HomeMy WebLinkAbout99-07262
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IN Tall: COURT OF COMMON PLEAS OF CUMBERLAND COUNTY. I'ENNSYI.VANIA
CIVIL ACTION-LAW
SIMI I'ARAS, INC., a Pennsylvania
Corporation. and PIZAFUL C.
SANGIIANI, an adult individual.
Plaintiffs
S.A.C. ENTERP121SES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
NO. ?1- 7'01 b a (? vu ?a?n ,.
NOTICE
You have been sued in Court. I l 'you wish to defend against the claims set forth in the
following pages. you must take action within twenty (20) clays alter this Complaint and Notice
are served. by entering a written appearance personally or by attorney and tiling in writing with
the Court your defenses or objections to the claims set forth against you. You are warned that it'
you Tail to do so the case may proceed without you and a judgment may be entered against you by
the Court without flurther notice forany money claimed in the Complaint or for any other,claim
or reliel'requesled by the 1'laintill'. You may lose money or property or other rights important to
eau.
YOU SHOULD TAKE'TI IIS PAPER TO YOUR LAWYER AT ONCE. 11-- YOU DO
NOT HAVE A LAWYER OR CANNOT AFFORD ONE. GO TO OR TELEPHONE" THE
OFFICE SET FORTH BELOW TO FIND OUT Wt1ERE YOU CAN GET LEGAL I IELP.
Court Administrator
4"' Floor
Cumberland County Courthouse
Carlisle. 11A 17013
(717)240-6200
IN'I'111. CoUlt'1' of CoNINIOC1VIl. A OIONULA1VRLAND COUN'I'Y.1'6NNSYI,VANIA
SIiRI PARAS, INC., a Pennsylvania
Corporation. and PRAFUL C.
SANCHANI, an adult individual.
Plaintiffs
S.A.C. ENTERPRISES, INC.
x Penns' aria Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
NO. COMPLAINT'
L Plaintiff SHRI PARAS, INC. (hereinafter "Paris") is a Pennsylvania Corporation with
a place of business at 12391 tarrisburg Pike. Carlisle. Cumberland County. Pennsylvania 17013.
2. PlaintilT PRAFUL C. SANGIIANI (hereinaller "Sanghani") is an adult individual
residing at 1239 Harrisburg Pike. Carlisle. Cumberland County. Pennsylvania 17013
3. Defendant S.A.C. ENTERPRISES, INC. (hereinafter-S.A.C:') is a Pennsylvania
Corporation with a business address ofe/o Lcono Lodge. 860 North Front Street. Wonnleysburg.
Cumberland County. Pennsylvania.
d. Defendant SHANTILAL N. PATEL (hereinalter "Patel") is an adult individual
residing at Econo Lodge. 860 North Front Street. Wormlcysburg. Cumberland County.
Pennsylvania.
>. All acts alleged herein were perRn•nud by the parties or their duly authorized agents.
6. On April 13. 1999. Sanghaoi entered into an Agreement ol'Sale (hereinafter
"Agreement') with S.A.C. to purchase certain real properly and business assets all ol'which was
operating under a Franchise Agreement with Choice I l0tcls International. Inc. as "Rodeway Inn-
(hereinaller the "Property') located at 1239 1larrisburg Pike, Carlisle, Pennsylvania Ibr the
purchase price ol'One Million Six I luadred Thousand ($1.600.000.00) Dollars. A copy of this
Agreement of Sale is attached hereto and incorporated herein as Exhibit "A".
7. On April 19. 1999. Sanghani assigned his rights under the Agreement to Paras. A
copy of the Assignment Agreement is attached hereto and incorporated herein as Exhibit "I3".
8. The Franchise Agreement liar the property had been executed by S.A.C. as Franchisee.
as well as Sh'antital N. Patel. et. al. individually.,jointly and severally. A copy ol'the Franchise
Agreement is attached hereto and incorporated herein as Exhibit "C.
9. On April 19. 1999. the parties settled on the Agreement and S.A.C. conveyed the
Property to Paras.
10. pursuant to the Agreement. the Property included all "contracts and contract rights"
related to the properly and held by S.A.C. The Agreement also provides as follows:
Covenants. Item'yscntatir?r_s and Warranties of
Scllcr. Seller hereby agrees that the Ibllowing
representations. covenants and warranties arc Irlle
and accurate and will lac true and accurate through
closing hereunder but. unless specifically provided
fiir herein. will not survive closing hereunder:
(i) That Seller has disclosed to Buyer all material
contracts. agreements and commitments to which
the Seller is a party (the "Contracts"). The
Contracts are legally valid and binding and in full
lorce and elTect: The Seller has perl'ornied all
obligations on its part to be performed as of the
Closing: and there are no material defaults by the
Seller thereunder. There have been no
modifications. alterations. amendments or
cancellation orany orthc same. This shall survive
Closing.
(s) As orlhe Closing. all the Seller's payables 11or the
operation or the Motel including. without limitation.
salaries. fringe benefits, commissions. taxes.
insurance. telephone. cable TV. utilities. supplies.
f)•muhise Ices, rent and other charges under
equipment leases. and charges and royalties shall be
paid current and none orthc foregoing shall be past
due. This shall survive Closing.
11. After the conveyance orthe Properly. Paris took over the operation of' the motel
located Ihereon.
12. Upon operating the motel. Paris learned that the franchise fees to the motel's
Franchisor. Choice Hotels (hercinalier "Franchisor-). hid not been paid and were approximately
two years delinquent.
13. In May. 1999. the Franchisor terminated its services to Paris because orthe non-
payment or the Franchise fees orthe previous owner. S.A.C.
14. The Franchisor then immediately ceased lorwarding any reservations to Paras.
resulting in a severe. adverse financial impact on Pares.
15. Upon signing the Agrcement. Defendants indicated to Paras that if renovations
required by the Franchisor exceeded $20.000.00. the Agreement could be voided.
16. Aber signing the Agrecalent. Dclendanls failed to disclose to Paras that they had
been notified by the Franchisor of numerous punch list items that required renovation.
17. Since the closing date. Paras has discovered the punch list items and that the total
cost ot'required renovations will exceed $150.000.00.
COUNT I. 1111EACII OF CONTRACT
PARAS and SANGIIANI v. S.A.C. and PATEL
13. Paragraphs 1 through 17 arc incorporated herein as though stated in full.
19. S.A.C.'s failure to pay Franchise i'ecs fiir two years prior to the sale of the Premises
to Paras constitutes a serious and substantial violation of the Agreement. specifically a breach of
the Covenants. Representations. and Warranties listed in Paragraph 7. Subparagraphs (i) and (s).
20. Patel personally guaranteed the Franchise Agreement to Choice 1-10lcls.
21. Plaintiffs relied on Patel's representation that the Franchise fees had been paid in full
and are third party beneficiaries of Patel's personal guarantee. thus making Patel personally liable
for am' breach ol'contract concerning the Franchise Agreement.
22. As a direct and proximate result of Defendants' breach of contract. Plaintiff's have
sulTered the loss of Franchisor reservations. and a substantial loss ol'revenue believed to be at
least $50.000.00.
WI IEREVORG. 1)[ailit iIls (lei andjudgment in their favor and against Delcndanis in the
amount of Fifty'I'housand ($50.000.00) Dollars, or such other amount that Plaintiff's can prove at
trial. together with costs and attorney Ices as permitted by law.
COUNT 11; FRAUDULENT MISREPRESENTATION
PARAS and SANGHANI v. S.A.C. and PATEL
23. Paragraphs I through 22 are incorporated herein as though staled in (till.
24. Paras relied on the covenants. representations and warranties ol'S.A.C. in the
Agreement that the Franchise Agreement was paid current.
25. Shantital N. Patel also personally represented and/or led Plaintiff's to believe that the
Franchise Ices, as well as all other contracts. were paid in lull.
26. Defendants' false representations that their Franchise Agreement was paid current to
Closing constituted fraudulent misrepresentation on Dclcndants' part.
27. As a result of Defendants' li•audUlent misrepresentations. Plaintiffs have suffered
losses ol'at least $50.000.00.
W1113RGFORP.. Plaintiffs demand judgment in their flavor and against Defendants in the
amount ol'Filty'I'housand ($50.000.00) Dollars. or such other amount that Plaintiff's can prove at
trial. together with costs and attorney flees as permitted by law.
COUNT I11; FIZAUI)ULI'N'I' MISRI's1'RESENTA'I'ION
PARAS and SANGIIANI v. S.A.C. and PATEL
26. Paragraphs I through 25 are incorporated herein as though stated in fill.
27. Plaintiffs relied on Defendants' representations that there were minimal renovations
required by Choice Hotels to keep the Franchise Agreement.
28. As a result of Defendants' false representations that there were no substantial or
serious renovations required. Plaintiffs have suffered losses ofapprosimately $150.000.00.
WI IGRGFORL. Plaintiff demands judgment in its favor and against Defendant in the
amount of One Hundred and Filly Thousand ($150.000.00) Dollars together with costs and
attorney fees as permitted by law.
Respectfully Submitted
CLYMER & MUSSER. P.C.
by. Jam er
Attorney or Plaintiff
23 North Lime Street
Lancaster. PA 17602
(717) 299-7101
11)9 27151
VERIFICATION
1, Praful C. Sanghani, President, am an authorized officer and representative of Shri Paras,
Inc.; and I verify that I am familiar with the facts contained in the within Complaint and that the
said facts and statements made therein are true and correct to the best of my knowledge,
information and belief. I understand that false statements herein are subject to the penalties of 18
Pa.C.S. 4904 relating to unsworn falsification to authorities.
Gvr Sivevr?
Praful C. Sanghani, President
Dated: ja/ I / l 1
I
VERIFICATION
I, verify that the statements made in the foregoing Complaint are true and correct to the
best of my knowledge, information and belief.
I understand that false statements therein are made subject to the penalties of 18 Pa.C.S.A.
Sec. 4904 relating to unsworn falsification to authorities.
C fin. vrr
Praful C. Sanghani
Date: 11/ l l Q
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0144
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AGREEMENT OF SALE
This Agreement is entered into this /.3 ay of . 1999 by and Between
S.A.C. Enterprises, Inc., A Pennsylvania Corporation, (hereinafter referred to as "Seller")
and
Praful C. Sanghani an individual, or his assigns (hereinafter referred to as "Buyer")
WHEREAS, Seller is the owner of certain three tracts of land located in Middlesex
Township, Cumberland County, Pennsylvania, more particularly described in Exhibit "A"
attached hereto and made a part hereof with a motel, the "Rodeway Inn" situated thereon;
and
WHEREAS, Buyer wishes to purchase the aforesaid real estate together with all
equipment, inventory, furniture, appliance and fixtures located thereon;
WHEREAS, the parties have agreed to the terms stated,
NOW, THEREFORE, inconsideration of the purchase price. and other considerations
expressed herein, intending to be legally bound, the parties hereto agree as follows:
. 1. ASSETS: Subject to the terms and conditions of this Agreement, Seller hereby agrees
to sell, transfer, convey and assign to Buyer, and. Buyer hereby agrees for the consideration
-set forth herein to purchase and accept from Seller a motel business known as the Rodeway
Inn, including but not limited to all of the following property, both real and personal (the
"assets").
(a) Real Estate. All right, title and interest of Seller in those premises
described in Exhibit "A" attached hereto, and together with all singular the
right and appurtenances pertaining thereto, including all right, title and interest
of Seller in and to adjacent streets, alleys and rights-of-way.
(b) Tanoible Personalty. All right, title and interest of Seller in all fixtures,
machinery, equipment, furniture and items of inventory located on the afore-
described real estate, along with all inventory and supplies, business records,
customer lists, contracts and contract rights, vendor warranties, reservations,
rights and benefits in leases, furniture and fixtures.
2. PURCHASE PRICE: The total purchase price for the Assets to be sold, assigned,
conveyed and transferred shall be One Million, Six Hundred Thousand ($1,600,000.00)Dollars
("Purchase Price"), payable as follows:
(a) $25,000.00 to be paid upon execution of this Agreement, which shall
be held in escrow by Seller's Attorney;
r•s Agreement of Sale between S.A.C. Enterprises Inc and Praful C Sanghani Pepe 2•""
(b) The balance of $1,575,000.00 to be paid at settlement.
3. ZONING CONTINGENCY: It is understood that the Buyer intends to use the
premises as motel. If the premises cannot be so used due to contrary zoning restrictions,
deed restrictions, environmental regulations, township or other governmental regulations
then this agreement is voidable at the option of Buyer.
4. ALLOCATION OF PURCHASE PRICE: The Purchase Price shall be allocated among
the assets being purchased as follows:
Real Estate: 4 3 fO 006-
Personalty: ?r? Jr0 U6b _
5. NO ASSUMPTION OF SELLER'S OBLIGATIONS/LIABILITIES: Except as otherwise
expressly provided herein, Buyer shall not, by virtue of consummating the transaction
contemplated hereunder, be deemed to have assumed any liabilities or obligations of Seller .
with respect to the Assets or otherwise, whether existing as of the date of this Agreement, or
as of the date of Closing, including, but not limited to obligations to any creditors or
suppliers, with the exception of the following:
(a) Obligation to Alan G. Leisawitz, Esq., on account•of legal fees in the
amount of $10,402.00 for Tax assessment appeal for Tax year 1999, which
amount shall be prorated between the parties for Calendar year 1999.
(b) Any obligations by reason of Franchise Agreement with Rodeway
Inn, with the exception that in the event that any renovations are required
under the franchise agreement by reason of the transfer of the franchise, they
shall not exceed $20,000.00, or either party may declare this agreement null and
void.
(c) All leases including television and telephone leases, provided that
payments are current as of the date of Closing.
6. INSPECTION OF THE ASSETS: Seller has given Buyer and his representatives full
access to the property and Buyer has made such necessary inspections as it deems
reasonable of the purchase of the Assets, including equipment, and has reached an informed
decision with respect to the purchase of the Assets. Buyer hereby accepts the condition of
the Assets in their "as is" condition, subject to the covenants, warranties and representations
of Seller set forth herein. Buyer reserves the right, however, to make a final inspection
Agreement of Sale between S.A.C. Enterprises, Inc. and Praful C. Sandneni Page 3
immediately prior to settlement to confirm the location and existence of the Assets existing at
the time of the execution of this Agreement.
7. COVENANTS. REPRESENTATIONS AND WARRANTIES OF SELLER: Seller hereby
agrees that the following representations, covenants and warranties are true and accurate
and will be true and accurate through closing hereunder but, unless specifically provided for
herein, will not survive closing hereunder:
(a) That Seller is the lawful owner of the property which is the subject of
this agreement and that Seller has the right to sell same. This shall survive
Closing.
(b) That the Seller has good and marketable title to all machinery
equipment, fixtures and inventory to be transferred to Buyer at Closing. This
shall survive Closing.
(c) That Seller has not received any notice of any pending condemnation,
appropriation, eminent domain or similar proceedings effecting all or any
portion of the subject premises, nor has Seller received any notice as to the
existence of any assessment or special assessment effecting the premises. This
shall survive Closing.
(d) That Seller has filed local, state, and federal tax returns and that no
local, state, and federal taxes are owing. This shall survive Closing.
(e) That Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the Commonwealth of Pennsylvania, with full
corporate authority to cant' on its business and affairs as presently conducted
and to own, lease and operate its properties. The Seller has no subsidiaries nor
does it own, of record or beneficially, any capital stock or other securities of any
other corporation, nor any other business organization or association. This shall
survive Closing.
(f) That Seller has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein, and this
Agreement constitutes the legal, valid and binding obligation of the Seller and is
enforceable in accordance with its terms, Neither the execution or delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, violates, conflicts with, or constitutes a default under (1) any contract,
instnurlent, agreement or commitment of which the Seller is a party, or to which
any of the Purchased Assets of the Seller are subject or (2) the Articles of
Incorporation and By-laws of the Seller nor is any consent, approval or waiver
required as a condition of the Seller's consummation of the transactions
contemplated by this Agreement. This shall survive Closing.
(g) That Seller has good and marketable title to the Purchased Assets
which it purports to own, real and personal, tangible and intangible, and/or
which are shown on the latest financial statements for the Seller, free and clear
of all liens, encumbrances or security interests. This shall survive Closing.
(h) That Seller has no knowledge of nor has the Seller received any
written notice of any threatened or pending suit, action or legal, administrative,
arbitrative or other proceedings pending against the Seller with respect to the
Business or affecting the Purchased Assets, and, to the Seller's knowledge, the
Seller is not presently under investigation with respect to any charge
concerning violation of any law or administrative regulation, federal, local or
state, domestic or foreign, with respect to either the Business or the Purchased
Assets, except as more fully disclosed as follows:
(1) Claim -before Pa. Human Relations Commission by
Michelle D. Janney, PHRC Docket # E88127D. Seller shall assume
full responsibility to the defense and payment, if any, of this claim,
and indemnify, defend and hold Buyer harmless for the same. This
shall survive Closing.
(f) That Seller has disclosed to Buyer all material contracts, agreements
and commitments to which the Seller is a party (The "Contracts"). The
Contracts are legally valid and binding and in full force and effect; the Seller has
performed all obligations on its pan to be performed as of the Closing; and there
are no material defaults by the Seller thereunder. There have been no
modifications, alterations, amendments or cancellation of any of the same. This
shall survive Closing.
