CONTRIBUTION AGREEMENT dated as of January 10, 2007 between SHREE ASSOCIATES, KUNJ ASSOCIATES, SHANTI III ASSOCIATES, TRUST FBO NEIL H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST, TRUST FBO JAY H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST,...
Exhibit
10.1
dated
as
of January 10, 2007
between
SHREE
ASSOCIATES, KUNJ ASSOCIATES, SHANTI III ASSOCIATES, TRUST FBO ▇▇▇▇ ▇. ▇▇▇▇
UNDER
THE HASU AND ▇▇▇▇▇▇ ▇▇▇▇ 2004 TRUST, TRUST FBO ▇▇▇ ▇. ▇▇▇▇ UNDER THE HASU
AND
▇▇▇▇▇▇ ▇▇▇▇ 2004 TRUST, DEVI ASSOCIATES, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AND ▇▇▇▇▇▇▇▇▇▇▇
ENTERPRISES, LTD.
as
Contributors,
and
HERSHA
HOSPITALITY LIMITED PARTNERSHIP AND HERSHA HOSPITALITY, LLC
as
Acquirors
IN
CONNECTION WITH THE CONTRIBUTION AND ACQUISITION
OF
PARTNERSHIP INTERESTS IN 44 CARLISLE ASSOCIATES, LP,
OWNER
OF
RESIDENCE INN, CARLISLE, PENNSYLVANIA
THIS
CONTRIBUTION AGREEMENT (the “Agreement”), dated this 10th day of January, 2007,
between SHREE ASSOCIATES ("Shree"), KUNJ ASSOCIATES ("Kunj"), SHANTI III
ASSOCIATES ("Shanti III"), DEVI ASSOCIATES (“Devi”), all Pennsylvania limited
partnerships (the “Partnership Contributors”), TRUST FBO ▇▇▇▇ ▇. ▇▇▇▇ UNDER THE
HASU AND ▇▇▇▇▇▇ ▇▇▇▇ 2004 TRUST (“NHS Trust”), TRUST FBO ▇▇▇ ▇. ▇▇▇▇ UNDER THE
HASU AND ▇▇▇▇▇▇ ▇▇▇▇ 2004 TRUST (“JHS Trust”) (the “Trust Contributors”), and
▇▇▇▇▇▇▇▇▇▇▇ Enterprises, Ltd. (“SEL”), a Pennsylvania corporation, (the
“Corporate Contributor”), (collectively, the “Contributors”), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(“▇▇▇▇▇▇”) (the “Individual Contributor”), AND HERSHA HOSPITALITY LIMITED
PARTNERSHIP, a Virginia limited partnership (the “Partnership Acquiror” or
“HHLP”) and HERSHA HOSPITALITY, LLC, a Virginia limited liability company (the
“LLC Acquiror” or “HHLLC”) (collectively, the “Acquirors”) and
provides:
ARTICLE
I
DEFINITIONS;
RULES OF CONSTRUCTION
1.1 Definitions.
The
following terms shall have the indicated meanings:
"Act
of Bankruptcy"
shall
mean if a party hereto or any general partner thereof shall (a) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part
of
its property, (b) admit in writing its inability to pay its debts as they
become due, (c) make a general assignment for the benefit of its creditors,
(d) file a voluntary petition or commence a voluntary case or proceeding
under the Federal Bankruptcy Code (as now or hereafter in effect), (e) be
adjudicated a bankrupt or insolvent, (f) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, (g) fail to controvert in
a timely and appropriate manner, or acquiesce in writing to, any petition
filed
against it in an involuntary case or proceeding under the Federal Bankruptcy
Code (as now or hereafter in effect), or (h) take any corporate or
partnership action for the purpose of effecting any of the foregoing; or
if a
proceeding or case shall be commenced, without the application or consent
of a
party hereto or any general partner thereof, in any court of competent
jurisdiction seeking (1) the liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of debts, of such party or
general partner, (2) the appointment of a receiver, custodian, trustee or
liquidator or such party or general partner or all or any substantial part
of
its assets, or (3) other similar relief under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts, and such proceeding or case shall continue undismissed; or an order
(including an order for relief entered in an involuntary case under the Federal
Bankruptcy Code, as now or hereafter in effect) judgment or decree approving
or
ordering any of the foregoing shall be entered and continue unstayed and
in
effect, for a period of 60 consecutive days.
"HHLP-
JHS Trust Assignment and Assumption Agreement"
shall
mean that certain assignment and assumption agreement whereby JHS Trust assigns
and HHLP assumes the HHLP- JHS Trust Interest.
“HHLP-NHS
Trust Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby NHS Trust assigns
and HHLP assumes the HHLP - NHS Trust Interest.
“HHLP-Shree
Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby Shree assigns
and
HHLP assumes the HHLP-Shree Interest.
“HHLP-Kunj
Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby Kunj assigns
and
HHLP assumes the HHLP-Kunj Interest.
“HHLP-Shanti
III Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby Shanti III
assigns
and HHLP assumes the HHLP-Shanti III Interest.
“HHLP-Devi
Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby Devi assigns
and
HHLP assumes the HHLP-Devi Interest.
“HHLP-Desfor
Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby Desfor assigns
and
HHLP assumes the HHLP-Desfor Interest.
“HHLLC-SEL
Assignment and Assumption Agreement”
shall
mean that certain assignment and assumption agreement whereby SEL assigns
and
HHLLC assumes the HHLLC-SEL Interest.
“Assignment
and Assumption Agreements”
shall
mean the HHLP-Shree Assignment and Assumption Agreement, the HHLP-Kunj
Assignment and Assumption Agreement, the HHLP-Shanti III Assignment and
Assumption Agreement, the HHLP-JHS Trust Assignment and Assumption Agreement,
the HHLP- NHS Trust Assignment and Assumption Agreement, the HHLP-Devi
Assignment and Assumption Agreement, the HHLP-Desfor Assignment and Assumption
Agreement, and the HHLLC-SEL Assignment and Assumption Agreement.
"Authorizations"
shall
mean all licenses, permits and approvals required by any governmental or
quasi-governmental agency, body or officer for the ownership, operation and
use
of the Property or any part thereof.
"Closing"
shall
mean the closing of the contribution and acquisition of the Interests pursuant
to this Agreement.
"Closing
Date"
shall
mean the date on which the Closing occurs.
“Consideration”
shall
mean $8,615,000 payable to the Contributors at Closing in the manner described
in Section
2.3.
“Continuing
Liabilities”
shall
include liabilities arising under operating agreements, equipment leases,
loan
agreements, or proration credits at Closing, but shall exclude any liabilities
arising from any other arrangement, agreement or pending
litigation.
"Escrow
Agent"
shall
mean All American Abstract Co., Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
"FIRPTA
Certificates"
shall
mean the affidavit of each of the Contributors under Section 1445 of the
Internal Revenue Code certifying that such Contributor is not a foreign
corporation, foreign partnership, foreign trust, foreign estate or foreign
person (as those terms are defined in the Internal Revenue Code and the Income
Tax Regulations), in form and substance satisfactory to the
Acquirors.
"Governmental
Body"
means
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
"Hotel"
shall
mean the hotel and related amenities located on the Land.
"Improvements"
shall
mean the Hotel and all other buildings, improvements, fixtures and other
items
of real estate located on the Land.
“HHLP-JHS
Trust Interest”
shall
mean all right, title and interest of JHS Trust in the Partnership, consisting
of a 20% limited partnership interest in the Partnership.
“HHLP-NHS
Trust Interest”
shall
mean all right, title and interest of NHS Trust in the Partnership, consisting
of a 20% limited partnership interest in the Partnership.
