Property as the Hotel in accordance with all Legal Requirements.
“Title Commitment”
shall have the meaning set forth in Section 4.2.
“Title Company” shall
have the meaning set forth in Section 4.2.
“Title Policy” shall
have the meaning set forth in Section 4.2.
“Tradenames” shall
mean all telephone exchanges and numbers, tradenames, trade styles, trade marks,
logos, and other identifying material, and all variations thereof, together with
all related goodwill and other intangible property relating to the
Hotel.
“Trade Contractor”
shall mean the major trade contractors and Construction Manager as set forth in
Exhibit
M.
9
“Uniform System” shall
mean the “Uniform System of Accounting for the Lodging Industry”, Tenth Revised
Edition, 2006, as published by the Educational Institute of the American Hotel
& Motel Association.
“Unit Holder
Agreements” shall have the meaning set forth in Section
2.2(c).
“Value” shall have the
meaning set forth in Section 2.2(b)(ii).
“Voluntary Termination of
License Agreement” shall mean Seller’s agreement with Franchisor to
terminate Seller’s Franchisor Agreement upon the sale of the Property to the
Buyer.
“Warranties” shall
mean (i) all warranties assignable to Buyer at Closing, including, without
limitation, the Construction Warranty, the warranties from the Trade
Contractors, all equipment warranties and those warranties more particularly
provided for on Exhibit M, and (ii) all other rights of Seller with respect to
any contractor, subcontractor or architect on account of defective or improper
work rendered in connection with the construction, design and/or development
of the Property (the rights in this clause (ii) being hereinafter called “Defect
Claims”).
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1.2
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(a)
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Whenever
appropriate herein or required by the context or circumstances, the
masculine shall be construed as the feminine and/or the neuter, the
singular as the plural, and vice
versa.
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(b)
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The
words “hereof”, “herein”, “hereunder” and similar terms when used in this
Contract shall refer to this Contract as a whole and not to any particular
provision of this Contract.
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(c)
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The
words “include” and “including” wherever used in this Contract shall be
deemed to be followed by the words “without
limitation”.
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ARTICLE
II
2.1 Purchase and
Sale. Seller agrees to sell and convey to Buyer or its
Affiliates and/or assigns, and Buyer or its Affiliates and/or assigns agrees to
purchase from Seller, the Property, in consideration of the Purchase Price and
upon the terms and conditions hereof. Except as otherwise provided
for herein, all of the Property shall be conveyed, assigned, and transferred to
Buyer at Closing, free and clear of all mortgages, liens, encumbrances,
licenses, franchises, concession agreements, security interests, prior
assignments or conveyances, conditions, restrictions, rights-of-way, easements,
encroachments, claims and other matters affecting title or possession, except
for the Permitted Exceptions.
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(a)
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In
consideration of the payment of the Purchase Price by the Buyer to the
Seller, the Seller agrees to contribute, assign and transfer the Property
to the Buyer in accordance with the terms and conditions set forth in this
Contract as a contribution to the capital of Hersha Hospitality Limited
Partnership, a Virginia limited partnership (the “OP”), of which
Buyer is a directly and indirectly wholly-owned subsidiary, pursuant to
Section 721 of the Internal Revenue Code of 1986, as
amended.
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(b)
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The
total consideration (the “Purchase
Price”) for the contribution by the Seller of the Property, which
the OP and the Buyer agree to pay to the Seller and which the Seller
agrees to accept for the contribution of the Property, is Fifty Four
Million Two Hundred and Eighty Thousand Dollars and No Cents
($54,280,000.00), consisting of the
following:
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(i)
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the
“Partnership
Units” which shall consist of units of limited partnership interest
in the OP with a Value (as defined below) equal to no greater than One
Million Five Hundred Thousand Dollars and No Cents ($1,500,000.00);
and
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(ii)
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the
“Cash
Amount” which shall be the Purchase Price less the Value of the
Partnership Units; and
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which
shall be subject to the payment schedule, the holdback deductions, the
prorations and adjustments described herein and payable as set forth herein,
provided, however, that all holdbacks,
deductions, prorations and any other adjustments or costs affecting the
aggregate Purchase Price shall be paid from or added to the Cash Amount. For
purposes hereof, the “Value” of the
Partnership Units shall be determined by multiplying (i) the volume weighted
average price of Hersha Hospitality Trust Class A common shares as traded on the
New York Stock Exchange for the twenty (20) trading days occurring prior to the
trading day that is two (2) trading days prior to the Closing Date, by (ii) the
number of Partnership Units Seller receives as part of the Purchase
Price.
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(c)
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Seller
and Buyer will be required to enter into separate agreements, such as a
tax-related agreement and an agreement regarding partnership units (the
“Unit Holder
Agreements”) with the OP and Hersha Hospitality Trust, a Maryland
real estate investment trust and the general partner of the OP, to
effectuate issuance of the Partnership Units and to ensure that Seller,
together with all other persons who become permitted transferees pursuant
to a Transfer permitted under Section 9.02 of the Amended and Restated
Limited Partnership Agreement of the OP (the “Partnership
Agreement”), shall have the redemption rights, registration rights
and other rights provided in (i) the Partnership Agreement and (ii) the
Unit Holder Agreements, subject to the
following:
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11
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(i)
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No
Partnership Units shall be issued by the OP, and following such issuance
no Partnership Units shall be transferred by Seller, to any person or
entity that is not an accredited investor within the meaning of Regulation
D promulgated the Securities Act, and to the extent any such
non-accredited person or entity is entitled to receive any portion of the
Purchase Price, such portion shall be paid in cash rather than Partnership
Units and the number of Partnership Units issuable in payment of the
Purchase Price shall be reduced
accordingly.
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(ii)
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Seller
agrees to take such actions as the OP may reasonably request in order to
ensure that the issuance of any Partnership Units pursuant to this
Contract complies with the requirements of the Securities Act and
Regulation D promulgated thereunder. Except as otherwise expressly set
forth in this Contract, the Seller acknowledges and agrees that once the
Closing occurs, the Seller shall no longer hold any right, title or
interest in the Property (except through its ownership of the Partnership
Units).
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(iii)
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The
Seller that acquires Partnership Units acknowledges that any certificates
evidencing the Partnership Units will bear appropriate legends indicating
(i) that the Partnership Units have not been registered under the
Securities Act, and (ii) that the Partnership Agreement restricts the
transfer of the Partnership Units.
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(iv)
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Seller
shall upon receipt of the Partnership Units at Closing become a limited
partner of the OP by executing the form of joinder (“Joinder”) to
the Partnership Agreement and deliver the executed Joinder at Closing;
provided, however, that if Seller
is, at the time of Closing, a limited partner of the OP, Seller shall not
be required to execute and deliver the
Joinder.
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(v)
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By
executing and delivering the Joinder in accordance with the terms of this
Contract and the Unit Holder Agreements, Seller shall acknowledge that it
will be bound by the terms and provisions of the Partnership
Agreement.
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2.3 Allocation. Buyer and Seller
hereby agree on the allocation of the Purchase Price among Real Property,
Tangible Personal Property and Intangible Property related to the Property as
set forth on Schedule 2.3 attached hereto for federal, state and local tax
purposes. Buyer and Seller agree to report the federal, state and
local income and other tax consequences of the transactions contemplated by this
Contract and in particular, to report the information required by Section
1060(b) of the Internal Revenue Code of 1986, as amended, and to file all tax
returns and related tax documents, in a manner consistent with such allocation,
and neither Buyer nor Seller shall take any position inconsistent with such
agreed upon allocation of the Purchase Price in any tax return or
otherwise. Buyer shall pay at the Closing 100% of any applicable
taxes relating to the Purchase Price allocated to Tangible Personal Property
relating to the Property. The parties agree to reasonably cooperate
with one another to establish a realistic salvage value for the Tangible
Personal Property. Each party will provide and make available
to the other party any resale certificates and other exemption certificates or
information reasonably requested by either party. At the written
request of Buyer or Seller, the other party shall provide written evidence of
its remittance of applicable taxes. This provision shall survive the
Closing.
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2.4 Payment. The
Purchase Price, including the Xxxxxxx Money Deposit, which Buyer elects to have
applied against the Purchase Price (as provided below), shall be paid to Seller
by Escrow Agent by wire transfer of immediately available funds on the Closing
Date.
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(a)
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Within
three (3) days following the full execution and delivery of this Contract
unless such third day is not a Business Day, in which case the Initial
Deposit shall be due on the next Business Day, Buyer shall deposit the sum
of $100.00 (One
hundred dollars) by wire transfer of immediately available funds (the
“Initial
Deposit”) with the Escrow Agent. In the event Buyer
fails to make such Initial Deposit then this Contract shall automatically
terminate with no further liability on either party’s behalf except with
respect to those provisions of this Contract that are deemed to survive
such termination. If, pursuant to the provisions of Section 3.1
of this Contract, Buyer does not elect to proceed with this Contract prior
to the expiration of the Review Period, then Escrow Agent shall return the
Initial Deposit to Buyer immediately upon written notice to that effect
from Buyer. If Buyer elects to proceed with this Contract
before the expiration of the Review Period, then Buyer shall deposit the
additional sum of $10,000.00 (ten thousand
dollars), by letter of credit or by wire transfer of immediately available
funds (the “Additional
Deposit”) with the Escrow Agent on or before the expiration of the
Review Period. The Initial Deposit and the Additional Deposit
shall hereinafter be collectively referred to as the “Xxxxxxx Money
Deposit”. If Buyer elects to proceed with this Contract
prior to the expiration of the Review Period, then Buyer’s failure to
deposit the Additional Deposit when due shall constitute a default by
Buyer, in which case, Seller shall be entitled to exercise its remedies
set forth in Section 14.1.
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(b)
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The
Xxxxxxx Money Deposit shall be held by Escrow Agent pursuant to the terms
of this Contract. Seller’s Federal Tax Identification Number is
00-0000000.
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13
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(c)
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All
wires to the Escrow Agent shall be sent pursuant to the wiring
instructions attached hereto as Schedule 2.5 or such other wiring
instructions as Escrow Agent shall send to Buyer and Seller in
writing.
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ARTICLE
III
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3.1
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(b)
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In
the event that Buyer does not elect to proceed with this Contract by
written notice to Seller and Escrow Agent prior to the expiration of the
Review Period, then the Xxxxxxx Money Deposit shall be immediately
returned to Buyer by Escrow Agent and upon receipt of the Xxxxxxx Money
Deposit, Seller and Buyer shall be relieved of all other rights,
obligations and liabilities hereunder except as to any provision
specifically deemed to survive termination of this
Contract.
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(c)
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In
the event Buyer elects to proceed with this Contract by written notice to
Seller and Escrow Agent prior to the expiration of the Review Period, then
the Additional Deposit shall become due in accordance with Section
2.5(a).
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(d)
|
At
any time prior to the expiration of the Review Period, Buyer and/or its
representatives and agents shall review the Due Diligence and have the
right to enter upon the Property at all reasonable times for the purposes
of reviewing all Records and other data, documents and/or information
relating to the Property and conducting such surveys, appraisals,
engineering tests, soil tests (including, without limitation, Phase I and
Phase II environmental site assessments), inspections of construction and
other inspections and other studies as Buyer deems reasonable and
necessary or appropriate to evaluate the Property, subject to providing
advance (not less than 24 hours) notice to Seller unless otherwise agreed
to by Buyer and Seller (the “Due Diligence
Examination”). Seller shall have the right to have its
representative present during Buyer’s physical inspections of the
Property, provided that failure of Seller to do so shall not prevent Buyer
from exercising its due diligence, review and inspection rights
hereunder. If Buyer elects to perform or have any
invasive inspections (such as a Phase II environmental site assessment of
the Property) performed, then at least 48 hours prior to entry onto the
Property, Buyer shall provide to Seller upon Seller’s request, evidence of
liability insurance, in the amount of $1,000,000.00, from any contractors,
subcontractor, and/or third party which Buyer elects to use to perform
such invasive inspections naming the Seller and Seller’s Existing Finance
Provider as additional insured.
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14
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(e)
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Buyer
covenants and agrees to use its good faith efforts not to damage or
destroy any portion of the Property in conducting its examinations and
studies of the Property during the Due Diligence Examination and, if
Closing does not occur, shall repair any portion of the Property damaged
by the conduct of Buyer, its agents or employees, to substantially the
condition such portion(s) of the Property were in immediately prior to
such examinations or studies, and Buyer agrees to indemnify and hold
Seller harmless concerning any such damage provided that such damage is
caused by Buyer or its agents, provided, however, that Buyer shall not be
responsible under any circumstances for any environmental hazards
discovered which may arise as a result of Buyer’s or its agents’
activities provided that such inspections or tests were performed in
accordance with applicable laws. This Section 3.1(e) shall
survive the early termination of this
Contract.
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3.2
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Intentionally
Deleted.
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ARTICLE
IV
4.1 Survey. Buyer has
received true, correct and complete copies of the most recent draft as-built
surveys of the Land (the “Survey”).