(j) That Seller's use of the Purchased Assets and operation of its
Business, to the Seller's knowledge, has been in material compliance with all
federal, state and local laws, rules, regulations, ordinances, codes and orders
("Laws"') governing the operation of the Seller's or the use of the Seller's assets.
As of the closing, the Seller shall have in full force and effect all necessary
permits, clearances and other government licenses, permits and approvals
required for the conduct of the Seller's business. To the best of Seller's
knowledge, there are no material problems with respect to adequate water
supply, sewage and waste disposal facilities or air, water or other
environmental pollution.
(k) That no pending or threatened challenge exists as to any of the
Seller's intangible asset, proprietary right or information possessed, used or
held by the Seller in connection with its business. The Seller has not granted in
writing to any person, firm or corporation any right, license or privilege in any
intangible asset, proprietary right or information that is owned by the Seller or
to which the Seller has any right or interest and is used by the Seller in its
business. This shall survive Closing.
(1) That Buyer has had an opportunity to review all employment and
personnel records of all those employed by Seller in the operation of the Motel.
The Seller has no written or oral employment agreements with any of its
employees not terminable at will.
(m) That Seller does not maintain in respect of its employees any
"employee benefit plans" ("Plans"), as defined in Section 3(3) of the
Employment Retirement Income Security Act of 1974, as amended ("ERISA")
and the Seller has not directly or indirectly sponsored, maintained or
contributed to any Plans with respect to the Employees. The Seller is not a
"fiduciary", as defined in Section 3(21) of ERISA, or an., employer", as defined in
Section 3(5) of ERISA, with respect to any Plans. The Seller is not part of any.
multi employer plan as defined in Sec. 4001 of the Internal Revenue Code of
1986, as amended, or within the meaning of Sec. 3(3 7) of ERISA. This shall
survive Closing.
(n) That Seller is not a party to any union contract or collective bargaining
agreement and there have been no attempts to organize or.unionize any of the.
Seller's employees during the past five years. No unfair labor practice charge is
pending or threatened against the Seller before the National Labor Relations
Board or any state or local agency, no labor strike, picketing, boycott or other
labor dispute affecting the Seller is pending or threatened in writing, and no
grievance is pending against the Seller. This shall survive Closing.
(o) All premiums due and payable on all liability insurance policies
maintained in respect of the Seller's operation of the Motel, including, without
limitation, worker's compensation insurance, and all payments due and payable
under all Plans (defined above) have been paid to date, and the Seller has not
received any notice within the past three years of material violation of any such
policies, from the insurers thereunder, or of the Plans, which have not been
corrected. The Seller knows of no individual claim pending under any such
policies. This shall survive Closing.
(p) That there are no outstanding citations issued by, defaults asserted
by, or any claims asserted or threatened against the Seller by, any person or
government agency in respect of discrimination in employment, occupations
safety and health matters or environmental or hazardous materials, or other
governmental regulation of business or employers, other than as set forth
herein. This shall survive Closing.
...rte.
(q) That Seller has no knowledge of any liabilities, contingent or
otherwise, arising from or involving any state or federal environmental laws
which would be applicable to the use or condition of any of the Purchased
Assets or the conduct of the Business.
(r) That if Seller is holding security deposits and/or advance deposits for motel
room rentals, they shall be disclosed to Buyer prior to Closing.
(s) As of the Closing, all the Seller's payables for the operation of the
Motel, including, without limitation, salaries, fringe benefits, commissions,
taxes, insurance, telephone, cable TV, utilities, supplies, franchise fees, rent and
other charges under equipment leases, and charges and royalties shall be paid
current and none of the foregoing shall be past due. This shall survive Closing.
(t) As of the Closing, all the Seller's taxes and obligations for the payment
of taxes, including, but not limited to, income taxes, withholding and other
employment related taxes, sales tax, hotel tax, real estate taxes, capital stock
tax, shall be paid current and none of such taxes or obligations for the payment
of taxes shall be overdue. This shall survive Closing.
(u) As of the Closing, the Motel operation will have an adequate quantity
of inventory and supplies, i.e., linens, towels, etc.
shall: (v) Between the date hereof and the completion of the Closing, the Seller.
(1) Operate the Motel in the ordinary course and use their
best efforts to preserve their relationships with the Seller's
vendors, service providers, licensees, subtenants and all others
with whom it deals and keep available the services of its present
employees, agents and contractors and preserve all good will and
value existing in respect of the Motel and its operation.
(2) Use its diligent efforts to continue its current practice of
performing all of its obligations under the leases, operating
contracts and all other third parry agreements.
(3) Keep the Motel and all equipment, furniture, fixtures,
inventory and supplies in good condition and good working order
and continue to perform all normal repairs and maintenance
thereto.
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Agreement of Sale between S.A.C Enterprises Inc and Praful C San lhnnl ?..?p!ya.P• Page 7
(4) Continue to operate the Motel in the usual and
customary manner, not commit or allow to exist any nuisance upon
the Property.
(w) Between the date hereof and the completion of the Closing, the Seller
shall not:
(1) Change materially or adversely the general character of
the seller's operation of the Motel.
(2) Remove or allow the removal of any personal property,
any fixtures, any mechanical equipment or any other material item
used in the operation of the Motel (with the exception of the
refrigerator in the managers apartment behind the office), except
where authorized or required under the terms of the, leases in
effect on the date hereof, or to maintain the Motel by replacement
with similar fixtures, equipment or items of at least equal value.
(3) Reduce the insurance now held and maintained by the
Seller covering the Motel and its operation of the Property.
(4) Enter into any arrangements, licenses, subleases or other
undertaldng or arrangements with respect to the Motel or modify
any existing agreements including service contracts, unless
otherwise approved by Buyer.
8. POSSESSION: Possession of the property, shall be delivered to Buyer at Closing and
not prior thereto.
9. ALLOCATION OF INCOME AND EXPENSES: Rent, if any, and all other water,
sewer, electricity and other utilities shall be adjusted and pro-rated to date of Closing.
10. REAL ESTATE TAXES: Real estate and other state and local taxes, charges and
assessments, along with sewer and water rents, if applicable, shall be apportioned as of the
date of Closing on the basis of the year of assessment and on the fiscal tax year of the
authority levying the same. Any service contracts, television and telephone leases shall also
be apportioned as of the date of settlement.
11. CLEARANCE CERTIFICATE: Seller shall procure a Clearance Certificate from the
Pa. Department df Revenue. In the event the above is not obtained prior to closing, Seller
expressly warrants and represents that Seller has no liability for unpaid taxes to the
Commonwealth of Pennsylvania. The provisions of this Agreement shall survive the closing.
sr- * I I
all within obligations from Purchaser to Sellers the payment of damages for the "taking" shall
be divided between the Purchaser and the Sellers as their respective interests then may
appear.
19. SURVIVAL OF COVENANTS REPRESENTATIONS AND WARRANTIES: Unless it is
specifically provided for in this agreement, none of the covenants, representations and
warranties made by Seller hereunder shall survive Closing. No warranties or representations,
if any made, concerning the condition or status of any of the realty or personalty shall survive
Closing, as all such property is purchased "AS IS", without warranty.
20. NAME: The use of the name of the motel or variation thereof shall be assigned to
Buyer, subject to approval under the Seller franchise agreement with Rodeway Inn.
21. NOTICES: All notices and other communications hereunder shall be in writing and
shall be mailed by certified mail, return receipt requested, to the following addresses, or to
such other address as any party hereto shall hereafter designate for himself or itself by
written notice to the other party:
To Buyer:
c/o James Clymer, Esq.
23 N. Lime Street
P.O. Box 1766
Lancaster, Pa 17608-1766
To Seller:
c/o John W. Purcell, Jr., Esq.
1719 N. Front Street
Harrisburg, PA 17102-2392
For purposes of this Agreement, notices shall be deemed delivered on the date deposited in
the mail.
22. GOVERNING LAWS; PARTIES OF INTEREST: This Agreement shall be governed
by and interpreted according to the laws of the Commonwealth of Pennsylvania (but not the
law of conflicts of law) and will bind and inure to the benefit of the parties hereto and to their
respective heirs, executors, administrators, successors, assigns and personal representatives.
23. EXECUTION AND COUNTERPARTS: This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an original, but
all of which together constitutes one and the same instrument.
24. ENTIRE AGREEMENT: This Agreement and the exhibits hereto set forth, all of the
promises, representations, warranties, covenants, agreements, conditions and undertakings
between the parties hereto with respect to the subject matter hereof, and supersede all prior
and contemporaneous agreements and understandings, inducements or conditions, express
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ASSIGNMENT AGREEMENT
Agreement made this 19'h day of April, 1999, by and between PRAFUL C. SANGHANI
with a mailing address of 1615 South Main Street, Blacksburg, Virginia 24060 ("Assignor") and
SHRI PARAS, INC., a Pennsylvania Corporation with its registered office at 1239 Harrisburg
Pike, Carlisle, Pennsylvania 17013 ("Assignee").
WHEREAS, by date of April/3, 1999, S.A.C. ENTERPRISES, INC., a Pennsylvania
Corporation, entered into an Agreement of Sale ("Agreement") as Seller for the sale of certain
real estate and motel knows as Rodeway Inn and related facilities ("Roadway Inn") located at
1239 Harrisburg Pike, Carlisle, Pennsylvania 17013 to Assignor; and
WHEREAS, Assignors desire to relinquish and assign their rights under the Agreement
of and Assignee is willing to assume the obligations thereof and accept such assignment.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties, intending to be legally bound hereby covenant and agree as
follows:
1. Assignor hereby assign, grant release and quitclaim to Assignee all of their right, title
and interest in and to the Agreement dated April) I , 1999 for the purchase of the Rodeway Inn
facility.
2. Assignee hereby agree to assume and undertake all obligations and responsibilities of
the Agreement and do further agree to hold harmless, defend and indemnify Assignor for any
liability Assignor may incur under the terms of said Agreement.
IN WITNESS WHEREOF, the parties have hereunto their hand and seal the date and year
first above written.
ASSIGNOR:
?
Praful C.Sanghani
SHRI PARRS, INC., a Pennsylvania Corporation
a?
By:
PrafulC.Sanghani
CORPORATE RESOLUTION
I hereby certify that I am the duly elected and qualified secretary of S.A.C.
Enterprises, Inc., and that the following is a true and correct copy of the Resolutions
adopted at a timely called meeting of the Board of Directors held in accordance with
VtN
the by-laws on the 16- day of April, 1999.
A quorum being present, upon Motion duly made, seconded and unanimously
carried the following Resolution was had:
"Resolved, that this corporation is authorized to sell and transfer the
motel known as Rodeway Inn, located at Route 11, Harrisburg Pike,
Carlisle, Middlesex Township, Pennsylvania, along with all rights and
obligations therein, including the real estate, furnishings, equipment,
name, franchise, and other property attendant to the conduct of the
business known as Rodeway Inn, for the sum of One Million Six
Hundred Thousand ($1,600,000.00) Dollars; and
Further resolved, that the officers of this corporation be authorized,
empowered and directed to execute a Deed, Bill of Sale and other such
agreements, writings and documents as may be necessary to effectuate
the foregoing."
In Witness Whereof, I have hereunto affixed my name as secretary and have
caused the corporate seal of said corporation to be hereto affixed this /6 n day of
April, 1999.
t J
Heman.
r
? embs
HYK-14-1`Jyy 110: 410 F'UNCELL. KRUG 8 HALLER
11/97
RODEWAY INNO
717 233 1149 P. 02/11
PA 128.RWiN
FRANCHISE AGREEMENT, s r N p1-'
THIS t3RBEMENT Is made in Silver spring, Maryland, effective on thef da of
199, between Choice Hotels International, Inc., a Delaware corporation ("we" or "us"), and S A.C. tEnr,s,'
Ina., a Pennsylvanin Corporation, Shantilal N. Patel, Hemant J. Patel, Ranchhod B. Patel, Babu C. Patel and
Bharat Patel, Individually, Jointly and Severally ("you").
We and you agree:
1. Detinltion& In addition to the terms which are defined In other pmts of this Agreement, the following
terms shall have the indicated meaning,:
2. "Hotel" means the property at 1239 Harrisburg Pike, Carlisle, PA 17013 ("Location") and
includes the building, land and all improvements, structures, fixtures, amenities, equipment, fbrnilure and related rights,
privileges and properties. The Hotel will be operated only under the name RODEWAY INNe,
b. "Rentable Rooma" means 102, which Is and shall be the total number of rentable sleeping rooms in
the Hotel.
c. "Designated Represcntative" means your representative for matters about this Agreement. until
you change the Designated Representative under section 15 below, your Designated Representative is Shantilal N.
Patel whose address is c/o Econo I.adge, 960 N. Front Street, Wormeysburg, PA 17043,
d. "Opening Date" means the date on which you begin to rent sleeping rooms to the public at the
Hotel under this Agreement.
e. "Gross Room Revenues" means revenues from the rental, sale, use or occupancy of sleeping rooms
and meeting rooms at the Hotel, including cash and credit transactions, whether or not collected by you. It also
-includes any proceeds of businett interruption Insurance, but dots not include taxes required by law, revenues from
telephone calls, vending machines, room service or food and beverages sales.
f. "Hotel 000W means 211 furniture, fismres, equipment, signs and supplies used in the construction
and operation of the Hotel.
g. "Marks" means the trademarks, trade names, service marks and logos RODEWAY', RODEWAY
INN' and the related logo(s), including designs, stylized letters, and colors that we permit you to use at the Hotel and in
advertising for the Hotel, and any other additional or substituted trademarks, trade names, service marks or logos which
we subsequently adopt•and authorize you In writing to use,
h. "Manuals" means our published materials containing, among other things, our recommendations'
for constructing, equipping. furnishing, supplying, cpemtiea, maintaining and marketing are Hotel.
I. "Rules and lteguletlons" means our published materials containing, among other things, our
APR-14-1999 10:40 PURCELL,I(RUG 8 HALLER
717 233 1149 P:03i11
standards and requirements for constructing, equipping, furnishing, supplying, operating
the Hotel. , maintaining and marketing
j. "System" means our system (as It may be modified by us from time to time) for providing hotel
accommodations with a high standard of service, courtesy and cleanliness using the Marks and includes our advance
reservation system, our business referral and credit card agreements and those Identlfying characteristics as we may
from time to time reasonably require.
s. Grant or License. We grant to you a non-exclusive license to use the System and the marks RODEWAY°
and RODEWAY INN a together with the designated logo in operating the Hotel. You are not authorized to use the
other Marks.
3. Term. The term of this Agreement ("Tenn") 1s from the date this Agreement Is signed by both panics to
the date 20 years after the Opening Date. However, either of us has the right to terminate this Agreement on any
anniversary date of the Opening Date by giving at lean three months' prior wrihen notice to the other.
4. Fees and Reports.
A, AfflEgion Fee. When you sign this Agreement, you pay us an affiliation fee of S5,000.00
efb dable.nAny "mooys which the you paid Affiliation Fee Wharf oth
Affiliation Fee Is non-
to us as an application fee will be credited to the Affiliation Fee.
b. Royalty e. Beginning on the Opening Date, you will pay us 3.5% of your Gross Room
Revenues each month during the Tenn as a Royalty Fee, BEE ABBERBIlh!
c• M91kc1l"a Fe - Beginning an the Opening Data, you will pay us a Marketing Fee of 1.25es of
your Grose Room Revenues each month during the Tenn. We May Increase the Marketing Fee for increases in inflation
or costs of advertising, publicity, public relations, or marketing so long as any Marketing Fee increases apply to all or
most of the U.S. hotels in the System. !R£Ly (gtHy.
d. Reservation Fee. Beginning on the Opening Date, you will pay us a Reservation Fee of 1.25% of
your Gross Room Revenues each month during the Term. We may increase the Reservation Fee for increases in
inflation or other costs so long as any Reservation fee increases apply to all or most of the U.S. hotels In the System.
SEE ADDENDUM
e. 2T'Mts_ and Reeorts. Beginning on the Opening Date, within 10 days after the end of each
calendar month, you will send us a statement on our form showing the Hotel's Gross Room Revenues, occupancy and
other related information that we request. YOU will certify that your reports arc true and accurate. We will bill you for
amounts due on or about the l5th day of each month, and you will pay us those amounts by the first day of the
following mnth. You agree that timely payment of all fees is of the essence of this Agreement. You also agree that
may apply payments which you make in such order as we may determine regardless of any contrary language you
may indicate. You will participate in computerized Information reporting programs that we may adopt for use by hotels
in the System. You may need to buy computer hardware and related telephone services to participate in this program.
If you do not send us the required reports on time, we will estimate your Gross Room Revenues for interim billing
purposes, and you must pay us a late charge of 1.5% of your previous month's Continuing Franchise Fee, Marketing
Fee and Reservations Fee, but not less than 5100. Interim bills will be considered accurate until we receive any late
monthly reports.
f. Keening Records, You will keep at the Hotel or, if you notify us in writing,
business, for at least 3 years, accurate Hotel aeceunts, books, records and data, including information on principal
rentals. Gross Room Revenues and profitability ("Hotel Data,% You will allow us to examine, audit and copy the Hotel
Data during your normal business hours. If we request in writing, you will send us copies of the Hotel Data. If we find
by an audit of the Hotel Data that you underpaid any fees due us under this Agreement, you must pay us all undelpa[d
APR-14-1999 10141 PURCELL.KRUG & HALLER ' 717 233 1149 P:04/11-
amounts plus interest at the rate in section 4.g below. If you underpaid its by mrim than 5% of fees payable during the
period covered by this audit, you must also'pay tha•reasohable cotta of the ¦udit.
g. interest, You will pay us interest on amounts not paid on time At the rate of 1.5%• per month or
portion of a month, but not more than the maximum interest rate permitted by applicable laws.