“HHLP-Shree
Interest”
shall
mean all right, title and interest of Shree in the Partnership, consisting
of a
14% limited partnership interest in the Partnership.
“HHLP-Kunj
Interest”
shall
mean all right, title and interest of Kunj in the Partnership, consisting
of a
15% limited partnership interest in the Partnership.
“HHLP-Shanti
III Interest”
shall
mean all right, title and interest of Shanti III in the Partnership, consisting
of a 14% limited partnership interest in the Partnership.
“HHLP-Devi
Interest”
shall
mean all right, title and interest of Devi in the Partnership, consisting
of a
14% limited partnership interest in the Partnership.
“HHLP-Desfor
Interest”
shall
mean all right, title and interest of Desfor in the Partnership, consisting
of a
2% limited partnership interest in the Partnership.
“HHLLC-SEL
Interest” shall
mean all right, title and interest of SEL in the Partnership, consisting
of a 1%
general partnership interest in the Partnership.
"Insurance
Policies"
shall
mean those certain policies of insurance described on Exhibit C
attached
hereto.
"Intangible
Personal Property"
shall
mean all intangible personal property owned or possessed by the Contributors
and
used in connection with the ownership, operation, leasing, occupancy or
maintenance of the Property, including, without limitation, the right to
use the
trade name "Residence Inn" and all variations thereof, the Authorizations,
escrow accounts, insurance policies, general intangibles, business records,
plans and specifications, surveys and title insurance policies pertaining
to the
Real Property and the Personal Property, all licenses, permits and approvals
with respect to the construction, ownership, operation, leasing, occupancy
or
maintenance of the Property, any unpaid award for taking by condemnation
or any
damage to the Land by reason of a change of grade or location of or access
to
any street or highway, and the share of the Tray Ledger as hereinafter defined,
excluding (a) any of the aforesaid rights the Acquirors elect not to
acquire, (b) the Contributors’ cash on hand, in bank accounts and invested
with financial institutions and (c) accounts receivable except for the above
described share of the Tray Ledger.
“Interests”
shall
mean the HHLP-Shree Interest, the HHLP-Kunj Interest, the HHLP-Shanti III
Interest, the HHLP- JHS Trust Interest, the HHLP-NHS Trust Interest, the
HHLP-Devi Interest, the HHLP-Desfor Interest, and the HHLLC-SEL
Interest.
"Inventory"
shall
mean all "inventories of merchandise" and "inventories of supplies", as such
terms are defined in the Uniform System of Accounts for Hotels [9th
Revised
Edition] as published by the Hotel Association of New York City, Inc., as
revised, and similar consumable supplies.
"Land"
shall
mean that certain parcel of real estate lying and being at, more commonly
known
as the, as more particularly described on Exhibit A
attached
hereto, together with all easements, rights, privileges, remainders, reversions
and appurtenances thereunto belonging or in any way appertaining, and all
of the
estate, right, title, interest, claim or demand whatsoever of the Contributors
therein, in the streets and ways adjacent thereto and in the beds thereof,
either at law or in equity, in possession or expectancy, now or hereafter
acquired.
"Leases"
shall
mean those leases of real property attached hereto as Exhibit
D.
“Lessee”
shall
mean 44 New England Management Company.
"Manager"
shall
mean Hersha Hospitality Management, L.P.
"Operating
Agreements"
shall
mean the management agreements, service contracts, supply contracts, leases
(other than the Leases) and other agreements, if any, in effect with respect
to
the construction, ownership, operation, occupancy or maintenance of the
Property. All of the Operating Agreements in force and effect as of the date
hereof are listed on Exhibit E
attached
hereto.
“Organizational
Documents”
shall
mean the current partnership agreements and certificates of limited partnership
of the Partnership Contributors, true and correct copies of which are attached
hereto as Exhibit
F
and
Exhibit
G,
respectively.
"Owner's
Title Policy"
shall
mean an owner's policy of title insurance issued to the Acquirors by the
Title
Company, pursuant to which the Title Company insures the Acquirors' ownership
of
fee simple title to the Real Property (including the marketability thereof)
subject only to Permitted Title Exceptions. The Owner's Title Policy shall
insure the Acquirors in the amount of the Consideration and shall be acceptable
in form and substance to the Acquirors. The description of the Land in the
Owner's Title Policy shall be by courses and distances and shall be identical
to
the description shown on the Survey.
“Partnership”
shall
mean 44 Carlisle Associates, LP, a Pennsylvania limited partnership that
owns as
its sole assets hotel improvements situated at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇.
"Permitted
Title Exceptions"
shall
mean those exceptions to title to the Real Property that are satisfactory
to the
Acquirors.
"Property"
shall
mean collectively the Real Property, the Inventory, the Reservation System,
the
Tangible Personal Property and the Intangible Personal Property.
"Real
Property"
shall
mean the Land and the Improvements.
"Reservation
System"
shall
mean the Contributors’ Reservation Terminal and Reservation System equipment and
software, if any.
"Tangible
Personal Property"
shall
mean the items of tangible personal Property consisting of all furniture,
fixtures and equipment situated on, attached to, or used in the operation
of the
Hotel, and all furniture, furnishings, equipment, machinery, and other personal
property of every kind located on or used in the operation of the Hotel and
owned by the Contributors; provided, however, that the Acquirors agree that,
all
Inventory shall be conveyed to the Acquirors' property manager.
"Title
Commitment"
shall
mean the commitment by the Title Company to issue the Owner's Title
Policy.
"Title
Company"
shall
mean All American Abstract Co., Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
"Tray
Ledger"
shall
mean the final night's room revenue (revenue from rooms occupied as of 12:01
a.m. on the Effective Date, exclusive of food, beverage, telephone and similar
charges which shall be retained by the Contributors), including any sales
taxes,
room taxes or other taxes thereon.
"Utilities"
shall
mean public sanitary and storm sewers, natural gas, telephone, public water
facilities, electrical facilities and all other utility facilities and services
necessary for the operation and occupancy of the Property as a
hotel.
1.2 Rules
of Construction.
The
following rules shall apply to the construction and interpretation of this
Agreement:
(a) Singular
words shall connote the plural number as well as the singular and vice versa,
and the masculine shall include the feminine and the neuter.
(b) All
references herein to particular articles, sections, subsections, clauses
or
exhibits are references to articles, sections, subsections, clauses or exhibits
of this Agreement.
(c) The
headings contained herein are solely for convenience of reference and
shall
not
constitute a part of this Agreement nor shall they affect its meaning,
construction or effect.
(d) Each
party hereto and its counsel have reviewed and revised (or requested revisions
of) this Agreement, and therefore any usual rules of construction requiring
that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Agreement or any
exhibits hereto.
ARTICLE
II
CONTRIBUTION
AND ACQUISITION; PAYMENT OF CONSIDERATION AND CONTINGENT
CONSIDERATION
2.1 Contribution
and Acquisition.
Each of
the Contributors agrees to contribute, assign and transfer its respective
Interest to the Acquirors and the Acquirors agree to accept each Contributor’s
Interest in exchange for the Consideration and in accordance with the other
terms and conditions set forth herein.
2.2 Intentionally
Omitted.
2.3 Payment
of the Consideration.
The
consideration shall be paid to the Contributor in the following
manner:
(a)
The
Acquirors shall receive a credit against the Consideration in an amount equal
to
the Contributors’ closing costs assumed and paid for by the Acquirors pursuant
to Section 6.4 hereof.
