AGREEMENT OF PURCHASE AND SALE

AGREEMENT OF PURCHASE AND SALE

MOTELS OF AMERICA LLC, Seller

and

SUPERTEL LIMITED PARTNERSHIP, Purchaser

Dated: As of November 10, 2006

 

 

 

TABLE OF CONTENTS

 

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ARTICLE 1	PURCHASE AND SALE OF THE PROPERTY
1.1		Property	1
1.2		Excepted Items	2
ARTICLE 2	PURCHASE PRICE
2.1		Purchase Price	2
2.2		Escrow Agent	3
2.3		Allocation of Purchase Price	3
ARTICLE 3	TITLE AND SURVEY
3.1		Permitted Encumbrances	3
3.2		Title	4
3.3		Objections	4
3.4		Discharge of Liens	5
3.5		Title Insurance Costs	6
ARTICLE 4	CLOSING DATE
4.1		Closing	6
ARTICLE 5	DUE DILIGENCE
5.1		Review Period	6
5.2		Inspection of Real Estate	7
5.3		Insurance	7
5.4		Normal Business Hours	7
5.5		Risk of Loss	7
5.6		Termination During Review Period	8
5.7		Return of Deposit	8
5.8		Return of Records; Tests	8
5.9		No Exclusion	8
ARTICLE 6	SELLER’S REPRESENTATIONS, WARRANTIES AND AGREEMENTS
6.1		Representations and Warranties	8
6.2		Accuracy and Survival - Seller	11

 

 

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6.3		Limitation on Damages	12
ARTICLE 7	PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1		Purchaser’s Duty of Review	12
7.2		Warranties and Representations	12
7.3		Accuracy and Survival - Purchaser	13
7.4		Covenants of Purchaser	13
ARTICLE 8	DEFAULTS; FAILURE TO PERFORM; LIQUIDATED DAMAGES
8.1		PURCHASER’S DEFAULT	14
8.2		Seller’s Default	14
8.3		Survival	14
ARTICLE 9	CLOSING DOCUMENTS
9.1		Seller’s Documents	15
9.2		Purchaser’s Documents	16
ARTICLE 10	RISK OF LOSS
10.1		Casualty	17
10.2		Improvements	17
10.3		Condemnation	18
ARTICLE 11	CONDITION “AS IS”; NO FURTHER REPRESENTATIONS
11.1		“As Is”	18
ARTICLE 12	ASSIGNMENT OF CERTAIN CONTRACTS, LICENSES AND PERMITS
12.1		Permits and Licenses	19
12.2		Assumption of Contracts	19
ARTICLE 13	OPERATIONS PRIOR TO CLOSING
13.1		Operation	19
13.2		Maintenance	20
13.3		Insurance	20
13.4		New Agreements	20

 

 

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13.5		New Reservations	20
13.6		Permits and Licenses	20
13.7		Transition	20
13.8		Unpaid Bills	21
ARTICLE 14	INVENTORY OF PERSONAL PROPERTY
14.1		Inventory Prior to Closing	21
ARTICLE 15	PRORATIONS; ADJUSTMENTS, POST-CLOSING ESCROW; COSTS
15.1		Prorations	21
15.2		Adjustments	26
15.3		Closing Statement	26
15.4		Costs	26
15.5		Special Assessments	26
ARTICLE 16	BROKERAGE
16.1		Broker	26
ARTICLE 17	THE DEPOSIT - ESCROW
17.1		Escrow Agent	27
ARTICLE 18	MERGER OF UNDERSTANDINGS
18.1		Merger	29
ARTICLE 19	MISCELLANEOUS
19.1		Recordation	29
19.2		Insufficient Funds	29
19.3		Entire Agreement	29
19.4		Waiver	30
19.5		Assignment	30
19.6		Captions	30
19.7		Parties in Interest	30
19.8		Notices	30
19.9		Choice of Law	32

 

 

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19.10		Survival	32
19.11		Construction	32
19.12		Attorneys’ Fees	32
19.13		Time of the Essence	32
19.14		Reporting Requirements	32
19.15		Counterparts	33
19.16		Enforceability	33
19.17		Amendment	33
19.18		Incorporation of Exhibits	33
ARTICLE 20	CONFIDENTIALITY
20.1		Confidentiality	33
20.2		Exclusions	34
20.3		Survival	35
ARTICLE 21	DEFINITIONS
21.1		Definitions	35

 

 

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AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT, made as of the 10th day of November, 2006, by and between MOTELS OF AMERICA LLC (“MOA”), a Delaware limited liability company having an address at 156 East 56th Street, New York, New York 10019 (“Seller”) and SUPERTEL LIMITED PARTNERSHIP , a Virginia Limited Partnership, having an address at 309 N. 5th Street, Norfolk, Nebraska 68701 (“Purchaser”).

W I T N E S S E T H :

ARTICLE 1

 

PURCHASE AND SALE OF THE PROPERTY

1.1 Property . Seller hereby agrees to sell to Purchaser and Purchaser agrees to purchase from Seller, upon the terms and conditions set forth in this Agreement, all of Seller’s right, title and interest in the Land, Improvements, Personal Property, Warranties and Guaranties, Assumed Contracts, Permits and Licenses, Inventory, Reservations and Intangible Property (all as such terms are hereinafter defined) relating to each of those certain five (5) motel properties identified generally by name and address on Exhibit A attached hereto and made a part hereof (individually, a “Property” and collectively, the “Property”) which Property is more particularly described as follows:

1.1.1             Land . Those certain tracts or parcel of land described on Exhibits A-1 through A-5 , attached hereto and made a part hereof, together with the Appurtenant Easements (collectively, the “Land”).

1.1.2             Improvements . The Improvements (the Land and Improvements, collectively, the “Real Estate”).

1.1.3             Personal Property . The Personal Property and all replacements, substitutions and additions of and to the Personal Property, including, without limitation, those items set forth on Exhibits B-1 through B-5 attached hereto and made a part hereof (the Land, Improvements and Personal Property relating to each Property, a “Hotel” and collectively, the “Hotels”).