5. Our Duties. We will:
a. Loan to you one copy of the current manuals and of the Rules and Regulations. These are our
property and we may change them periodically;
b. Periodically inspect the Hotel, evaluate your compliance with this Agreement and the Rules and
Regulations, and advise you on changes necessary to bring the Hotel into System compliance;
c. Provide national and regional advertising, promotion, publicity, marketing research, System
programs and related activities as we determine to be appropriate for the System. These services may be combined
with other hotel systems that we or our affiliates operate in our solo discretion. Periodically, we will publish and
distribute to the traveling public a directory of all System hotels in good standing;
d. Provide an advance reservation system for your Hotel and for other hotels which belong to the
System (and, if we choose to do so, for other hotel systems that we or our affiliates operate); and
A. Except as otherwise permitted, maintain In confidence all information you provide us about the
Hotel's operations and profitability, including Hotel Data
6. Your Duties. You will:
A. Operate, famish, maintain and advertise the Hotel according to the Agreement and the Rules and
Regulations. You will, purchase the start-up materials and training service package that we designate and have those
items at the Hotel prior to the Opening Date, You must keep current your copy of the Manuals and of the Rules and
Regulations and comply with any changes that we make in the Rules and Regulations and to the System. If a dispute
arises, our copy of the Manuals or Rules and Regulations will control. You may not share the confidential Information
in the Manuals or the Rules and Regulations except with your authorized employees;
b. Establish and maintain a high ethical and moral standard in connection with your activities and the
operation of the Hotel;
c. Not permit the Hotel to be used for any purpose or activity not contemplated in this Agreement
without our written consent;
d. Send the Hotel general manager(s), at your expense, to our training programs;
e. Obtain and display prominently at the Hotel, our approved illuminated exterior signs. You must
maintain these exterior signs in good working order At all times. In displaying the signs, you are responsible for
complying with all applicable Iowa or regulations;
f. Obtain, install and maintain at the Hotel our designated property management system, and
participate in our Advance reservation system, making reservations and accepting reservations using required
equipment, software and procedures;
g. Allow us or our agents to enter the Hotel at any reasonable time to evaluate your compliance with
this Agreement. During our evaluation, you will assist us or our agent and, subject to availability, provide us with one
free Hotel sleeping room for one night;
74 ?'-Mri!m
.Ht'K-14-1777 1b?41
t'UKLtLL,KKUU K 14HLLtK
'!1'! 233 1147
N:b5/11-
h. Send "us tvhcq we rogJesl your Hotel deect;ption and rates so.diat we may include this Information
the in directories that we may publish. If you do not send us changes by the deadlines which are indicated, you will honor
rates and descriptive Information on record;
I. Honor the terms of any discount or promotional program that we offer to the public on your behalf,
and any room rate quoted to any guest at the time the guest makes an advance reservation;
I Pay reasonable travel agent commissions and global distribution system charges as required by the
Rules and Regulations;
it. Use your best efforts to maximize and Increase Hotel and System business. If you are unable to
accommodate a potential guest, you will refer the guest to other System hotels near the Hotel. If you refer a guest to a
non-System hotel where nearby System hotels leave space available, you must pay us liquidated damages equal to the
average room rate (gross room revenues divided by the number of rooms rented) for the month during which the
violation occurred; and
I. Not change the Rentable Rooms by more than 5% from the original Rentable Rooms in Section l.b
Agreement without receiving our prior written consent and obeying other requirements of this Agreement, and
of notify this us in writing and obey other restrictions In this Agreement If you change the Rentable Rooms by 5% or less from
the number stated in Section l.b.
7. Marks.
a. You will not contest our rights to the current or future System and Marks, nor our right to grant to
others use of the Marks or of any other marks. You understand that the Marks are and will remain our property, and
that your use of the Marks inures to our benefit, You will immediately assign to us on our request any rights to the
Marks that you may gain through your use of the Marks.
b. You must not include die Marks or any words any of your affiliates, whether a Partnership, corporation, joint venture of
or any other type of business organization..
c. If you are required by law to register the Marks, your registration application must specify that you
use the Marks: (1) only at the Hotel and in advertising for the Hotel; (2) only during the Term; and (3) without
claiming any property right in the Marks during or after the Tent.
• d. You will not interfere with our use or registration of the Marks, or with use of the Marks by other
hotels.
e. You must promptly notify us of any suit filed or demand made against you challenging the validity
of any of the Marks ("Mark Claim"). Using our attorneys, we agree to protect and defend you against a Mark Claim,
and to defend and indemnify you against your loss, cost or expense related to the Mark Claim, except where the Mark
Claim arose because you used the Marks in violation of this Agreement You may not settle or compromise a Mark
Claim without our prior written consent, and you agree to cooperate with us in defending agalnee a Mark Claim.
f. You have no right to sub-license anyone else to use the Marks or the System or to use them at any
place other than in connection with the Hotel.
8. Future Additions. You may not change the Room Count by more than 5% by constructing additional
sleeping rooms nor may you make substantial alterations to the Hotel without our prior written consent, which we are
under no obligation to give. In order to obtain our consent, you must send us your construction plans and pay us an
expansion fee for each additional sleeping room equal to the per-room charge under new franchise) fot this brand, but
the expansion fee will be not less than $1,000. You may not change the Room Count by 5% or less by constructing
MI'R-14-1777 lrl•4G YUKLt_LL,KKUU & HHLLER ',.A r e..l
'(1Y 2S3 1149 P:06/11•
additional sleeping rooms without prior notice to us. We will add any additional sleeping rooms which you construct to
the Rentable Rooms, and-will include revenues from the additional sleeping rooms and any additional .
calculating the Gross Room kOvenuCs for determining fees due under this Agreement. meeting rooms in
9. Assignment.
a• i t. We may assign all or part of our rights or obligations under this Agreement to
any person or legal entity. We are not relieved of our obligations under this Agreement by assigning the Agreement.
b. Your A--=sianment. Your rights and duties under this Agreement are personal to you. We granted
this Agreement to you in reliance on the business skill. t]nencial capacity and personal character of you or your
principal owners. You may not sell, assign, transfer, or otherwise encumber any direct or Indirect interest that you have
in the Hotef, in you, or in any rights or obligations created by this Agreement without giving us at least 15 days prior
written notice and obtaining our prior written consent. Furthermore, if a Controlling Interest is being transferred or if
you are conveying the Hotel or more than 50% undivided interest In the Hotel, you must also comply with whatever
reasonable conditions we requite (including the signing of the then-current form of franchise agreement by the
transferee and payment of a re-licensing fee equal to the then•curent Affiliation Fee charged by us). Our consent will
not be required for a mortgage, for a collateral assignment of the Fnurchise Agreement as collateral for a mortgage, or
for the sale or transfer by any party of securities in a publicly-traded corporation or entity which individually, or in the
aggregate with other sales or transfers by a patty, constitute the sale or transfer of less than S% of the outstanding
capital stock or other equity Interests In the corporation or entity. We may charge a fee where your lender requires that
we give our written consent to or become a party to a proposed collateral assignment or that we provide an estoppel
letter. If you assignor transfer the Hotel or this Agreement without our written consent, you breech this Agreement and
we may terminate this Agreement.
C. Transfer on Beath or Ment I t
---- - comer if you or any natural person in your entity dies or
becomes mentally Incompetent, the executor, administrator, or personal representative of that person must transfer that
person's Hotel interest (within 12 months after death or mental incompetence) to one or more of the remaining persons
in your entity (if applicable) or to your heirs that we approve.
CL Coneroll[ne ?ntere3 For purposes of this Agreement, "Controlling Interest" includes any general
partner's Interest in a partnership entity, 50% or more of the voting stock of a corporate entity, and SO% or more of the
ownership interests in a limited liability company.
10, Default and Termination.
a Te ina 'on oar. If we default in our material obligations under this Agreement, you may
terminate only if you first give us written notice of the defaults and of your Intention to terminate the Agreement. You
may then terminate this Agreement if wo do not cure those defaults within 30 days from receiving your written notice.
b. TerminationBvUs.
RI_
(1) Te motion with Notice. If you default in your material obligations under this
Agreement, we may teammate this Agreement, effective on the date speckled In our notice (or the earlie date
Permitted by applicable law): st
required monthly reports of Gross RoomfRev e n es within 10 days of our written notl a of default tlto yop?eement or file
(b) If you do not cure fully any other breach of your obligations or warranti
under this Agreement within 30 days of our written notice of default to you, as
(c) Ifyou'or an Affiliate of you materially breeches any other agreement with us or
it
•RPR-14-1999 10:42 PURCELL,k:RUG 8 HRLLER• 717 233 1149 F. 07/11'
affiliates and subsidiaries, or our officers, directors, agents and employees of each, from or to remedy, your defaults
under this Agreement or claims arising out of your operation of the Hotel. We will have the sole and exclusive control
(including the right to be represented by attorneys of our chbosing) over the defense of any claims;ritede ogairist'its iirid
over their settlement, compromise or other disposition.
14. Casualty. If the Hotel Is damaged.by fire or other casualty, you must promptly repair the damage. if the
.damage or repair requires closing the Hotel, you must immediately notify us, begin reconstruction within 6 months after
closing and in accordance with the Rules and Regulations, and reopen the Hotel for continuous business operations as
soon as practicable (but in any event within 12 months after the Hotel closing), sending us at least 30 days prior written
notice of the date of reopening. We will extend the Term of the Franchise Agreement by the number of days between
the date of closing and the date of reopening. If your insurance proceeds are not available to repair or rebuild the Hotel
and If you notify us within 6 months after closing, we will terminate this Agreement without penalty to either parry.
15. Notices. All notices required or permitted under this Agreement must be in writing, must be personally
.delivered or mailed by registered or certified mall, ratmn recelpt requested, or by a nationally recognized courier
service; to us at Choice Hotels International, Inc„ 10750 Columbia Pike, Silver Spring, Maryland 20901,
Attention,. General Counsel, and to you at the Designated Representatives address above until a different address has
been designated by written notice to the other parry. The Designated Representative is authorized to receive our written
notices to you. Any notice by registered or certified mail or by courier service is deemed given and received at the date
and time of sending. You may change the Designated Representative by written notice to us.
16. Business Relationship.
a. You agree that:
(1) This Agreement does not create a Flduclary relationship between you and us;
(2) You are an independent contractor, Nothing in this Agreement is intended to make and
does not make either party an agent, legal representative, subsidiary, joint venturer, partner, employee, Independent
contractor or servant of the other (except that we are acting as your agent when making reservations for your Hotel);
(3) You are not authorized to make any contract, agreement, warranty, or representation on
our behalf, or to incur any debt or other obligation in our name; and
(4) You will not represent in any proposed financing agreement or to any proposed lender or
participant in a public or private ipvestment offering that we or any of our affiliates is, or will become, responsible for
your obligation under the financing agreement, nor that we are, or will be, participating in a private or public
investment offering. Before you distribute a prospectus of your Intended private or public offering, you must send us a
copy for our prior written approval, not to be unreasonably withheld.
b. Neither party assumes liability for, or will be deemed liable as a result of action or omission of the
other party, or any claim or judgment arising from such action or omission.
17. Attorneys' Fen. The prevailing party in any action filed to enforce the terms and conditions of this
Agreement (as determined by the Court or arbitrator) shell recover from the other party reasonable attamcys' fees and
court costs.
1S. Taxes, Permit; Compliance with Laws; Notice of Legal Actions,
a. You must pay when due all taxes related to the Hotel which may be levied or assessed by any
federal, state, or local tax authority, and any and all other indebtedness related to the Hotel. You must pay sales tax,
gross receipts tax, or similar tax imposed on us (but not including our income taxes) on any payments that you must
make to us under this Agreement.
rrrK-at, i7 ae?4? rurcl.tLL,ICKUIi zs HHLLtK 'rl'I L33 1149 P:06i11r
crli b. If there is a,boda Yde iilspbtc as td liablliry for taxis asse9sbd'Or-uili" iindebfedness, you may
contest the validity or the amount of the tax or indebtedness under the procedures of the taxing authority or applicable
law. You may not permit a tax sale or seizure by levy of execution or similar writ or warrant, or attachment by a
creditor to occur against the Hotel or the Location.
c. You must comply with all federal, state, and local laws, rules and regulations applicable to you and
to the Hotel. You must timely obtain any and all permits, certificates, or licenses necessary for the construction,
operation and maintenance of the Hotel, Including licenses to do business, fictitious name registration and sales tax
permits, health and sanitatlon permits, and ratings and fire clearances. You must send us, within 10 days of your
receipt, copies of all inspection reports, warnings, certificates, and iatings, received from any governmental entity.
d. You must notify us in writing, within 5 days of receipt, Information about any action, suit,
proceeding, or the Issuance of any order, writ, iglunetion, award, or decree of any court, agency, or other governmental
Instrumentality, which may adversely affect the operation of the Hotel or your financial condition.
19. Approvals and Waivers.
a. Our approvals and consents will not be effective unless signed by one of our duly-elected officers.
We may withhold our consent If you are In breach of a material obligation under this Agreement.
b. Except as otherwise expressly stated in writing in this Agreement (including any amendments), we
make no warranties or guarantees on which you may rely. We assume no liability or obligation to you by providing
any waiver, approval, consent, or suggestion to you with this Agreement, or by reason of any delay or denial of any
request.
c, Failure to exercise any power or to insist on strict compliance with any obligation or condition
under this Agreement does not constitute a waiver of any future right to demand exact compliance with any of the terms
in this Agreement, Waiver of any particular default will not affect or impair a partys right with respect to-any
subsequent default of the same, similar, or different nature. No delay, forbearance, or omission to exercise any power
or right following any breach or default of any of the terms, sections, or covenants hereof, will affect or Impair a party s
rights.
20. Severabllity and Construction.
a. If any secdon of the Agreement is held to be illegal, invalid or unenforceable, both parties agree
that (I) the section will be removed; (2) this Agreement will be understood and enforced as if the illegal, invalid, or
unenforceable section had never been In this Agreement and (3) the remaining sections will remain In fall force gild
effect and will not be affected by the illegal, invalid, or unenforceable section or by Its removal. A section similar to
the removed section will be automatically added as a part of this Agreement to the maximum extent enforceable.
b. Except as otherwise expressly provided in this Agreement, nothing in this Agreement is intended,
nor will anything in this Agreement be deemed, to confer on any person or legal entity other then us or you, or our
respective successors and assigns, any rights or remedies under or by reason orthis Agreement.
c. All captions in this Agreement are intended solely for the convenience of the parties and do not
affect the meaning or construction of any section.
d. All-references to the masculine, neuter, or singular, include the masculine, feminine, neuter, or
plural. If "you" consists of.more than one person or entity, your acknowledgments, promises, covenants, agreements,
and obligations made or undertaken in this Agreement are jointly and severally undertaken by each of you.
e. If this Agreement is executed in multiple counterparts, each executed copy is an original.
10
!2 fn ?
•APR-14-1999 10:43 PURCELL.KRUG & IiALLER 717 233 1149 P:09i11'
f. This Agreement becomes valid only when-wo have signed it, andlit WllhbViriteroreted under the
substantive laws of Maryland, not Including Its conflict of laws provision.
:tight or remedy. Rights and remedies provided for in this Agreement are cumulative and not exclusive of any other
h. Each party may obtain Injunctive relief against threatened conduct that will cause It toss or
damages, under the usual equity rules, including the applicable rules for obtaining restraining orders and preliminary
Injunctions,
I. THIS AGREEMENT CONTAINS THE COMPLETE UNDERSTANDING OF THE
PARTIES AND REPLACES ANY PREVIOUS WRITTEN OR ORAL. AGREEMENT ON THE SAME
SUBJECT MATTER. NO REPRESENTATION, INDUCEMENT, PROMISE OR AGREEMENT, ORAL OR
OTHERWISE, NOT IN THIS AGREEMENT, WILL BE OF ANY FORCE OR EFFECT.
J, Amendments to this Agreement will not be effective unless signed by one of our duly-elected
officers and by you.
k. Neither party may file a claim (except claims for indemnification) arising out of or related to this
Agreement after 3 years from the date on which the claim arose, unless applicable law specifies a shorter statute of
limitations.
zt. Acknowledgments.
A, You have conducted an independent investigation of this Agreement, and you understand that the
business venture contemplated by this Agreement involves business risks, and that Its success will be largely dependent
on your ability as an independent business person. We have not made, and you acknowledge that you have not received
from us or our agents, any projection, warranty or guarantee, express or Implied, as to the profitability or other potential
success of the business venture contemplated by this Agreement By signing this Agreement, you represent to us that
you have neither received nor relied on representations of any kind concerning the Agreement except as set forth in the
disclosure statement(s) given to you and except any written In this Agreement.
b. You agree that this Agreement relates only to the Hotel and the Location. We may own, operate,
franchise or license other RODEWAY INNm hotels under the System, as well as hotels using any other brand, at any
other location. Wo, our affiliates and other 9mtchlsees may now or in the future engage ht transient lodging or related
business activities which may compete with the System or with the Hotel.
c. You agroo that the Marks and this Agreement relate only to the System, and that we may decide to
provide services to the Hotel simultaneously to one or more of our other brands, either separately or combined.
d. You are solely responsible for exercising ordinary business control over the Hotel.
e. You warrant the btnh and completeness of all your statements in your application and those in all
other documents that you send us as part of the application process. This warranty will survive the signing and the
termination of this Agreement,
f. You acknowledge that you received from us a disclosure document required by the Federal Trade
Commission and by the state(s) in which you live and where the Hotel is located, either during your first personal
meeting with our representative to discuss the franchise sale, or at least 10 business days before you signed this
Agreement or Paid to us. any cohslderatian for the franetusa, whlchovar of those first occurred. You also acknowledge
that we gave to you the curnple" Copies -off jtis Agreement for your signature at least 5 business daphefOre you
signed this 40 etpfpt,::' ; ' 4V
r » :?