(b)
The
Acquirors shall receive a credit against the Consideration in an amount equal
to
the outstanding balance (principal, interest, fees and the like), as of the
date
of Closing (approximately $7million), of the existing mortgage loan encumbering
the property as such balance is evidenced by a letter from the lender, which
loan the Acquirors shall take subject to or, if requested, assume.
(c)
The
Acquirors shall issue units of Hersha Hospitality Limited Partnership for
the
amount of $1,330,000.00.
(d)
The
Acquirors shall pay in the lawful money of the United States for the balance
of
the Consideration.
The
parties agree that the transfer of the assets to the Acquirors pursuant to
this
Agreement shall be treated for federal income tax purposes as a contribution
of
such assets solely in exchange for partnership interests in the Partnership
Contributor that qualifies as a tax-free contribution under Section 721 of
the
Internal revenue Code of 1986, as amended.
ARTICLE
III
CONTRIBUTORS’
REPRESENTATIONS, WARRANTIES AND COVENANTS
To
induce
the Acquirors to enter into this Agreement and to acquire the Interests,
the
Contributors hereby make the following representations, warranties and covenants
on a joint and several basis, upon each of which the Contributors acknowledge
and agree that the Acquirors is entitled to rely and has
relied:
3.1 Organization
and Power.
The
Partnership Contributors are each limited partnerships duly formed, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and the Corporate Contributor is a corporation duly formed,
validly existing and in good standing under the laws of the Commonwealth
of
Pennsylvania and have all requisite powers and all governmental licenses,
authorizations, consents and approvals necessary to carry on its business
as now
conducted, to own, lease and operate its properties, to execute and deliver
this
Agreement and any document or instrument required to be executed and delivered
on behalf of the Contributors hereunder, to perform their obligations under
this
Agreement and any such other documents or instruments and to consummate the
transactions contemplated hereby.
3.2 Authorization,
No Violations and Notices.
| (a) |
The
execution, delivery and performance of this Agreement by the Contributors,
and the consummation of the transactions contemplated hereby have
been
duly authorized, adopted and approved by the Contributors, and
the
partners of the Contributors for those Contributors that are partnerships,
and the shareholders of the Corporate Contributor, to the extent
required
by their organizational documents and applicable law. No other
proceedings
are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed by Shree,
Kunj,
Shanti III, Devi, JHS Trust, NHS Trust, Desfor, and SEL, and is
a valid
and binding obligation enforceable against them in accordance with
its
terms.
|
| (b) |
Neither
the
execution, delivery, or performance by the Contributors of this
Agreement,
nor the consummation of the transactions contemplated hereby, nor
compliance by the Contributors with any of the provisions hereof,
will:
|
|
(i) violate,
conflict with, result in a breach of any provision of, constitute
a
default
(or an event that, which, with or lapse of time or both, would
constitute
a default) under, result in the termination of, accelerate the
performance
required by, or result in a right of termination or acceleration,
or the
creation of any lien, security interest, charge, or encumbrance
upon any
of the properties or assets of the Partnership, under any of the
terms,
conditions, or provisions of, its Partnership, or any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement,
or other
instrument, or obligation to which the Partnership is a party,
or by which
the Partnership may be bound, or to which the Partnership or its
properties or assets may be subject;
or
|
|
(ii) violate
any judgment, ruling, order, writ, injunction, decree, statute,
rule, or
regulation applicable to the Partnership or its property or assets
that
would not be violated by the execution, delivery or performance
of this
Agreement or the transactions contemplated hereby by the Contributors
or
compliance by the Contributors with any of the provisions
hereof.
|
3.3 Litigation
with respect to Contributors.
There is
no action, suit, claim or proceeding pending or, to the Contributors’ knowledge,
threatened against or affecting the Contributors or their assets in any court,
before any arbitrator or before or by any governmental body or other regulatory
authority (i) that would adversely affect the Interests, (ii) that seeks
restraint, prohibition, damages or other relief in connection with this
Agreement or the transactions contemplated hereby, or (iii) would delay the
consummation of any of the transactions contemplated hereby. The Contributors
are not subject to any judgment, decree, injunction, rule or order of any
court
relating to the Contributors’ participation in the transactions contemplated by
this Agreement.
3.4 Interests.
The
Interests will be free and clear of all liens and encumbrances on the Closing
Date and the Contributors have good, merchantable title thereto and the right
to
convey same in accordance with the terms of this Agreement. Upon delivery
of the
Assignment and Assumption Agreements to the Acquirors at Closing, good valid
and
merchantable title to the Interests, free and clear of all liens and
encumbrances, will pass to the Acquirors.
3.5 Bankruptcy
with Respect to Contributors.
No Act
of Bankruptcy has occurred with respect to the Contributors.
3.6 Brokerage
Commission.
The
Contributors have not engaged the services of, nor are they or will they
or
Acquirors become liable to, any real estate agent, broker, finder or any
other
person or entity for any brokerage or finder’s fee, commission or other amount
with respect to the transactions described herein on account of any action
by
the Contributors.
3.7 The
Partnership.
| (a) |
The
Partnership is a limited partnership duly formed, validly existing
and in
good standing under the laws of the Commonwealth of Pennsylvania
and has
all requisite powers necessary to carry on its business as now
conducted,
to own, lease and operate its
properties.
|
| (b) |
Neither
the
execution, delivery, or performance by the Contributors of this
Agreement,
nor the consummation of the transactions contemplated hereby, nor
compliance by the Contributors with any of the provisions hereof,
will:
|
|
(i) violate,
conflict with, result in a breach of any provision of, constitute
a
default (or an event that, with notice or lapse of time or both,
would
constitute a default) under, result in the termination of, accelerate
the
performance required by, or result in a right of termination or
acceleration, or the creation of any lien, security interest, charge,
or
encumbrance upon any of the properties or assets of the Partnership,
under
any of the terms, conditions, or provisions of, their articles
of
incorporation or bylaws, or any note, bond, mortgage, indenture,
deed of
trust, license, lease, agreement, or other instrument or obligation
to
which the Partnership is a party, or by which the Partnership may
be
bound, or to which the Partnership or its properties or assets
may be
subject; or
|
|
(ii) violate
any judgment, ruling, order, writ, injunction, decree, statute,
rule, or
regulation applicable to the Partnership or any of the Partnership’s
properties or assets.
|
| (c) |
Except
for
the Contributors, no party has any interest in the Partnership
or the
right or option to acquire any interest in the Partnership or the
property
or any portion thereof. The Partnership has no subsidiaries and
does not
directly or indirectly own any securities of or interest in any
other
entity, including, without limitation, any partnership or joint
venture.
|
3.8 Liabilities,
Debts and Obligations.
Except
for the Continuing Liabilities, the Partnership has no liability, debt or
obligation.
3.9 Tax
Matters with respect to Partnership.
| (a) |
The
Partnership has filed all income tax information returns on IRS
Form 1065
(including K-1s for each partner) and applicable state and local
income
tax forms required to be filed with the United States Government
and with
all states and political subdivisions thereof where any such returns
are
required to be filed and where the failure to file such return
or report
would subject the Partnership or its partners to any material liability
or
penalty. All taxes (other than sale taxes, rental taxes or the
equivalent
and real property taxes) imposed by the United States, or by any
foreign
country, or by any state, municipality, subdivision, or instrumentality
of
the United States or of any foreign country or by any other taxing
authority, which are due and payable by the Partnership have been
paid in
full or adequately provided for by reserves shown in their records
and
books of account and in the Partnership’s financial information. The
Partnership has not obtained or received any extension of time
(beyond the
Closing Date) for the assessment of deficiencies for any years
or waived
or extended the statute of limitations for the determination or
collection
of any tax. To the Contributors’ knowledge no unassessed tax deficiency is
proposed or threatened against the
Partnership.
|
| (b) |
All
taxes, rental taxes or the equivalent, and all interest and penalties
due
thereon, required to be paid or collected by the Partnership in
connection
with the operation of the Property as of the Closing Date will
have been
collected and/or paid to the appropriate governmental authorities,
as
required or such amounts shall be pro-rated as of the Closing Date.