4.2 Title. Seller
has delivered to Buyer title certificates prepared by First American Title
Insurance Company of New York (the “Title Company”),
including copies of all documents referred to therein, for the Real
Property. Buyer has obtained (i) a Commitment for Title Insurance
(the “Title
Commitment”) issued by the Title Company with an effective date of
November 9, 2009, on a 2006 ALTA form of owner’s policy of title insurance in
New York which is attached as Exhibit N, covering the Real Property, setting
forth the current status of the title to the Real Property, showing all liens,
claims, encumbrances, easements, rights of way, encroachments, reservations,
restrictions and any other matters affecting the Real Property and pursuant to
which the Title Company shall issue to Buyer at Closing an Owner’s Policy of
Title Insurance on the 2006 form of ALTA owner’s policy available in New York,
at standard rates, covering the full amount of the Purchase Price and shall
include such endorsements as are customary or required by Buyer, or a Finance
Provider in their sole discretion subject only to the Permitted Exceptions and
Seller shall execute and deliver at Closing an affidavit in the form that the
Title Company shall require for the issuance of the such policy with extended
coverage (the “Title
Policy”) and (ii) true, complete, legible and, where applicable, recorded
copies of all documents and instruments referred to or identified in the Title
Commitment, including, but not limited to, all deeds, lien instruments, leases,
plats, surveys, reservations, restrictions, and easements affecting the Real
Property.
15
4.3 Survey or Title
Objections. If Buyer disapproves any condition of title to the
Real Property, Survey or other matters by written objection to Seller prior to
the expiration of the Review Period, Seller shall elect either to attempt to
cure or not cure any such item by written notice sent to Buyer within ten (10)
days after Seller’s receipt of notice from Buyer, and if Seller agrees in
writing to attempt to cure any such item, then Seller shall be given Closing to
cure any such defect. In the event that (a) Seller shall fail or is
unable to cure an exception, defect or objection raised by Buyer pursuant to
this Section 4.3 or (b) one or more exceptions, title or survey defects or
objections arise or are discovered by Buyer after the date of the Title
Commitment or Survey, as applicable, but prior to Closing (and which are not
disclosed on the Title Commitment or Survey) in which case Seller shall have
until Closing to cure, and Seller shall fail to cure exceptions, title or survey
defects or objections within the time period required following written notice
from Buyer, then Buyer may elect, in Buyer’s sole and absolute discretion: (i)
to waive such exception, defect or objection and proceed to Closing in
accordance with this Contract, or (ii) to terminate this Contract in which case
the Xxxxxxx Money Deposit shall be returned to Buyer and neither party shall
have further obligations to the other except those that expressly survive
pursuant to this Agreement. The (w) items shown on the Title
Commitment which are not objected to by Buyer as set forth above prior to the
expiration of the Review Period, (x) standard exceptions from coverage contained
in the form title policy “jacket” and (y) Candlewood/Hampton Easement for the
Greenhouse are hereinafter referred to, collectively, as the “Permitted
Exceptions”. In no event shall Permitted Exceptions include
title exceptions entered into by Seller after the effective date of the Title
Commitment or any Seller Liens (hereinafter defined), other than the mortgages
being assigned at the request of Buyer. Liens or documents evidencing
liens, securing any indebtedness or any mechanics’ or materialmen’s liens or any
claims or potential claims therefor covering the Property or any portion
thereof, Environmental Control Board judgments, water bills, fire safety,
elevator violations, tax liens or any title exception, and violations or
objections capable of being cured solely through the payment of money by Seller
are hereinafter collectively called “Seller Liens” and shall be
paid in full by Seller and released at Closing except for any Approved Liens as
set forth herein. At Closing, Seller shall deliver a Release of
Mechanics’ Liens in the form provided by the Title Company from all mechanics’
liens and an affidavit in the form of Exhibit W in which it sets forth, to
Seller’s knowledge, any Lienable Claims. If any Lienable
Claim is not released in writing in form satisfactory to Buyer and the Title
Company by the Closing, then Seller shall deposit monies equal to 150% (one
hundred and fifty percent) of the amount required to satisfy and discharge all
such unreleased Lienable Claims, in the aggregate, at Closing with the Title
Company pursuant to an escrow agreement (the “Seller Lien Escrow”) in order to
omit such Lienable Claims in a manner reasonably acceptable to Buyer and the
Title Company such that the Title Company issues the Title Policy and a loan
policy without exception for such Lienable Claims at no additional premium
(“Approved Lien”). In the event that the Title Company shall not deem
the Seller Lien Escrow sufficient to remove any Seller Lien or other Lienable
Claim at
Closing, then the Title Company shall advise at Closing the sufficient amount
needed to escrow in the Seller Lien Escrow and Seller shall deposit such amount
with Escrow Agent at Closing. Seller shall indemnify, defend and hold
harmless Buyer from and against any Lienable Claims any other liens that may be
filed against the Property due to acts or omissions of Seller, and funds from
the Seller Lien Escrow shall be made available to reimburse Buyer from any
costs, losses, damages or expenses which Buyer suffers on account of Lienable
Claims or any other liens that may be filed against the Property due to the acts
or omissions of Seller. The immediately preceding sentence shall
survive Closing.
16
4.4 Mortgage Assignment. At
the request of Buyer, Seller agrees to use commercially reasonable efforts to
cause Seller’s Existing Finance Provider(s) to assign Seller’s Existing
Mortgages to an entity designated by Buyer.
ARTICLE
V
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(a)
|
Seller
has obtained a franchise agreement with Franchisor to operate the Hotel
(the “Seller’s
Franchise Agreement”) and Seller shall deliver Seller’s Franchise
Agreement to Buyer upon execution of this
Contract.
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(b)
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Buyer
shall submit a franchise application within five (5) Business
Days from the date of this Contract to the Franchisor. Buyer
agrees to use commercially reasonable efforts, and Seller agrees to
cooperate with Buyer, to obtain from Franchisor an
Approval Letter from Franchisor and execute a New Franchise License in
form and substance satisfactory to Buyer in its sole discretion, from the
Franchisor to be effective upon Franchisor executing the New Franchise
License, which shall be effective after the Closing Date (the “New Franchise
License”). Buyer shall pay for any required Brand
application fees charged by Franchisor and any expenses of Buyer’s
attorneys with respect to such application and Seller shall pay any
termination fees charged by Franchisor in connection with Seller’s
Franchise Agreement, subject to Section
5.1(d).
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(d)
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Prior
to Closing, Seller shall execute a Voluntary Termination of License
Agreement with Franchisor and promptly following the Closing
Date, Buyer shall provide to the Franchisor a copy of the executed Deed
showing proof of ownership. If (i) Closing occurs pursuant to
this Contract, (ii) Seller’s Franchise Agreement is terminated, (iii) the
Franchisor is ready willing and able to enter into the New Franchise
License on terms and conditions previously agreed to by Buyer and (iv)
Buyer does not deliver a copy of the Deed or Buyer withdraws the New
Franchise License from Franchisor prior to execution and delivery by
Franchisor, then Buyer agrees to pay and indemnify and hold Seller
harmless for any and all fees, liquidated damages set forth in the
Seller’s Franchise Agreement, attorneys’ fees and costs required to be
paid by Seller in connection with such termination of the Seller’s
Franchise Agreement (collectively, “Buyer’s Franchise
Agreement Termination Fee”) and Seller shall bear such costs under
all other circumstances. This Section 5.1(d) shall survive
Closing.
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17
5.2 Intentionally
Deleted
ARTICLE
VI
HOTEL
CONTRACTS
6.1 Hotel
Contracts. The parties acknowledge and agree that this
Contract is being entered into in connection with and simultaneously with the
Candlewood Suites Contract (the “Other Hotel
Contract”). The parties acknowledge and agree that,
notwithstanding anything contained herein to the contrary, the obligations of
Buyer to consummate the transaction as contemplated hereunder shall be
contingent upon the simultaneous closing of the sale under the Other Hotel
Contract with the Closing of the Property under this Contract.
6.2 Termination of Hotel
Contracts. The parties expressly acknowledge and agree that
the exercise by Buyer of any right under this Contract which has the effect of
terminating this Contract shall be and be deemed to be a termination of the
Other Hotel Contract, notwithstanding the fact that no independent termination
right may have occurred under any Other Hotel Contract. To the extent
that upon any such termination, Buyer is entitled to receive the return of the
Xxxxxxx Money Deposit, then Buyer shall be entitled to receive the corresponding
payments under the Other Hotel Contract, together with any other payments that
may be required to be paid upon termination of the Other Hotel
Contract.
ARTICLE
VII
7.1 Seller’s Representations,
Warranties and Covenants. Seller hereby represents, warrants
and covenants to Buyer as follows:
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(a)
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Authority; No
Conflicts; Consents. Seller is a limited liability
company duly formed, validly existing and in good standing under the laws
of the State of New York. Seller has obtained all necessary consents to
enter into and perform this Contract and is fully authorized to enter into
and perform this Contract and to complete the transactions contemplated by
this Contract. No consent or approval of any person, entity or
governmental authority is required for the execution or delivery of this
Contract and the documents required to be executed and delivered at
Closing, in each case, by Seller or the performance of Seller’s
obligations hereunder. This Contract is, and the documents to
be executed and delivered by Seller at Closing will be, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
terms. Neither the execution nor the performance of, or
compliance with, this Contract by Seller has resulted, or will result, in
any violation of, or default under, or acceleration of, any obligation
under any existing corporate charter, certificate of incorporation, bylaw,
articles of organization, limited liability company agreement or
regulations, partnership agreement or other organizational documents and
under any, mortgage indenture, lien agreement, promissory note, contract,
or permit, or any judgment, decree, order, restrictive covenant, statute,
rule or regulation, applicable to Seller or to the
Hotel.
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18
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(b)
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FIRPTA. Seller
is not a foreign corporation, foreign partnership, foreign trust or
foreign estate (as those items defined in the Internal Revenue Code and
Income Tax Regulations).
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(c)
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Bankruptcy. Neither
Seller, nor, to Seller’s knowledge, any of its or their partners or
members, is insolvent or the subject of any bankruptcy proceeding,
receivership proceeding or other insolvency, dissolution, reorganization
or similar proceeding.
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(d)
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Pending
Claims. Except as has been disclosed in writing by
Seller within ten (10) days of the effective date of this Agreement, there
are no (i) material claims, demands, litigations, proceedings or
governmental investigations pending, or to the best of Seller’s knowledge
threatened against the Property or Seller, except as set forth in the
Title Commitment, (ii) special assessments or extraordinary taxes and
(iii) pending, or to the best of Seller’s knowledge, threatened
condemnation or eminent domain proceeding which would affect the Real
Property or any part thereof. There are no pending arbitration
proceedings or unsatisfied arbitration awards, or judicial proceedings or
orders respecting awards, which might become a lien on the Property or any
portion thereof, or other pending, actual or, to Seller’s knowledge,
threatened litigation claims, charges, complaints, petitions or
unsatisfied orders by or before any administrative agency or court which
could affect Seller, the Real Property or might become a lien on the Real
Property.
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(e)
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Environmental. Seller
has delivered to Buyer true, correct and complete copies of all
environmental reports and investigations, including any and all
remediation documents (all of which are more particularly set forth on
Exhibit
D) (the “Environmental
Reports”). To the best of Seller’s knowledge and except
as set forth in the Environmental Reports, (i) there has been no Release
or threat of Release of Hazardous Materials from the Real Property, (ii)
no portion of the Real Property is being or has been used for the
treatment, storage, disposal or other handling of Hazardous Materials or
machinery containing Hazardous Materials, except for that which shall be
stored on the Property in strict compliance with applicable Environmental
Requirements and applicable laws, (iii) no underground storage tanks have
been or are currently located on, under, or in the Real Property or any
portion thereof, (iv) no environmental investigation, administrative
order, notification, consent order, litigation, claim, judgment or
settlement with respect to the Property or any portion thereof is pending
or threatened, (v) there is currently no mold, fungal or other
microbial growth in or on the Real Property, or conditions within
buildings, structures or mechanical equipment serving such buildings, that
could reasonably be expected to result in material liability or material
costs or expenses to remediate the mold, fungal or microbial growth, or to
remedy such conditions that could reasonably be expected to result in such
growth, (vi) there are no reports or other documentation regarding the
environmental condition of the Real Property in the possession of Seller
or its Affiliates, consultants, contractors or agents other than the
Environmental Reports and (vii) to Seller’s knowledge, no Hazardous
Materials are present on the real property which has migrated or otherwise
affected the Real Property or which could reasonably be expected to
migrate to or otherwise affect the Real Property. As used in
this Contract, “Hazardous
Materials” means (1) “hazardous wastes” as defined by the Resource
Conservation and Recovery Act of 1976, as amended from time to time
(“RCRA”),
(2) “hazardous substances” as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601 et seq.), as
amended by the Superfund Amendment and Reauthorization Act of 1986 and as
otherwise amended from time to time (“CERCLA”); (3)
“toxic substances” as defined by the Toxic Substances Control Act, as
amended from time to time (“TSCA”), (4)
“hazardous materials” as defined by the Hazardous Materials Transportation
Act, as amended from time to time (“HMTA”), (5)
asbestos, oil or other petroleum products, radioactive materials, urea
formaldehyde foam insulation, radon gas and transformers or other
equipment that contains dielectric fluid containing polychlorinated
biphenyls and (6) any substance whose presence is detrimental or hazardous
to health or the environment, including, without limitation, microbial or
fungal matter or mold, or is otherwise regulated by federal, state and
local environmental laws (including, without limitation, RCRA, CERCLA,
TSCA, HMTA), rules, regulations and orders, regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous
Materials or environmental, health or safety compliance (collectively,
“Environmental
Requirements”). As used in this Contract, “Release” means
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or
disposing.
