AGREEMENT OF SALE
THIS AGREEMENT OF SALE is dated as of November __, 1998
between KEYDOCROM, INC., a New Jersey corporation, with offices at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller") and OHIO KEY I,
INC. and OHIO KEY II, INC., both Florida corporations, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
IN CONSIDERATION of the Purchase Price set forth below and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Seller agrees to sell and the Purchaser agrees to
purchase the Property described below on and subject to the terms of this
Agreement.
1. Property. Seller agrees to sell to Purchaser the property
commonly known as the ▇▇▇▇▇▇ Inn, consisting of the following elements
(collectively, the "Property"):
a. Land. This sale includes the real property located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and shown
as ▇▇▇▇▇ ▇, ▇▇▇ ▇▇ on the Official Tax Map of the Township of West Windsor and
as more particularly described on Schedule A annexed hereto (the "Land").
b. Improvements. This sale includes the 105 room hotel
building and other improvements situated on the Land (the "Improvements").
c. Personal Property. This sale includes the personal property
owned and used by Seller in the operation of the Improvements and physically
located on the Land or within the Improvements, including all of Seller's
furniture, fixtures, equipment to the extent present on the Land or Improvements
as of the date hereof and supplies and inventory to the extent present at
Closing (the "Personal Property"). Seller agrees not to deplete the supplies or
inventory except in the ordinary course of business. The Personal Property
specifically excludes the items or categories of items listed on Schedule B. The
Personal Property will be delivered in its "as is, where is" condition, without
warranty of any kind, except as to title.
d. Contract Rights. This sale includes the rights of Seller in
the Lease, the Service Contracts, and the Concession Agreement (each, as defined
below).
e. Other Rights. This sale also includes all right, title and
interest of Seller, if any, in and to (a) the land constituting any public
street, road or avenue, opened or proposed, in front of or adjoining the Land,
(b) any award made or to be made in lieu thereof and any unpaid award for
damages to the Land or the Improvements by reason of change of grade of any
street, road or avenue, (c) any condemnation claim or award paid or payable with
respect to the property interests to be conveyed hereunder, (d) all privileges
appurtenant or related to the Land or the Improvements; and (e) any rights of
Seller in the name "▇▇▇▇▇▇ Inn" and to any phone numbers used by Seller in the
operation of the business.
2. Purchase Price. Purchaser agrees to pay Seller a purchase
price of SEVEN MILLION FIVE HUNDRED THOUSAND ($7,500,000.00) DOLLARS (the
"Purchase Price"). The Purchase Price shall be paid as follows:
a. Deposit. Upon the signing of this Agreement, Purchaser
shall pay a deposit of ONE HUNDRED THOUSAND ($100,000.00) DOLLARS (the
"Deposit"). The Deposit shall be paid to Lawyers Title Insurance Corp. (the
"Title Company"). The Deposit shall be held in escrow until Closing and passing
of title or default by Purchaser, or returned to Purchaser if (a) any
contingency in this Agreement is not satisfied or waived by the party benefitted
within the time period specified, (b) Purchaser properly terminates this
Agreement or (c) Seller defaults or is otherwise unable to deliver title to the
Property under this Agreement. The Title Company's service as escrow agent is
solely as an accommodation to the parties and no liability shall attach to or
against the Title Company for its acts taken in good faith as long as it
complies with the provisions of this Agreement. The Deposit shall be held in a
segregated FDIC insured money market account and all interest or earnings
thereon shall belong to the Purchaser except in the case of a breach by
Purchaser.
b. Cash at Closing. At Closing (defined below), Purchaser
shall pay TWO MILLION FOUR HUNDRED THOUSAND ($2,400,000.00) DOLLARS in
immediately available funds.