1.1.4             Warranties and Guaranties . Seller’s interest, if any and to the extent assignable, in, to and under all unexpired warranties, guaranties, indemnities and sureties, which are

 

related to the use or operation of the Hotels (the “Warranties and Guaranties”).

1.1.5             Assumed Contracts . The Assumed Contracts relating to the use or operation of the Hotels.

1.1.6             Permits and Licenses . The Permits and Licenses, to the extent assignable, relating to the use or operation of the Hotels.

1.1.7             Inventory . Opened or unopened supplies and other depletable or usable goods and merchandise customarily held in inventory in connection with the use or operation of the Hotels, including, paper goods, brochures, office supplies, food, beverages, merchandise, china, glassware, flatware, linens, uniforms, towels, deodorizers, detergents, chemicals, soaps, gasoline, fuel oil, and all other guest supplies (including guest room amenities) located at the Hotels (collectively, the “Inventory”).

1.1.8             Reservations . All guest room and other reservations and bookings for dates on or after Closing, as hereinafter defined, as the same may be amended, canceled and renewed (the “Reservations”).

1.1.9             Intangible . Except as otherwise provided in this Agreement, Seller’s interest, if any and to the extent assignable, in and to all intangible property owned by Seller and used in connection with the use or operation of the Hotels (collectively, the “Intangible Property”).

1.2          Excepted Items . Notwithstanding anything to the contrary contained in this Agreement, the Excepted Items are not included in this sale or in the definition of Property.

ARTICLE 2

 

PURCHASE PRICE

2.1          Purchase Price . The Purchase Price for the Property is TWENTY-FOUR MILLION and 00/100 ($24,000,000.00) DOLLARS , payable as follows:

2.1.1             FIVE HUNDRED THOUSAND and 00/100 ($500,000.00) DOLLARS (the “Deposit”) upon the execution and delivery of this Agreement by wire transfer of immediately available federal funds to (or by check, subject to collection,

 

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payable to the order of) Escrow Agent, as hereinafter defined; and

2.1.2             TWENTY-THREE MILLION FIVE HUNDRED THOUSAND and 00/100 ($23,500,000.00) DOLLARS upon Closing, by wire transfer of immediately available federal funds to an account designated by MOA.

2.2                Escrow Agent . The Deposit shall be held in escrow (and disbursed) by the Escrow Agent together with interest thereon, if any, pursuant to the provisions of ARTICLE 17 hereof. At Closing, Purchaser and Seller shall execute and deliver mutually acceptable escrow instructions to the Escrow Agent consistent with the provisions of this Agreement.

2.3          Allocation of Purchase Price . Seller and Purchaser shall, prior to Closing, use good faith efforts to agree upon the allocation of the Purchase Price among the real and personal property included within the Property and the values so agreed upon shall be reflected in the documentary fee, recording tax, transfer tax and sales tax, if any, paid or payable at Closing.

ARTICLE 3

 

TITLE AND SURVEY

3.1          Permitted Encumbrances . The Property shall be transferred at Closing subject to each and all of the following (the “Permitted Encumbrances”):

3.1.1             Covenants and Restrictions . All covenants, restrictions, easements, reservations and agreements of record set forth on Exhibit C attached hereto and made a part hereof and all other covenants, restrictions, easements, reservations and agreements of record, if any, provided such other covenants, restrictions, easements, reservations and agreements do not materially adversely affect the use of any Hotel as a motel/hotel.

3.1.2             Applicable Laws . Any and all present and future zoning restrictions, regulations, requirements, laws, ordinances, resolutions and orders of any city, county, town or village in which the Property lies and of all boards, bureaus, commissions, departments and bodies of any municipal, county, state or federal sovereign or other governmental authority now or hereafter having or acquiring jurisdiction of the Property or the use and improvement thereof.

 

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3.1.3             Surveys . Such state of facts as shown on those surveys described on Exhibit D , attached hereto and made a part hereof, and any other state of facts which a current accurate survey of any Hotel would show, provided that such other state of facts would not materially adversely affect the use of a Hotel as a motel/hotel.

3.1.4             Physical Inspection . Any state of facts a physical inspection of the Hotels would show.

3.1.5             Real Estate Taxes . Real estate taxes, water and sewer charges and other taxes for the fiscal year in which the Closing occurs.

3.1.6

Utility Companies . Rights of utility companies, if any.

3.1.7             Leases . The leases set forth on Exhibit E attached hereto and made a part hereof (the “Leases”).

3.2          Title . At Closing, Seller agrees to convey to Purchaser, and Purchaser agrees to accept, title to the Real Estate in such form as (a) LandAmerica Lawyers Title Corp., having an office at 1850 North Central Avenue, Suite 300, Phoenix, Arizona 85004 or (b) any other national title insurance company doing business in the States where the Property is located (the “Title Company”) would be willing to insure, subject only to the Permitted Encumbrances. Purchaser will deliver to Seller’s attorneys promptly after the receipt thereof, a commitment for title insurance (the “Commitment”) with respect to each Property from the Title Company, together with copies of all title reports, certificates, updates, UCC searches and surveys obtained by Purchaser in connection therewith.