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19
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(f)
|
Title and
Liens. Except for Seller Liens and Approved Liens to be
released and/or escrowed at Closing, respectively, there are no
encroachments (other than what might be evidenced on the survey), rights
of way or easements on or affecting the Real Property and Seller has good
and marketable fee simple title to the Real Property subject only to the
Permitted Exceptions. Except for any applicable Permitted
Exceptions, at the Closing, Seller shall have good and marketable title to
the Real Property and the Personal Property, free and clear of all liens,
claims, encumbrances or other rights whatsoever, and there shall be no
other liens, claims, encumbrances or other rights pending or of which
Seller has received notice or which are otherwise known to Seller related
to any other Personal Property other than an Approved
Lien. Pursuant to the disclosure required under Section 7.1(d)
above, Buyer has been advised that there are numerous outstanding disputes
with or claims by contractors or subcontractors and there are and shall be
as of Closing numerous mechanic's liens filed, pending or threatened
against the Real Property or Seller. Notwithstanding, in the
event that any contractor or Trade Contractor has not been paid in full at
the time of Closing, then pursuant to Section 4.3 above, 150% (one hundred
and fifty percent) of the claimed payment amount (or such higher amounts
as is required by the Title Company) shall be included in the Seller Lien
Escrow and deposited in accordance with the Seller Lien Escrow
Agreement.
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20
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(g)
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Utilities;
Access. All appropriate utilities, including sanitary
and storm sewers, water, gas, telephone, cable, internet and electricity,
are available at the boundaries of the Land and have been connected to the
Real Property, all connection or “tap-on,” usage and similar
fees have been paid, and such utilities shall be sufficient and available
at Closing to service the Real Property in connection with the operation
of the Real Property in accordance with its use as a hotel and otherwise
as required by Legal Requirements and the Seller’s Franchise
Agreement. Seller has no knowledge of any fact or condition
which would result or could result in the termination or reduction of the
current access from the Real Property to existing public streets, or of
any reduction in or to sewer or other utility services presently serving
the Property.
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(h)
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Approvals and Permits
and Licenses. The Real Property complies with all
applicable Permits and Licenses and federal, state or local
statutes, laws, ordinances, rules, regulations, requirements and codes
including, without limitation, those regarding building, fire, health,
safety, environmental, and the Americans with Disabilities Act, and
similar rules and regulations relating and/or applicable to the ownership,
use and operation of the Real Property as it is contemplated to be
operated and Seller or Seller’s Managing Agent has provided to Buyer true,
correct and complete copies of all Permits and Licenses related to the
Real Property, a list of which is attached as Exhibit E, as
part of the Due Diligence deliveries and shall provide the original
Permits and Licenses to Buyer at Closing. All Permits and
Licenses and approvals are transferable to Buyer at Closing without any
reapplication or the payment of any transfer fees except for permits
related to the Greenhouse. The use and occupancy of the Real
Property as the Hotel complies with all applicable local zoning,
subdivision and land use laws and
ordinances.
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(i)
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Recorded
Documents. All obligations of Seller to be performed or
complied with under all easements, declarations, covenants, conditions,
restrictions, reciprocal easement agreements, and all other agreements of
record (collectively, the “Recorded
Documents”) through the date of Closing have been satisfied or
shall be satisfied prior to the date of Closing, including, without
limitation, the obligation of Seller to pay any assessments, fees, charges
or other amounts which may become due under the Recorded Documents prior
to the date of Closing, and a list of such Recorded Documents is attached
hereto as Exhibit
R.
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21
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(j)
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Employees. Other
than pursuant to Seller’s Management Agreement and Seller’s previous
management agreement that has been terminated, there is no Person or
Persons which are currently employed at or with respect to the Property,
nor are any of Seller’s employees at the Hotel, if any, a party to any
employment agreements, Employee Plan or union contracts with respect to or
relating to the Property nor are any of the employees of the Hotel
represented by any labor
organization.
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(k)
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Compliance with
Insurance Requirements. Seller has not received any
written notice from any of the insurers of the Property or any board of
fire underwriters of any physical condition thereof of which such insurer
has required correction or change or of any practice of Seller or refusing
to renew any insurance policy.
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(l)
|
Casualty. There
has been no casualty or damage to the Property which has not been fully
repaired and the cost thereof fully
paid.
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(m)
|
Hotel. The
Hotel has been be constructed substantially in accordance with the Plans
and the construction, use and operation of the Real Property as a hotel
does not violate any building, health, environmental, fire or similar law,
ordinance, regulation or restrictive covenant now in force or
effect. The Hotel does not violate any federal, state,
county, or municipal laws, ordinances, orders, regulations or requirements
nor has Seller or any of its agents received any notice of any such
violation. The Hotel and all of its building and operating
systems were, at the time of installation, in a new condition and are in
working order except for normal wear and tear in the normal course of
business. The Property to be purchased is all of the property
of every kind and nature necessary for the operation of the Hotel as a
hotel in the ordinary course of business in accordance with the Seller’s
Franchise Agreement, and at Closing, the Hotel will be fully equipped with
FF&E and OS&E in accordance with the terms of this
Contract.
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(n)
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Taxes. On
or prior to Closing, Seller shall have duly filed in a timely manner (or
will file within the required time periods, including extensions obtained)
all federal, state, county and local income, franchise, excise,
withholding, sales, occupancy, payroll, property (real, personal and
intangible), hotel and any other tax returns and reports with respect to
the Property and shall have paid all taxes, interest, penalties and all
assessments owed by Seller through the date of Closing. Seller
has paid, or made adequate provision for the payment of, all taxes with
respect to the conduct of its business at the Property through the
Closing. Seller has been notified of a tax deficiency,
assessment and penalty with respect the Property and will pay such amount
in full at Closing. Seller has no knowledge of any
basis for any additional claim or assessment for taxes, interest or
penalties. No liens for taxes, federal, state or local, have
been filed against Seller or its assets, which constitute the
Property. For the period from Closing until the expiration of
the Bulk Sales Survival Period, Buyer shall indemnify Seller for any
additional taxes related to the Purchase Price allocated to Tangible
Personal Property which may become due as the result of an audit or other
determination by the State of New York (“Seller’s Bulk Sale
Covenant”).
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22
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(o)
|
No
Options. There are no options to purchase, rights of
first refusal or other similar agreements with respect to the Property
which give anyone the right to purchase the Property or any part thereof,
other than Buyer.
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(p)
|
Service Contracts and
Leases. Except for those disclosed to Buyer by Seller’s
Managing Agent, there are no contracts or agreements which affect the
Property, except for the Service Contracts and Leases set forth on
Exhibits P and O and New Contracts, and Seller has not entered into any
agreements with any hotel franchisor relating to the Property that would
be binding on Buyer or the Property, other than Seller’s Franchise
Agreement which will be terminated in connection with
Closing. Seller represents and warrants to Buyer that: (i)
true, correct and complete copies of all Service Contracts and Leases have
been delivered to Buyer, (ii) the Service Contracts and Leases are in full
force and effect and have not been amended or modified except as disclosed
in writing to Buyer prior to the date of this Contract, (iii) except for
the Seller’s Franchise Agreement, the Service Contracts and Leases are
fully transferable and assignable to Buyer without the payment of any
fees and (iv) there are no defaults by Seller or any conditions
existing which, with the passage of time or the giving of notice or both
will become a default. Buyer will provide a list to Seller on
or prior to the expiration of the Review Period of the Service Contracts
and Leases that shall be assigned to Buyer at Closing and Seller shall
terminate all other Service Contracts and Leases prior to Closing at
Seller’s expense. Notwithstanding anything in this Section
7.1(p) to the contrary, Seller shall assign any and all New Contracts
entered into in accordance with the terms of this Contract to Buyer at the
time of Closing.
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(q)
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Warranties. The
Warranty from the Contractor is assignable and will be assigned at Closing
to Buyer without the requirement of any consent from any third
party. In addition, Seller agrees to use commercially
reasonable efforts to secure Warranties from all Trade Contractors and
assign such Warranties to Buyer after the date of Closing. All
FF&E and OS&E at the Hotel are owned by Seller (and not leased)
and have never been used other than at the Property and shall be in new
condition, except for normal wear and tear during the normal course of
business.
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(r)
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Not a Prohibited
Person. None of Seller, any subsidiary of Seller nor, to
Seller’s knowledge, any of their respective direct or indirect beneficial
owners is now or shall be at any time prior to or at the Closing a person
with whom (i) a United States citizen, permanent resident alien or person
within the United States, (ii) an entity organized under the laws of the
United States or its territories, (iii) an entity wherever organized or
doing business that is owned or controlled by persons specified in (i) or
(ii) or an entity organized under the laws of the United States or its
territories or entity having its principal place of business within the
United States or any of its territories (collectively, a "U.S. Person")
is prohibited from transacting business of the type contemplated by this
Contract, whether such prohibition arises under any relevant United States
law, regulation and executive orders, including lists published by the
Office of Foreign Assets Control, Department of the Treasury ("OFAC")
(including those executive orders and lists published by OFAC with respect
to persons or entities that have been designated by executive order or by
the sanction regulations of OFAC as persons or entities with whom U.S.
Persons may not transact business or must limit their interactions to
types approved by OFAC or otherwise) or under United Nations, OEDC or
other similar laws, regulations, executive orders or
guidelines. To Seller's Knowledge, neither Seller nor any of
its direct or indirect beneficial owners is a Person with which a U.S.
Person, including a United States Financial Institution as defined in 31
U.S.C. §5312, as amended is prohibited from transacting business of the
type contemplated by this Contract under any applicable
laws. To Seller's Knowledge, Seller and its direct and indirect
beneficial owners are in compliance with the Patriot Act as applicable to
Seller and its direct and indirect beneficial
owners.
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23
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(s)
|
Due
Diligence. As of the date hereof and as set forth in
Section 3.1, Seller has furnished to Buyer all documents in its possession
or control (or reasonably available to Seller by and through its agents or
representatives) related to the Property, which documents are listed on
Exhibit C
attached hereto, including the documents listed on Exhibit C-1
attached hereto which were previously in Buyer’s possession (collectively,
the “Due
Diligence”). The Due Diligence is true, correct and
complete and Seller shall provide all amendments and updates thereto up to
and through the Closing Date. Exhibit C
contains Seller’s comments such that where Seller has marked “does not
exist” next to an item then Seller represents and warrants that such item
does not exist in connection with the
Property.
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(t)
|
Temporary Certificates
of Occupancy. Seller has provided Buyer a
Temporary Certificate of Occupancy for the Real
Property.
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(u)
|
Conveyance. For
so long as this Contract shall remain in full force and effect, Seller
shall not rent, assign, lease, convey grant a security interest in or
otherwise dispose of any interest in the Hotel or the Property, or any
part thereof or interest therein, or consent to any of the foregoing,
without Buyer’s prior written consent, except that Seller through Seller’s
Manager shall be entitled to rent guest rooms in the Hotel, enter into
Bulk Room Agreements and make reservations for the same in the ordinary
course of business.
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24
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(v)
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Hotel
Operations. Seller’s Franchise Agreement is in full
force and effect with no defaults thereunder or any conditions existing
which, with the passage of time or giving of notice or both, will become a
default.
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7.2 Buyer’s Representations,
Warranties and Covenants. Buyer represents warrants and
covenants as follows:
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(a)
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Authority. Buyer
is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of its formation and is qualified to
do business in the State of New York. Buyer has received or
will have received by the date of Closing all necessary consents of the
Buyer and is fully authorized to complete the transactions contemplated by
this Contract. No other consent or approval of any person,
entity or governmental authority is required for the execution, delivery
or performance by Buyer of this Contract, and this Contract is hereby
binding and enforceable against
Buyer.
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(b)
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Bankruptcy. Buyer
is not insolvent nor the subject of any bankruptcy proceeding,
receivership proceeding or other insolvency, dissolution, reorganization
or similar proceeding.
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(c)
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Judgments. There
are no judgments, orders or decrees of any kind against Buyer which are
unpaid or unsatisfied of record, nor any actions, suits or other legal or
administrative proceedings pending or threatened against Buyer which would
have a material adverse effect against Buyer’s ability to consummate the
transactions contemplated by this
Contract.