The
Partnership shall file, all necessary returns and petitions required
to be
filed through the Closing Date. The Partnership shall prepare and
file all
federal and state income tax returns for the tax period ending
on the
Closing Date, which shall reflect the termination for tax purposes
of the
Partnership. If requested by the Acquirors, the Contributors shall
cause
the Partnership to make an election under Section 754 of the Code
for the
period ending on the Closing
Date.
|
3.10 Contracts
and Agreements.
There is
no loan agreement, guarantee, note, bond, indenture and other debt instrument,
lease and other contract to which the Partnership is a party or by which
its
assets are bound other than Permitted Title Encumbrances, the Leases, and
the
Operating Agreements.
3.11 No
Special Taxes.
The
Contributors have no actual knowledge of, nor have they received any written
notice of, any special taxes or assessments relating to the Partnership or
Property or any part thereof or any planned public improvements that may
result
in a special tax or assessment against the Property.
3.12 Compliance
with Existing Laws.
The
Partnership possesses all Authorizations, each of which is valid and in full
force and effect, and, to Contributors’ actual knowledge, no provision,
condition or limitation of any of the Authorizations has been breached or
violated. The Partnership has not misrepresented or failed to disclose any
relevant fact in obtaining all Authorizations, and the Contributors have
no
actual knowledge of any change in the circumstances under which those
Authorizations were obtained that result in their termination, suspension,
modification or limitation. The Contributors have no actual knowledge, nor
have
they received written notice within the past three years, of any existing
violation of any provision of any applicable building, zoning, subdivision,
environmental or other governmental ordinance, resolution, statute, rule,
order
or regulation, including but not limited to those of environmental agencies
or
insurance boards of underwriters, with respect to the ownership, operation,
use,
maintenance or condition of the Property or any part thereof, or requiring
any
repairs or alterations other than those that have been made prior to the
date
hereof.
3.13 Operating
Agreements.
The
Partnership has performed all of its obligations under each of the Operating
Agreements and no fact or circumstance has occurred which, by itself or with
the
passage of time or the giving of notice or both, would constitute a material
default under any of the Operating Agreements. The Partnership shall not
enter
into any new management agreement, maintenance or repair contract, supply
contract, lease in which it is lessee or other agreements with respect to
the
Property, nor shall the Partnership enter into any agreements modifying the
Operating Agreements, unless (a) any such agreement or modification will
not bind the Acquirors or the Property after the date of Closing or (b) the
Contributors have obtained the Acquirors' prior written consent to such
agreement or modification, which consent shall not be unreasonably withheld
or
delayed.
3.14 Warranties
and Guaranties.
The
Partnership shall not before Closing, release or modify any warranties or
guarantees, if any, of manufacturers, suppliers and installers relating to
the
Improvements and the Personal Property or any part thereof, except with the
prior written consent of the Acquirors, which consent shall not be unreasonably
withheld or delayed. A complete list of all such warranties and guaranties
in
effect as of this date is attached hereto as Exhibit H.
3.15 Insurance.
All of
the Partnership’s Insurance Policies are valid and in full force and effect, all
premiums for such policies were paid when due and all future premiums for
such
policies (and any replacements thereof) shall be paid by the Partnership
on or
before the due date therefor. The Partnership shall pay all premiums on,
and
shall not cancel or voluntarily allow to expire, any of the Partnership’s
Insurance Policies prior to the Closing Date unless such policy is replaced,
without any lapse of coverage, by another policy or policies providing coverage
at least as extensive as the policy or policies being replaced. The Partnership
shall name the Acquirors as an additional insured on each of the Partnership’s
Insurance Policies.
3.16 Condemnation
Proceedings; Roadways.
The
Partnership has received no written notice of any condemnation or eminent
domain
proceeding pending or threatened against the Property or any part thereof.
The
Contributors have no actual knowledge of any change or proposed change in
the
route, grade or width of, or otherwise affecting, any street or road adjacent
to
or serving the Real Property.
3.17 Litigation
with respect to Partnership.
Except
as set forth on Exhibit
I
there is
no action, suit or proceeding pending or known to be threatened against or
affecting the Partnership or its property in any court, before any arbitrator
or
before or by any governmental agency which (a) in any manner raises any question
affecting the validity or enforceability of this Agreement or any other material
agreement or instrument to which the Partnership are a party or by which
they
are bound and that is or is to be used in connection with, or is contemplated
by, this Agreement, (b) could materially and adversely affect the business,
financial position or results of operations of the Partnership, (c) could
materially and adversely affect the ability of the Partnership perform its
obligations hereunder, or under any document to be delivered pursuant hereto,
(d) could create a lien on the Property, any part thereof or any interest
therein, or (e) could otherwise materially adversely affect the Property,
any
part thereof or any interest therein or the use, operation, condition or
occupancy thereof.
3.18 Labor
Disputes and Agreements.
The
Partnership currently has no labor disputes pending or, threatened as to
the
operation or maintenance of the Property or any part thereof. The Partnership
is
not a party to any union or other collective bargaining agreement with employees
employed in connection with the ownership, operation or maintenance of the
Property. The Acquirors will not be obligated to give or pay any amount to
any
employee of the Partnership, and the Acquirors shall not have any liability
under any pension or profit sharing plan that the Partnership may have
established with respect to the Property or their or its employees.
3.19 Financial
Information.
To the
best of the Contributors’ knowledge except as otherwise disclosed in writing to
the Acquirors prior to the closing, for each of the Partnership’s accounting
years, when a given year is taken as a whole, all of the Partnership’s financial
information previously delivered or to be delivered to the Acquirors is and
shall be correct and complete in all material respects and presents accurately
the results of the operations of the Property for the periods indicated,
except
such statements do not have footnotes or schedules that may otherwise be
required by GAAP. If requested by the Acquirors, Contributors will forward
promptly all four-week period ending financial information they receive from
the
Partnership. Contributors’ financial information is prepared based on
information provided by the Partnership based on books and records maintained
by
the Partnership in accordance with the Partnership’s accounting system.
Partnership financial information provided by the Acquirors has been provided
to
the Acquirors without any changes or alteration thereto. To the best of
Contributors’ knowledge, since the date of the last financial statement included
in the Partnership’s financial information, there has been no material adverse
change in the financial condition or in the operations of the
Property.
3.20 Organizational
Documents.
The
Partnership’s Organizational Documents are in full force and effect and have not
been modified or supplemented, and no fact or circumstance has occurred that,
by
itself or with the giving of notice or the passage of time or both, would
constitute a default thereunder.
3.21 Operation
of Property.