3.3          Objections . If any Commitment, any amendments or supplements thereto, or any title reports, certificates, updates, UCC searches or surveys (collectively, the “Search Items”), discloses any lien or encumbrances on (or defect in the Seller’s title to) the Real Estate, other than the Permitted Encumbrances, to which Purchaser objects, Purchaser shall notify Seller in writing of such objection (the “Objection Notice”) in detail within five (5) business days after receipt by Purchaser of any such Search Item. If Purchaser fails to timely give an Objection Notice, Purchaser shall be deemed to have approved all matters to which Purchaser may have objected in such Objection Notice if given timely. If Purchaser timely gives the Objection Notice, Seller shall have the right, but not the obligation, to indicate which matters, if any, identified in the Objection Notice will be addressed (and the manner in which such matters will be addressed) by Closing by giving written notice thereof (“Seller’s Response”) to Purchaser within three (3) business days after receipt by Seller of an Objection Notice. Seller’s failure to give timely Seller’s Response shall be deemed to constitute Seller’s election not to address any of the matters set forth in the Objection Notice. If Seller

 

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elects to address any such matter it shall do so in a manner reasonably acceptable to Purchaser. If Seller elects (or is deemed to have elected) not to address any such matter, or having elected to do so fails to address any such matter in a manner reasonably acceptable to Purchaser, then Purchaser shall have the options set forth in subparagraph (ii) below of this paragraph 3.3. Seller shall have and be entitled to a reasonable adjournment of the Closing (not to exceed sixty (60) days), within which to address such objections, and it is mutually agreed and covenanted that any matter shown in any Search Item, not set forth in an Objection Notice is waived as an objection to title and shall be deemed included within the Permitted Encumbrances as if set forth in Section 3.1. Notwithstanding anything to the contrary, Seller shall have no obligation to remove any such matters to which Purchaser objects in an Objection Notice if the expense to Seller to remove such matters exceeds (a) FIFTY THOUSAND and 00/100 ($50,000.00) DOLLARS in the aggregate with respect to a Property and (b) TWO HUNDRED FIFTY THOUSAND and 00/100 ($250,000.00) DOLLARS in the aggregate with respect to all the Property, except that Seller shall cause the Title Company to agree to omit from any policy of title insurance to be issued to Purchaser at Closing, pursuant to the Commitment, any mortgage liens encumbering a Property, including, without limitation, the mortgage liens held by iStar Financial, Inc. and Alpha Capital LLC (collectively, the “Liens to be Discharged”). Other than the Liens to be Discharged, if Seller (i) is unable or unwilling to remove any such matters aggregating more than FIFTY THOUSAND and 00/100 ($50,000.00) DOLLARS with respect to a Property or TWO HUNDRED FIFTY THOUSAND and 00/100 ($250,000.00) DOLLARS for all the Property or fails to cause the Title Insurance Company to remove same from Purchaser’s title insurance policy or (ii) is unable to convey the Property as herein agreed to be conveyed, Purchaser shall have the option of either (1) waiving Purchaser’s objection to such matters and proceeding with the Closing and accepting title subject to such matters without any abatement or reduction to the Purchase Price; or (2) rejecting the title and receiving a return of the Deposit, whereupon all liability and obligations hereunder shall terminate, except those expressly stated to survive termination hereof, and this Agreement and all rights of Purchaser herein and to the Property shall become null and void. Without limiting the generality of the foregoing, Seller shall not be obligated to bring any action or proceeding to remove any matters to which Purchaser objects in an Objection Notice.

3.4          Discharge of Liens . Any lien or encumbrance or apparent lien or encumbrance appearing of record against the Property which can be discharged by the payment of money, shall not be an objection to title provided Seller allows to Purchaser, as an adjustment to the Purchase Price at the time of Closing, the amount thereof. A lien or encumbrance, dischargeable by satisfaction, shall not be deemed an objection to title if at the time of the Closing Seller shall cause to be delivered either (a) a duly executed and acknowledged satisfaction along with the filing fee or (b) a payoff letter and the appropriate funds to satisfy the lien or encumbrance, both of which shall be in form satisfactory to and delivered to the Title Insurance Company at the Closing sufficient to cause the Title Insurance Company to delete such lien or encumbrance from any policy of title insurance to be issued to Purchaser. Seller shall have the right to apply the proceeds of the sale to the satisfaction of the lien or encumbrance, but shall

 

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not be under any obligation to do so, except as expressly required under the terms of this Agreement. Notwithstanding anything to the contrary contained within this ARTICLE 3, no matter shall be an objection to title if the Title Company is willing to insure the Property without exception therefor or affirmatively insure against collection out of the Property by reason thereof.

3.5          Title Insurance Costs . Purchaser shall pay at Closing all costs incurred in connection with Purchaser obtaining (a) any policy of title insurance issued by the Title Company to Purchaser, (b) any endorsements thereto and (c) any surveys of the Property.

ARTICLE 4

 

CLOSING DATE

4.1          Closing . The closing of title under this Agreement (the “Closing”) shall take place on or before the earlier of (a) twenty (20) days after written notice from Purchaser and (b) January 10, 2007 (the “Closing Date”) (unless otherwise agreed by the parties hereto) and shall be conducted by an escrow closing through the Title Company. In furtherance of such Closing, Seller and Purchaser shall each deposit, in escrow, with the Title Company, all monies, closing documents and other items required to consummate the Closing pursuant to this Agreement at least one (1) business day prior to the Closing Date in order to assure that the Purchase Price be paid by wire transfer on the Closing Date. Seller and Purchaser shall endeavor, in good faith, to compile and calculate all required prorations and adjustments, and to prepare (or cause the Title Company to prepare) a settlement statement no later than one (1) business day prior to the Closing Date.

ARTICLE 5

 

DUE DILIGENCE

5.1          Review Period . Purchaser shall have a period (the “Review Period”) beginning on the date of this Agreement and expiring on December 10, 2006 to conduct and complete (subject to the provisions hereinafter set forth in this ARTICLE 5, at Purchaser’s sole costs and expense, (a) a physical examination of the Property, (b) a review of Seller’s books and records for the preceding three (3) years relating to the Property, (c) a review of the Permitted Encumbrances and Surveys, (d) a Phase I and, if deemed necessary, a Phase II Environmental Inspection of the Property, (e) a review of all zoning and building codes of each governmental authority having jurisdiction over the property, and (f) such other reviews and inspections as Purchaser shall deem necessary or desirable to determine if the Property is satisfactory to Purchaser in all respects.