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(d)
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Not a Prohibited
Person. None of Buyer, any subsidiary of Buyer nor (to
Buyer’s knowledge) any of their respective direct or indirect beneficial
owners is now or shall be at any time prior to or at the Closing a person
with whom a U.S. Person is prohibited from transacting business of the
type contemplated by this Contract, whether such prohibition arises under
any relevant United States law, regulation and executive orders, including
lists published by OFAC (including those executive orders and lists
published by OFAC with respect to persons or entities that have been
designated by executive order or by the sanction regulations of OFAC as
persons or entities with whom U.S. Persons may not transact business or
must limit their interactions to types approved by OFAC or otherwise) or
under United Nations, OEDC or other similar laws, regulations, executive
orders or guidelines. To Buyer's Knowledge, neither Buyer nor
any of its direct or indirect beneficial owners is a Person with which a
U.S. Person, including a United States Financial Institution as defined in
31 U.S.C. §5312, as amended is prohibited from transacting business of the
type contemplated by this Contract under any applicable
laws. To Buyer's Knowledge, Buyer and its direct and indirect
beneficial owners are in compliance with the Patriot Act as applicable to
Buyer and its direct and indirect beneficial
owners.
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7.3
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25
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(a)
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Survival
Period. Each party represents and warrants that all of
the representations and warranties made by such party are true, correct
and complete as of the date hereof and shall be true, correct and complete
in all material respects as of the date of Closing and, in each case,
without qualification or limitation as to a party’s knowledge thereof
except as expressly provided for in this Article VII. All of
the representations and warranties made herein shall survive Closing for
one year from the date of Closing (the “Survival
Period”) and shall not be deemed to merge into or be waived by the
Deed or any other closing documents. A party shall only be
permitted to make a claim against the other party for a breach of any
representation or warranty made herein if (i) such breach shall have been
discovered prior to the expiration of the Survival Period, (ii) a notice
of such breach shall have been given to the breaching party prior to the
expiration of the Survival Period and (iii) an action, suit or other
proceeding shall have been commenced, or a claim shall have been filed,
against the breaching party within sixty (60) days after the expiration of
the Survival Period. Until Closing, Seller and Buyer shall use
commercially reasonable efforts to promptly update any representation or
warranty in this Contract and to correct any mistake and/or to reflect any
matter which arises after the date hereof, but no such updating shall
limit any liability a party may have for a representation or warranty
which was not true when made.
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(b)
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Bulk Sale Survival
Period. Notwithstanding any other provision of this
Contract, Seller’s Bulk Sale Covenant shall survive Closing for thirty-six
(36) months (the “Bulk Sale Survival
Period”) and shall not be deemed to merge into or be waived by the
Deed or any other closing documents. During the period between
the expiration of the Survival Period and the expiration of the Bulk Sale
Survival Period, if any, Buyer shall only be permitted to make a claim
against Seller for a breach of Seller’s Bulk Sale Covenant made herein if
(i) such breach shall have been discovered prior to the expiration of the
Bulk Sale Survival Period and (ii) a notice of such breach shall have been
given to Seller and Escrow Agent prior to the expiration of the Bulk Sale
Survival Period, and any such claim shall be satisfied in accordance with
Section 8.12 hereof.
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(c)
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This
Section 7.3 shall survive Closing as provided
above.
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7.4 Changed Fact or
Circumstance. All of Seller’s representations and warranties
set forth in Section 7.1 shall be deemed to have been remade on and as of the
Closing Date.
ARTICLE
VIII
ADDITIONAL
COVENANTS
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8.1
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Intentionally
Deleted.
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8.2
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Intentionally
Deleted
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26
8.3 Bulk
Sales. Seller and Buyer shall comply with the bulk sales or
similar laws of any state in which the Property is located or in which
operations related to the Hotel are conducted.
8.5 Inspections. Buyer
and/or its representatives and agents shall have the right to inspect the
Property at all reasonable times until Closing and shall be do so only at
reasonable times and in a manner that will minimize any interference with the
development and construction of the Hotel on the Property. Seller
shall have the right to have its representative present during such inspections
of the Property, provided that failure of Seller to do so shall not prevent
Buyer from exercising its review and inspection rights
hereunder. Buyer covenants and agrees to use its good
faith efforts not to damage or destroy any portion of the Property in conducting
its inspections of the Property and, if Closing does not occur, shall repair any
portion of the Property damaged by the conduct of Buyer, its agents or
employees, to substantially the condition such portion(s) of the Property were
in immediately prior to such examinations or studies and Buyer agrees to
indemnify and hold Seller harmless concerning any such damage provided that such
damage is caused by Buyer or its agents, provided, however, that
Buyer shall not be responsible under any circumstances for any environmental
hazards discovered which may arise as a result of Buyer’s or its agents’
activities provided that such inspections or tests were performed in accordance
with applicable laws. This Section 8.5 shall survive the early
termination of this Contract.
8.7 Other Obligations of
Seller. From and after the date hereof through the Closing or
earlier termination of this Contract, Seller shall perform and comply with all
of the following:
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(a)
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Advise
Buyer promptly of any litigation, arbitration, or administrative hearing
before any court or governmental agency concerning or affecting the Real
Property which is instituted or threatened after the date of this Contract
or if any representation or warranty contained in this Contract shall
become false, and promptly provide Buyer copies of all notices received
from or any correspondence with respect to any governmental authority,
whether new or previously received, with regard to zoning, building
violations or other matters which affect the Real
Property. Notwithstanding, Seller shall not considered in
default of this section if Seller fails to provide any Environmental
Control Board and/or Department of Buildings violations received by Seller
or its Contractor during the normal course of construction of the Hotel
provided that Seller has cured, removed and paid all fines and penalties
associated with such Environmental Control Board and Department of
Buildings violations;
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(b)
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Not
take, allow or purposefully omit to take, any action that would have the
effect of violating any of the representations, warranties, covenants or
agreements of Seller contained in this
Contract;
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27
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(c)
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Pay
or cause to be paid all taxes, assessments and other impositions levied or
assessed on the Real Property and Personal Property or any part thereof
prior to the date due, and comply with all federal, state, and municipal
laws, ordinances, regulations and orders relating to the Property, except
that any unpaid real estate taxes, water, sewer and/or utility services
may be paid by Seller at Closing from the Purchase
Price;
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(d)
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Not
allow any permit, license, warranty, franchise or right in existence with
respect to the construction, operation, use, occupancy or maintenance of
the Real Property to expire, be canceled or otherwise terminate, and
Seller shall assign all Warranties to Buyer at Closing and evidence such
assignment by delivering warranty assignments executed by the provider of
each Warranty at Closing (subject to Section 7.1(q) with respect
to Trade Contractors);
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(e)
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Seller
shall maintain and obtain all insurance coverage as is currently in effect
as of the date hereof or becomes required under Seller’s Franchise
Agreement and/or Seller’s Management Agreement; Seller shall maintain in
full force and effect all policies of insurance relating to the Hotel
through the Closing Date, shall pay all premiums with respect thereto on
or before the due date and shall not take any action or fail to take any
action which would cause any such policies of insurance not to be in full
force and effect;
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(f)
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Seller
shall (i) not enter into any employment agreement, Employee Plan or union
contract, with respect to the Property or the hotel without the prior
written consent of Buyer and (ii) comply with all Employment
Laws;
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(g)
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Seller
shall not solicit any of Buyer’s general manager or salaried employees for
a period of two (2) years after Closing. This provision shall
survive the Closing for a period of two (2)
years;
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(h)
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After
Buyer deposits the Additional Deposit with Escrow Agent, then Seller shall
not enter into any Service Contract without the prior written consent of
Buyer (i) that is with an Affiliate of Seller or (ii) unless such Service
Contract (x) is specifically required in writing by Franchisor to maintain
Seller’s Franchise Agreement in good standing or (y) is specifically
required by the New York City Department of Buildings and/or other
governmental agencies of New York in order to continue to use and occupy
the Property as a hotel. Prior to Closing, Seller’s Manager,
upon prior written notice to Buyer, may enter into Service Contracts in
the ordinary course of business for the Hotel without the prior approval
of Buyer provided that each such Service Contract is not with an affiliate
of Seller or Seller’s Manager, is on terms consistent with the prevailing
market and has a term no longer than one year. Any such Service
Contract permitted pursuant to this Section 8.7(h) shall be a “New
Contract”. Seller shall promptly provide to Buyer true,
correct and complete copies of all New Contracts entered into after the
date hereof. Notwithstanding the foregoing, Seller’s Manager
may enter into any Bulk Room Agreements following the date hereof without
prior approval of Buyer, provided that Seller promptly provides a complete
copy of each executed Bulk Room Agreement to
Buyer;
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28
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(i)
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Seller
and Seller’s Affiliates shall use best efforts to cause each “Seller”
under both of the Hotel Contracts to comply with all of the terms,
covenants and conditions required to be complied with on the part of each
“Seller” thereunder such that both Hotel Contracts close simultaneously,
each in accordance with their respective terms and
conditions;
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(j)
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From
and after the date hereof, through the Closing Date, Seller shall maintain
and operate the Hotel, at Seller’s sole cost and expense, in the same
manner as comparable hotels located in the New York City metropolitan area
operated by Seller’s Manager; and
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(k)
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Prior
to Closing, Seller shall keep Seller’s Management Agreement in full force
and effect.
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(a)
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Buyer
shall have the right to arrange for an inspection of the Hotel with Seller
and Seller’s Manager prior to Closing. Following the
inspection, Buyer shall prepare a list of items requiring correction or
completion without taking into account any ordinary wear and tear as
provided for in this Agreement (“Buyer’s Punch
List”). To the extent possible, Seller shall diligently
pursue correction and completion of the items on the Buyer’s Punch List
prior to Closing. In the event that the Buyer’s Punch List is
not completed prior to Closing, then the costs of completing the Buyer’s
Punch List, as agreed to by Buyer, Seller and Seller’s Manager (with a
value attributed to each item on Buyer’s Punch List), plus twenty percent
(20%) of such costs (collectively, “Buyer’s Punch List
Escrow”) shall be retained by the Escrow Agent from the Purchase
Price at Closing . Following Closing, Seller shall use
commercially reasonable efforts to diligently pursue the correction or
completion of the Buyer’s Punch List within the one hundred and eighty
(180) day period subsequent to the Closing Date (“Punch List
Period”).
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(b)
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Upon
completion of all or any of the items on the Buyer’s Punch List and, if
the work is related to a construction deficiency (as opposed to a Personal
Property deficiency). the delivery to Buyer of a release of liens from the
Contractor and any applicable subcontractor for the work in question in a
form reasonably acceptable to Buyer, Seller shall submit to Escrow Agent a
request for release of funds equal to the amount that corresponds with the
amount allocated to the work completed plus twenty percent
(20%). A copy of the request shall be concurrently sent to
Buyer indicating (i) that Seller is requesting a release of funds from the
Buyer’s Punch List Escrow, (ii) the specified punch list
item completed, (iii) that the applicable releases of liens
have been provided and (iv) the amount requested (“Buyer’s Punch List
Claim Notice”). Each request, if it references work pertaining
to a construction deficiency, shall also include a written
statement from the Architect certifying that the punch list items for
which Seller is seeking reimbursement have been completed. If
Seller delivers a Buyer’s Punch List Claim Notice to Escrow Agent and
Buyer, then Buyer shall have ten (10) days following receipt of the
Buyer’s Punch List Claim Notice from Seller to notify Seller and Escrow
Agent that either Buyer (x) consents to Seller’s claim and to the
disbursement by Escrow Agent of the amount set forth in the Buyer’s Punch
List Claim Notice or (y) objects to Seller’s claim, which objection notice
shall specifically state the reason for Buyer’s objection. If
Escrow Agent receives an acceptance notice from Buyer or if Buyer fails to
deliver written notice within the aforementioned ten (10) day period, the
Escrow Agent is authorized and directed to disburse to Seller from the
Buyer’s Punch List Escrow the amount specified in Buyer’s Punch List Claim
Notice. If Escrow Agent receives an objection from the Buyer
within the aforementioned ten (10) day period then the Escrow Agent shall
take no further action with respect to the specific items disapproved by
Buyer until Escrow Agent receives joint-written instructions by Buyer and
Seller or a court order with
respect to which any relevant appeal period has expired without an appeal
having been taken; provided, however, that Escrow Agent shall disburse to
Seller the portion of the claim relating to the punch list items that are
not disapproved in Buyer’s objection letter. A written
statement from the Architect and/or Buyer’s Manager confirming that each
punch list item for which Seller is seeking reimbursement has been
completed to such party’s satisfaction shall be prima facie evidence of
Seller’s satisfaction of the requirements for release of the amount
allocated to the completed work, absent manifest
error. To the extent Seller has not satisfied the
conditions for the release of any portion of the Buyer’s Punch List Escrow
by the end of the Punch List Period, Buyer shall be entitled to receive
such funds from Escrow Agent. If at the end of the Punch List Period,
there is an outstanding Buyer’s Punch List Claim Notice which has not been
paid and has not been resolved by joint written instructions or a final
court order (“Outstanding Buyer’s Punch List Claim Amount”), then Escrow
Agent is authorized to continue to hold Outstanding Buyer’s Punch List
Claim Amount until receipt of a final court order or joint written
instructions of Buyer and Seller, and Escrow Agent shall, on
the first Business Day after the Punch List Period, disburse to
Buyer the remaining balance of the Buyer’s Punch List Escrow (excluding
the Outstanding Buyer’s Punch List Claim Amount), if any, without notice
to or consent of Buyer or Seller.