c. Assumption of First Mortgage. At Closing, Purchaser shall
assume Seller's obligations under the existing first mortgage (the "Existing
Mortgage") held by PNC Bank ("PNC"), the outstanding principal balance of which
will be THREE MILLION ONE HUNDRED NINETY THOUSAND FOUR HUNDRED AND TWELVE
($3,190,412.00) DOLLARS as of November 1, 1998, bearing interest at PNC's prime
rate and being payable in equal monthly installments of principal in the amounts
of $13,576.22 together with interest on the unpaid principal balance. The
Purchaser will supply all necessary information and will pay all commercially
reasonable application and other fees and expenses requested by PNC in
connection with the transfer of the Property and Purchaser's assumption of the
Existing Mortgage. The Purchaser shall indemnify and save the Seller and any
guarantor of the Existing Mortgage harmless from and against any and all claims,
damages, costs and expenses, including reasonable attorneys fees arising out of
any default by Purchaser under the Existing Mortgage. The foregoing indemnity
shall survive the Closing.
d. Purchase Money Second Mortgage. At Closing, Purchaser shall
execute and deliver a promissory note in the form annexed hereto as Schedule C
(the "Note"), secured by a second purchase money mortgage and assignment of
leases, rents and profits upon the
Property, in the form annexed hereto as Schedule D (the "Second Mortgage"). The
Note shall bear interest at the annual rate of seven and one-half (7 1/2%)
percent for the first six (6) months of its term and at the annual rate of eight
(8%) percent thereafter. The Note shall mature eighteen (18) months following
the date of Closing. The amount of the Note shall be ONE MILLION EIGHT HUNDRED
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AND NINE THOUSAND FIVE HUNDRED AND EIGHTY-EIGHT ($1,809,588.00) DOLLARS as such
amount may be adjusted to reflect the actual principal balance of the Existing
Mortgage at the time of Closing. The Second Mortgage shall also secure
Purchaser's indemnity obligations to Seller and any guarantor of the Existing
Mortgage arising under this Agreement.
3. Title. Seller will convey marketable title of record to the
Property such as will be insurable at regular rates by the Title Company subject
to easements, conditions and restrictions of record, if any and such items as a
careful inspection and an accurate survey of the Property would reveal, provided
none of the same would render title unmarketable or impair Purchaser's use of
the Property as a hotel. Title shall be expressly subject to the following
("Permitted Exceptions"):
a. all present zoning, building, environmental and other laws,
ordinance, codes, restrictions and regulations of all governmental authorities
having jurisdiction;
b. that certain lease agreement dated August 11, 1987 (the
"Lease") between Seller and ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ of West Windsor, Inc. (the "Tenant")
a copy of which is annexed hereto as Schedule E;
c. that certain hotel management agreement dated August 1,
1986 (the "Management Agreement") between Seller and The ▇▇▇▇▇ Company (the
"Manager") a copy of which is annexed hereto as Schedule F;
d. those service contracts listed on Schedule G (the "Service
Contracts");
e. that certain concession agreement dated September 19, 1997
between Seller, Tenant and Manager (the "Concession Agreement") a copy of which
is annexed hereto as Schedule H;
f. current taxes or liens for taxes and assessments to the
extent not yet due and payable;
g. the Existing Mortgage;
h. the items listed on Schedule I; and
i. that certain equipment lease dated as of December 7, 1994
between Mitel Financial Services, a Division of Mitel, Inc. ("Equipment Lessor")
and Seller (the "Equipment Lease") relating to certain equipment described
therein. A copy of the Equipment Lease is annexed hereto as Schedule J.
Purchaser agrees to assume the Seller's obligations under the Equipment Lease
and to use its best efforts to obtain the written consent of the Equipment
Lessor prior to Closing.
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Purchaser shall have the right to conduct a title examination
at its cost and expense and to obtain a survey. If Purchaser obtains a survey,
Purchaser shall have the survey certified to the Seller. If the title report or
survey reveal title defects other than Permitted Exceptions ("Title Problems"),
it shall immediately give Seller copies of the title report and survey together
with written notice identifying the matters to be addressed before Closing.