 

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5.2          Inspection of Real Estate . Purchaser shall have the right to inspect the Property to satisfy itself that the Property, as of the date of such inspection, is in good operating condition and repair. Such inspection may include performing environmental, engineering and other noninvasive tests at Purchaser’s discretion, upon notice to and approval by Seller, such approval not to be unreasonably withheld. Purchaser acknowledges that Seller makes no representation or warranty with respect to the foregoing or in any manner in connection with the condition or operation of the Property, except as specifically set forth in this Agreement. Purchaser shall bear the cost of all inspections and any repairs necessary by reason of such inspections referred to in this paragraph.

5.3          Insurance . Prior to any entry or inspection in, on or with respect to the Property, Purchaser shall (a) procure (and thereafter maintain at all times prior to Closing), at its sole cost and expense, a policy of commercial general liability insurance in customary form (which shall provide coverage of Purchaser’s indemnification obligations under this Agreement to the extent reasonably available) regarding Purchaser’s entry and inspection in, on and with respect to the Property, contemplated under this Agreement, issued by an insurance company having a Best’s rating of not less than A- in an amount equal to not less than ONE MILLION and 00/100 ($1,000,000.00) DOLLARS, naming Seller as an additional insured and providing that the insurer shall endeavor to notify the insured and Seller not less than thirty (30) days in advance of any cancellation of such policy, and (b) provide Seller with a valid certificate of insurance reflecting that such insurance is in full force and effect and provides coverage on a basis which satisfies all of the requirements of this paragraph.

5.4          Normal Business Hours . Purchaser shall conduct any inspections only during normal business hours, unless otherwise agreed in writing by Seller. Seller shall have the right to impose reasonable conditions on performance of any inspections (including, without limitation, reasonable schedule modifications) so as to minimize disturbances at the Property. Purchaser shall require all personnel involved in any inspections to sign in with Seller’s property management personnel (or such party or parties at the Property designated by Seller), when entering the Property and to sign out when leaving the Property, if applicable, and in all cases to contact Seller’s property management personnel (or a designated representative of Seller) to arrange for entry. Purchaser shall not contact any employees, contractors, vendors or suppliers of Seller without giving prior notice to and obtaining specific approval from Seller.

5.5          Risk of Loss . Purchaser expressly assumes the risk of loss or injury to Purchaser or to its representatives from entering the Property or performing inspections in, on or with respect to the Property. Purchaser hereby agrees to indemnify, defend and hold harmless Seller, its affiliates, directors, officers, employees, attorneys and agents, and their respective successors and assigns, from and against any claim and any actual damages, liability, cost and expense (including reasonable attorneys’ fees) for personal injury or property damage arising out of, in connection with

 

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or resulting from any entry or inspection by Purchaser or its representatives in, on or with respect to the Property.

5.6                Termination During Review Period . Should Purchaser determine in Purchaser’s sole discretion, that a Property is not satisfactory to Purchaser for any reason whatsoever, Purchaser shall have the right, at its election, exercised prior to the expiration of the Review Period (time being of the essence), to terminate this Agreement by written notification of such election to Seller (“Termination Notice”). Failure to deliver timely the Termination Notice shall be deemed to constitute an election to proceed to Closing of the Property in all respects.

5.7          Return of Deposit . Upon termination of this Agreement under this ARTICLE 5, Purchaser shall be entitled to the return of the Deposit, upon return of which neither Purchaser nor Seller shall have any further liability hereunder.

5.8          Return of Records; Tests . If Purchaser elects to terminate this Agreement, or otherwise fails to purchase the Property for any reason by the Closing Date, Purchaser shall, within thirty (30) days after the termination of this Agreement, deliver to Seller the results and all copies of all plans, studies, inspections or tests of the Property made by Purchaser in connection with its inspection and evaluation of the Property, including all information provided to Purchaser by Seller.

5.9          No Exclusion . Purchaser acknowledges and agrees that Seller’s obligation herein is to sell all, and not less than all, of the Property as a portfolio of five (5) properties. Accordingly, Purchaser expressly acknowledges that Seller shall have no obligation to sell, and Purchaser shall have no right hereunder to purchase, any of the Property constituting less than all of the Property, as herein contemplated.

ARTICLE 6

 

SELLER’S REPRESENTATIONS, WARRANTIES AND AGREEMENTS

6.1          Representations and Warranties . Seller represents, warrants and agrees that the following facts and conditions exist on the date of execution hereof by Seller and shall exist as of Closing, subject to any limitations set forth in this ARTICLE 6 , and, if applicable, covenants as follows:

6.1.1             Organization . Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware, authorized to transact business in the states in which each Property is located, with full power to enter into and perform this Agreement and to sell, convey, assign and transfer the Property.

6.1.2             Authorization and Non-Contravention . Seller has all requisite corporate power and authority to perform

 

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Seller’s obligations under this Agreement and the execution, delivery, and performance of this Agreement by Seller has been duly and validly authorized by all officers or directors whose approval is required under the organizational documentation of Seller. Each person executing and delivering this Agreement and all documents to be executed and delivered in regard to the consummation of the transaction herein has due and proper authority to execute and deliver those documents. This Agreement and all documents executed and delivered by Seller in connection with the transaction herein shall constitute legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their terms. No consent or approval of any person, firm, lender, corporation or governmental authority is required to be obtained by Seller in order for Seller to enter into this Agreement or to perform Seller’s obligations under this Agreement.

6.1.3             Litigation . Other than actions disclosed on Exhibit F attached hereto and made a part hereof, to the Knowledge of Seller, there are no legal actions, litigations or other proceedings of any type affecting the Property which will materially adversely affect the Purchaser upon consummation of the Closing hereunder.