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29
8.11 Intentionally
Deleted.
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(a)
|
Intentionally
Deleted.
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(b)
|
Intentionally
Deleted.
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(c)
|
Seller’s Post Closing
Escrow. On the Closing Date the Escrow Agent shall hold
back One Hundred and Twenty-Five Thousand Dollars ($125,000.00) under this
Contract (the “Seller’s Post Closing
Escrow”). Amounts held by the Escrow Agent in the
Seller’s Post Closing Escrow shall be released to Seller once the
Certificate of Occupancy is secured provided that the Certificate of
Occupancy is secured within the timeframe set forth in Section 8.13 below;
otherwise the amounts held by the Escrow Agent in the Seller’s
Post Closing Escrow shall be released to
Buyer.
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(d)
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Construction
Warranty. On the Closing Date, Seller shall execute and
deliver and shall cause the Contractor to execute and deliver the
Construction Warranty to Buyer in the form attached hereto as Exhibit
G. Buyer shall use commercially reasonable efforts to
send Seller a copy of any demand made by Buyer upon the Contractor;
provided, however, that any failure to send a notice shall not modify,
diminish or negate any of the rights or remedies that Buyer has under this
Contract. Seller agrees to use commercially reasonable efforts
to assist Buyer in resolving its claims against Contractor and that
obligation shall survive Closing.
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8.13 Certificate of
Occupancy. Seller shall use commercially reasonable efforts to
cause the Certificate of Occupancy for the Hotel to be issued to Buyer as soon
as possible following the Closing, but in any event within eighteen (18) months
from the Closing Date. Seller shall employ an expediter following
Closing, at Seller’s sole cost and expense, reasonably acceptable to Buyer, to
assist in the issuance of the Certificate of Occupancy and Seller’s employment
of such expediter will only terminate after such Certificate of Occupancy has
been issued to Buyer.
8.14 Indemnification
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(a)
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Indemnification of
Buyer. Without in any way limiting or diminishing the
warranties, representations or agreements herein contained or the rights
or remedies available to Buyer for a breach hereof, Seller hereby agrees,
for the Survival Period (and for the Bulk Sale Survival Period with
respect to subsection (v) below only), to indemnify, defend and hold
harmless Buyer and its respective designees, successors and assigns from
and against all losses, judgments, liabilities, claims, damages or
expenses (including reasonable attorneys’ fees and disbursements) of every
kind, nature and description in existence before, on or after Closing,
whether known or unknown, absolute or contingent, joint or several,
arising out of or relating to:
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30
(i) any
claim made or asserted against Buyer or against the Property by a creditor of
Seller;
(ii) the
breach of any representation, warranty, covenant or agreement of Seller
contained in this Contract which expressly survives Closing or the earlier
termination of this Contract;
(iii) any
liability or obligation of Seller not expressly assumed by Buyer pursuant to
this Contract;
(iv) the
conduct, use and operation of the Real Property by or on behalf of Seller prior
to Closing; and
(v) Seller’s
Bulk Sale Covenant in accordance with Section 7.1(n).
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(b)
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Indemnification of
Seller. Without in any way limiting or diminishing the
warranties, representations or agreements herein contained or the rights
or remedies available to Seller for a breach hereof, Buyer hereby agrees,
with respect to this Contract, to indemnify, defend and hold harmless
Seller from and against all losses, judgments, liabilities, claims,
damages or expenses (including reasonable attorneys’ fees) of every kind,
nature and description in existence before, on or after Closing, whether
known or unknown, absolute or contingent, joint or several, arising out of
or relating to:
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(i) the
breach of any representation, warranty, covenant or agreement of Buyer contained
in this Contract which expressly survives Closing; and
(ii) any
liability or obligation of Buyer expressly assumed by Buyer at
Closing.
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(c)
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Indemnification
Procedure for Claims of Third Parties. Indemnification,
with respect to claims resulting from the assertion of liability by those
not parties to this Contract (including governmental claims for penalties,
fines and assessments), shall be subject to the following terms and
conditions:
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(i) The
party seeking indemnification (the “Indemnified Party”)
shall give prompt written notice to the party or parties from which it is
seeking indemnification (the “Indemnifying Party”)
of any assertion of liability by a third party which might give rise to a claim
for indemnification based on the foregoing provisions of this Section 8.14,
which notice shall state the nature and basis of the assertion and the amount
thereof, to the extent known; provided, however, that no delay on the part of
the Indemnified Party in giving notice shall relieve the Indemnifying Party of
any obligation to indemnify unless (and then solely to the extent that) the
Indemnifying Party is materially prejudiced by such delay.
31
(ii) If
in any action, suit or proceeding (a “Legal Action”) the
relief sought is solely the payment of money damages, and if the Indemnifying
Party specifically agrees in writing to indemnify such Indemnified Party with
respect thereto and demonstrates to the reasonable satisfaction of such
Indemnified Party its financial ability to do so, the Indemnifying Party shall
have the right, commencing thirty (30) days after such notice, at its option, to
elect to settle, compromise or defend, pursuant to this paragraph, by its own
counsel and at its own expense, any such Legal Action involving such Indemnified
Party’s asserted liability. If the Indemnifying Party does not
undertake to settle, compromise or defend any such Legal Action, such
settlement, compromise or defense shall be conducted in the sole discretion of
such Indemnified Party, but such Indemnified Party shall provide the
Indemnifying Party with such information concerning such settlement, compromise
or defense as the Indemnifying Party may reasonably request from time to
time. If the Indemnifying Party undertakes to settle, compromise, or
defend any such asserted liability, it shall notify such Indemnified Party in
writing of its intention to do so within thirty (30) days of notice from such
Indemnified Party provided above.
(iii) Notwithstanding
the provisions of the previous subsection of this Contract, until the
Indemnifying Party shall have assumed the defense of the Legal Action, the
defense shall be handled by the Indemnified Party. Furthermore, (x)
if the Indemnified Party shall have reasonably concluded that there are likely
to be defenses available to it that are different from or in addition to those
available to the Indemnifying Party; (y) if the Legal Action involves other than
money damages and seeks injunctive or other equitable relief; or (z) if a
judgment against Buyer, as the Indemnified Party, in the Legal Action will, in
the good faith opinion of Buyer, establish a custom or precedent which will be
adverse to the best interests of the continuing business of the Hotel, the
Indemnifying Party, shall not be entitled to assume the defense of the Legal
Action and the defense shall be handled by the Indemnified Party. If
the defense of the Legal Action is handled by the Indemnified Party under the
provisions of this subsection, the Indemnifying Party shall pay all legal and
other expenses reasonably incurred by the Indemnified Party in conducting such
defense.
(iv) In
any Legal Action initiated by a third party and defended by the Indemnified
Party (w) the Indemnified Party shall have the right to be represented by
advisory counsel and accountants, at its own expense, (x) the Indemnifying Party
shall keep the Indemnified Party fully informed as to the status of such Legal
Action at all stages thereof, whether or not the Indemnified Party is
represented by its own counsel, (y) the Indemnifying Party shall make available
to the Indemnified Party and its attorneys, accounts and other representatives,
all reasonably necessary books and records of such Indemnifying Party relating
to such Legal Action and (z) the parties shall render to each other such
assistance as may be reasonably required in order to ensure the proper and
adequate defense of such Legal Action.
(v) In
any Legal Action initiated by a third party and defended by the Indemnifying
Party, the Indemnifying Party shall not make settlement of any claim without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Without limiting the generality of the
foregoing, it shall not be deemed unreasonable to withhold consent to a
settlement involving injunctive or other equitable relief against Buyer or its
respective assets, employees, Affiliates or business, or relief which Buyer
reasonably believes could establish a custom or precedent which will be adverse
to the best interests of its continuing business.
32
ARTICLE
IX
9.1 Conditions to Obligations of
Seller. The obligations of Seller under this Contract to sell
the Property and consummate the other transactions contemplated hereby shall be
subject to the satisfaction of the following conditions on or before the Closing
Date, except to the extent that any of such conditions may be waived by Seller
in writing at Closing in Seller's sole and absolute discretion.
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(a)
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All
representations and warranties of Buyer contained in Section 7.2 shall be
true and correct as of the Closing Date, with the same force and effect as
if such representations and warranties were made anew as of the Closing
Date, and Buyer shall have performed and complied in all material respects
with all covenants and agreements required by this Contract to be
performed or complied with by Buyer on or prior to the Closing
Date.
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(b)
|
Buyer
shall have delivered the Purchase Price to Escrow Agent as and when
required on or prior to Closing.
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(c)
|
Buyer
shall have delivered or caused to be delivered to Seller the documents and
instruments required to be delivered by Buyer pursuant to Section 10.3 of
this Contract.
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(d)
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If
Buyer elects to do so and notifies Seller prior to Closing, Seller shall
cause the Seller’s Management Agreement for the Hotel to be terminated at
Closing, and shall deliver to Buyer at Closing written evidence of such
termination. The Buyer shall be responsible for all costs and fees in
connection with such termination.
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9.2 Termination for Failure of a
Seller’s Condition. In
the event Seller shall elect not to close due to the failure of any one or more
of the conditions precedent to Seller's obligation to sell set forth in Section
9.1 which has not been waived by Seller in writing in Seller's sole and absolute
discretion, Seller may immediately terminate this Contract by notifying Buyer in
writing on the Closing Date. Promptly following receipt of such
written notice, the Escrow Agent shall return the Xxxxxxx Money Deposit to
Seller and this Contract shall terminate, and Seller and Buyer shall be relieved
of all other rights, obligations and liabilities hereunder except as to any
provision specifically deemed to survive termination of this
Contract.
9.3 Conditions to Obligations of
Buyer. The obligations of Buyer under this Contract to
purchase the Property and consummate the other transactions contemplated hereby
shall be subject to the satisfaction of the following conditions on or before
the Closing Date, except to the extent that any of such conditions may be waived
by Buyer in writing at Closing in the Buyer's sole and absolute
discretion.
33
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(a)
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Seller
shall have obtained either a Certificate of Occupancy or the Temporary
Certificate of Occupancy at the time of
Closing.
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(b)
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Seller
must have completed construction, furnished and opened each “Hotel” under
both of the Hotel Contracts in accordance with (i) the “Plans” (as defined
in each Hotel Contract), which shall be evidenced by a completion
certificate on a standard AIA form (including a certification of
compliance with all laws including ADA), completed and executed by the
Architect and including the certification that direct connection has been
made to all appropriate utility facilities, (ii) the contracts with
Contractor and Construction Manager and (iii) the Brand
Standards.
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(c)
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Seller
shall have furnished the Hotel with all of FF&E and OS&E in
accordance with Seller’s Franchise
Agreement.
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(d)
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Seller
shall have delivered to Buyer title to the Real Property at Closing in
accordance with Section 4.2.
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(f)
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Seller
shall have delivered or caused to be delivered to the Buyer the documents
and instruments required to be delivered by the Seller pursuant to Section
10.2 of this Contract.
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(g)
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Seller
and/or its Affiliates have performed the obligations of each “Seller”
under all the Hotel Contracts.
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(h)
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Seller
has executed and delivered the Voluntary Termination of License Agreement
to Franchisor.
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(i)
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All
representations and warranties of Seller contained in Section 7.1 shall be
true and correct as of the Closing Date, with the same force and effect as
if such representations and warranties were made anew as of the Closing
Date, and Seller shall have performed and complied in all material
respects with all covenants and agreements required by this Contract to be
performed or complied with by Seller on or prior to the Closing
Date.
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(k)
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The
Title Company is prepared to issue a Title Policy to Buyer in accordance
with the terms of this Contract.
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(l)
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Buyer
has received an Approval Letter, which Approval Letter is in full force
and effect and has not been otherwise modified or rescinded by Franchisor,
and Buyer has executed and submitted a New Franchise License to Franchisor
which is acceptable to Buyer in Buyer’s sole
discretion.
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(m)
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Seller
has delivered to Buyer an executed copy of the Right to First Offer
Agreement in substantially the same form as set forth in Exhibit
K.
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9.4 Termination for Failure of a
Buyer’s Condition. In the event Buyer shall elect not to close
due to the failure of any one or more of the conditions precedent to Buyer's
obligation to consummate this transaction set forth in Section 9.3 which has not
been waived by Buyer in writing in Buyer's sole and absolute discretion, Buyer
shall so notify Seller in writing specifying the unfulfilled condition(s), and
Buyer shall elect to (i) terminate the Contract in which case Seller shall be
obligated to pay and comply with the Buyer’s Terms or (ii) postpone the Closing
pursuant to Section 10.1 during which xxxx Xxxxxx shall diligently pursue the
cure of any failed condition(s) within Seller’s reasonable
control. Notwithstanding this Section 9.4, in the event that a
failure of any one or more of the conditions precedent to Buyer's obligation to
consummate this transaction set forth in Section 9.3 is also a default by Seller
under this Contract then all rights and remedies provided under this Contract,
including those under Section 14.2, shall be available to Buyer.