•APR-14-1999 10:44 PURCELL.KRUG & HALLER' 717 233 1149 P'.10i11-
• Vdifhro the true owner of, and record holder or title to, the Ffoiel, unless you have told iii in We
'
application that you lease the Hotel under a lease with at least 20 years remaining in Its term.
h, You acknowledge that we may use the Marketing Fees to meet any costs Incident to the marketing
services which we provide to the System, and that those costs may include our overhead expenses which are reasonably
allocated to those services. You fltrther agree that we will have the absolute and unilateral right to determine, when,
how and where the Marketing peas will be spent, including the absolute right to purchase and pay for product research
and development, production materials, ad slicks, brochures, videotapes, radio and television commercials, media
advertising (television, radio, cable, magazines, newspapers and other print), services provided by advertising agencies,
market research, computers, furniture, equipment, trade shows, promotions, marketing, research and design, public
relations, personnel, accounting services, travel expenses, office space, administrative costs, salaries and f nInge benefits,
development, design and updating of World Wide Web Site ("Home Page") and maintaining Home Page on the
Internet, including Internet service provider costs, and for other Similar Costs which we deem to be appropriate. You
also acknowledge that other franchisees may not contribute the same percentage or total amount as you are required to
pay as Marketing Fees.
I, You acknowledge that we may use the Reservations Fees to meet any Costs incident to the
reservations services which we provide to the System, and that those costs may include our overhead expenses which
are reasonably allocated to those services. You also agree that we will have the absolute and unilateral right to
determine, when, how and where the Reservations Fees will be spent, including the absolute right to purchase and pay
for product research and development, computers, fhmiture, equipment, research and design, personnel, accounting
services, travel expenses, office space, administrative costs, salaries and fringe benefits, development, design and
updating of World Wide Web Site ("Home Page") and maintaining Home Page on the Internet, including Internet
service provider costs, and for other similar costs which we deem to be appropriate. You agree that we do not have any
duty to ensure that franchisees receive a proportionate beneFlt from the spending of those Fees. You also acknowledge
that other franchisees may not contribute the same percentage or total amount as you are required to pay as
Reservations Fees.
J. You acknowledge that we own the rights to data concerning customers who stay at the Hotel and
that we may use that data in any manner determined solely by us. We acknowledge that you also own that data and that
you may use that data in any manner determined solely by you.
22. Arbitration. Except for our claims against you for indemnification, actions for collection of moneys
owed us under this Agreement, or actions seeking to enjoin you from using the Marks In violation of this Agreement,
any controversy or claim relating to this Agreement, or the breach of this Agreement, including any claim that this
Agreement or any part of this Agreement Is invalid, illegal, or otherwise voidable or void, will be sent to final and
binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator will apply the substantive laws of Maryland, without reference to Its conflict of laws provision. Judgment on
the arbitration award may be entered in any court having jurisdiction. If any party fails to appear at any properly
noticed arbitration proceeding, an award may be entered against the party, notwithstanding its failure to appear.. Any
arbitration will be conducted at our headquarters office in Maryland.
This Agreement is signed by you (and your principals, if a lini ted liability company, partnership or
corporation) mid us, on the date written above.
WITNESS/ATTEST:
CHOICE HOTELS INTERNATIONAL, INC.
By: d
KvAn M. Rt>on Everett 'R Casey
Assistant Sec Lary Vp & Deputy Genera `ounsel
12
5 1
}IHK-14-1777 147, 44
t'UKLtLL, KKUU a HHLLtK
:WITNESS/ATTEST: •
•n•r zs.7 114`J r.lvtl.
S.A.C. ENTERPRISES, INC., a Pennsylvania
Corporation, Shantilal N, Patel, Hemant J. Patel,
Ranchhod B. Patel, Babu C. Patel and Bharat Patel,
Individually, Jointly and Seve Ily
By: C? 1 V
Shantilal N, Patel, Individually & as President
Date: I- 13 e
Homan[ t77R-tel, individually
Date: -7 x 0
Ranchbod B.'Ta cT Individually
Date: v '1- r 3
t,l ' r L
Bab C. a Individually
Data:; ??f3--??
Bharat Patel, Individually
3
Date: `l 7-(
NOTE: The person or business organization which is the title owner of the Location, as of the date of this Agreement,
must be a named signatory. The liability of all signatories will be joint and several.
13
TOTAL P.11
SHRI PARAS, INC., a Pennsylvania IN THE COURT OF CONIMON PLEAS
Corporation, and PRAFUL C. OF CUMBERLAND COUNTY,
SANGHANI, an adult individual, PENNSYLVANIA
Plaintiffs CIVIL ACTION - LAW
NO: 99-7262
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
ORDER
AND NOW, this day of
2000, upon consideration of
the Briefs and Arguments of counsel, it is hereby ordered that the Preliminary Objections filed by
Defendants, S.A.C. Enterprises, Inc. and Shantilal N. Patel, are granted. It is further ordered that:
Shantilal N. Patel is dismissed as a Defendant in the above-captioned lawsuit; and
2. The claim of fraudulent misrepresentation as set forth in Count III of Plaintiffs'
Complaint against S.A.C. Enterprises, Inc., is dismissed.
BY THE COURT:
J.
i ,
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
JURY TRIAL DEMANDED
PRELIMINARY OBJECTIONS OF DEFENDANTS,
S.A.C. ENTERPRISES, INC. AND SHANTILAL N. PATEL
Now comes, Defendants, S.A.C. Enterprises, Inc. ("S.A.C.") and Shand lal N. Patel
("Patel"), respectfully requesting that this Honorable Court enter an Order granting these
Preliminary Objections, and in support thereof state as follows:
(INTRODUCTION)
On or about December 2, 1999, Plaintiffs, Shri Paras, Inc. (°Paras") and Praful C.
Sanghani ("Sanghani"), filed their Complaint, a copy of which (including Exhibits) is attached
hereto as Exhibit 1, against Defendants in the above-captioned matter, alleging that all
Defendants are liable to them under breach of contract and fraudulent misrepresentation theories.
2. On or about December 6, 1999, Plaintiffs' Complaint was served on Defendants.
In paragraph 6 of Plaintiffs' Complaint, Plaintiffs allege that "on or about April
13, 1999, Sanghani entered into an Agreement of Sale ("Agreement") with S.A.C. to purchase
certain real property and business assets all of which was operating under a Franchise Agreement
with Choice Hotels International, Inc. as'Roadway Inn' (hereinafter the 'Property') located at
1239 Harrisburg Pike, Carlisle, Pennsylvania for the purchase price of One Million Six Hundred
Thousand Dollars ($1,600,000.00)."
4. A copy of the Agreement is attached to Plaintiffs' Complaint as Exhibit "A" and
incorporated herein by reference.
5. In paragraph 7 of their Complaint, Plaintiffs allege that "bn April 19, 1999,
Sanghani assigned his rights under the Agreement to Paris."
6. A copy of the Assignment Agreement is attached to Plaintiffs' Complaint as
Exhibit "B" and is incorporated herein be reference.
In paragraph 8 of Plaintiffs' Complaint, Plaintiffs alleged that "the Franchise
Agreement for the Property had been executed by S.A.C. as Franchisee, as well as Shantilal N.
Patel, et al., individually, jointly and severally."
8. A copy of the aforementioned Franchise Agreement is attached to Plaintiffs'
Complaint as Exhibit "C" and is incorporated herein by reference.
9. Paragraph 9 of Plaintiffs' Complaint alleges that "on April 19, 1999, the parties
settled on the Agreement and S.A.C. conveyed the property to Paris.
10. Paragraph I I of Plaintiffs' Complaint alleges that Paris began operating the motel
after the Property was conveyed to it.
11. Paragraph 12 of Plaintiffs' Complaint alleges that upon operating the motel, Paris
learned that the franchise fees to the motel's Franchisor, Choice Hotels (hereinafter
"Franchisor'), had not been paid and were approximately two (2) years delinquent.
12. In paragraph 15 of Plaintiffs' Complaint it is alleged that "upon signing the
Agreement, Defendants indicated to Paris that if renovations required by the Franchisor
) 1 1
exceeded Twenty Thousand Dollars ($20,000.00) the Agreement could be voided."
13. The allegations set forth by Plaintiffs in paragraph 15 of their Complaint
expressly contradict paragraph 5(b) of the Agreement which pertinently provides as follows:
5. NO ASSUMPTION OF SELLER'S OBLIGATION/LIABILITIES: Except as
otherwise expressly provided herein, buyer shall not, by virtue of consummating
the transaction contemplated hereunder, be deemed to have assumed any
liabilities or obligations of seller with respect to the assets or otherwise, whether
existing as of the date of this agreement or as of the date of closing, including, but
not limited to obligations to any creditors or suppliers, with the exception of the
following: W**
(b) any obligation by reason of franchise agreement with roadway in, with the
exception that in the event that any renovations are required under the franchise
Dby reason of tile transfer ollars ($20,000) or either party the t fma franchise, this ?tagreement exceed Twenty
ill and
Thousand agreement
void.
14. Paragraph 6 of the Agreement states as follows:
6. INSPECTION OF THE ASSETS: Seller has given Buyer and his
representatives full access to the Property and Buyer has made such necessary
inspection as it deems reasonable of the purchase of the Assets, including
equipment, and has reached an informed decision with respect to the purchase of
the Assets. Buyer hereby accepts the condition of the Assets in their "as is"
condition, subject to the covenants, warranties and representations of the Seller set
forth herein. Buyer reserves the right, however, to make a final inspection
immediately prior to settlement to confirm that the location and existence of the
Assets existing at the time of the execution of this Agreement.
15. Despite the aforementioned provisions of the Agreement, paragraph16 of
Plaintiffs' Complaint alleges that "after signing the Agreement, Defendants failed to disclose to
Paras that they had been notified by the Franchiser of numerous panel, list items that require
renovation.
16. Paragraph 17 of Plaintiffs' Complaint alleges that "since the closing date, Paras
has discovered the pinch list items and that the total cost of required renovations will exceed
One Hundred Fifty Thousand Dollars ($150,000.00)."
17. Paragraph 20 of Plaintiffs' Complaint alleges that "Patel personally guaranteed
the Franchise Agreement to Choice Hotels."
18. The basis of the aforementioned allegations of paragraph 20 of Plaintiffs'
Complaint arises from the fact that Patel [and others]signed the Franchise Agreement both
individually and in his capacity of President of S.A.C.
19.' Paragraph 21 of Plaintiffs' Complaint alleges that Plaintiffs "relied on Patel's
representation that the franchise fees had been paid in full and are third party beneficiaries of
Patel's personal guarantee, thus making Patel personally liable for any breach of contract
concerning the Franchise Agreement."
20. Paragraph 25 of Plaintiffs' Complaint alleges that "Patel also personally
represented and/or led Plaintiffs to believe that the franchise fees, as well as other contracts, were
paid in full."
21. Paragraph 27 of Plaintiffs' Complaint alleges that "Plaintiffs relied on
Defendants' representations that there were minimal renovations required by Choice Hotels to
keep the Franchise Agreement."
1. DEMUR AS TO ALL CLAIMS AGAINST SHANTILAL N. PATEL
22. Patel hereby incorporates the allegations of Paragraph 1 through 20 above as if set
forth herein at length.
23. Plaintiffs' Complaint fails to allege that Patel was acting in any capacity other
than that of President, agent, representative, employee and/or assign of S.A.C. at all times
material to their Complaint.
24. The allegations set forth in Plaintiffs' Complaint as well as the inferences
reasonably gleaned from the Exhibits attached thereto support the conclusion that Patel was
acting in his capacity as President, agent, representative, employee and/or assign of S.A.C. at all
times material thereto.
25. Based upon the foregoing, Plaintiffs' Complaint fails to set forth a legally
sufficient claim against Patel for breach of contract, fraudulent misrepresentation as to the
payment of the franchise fees and/or fraudulent misrepresentation as to the amount of
renovations required by Franchisor pursuant to the Franchise Agreement.
WHEREFORE, Defendant, Shantilal N. Patel, respectfully request that this Honorable
Court enter an order granting his Preliminary Objections in the Nature in Demur as to all counts
of Plaintiffs' Complaint as Plaintiffs' Complaint is legally insufficient to support any cause of
action against him individually.
II. DEMUR AS TO PLAINTIFFS' CLAIMS OF BREACH OF CONTRACT
AGAINST PATEL.
26. Patel hereby incorporates the allegations of Paragraph I through 26 above as if set
forth herein at length.
27. Plaintiffs lack standing to assert a claim as a third party beneficiary under the facts
and circumstances of this case.
28. The Franchise Agreement fails to indicate that the parties thereto intended either
of the Plaintiffs to be a third party beneficiary to the Franchise Agreement.
29. In order to be a third party beneficiary to any agreement, the parties to said
agreement must intend that their agreement benefit the third party and said intention must be
indicated in the Agreement itself.
30. Plaintiffs' Complaint fails to set forth a legally sufficient claim for breach of
contract against Patel pursuant to their theory that they are third party beneficiaries of the
Franchise Agreement.
WHEREFORE, Defendant, Shantilal N. Patel, respectfully request that this Honorable
Court enter an order granting his Preliminary Objection in the nature of demurrer and dismissing
him as a Defendant to the breach of contract claim set forth in Count I of Plaintiffs' Complaint.
III. DEMUR AS TO CLAIM OF FRAUDULENT MISREPRESENTATION
PERTAINING TO RENOVATIONS AGAINST PATEL AND S.A.C.
31. Defendants hereby incorporate the allegations of Paragraph I through 29 above as
if set forth herein at length.
32. In order to set forth a claim of fraudulent misrepresentation, the Plaintiff must
demonstrate that he relied upon a representation made by the Defendant which was false and said
misrepresentation caused the Plaintiff to suffer damages.
33. In light of paragraph 5(b) and paragraph 6 of the Agreement, Plaintiffs could not
have relied upon any alleged misrepresentation made by either Defendant pertaining to the
amount of the renovations necessary to satisfy the terms and conditions of the Franchise
Agreement.
34. Based upon the foregoing, Plaintiffs' Complaint fails to set forth a legally
sufficient claim against S.A.C. and/or Patel for fraudulent misrepresentation of renovations
necessary to satisfy the terms and conditions of the Franchise Agreement.
WHEREFORE, Defendants, S.A.C. Enterprises, Inc. and Shantilal N. Patel, respectfully
request that this Honorable Court enter an order granting their Preliminary objection in the
nature of a demurrer pertaining to alleged fraudulent misrepresentation of the amount of
renovations and dismissing Count III of Plaintiffs' Complaint.
Respectfully submitted,
enneth Millman, Esquire
I.D. No. 75272
Leisawitz Heller Abramowitch Phillips, P.C.
2201 Ridgewood Road
Wyomissing, PA 19610-1193
(610) 372-3500
Attorney for Defendants, S.A.C. Enterprises,
Inc. and Shantilal N. Patel
-I
? ?- !t4 l?? i l ?: ? ?7
?I. _
j ..
.. 1
?I
SHRI PARAS, INC., a Pennsylvania IN THE COURT OF COMMON PLEAS
Corporation, and PRAFUL C. OF CUMBERLAND COUNTY,
SANGHANI, an adult individual, PENNSYLVANIA
Plaintiffs CIVIL ACTION - LAW
NO: 99-7262
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I, Kenneth Millman, Esquire, do hereby certify that a true and correct copy of
Preliminary Objections of Defendants, S.A.C. Enterprises, Inc. and Sbantilal N. Patel, was
served on the following person, at the following address, via United States First Class Mail,
postage prepaid.
James N. Clymer, Esquire
23 N. Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
I understand that statements herein are made subject to the penalties of 18 Pa. C.S. 4904
relating to unsworn falsification to authorities.
NNETH [ LI AN
Leisawitz Heller Abramowitch PHILLIPS, P.C
2201 Ridgewood Road
Suite 400
Wyomissing, PA 19610
(601) 372-3500
Dated: December 21, 1999
EXHIBIT 1
I m
9b
IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION-LAW
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
v
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
NO. '72fo a. Cw-Zfi, T4A^^
NOTICE
You have been sued in Court. If you wish to defend against the claims set forth in the
following pages, you must take action within twenty (20) days after this Complaint and Notice
are served, by entering a written appearance personally or by attorney and filing in writing with
the Court your defenses or objections to the claims set forth against you. You are warned that if
you fail to do so the case may proceed without you and a judgment may be entered against you by
the Court without further notice for any money claimed in the Complaint or for any other claim
or relief requested by the Plaintiff. You may lose money or property or other rights important to
you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO
NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE
OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP.