The
Contributors covenant that between the date hereof and the date of Closing
they
will make good faith efforts to cause the Partnership to (a) operate the
Property only in the usual, regular and ordinary manner consistent with the
Partnership’s prior practice, (b) maintain their books of account and records in
the usual, regular and ordinary manner, in accordance with sound accounting
principles applied on a basis consistent with the basis used in keeping its
books in prior years, and (c) use all reasonable efforts to preserve intact
their present business organization, keep available the services of their
present officers and employees and preserve their relationships with suppliers
and others having business dealings with them. The Contributors shall make
good
faith efforts to encourage the Partnership to continue to make good efforts
to
take guest room reservations and to book functions and meetings and otherwise
to
promote the business of the Property in generally the same manner as the
Partnership did prior to the execution of this Agreement. Except as otherwise
permitted hereby, from the date hereof until Closing, the Contributors shall
use
its good faith efforts to ensure that the Partnership shall not take any
action
or fail to take action the result of which (i) would have a material adverse
effect on the Property or the Acquirors’ ability to continue the operation
thereof after the date of Closing in substantially the same manner as presently
conducted, (ii) reduce or cause to be reduced any room rents or any other
charges over which Contributors have operational control, or (iii) would
cause
any of the representations and warranties contained in this Article
III
to be
untrue as of Closing.
3.22 Bankruptcy
with respect to Partnership.
No Act
of Bankruptcy has occurred with respect to the Partnership.
3.23 Hazardous
Substances.
Except
for matters in Partnership’s or Acquirors' audits, Contributors have no
knowledge: (a) of the presence of any "Hazardous Substances" (as defined
below) on the Property, or any portion thereof, or, (b) of any spills,
releases, discharges, or disposal of Hazardous Substances that have occurred
or
are presently occurring on or onto the Property, or any portion thereof,
or (c)
of the presence of any PCB transformers serving, or stored on, the Property,
or
any portion thereof, and Contributors have no actual knowledge of any failure
to
comply with any applicable local, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders relating to
the
generation, recycling, reuse, sale, storage, handling, transport and disposal
of
any Hazardous Substances (as used herein, "Hazardous Substances" shall mean
any
substance or material whose presence, nature, quantity or intensity of
existence, use, manufacture, disposal, transportation, spill, release or
effect,
either by itself or in combination with other materials is either:
(1) potentially injurious to the public health, safety or welfare, the
environment or the Property, (2) regulated, monitored or defined as a
hazardous or toxic substance or waste by any Environmental Authority, or
(3) a basis for liability of the owner of the Property to any Environmental
Authority or third party, and Hazardous Substances shall include, but not
be
limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products,
by-products or components thereof, and asbestos). Notwithstanding anything
to
the contrary contained herein Contributors shall have no liability to Acquirors
for any Hazardous Substances of which Contributors have no actual
knowledge.
3.24 Room
Furnishings.
All
public spaces, lobbies, meeting rooms, and each room in the Hotel available
for
guest rental are furnished in accordance with Licensor's standards for the
Hotel
and room type.
3.25 License.
The
license from Residence Inn Carlisle (Marriott International) (the "Licensor")
with respect to the Hotel (the "License") is, and at Closing will be, valid
and
in full force and effect, and Contributors will make good faith efforts not
to
be in default with respect thereto (with or without the giving of any required
notice and/or lapse of time).
3.26 Independent
Audit.
Contributors shall provide access by Acquirors' representatives, to all
financial and other information relating to the Property which would be
sufficient to enable them to prepare audited financial statements in conformity
with Regulation S-X of the Securities and Exchange Commission (the "Commission")
and to enable them to prepare report or disclosure statement for filing with
the
Commission. Contributors shall also provide to Acquirors' representatives
a
signed representative letter and a hold harmless letter, which would be
sufficient to enable an independent public accountant to render an opinion
on
the financial statements related to the Property.
3.27 Bulk
Sale Compliance.
Contributors shall indemnify Acquirors against any claim, loss or liability
arising under the bulk sales law in connection with the transaction contemplated
herein.
3.28 Intentionally
Omitted.
3.29 Sufficiency
of Certain Items.
The
Property contains not less than:
(a) a
sufficient amount of furniture, furnishings, color television sets, carpets,
drapes, rugs, floor coverings, mattresses, pillows, bedspreads and the like,
to
furnish each guest room, so that each such guest room is, in fact, fully
furnished; and
(b) a
sufficient amount of towels, washcloths and bed linens, so that there are
three
sets of towels, washcloths and linens for each guest room (one on the beds,
one
on the shelves, and one in the laundry), together with a sufficient supply
of
paper goods, soaps, cleaning supplies and other such supplies and materials,
as
are reasonably adequate for the current operation of the Hotel.
3.30 Intentionally
Omitted.
3.31 Leases.
True,
complete copies of the Leases, if any, are attached as Exhibit D hereto.
The
Leases are, and will at Closing be, in full force and effect and Contributors,
is not in default and will make good faith efforts not to be in default with
respect thereto (with or without the giving of any notice and/or lapse of
time).
The Leases are, or will be at Closing, freely assignable by Contributors
and
Contributors will have obtained consents all necessary consents of any third
party.
3.32 Securities
Law Matters.
Acquirors further represent and warrant that they have (i) received, reviewed,
been given the opportunity to ask questions of representatives of the Operating
Partnership and the REIT regarding, and understand the Acquirors' Partnership
Agreement, as amended, and each filing of the REIT under the Securities Act,
and
(ii) Contributors and the Transferees are "accredited investors" as defined
under Regulation D promulgated under the Securities Act.
3.33 Tax
Matters with Respect to Contributors.
The
Contributors represent and warrant that they (and each of its partners) have
obtained from its own counsel advice regarding the tax consequences of (i)
the
transfer of the Partnership Interest to the Acquirors and the receipt of
lawful
money of the United States as consideration therefor, (ii) the Contributors’
admission as partners of the Acquirors, and (iii) any other transaction
contemplated by this Agreement. The Contributors further represent and warrant
that they have not relied on the Acquirors or the Acquirors' representatives
or
counsel for such advice.
3.34 Noncontravention.
The
execution and delivery of, and the performance by the Contributors of their
obligations under this Agreement do not and will not contravene, or constitute
a
default under, any provision of applicable law or regulation, the Contributors’
Organizational Documents or any agreement, judgment, injunction, order, decree
or other instrument binding upon the Contributors, or result in the creation
of
any lien or other encumbrance on any asset of the Contributor. There are
no
outstanding agreements (written or oral) pursuant to which the Contributors
(or
any predecessor to or representative of the Contributors) have agreed to
contribute or have granted an option or right of first refusal to acquire
the
Property or any part thereof.
Each
of
the representations, warranties and covenants contained in this Article
III
and its
various subparagraphs are intended for the benefit of the Acquirors and may
be
waived in whole or in part, by the Acquirors, but only by an instrument in
writing signed by the Acquirors. Each of said representations, warranties
and
covenants shall survive the closing of the transaction contemplated hereby
for
twenty-four (24) months, and no investigation, audit, inspection, review
or the
like conducted by or on behalf of the Acquirors shall be deemed to terminate
the
effect of any such representations, warranties and covenants, it being
understood that the Acquirors has the right to rely thereon and that each
such
representation, warranty and covenant constitutes a material inducement to
the
Acquirors to execute this Agreement and to close the transaction contemplated
hereby and to pay the Consideration to the Contributors. Acquirors acknowledges
and agrees that, except for the representations and warranties expressly
set
forth herein, Acquirors is acquiring the Property "AS-IS, WHERE-IS" with
no
representations or warranties by or from Contributors or any of its affiliates,
express or implied, or any nature whatsoever.
ARTICLE
IV
ACQUIRORS'
REPRESENTATIONS, WARRANTIES AND COVENANTS
To
induce
the Contributors to enter into this Agreement and to sell the Interests,
the
Acquirors hereby make the following representations, warranties and covenants
with respect to the Property, upon each of which the Acquirors acknowledge
and
agree that the Contributors are entitled to rely and have relied:
4.1 Organization
and Power.