6.1.4             Contracts . The Contracts identified in Exhibit G constitute all Contracts (other than Contracts otherwise disclosed in this Agreement or the Exhibits hereto) relating to the use and operation of the Hotels; it being understood that if any other Contracts are in force and effect the same shall not be deemed a breach of the foregoing if such Contract is either accepted by Purchaser or terminated by Seller, at Seller’s own cost and expense, prior to Closing.

6.1.5             FIRPTA . Seller is not a “foreign person” for purposes of the withholding rules of the Federal Deficit Reduction Act of 1984 (including Section 1445 of the Internal Revenue Code of 1954) or FIRPTA. Seller will furnish at closing the certification required by such Section of the Code regarding its status as a “foreign person.”

6.1.6             Condemnation . There are no pending (and to the Knowledge of Seller, Seller has received no written notice from any Governmental Authority threatening) condemnation or other similar proceeding affecting any Hotel or any portion thereof.

 

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6.1.7             Leases . Other than the Leases, there are no leases affecting any of the Property. None of the Property or any of the equipment used in conjunction with the Property is leased from any third party.

6.1.8             Financial Statements . Seller has previously furnished to Purchaser (a) the audited balance sheet of Seller as of February 28, 2004 and February 28, 2003 and the audited balance sheet for the Property as of February 28, 2006 and the related statements of operations, comprehensive income (loss), members’ equity and cash flows for Seller for each of the years ended February 28, 2004 and February 28, 2003 and for the Property for the year ended February 28, 2006, together with the appropriate notes to such financial statements and the audit report thereon and (b) the unaudited balance sheet of Seller as of February 28, 2005, and the unaudited balance sheet of Seller as of February 28, 2006, and the related statements of operations, comprehensive income (loss), members’ equity and cash flows for the period then ended, together with the appropriate notes to such financial statements (collectively, the “Financial Statements”). Such Financial Statements have been prepared in conformity with GAAP consistently applied and such Financial Statements fairly present, in all material respects, the financial condition, results of operations and cash flow of Seller as of their respective dates and for the respective periods covered thereby.

6.1.9             Compliance with SEC Reporting Requirements . For a period of time commencing on the date of this Agreement and continuing through the first anniversary of the Closing Date, Seller shall, or shall cause Seller’s property manager (the “Property Manager”), as applicable, from time-to-time, upon reasonable advance written notice from Purchaser, and at Purchaser’s sole cost and expense, provide Purchaser and its representatives with reasonable access to all of Seller’s information and documentation relating to the Property, provided the same shall then be in Seller’s (or a representative or affiliate of Seller’s) possession, which information is relevant and reasonably necessary, in the opinion of the outside accountants of Purchaser, to enable Purchaser and Purchaser’s outside accountants to file financial statements, pro formas and any and all other information in compliance (at Purchaser’s cost) with any and all of (a) Rule 3-5 or 3-14 of Regulation S-X of the SEC; (b) any other rule issued by the SEC and applicable to Purchaser or its subsidiaries; and (c) any registration statement,

 

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424(b) prospectus, report or disclosure statement filed with the SEC by or on behalf of Purchaser. Seller shall reasonably cooperate with Purchaser to cause any SEC audit requirements to be completed and delivered to Purchaser within a reasonable time period to insure that all SEC filing requirements are met, and Purchaser shall reimburse Seller for all reasonable out-of-pocket, third-party costs and expenses paid to third parties by Seller in connection therewith. Seller shall also authorize, and shall cause the Property Manager to authorize, as applicable any attorneys who have represented Seller or the Property Manager, as applicable, in material litigation pertaining to or affecting the Property to respond, at Purchaser’s expense, to inquiries from Purchaser’s representatives, attorneys and independent accounting firm. Seller shall also provide and/or shall cause the Property Manager, as applicable, to provide to Purchaser’s independent accounting firm a signed representation letter which would be sufficient to enable an independent public accountant to render an opinion on the financial statements related to the Property.

6.1.10          Employee Matters . Seller has no employment agreements, or any agreements that contain any severance or termination pay liabilities, or any obligations for any bonus, deferred compensation, or similar amounts with any of Seller’s on-site employees. Seller has no on-site employee with respect to whom there is any accrued or potential liability for sick leave or vacation pay for periods up to the Closing Date.

6.1.11          Environmental . To Seller’s knowledge, no notice has been serve on Seller from any Governmental Authority claiming any violation of or requiring compliance with any Environmental Laws.

6.2          Accuracy and Survival - Seller . All of the representations and warranties of Seller (a) are true and correct in all material respects and (b) do not contain untrue statements of a material fact or omit any material fact that would make the representations and warranties misleading in any material respect. The representations and warranties of Seller shall survive the Closing, and continue in full force and effect for a period of twelve (12) months from Closing.

6.3

Limitation on Damages .

6.3.1             Notwithstanding anything to the contrary contained in this Agreement (a) upon the consummation of the Closing, Purchaser shall be deemed to have waived any misrepresentation or breach of warranty by Seller under this

 

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Agreement of which Purchaser was aware at Closing, whether Purchaser became aware of such misrepresentation or breach of warranty through Purchaser’s own due diligence, by reason of a notice from Seller or otherwise, and (b) no claims may be asserted by Purchaser against Seller for misrepresentation or breach of warranty under Section 6.1 of this Agreement until the aggregate dollar amount of such claims exceeds the sum of FIFTY THOUSAND and 00/100 ($50,000.00) DOLLARS and then to the full extent of such aggregate amount in excess of FIFTY THOUSAND and 00/100 ($50,000.00) DOLLARS up to a maximum of ONE MILLION and 00/100 ($1,000,000.00) DOLLARS.

6.3.2             All claims asserted by Purchaser in accordance with ARTICLE 6 of this Agreement shall be in writing and shall specify in detail the basis for such claims and the amount claimed.