Court Administrator
4°i Floor
Cumberland County Courthouse
Carlisle. PA 17013
(717) 240-6200
RON,
TRUE COPY '*
in ?asilmc^Y 1 l ?ir% ur io art my han0
and tha seal el Said Lour, sl (,a?ltsla, Pa-
i
+a0
IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION-LAW
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual.
Plaintiffs
v
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
COMPLAINT
NO. 9 q1- 7 Ito 1 J'' 7-e&,-,
1. Plaintiff SHRI PARAS, INC. (hereinafter "Paras") is a Pennsylvania Corporation with
a place of business at 1239 Harrisburg Pike, Carlisle, Cumberland County, Pennsylvania 17013.
2. Plaintiff PRAFUL C. SANGHANI (hereinafter "Sanghani") is an adult individual
residing at 1239 Harrisburg Pike, Carlisle. Cumberland County, Pennsylvania 17013
3. Defendant S.A.C. ENTERPRISES, INC. (hereinafter "S.A.C. ") is a Pennsylvania
Corporation with a business address of c/o Econo Lodge, 860 North Front Street, Wormleysburg,
Cumberland County, Pennsylvania.
4. Defendant SHANTILAL N. PATEL (hereinafter "Patel") is an adult individual
residing at Econo Lodge. 860 North Front Street, Wormleysburg, Cumberland County,
Pennsylvania.
5. All acts alleged herein were performed by the parties or their duly authorized agents.
6. On April 13, 1999, Sanghani entered into an Agreement of Sale (hereinafter
"Agreement") with S.A.C. to purchase certain real property and business assets all of which was
operating under a Franchise Agreement with Choice Hotels International, Inc. as "Rodeway Ind"
(hereinafter the "Property") located at 1239 Harrisburg Pike, Carlisle, Pennsylvania for the
purchase price of One Million Six Hundred Thousand ($1,600,000.00) Dollars. A copy of this
Agreement of Sale is attached hereto and incorporated herein as Exhibit "A".
7. On April 19, 1999, Sangltani assigned his rights under the Agreement to Paras. A
copy of the Assignment Agreement is attached hereto and incorporated herein as Exhibit "B".
8. The Franchise Agreement for the property had been executed by S.A.C. as Franchisee,
as well as Shmrtital N. Patel, et. al. individually,.jointly and severally. A copy of the Franchise
Agreement is attached hereto and incorporated herein as Exhibit "C".
9. On April 19, 1999, the parties settled on the Agreement and S.A.C. conveyed the
Property to Paras.
10. Pursuant to the Agreement, the Properly included all "contracts and contract rights"
related to the property and held by S.A.C. The Agreement also provides as follows:
Covenants. Remesentations and Warranties of
Seller. Seller hereby agrees that the following
representations. covenants and warranties are true
and accurate and will be true and accurate through
closing hereunder but, unless specifically provided
for herein, will not survive closing hereunder:
(i) That Seller has disclosed to Buyer all material
contracts, agreements and commitments to which
the Seller is a party (the "Contracts"). The
Contracts are legally valid and binding and in full
force and effect; The Seller has performed all
obligations on its part to be performed as of the
Closing; and there are no material defaults by the
Seller thereunder. There have been no
modifications, alterations, amendments or
cancellation of all), of the same. This shall survive
Closing.
(s) As of the Closing, all the Seller's payables for the
operation of the Motel including, without limitation,
salaries, fringe benefits, commissions, taxes,
insurance, telephone, cable TV, utilities, supplies,
franchise fees, rent and other charges under
equipment leases, and charges and royalties shall be
paid current and none of the foregoing shall be past
due. This shall survive Closing.
11. After the conveyance of the Property, Paris took over the operation of the motel
located thereon.
12. Upon operating the motel. Paris learned that the franchise fees to the motel's
Franchisor, Choice Hotels (hereinafter "Franchisor'), had not been paid and were approximately
two years delinquent.
13. in May, 1999, the Franchisor terminated its services to Paris because of the non-
payment of the Franchise fees of the previous owner. S.A.C.
14. The Franchisor then immediately ceased forwarding any reservations to Paris,
resulting in a severe, adverse financial impact on Paras.
15. Upon signing the Agreement.. Defendants indicated to Paris that if renovations
required by the Franchisor exceeded $20,000.00, the Agreement could be voided.
16. After signing the Agreement. Defendants failed to disclose to Paras that they had
been notified by the Franchisor of numerous punch list items that required renovation.
17. Since the closing date, Paris has discovered the punch list items and that the total
cost of'required renovations will exceed $150.000.00.
COUNT I; BREACH OF CONTRACT
PARAS and SANGHANI v. S.A.C. anti PATEL
18. Paragraphs I through 17 are incorporated herein as though stated in full.
19. S.A.C.'s failure to pay Franchise fees for two years prior to the sale of the Premises
to Paris constitutes a serious and substantial violation of the Agreement, specifically a breach of
the Covenants, Representations, and Warranties listed in Paragraph 7, Subparagraphs (i) and (s).
20. Patel personally guaranteed the Franchise Agreement to Choice Hotels.
21. Plaintiffs relied on Patel's representation that the Franchise fees had been paid in fill
and are third party beneficiaries of Patel's personal guarantee, thus making Patel personally liable
for any breach of contract concerning the Franchise Agreement.
22. As a direct and proximate result of Defendants' breach of contract, Plaintiffs have
suffered the loss of Franchisor reservations, and a substantial loss of revenue believed to be at
least $50,000.00.
WHEREFORE, Plaintiffs demand judgment in their favorand against Defendants in the
amount of Fifty Thousand ($50,000.00) Dollars, or such other amount that Plaintiffs can prove at
trial, together with costs and attorney fees as permitted by law.
COUNT II• FRAUDULENT MISREPRESENTATION
PARAS and SANGHANI v. S.A.C. and PATEL
23. Paragraphs I through 22 are incorporated herein as though stated in full.
24. Paras relied on the covenants, representations and warranties of S.A.C. in the
Agreement that the Franchise Agreement was paid current.
25. Shantital N. Patel also personally represented and/or led Plaintiffs to believe that the
Franchise fees, as well as all other contracts, were paid in full.
26. Defendants' false representations that their Franchise Agreement was paid current to
Closing constituted fraudulent misrepresentation on Defendants' part.
27. As a result of Defendants' fraudulent misrepresentations, Plaintiffs have suffered
losses of at least $50,000.00.
WHEREFORE, Plaintiffs demand judgment in their favor and against Defendants in the
amount of Fifty Thousand ($50,000.00) Dollars, or such other amount that Plaintiffs can prove at
trial, together with costs and attorney fees as permitted by law.
?rYk?
COUNT III: FRAUDULENT IVIISREPRESENTATION
PARAS and SANGHANI v. S.A.C. and PATEL
26. Paragraphs 1 through 25 are incorporated herein as though stated in full.
27. Plaintiffs relied on Defendants' representations that there were minimal renovations
required by Choice Hotels to keep the Franchise Agreement.
28. As a result of Defendants' false representations that there were no substantial or
serious renovations required, Plaintiffs have suffered losses of approximately $150,000.00.
WHEREFORE, Plaintiff demands judgment in its favor and against Defendant in the
amount of One Hundred and Fifty Thousand ($150,000.00) Dollars together with costs and
attorney fees as permitted by law.
Respectfully Submitted
CLYMER & MUSSER, P.C.
by. lam er
Attorney or Plaintiff
23 North Lime Street
Lancaster. PA 17602
(717) 299-7101
ID# 27151
r
VERIFICATION
I, Praful C. Sanghani, President, am an authorized officer and representative of Shri Paras,
Inc.; and I verify that I am familiar with the facts contained in the within Complaint and that the
said facts and statements made therein are true and correct to the best of my knowledge,
information and belief. I understand that false statements herein are subject to the penalties of 18
Pa. C.S. 4904 relating to unsworn falsification to authorities.
Praful C. Sanghani, President
Dated: a/ I ( ` I
k.tll' _
fi
4
t
!1f.
VERIFICATION
I, verify that the statements made in the foregoing Complaint are true and correct to the
best of my knowledge, information and belief.
I understand that false statements therein are made subject to the penalties of 18 Pa.C.S.A.
Sec. 4904 relating to unsworn falsification to authorities.
Prafal C.Sanghani
Date: I11 1 1 g l
AGREEMENT OF SALE
This Agreement is entered into this L? ay of t`/ 1999 by and Between
S.A.C. Enterprises, Inc., A Pennsylvania Corporation, (hereinafter referred to as "Seller")
and
Praful C. Sanghani an individual, or his assigns (hereinafter referred to as "Buyer")
WHEREAS, Seller is the owner of certain three tracts of land located in Middlesex
Township, Cumberland County, Pennsylvania, more particularly described in Exhibit "A"
attached hereto and made a part hereof with a motel, the "Rodeway Inn" situated thereon;
and
WHEREAS, Buyer wishes to purchase the aforesaid real estate together with all
equipment, inventory, furniture, appliance and fixtures located thereon;
WHEREAS, the parties have agreed to the terms stated,
NOW, THEREFORE, in consideration of the purchase price-and other considerations
expressed herein, intending to be legally bound, the parties hereto agree as follows:
. 1. ASSETS: Subject to the terms and conditions of this Agreement, Seller hereby agrees
to sell, transfei, 'convey and assign to Buyer, and. Buyer hereby agrees for the consideration
set forth herein to purchase and accept from Seller a motel business Imown as the Rodeway
Inn, including but not limited to all of the following property, both real and personal (the
"assets").
c (a) Real Estate. All right, title and interest of Seller in those premises
described in Exhibit "A" attached hereto, and together with all singular the
right and appurtenances pertaining thereto, including all right, title and interest
of Seller in and to adjacent streets, alleys and rights-of-way.
(b) Tancible Personalty. All right, title and interest of Seller in all fixtures,
machinery, equipment, furniture and items of inventory located on the afore-
described real estate, along with all inventory and supplies, business records,
customer lists, contracts and contract rights, vendor warranties, reservations,
rights and benefits in leases, furniture and fixtures.
2. PURCHASE PRICE: The total purchase price for the Assets to be sold, assigned,
conveyed and transferred shall be One Million, Six Hundred Thousand ($1,600,000.00)Dollars
("Purchase Price"), payable as follows:
(a) $25,000.00 to be paid upon execution of this Agreement, which shall
be held in escrow by Seller's Attorney;
i?x 4th .4 A
Agreement of Sale between S.A.C. Enterprises Inc. and Praful C. San hani
(b) The balance of $1,575,000.00 to be paid at settlement.
3. ZONING CONTINGENCY: It is understood that the Buyer intends to use the
premises as motel. If the premises cannot be so used due to contrary zoning restrictions,
deed restrictions, environmental regulations, township or other governmental regulations
then this agreement is voidable at the option of Buyer.
4. ALLOCATION OF PURCHASE PRICE: The Purchase Price shall be allocated among
the assets being purchased as follows:
Real Estate: ??/ 3 S0, Odd-
Personalty: a v?0 00d -
5. NO ASSUMPTION OF SELLER'S OBLIGATIONS/LIABILITIES: Except as otherwise
expressly provided herein, Buyer shall not, by virtue of consummating the transaction
contemplated hereunder, be deemed to have assumed any liabilities or obligations of Seller. .
with respect to the Assets or otherwise, whether existing as of the date of this Agreement, or .
as of the date of Closing, including, but not limited to obligations to any creditors or
suppliers, with the exception of the following:
(a) Obligation to Alan G. Leisawitz, Esq., on account-of legal fees in the
amount of $10,402.00 for Tax assessment appeal for Tax year 1999, which
amount shall be prorated between the parties for Calendar year 1999.
(b) Any obligations by reason of Franchise Agreement with Rodeway
Inn, with the exception that in the event that any renovations are required
under the franchise agreement by reason of the transfer of the franchise, they
shall not exceed $20,000.00, or either party may declare this agreement null and
void.
(c) All leases including television and telephone leases, provided that
payments are current as of the date of Closing.
6. INSPECTION OF THE ASSETS: Seller has given Buyer and his representatives full
access to the property and Buyer has made such necessary inspections as it deems
reasonable of the purchase of the Assets, including equipment, and has reached an informed
decision with respect to the purchase of the Assets. Buyer hereby accepts the condition of
the Assets in their "as is" condition, subject to the covenants, warranties and representations
of Seller set forth herein. Buyer reserves the right, however, to make a final inspection
Agreement of Sale between S.A.C. Enterprises, Inc. and Prafu: C. San! nenl Pape 3
immediately prior to settlement to confirm the location and existence of the Assets existing at
the time of the execution of this Agreement.
7. COVENANTS. REPRESENTATIONS AND WARRANTIES OF SELLER: Seller hereby
agrees that the following representations, covenants and warranties are true and accurate
and will be true and accurate through closing hereunder but, unless specifically provided for
herein, will not survive closing hereunder:
(a) That Seller is the lawful owner of the property which is the subject of
this agreement and that Seller has the right to sell same. This shall survive
Closing.
(b) That the Seller has good and marketable title to all machinery
equipment, fixtures and inventory to be transferred to Buyer at Closing. This
shall survive Closing.
(c) That Seller has not received any notice of any pending condemnation,
appropriation, eminent domain or similar proceedings effecting all or any
portion of the subject premises, nor has Seller received any notice as to the
existence of any assessment or special assessment effecting the premises. This
shall survive Closing.
(d) That Seller has filed local, state, and federal tax returns and that no
local, state, and federal taxes are owing. This shall survive Closing.
(e) That Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the Commonwealth of Pennsylvania, with full
corporate authority to carry on its business and affairs as presently conducted
and to own, lease and operate its properties. The Seller has no subsidiaries nor
does it own, of record or beneficially, any capital stock or other securities of any
other corporation, nor any other business organization or association. This shall
survive Closing.
(f) That Seller has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein, and this
Agreement constitutes the legal, valid and binding obligation of the Seller and is
enforceable in accordance with its terms, Neither the execution or delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, violates, conflicts with, or constitutes a default under (1) any contract,
instrument, agreement or commitment of which the Seller is a party, or to which
any of the Purchased Assets of the Seller are subject or (2) the Articles of
Incorporation and By-laws of the Seller nor is any consent, approval or waiver
required as a condition of the Seller's consummation of the transactions
contemplated by this Agreement. This shall survive Closing.
-r, 1lgmement of sale between S.A.C. Enterprises, Inc. and Praful C. Sanghani """` ' ":? Pagexl=?"
(g) That Seller has good and marketable title to the Purchased Assets
which it purports to own, real and personal, tangible and intangible, and/or
which are shown on the latest financial statements for the Seller, free and clear
of all liens, encumbrances or security interests. This shall survive Closing.
(h) That Seller has no knowledge of nor has the Seller received any
written notice of any threatened or pending suit, action or legal, administrative,
arbitrative or other proceedings pending against the Seller with respect to the
Business or affecting the Purchased Assets, and, to the Seller's knowledge, the
Seller is not presently under investigation with respect to any charge
concerning violation of any law or administrative regulation, federal, local or
state, domestic or foreign, with respect to either the Business or the Purchased
Assets, except as more fully disclosed as follows:
(1) Claim before Pa. Human Relations Commission by
Michelle D. Janney, PHRC Docket # E88127D. Seller shall assume
full responsibility to the defense and payment, if any, of this claim,
and indemnify, defend and hold Buyer harmless for the same. This
shall survive Closing.
(i) That Seller has disclosed to Buyer all material contracts, agreements
and commitments to which the Seller is a party (The "Contracts"). The
Contracts are legally valid and binding and in full force and effect; the Seller has'
performed all obligations on its part to be performed as of the Closing; and there
are no material defaults by the Seller thereunder. There have been no
modifications, alterations, amendments or cancellation of any of the same. This
shall survive Closing.
(j) That Seller's use of the Purchased Assets and operation of its
Business, to the Seller's knowledge, has been in material compliance with all
federal, state and local laws, rules, regulations, ordinances, codes and orders
("Laws") governing the operation of the Seller's or the use of the Seller's assets.
As of the closing, the Seller shall have in full force and effect all necessary
permits, clearances and other government licenses, permits and approvals
required for the conduct of the Seller's business. To the best of Seller's
knowledge, there are no material problems with respect to adequate water
supply, sewage and waste disposal facilities or air, water or other
environmental pollution.
(k) That no pending or threatened challenge exists as to any of the
Seller's intangible asset, proprietary right or information possessed, used or
held by the Seller in connection with its business. The Seller has not granted in
writing to any person, firm or corporation any right, license or privilege in any
intangible asset, proprietary right or information that is owned by the Seller or
Agreement of Sale between S A.C Enterprises Inc. and Prafcl r:, =angbani . •-' ^'" Page 5
to which the Seller has any right or interest and is used by the Seller in its
business. This shall survive Closing.
(1) That Buyer has had an opportunity to review all employment and
personnel records of all those employed by Seller in the operation of the Motel.
The Seller has no written or oral employment agreements with any of its
employees not terminable at will.
(m) That Seller does not maintain in respect of its employees any
"employee benefit plans" ("Plans"), as defined in Section 3(3) of the
Employment Retirement Income Security Act of 1974, as amended ("ERISA")
and the Seller has not directly or indirectly sponsored, maintained or
contributed to any Plans with respect to the Employees. The Seller is not a
"fiduciary", as defined in Section 3(21) of ERISA, or an "employer", as defined in
Section 3(5) of ERISA, with respect to any Plans. The Seller is not part of any
multi-employer plan as defined in Sec.. 4001 of the Internal Revenue Code of
1986, as amended, or within the meaning of Sec. 3(3 7) of ERISA. This shall
survive Closing.