The
Partnership Acquiror is a limited partnership duly organized, validly existing
and in good standing under the laws of the Commonwealth of Virginia, and
have
all partnership powers and all governmental licenses, authorizations, consents
and approvals to carry on their businesses as now conducted and to enter
into
and perform their obligations under this Agreement and any document or
instrument required to be executed and delivered on behalf of the Acquirors
hereunder. The LLC Acquiror is a limited liability company duly organized,
validly existing, and in good standing under the laws of the Commonwealth
of
Virginia, and have all corporate powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations under this Agreement an any
document or instrument required to be executed and delivered on behalf of
the
Acquirors hereunder.
4.2 Noncontravention.
The
execution and delivery of this Agreement and the performance by the Acquirors
of
their obligations hereunder do not and will not contravene, or constitute
a
default under, any provisions of applicable law or regulation, the Partnership
Acquiror’s partnership agreements or any agreements, the LLC Acquiror’s
Certificate of Organization or any agreement, judgment, injunction, order,
decree or other instrument binding upon the Acquirors or result in the creation
of any lien or other encumbrance on any asset of the Acquirors.
4.3 Litigation.
There is
no action, suit or proceeding, pending or known to be threatened, against
or
affecting the Acquirors in any court or before any arbitrator or before any
Governmental Body which (a) in any manner raises any question affecting the
validity or enforceability of this Agreement or any other agreement or
instrument to which the Acquirors are a party or by which they are bound
and
that is to be used in connection with, or is contemplated by, this Agreement,
(b) could materially and adversely affect the business, financial position
or results of operations of the Acquirors, (c) could materially and
adversely affect the ability of the Contributors to perform their obligations
hereunder, or under any document to be delivered pursuant hereto, (d) could
create a lien on the Property, any part thereof or any interest therein or
(e) could adversely affect the Property, any part thereof or any interest
therein or the use, operation, condition or occupancy thereof.
4.4 Bankruptcy.
No Act
of Bankruptcy has occurred with respect to the Acquirors.
4.5 No
Brokers.
The
Acquirors have not engaged the services of, nor is it or will it become liable
to, any real estate agent, broker, finder or any other person or entity for
any
brokerage or finder's fee, commission or other amount with respect to the
transaction described herein.
ARTICLE
V
CONDITIONS
AND ADDITIONAL COVENANTS
The
Acquirors' obligations hereunder are subject to the satisfaction of the
following conditions precedent and the compliance by the Contributors with
the
following covenants:
5.1 Contributors’
Deliveries.
The
Contributors shall have delivered to the Escrow Agent or the Acquirors, as
the
case may be, on or before the date of Closing, all of the documents and other
information required of Contributors pursuant to Section 6.2.
5.2 Representations,
Warranties and Covenants; Obligations of Contributors;
Certificate.
All of
the Contributors’ representations and warranties made in this Agreement shall be
true and correct as of the date hereof and as of the date of Closing as if
then
made, there shall have occurred no material adverse change in the financial
condition of the Property since the date hereof, the Contributors shall have
performed all of its material covenants and other obligations under this
Agreement and the Contributors shall have executed and delivered to the
Acquirors at Closing a certificate to the foregoing effect.
5.3 Title
Insurance.
Good and
indefeasible fee simple title to the Real Property shall be insurable as
such by
the Title Company at or below its regularly scheduled rates subject only
to
Permitted Title Exceptions.
5.4 Condition
of Improvements.
The
Improvements and the Tangible Personal Property (including but not limited
to
the mechanical systems, plumbing, electrical, wiring, appliances, fixtures,
heating, air conditioning and ventilating equipment, elevators, boilers,
equipment, roofs, structural members and furnaces) shall be in the same
condition at Closing as they are as of the date hereof, reasonable wear and
tear
excepted. Prior to Closing, the Contributors shall not have diminished the
quality or quantity of maintenance and upkeep services heretofore provided
to
the Real Property and the Tangible Personal Property and the Contributors
shall
not have diminished the Inventory. The Contributors shall not have removed
or
caused or permitted to be removed any part or portion of the Real Property
or
the Tangible Personal Property unless the same is replaced, prior to Closing,
with similar items of at least equal quality and acceptable to the
Acquirors.
5.5 Utilities.
All of
the Utilities shall be installed in and operating at the Property, and service
shall be available for the removal of garbage and other waste from the
Property.
5.6 License.
From the
date hereof to and including the Closing Date, Contributors shall comply
with
and perform all of the duties and obligations of licensee under the
License.
ARTICLE
VI
CLOSING
6.1 Closing.
Closing
shall be held at a location that is mutually acceptable to the parties, on
or
before January 10,
2007.
6.2 Contributors’
Deliveries.
At
Closing, the Contributors shall deliver to Acquirors all of the following
instruments, each of which shall have been duly executed and, where applicable,
acknowledged on behalf of the Contributors and shall be dated as of the date
of
Closing:
(a) The
certificate required by Section 5.2.
(b) The
Assignment and Assumption Agreements.
(c) Certificate(s)/Registration
of Title for any vehicle owned by the Contributors and used in connection
with
the Property.
(d) Such
agreements, affidavits or other documents as may be required by the Title
Company to issue the Owner's Title Policy with affirmative coverage over
mechanics' and materialmen's liens.
(e) The
FIRPTA Certificates.
(f) True,
correct and complete copies of all warranties, if any, of manufacturers,
suppliers and installers possessed by the Contributors and relating to the
Improvements and the Personal Property, or any part thereof.
(g) Certified
copies of the Contributors’ and the Partnership’s Organizational
Documents.
(h) Appropriate
resolutions of the partners of the Partnership Contributors, together with
all
other necessary approvals and consents of the Contributors, authorizing
(A) the execution on behalf of the Contributors of this Agreement and the
documents to be executed and delivered by the Contributors prior to, at or
otherwise in connection with Closing, and (B) the performance by the
Contributors of its obligations hereunder and under such documents.
(i) Valid,
final and unconditional certificate(s) of occupancy for the Real Property
and
Improvements, issued by the appropriate governmental authority.
(j) The
written consent of the Licensor to the transfer of the license, if applicable,
and if so required.
(k) Such
proof as the Acquirors may reasonably require with respect to Contributors’
compliance with the bulk sales laws or similar statutes.
(l) A
written
instrument executed by the Contributors, conveying and transferring to the
Acquirors all of the Contributors’ right, title and interest in any telephone
numbers and facsimile numbers relating to the Property, and, if the Contributors
maintains a post office box, conveying to the Acquirors all of its interest
in
and to such post office box and the number associated therewith, so as to
assure
a continuity in operation and communication.
(m) All
current real estate and personal property tax bills in the Contributors’
possession or under its control.
(n) A
complete set of all guest registration cards, guest transcripts, guest
histories, and all other available guest information.
(o) An
updated schedule of employees, showing salaries and duties with a statement
of
the length of service of each such employee, brought current to a date not
more
than 48 hours prior to the Closing.
(p) A
complete list of all advance room reservations, functions and the like, in
reasonable detail so as to enable the Acquirors to honor the Contributors’
commitments in that regard.
(q) A
list of
the Contributors’ outstanding accounts receivable as of midnight on the date
prior to the Closing, specifying the name of each account and the amount
due the
Contributors.
(r) All
keys
for the Property.
(s) All
books, records, operating reports, appraisal reports, files and other materials
in the Contributors’ possession or control which are necessary in the Acquirors
discretion to maintain continuity of operation of the Property.
(t) To
the
extent permitted under applicable law, documents of transfer necessary to
transfer to the Acquirors the Contributors’ employment rating for workmens'
compensation and state unemployment tax purposes.