Seller shall not be required to bring any action or incur any expense, except
for the payment of any encumbrance in a fixed or liquidated amount to correct
any Title Problem. If Seller is unable in good faith to convey title as required
under this Agreement, Purchaser, as its sole remedy, may terminate this
Agreement, in which event the Title Company shall return the Deposit plus
interest earned thereon to Purchaser.
4. Closing. The closing of the transfer of title to the
Property (the "Closing") shall take place at 10 a.m. in the offices of [Schenck,
Price, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇] on the __th
business day following satisfaction or waiver of all contingencies contained
herein, but in no event later than December 1, 1998, WHICH TIME AND DATE IS OF
THE ESSENCE OF THIS AGREEMENT. If Purchaser fails to close title on the date set
for Closing, the parties agree to make all closing adjustments as of the
scheduled date for Closing, and Purchaser further agrees to reimburse Seller for
its insurance, tax, and interest on the Existing Mortgage and other costs of
ownership of the Property such as described in Section 5 during the period
between such date and the actual date of Closing. At Closing, Purchaser shall
assume the Existing Mortgage, cause the delivery of the Deposit and deliver the
balance of the cash portion of the Purchase Price, the Note and the Second
Mortgage and Seller shall deliver the following items duly executed by Seller:
a. A Bargain and Sale Deed with Covenant against Grantor's
Acts, in recordable form, containing a legal description in accordance with
Schedule A.
b. A certified copy of its corporate resolutions authorizing
this Agreement and the transactions contemplated hereby and a corporate
affidavit of title.
c. A quitclaim ▇▇▇▇ of Sale, without warranty of any kind
except as to title, with respect to any Personal Property and an assignment
without recourse of any manufacturer's warranties or Service Contracts owned by
Seller and relating to any Personal Property or the Improvements.
d. An assignment and assumption agreement relating to the
Lease and the Concession Agreement together with a letter directing the Tenant
therein to make future rental and concession payments to Purchaser.
e. An assignment and assumption agreement relating to the
Management Agreement.
f. An estoppel certificate from the tenant in accordance with
Section 4.01 of the Lease.
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g. A certification of non-foreign status.
h. A letter of non-applicability issued by the New Jersey
Department of Environmental Protection under the Industrial Site Recovery Act
("ISRA").
i. Any keys, existing plans, specifications, engineering
drawings, manuals, service and maintenance logs, paid invoices and similar
documents relating to the Improvements or Personal Property, to the extent
within Seller's possession or control.
j. Certificates of inspection and registration with the
Department of Community Affairs, certificate of occupancy, elevator inspection
certificates and other similar governmental inspection certificates.
k. A non-disturbance agreement in favor of the Tenant.
l. An assignment of Seller's rights under the Equipment Lease,
and any right of Seller to purchase the equipment covered by the Equipment
Lease.
m. An assignment or other appropriate instrument of conveyance
transferring rights set forth in Section 1e.
5. Adjustments. At Closing, the following items shall be
apportioned between the parties as of 11:59 p.m. on the day preceding the date
of Closing:
a. Real estate taxes, water and sewer assessments, if any, on
the basis of the fiscal year for which assessed. If there is any refund or other
benefit as a result of any appeal of taxes for 1998, the parties agree to
apportion same as of the date of Closing, based upon their periods of ownership
during that year.
b. Any water and sewer charges, according to a final reading,
or if unmetered, prorated on the basis of the applicable billing period.
c. Prepaid charges, fees or escrows for transferable licenses,
permits or applications which are transferred to Purchaser at Closing.
d. Fuel on the Property, if any, at current market prices.
e. Charges or fees under the Service Contracts or the
Management Agreement.
f. Base rents, additional rents, other lease or occupancy
payments, deposits received or receivable relating to the Lease, the Concession
Agreement and the operation of the hotel business at the Property.