(n) That Seller is not a party to any union contract or collective bargaining
agreement and there have been no attempts to organize o;.unionize any of the.
Seller's employees during the past five years. No unfair labor practice charge is
pending or threatened against the Seller before the National Labor Relations
Board or any state or local agency, no labor strike, picketing, boycott or other
labor dispute affecting the Seller is pending or threatened in writing, and no
grievance is pending against the Seller. This shall survive Closing.
(o) All premiums due and payable on all liability insurance policies
maintained in respect of the Seller's operation of the Motel, including, without
limitation, worker's compensation insurance, and all payments due and payable
under all Plans (defined above) have been paid to date, and the Seller has not
received any notice within the past three years of material violation of any such
policies, from the insurers thereunder, or of the Plans, which have not been
corrected. The Seller knows of no individual claim pending under any such
policies. This shall survive Closing.
(p) That there are no outstanding citations issued by, defaults asserted
by, or any claims asserted or threatened against the Seller by, any person or
government agency in respect of discrimination in employment, occupations
safety and health matters or environmental or hazardous materials, or other
governmental regulation of business or employers, other than as set forth
herein. This shall survive Closing.
• *?• AgreenldntW Sale between S.A.C. Enterprises, Inc, and Praful C. Sanghanl - •Poge+?rr.;-•y;,
(q) That Seller has no knowledge of any liabilities, contingent or
otherwise, arising from or involving any state or federal environmental laws
which would be applicable to the use or condition of any of the Purchased
Assets or the conduct of the Business.
(r) That if Seller is holding security deposits and/or advance deposits for motel
room rentals, they shall be disclosed to Buyer prior to Closing.
(s) As of the Closing, all the Seller's payables for the operation of the
Motel, including, without limitation, salaries, fringe benefits, commissions,
taxes, insurance, telephone, cable TV, utilities, supplies, franchise fees, rent and
other charges under equipment leases, and charges and royalties shall be paid
current and none of the foregoing shall be past due. This shall survive Closing.
(t) As of the Closing, all the Seller's taxes and obligations for the payment
of taxes, including, but not limited to, income taxes, withholding and other
employment related taxes, sales tax, hotel tax, real estate taxes, capital stock
tax, shall be paid current and none of such taxes or obligations for the payment
of taxes shall be overdue. This shall survive Closing.
(u) As of the Closing, the Motel operation will have an adequate quantity
of inventory and supplies, i.e., linens, towels, etc.
(v) Between the date hereof and the completion of the Closing, the Seller,
shall:
(1) Operate the Motel in the ordinary course and use their
best efforts to preserve their relationships with the Seller's
vendors, service providers, licensees, subtenants and all others
with whom it deals and keep available the services of its present
employees, agents and contractors and preserve all good will and
value existing in respect of the Motel and its operation.
(2) Use its diligent efforts to continue its current practice of
performing all of its obligations under the leases, operating
contracts and all other third party agreements.
(3) Keep the Motel and all equipment, furniture, fixtures,
inventory and supplies in good condition and good working order
and continue to perform all normal repairs and maintenance
thereto.
i' k?s
(4) Continue to operate the Motel in the usual and
customary manner, not commit or allow to exist any nuisance upon
the Property.
(w) Between the date hereof and the completion of the Closing, the Seller
shall not:
(1) Change materially or adversely the general character of
the seller's operation of the Motel.
(2) Remove or allow the removal of any personal property,
any fixtures, any mechanical equipment or any other material item
used in the operation of the Motel (with the exception of the
refrigerator in the managers apartment behind the office), except
where authorized or required under the terms of the, leases in
effect on the date hereof, or to maintain the Motel by replacement
with similar fixtures, equipment or items of at least equal value.
(3) Reduce the insurance now held and maintained by the
Seller covering the Motel and its operation of the Property.
(4) Enter into any arrangements, licenses, subleases or other
undertaldng or arrangements with respect to the Motel or modify
any existing agreements including service contracts, unless
otherwise approved by Buyer.
8. POSSESSION: Possession of the property, shall be delivered to Buyer at Closing and
not prior thereto.
9. ALLOCATION OF INCOME AND EXPENSES: Rent, if any, and all other water,
sewer, electricity and other utilities shall be adjusted and pro-rated to date of Closing.
10. REAL ESTATE TAXES: Real estate and other state and local taxes, charges and
assessments, along with sewer and water rents, if applicable, shall be apportioned as of the
date of Closing on the basis of the year of assessment and on the fiscal tax year of the
authority levying the same. Any service contracts, television and telephone leases shall also
be apportioned as of the date of settlement.
11. CLEARANCE CERTIFICATE: Seller shall procure a Clearance Certificate from the
Pa. Department df Revenue. In the event the above is not obtained prior to closing, Seller
expressly warrants and represents that Seller has no liability for unpaid taxes to the
Commonwealth of Pennsylvania. The provisions of this Agreement shall survive the closing.
C. Sangho
all within obligations from Purchaser to Sellers the payment of damages for the "talang" shall
be divided between the Purchaser and the Sellers as their respective interests then may
appear.
19. SURVIVAL OF COVENANTS REPRESENTATIONS AND WARRANTIES: Unless it is
specifically provided for in this agreement, none of the covenants, representations and
warranties made by Seller hereunder shall survive Closing. No warranties or representations,
if any made, concerning the condition or status of any of the realty or personalty shall survive
Closing, as all such property is purchased "AS IS", without warranty.
20. NAME: The use of the name of the motel or variation thereof shall be assigned to
Buyer, subject to approval under the Seller franchise agreement with Rodeway Inn.
21. NOTICES: All notices and other communications hereunder shall be in writing and
shall be mailed by certified mail, return receipt requested, to the following addresses, or to
such other address as any party hereto shall hereafter designate for himself or itself by
written notice to the other party:
To Buyer:
c/o James Clymer, Esq.
23 N. Lime Street
P.O. Box 1766
Lancaster, Pa 17608-1766
To Seller:
c/o John W. Purcell, Jr., Esq.
1719 N. Front Street
Harrisburg, PA 17102-2392
For purposes of this Agreement, notices shall be deemed delivered on the date deposited in
the mail.
22. GOVERNING LAWS PARTIES OF INTEREST: This Agreement shall be governed
by and interpreted according to the laws of the Commonwealth of Pennsylvania (but not the
law of conflicts of law) and will bind and inure to the benefit of the parties hereto and to their
respective heirs, executors, administrators, successors, assigns and personal representatives.
23. EXECUTION AND COUNTERPARTS: This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an original, but
all of which together constitutes one and the same instrument.
24. ENTIRE AGREEMENT: This Agreement and the exhibits hereto set forth, all of the
promises, representations, warranties, covenants, agreements, conditions and undertaldngs
between the parties hereto with respect to the subject matter hereof, and supersede all prior
and contemporaneous agreements and understandings, inducements or conditions, express
Ay(reet..ant a: Sale between S.A.C. Enterprises, Inc. and Praful C. Sanahani
Esme
or implied, oral or written, except as contained herein. This Agreement may not be changed
orally, but only by an Agreement in writing, duly executed by or on behalf of the party or
parties against whom enforcement of any waiver, change, modification, consent or discharge
is sought.
25. SETTLEMENT: Settlement in accordance with this Agreement shall be held on or
before 30 days from the execution of this agreement in order to provide Buyer the opportunity
to conduct "due diligence". Time is of the essence.
26. FURTHER ASSURANCES: Both parties agree to execute and deliver to the other
such additional documents or agreements as may be reasonably necessary for the
consummation of the transactions contemplated by this agreement.
27. OPERATION OF THE PROPERTY- Both parties agree that until the date of
settlement as set forth herein, or as extended by mutual agreement of the parties, Seller shall
continue to operate and manage the Property in accordance with good business practices,
and shall not enter into any new leases or amend any current leases without Buyer's written
approval.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals.
WITNESS:
S.A.C. Enterprises, Inc.
President
A?z
PrafW U, San
ghani
ASSIGNMENT AGREEMENT
Agreement made this 19" day of April, 1999, by and between PRAFUL C. SANGHANI
with a mailing address of 1615 South Main Street, Blacksburg, Virginia 24060 ("Assignor") and
SHRI PARAS, INC., a Pennsylvania Corporation with its registered office at 1239 Harrisburg
Pike, Carlisle, Pennsylvania 17013 ("Assignee"),
WHEREAS, by date ofApril/3 , 1999, S.A.C. ENTERPRISES, INC., a Pennsylvania
Corporation, entered into an Agreement of Sale ("Agreement') as Seller for the sale of certain
real estate and motel knows as Rodeway Inn and related facilities ("Roadway Inn") located at
1239 Harrisburg Pike, Carlisle, Pennsylvania 17013 to Assignor; and
WHEREAS, Assignors desire to relinquish and assign their rights under the Agreement
of and Assignee is willing to assume the obligations thereof and accept such assignment.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties, intending to be legally bound hereby covenant and agree as
follows:
L Assignor hereby assign, grant release and quitclaim to Assignee all of their right, title
and interest in and to the Agreement dated April] 3 , 1999 for the purchase of the Rodeway Inn
facility.
2. Assignee hereby agree to assume and undertake all obligations and responsibilities of
the Agreement and do further agree to hold harmless, defend and indemnify Assignor for any
liability Assignor may incur under the terms of said Agreement.
IN WITNESS WHEREOF, the parties have hereunto their hand and seal the date and year
first above written.
ASSIGNOR:
GSM UY`".
Praful C. Sanghani
SHRI PARRS, INC., a Pennsylvania Corporation
arrw
By:
Praful C. Sanghani
E
CORPORATE RESOLUTION
I hereby certify that I am the duly elected and qualified secretary of S.A.C.
Enterprises, Inc., and that the following is a true and correct copy of the Resolutions
adopted at a timely called meeting of the Board of Directors held in accordance with
15
the by-laws on the day of April, 1999.
A quorum being present, upon Motion duly made, seconded and unanimously
carried the following Resolution was had:
"Resolved, that this corporation is authorized to sell and transfer the
motel known as Rodeway Inn, located at Route 11, Harrisburg Pike,
Carlisle, Middlesex Township, Pennsylvania, along with all rights and
obligations therein, including the real estate, furnishings, equipment,
name, franchise, and other property attendant to the conduct of the
business known as Rodeway Inn, for the sum of One Million Six
Hundred Thousand ($1,600,000.00) Dollars; and
Further resolved, that the officers of this corporation be authorized,
empowered and directed to execute a Deed, Bill of Sale and other such
agreements, writings and documents as may be necessary to effectuate
the foregoing."
In Witness Whereof, I have hereunto affixed my name as secretary and have
caused the corporate seal of said corporation to be hereto affixed this
April, 1999.
WX-14-1.17'J 10:419 PURCELL,KRU5 &.HALLER 717 233 1149 P.02/11
11/97
_ PA 128•PWIN
ROI)EWAY YNNO
FRANCHISE AGREEMENT, s r
THIS GREEMENT Is made In Silver Spring, Maryland, effective on the fs?.
199, between Choice Hotels International, Ire., a Delaware corporation ("we say of
Inc., a Pennsylvania Corporation, Sbantilal N. Patel, Hemant J. Patel, Ranehh
" or od B. Pahl, Babu C. Patel slid
Hharst Patel, Individually, Jointly and Severally ("you").
We and you agree:
1 Dallnitions. In addition to the terms which are defined In other parts of this Agreement, the following
tmns shali have the Indimted mosoings:
a. "Hotel" means the property at 1239 Harrisburg Pike, Carlisle, PA 17013 ("Location") and
includes the building, land and all Improycilitnts, structures, fixtures, ameie, equipment, furn
privileges and properties, The Hotel will be operated only under the name RODEWAY INN® imre and related rights,
b. "Rentable Rooms" mesas 102, which Is and shall be the total number of rentable sleeping rooms in
the Hotel.
c. "Designated Representative" means your representative for matters about this Agreement. Until
you change the Designated Representative under section 15 below, your Designated Representative is Shantlial N.
Patel whose address is c% Econo Lodge, 860 N. Front Street, Wormeysburg, PA 17043,
d. "Opening Date" means the date on which you begin to rent sleeping rooms to the public at the
Hotel under this Agreement Gros and meeting rooms at thesHotel, including cashn and c ed t transactionrenl, sale, use or s,?whether or notccoleettdobfsleeptng rooms
It
also
-Includes any proceeds of business interruption Insurance, but does not include taxes required by law r venu es from
telephone tails, vending machines, room service or food and beverages sales. ,
E "Hotel Goods" means ail furniture, fixtures, equipment, signs and supplies used in the construction
and operation of the Hotel.
9. "Marks" means the trademarks, trade names, service marks and logos RODEWAYe, RODEWAY
INN' and the related logo(s), including designs, stylized letters, and colors that we permit you to use at the Hotel and in
the
advertising for. Hotel, Ind any other additional or substituted trademarks, trade names, service marks or logos which
we subsequently y adoPt'and 1, authorize you in writing to use,
h. "Manuals" means our published materials containing, among other things, our recommendations'
for constructing, equipping. furnishing, supplying, operating, maintaining and marketing the Hotel.
I. "Rules and Regulations" means our published materials containing, among other things, our
Ckl??b?? C
RPR-14-1999 10:40
PURCELL,KRUG & HALLER 717 233 1149 P.03i11
Standards and requirements for constructing,
the Hotel. equipping, Pomishing, supplying, operating, maintaining and marketing
j. "System" means our system (as it may be modified by us from time to time) for providing hotel
accommodations with a high standard of service, courtesy and cleanliness using the Marks and includes our advance
reservation system, our business referral and credit curare agreements and those Identifying characteristics as ad may
from time to time reasonably require.
s. Grant of License. We grant to you a non-exclusive license and the marks RODEWAYm
and RODEWAY INN ° together with the designated logo hl operatingtotheuseHotelSystem an
other Marks.
the. You a not Mauthorized arks R to use the
3. Term. The tens of this Agreement ("Term") is from the date this Agreement is signed by both parties to
the date 20 years after the Opening Date, However, either of us has the right to terminate this Agreement on any
armivernry date of the Opening Date by giving at least three tnonths' priorwritten notice to the other.
4. Fees and Reports,
A. Affiliation Fee When you sign this Agreement, you pay us an affiliation fee of SS,00o.00
("Affiliation Fee"). We earn the Affiliation Fee when both parties sign this Agreement The q(filiation Fee Is non-
refhndable. Any moneys which you paid to us as an application fee w1116e credited to the Affiliation Fee,
b. Ro al F e. Beginning on the Opening Date, you will pay us 3.5% of your Gross Room
Revenues each month during the Tenn as a Royalty Fee, OEE?gpgHgYOU Oil
you w
l pay us a
Marke
ing Fee of 1.250/. of
your Gross Room Revenues each month during the Terrm. Wemaymerease the (Marketing Fee fortinereases in to anion
or costs of advertising, publicity, public relations, or marketing so long as any Marketing Fee Increases apply to all or
most of the U.S. hotels In the System. ly
d. Reservation Pee. Beginning an the Opening Date, you will pay us a Reservation Fee Increases es of
your Gross Room Revenues each month during the Term. We may, incmase the Reservation Fee for of 1.25
in
Inflation or other costs so long as any Reservation Fee increases apply to all or most of the U.S. hotels in the System.
SEE ADDENDUM
e• p
calend ayments„d RED rts Beginning on the Opening Date, within
calendar month,
you will send us 10 days after the end of each
other related information a statement on our form showing the Hotel's Gross Room Revenues, Occupancy and
that we request you will certifyanddratyouyourwillreportspayareustruethoseandamounts b accurate, tie will bill you far
amounts due on or about ere 15th day of each month
y
, the first day of the
following month. YOU Agree that timely payment of all fees is of the essence of this Agreement. You also agree that
we may apply payments which you make in such order as we may determine regardless of any contrary language you
may indicate. You will participate in computerized information reporting programs that we may adopt for use by hotels
in the System. You may need to buy computer hardware and related telephone services to participate in this program.
If you do not send us the required reports on time, we will estimate your Gross Room Revenues for interim billing
purposes, and you must pay us a late charge of 1.5% of your previous month's Continuing Franchise Fee, Marketing
Fee and Reservations Fee, but not less than S100. Interim bills will be considered accurate until we receive Any late
monthly reports.
f, Keeoin, _e R mcsis, You will keep at the Hotel or, if you notify us in writing, principal
business, for at least 3 years, accurate Hotel accounts, books, records and data, fncluding lgfotmationyouron Hatelplaceroomof
rentals, Gross Room Revenues and profitability ("Hotel Data"), you will allow us to examine, d
Data during your normal business hours, if we request in writing, you will send us copies of thaeuHotand c
itel Detaopy. itithe we Hotel
find
n by an audit of the Hotel Data that you underpaid any fees due us under this Agreement, you must pay us all U we i (d.,,.
aersud `' '71'7 233 1149 P,04/11
APR-14-1999 10:41 PURCELL,KRUG & HALLER
amounts plus interest at the rate in section 4.g below. If you underpaid us by more than 5% of fees payable during the
-period covered by this audit, you must also'pay tha•reasobawe cotta of the audit
g, i tere . You will pay us interest on amounts not paid on time at the rate of 1,5% per month or
portion of a month, but not more than the maximum interest rate permitted by applicable laws.