ARTICLE
X
CLOSING
AND CONVEYANCE
10.1
Closing. Subject
always to the satisfaction of the conditions in Sections 9.1 and 9.3, the
closing of the purchase and sale of the Property (the “Closing”) shall occur on
a date selected by Buyer on at least five (5) days prior written notice to
Seller, which date shall be in no event be later than December 31, 2009, time
being of the essence (the “Closing Date”). If Closing does not occur on or
before December 31, 2009 other than due to Seller’s default or a postponement
due to the operation of Sections 9.4, 13.3 or 16.17, this Agreement
shall, at the option of Seller, terminate upon written notice to Buyer at which
time neither party shall have any obligations under this Agreement except those
that expressly survive its termination.
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(a)
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Intentionally
Deleted.
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(b)
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Intentionally
Deleted.
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10.2
Seller’s
Deliveries. At Closing, Seller shall deliver to Buyer the
following, and, as appropriate, all instruments shall be properly executed and
acknowledged (the terms, provisions and conditions of all instruments not
attached hereto as Exhibits shall be mutually agreed upon by Buyer and Seller
prior to Closing) in their
respective reasonable discretion).
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(a)
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Deed. A
Bargain and Sale Deed with covenants conveying to Buyer fee simple title
to the Real Property in the form attached hereto as Exhibit F (the
“Deed”).
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(b)
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Xxxx of
Sale. A xxxx of sale to Buyer conveying title to the
Tangible Personal Property in the form attached hereto as Exhibit I free
and clear of any lien, sales tax or encumbrance other than Permitted
Exceptions, and containing a general warranty of title, together with
delivery of all said items to
Buyer.
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(c)
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General
Assignment. A general assignment of all of Seller’s
right, title and interest in and to all Service Contracts, Records,
Warranties, Defect Claims, Permits and Licenses, Leases,
Tradenames, the Plans and all Intangible Property applicable to
the Hotel, including any rights of Seller under Seller’s construction
contract with the Contractor (but not any obligations under such
construction contract), in the form attached hereto as Exhibit H (the
“General
Assignment”) free and clear of any lien or encumbrance, together
with written evidence satisfactory to Buyer of any required third party
consent to such assignment. Seller will deliver all original
Service Contracts and Leases, if any, which Buyer has elected to assume;
all Warranties, Permits and Licenses, including the Temporary and
Certificate of Occupancy for the Property allowing legal occupancy of the
Hotel as a hotel; and any Seller FF&E and Seller OS&E required
under this Contract and any repairs and additions thereto; permits,
approvals and licenses issued by all appropriate governmental authorities
and fire underwriting organizations with respect to the construction and
use of the Real Property or any part thereof; and any copies of the
Plans.
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(d)
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FIRPTA;
1099. A FIRPTA Affidavit or Transferor’s Certificate of
Non-Foreign Status as required by Section 1445 of the Internal Revenue
Code and an IRS Form 1099.
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(e)
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Title Company
Documents. All affidavits, gap and other indemnity
agreements and other documents reasonably required by the Title Company to
deliver the Title Policy required to be delivered at Closing under this
Contract.
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(f)
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Possession; Estoppel
Certificates. An estoppel certificate from Contractor in
the form attached hereto as Exhibit T and
an estoppel certificate from Architect in the form attached hereto as
Exhibit
U, each of which shall be dated no more than five (5) Business Days
prior to the Closing Date.
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(g)
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Certificate Updating
Representations. A certificate from Seller certifying
that all representations and warranties of Seller contained in this
Contract are true and correct as of the Closing
Date.
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(h)
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Authority
Documents. Certified copy of resolutions of the
partners, members or other applicable constituent owners of Seller
authorizing the sale of the Property contemplated by this Contract, and/or
other evidence reasonably satisfactory to Buyer and the Title Company that
the person or persons executing the closing documents on behalf of Seller
have full right, power and authority to do so, along with a certificate of
good standing of Seller from the State in which the Property is
located.
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(i)
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Plans, Keys, Records,
Etc. To the extent not previously delivered to and in
the possession of Buyer, Plans, Service Contracts, Leases, Permits and
Licenses, all Records, which shall be organized, bound and labeled, all
keys (which keys shall be properly tagged for identification),
combinations and passwords for the Hotel and its
equipment.
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(j)
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Settlement
Statement. An executed counterpart to the closing
statement setting forth all adjustments and prorations and other costs to
be paid in connection with the transactions contemplated herein in
accordance with this Contract (the “Settlement
Statement”).
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(k)
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Tax
Returns. All state, city, county and local transfer tax
returns and sales tax returns required to be filed in connection with the
performance of the parties’ obligations under this Contract at Closing
pursuant to applicable laws or this Contract together with all required
payments thereon, including a New York State TP-584 transfer tax form and
a New York City RPT transfer tax form and sales tax form with respect to
the payment of the applicable taxes relating to the Purchase Price
allocated to Tangible Personal Property and Intangible Property relating
to the Property pursuant to Section
2.3.
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(l)
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Miscellaneous. Such
other instruments as are contemplated by this Contract to be executed or
delivered by Seller, reasonably required by Buyer or the Title Company, or
customarily executed in New York, to effectuate the conveyance of the
Property, with the effect that, after the Closing, Buyer will have
succeeded to all of the rights, titles, and interests of Seller related to
the Property and Seller will no longer have any rights, titles, or
interests in and to the Property.
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(m)
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Municipality
Documents. All certificates, affidavits and other
agreements which are required to be delivered to or by any state, county
or city municipality under Legal Requirements, including all certificates,
affidavits and other agreements required to effectuate the conveyance of
the Property to Buyer and/or record the
Deed.
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(n)
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Sales
Tax. Payment by certified funds to the applicable
governmental or taxing authority for the sales tax due pursuant to Section
2.3.
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(o)
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Construction
Warranty. An executed Construction
Warranty.
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(p)
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Assignment of
Leases. If there are any Leases to be assigned, then
Seller’s executed counterpart signature page to the Assignment of Leases,
the form of which is attached hereto as Exhibit
J.
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(q)
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Warranty. Warranty
assignment acknowledgement from the provider of each Warranty for all
Warranties (subject to Section 7.1(q) with respect to Trade
Contractors).
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(r)
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Voluntary Termination
of License Agreement. An executed Voluntary Termination
of License Agreement to Franchisor at
Closing.
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(s)
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Operational Items and
Accounts. All hotel inventory, cash on hand and accounts
and all other items used in the operation of the
Hotel.
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(t)
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Settlement
Statement. Seller’s executed counterpart signature page
to the Settlement Statement.
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10.3
Buyer’s
Deliveries. At Closing of the Hotel, Buyer shall deliver the
following:
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(a)
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Purchase
Price. The balance of the Purchase Price, adjusted
pursuant to the terms hereto.
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(b)
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Authority
Documents. Certified copy of resolutions of the
partners, members or the other applicable constituent owners of Buyer
authorizing the purchase of the Hotel contemplated by this Contract,
and/or other evidence reasonably satisfactory to Seller and the Title
Company that the person or persons executing the closing documents on
behalf of Buyer have full right, power and authority to do
so.
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(c)
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Miscellaneous. Such
other instruments as are contemplated by this Contract to be executed or
delivered by Buyer, reasonably required by Seller or the Title Company, or
customarily executed in New York, to effectuate the conveyance of the
Property, with the effect that, after the Closing, Buyer will have
succeeded to all of the rights, titles, and interests of Seller related to
the Property and Seller will no longer have any rights, titles, or
interests in and to the Property; provided, however, that in no event
shall Buyer be deemed to have assumed any obligations or liabilities of
Seller unless Buyer has expressly agreed in writing to assume the
same.
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(d)
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Settlement
Statement. An executed counterpart to the Settlement
Statement.
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(e)
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Tax
Returns. All state, city, county and local transfer tax
returns and sales tax returns required to be filed in connection with the
performance of the parties’ obligations under this Contract at Closing
pursuant to applicable laws or this Contract, including a New York State
TP-584 transfer tax form and a New York City RPT transfer tax form and
sales tax form with respect to the payment of the applicable taxes
relating to the Purchase Price allocated to Tangible Personal Property and
Intangible Property relating to the Property pursuant to Section
2.3.
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(f)
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Certificate Updating
Representations. A certificate or Buyer certifying that
all representations and warranties of Buyer contained in this Contract are
true and correct in all material respects on and as of the Closing Date
with the same effect as if made on and as of such
date.
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(g)
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General
Assignment. Buyer’s executed counterpart signature page
to the General Assignment.
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38
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(h)
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Assignment of
Leases. If there are any Leases to be assigned, then
Buyer’s executed counterpart signature page to the Assignment of
Leases.
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(i)
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New Franchise
License. Buyer’s executed counterpart signature page to the New
Franchise License.
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(j)
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Settlement
Statement. Buyer’s executed counterpart signature page
to the Settlement Statement.
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ARTICLE
XI
All
Closing costs shall be paid as set forth below:
11.1
Seller’s
Costs. In connection with the sale of the Property contemplated under this
Contract, Seller shall be responsible for (a) all state, city and county real
estate transfer taxes and fees, (b) zero percent (0%) of any applicable taxes
relating to the Purchase Price allocated to Tangible Personal Property and
Intangible Property relating to the Property pursuant to Section 2.3, (c) the
costs related to the termination of the Seller’s Franchise Agreement as provided
in Section 5.1, (d) the costs and expenses of Seller’s attorneys, accountants,
appraisers and other professionals, consultants and representatives, (e) payment
of all prepayment penalties and other amounts payable in connection with the
pay-off of any liens and/or indebtedness encumbering the Property, including
Seller Liens, (f) zero percent (0%) of the cost of the Title Policy and Finance
Provider’s loan policy and (g) zero percent (0%) of any normal and customary
escrow fees by the Title Company.
11.2
Buyer’s
Costs. In connection with the purchase of the Property
contemplated under this Contract, Buyer shall be responsible for (a) the costs
and expenses of its attorneys, accountants and other professionals, consultants
and representatives, (b) the costs and expenses in connection with the
preparation of any environmental report, any update to the survey and the costs
and expenses of preparation of the title insurance commitment, (c) one hundred
percent (100%) of the cost of the Title Policy, (d) recording charges, (e)
intentionally deleted; (f) any attorney fees associated with the assignment of
Seller’s Existing Mortgage to Buyer and (g) one hundred percent (100%) of any
normal and customary escrows fees by the Title Company and (h) one hundred
percent (100%) of any applicable taxes relating to the Purchase Price allocated
to Tangible Personal Property and Intangible Property relating to the Property
pursuant to Section 2.3.
11.3
Other
Costs. All other fees, costs and expenses not expressly
addressed in Section 11.1 or Section 11.2 or elsewhere in this Contract shall be
allocated between Seller and Buyer in accordance with applicable local custom
for transactions involving similar hotel properties.
ARTICLE
XII
12.1
Adjustments . Unless
otherwise provided herein, at Closing, adjustments between the parties of income
and expenses related to the Property shall be made as of 11:59 p.m. on the day
immediately preceding the Closing Date (“Apportionment Date”),
except as expressly set forth below. All of such adjustments and
allocations shall be made in cash at Closing and shall be collected through
and/or adjusted in accordance with the terms of the Contract. Except
as otherwise expressly provided herein, all apportionments and adjustments shall
be made on an accrual basis in accordance with generally accepted accounting
principles.
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(a)
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Taxes. All
real estate taxes, personal property taxes, or any other taxes and special
assessments (special or otherwise) of any nature upon the Property levied,
assessed or pending for the calendar year in which the Closing occurs
(including the period prior to Closing, regardless of when due and
payable) shall be prorated as of the Apportionment Date, paid at Closing
if required by the Title Company in order to omit such taxes from the
Title Policy, and, if no tax bills or assessment statements for such
calendar year are available, such amounts shall be estimated on the basis
of the best available information for such taxes and assessments that will
be due and payable on the Property for the calendar year in which Closing
occurs, but in no event shall taxes be estimated at less than 110% of the
previous year,
with an adjustment between Buyer and Seller promptly after the actual tax
bills and/or assessment statements become available, provided that any
delinquency or late fees shall not be apportioned and shall remain solely
the Seller’s obligation. Notwithstanding anything else in this
agreement, all unemployment compensation taxes shall be the sole
responsibility of Seller and shall not be apportioned to Buyer in any
way.
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(b)
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Utilities. All
suppliers of utilities shall be instructed to read meters or otherwise
determine the charges owing as of the Closing Date for services prior
thereto, which charges shall be allocated to Seller. Charges
accruing on and after the Closing Date shall be allocated to
Buyer. If elected by Seller, Seller shall be given credit, and
Buyer shall be charged, for any utility deposits transferred to and
received by Buyer at Closing.
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(c)
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Revenues. All
revenues (whether collected or not) from the rental of guestrooms and from
food and beverage and other sales or services posted to a guest room
account through 11:59 pm on the Apportionment Date shall belong to
Seller. After this time all revenues from the rental of
guestrooms and other sales or services posted to a guest room account
shall belong to Buyer. For purpose of these apportionments, the
hotel personnel shall promptly post all charges as they are
incurred. Guestroom rental charges of those guests who check-in
on the Apportionment Date shall be deemed incurred at
check-in. Revenues from any meeting room occupied, but vacated
prior to midnight of the Apportionment Date shall belong to
Seller. Revenues from any meeting room that was not occupied
until after this time shall belong to Buyer. Revenues for any
meeting room that was occupied by the same customer on both the
Apportionment Date and the Closing Date shall be allocated between the
Seller and Buyer based on the number of hours on each such date that the
room was occupied and unavailable for rental to other
customers.