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g. The parties agree that all deposits, if any, made by Seller
as security under any public or private service or utility contract shall be
credited to Seller if such amounts remain on deposit after the Closing for the
benefit of Purchaser.
h. The annual fee associated with any permit or certificate
for the 12 month period which has not expired as of the Closing.
i. Any other items normally adjusted between purchasers and
sellers in such transactions. Any errors, omissions or estimations in computing
apportionments at Closing, including any corrections to any payoff amounts owing
on the Existing Mortgage, shall be corrected as soon as practicable thereafter.
The provisions of this Section 5 shall survive the Closing.
6. Inspections. Purchaser shall have the right for fifteen
(15) days following the date hereof to have the Property inspected by a licensed
engineer, architect, contractor, environmental consultant and/or other
reasonably qualified experts of Purchaser's selection. If such inspections
reveal any condition unsatisfactory to Purchaser affecting the structural
integrity of the Improvements, or any unsatisfactory condition impairing the
proper functioning of any building component or mechanical system, or any
unsatisfactory environmental condition, any or all of which would require an
expenditure of more than $50,000 to correct, Purchaser shall have the right to
terminate this Agreement by simultaneously delivering to Seller a notice of
termination and a copy of all inspection reports, including those specifying any
unsatisfactory condition or environmental condition. In case of such termination
by Purchaser, the Deposit and all interest shall be returned to Purchaser and
neither party shall have any further right or liability hereunder.
Notwithstanding the foregoing, Seller may negate Purchaser's notice of
termination under this Section by notifying Purchaser in writing within 24 hours
of receipt of the notice that Seller will (a) at its own cost and expense prior
to Closing, or as soon thereafter as is reasonable, correct and remediate any
such unsatisfactory condition by making all reasonably necessary structural and
nonstructural repairs, or (b) allow to Purchaser's account at Closing such sums
as are reasonably necessary to do so. Purchaser agrees to indemnify, save,
defend and hold Seller harmless from any and all causes of action, claims,
demands, losses, liabilities, judgments, costs and expenses (including
reasonable attorney's fees) relating to any injury or death to person or damage
to property resulting from Purchaser's investigation activities on the Property,
or due to Purchaser's failure to comply with applicable law. Purchaser also
agrees to restore the Property to its condition existing immediately prior to
the investigations. Purchaser shall obtain and maintain in full force and effect
at all times during the investigations a policy of public liability insurance in
a minimum amount of $1,000,000 per occurrence (plus $3 million in excess
coverage, with aggregate coverage of $4 million for all policy claims within the
policy period). The policy shall name Seller as an additional insured and as
loss payee and shall require the carrier to furnish 30 days advance written
notice of reduction or cancellation of coverage to Seller. Purchaser shall
furnish a certificate of insurance to Seller prior to entering the Property to
conduct any investigations.
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7. Financing. Purchaser's obligation to closing title
hereunder is contingent upon the Purchaser's obtaining a written agreement from
PNC permitting Purchaser to assume the Existing Mortgage without amendment of
its rates or terms and consenting to the placement of the Second Mortgage on the
Property. Purchaser agrees to pay all costs and fees required by PNC in order
for it to consider permitting the assumption as well as any fees required by it
for allowing the assumption. Seller agrees that it will not seek a release from
PNC on behalf of Seller or any guarantor of the Existing Mortgage, but Seller
shall not be obligated to increase the liability of Seller or any guarantor with
regard to the Existing Mortgage. Purchaser shall provide the holder of the
Existing Mortgage with personal guaranties of its principals to the extent
required to secure a permitted assumption.
8. Environmental. Seller agrees that it will apply, diligently
pursue and obtain and deliver at Closing a letter of non-applicability of ISRA.
If, for any reason, Seller is unable to obtain a letter of non-applicability of
ISRA by the Closing, Purchaser's sole and exclusive remedy shall be to terminate
the Agreement and receive back the Deposit with interest.