(u) An
assignment of all warranties and guarantees from all contractors and
subcontractors, manufacturers, and suppliers in effect with respect to the
Improvements.
(v) Complete
set of "as-built" drawings for the Improvements.
(w) Such
agreements, affidavits or other documents as may be required by the Title
Company in order to issue affirmative mechanics lien coverage in the Owner's
Title Policy for the Property.
(x) Any
other
document or instrument reasonably requested by the Acquirors or required
hereby.
6.3 Acquirors's
Deliveries.
At
Closing, the Acquirors shall pay or deliver to the Contributors the
following:
(a) The
Consideration described in Section 2.3.
(b) The
Assignment and Assumption Agreements.
(c) Any
other
document or instrument reasonably requested by the Contributors or required
hereby.
6.4 Closing
Costs.
The
Acquirors shall pay all legal fees and expenses. All filing fees for the
recording or other similar taxes due with respect to the transfer of title
and
all charges for title insurance premiums shall be paid by the Acquirors.
The
Contributors shall pay reasonable fees for the preparation of the documents
to
be delivered by the Contributors hereunder. Acquirors shall pay for the releases
of any deeds of trust, mortgages and other financing encumbering the Property
and for any costs associated with any corrective instruments. The Acquirors
shall pay all other costs, including all franchise license transfer fees,
in
carrying out the transactions contemplated hereunder.
6.5 Income
and Expense Allocations.
All
income, except any Intangible Personal Property, and expenses with respect
to
the Property, and applicable to the period of time before and after Closing,
determined in accordance with sound accounting principles consistently applied,
shall be allocated between the Contributors and the Acquirors. The Contributors
shall be entitled to all income (including all cash box receipts and cash
credits for unused expendables), and responsible for all expenses for the
period
of time up to but not including 12:01 a.m. on the Closing Date, and the
Acquirors shall be entitled to all income and responsible for all expenses
for
the period of time from, after and including the Closing Date. Only adjustments
for ground rent, if applicable, and real estate taxes shall be shown on the
settlement statements (with such supporting documentation as the parties
hereto
may require being attached as exhibits to the settlement statements) and
shall
increase or decrease (as the case may be) the amount payable by the Acquirors.
All other such adjustments shall be made by separate agreement between the
parties and shall be payable by check or wire directly between the parties.
Without limiting the generality of the foregoing, the following items of
income
and expense shall be allocated as of the Closing Date:
(a) Current
and prepaid rents, including, without limitation, prepaid room receipts,
function receipts and other reservation receipts.
(b) Real
estate and personal property taxes.
(c) Amounts
under the Operating Agreements.
(d) Utility
charges (including but not limited to charges for water, sewer and
electricity).
(e) Wages,
vacation pay, pension and welfare benefits and other fringe benefits of all
persons employed at the Property who the Acquirors elect to employ.
(f) Value
of
fuel stored on the Property at the price paid for such fuel by the Contributors,
including any taxes.
(g) All
prepaid reservations and contracts for rooms confirmed by Contributors prior
to
the Closing Date for dates after the Closing Date, all of which Acquirors
shall
honor.
The
Tray
Ledger shall be retained by the Contributors. The Contributors shall be required
to pay all sales taxes and similar impositions currently up to the Closing
Date.
Acquirors
shall not be obligated to collect any accounts receivable or revenues accrued
prior to the Closing Date for Contributors, but if Acquirors collect same,
such
amounts will be promptly remitted to Contributors in the form
received.
If
accurate allocations cannot be made at Closing because current bills are
not
obtainable (as, for example, in the case of utility bills or tax bills),
the
parties shall allocate such income or expenses at Closing on the best available
information, subject to adjustment upon receipt of the final ▇▇▇▇ or other
evidence of the applicable income or expense. Any income received or expense
incurred by the Contributors or the Acquirors with respect to the Property
after
the date of Closing shall be promptly allocated in the manner described herein
and the parties shall promptly pay or reimburse any amount due. The Contributors
shall pay at Closing all special assessments and taxes applicable to the
Property.
ARTICLE
VII
CONDEMNATION;
RISK OF LOSS
7.1 Condemnation.
In the
event of any actual or threatened taking, pursuant to the power of eminent
domain, of all or any portion of the Real Property, or any proposed sale
in lieu
thereof, the Contributors shall give written notice thereof to the Acquirors
promptly after the Contributors learns or receives notice thereof. If all
or any
part of the Real Property is, or is to be, so condemned or sold, the Acquirors
shall have the right to terminate this Agreement pursuant to Section 8.3.
If the
Acquirors elects not to terminate this Agreement, all proceeds, awards and
other
payments arising out of such condemnation or sale (actual or threatened)
shall
be paid or assigned, as applicable, to the Acquirors at Closing.
7.2 Risk
of Loss.
The risk
of any loss or damage to the Property prior to the Closing shall remain upon
the
Contributors. If any such loss or damage to more than twenty five percent
(25%)
of the value of the improvements occurs prior to Closing, the Acquirors shall
have the right to terminate this Agreement pursuant to Section 8.3.
If the
Acquirors elects not to terminate this Agreement, all insurance proceeds
and
rights to proceeds arising out of such loss or damage shall be paid or assigned,
as applicable, to the Acquirors at Closing.
ARTICLE
VIII
LIABILITY
OF ACQUIRORS; INDEMNIFICATION BY CONTRIBUTORS;
TERMINATION
RIGHTS
8.1 Liability
of Acquirors.
Except
for any obligation expressly assumed or agreed to be assumed by the Acquirors
hereunder and in the Assignment and Assumption Agreement, the Acquirors do
not
assume any obligation of the Contributors or any liability for claims arising
out of any occurrence prior to Closing.
8.2 Indemnification
by Contributors.
The
Contributors hereby indemnify and hold the Acquirors harmless from and against
any and all claims, costs, penalties, damages, losses, liabilities and expenses
(including reasonable attorneys' fees), subject to Section
9.11
that may
at any time be incurred by the Acquirors, whether before or after Closing,
as a
result of any breach by the Contributors of any of their representations,
warranties, covenants or obligations set forth herein or in any other document
delivered by the Contributors pursuant hereto.
8.3 Termination
by Acquirors.
If any
condition set forth herein cannot or will not be satisfied prior to Closing,
or
upon the occurrence of any other event that would entitle the Acquirors to
terminate this Agreement and their obligations hereunder, and the Contributors
fails to cure any such matter within ten business days after notice thereof
from
the Acquirors, the Acquirors, at their option and as their sole remedy, shall
elect either (a) to terminate this Agreement and all other rights and
obligations of the Contributors and the Acquirors hereunder shall terminate
immediately, or (b) to waive their right to terminate and, instead, to
proceed to Closing.
8.4 Termination
by Contributors.
If,
prior to Closing, the Acquirors default in performing any of their obligations
under this Agreement (including their obligation to purchase the Property),
and
the Acquirors fail to cure any such default within ten business days after
notice thereof from the Contributors, then the Contributors’ sole remedy for
such default shall be to terminate this Agreement.
ARTICLE
IX
MISCELLANEOUS
PROVISIONS
9. Completeness;
Modification.
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersedes all prior
discussions, understandings, agreements and negotiations between the parties
hereto. This Agreement may be modified only by a written instrument duly
executed by the parties hereto.
9.2 Assignments.
The
Acquirors may assign their rights hereunder to any affiliate of Acquirors
without the consent of the Contributors. No such assignment shall relieve
the
Acquirors of any of their obligations and liabilities hereunder.
9.3 Successors
and Assigns.
The
benefits and burdens of this Agreement shall inure to the benefit of and
bind
the Acquirors and the Contributors and their respective party
hereto.