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(d)
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Sales
Taxes. All sales, use and occupancy taxes, if any, due
or to become due in connection with revenues from the Hotel apportioned or
allocated to Seller in accordance with Section 12.1(c) shall be paid by
Seller, and all sales, use and occupancy taxes due or to become due in
connection with revenues apportioned or allocated to Buyer in accordance
with Section 12.1(c) shall be paid by Buyer. Seller and Buyer
shall each indemnify the other from and against any liability for unpaid
sales, use or occupancy tax resulting from the indemnifying party’s
failure to make the payments required under this Section
12.1(d).
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(e)
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Receivables. Buyer
shall purchase the entire book of accounts at 95% of the account
balance.
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(f)
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House
Banks. Buyer shall purchase the xxxxx cash funds and
cashiers’ banks (“House Banks”)
at the cash value of the House Banks, as determined by Seller and Buyer
jointly, provided that Buyer shall only purchase cash on hand and shall in
no event purchase any receipts pursuant to this Section
12.1(f).
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(g)
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Accounts
Payable. Seller shall retain and be responsible for the
payment of all accounts payable and other debts and liabilities of Seller
or otherwise relating to the Hotel, which have accrued prior to the
Closing, whether or not invoiced (“Accounts
Payable”), except to the extent Buyer has received a credit for any
such item under this Section 12.1. The parties acknowledge and
agree that except as may be expressly set forth in this Contract, Buyer is
in no way assuming any responsibility for the payment of any Accounts
Payable of Seller.
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(h)
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Bookings, Advance
Deposits, etc. All income generated by the Hotel,
including receipts from guest room or suite rentals, all prepaid rentals,
room rental deposits, and all other deposits for advance registration on
or after the Closing Date, whether received during the period before the
Closing Date or to be received during the period on and after the Closing
Date, shall belong to Buyer without any proration, setoff or adjustment at
Closing.
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(i)
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Guests. As
of 12:01 a.m. of the Closing Date, all Hotel guests reflected on the hotel
ledger (including direct xxxx guests), shall be checked out by Seller (who
may process the account charges for collection), and shall be re-checked
in by Buyer (from which time all such accounts shall be invoiced by and
belong to Buyer). The Buyer shall be entitled to all revenues
(whether collected or not), including, without limitation, the room rental
and other charges for the night immediately preceding the Closing
Date. The Seller shall collect and pay all room and other tax
surcharges on all of the foregoing accounts checked out by Seller and for
all check out occurring prior to the
Closing.
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(j)
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Guest Baggage/Safe
Deposit Boxes. On the Closing Date, authorized
representatives of Seller and Buyer shall take inventory of all baggage
suitcases, luggage, valises and trunks of Hotel guests checked or left in
the care of Seller and all items designed as lost and found by the Seller
and all contents on the safe deposit boxes maintained exclusively by the
Hotel but no such baggage, suitcases, luggage, valises, trunk items or
safe deposit boxes shall be opened.
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41
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(k)
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Employee Wages and
Other Compensation. On or before the Closing Date,
Seller shall pay or cause to be paid (i) all unpaid wages or salaries
(including any earned but unused vacation days accrued, irrespective of
whether such vacation days are actually vested) of the personnel employed
to operate the Hotel (“Employees”);
(ii) any employment taxes or government levies on item (i) above; and
(iii) any retirement plan payments, medical insurance payments or other
similar deductions. Hereinafter, (i) through (iii) above shall
be referred to as the “Seller’s Employee
Payment”. Seller shall be responsible for Seller’s
Employee Payment accruing (i) through the Closing Date for housekeeping
and laundry service Employees, (ii) through the posted check-out time for
front desk employees, (iii) through 7:00 am on the Closing Date for the
night auditor and security force, and (iv) through 11:59 pm on the
Apportionment Date for all other Employees. From these
timeframes forward, Purchaser shall be responsible for these expenses. If
all or any portion of the housekeeping or laundry service is
subcontracted, Seller shall be responsible for such costs through the
Closing Date.
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(l)
|
Other
Costs. All other costs attributable to the period before
the Closing Date, including the cost of property and liability insurance
incurred by Seller, shall be allocated to Seller, and all costs
attributable to the period on and after the Closing Date shall be
allocated to Buyer.
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(m)
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Seller’s
Acknowledgement. It is expressly acknowledged and agreed
by Seller that Buyer has no intention of assuming, and does not and will
not, in any way, assume, undertake, agree to perform or accept
responsibility for any debts, liabilities or obligations of Seller of any
kind whatsoever, whether absolute, contingent or otherwise, known or
unknown, pending or threatened, concerning the Property or otherwise,
other than liabilities and obligations that Buyer expressly assumes under
the terms of this Contract or under any of the documents executed by Buyer
at the Closing, including the Existing Contracts and the New
Contracts. Seller shall remain fully and solely responsible for
the satisfaction of all of Seller’s own liabilities and obligations,
absolute, contingent or otherwise, known or unknown, liquidated or
unliquidated, pending or threatened, whether incurred before or after the
Closing Date, except as aforesaid. Likewise, Seller shall not assume or be
liable for any liabilities of Buyer from and after the date of Closing,
and Buyer shall remain fully and solely responsible and liable for the
same.
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12.2
Reconciliation and
Final Payment. Seller and Buyer shall reasonably cooperate
after Closing to make a final determination of the allocations and prorations
required under this Contract within sixty (60) days after the Closing
Date. Upon the final reconciliation of the allocations and prorations
under this Section 12.2, the party which owes the other party any sums hereunder
shall pay such party such sums within ten (10) days after the reconciliation of
such sums. The obligations to calculate such prorations make such
reconciliations and pay any such sums shall survive the Closing.
42
ARTICLE
XIII
CASUALTY
AND CONDEMNATION
13.1 Risk of Loss;
Notice. Prior to Closing and the delivery of possession of the
Property to Buyer in accordance with this Contract, all risk of loss to the
Property (whether by casualty, condemnation or otherwise) shall be borne by
Seller. In the event that (a) any loss or damage to the Property
shall occur prior to the Closing Date as a result of fire or other casualty, or
(b) Seller receives notice that a governmental authority has initiated or
threatened to initiate a condemnation proceeding affecting the Hotel, Seller
shall give Buyer immediate written notice (a “Casualty/Condemnation
Notice”) of such loss, damage or condemnation proceeding (which notice
shall include a certification of (i) the amounts of insurance coverage in effect
with respect to the loss or damage and (ii) if known, the amount of the award to
be received in such condemnation).
13.2 No Settlement of
Claims. Seller shall not adjust or settle any claims in
connection with any casualty or proposed taking or enter into any construction
or other contract for the repair or the restoration of the Property without
Buyer’s prior written consent, which consent shall not be unreasonably withheld
or delayed; provided however, Buyer’s prior consent shall not be required for
any action that Seller shall elect to take in order to repair or remediate any
condition which poses a danger to the health and welfare of any hotel guests,
employees and/or the general public or if the action to repair or remediate is
less than Five Hundred Thousand Dollars ($500,000.00) in the
aggregate.
13.3 Buyer’s Termination
Right. If, prior to Closing and the delivery of possession of
the Property to Buyer in accordance with this Contract, (a) any condemnation
proceeding shall be pending against a substantial portion of the Hotel or (b)
there is any substantial casualty loss or damage to the Hotel, Buyer shall have
the option to terminate this Contract, provided Buyer delivers written notice to
Seller of its election within twenty (20) days after the date Seller has
delivered to Buyer a Casualty/Condemnation Notice as provided above, and in
which case the Xxxxxxx Money Deposit shall be returned to Buyer and the parties
shall have no further obligations other than those which expressly survive this
Contract. In
the context of condemnation, “substantial” shall mean condemnation of such
portion of the Hotel (or access thereto) as could, in Buyer’s reasonable
judgment, render use of the remainder impractical or unfeasible for the uses
herein contemplated, and, in the context of casualty loss or damage,
“substantial” shall mean a loss or damage in excess of One Million Dollars
($1,000,000) or loss of the access to the Hotel. In the event that
Buyer has the right to terminate this Contract under this Section 13.3 but
elects not to do so, Seller agrees to pay to Buyer at the Closing all insurance
proceeds or condemnation awards which Seller has received as a result of the
same, plus an amount equal to the insurance deductible, and assign to Buyer all
insurance proceeds and condemnation awards payable as a result of the same, in
which event the Closing shall occur without Seller replacing or repairing such
damage. In the case of damage, casualty or condemnation which is not
substantial, Buyer may elect to (i) adjourn the Closing until the Property has
been so repaired and restored by Seller at Seller’s sole cost and expense or
(ii) receive payment from Seller at the Closing of all insurance proceeds or
condemnation awards which Seller has received as a result of the same, plus an
amount equal to the insurance deductible, and assignment of all insurance
proceeds and condemnation awards payable as a result of the same, in which event
the Closing shall occur without Seller replacing or repairing such
damage. Notwithstanding the foregoing, Buyer’s prior consent shall
not be required for any action that Seller shall elect to take in order to
repair or remediate any condition which poses a danger to the health and welfare
of any hotel guest, employee and/or general public or if the cost of all such
actions to repair or remediate is less than Five Hundred Thousand Dollars
($500,000.00) in the aggregate.
43
ARTICLE
XIV
14.1 Buyer
Default. If Buyer defaults in the performance of any of its
obligations to be performed on the Closing Date under this Contract and such
default continues for ten (10) days following written notice from Seller and
Closing does not occur as a result thereof, then at Seller’s election by written
notice to Buyer and as Seller’s sole and exclusive remedy on account of such
default, Seller may terminate this Contract by written notice to Buyer at any
time prior to completion of a cure of such default, in which event the Xxxxxxx
Money Deposit, shall be paid to and retained by the Seller as
liquidated damages for Buyer’s default or failure to close and not as a penalty,
and both Buyer and Seller shall thereupon be released from all obligations
hereunder except those which expressly survive the termination of this
Contract. Seller and Buyer agree that Seller’s damages resulting from
Buyer’s default are difficult, if not impossible, to determine and the Xxxxxxx
Money Deposit is a fair estimate of those damages which has been agreed to in an
effort to cause the amount of such damages to be certain. Buyer shall
not be responsible for any consequential or special damages under any
circumstances.
14.2 Seller
Default. If Seller defaults under this Contract and such
default continues for ten (10) days following written notice from Buyer, Buyer
shall elect in writing within thirty (30) days thereafter, as Buyer’s sole and
exclusive remedy hereunder: (i) to terminate this Contract by written notice
delivered to Seller, in which event Seller shall be obligated to pay and comply
with Buyer’s Terms or (ii) to seek specific performance of this Agreement
without adjustment of the Purchase Price except as set forth elsewhere in this
Contract.
14.3 Attorneys’
Fees. Anything to the contrary herein notwithstanding, if
Buyer or Seller shall incur attorneys’ fees in the enforcement of its rights
pursuant to this Contract because of the default of the other party, and the
non-defaulting party is successful in enforcing such rights, then the defaulting
party shall reimburse the non-defaulting party for the non-defaulting party’s
reasonable attorneys’ fees, costs and expenses.
44
ARTICLE
XV
All
notices required herein shall be deemed to have been validly given, as
applicable: (i) if given by telecopy, when the telecopy is
transmitted to the party’s telecopy number specified below and confirmation of
complete receipt is received by the transmitting party prior to 6:00 P.M. New
York City local time on the day that it is transmitted or on the next Business
Day if not confirmed prior to 6:00 P.M. New York City local on the day that it
is transmitted, or (ii) if hand delivered to a party via hand delivery, by
certified mail, return receipt requested, postage prepaid, or by recognized and
reputable commercial overnight delivery service marked for next day delivery,
the date on which notice shall be received or refused:
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If
to Buyer:
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Penn
Mutual Towers
000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attn: Xxxxxx
X. Xxxxxx
Fax No.
000-000-0000
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|
Copy
to:
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Cozen
X’Xxxxxx
|
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxxxxxx, Esq.
Fax No.
000-000-0000
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|
If
to Seller:
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Metro
Eleven Hotel, LLC
|
000 Xxxxx
Xxxx Xxxx
Xxxxx
Xxxx, Xxx Xxxx
Attn:
Xxxxx Xxxxx, Esq.
Fax No.
000-000-0000
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|
If
to Escrow Agent:
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Attn: Xxxxxxx
Xxxxx
|
First
American title Insurance Company of New York
000 Xxxxx
Xxxxxxxx Xxxx.
Xxxxxxxxx,
XX 00000
Fax No.
000-000-0000
Addresses
may be changed by the parties hereto by written notice in accordance with this
Article XV.
ARTICLE
XVI
16.1 Binding Effect;
Assignment. This Contract shall be binding upon and shall
inure to the benefit of each of the parties hereto, their respective successors
and assigns.