9. Risk of Loss. The risk of loss, which shall not exceed the
net proceeds of sale due to damage to the Property beyond ordinary wear and tear
prior to the Closing shall be upon Seller. If the Property is damaged beyond
normal wear and tear prior to Closing, the Seller may, at Seller's sole option,
(a) before Closing or as reasonably soon thereafter as is feasible, repair or
remediate the damage to the satisfaction of any governmental authority having
jurisdiction and the reasonable satisfaction of Purchaser, or (b) at Closing
give Purchaser a credit against the Purchase Price in the amount of the
estimated cost of such repair or remediation, or (c) if the loss was insured
against, assign to Purchaser at Closing any insurance proceeds received or
receivable by Seller on account of any damage. If Seller elects to repair the
Property, all such repairs shall be completed within a reasonable period of
time, allowing for the recovery of insurance proceeds and the obtaining of any
required approvals. Any repairs made by Seller shall be done in a good and
workmanlike manner, by reputable contractors.
10. Post-Closing Refinancing. Purchaser agrees that,
immediately following the Closing, it shall make application for permanent
financing of the Property in the amount of $5,000,000 and shall be obligated to
accept any commitment letter for financing of $4,500,000 or more provided that
the proposed loan has an amortization rate of 25 years, a term of at least 7
years and an interest rate of not greater than 8.5% (the "New Loan"). The
proceeds of the New Loan shall be used to satisfy the Existing Mortgage and the
Note. In the event that the proceeds of the New Loan are less than $5,000,000,
Seller agrees to refinance the remaining principal balance of the Note (up to
$500,000) with a new note (the "Replacement Note"). The Replacement Note shall
be secured by a pledge of 100% of the capital stock of the Purchaser pursuant to
a stock pledge and escrow agreement in form and substance reasonably acceptable
to the Seller's counsel. The Replacement Note shall be convertible, at any time
prior to repayment into shares of the Purchaser's capital stock having a value
equal to the unpaid principal balance of the Replacement Note at the time of
conversion, with the value to be established by independent appraisal at the
Purchaser's expense. The Replacement Note shall bear interest at the greater of
8% per annum or 1% above the rate applicable to the New Loan. The Replacement
Note shall have a three (3) year term and a ten (10) year amortization rate. In
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the event of a sale of the Property by Purchaser or a refinance of the New Loan,
the Replacement Note shall become immediately due and payable. The Replacement
Note shall be personally guaranteed by C. ▇▇▇▇ ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
11. Brokerage. Purchaser and Seller respectively represent to
each other that no broker has been involved in connection with any aspect of
this sale other than CHK Realty Associates and The Lefferts Group, Inc.
(collectively, the "Broker"), whose commissions shall be paid by Seller pursuant
to a separate written agreement. Each party agrees to indemnify the other from
and against any loss, damage or expenses arising from or relating to the sale of
the Property (including litigation costs and reasonable attorney's fees) by
reason of any claim for compensation or commission by any broker other than the
Broker based upon an allegation of relations or negotiations between the
claimant and the indemnitor inconsistent with the representations herein made.
This representation, warranty and covenant shall survive the Closing or
termination of this Agreement.
12. Notices. Any notices or other communications provided for
hereunder may be given by the party or its attorney, shall be in writing and
shall be either (a) hand-delivered or telecopied to the other party, (b)
deposited with a nationwide, overnight courier delivery service for delivery to
the other party at the address first set forth above or (c) mailed by certified
mail, return receipt requested, postage prepaid to the other party at the
address first set forth above. All notices shall be deemed to have been given
either when hand-delivered or telecopied, 1 day after having been deposited with
a nationwide, overnight courier delivery service or 2 days following the date of
mailing. In order to be effective, copies of any notice having to do with the
Deposit or other duties of the Title Company must be sent in the manner
aforesaid to the Title Company at its address set forth on the signature page
hereof.