ARTICLE 7

 

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1          Purchaser’s Duty of Review . Purchaser is entering into this Agreement in reliance on its own knowledge and familiarity with the hotel industry, and its inspection of the Property. Purchaser is not relying on any representation of Seller, its officers, shareholders or agents, except as expressly made by Seller in this Agreement or the Exhibits attached to this Agreement.

7.2          Warranties and Representations . Purchaser represents, warrants and agrees that the following facts and conditions exist on the date of execution hereof and shall exist at Closing:

7.2.1             Organization . Purchaser has been duly organized and validly existing and in good standing under the laws of the state of its formation and has the requisite power and authority to own its properties and to transact the business in which it is engaged. Purchaser has taken all necessary action to authorize the execution, delivery and performance of this Agreement and all of the documents executed and delivered by Purchaser in connection with the transaction described herein. This Agreement and all such documents shall constitute legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their terms.

 

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7.2.2             Authority . Purchaser has the right, power, legal capacity and authority to enter into and perform its obligations under this Agreement, and no approvals or consents of any persons other than Purchaser are required in connection with this Agreement. The execution of this Agreement and consummation of the transactions contemplated hereby will not result in or continue any default or event that, with notice or lapse of time or both, would be a default, breach or violation of the organizational instruments or laws governing Purchaser or any lease, license, promissory note, conditional sales contract, commitment, indenture, mortgage, deed of trust, or other agreement, instrument, or arrangement to which Purchaser is a party or by which Purchaser is a party or by which Purchaser is bound.

7.3          Accuracy and Survival - Purchaser . All of the representations and warranties of Purchaser are true and correct in all material respects and do not contain untrue statements of a material fact or omit any material fact that would make the representations and warranties misleading in any material respect. The representations and warranties herein contained shall survive the closing and shall continue in full force and effect for a period of twelve (12) months from Closing.

7.4          Covenants of Purchaser . Purchaser covenants to accept and assume as of the Closing all obligations of Seller (a) with respect to the Reservations, (b) under the Assumed Contracts and (c) under the Leases. Purchaser shall execute at Closing assumption agreements with respect to the Reservations, the Intangible Property, the Assumed Contracts and the Leases in form and substance reasonably acceptable to both parties. Purchaser shall not be deemed for any purpose to have assumed any liabilities of Sellers except as expressly provided herein. Wherever it is provided in this Agreement that Purchaser shall assume any obligation of Seller, such assumption shall be effective only from and after Closing, and such assumption shall not require Purchaser to assume, nor shall Purchaser assume, any liabilities or obligations of Seller’s relating to or arising from Sellers’ performance of, or failure to perform, any of the terms of the assumed obligation required to be performed prior to Closing.

ARTICLE 8

 

DEFAULTS; FAILURE TO PERFORM; LIQUIDATED DAMAGES

8.1          PURCHASER’S DEFAULT . IN THE EVENT (a) ALL OF THE CONDITIONS TO THIS AGREEMENT SHALL HAVE BEEN SATISFIED OR WAIVED: (b) SELLER SHALL HAVE FULLY PERFORMED OR TENDERED PERFORMANCE OF ITS OBLIGATIONS HEREUNDER; (c) PURCHASER SHALL FAIL TO PERFORM ITS OBLIGATION HEREUNDER; AND (d) THE CLOSING SHALL FAIL TO OCCUR SOLELY AS A RESULT OF PURCHASER’S DEFAULT HEREUNDER, THEN, AS

 

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SELLER’S SOLE AND EXCLUSIVE REMEDY FOR PURCHASER’S FAILURE TO CLOSE, THE ENTIRE AMOUNT OF THE DEPOSIT (PLUS ALL INTEREST ACCRUED THEREON IF ANY) SHALL BE IMMEDIATELY PAID TO SELLER. PURCHASER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT SELLER’S DAMAGES WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE AND THE AMOUNT OF THE DEPOSIT (PLUS ALL INTEREST ACCRUED THEREON IF ANY) IS THE PARTIES’ BEST AND MOST ACCURATE ESTIMATE OF DAMAGES SELLER WOULD SUFFER IN THE EVENT THE TRANSACTION PROVIDED FOR IN THIS AGREEMENT FAILS TO CLOSE. PURCHASER AND SELLER AGREE THAT SELLER’S RIGHT TO RETAIN THE DEPOSIT (PLUS ALL INTEREST ACCRUED THEREON IF ANY) SHALL BE THE SOLE AND EXCLUSIVE REMEDY OF SELLER IN THE EVENT OF BREACH OF THIS AGREEMENT BY PURCHASER AS PROVIDED ABOVE.

8.2          Seller’s Default . If Seller, through no fault of Purchaser, fails to perform its obligations hereunder and Closing does not occur as a result thereof, Purchaser may, as its sole remedy, at its option, either: (a) terminate this Agreement and receive a refund of the Deposit (together with interest, if any, thereon) and a reimbursement by Seller of Purchaser’s out-of-pocket costs and expenses incurred in connection with this Agreement up to, but not to exceed, ONE HUNDRED THOUSAND and 00/100 ($100,000.00) DOLLARS, whereupon the obligations of the parties hereto, other than those expressly set forth to survive termination hereof, shall terminate, or (b) seek an action for specific performance under this Agreement, except that the state of title and survey shall be accepted “as is.” In no event whatsoever shall Purchaser be entitled to collect any damages from Seller.

8.3          Survival . The provisions of ARTICLE 8 shall survive the Closing or other termination of this Agreement.

ARTICLE 9

 

CLOSING DOCUMENTS

9.1          Seller’s Documents . At the Closing (and as a condition to Purchaser’s obligation to close title hereunder), Seller shall deliver or cause to be delivered to Purchaser the following:

9.1.1             A special or limited warranty deed as customarily provided on a state-by-state basis (the “Deed”), duly executed and acknowledged by Seller, sufficient to transfer and convey to Purchaser the Real Estate.