5. our Duties. We will:
a, Loan to you one copy of the current Manuals and of the Rules and Regulations, These are our
property and we may change them periodically;
b. Periodically Inspect the Hotel, evaluate your compliance with this Agreement and the Rules and
Regulations, and advise you on changes necessary to bring the Hotel into System compliance;
c. Provide national and regional advertising, promotion, publicity, marketing research, System
programs and related activities as we determine to be appropriate for the System. These services may be combined
with other hotel systems that we or our affiliates operate in our sole discretion, Periodically, we will publish and
distribute to the traveling public a directory of all System hotels in good standing:
d. Provide an advance reservation system for your Hotel and for other hotels which belong to the
System (and, if we choose to do so, for other hotel systems that we or out affiliates operate); and
e. Except as otherwise permitted, maintain in confidence all Information you provide us about the
Hotel's operations and profitability, including Hotel Data.
6. Your Duties. You will:
e. operate, famish, maintain and advertise the Hotel according to the Agreement and the Rules and
Regulations. You will,purchase the start-up materials and training service package that we designate and have those
items at the Hotel prior to the Opening Date, You must keep current your copy of the Manuals and of the Rules and
Regulations and comply with any changes that we make in the Rules and Regulations and to the System. If a dispute
arises, our copy of the Manuals or Rules and Regulations will control. You may not share the confidential Information
in the Manuals or the Rules end Regulations except with your authorized employees;
b. Establish and maintain a high ethical and moral standard in connection with your activities and the
operation of the Hotel;
c. Not permit the Hotel to be used for any purpose or activity not contemplated in this Agreiment
without our written consent;
d. Send the Hotel general manager(s), at your expense, to our training programs;
e. Obtain and display prominently at the Hotel, our approved Illuminated exterior signs. You must
maintain these exterior signs in good working order at all times. in displaying the signs, you are responsible for
complying wlth all applicable laws or regulations;
C Obtain, install and maintain at the Hotel our designated property management system, and
participate in our advance reservation system, making reservations and accepting reservations using required
equipment, software and procedures;
S, Allow us or our agents to enter the Hotel at any reasonable time to evaluate your compliance with
this Agreement During our evaluation, you will assist us or our agent and, subject to availability, provide us with one
free Hotel sleeping room for one night;
11
Hr'tC-14-1`Jyy 1b 41 r'UKI.tLL,KKUU K HHLLLK y1'e 2M 114V P.05/11
h. Send us Aeri we regffesl your Hotel deoct iption and rates so that we may include this information
In directories that we may publish. if you do not send us changes by the deadlines which are indicated, you will honor
the rates and descriptive information on record;
i. Honor the terms of any discount or promotional program that we offer to the public on your behalf.
and any room rate quoted to any guest at the time the guest makes an advance reservation;
j. Pay reasonable travel agent commissions and global distribution system charges as required by the
Rules and Regulations;
k. Use your best efforts to maximize and Increase Hotel and System business. If you are unable to
accommodate a potential guest, you will refer the guest to other System hotels near the Hotel. If you refer a guest to a
non-System hotel where nearby System hotels have space available, you must pay us liquidated damages equal to the
average room rate (gross room revenues divided by the number of rooms rented) for the month during which the
violation occurred; and
1. Not change the Rentable Rooms by more than 5% from the original Rentable Rooms in Section Lb
of this Agreement without receiving our prior written consent and obeying other requirements of this Agreement, and
notify us In writing and obey other reatriet;ons in this Agreement If you change the Rentable Rooms by 5% or less from
the number stated in Section l.b.
7. Marls.
a. You will not contest our rights to the current or furore System and Marks, nor our right to grant to
others use of the Marks or of any other marks. You understand that the Marks are and will remain our property, and
that your use of the Marks inures to our benefit. You will Immediately assign to us on our request any rights to the
Marks that you may gain through your use of the Marks.
b. You must not include die Marks or any words resembling the Marks in your name or the name of
any of your affiliates, whether a partnership, corporation, joint venture or any other type of business organization.
c. If you are required by law to register the Marks, your registration application must specify that you
use the Marks: (1) only at the Hotel and in advertising for the Hotel; (2) only during the Term; and (3) without
Claiming any property right in the Marks during or after the Term.
• d. You will not interfere with our use or registration of the Marks, or with use of the Marks by other
hotels.
e. You must promptly notify us of any suit filed or demand made against you challenging the validity
of any of the Marks ("Mark Claim"). Using our attorneys, we agree to protect and defend you against a Mark Claim,
and to defend and indemnify you against your loss, cost or expense related to the Mark Claim, except where the Mark
Claim arose because you used the Marks in violation of this Agreement You may not settle or compromise a Mark
Claim without our prior written consent, and you agree to cooperate with us in defending against a Mark Claim.
f. You have no right to sublicense anyone else to use the Marks or the System or to use them at any
place other than in connection with the Hotel.
8, Future Additions. You may not change the Room Count by more than 5% by constructing additional
sleeping rooms nor may you make substantial alterations to the Hotel without our prior written consent, which we are
under no obligation to give. In order to obtain our consent, you must send us your construction plans and pay us an
expansion fee for each additional sleeping mom equal to the per-room charge under new franchisee fot this brand, but
the expansion fee will be not less than $1,000. You may not change the Room Count by 5% or less by constructing
I{
tv-rt-14-1777 IYJ+4,e YUKt.t_LL,KKUU & HHLLLK *e1Y 23J 1149 P. 06/11
I
additional sleeping rooms without prior notice to us. We will add any additional sleeping rooms which you construct to
the Rentable Rooms, and-will -include revenues from the additional sleeping rooms and any additional meeting rooms in .
calculating the Gross Room Revcnubs for determining fees due under this Agreement.
9. Assignment,
a. Our Assignment. We may assign all or pan of our rights or obligations under this Agreement to
any person or legal entity. We are not relieved of our obligations tinder this Agreement by assigning the Agreement.
It. Your Assienment. Your rights and duties under this Agreement are personal to you. We granted
this Agreement to you in reliance on the business skill, financial capacity and personal character of you or your
principal owners. You may not sell, assign, transfer, or otherwise encumber any direct or Indirect interest that you have
in the Hotel, In you, or in any rights or obligations created by this Agreement without giving us at least 15 days prior
written notice and obtaining our prior written consent. Furthermore, If a Controlling Interest is being transferred or if
you are conveying the Hotel or more than 50% undivided interest In the Hotel, you must also comply with whatever
reasonable conditions we require (including the signing of the then-current form of franchise agreement by the
transferee and payment of a re-licensing fee equal to the then-current Affiliation Fee charged by us). Our consent will
not be required for a mortgage, for a collateral assignment of the Franchise Agreement as collateral for a mongage, or
for the sale or transfer by any party of securities in a publicly-traded corporation or entity which individually, or in the
aggregate with other sales or transfers by a party, constitute the sale or transfer of less than 5% of the outstanding
capital stock or other equity interests in the corporation or entity. We may charge a fee where your lender requires that
we give our written consent to or become a party to a proposed collateral assignment or that we provide an estoppel
letter. If you assign or transfer the Hotel or this Agreement without our written consent, you breach this Agreement and
we may terminate this Agreement.
c, Transfer on Death or Mental 1!ISQM rtence. If you or any natural person in your entity dies or
becomes mentally Incompetent, the executor, administrator, or personal representative of that person must transfer that
person's Hotel interest (within 12 months after death or mental incompetence) to one or more of the remaining persons
in your entity (if applicable) or to your heirs that we approve.
CL Controlline interest For purposes of this Agreement, "Controlling Interest" includes any general
partner's Interest in a partnership entity, 50% or more of the voting stock of a corporate entity, and 50% or more of the
ownership interests in a limited liability company,
10, Default and Termination.
I Termination By you_ If we default in our material obligations under this Agreement, you may
terminate only if you first give us written notice of the defaults and of your intention to terminate the Agreement. You
may then terminate this Agreement if we do not cure those defaults within 30 days from receiving your written notice.
b. Termination By Us.
Agreement, we may terminate thiisAgree ment?effecHve on If
theudatdefault in your e specified in our notice (arrathe earliest date
permitted by applicable law):
Agreement or file
(a) If you do not pay us fees or other monthly reports of Gross oom Revenues within 10 days of our written notice of defhultlto you;
(b) If you do not cure fully any other breach of your obligations or warranti
under this Agreement within 30 days of our written notice of default to you, as
(c) If you or an Affiliate of you materially breaches any other agreement with us or
RPR-14-1999 10:42 PURCELL,KRUG &.HALLER 717 233 1149 . P.07i11
affiliates and subsidiaries, or our officers, directors, agents and employees of each, from or to remedy, your defaults
under this Agreement or claims arising out of your operation of the Hotel., We will have the sole and exclusive control
(including the right to be represented by attorneys of our ehbtising) over the defense of any claims medE'egairist us Srid
over their settlement, compromise or other disposition,
14. Casualty. If the Hotel is damaged.by foe or other casualty, you must promptly repair the damage. If the
damage or repair requires closing the Hotel, you must immediately notify us, begin reconstruction within 6 months after
closing and in accordance with the Rules and Regulations, and reopen the Hotel for continuous business operations as
soon as practicable (but in any event within 12 months after the Hotel closing), sending us at least 30 days prior written
notice of the date of reopening. We will extend the Tenn of the Franchise Agreement by the number of days between
the date of closing and the date of reopening. If your insurance proceeds are not available to repair or rebuild the Hotel
and If you notify us within 6 months after closing, we will terminate this Agreement without penalty to either parry,
15. Notices, All notices required or permitted under this Agreement must be in writing, must be personally
delivered or mailed by registered or certified mail, return receipt requested, or by a nationally recognized courier
service; to us at Choice Hotels International, Inc., 10730 Columbia Pike, Silver Spring, Maryland 20901,
Attention; General Counsel, and to you at the Designated Representative's address above until a different address has
been designated by written notice to the other party. The Designated Representative Is authorized to receive our written
notices to you. Any notice by registered or certified mail or by courier service is deemed given and received at the date
and time of sending. You may change the Designated Representative by written notice to us.
16. Business Relationship.
a, You agree that:
(1) This Agreement does not create a fiduciary relationship between you and us;
(2) You are an independent contractor, Nothing in this Agreement is intended to make and
does not make either party an agent, legal representative, subsidiary, joint venturer, partner, employee, independent
contractor or servant of the other (except that we are acting as your agent when making reservations for your Hotel);
(3) You are not authorized to make any contract, agreement, warranty, or representation on
our behalf, or to Incur any debt or other obligation In our name; and
(4) You will not represent in any proposed financing agreement or to any proposed lender or
.participant In a public or private ipvestment offering that we or any of our affiliates is, or will become, responsible for
your obligation under the financing agreement, nor that we are, or will be, participating In a private or public
investment offering. Before you distribute a prospectus of your intended private or public offering, you must send us a
copy for our prior written approval, not to be unreasonably withheld.
b. Neither party assumes liability for, or will be deemed liable as a result of action or omission of the
other party, or any claim or judgment arising from such action or omission.
17. Attorneys' Fees. The prevailing party in any action filed to enforce the terms and conditions of this
Agreement (as determined by the Court or arbitrator) shall recover from the other party reasonable anomeys' fees and
court costs.
18. Taxes, Permit; Compliance with Laws; Notice of Legal Actions.
a. You must pay when due all taxes related to the Hotel which may be levied or assessed by any
federal, state, or local tax authority, and any and all other indebtedness related to the Hotel. You must pay sales tax,
gross receipts tax, or similar tax Imposed on us (but not including our income taxes) on any payments that you must
make to us under this Agreement.
HI"K-14-1777 1b 4? YUKLtLL,KKUU ei NHLLhx 71'e 2.33 1149 ,P.08/11
b. If ihere is a.boda'fde dispute as to liabiliry for taxes assessed or'other mde)itedness, you may
contest the validity or the amount of the tax or indebtedness under the procedures of the taxing authority or applicable
law. You may not permit a tax sale or seizure by levy of execution or similar writ or warrant, or attachment by a
creditor to occur against the Hotel or the Location.
c. You must comply with all federal, state, and local laws, rules and regulations applicable to you and
to the Hotel. You must timely obtain any and all permits, certificates, or licenses necessary for the construction,
operation and maintenance of the Hotel, Including licenses to do business, fictitious name registration and sales tax
permits, health and sanitation permits, and ratings and fire clearances. You must send us, within 10 days of your
receipt, copies of all Inspection reports, warnings, certificates, and ratings, received from any governmental entity.
d, You must notify us in writing, within 5 days of receip4 Information about any action, suit,
proceeding, or the Issuance of any order, writ, injunction, award, or decree of any court, agency, or other governmental
Instrumentality, which may adversely affect the operation of the Hotel or your financial condition.
19. Approvals and Waivers.
a. Our approvals and consents will not be effective unless signed by one of our duly-elected officers.
We may withhold our consent If you are In breach of a material obligation under this Agreement.
b. Except as otherwise expressly stated In writing in this Agreement (including any amendments), we
make no warranties or guarantees on which you may rely. We assume no liability or obligation to you by providing
any waiver, approval, consent, or suggestion to you with this Agreement, or by reason of any delay or denial of any
request,
c, Failure to exercise any power or to insist on strict compliance with any obligation or condition
under this Agreement does not constitute a waiver of any future right to demand exact compliance with any of the terms
In this Agreement, Waiver of any particular default will not affect or impair a party's right with respect to -any
subsequent default of the same, similar, or different nature. No delay, forbearance, or amission to exercise any power
or right following any breach or default of any of the terms, sections, or covenants hereof, will affect or impair a party's
rights.
20. Severability and Construction.
a, If any section of the Agreement is held to be illegal, invalid or unenforceable, both parties agree
that (1) the section will be removed; (2) this Agreement will be understood and enforced as if the illegal, invalid, of
unenforceable section had never been In this Agreement; and (3) the remaining sections will remain In lull tome and
effect and will not be affected by the illegal, invalid, or unenforceable section or by Its removal. A section similar to
the removed section will be automatically added as a part of this Agreement to the maximum extent enforceable.
b. Except as otherwise expressly provided In this Agreement, nothing in this Agreement is intended,
nor will anything in this Agreement be deemed, to confer on any person or legal entity other than us or you, or our
respective successors and assigns, any rights or remedies under or by reason of this Agreement.
c. All captions In this Agreement are intended solely for the convenience of the parties and do not
affect the meaning or construction of any section.
d. All'references to the masculine, neuter, or singular, include the masculine, feminine, neuter, or
plural. If "you" consists of more than one person or entity, your acknowledgments, promises, covenants, agreements,
and obligations made or undetaken in this Agreement areJointly and severally undertaken by each of you.
e. If this Agreement is executed in multiple counterparts, each executed copy is an original.
10
APR-14-1999 10:43 PURCELL,I(RUG & HALLER 717 233 1149 .P.09/11
. .
f. This Agreement hecames valid only when wo have signed it, a ndtit WIN-bc-biterproted under the
substantive laws of Maryland, not Including Its conflict of laws provision.
right or remedy. Rights and remedies provided for In this Agreement art cumulative and not eielaalva of any other
h, Each party may obtain Injunctive relief against threatened conduct that will cause it loss or
damages, under the usual equity rules, Including the applicable rules for obtaining restraining orders and preliminary
Injunctions,
1. THIS AGREEMENT CONTAINS THE COMPLETE UNDERSTANDING OF THE
PARTIES AND REPLACES ANY PREVIOUS WRITTEN OR ORAL AGREEMENT ON THE SAME
SUBJECT MATTER. NO REPRESENTATION, INDUCEMENT, PROMISE OR AGREEMENT, ORAL OR
OTHERWISE, NOT IN THIS AGREEMENT, WILL BE OF ANY FORCE OR EFFECT.
J. Amendments to this Agreement will not be effective unless signed by one of our dulyelectad
officers and by you.
k. Neither party may flit a claim (except claims for Indemnification) arising out of or related to this
Agreement after 3 years from the date on which the claim arose, unless applicable law specifies a shorter statute of
limitations.
21, Acknowledgmente.
a. You have conducted an independent investigation of this Agreement, and you understand that the
business venture contemplated by this Agreement involves business risks, and that its success will be largely dependent
on your ability as an independent business person. We have not made, and you acknowledge that you have not received
from us or our agents, any projection, wamnry or guarantee, express or Implied, as to the profitability or other potential
success of the business venture contemplated by this Agreement. By signing this Agreement, you represent to us that
you have neither received nor rolled on representations of any kind concerning the Agreement except as set forth in the
disclosure statement(s) given to you and except any written in this Agreement.
b. You agree that this Agreement relates only to the Hotel and the Location. We may own, operate,
franchise or license other RODEWAY INN* hotels under the System, as well as hotels using any other brand, at any
other location. We, our affiliates and other Ihnchlsees may now or In the future engage In transient lodging or related
business activities which may compete with the System or with the Hotel.
a. You agroo that the Marks and this Agreement relate only to the System, and that we may decide to
provide services to the Hotel simultaneously to one or more of our other brands, either separately or combined.
d. You are solely responsible for exercising ordinary business control over the Hotel.
e. You warrant the truth and completeness of all your statements in your application and those in all
other doeumenta that YOU send us as pan of the application process. This warranty will survive the signing and the
termination of this Agreement.