13. Assessments. All assessments for public improvements which
have been completed or initiated on or before the date of this Agreement are to
be paid in full or allowed by Seller at the Closing. All other assessments shall
be Purchaser's responsibility. Unconfirmed assessments or improvements, if any,
shall be paid and allowed by the Seller on account of the Purchase Price if the
improvement or work has been completed or initiated on or before the date of
this Agreement. Seller represents to its knowledge that no unpaid assessments
for public improvements are presently pending against the Property and that it
knows of no unconfirmed assessments or improvements planned, completed or under
construction as of the date hereof with respect to the Property. If Seller is
responsible for unconfirmed assessments or improvements as above provided,
Seller shall deposit such sums in escrow with the Title Company as in the
reasonable estimation of the Title Company may be required to satisfy the
unconfirmed assessments or improvements in full. However, Seller shall continue
to remain liable in full for any deficiency which may arise if the escrowed
amount proves insufficient. The Title Company shall pay such sums in discharge
of the liability once the same becomes fixed and promptly refund any excess to
Seller. The provisions of this Section shall survive the Closing.
14. Condemnation. Seller represents that it has not received
any notice of taking or other notification of anticipated or pending
condemnation proceedings affecting the Property. If proceedings to condemn the
Property or any part thereof as would materially impair the use of the Property
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as a hotel commence before the Closing, then Purchaser shall have the right to
terminate this Agreement, in which event Seller shall return to the Purchaser
the Deposit together with all interest earned thereon. If Purchaser does not
elect to terminate this Agreement or if the proceedings to condemn relate to a
part of the Property as would not, in Purchaser's sole but reasonable judgment,
materially impair the use of the Property as a hotel, then Purchaser shall
purchase the Property, in which event at the Closing, Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any claim Seller
may have or award or settlement Seller may be entitled to receive in the
condemnation proceedings and credit Purchaser with the amount of any
condemnation proceeds theretofore paid to or on behalf of Seller. If Purchaser
purchases the Property as above provided and an award is rendered to or
settlement reached by and paid to Seller before Closing, then the Purchase Price
to be paid hereunder shall be reduced by the full amount thereof. Seller agrees
to advise Purchaser in writing of any notice of taking or other notification of
anticipated or pending condemnation proceedings promptly upon Seller's receipt
of same and further agrees to permit Purchaser to participate in any such
condemnation proceeding as a "contract purchaser" if this Agreement is not
terminated.
15. Successors and Assigns. This Agreement shall inure to the
benefit of and shall bind the parties hereto, their successors and permitted
assigns. Purchaser may not assign this Agreement except to an entity under
common control with Purchaser. In the event of any assignment, Purchaser shall
remain directly liable, jointly and severally with the assignee under this
Agreement and under the Note.
16. Recording. Purchaser may file a notice of settlement in
relation to this Agreement but no copy of this Agreement or memorandum hereof
shall be recorded by either party.
17. Limitation of Liability. If Seller is unable to close
title under this Agreement, Seller's sole liability shall be to cause the return
of the Deposit plus all interest earned thereon, and thereafter this Agreement
shall be null and void and neither party shall have any further rights against
the other.
18. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute the original
hereof. If separately executed counterparts of this Agreement or its signature
page(s) have been executed by and delivered to all parties hereto, or their
counsel, they shall have the same effect as if the signatures were all on the
same copy hereof.
19. Tax Deferred Exchange. Purchaser requests that this
transfer be treated as an Internal Revenue Code Section 1031 Tax Deferred
Exchange. The parties agree to cooperate in effecting the exchange in accordance
with Section 1031 of the Internal Revenue Code, including execution of any
documents that may be reasonably necessary to effect the exchange; provided that
(1) Purchaser shall bear all additional costs incurred in connection with the
exchange; (2) Seller shall not be obligated to delay the Closing or execute any
note, contract or other document providing for any personal liability which
would survive the exchange.
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IN WITNESS WHEREOF, the parties have executed or caused their
authorized representatives to execute this Agreement as of the date first set
forth above.
KEYDOCROM, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
OHIO KEY I, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇, ▇▇.
----------------------------
C. ▇▇▇▇ ▇▇▇▇▇, ▇▇., President
OHIO KEY II, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇, ▇▇.
----------------------------
C. ▇▇▇▇ ▇▇▇▇▇, ▇▇., President
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