9.1.2             A bill of sale (the “Bill of Sale”), without representation or warranty by Seller, but free and clear of all liens, duly executed and acknowledged by Seller, sufficient to transfer to

 

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Purchaser all Seller’s right, title and interest in and to the Personal Property.

9.1.3             A certificate stating that Seller is not a “Foreign Person” within the meaning of IRC Section 1445(f)(3).

9.1.4

Original copies of the Leases, if available.

 

9.1.5

An Assignment of the Leases, executed by Seller.

9.1.6             Originals, or if not available, copies of the Assumed Contracts.

9.1.7             Originals, or if not available, copies of the Permits and Licenses.

9.1.8             An Assignment of Reservations, Intangible Property (including, without limitation, any telephone numbers used in connection with the operation of each Property), Assumed Contracts and Permits and Licenses, executed by Seller.

9.1.9             Evidence of Seller’s power and authority to enter into the subject transaction and evidence of the signatories’ authority to sign on behalf of Seller.

9.1.10          A letter addressed to Escrow Agent directing Escrow Agent to deliver the Deposit (together with interest, if any, thereon) to Seller and releasing Escrow Agent from any and all liability in connection with the subject transaction.

9.1.11          A certificate duly executed by Seller confirming that as of the Closing all of the representations and warranties made by Seller in ARTICLE 6 of this Agreement are true and correct in all material respects (or if any such representation or warranty is no longer true and correct in any material respect as of the Closing, stating the nature of the inaccuracy), which certificate shall survive Closing for a period of twelve (12) months.

9.1.12          A Non-Compete Agreement executed by MOA Hospitality, Inc. and Paul F. Wallace substantially in the form of Exhibit H attached hereto and made a part hereof.

9.1.13          Unless waived by Purchaser, (a) a letter or certificate from the landlord under that certain Commercial Lease, dated January 19, 2001, between Trans-Care, Inc., as Lessor, and MOA Hospitality, Inc., as Lessee (the “Commercial Lease”),

 

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stating that the Commercial Lease is in full force and effect, that Tenant is not in default thereunder in any material respect and consenting to an assignment of the Lessee’s interest thereunder to Purchaser and (b) an assignment from MOA Hospitality, Inc. to Purchaser in recordable form sufficient to assign the tenant’s interest under the Commercial Lease to Purchaser.

9.1.14          Such other instruments and documents as may be reasonably required to consummate the transaction herein contemplated.

9.2          Purchaser’s Documents . At the Closing (and as a condition to Seller’s obligation to close title hereunder), Purchaser shall deliver or cause to be delivered to Seller the following:

9.2.1             The balance of the Purchase Price as provided in ARTICLE 2 hereof.

9.2.2             Evidence of Purchaser’s power and authority to enter into the subject transaction and evidence of the signatories’ authority to sign on behalf of Purchaser.

9.2.3             A letter addressed to Escrow Agent directing Escrow Agent to deliver the Deposit (together with interest, if any, thereon) to Seller and releasing Escrow Agent from any and all liability in connection with the subject transaction.

9.2.4             An Assumption of Reservations, Intangible Property, Assumed Contracts and Permits and Licenses executed by Purchaser.

9.2.5             An Assumption of the Leases, executed by Purchaser.

9.2.6             Such other instruments and documents as may be reasonably required to consummate the transaction herein contemplated.

ARTICLE 10

 

RISK OF LOSS

10.1       Casualty . The risk of loss or damage to the Property by fire or other casualty, until the Closing, is assumed by Seller but without any liability or obligation of Seller to repair same except Seller, at Seller’s sole option, shall have the right to repair or replace such loss or damage to the Property. If Seller elects (such election to be

 

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made within twenty (20) days after Seller shall have actual knowledge of such damage) to make such repair or replacement, this Agreement shall continue in full force and effect, and Seller shall be entitled to reasonable adjournments of the Closing hereunder, not to exceed one hundred eighty (180) days in the aggregate, for such purpose. If Seller does not elect to repair or replace any such loss or damage, the following shall control:

10.2       Improvements . If the Improvements on more than two (2) motel/hotels comprising the Property shall be materially damaged or destroyed by fire, storm or other casualty before the Closing, Purchaser shall have the right to terminate this Agreement by written notice to Seller given within seven (7) business days after expiration of the period during which Seller may elect to make repairs or Seller’s notice to Purchaser that it does not elect to make such repairs, if sooner, entitling Purchaser to receive a refund of the Deposit, whereupon the obligations of the parties hereto, other than those expressly set forth to survive termination hereof, shall terminate. If Purchaser shall not elect to terminate this Agreement or if said destruction is immaterial, or if said destruction shall occur at, only two (2) or less of the Properties, this Agreement shall continue in full force and effect without any modification or abatement of the Purchase Price, and Purchaser shall be entitled to receive an absolute assignment (without representation or warranty by or recourse against Seller) from Seller of any interest Seller may have otherwise had in the proceeds of any insurance on the Property (including any rent loss or business interruption insurance proceeds allocable to the period from and after the Closing) except for any expense theretofore incurred by Seller for restoration or safety in connection therewith which sum shall be reimbursed by Purchaser to Seller at the Closing.

10.3       Condemnation . If notice of any action, suit or proceeding shall be given after the date hereof but prior to the Closing for the purpose of taking in eminent domain or condemning any material part of the Property at more than two (2) Property, then Purchaser and Seller shall each have the right to terminate this Agreement by written notice to the other party given within fourteen (14) days after receiving notice of such condemnation or taking. Upon such termination, Purchaser shall receive a refund of the Deposit whereupon the obligations of the parties hereto, other than those expressly set forth to survive termination hereof, shall terminate and the proceeds resulting from such condemnation or taking shall be paid to Seller. If neither Purchaser or Seller elects to terminate this Agreement as above provided or if the taking or condemnation is of an immaterial part of the Property, or if the taking concerns only two (2) or less of the Properties) Property, or in the event of a change of legal grade, the award with respect to such condemnation, taking or change, except for any expense theretofore incurred by Seller for restoration or safety in connection therewith which sum shall be reimbursed by Purchaser to Seller at the Closing, shall be assigned (without representation or warranty by or recourse against Seller) to Purchaser without further consideration, and this Agreement shall continue in full force and effect without any modification or abatement of the Purchase Price or any liability or obligation on the part of Seller by reason of such taking, and the definition of “Property” shall be accordingly

 

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amended. Any taking of any portion of an Improvement shall be considered “material” for purposes of this Section 10.3.