45
16.2 Entire
Agreement. This Contract, the Other Hotel Contract and the
exhibits and schedules attached hereto constitute the sole, final and entire
agreement between Buyer and Seller with respect to the subject matter hereof and
are intended to be an integration of all prior negotiations and
understandings. Buyer, Seller and their respective agents shall not
be bound by any terms, conditions, statements, warranties or representations,
oral or written, not contained herein. No modification of this Contract shall be
binding unless signed by both Buyer and Seller. Each party reserves
the right to waive any of the terms or conditions of this Contract which are for
their respective benefit and to consummate the transactions contemplated by this
Contract in accordance with the terms and conditions of this Contract which have
not been so waived. Any such waiver must be in writing signed by the
party for whose benefit the provision is being waived.
16.3 Governing
Law. The validity, construction, interpretation and
performance of this Contract shall in all ways be governed and determined in
accordance with the laws of the State of New York (without regard to conflicts
of law principles).
16.4 Captions. The
captions used in this Contract have been inserted only for purposes of
convenience and the same shall not be construed or interpreted so as to limit or
define the intent or the scope of any part of this Contract.
16.5 Confidentiality. Except
as either party may reasonably determine is required by law (including without
limitation laws and regulations applicable to Buyer or its Affiliates who may be
public companies): (i) prior to Closing, Buyer and Seller shall not
disclose the existence of this Contract or their respective intentions to
purchase and sell the Property or generate or participate in any publicity or
press release regarding this transaction, except to Buyer’s and Seller’s legal
counsel, employees and prospective and actual lenders and investors, Buyer’s
consultants and agents, Seller’s Manager, Seller’s Existing Finance Provider,
Finance Provider, Buyer’s Manager, the Franchisor and the Title Company
(collectively, “Buyer’s and Seller’s
Agents”) except as necessitated by Buyer’s Due Diligence Examination;
provided, however, Buyer and Seller shall make Buyer’s and Seller’s Agents, as
applicable, aware of this confidentiality provision at the time of such
disclosure and instruct Buyer’s and Seller’s agents to comply with this
provision, unless both Buyer and Seller agree in writing and as necessary to
effectuate the transactions contemplated hereby; provided, however that Seller,
if asked, may disclose that the Property is under contract for sale provided
that none of the terms of the Contract (including the identity of the Buyer) are
disclosed and (ii) following Closing, the parties shall coordinate any public
disclosure or release of information related to the transactions contemplated by
this Contract, and no such disclosure or release shall be made without the prior
written consent of Buyer and Seller, and no press release shall be made without
the prior written approval of Buyer and Seller. This Section
16.5 shall survive Closing or the termination of this Contract.
16.6 Closing
Documents. To the extent any Closing documents are not
attached hereto at the time of execution of this Contract, Buyer and Seller
shall negotiate in good faith with respect to the form and content of such
Closing documents prior to Closing.
46
16.7 Counterparts. This
Contract may be executed in counterparts by the parties hereto, and by facsimile
signature, and each shall be considered an original and all of which shall
constitute one and the same agreement.
16.8 Severability. If
any provision of this Contract shall, for any reason, be adjudged by any court
of competent jurisdiction to be invalid or unenforceable, such judgment shall
not affect, impair or invalidate the remainder of this Contract but shall be
confined in its operation to the provision or provisions hereof directly
involved in the controversy in which such judgment shall have been rendered, and
this Contract shall be construed as if such provision had never existed, unless
such construction would operate as an undue hardship on Seller or Buyer or would
constitute a substantial deviation from the general intent of the parties as
reflected in this Contract.
16.9 Interpretation . For
purposes of construing the provisions of this Contract, the singular shall be
deemed to include the plural and vice versa and the use of any gender shall
include the use of any other gender, as the context may require.
16.10 Further
Acts. In addition to the acts, deeds, instruments and
agreements recited herein and contemplated to be performed, executed and
delivered by Buyer and Seller, Buyer and Seller shall perform, execute and
deliver or cause to be performed, executed and delivered at the Closing or after
the Closing, any and all further acts, deeds, instruments and agreements and
provide such further assurances as the other party or the Title Company may
reasonably require to consummate the transaction contemplated
hereunder. This provision shall survive Closing.
16.11 Joint and Several
Obligations. If Seller or Buyer consists of more than one
person or entity, each such person or entity shall be jointly and severally
liable with respect to the obligations of Seller and Buyer, respectively under
this Contract.
16.12 Waiver of Jury
Trial. EACH PARTY HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES
ANY AND EVERY RIGHT EITHER PARTY MAY HAVE TO A TRIAL BY JURY, IN ANY SUIT,
ACTION OR PROCEEDING BROUGHT UNDER OR WITH RESPECT TO THIS
CONTRACT.
16.13 Cooperation with Seller’s
1031 Exchange. Seller reserves the right to include this
transaction as part of a tax deferred exchange under Internal Revenue Code
Section 1031 (“Seller’s 1031
Exchange”) on the Closing Date for the benefit of Seller, at no cost,
expense or liability to Buyer. Without limiting the foregoing, Buyer
agrees to execute any documents reasonably necessary in connection with Seller’s
1031 Exchange so long as such documents do not create any liability or
obligation of Buyer or delay the Closing. This Section 16.13 shall
survive the Closing.
16.14 Exclusivity. In
consideration of the time, effort and expense which Buyer or its Affiliates will
be committing to the pursuit of the Hotel Contracts and in recognition of the
time necessary to consummate the Closing, the Seller agrees that during the term
of this Contract, Seller and any party that is authorized to bind and/or to
represent Seller will not solicit interest in or otherwise enter into
discussions regarding the sale or disposition of any interest in the Property
until the earlier to occur of the termination of this Contract or the
Closing. Notwithstanding the foregoing, Seller shall have the right
to discuss this Contract with any lender and Seller’s Existing Finance Provider
during the term of this Contract.
47
16.15 Exhibits and
Schedules. Each of the exhibits and schedules attached hereto
are incorporated herein by reference.
16.16 Brokers and
Commissions. Seller represents and warrants to Buyer that
Seller has not engaged or entered into any agreement with any broker, finder or
other similar party in connection with the transaction contemplated
by this Contract. Seller agrees to save and hold the Buyer harmless
from any and all losses, damages, liabilities, costs and expenses (including,
without limitation, attorneys’ fees) resulting from or arising out of (i) any
breach of any representation and warranty made by such party in this Section
16.16 and/or (ii) any claims made by any agent, broker, or other person by or
through the acts of Seller in connection with this transaction. Buyer
represents and warrants to the Seller that buyer has not engaged or entered into
any agreement with any broker, finder or other similar party in connection with
the transaction contemplated by this Contract. Buyer agrees to save
and hold Seller harmless from any and all losses, damages, liabilities, costs
and expenses (including, without limitation, attorneys’ fees) resulting from or
arising out of (i) any breach of any representation and warranty made by Buyer
in this Section 16.16 and/or (ii) any claims made by any agent, broker, or other
person by or through the acts of Buyer in connection with this transaction. This
provision shall survive the Closing and any earlier termination of this
Contract.
16.17 Arbitration. Any
controversy, claim, or dispute arising out of or relating solely to any escrow
held under this Contract or the determination of the amount of any credit to
Buyer at Closing, will, upon demand of a party to the controversy, claim, or
dispute, be resolved by arbitration held in New York, New York, and administered
by the AAA in accordance with the Commercial Arbitration Rules of the AAA and,
to the maximum extent applicable, pursuant to the Federal Arbitration Act, 9
U.S.C. 1 et
seq. To the extent such dispute has not been determined as of
the date of Closing, Buyer shall have the right to postpone the Closing date
pending the outcome of the arbitration procedeeding. An award
rendered in any such proceeding shall be final, binding, and non-appealable, and
judgment thereon may be entered in any court having competent
jurisdiction. With respect to a controversy, claim or dispute in
which the claim or amount in controversy does not exceed One Hundred Thousand
and No/100 Dollars ($100,000.00), a single arbitrator will be impaneled, who
will have authority to render a maximum award of One Hundred Thousand and No/100
Dollars ($100,000.00), including all damages of any kind and costs, fees,
interest and the like. With respect to a controversy, claim or dispute in which
the claim or amount in controversy exceeds One Hundred Thousand and No/100
Dollars ($100,000.00), the dispute will be decided by a majority vote of three
arbitrators. Subject to the limitations contained in this Agreement,
the arbitrators may grant any remedy or relief they deem just and equitable,
including any provisional and injunctive remedies available at law or in equity
(in which case the party receiving such relief may apply to the court of
competent jurisdiction for enforcement of such provisional or injunctive order,
without prejudice to the continued arbitration of the matter); provided, however, that the
AAA may, upon the demand of any party to the controversy, claim, or dispute,
administratively appoint a single “provisional relief” arbitrator on an
expedited basis to consider any request for, and grant, such provisional or
injunctive remedy; and provided further, that the
arbitrators shall award reasonable attorneys’ fees and expenses to the
prevailing party. The arbitrators will resolve all disputes in
accordance with the laws of the State of New York. The arbitrators
will be knowledgeable in the subject matter of the dispute. The
arbitrators will make specific, written findings of fact and conclusions of
law. The arbitrators’ findings of fact will be binding on all parties
and will not be subject to further review.
48
16.18 Escrow
Provisions. The Escrow Agent shall hold the amounts required
under this Agreement in escrow upon the terms and conditions set forth in this
Contract and Sections 2.5, 8.10 and 8.12 hereof.
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(a)
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Escrow
Agent shall hold the Escrow Amount in an interest bearing,
non-commingled savings bank
account.
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(b)
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Escrow
Agent shall have no liability whatsoever arising out of or in connection
with its activity as Escrow Agent or for any error in judgment or for any
act done or step taken or omitted in good faith, or for any mistake of
fact or law, except for its gross negligence or willful
misconduct. Seller and Buyer severally (and not jointly) agree
to defend, indemnify and hold harmless Escrow Agent from and against any
and all loss, cost, claim, cause of action, damage, liability and expense
(including, without limitations, reasonable attorneys' fees and
disbursements either paid to retain attorneys, court costs, or
representing the fair value of legal services rendered by Escrow Agent to
itself) which may be incurred by reason of its acting as Escrow Agent,
except in cases of Escrow Agent's gross negligence or willful
misconduct.
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(c)
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Seller
and Buyer acknowledge that Escrow Agent is merely a
stakeholder. Upon payment of any amount held in escrow to
either Seller or Buyer in accordance with the provisions of this Contract,
Escrow Agent shall be fully released from all liability and obligations
with respect to such escrow amount.
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(d)
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Escrow
Agent shall be entitled to rely upon any judgment, certification, demand
or other writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact stated therein,
the propriety or validity thereof, or the jurisdiction of a court or
competent jurisdiction or an arbitration panel convened in accordance with
Section 16.17 issuing any such judgment. Escrow Agent may act
in reliance upon (1) any instrument or signature believed to be genuine
and duly authorized, and (2) advice of counsel in reference to any matter
or matters connected herewith.
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(e)
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It
is agreed that the duties of Escrow Agent are only as herein specifically
provided, and are purely ministerial in nature, and that Escrow Agent
shall incur no liability whatsoever except for its willful misconduct or
gross negligence. Seller and Buyer each release Escrow Agent
from any act done or omitted to be done by Escrow Agent in good faith in
the performance of its duties
hereunder.
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49
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(f)
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The
signing of this Contract by Escrow Agent is only to evidence Escrow
Agent's acceptance of the terms and conditions of this
Contract.
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(g)
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Escrow
Agent shall have the right, but not the obligation, to require and receive
such written certifications or instructions from either Seller or Buyer as
it deems reasonably necessary or appropriate before taking any action
hereunder.
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(h)
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Escrow
Agent may assume the genuineness of any document or signature which
appears to Escrow Agent to be genuine (whether or not original or
photocopy) if such document or signature is presented to it by either
party. Escrow Agent shall have no obligations other than those
specifically set forth herein. Escrow Agent shall in no event
be liable or responsible for any failure of any federally insured
financial institution in which the escrows are deposited, or of the
Federal Deposit Insurance Corporation, to pay the escrow amounts at Escrow
Agent's direction.
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16.19 Assignment. This
Contract may be assigned by Buyer to an Affiliate of its choosing on or prior to
Closing.
*
* * * *
50
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METRO ELEVEN HOTEL,
LLC, a
New York limited liability company
|
||||
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By:
|
/s/ Xxx Xxxxx | |||
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Name:
|
Xxx
Xxxxx
|
|||
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Title:
|
Managing
Member
|
|||
|
HHLP DUO ONE ASSOCIATES,
LLC, a New York limited liability company
|
||||
|
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
|
Name:
|
Xxxxxx
X. Xxxxxx
|
|||
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Title:
|
Manager
|
|||
ESCROW
AGENT:
FIRST
AMERICAN TITLE COMPANY OF NEW YORK
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By:
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/s/ Xxxxxxx X. Xxxxx | ||
|
Name:
Xxxxxxx X. Xxxxx
|
|||
|
Title:
Assistant Vice-President and Counsel
|