9.4 Days.
If any
action is required to be performed, or if any notice, consent or other
communication is given, on a day that is a Saturday or Sunday or a legal
holiday
in the jurisdiction in which the action is required to be performed or in
which
is located the intended recipient of such notice, consent or other
communication, such performance shall be deemed to be required, and such
notice,
consent or other communication shall be deemed to be given, on the first
business day following such Saturday, Sunday or legal holiday. Unless otherwise
specified herein, all references herein to a "day" or "days" shall refer
to
calendar days and not business days.
9.5 Governing
Law.
This
Agreement and all documents referred to herein shall be governed by and
construed and interpreted in accordance with the laws of the Commonwealth
of
Pennsylvania.
9.6 Counterparts.
To
facilitate execution, this Agreement may be executed in as many counterparts
as
may be required. It shall not be necessary that the signature on behalf of
both
parties hereto appear on each counterpart hereof. All counterparts hereof
shall
collectively constitute a single agreement.
9.7 Severability.
If any
term, covenant or condition of this Agreement, or the application thereof
to any
person or circumstance, shall to any extent be invalid or unenforceable,
the
remainder of this Agreement, or the application of such term, covenant or
condition to other persons or circumstances, shall not be affected thereby,
and
each term, covenant or condition of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
9.8 Costs.
Regardless of whether Closing occurs hereunder, and except as otherwise
expressly provided herein, each party hereto shall be responsible for its
own
costs in connection with this Agreement and the transactions contemplated
hereby, including without limitation fees of attorneys, engineers and
accountants.
9.9 Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be delivered by hand, transmitted by facsimile transmission,
sent prepaid by Federal Express (or a comparable overnight delivery service)
or
sent by the United States mail, certified, postage prepaid, return receipt
requested, at the addresses and with such copies as designated below. Any
notice, request, demand or other communication delivered or sent in the manner
aforesaid shall be deemed given or made (as the case may be) when actually
delivered to the intended recipient.
|
If
to the Contributors:
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▇▇▇▇▇
▇. ▇▇▇▇▇
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c/▇
▇▇▇▇▇▇ Enterprises, Ltd.
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44
▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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With
a copy to:
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Lok
Mohapatra, Esquire
|
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Franklin
Firm, LLP
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Penn
Mutual Towers
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51▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Phone:(▇▇▇)
▇▇▇-▇▇▇▇
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Fax:(▇▇▇)
▇▇▇-▇▇▇▇
|
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If
to the Acquirors:
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇
Hospitality Limited Partnership
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44
▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
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Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
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With
a copy to:
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Lok
Mohapatra, Esquire
|
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Franklin
Firm, LLP
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Penn
Mutual Towers
|
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51▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Or
to
such other address as the intended recipient may have specified in a notice
to
the other party. Any party hereto may change its address or designate different
or other persons or entities to receive copies by notifying the other party
and
the Escrow Agent in a manner described in this Section.
9.10 Incorporation
by Reference.
All of
the exhibits attached hereto are by this reference incorporated herein and
made
a part hereof.
9.12 Further
Assurances.
The
Contributors and the Acquirors each covenant and agree to sign, execute and
deliver, or cause to be signed, executed and delivered, and to do or make,
or
cause to be done or made, upon the written request of the other party, any
and
all agreements, instruments, papers, deeds, acts or things, supplemental,
confirmatory or otherwise, as may be reasonably required by either party
hereto
for the purpose of or in connection with consummating the transactions described
herein.
9.13 No
Partnership.
This
Agreement does not and shall not be construed to create a partnership, joint
venture or any other relationship between the parties hereto except the
relationship of Contributors and Acquirors specifically established
hereby.
9.14 Time
of Essence.
Time is
of the essence with respect to every provision hereof.
9.15 Confidentiality.
Except
as hereinafter provided, from and after the execution of this
Agreement, the Acquirors and the Contributors
shall keep the terms, conditions and provisions of this Agreement confidential
and neither shall make any public announcements hereof unless the other first
approves of same in writing, nor shall either disclose the terms, conditions
and
provisions hereof, except to persons who "need to know", such as their
respective attorneys, accountants, engineers, surveyors, financiers and bankers.
Notwithstanding the foregoing, it is acknowledged that the general partner
of
the Partnership Contributor has elected to be a real estate investment trust
("REIT") and that the REIT has sold shares and may seek to sell additional
shares to the general public and that in connection therewith, the Partnership
Contributor will have the absolute and unbridled right to market such securities
and prepare and file all necessary or reasonably required registration
statements, disclosure statements, and other papers, documents and instruments
necessary or reasonably required in the Partnership Contributor’s judgment and
that of its attorneys and underwriters with respect to the REIT's shares
with
the U.S. Securities and Exchange Commission and/or similar state authorities
and
to cause same to become effective and to disclose therein and thus to its
underwriters, to the U.S. Securities and Exchange Commission and/or to similar
state authorities and to the public all of the terms, conditions and provisions
of this Agreement.
[SIGNATURES
ON NEXT PAGE]
IN
WITNESS WHEREOF, the Contributors and the Acquirors have caused this Agreement
to be executed in their names by their respective duly-authorized
representatives.
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CONTRIBUTORS:
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||||
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SHREE
ASSOCIATES, a Pennsylvania limited partnership
|
||||
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By:
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|||
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▇▇▇▇
▇. ▇▇▇▇, General Partner
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||||
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KUNJ
ASSOCIATES a Pennsylvania limited partnership
|
||||
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By:
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|
|||
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▇▇▇▇▇
▇. ▇▇▇▇▇, General Partner
|
||||
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SHANTI
III ASSOCIATES, a Pennsylvania limited partnership
|
||||
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By:
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|
|||
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▇.
▇. ▇▇▇▇▇, General Partner
|
||||
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DEVI
ASSOCIATES, a Pennsylvania limited partnership
|
||||
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By:
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|
|||
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▇▇▇▇▇▇
▇. ▇▇▇▇▇, General Partner
|
||||
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TRUST
FBO ▇▇▇ ▇. ▇▇▇▇ UNDER THE HASU AND ▇▇▇▇▇▇ ▇▇▇▇ 2004 TRUST
|
||||
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By:
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|||
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▇▇▇
▇. ▇▇▇▇, Trustee
|
||||
| TRUST FBO ▇▇▇▇ ▇. ▇▇▇▇ UNDER THE HASU AND ▇▇▇▇▇▇ ▇▇▇▇ 2004 TRUST | ||||
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By:
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|||
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▇▇▇▇
▇. ▇▇▇▇, Trustee
|
||||
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▇▇▇▇▇
▇. ▇▇▇▇▇▇, individually
|
||||
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By:
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|||
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▇▇▇▇▇
▇. ▇▇▇▇▇▇
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||||
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▇▇▇▇▇▇▇▇▇▇▇
ENTERPRISES, LTD., a Pennsylvania corporation
|
||||
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By:
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|||
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▇▇▇▇
▇. ▇▇▇▇, President
|
||||
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ACQUIRORS:
|
||||
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HERSHA
HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited
partnership
|
||||
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By:
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HERSHA
HOSPITALITY TRUST, a Maryland business trust, its sole general
partner
|
|||
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By:
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|
|||
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Name:
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||||
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Title:
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||||
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HERSHA
HOSPITALITY, LLC, a Virginia limited liability company
|
||||
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By
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HERSHA
HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership,
its sole
member
|
|||
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By:
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HERSHA
HOSPITALITY TRUST, a Maryland business trust, its sole general
partner
|
|||
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By:
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|
|||
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Name:
|
||||
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Title:
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||||