ARTICLE 11

 

CONDITION “AS IS”; NO FURTHER REPRESENTATIONS

11.1              “As Is” . Purchaser represents and warrants that it has inspected the Property or caused an inspection thereof to be made on Purchaser’s behalf and is thoroughly acquainted with its condition, and it is agreed and understood that neither Seller nor any person purporting to act for Seller has made or now makes any representations or warranties as to the physical condition (including, without limitation, the presence of any Hazardous Material or any condition which would violate any laws regarding environmental matters), layout, leases, footage, rents, income, expense, operation or any other matter or thing affecting or relating to the Property or to this Agreement, except as specifically set forth in this Agreement and that no party hereto is relying on any statement, representation or warranty made by any other which is not embodied in this Agreement. Purchaser hereby expressly acknowledges that Seller has not made any representation or warranty which is not expressly set forth in this Agreement (or upon Closing, in the documents executed by Seller and delivered to Purchaser in connection with the Closing hereunder), and Purchaser further agrees to take and accept the Property “As Is,” with all faults and in its condition at the Closing subject to any rights of Purchaser arising by reason of any representation or warranty expressly made by Seller in this Agreement. Purchaser agrees that Seller is not liable or bound in any manner by any financial statements or written agreements or statements or representations of any broker which have been made any real estate brokers’ “set-ups” or information pertaining to the Property or any other matter or thing furnished by any real estate broker, agent, or other person unless the same are specifically stated herein. This ARTICLE 11 shall survive the Closing.

ARTICLE 12

 

ASSIGNMENT OF CERTAIN CONTRACTS, LICENSES AND PERMITS

12.1       Permits and Licenses . Seller shall cooperate with Purchaser (a) in the orderly assignment of all assignable Permits and Licenses identified on Exhibit I and (b) in the application and approval process for all Permits and Licenses which are not assignable and which must be replaced with new permits and licenses from the Governmental Authorities to Purchaser, provided, however, that all transfer fees and costs associated with (i) the assignment of the Permits and Licenses; (ii) the replacement thereof with new permits and licenses; and (iii) the transfer of the Certificate of Occupancy shall be borne by Purchaser. At Closing, Seller shall assign all Permits and Licenses which are legally assignable to Purchaser, and Purchaser shall assume all prospective obligations under said assigned Permits and Licenses arising from facts or circumstances occurring on or after Closing.

 

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12.2       Assumption of Contracts . Purchaser shall assume at the Closing all Contracts (other than those identified on Exhibit G as Contracts to be terminated) (collectively, the “Assumed Contracts”). Seller will cancel, at its sole expense, the Contracts identified on Exhibit G as Contracts to be terminated, effective no later than Closing. At the Closing, Seller and Purchaser shall execute an assignment and assumption of contracts under which the Assumed Contracts shall be assigned to (and assumed by) Purchaser at no cost or expense to Purchaser. Seller shall use its best efforts to obtain, if necessary under the terms of an Assumed Contract, the written consent of each other party thereto, all in form and substance reasonably satisfactory to Purchaser or as provided under such Contract. If Seller is unable to obtain such written consent, at the option of the Purchaser, such Contract shall be terminated by Seller, at Purchaser’s sole cost and expense.

ARTICLE 13

 

OPERATIONS PRIOR TO CLOSING

13.1       Operation . Seller shall continue to operate the Property prior to Closing in the usual and customary manner in which the Property has been operated up to the execution of this Agreement, in order to assure preservation of business relationships and goodwill, and shall maintain the inventories of supplies used in each Hotel at levels consistent with past practices for normal operation through the Closing.

13.2       Maintenance . Seller shall maintain the Property, or cause the Property to be maintained in the ordinary course consistent with past practices prior to the Closing, subject to normal wear and tear, and shall not remove, nor permit to be removed, any Personal Property, Improvement or any other component of the Property except as may be required for repair and maintenance and which will be returned or replaced with an item of like kind and character prior to the Closing.

13.3       Insurance . Seller shall maintain comprehensive casualty, workmen’s compensation, and general public liability insurance on the Property through and including the Closing.

13.4       New Agreements . Without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld or delayed, the Seller will not on, or after the date hereof, enter into:

13.4.1          any leases in the nature of the Leases (other than renewals of the Leases substantially in the same form as currently exist); or

13.4.2          any new service, maintenance or other contracts in connection with the use and operation of any Hotel other than (a) renewals or replacements of those Contracts set forth on

 

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Exhibit G upon substantially the same terms and conditions as currently exist and (b) any other such contracts provided (i)   such other contracts are cancelable upon thirty (30) days’ notice and (ii) with respect to each such other contract, none shall have an annual cost in excess of THIRTY THOUSAND and 00/100 ($30,000.00) DOLLARS; and

13.5              New Reservations . Without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld or delayed, the Seller will not accept any Reservations on or after the date hereof other than in the ordinary course of business consistent with the manner in which such Reservations have been accepted prior to the date hereof.

13.6              Permits and Licenses . Seller shall keep in force all existing Permits and Licenses and to cause all those expiring prior to the Closing to be renewed. If any such Permits and Licenses shall be suspended or revoked, Seller shall promptly notify Purchaser in writing and shall take all measures nece