L You acknowledge that you received from us a disclosure document required by the Federal Trade
Commission and by the state(s) in which you live and where the Hotel is located, either during your first personal
meeting with our representative to discuss the franchise sale, or at least 10 business days before you signed this
Agreement or paid to us, any consideration for the franehise, whichever of those first occurred. You also acknowledge
that we gevo to youtthe compJgc4 copies-gBJtis Agreement for your signature at least 5 business da s before you
signed thls46wemfgt., : .,..: .:
4V
APR-14-1999 1044 PURCELL,KRUG & HALLER
s ni]
'x,44
717 233 1149 P.10/11
VKir' the true owner of, and record holder of title to, the' Haiel,'unless you have told us iti [fie
application that you lease the Hotel under a lease with at least 20 years remaining in its term.
It. You acknowledge that we may use the Marketing Fees to meet any costs incident to the marketing
services which we provide to the System, and that those costs may include our overhead expenses which are reasonably
allocated to those services. You further agree that we will have the absolute and unilateral right to determine, when,
how and where the Marketing Feet will be spent, including the absolute right to purchase and pay for product research
and development, production materials, ad slicks, brochures, videotapes, radio and television commercials, media
advertising (television, radio, cable, magazines, newspapers and other print), services provided by advertising agencies,
market research, computers, furniture, equipment, trade shows, promotions, marketing, research and design, public
relations, personnel, accounting services, navel expenses, office space, administrative costs, salaries and fringe benefits,
development, design and updating of World Wide Web Site ("Home Page") and maintaining Home Page on the
IntemeL including Internet service provider costs, and for other aimllar Costs which we deem to be appropriate. You
also acknowledge that other franchisees may not contribute the same percentage or total amount as you are required to
pay as Marketing Fees.
i. You acknowledge that we may use the Reservations Fees to meet any costs incident to the
reservations services which we provide to the System, and that those costs may include our overhead expenses which
are reasonably allocated to those services. You also agree that we will have the absolute and unilateral right to
determine, when, how and where the Reservations Fees will be spent, including the absolute right to purchase and pay
for product research and development, computers, furniture, equlpment, research and design, personnel, accounting
services, travel expenses, office space, administrative costs, salaries and fringe benefits, development, design and
updating of World Wide Web Site ("Home Page") and maintaining Home Page on the Internet, including Internet
service provider costs, and for other similar costs which we deem to be appropriate. You agree that we do not have any
duty to ensure that franchisees receive a proportionate benefit from the spending of those Fees. You also acknowledge
that other franchisees may not contribute the same percentage or total amount as you are required to pay as
Reservations Fees.
J. You acknowledge that we own the rights to data concerning customers who stay at the Hotel and
that we may use that data in any manner determined solely by us. We acknowledge that you also own that data and that
you may use that data in any manner determined solely by you.
22. Arbitration. Except for our claims against you for indemniflcaden, actions for collection of moneys
owed us under this Agreement, or actions seeking to enjoin you from using the Marks in violation of this Agreement,
any controversy or claim relating to this Agreement, or the breach of this Agreement, including any claim that this
Agreement or any part of this Agreement is invalid, Illegal, or otherwise voidable or void, will be sent to final and
binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator will apply the substantive laws of Maryland without reference to its conflict of laws provision. Judgment on
the arbitration award may be entered in any court having jurisdiction. If any party fails to appear at any properly
noticed arbitration proceeding, art award may be entered against the party, notwithstanding its failure to appear.. Any
arbitration will be conducted at our headquarters office in Maryland,
This Agreement is signed by you (and your principals, if a lini ted liability company, partnership or
corporation) and us, on the date Written above.
WITNESS/ATTEST:
CHOICE HOTELS INTERNATIONAL, INC.
I.?
By:
KVA Roo+l Evarett'F Casey
•..J-nMnt CM tarv VP & Deputy Genara ounsel
12
+1F 4 'i
HrK-14-1777 I W i 44
:WITNESS/ATTEST:
'!1'e e,16 .114`3• - 1.11/11
' . 11 S.A.C. ZNTERPRISEs, INC., a.Pennsylvania
Corporation, Shantilal N. Patel, Hemant J. Patel,
Ranchhod B. Patel, Babu C. Patel and Bharat Patel,
Individually, Jointly and Seve liy
By: ! c__
Shantilal N. Patel, Individually & as President -"
Date: ' 7- 13
Hemant4-atel, Individually
Date:. -I.- 13 -5 !Y
Ranchhod B. ate , Indtvldually
Date: a 'l - 13 -'F
Bab C. a Individually
Date: ?J ?(j -mot
.4-0
Bharat Patel, Individually
Date: Y 7 - ( 3 °g( &
NOTE: The person or business organization which is the title owner of the Location, as of the date of this Agreement,
must be a named signatory. The liabllity, of all signatories will be joint and several.
r 41Ik-L L,KNUU E HHLL4H
13
TOTAL P. ii
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c.
fir) .. ?.)
J ti
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
JURY TRIAL DEMANDED
ENTRY OF APPEARANCE
TO THE PROTHONOTARY:
Kindly enter my appearance on behalf of the S.A.C. ENTERPRISES, INC. a
Pennsylvania Corporation, and SHANTILAL N. PATEL, an adult individual, in the above-
captioned matter.
LEISAWITZ, HELLER, ABRAMOWITCH &
PHILLIPS, P.C.
% ' 0 0: 10v
Kenneth Millman, Esquire
Berkshire Commons, Suite 400
2201 Ridgewood Road
Wyomissing, PA 19610
Telephone (610)372-3500
Dated: December 15, 1999
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
Defendants JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I, Kenneth Millman, Esquire, do hereby certify that a true and correct copy of Eurry of
Appearance, was served on the following person, at the following address, via United States
First Class Mail, postage prepaid.
James N. Clymer, Esquire
23 N. Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
I understand that statements herein are made subject to the penalties of 18 Pa. C.S. 4904
relating to unsworn falsification to authorities.
K TH MI MkN
Leisawitz Heller Abramovitch PHILLIPS, P.C
2201 Ridgewood Road
Suite 400
Wyomissing, PA 19610
(601)372-3500
Dated: December 15, 1999
Cl)
C14
.iii
PRAECIPE FOR ARGUMENT
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
SHRI PARRS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
1. State matter to be argued: Defendants' Preliminary Objections.
2. Identify counsel who will argue case:
(a) for Plaintiff: James N. Clymer, Esquire
23 N. Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
(b) for Defendant: Kenneth Millman, Esquire
Leisawitz Heller Abramowitch Phillips, P.C.
2201 Ridgewood Road, Suite 400
Wyomissing, PA 19610
3. I will notify all parties in writing within two days that this case has been listed for
argument.
4. Argument Court Date: March 1, 2000
n
Attorney for Defendants
Dated: December 21, 1999
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7263
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
1, Kenneth Millman, Esquire, do hereby certify that a true and correct copy ofPraecipe
jor,,lrgument was served on the following person, at the following address, via United States
First Class Mail, postage prepaid.
James N. Clymer, Esquire
23 N. Lime Street
P.O. Box 1766
Lancaster, PA 17605-1766
I understand that statements herein are made subject to the penalties of 13 Pa. C.S. 4904
relating to unsworn falsification to authorities.
NETH MILLMAN
FCI
Leisawitz Heller Abramowitch PHILLIPS, P.C
2201 Ridgewood Road
Suite 400
Wyomissing, PA 19610
(601) 372-3500
Dated: December 21, 1999
Y
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Z. ! SHERIFF'S RETURN - REGULAR
CASE NO: 1999-07262 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
SHRI PARAS INC ET AL
VS.
S A C ENTERPRISES INC ET AL
CPL. MICHAEL BARRICK Sheriff or Deputy Sheriff of
CUMBERLAND County, Pennsylvania, who being duly sworn according
to law, says, the within NOTICE & COMPLAINT
was served
upon SAC ENTERPRISES INC the
defendant, at 13:30 HOURS, on the 6th day of December
1999 at C/O ECONO LODGE 860 NORTH FRONT ST
WORMLEYSBURG, PA 17043 CUMBERLAND
County, Pennsylvania, by handing to SHANTILAL N. PATEL
a true and attested copy of the NOTICE & COMPLAINT
and at the same time directing His attention to the contents thereof.
Sheriff's Costs: So answers- .?
Docketing 18.00
Service 9.92 P
Affidavit
Surcharge 8.00
omas nne, eri
$35-92-12%07%1999USSER
by
U-LJULY
S eri
Sworn and subscribed to before me
this ?y day of
2 2=Lkn A. D.
V one ar
CASE NO: 1999-07262 P
SHERIFF'S RETURN - REGULAR
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
SHRI PARAS INC ET AL
VS.
S A C ENTERPRISES INC ET AL
CPL. MICHAEL BARRICK , Sheriff or Deputy Sheriff of
CUMBERLAND County, Pennsylvania, who being duly sworn according
to law, says, the within NOTICE & COMPLAINT was served
upon PATEL SHANTILAL N the
defendant, at 13:30 HOURS, on the 6th day of December
1999 at C/O ECONO LODGE 860 NORTH FRONT ST
WORMLEYSBURG, PA 17043 CUMBERLAND
County, Pennsylvania, by handing to SHANTILAL N. PATEL
a true and attested copy of the NOTICE & COMPLAINT
and at the same time directing His attention to the contents thereof.
Sheriff's Costs: So answers
Docketing 6.00
A
.00
Affidavit .00
Affidavit
Surcharge 8.00 omas it ne eri
-7i4.u0 CLYMER19g9USSER
by
e u hers ?-
Sworn and subscribed to before me
this /Ntm day of
I43 d-&?rt A.D.
ro ono a y?ono a yy
SHRI PARAS, INC., a Pennsylvania : IN THE COURT OF COMMON PLEAS OF
Corporation, and PRAFUL C. : CUMBERLAND COUNTY, PENNSYLVANIA
SANGHANI, an adult individual, :
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
A Pennsylvania Corporation, and
SHANTILaL N. PATEL, an adult
Individual,
Defendants
HOFFER, P.J.:
NO. 99-7262 CIVIL
CIVIL ACTION - LAW
AND NOW, June 28, 2000, after oral argument and careful consideration
of the parties' briefs and relevant law, defendants' preliminary objection in the
nature of a demurrer to causes of action against Defendant Shantilal N. Patel as
an individual is denied. Defendants' preliminary objection in the nature of a
demurrer to the claim for breach of contract against Defendant Shantilal N. Patel
is granted. Defendants' preliminary objection in the nature of a demurrer to the
cause of action against S.A.C. and/or Shantilal N. Patel for fraudulently
misrepresenting the amount of renovations required under the Franchise
Agreement is denied.
C
By the Court,
11Vh1k,r\
Ge ge E. Hoffer, P. J.
Kenneth Millman, Esquire
Leisawitz Heller Abramowitch Phillips, P.C.
2201 Ridgewood Road
Wyomissing, PA 19610 -1193
(Attorney for Defendants)
James N. Clymer, Esquire
Clymer & Musser, P.C.
23 North Lime Street
Lancaster, PA 17602
(Attorney for Plaintiffs)
SHRI PARRS, INC., a Pennsylvania : IN THE COURT OF COMMON PLEAS OF
Corporation, and PRAFUL C. : CUMBERLAND COUNTY, PENNSYLVANIA
SANGHANI, an adult individual,
Plaintiffs
V. : NO. 99-7262 CIVIL
S.A.C. ENTERPRISES, INC.
A Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
Individual,
Defendants : CIVIL ACTION - LAW
OPINION
HOFFER, P.J.:
Facts
Plaintiffs, the PARAS Corporation and Sanghani, filed a complaint on
December 2, 1999 alleging defendants' breach of contract and fraudulent
misrepresentation. Defendants have preliminarily objected in the nature of a
demurrer that plaintiffs have not set forth legally sufficient claims. Defendants
request that Shantilal N. Patel be dismissed as a defendant and that the claim of
fraudulent misrepresentation as set forth in plaintiffs' count three be dismissed.
Plaintiffs' complaint avers that plaintiffs bought a Rodeway Inn Hotel
property and business from defendants. The contract provided for the sale of
real property and a business at 1239 Harrisburg Pike, Carlisle. The facility
needed renovations, but on signing the contract, the defendants informed
plaintiffs that the agreement could be voided if the necessary renovations
exceeded $20,000. Plaintiffs state the contract specifically set forth that all
franchise fees to Choice Hotels International, Inc., had been paid in full at the
time of the settlement. Plaintiffs state that defendant Shantilal N. Patel
guaranteed the Franchise Agreement and led plaintiffs to believe that the fees
had been paid. After property settlement and transfer to the plaintiffs, plaintiffs
aver that: (1) franchise fees had not been paid for 2 years; (2) the franchise had
been cancelled by the franchisor, Choice Hotels International, Inc., along with
participation in the 1-800 number reservation system; and (3) necessary
renovations would cost more than $150,000.
Defendants agree that a contract was entered into for the sale of real
property and business assets at 1239 Harrisburg Pike, Carlisle, on April 19,
1999, for consideration of $1.6 million. Defendants state that the property is a
Rodeway Inn Hotel operating under franchise with Choice Hotels International,
Inc. Shantilal N. Patel, as an individual and as president of S.A.C., entered the
franchise agreement with Choice Hotels International, Inc. (hereinafter
"Franchisor").
Plaintiffs' complaint is threefold. Plaintiffs are Shri Paras, Inc., a
Pennsylvania corporation, and Praful C. Sanghani, an adult individual. Plaintiffs
first contend that defendants breached the contract of sale because the franchise
fees had not been paid in full at the date of settlement. Plaintiffs state that
defendant Shantilal N. Patel is personally liable for the breach of contract
because of the assurances Patel gave. Plaintiffs' second contention is that
2
defendants fraudulently misrepresented that the franchise fees were paid and
that the cost of necessary renovations would not exceed $20,000, while in fact
the necessary renovations would cost $150,000. Plaintiffs' third contention is
that the misrepresentations caused them to buy a property that they would not
have purchased but for the misrepresentation.
Discussion
A preliminary objection should be sustained only in cases that clearly and
without doubt fail to state a claim for which relief may be granted. Baker v.
Cambridge Chase, Inc., 1999 Pa. Super. 9, 725 A.2d 757 (1998) (citations
omitted). If the facts as pleaded state a claim for which relief may be granted
under any theory of law, then there is sufficient doubt to require the preliminary
objection in the nature of a demurrer to be rejected. Id.
Defendants' First Preliminary Objection -
Demurrer to Action Against Defendant Patel
Defendants' first preliminary objection is that plaintiffs' complaint fails to set
forth a legally sufficient cause of action against Patel. Defendants argue that
plaintiffs have not alleged the presence of one of the necessary factors to pierce
the corporate veil. Specifically, plaintiffs contend that the complaint does not
assert that Patel was acting personally or as other than within Paters relationship
to S.A.C. Corporation.
Plaintiffs argue that paragraph 20 of the complaint states that Patel
personally guaranteed the Franchise Agreement to Choice Hotels and personally
3
represented that the franchise fees had been paid in full. Plaintiffs also assert
that paragraph 20 indicates that Defendant Shantilal N. Patel was acting outside
Patel's capacity within S.A.C. when Patel signed the franchise agreement and
allegedly misrespresented that the agreement was still valid. Patel's alleged
fraudulent misrepresentation is that payments had been made on time when in
fact they were delinquent.
There is a strong presumption in Pennsylvania against piercing the
corporate veil. Lumax Industries, Inc. v. Aultman, 543 Pa. 38, 41-43, 669 A.2d
893, 895 (1995) (citations omitted). In Lumax Industries, Inc. v. Aultman, the
Court set forth factors to be considered in disregarding the corporate form:
undercapitalization, failure to adhere to corporate formalities, substantial
intermingling of corporate and personal affairs and use of the corporate form to
perpetrate a fraud. Id. While it is not necessary to set forth in a pleading the
evidence by which facts are to be proved, it is essential that such facts as the
pleader depends upon to show the liability sought to be enforced be averred. Id.
Here, the only alleged veil-piercing factor contained in plaintiffs' complaint
is fraudulent misrepresentation. We cannot say with certainty that this complaint
is facially devoid of merit with regard to piercing the corporate veil and, therefore,
cannot sustain defendants' demurrer on this ground. We find that the pleading
sufficiently states a claim against defendant Shantilal N. Patel individually.
Defendants' Second Preliminary Obiection -
Demurrer as to Breach of Contract by Defendant Patel
4
Defendants' second preliminary objection is that plaintiffs' complaint fails to
set forth a legally sufficient cause of action against Patel for breach of contract,
under a third party beneficiary theory. In support of this argument, defendants
state that while third party beneficiaries have contract rights, incidental
beneficiaries have none. Guy v. Llederbach, 501 Pa. 47, 61, 459 A.2d 744,
651-52, (1983). The trial court can give a party claiming third party beneficiary
status standing to sue. Id. In Pennsylvania, only intended beneficiaries have
such standing. Id.
Defendants argue that in this case, the Franchise Agreement does not
express an intention that third parties may benefit, and does not contain
language addressing plaintiffs as third parties. The Franchise Agreement was
between Choice Hotels International and Defendant Shantilal N. Patel, who
signed the agreement as president of S.A.C. Enterprises, Inc.
Defendants next argue that plaintiffs could only assert a claim as to the
Franchise Agreement via a theory of third party beneficiary status, which they
have not done.
Plaintiffs respond that they are third party beneficiaries under the Guy v.
Llederbach test. The Pennsylvania Supreme Court's two-part test for third party
beneficiary qualification is that 1) the beneficiary's rights must be appropriate to
effectuate the intention of the parties, and 2) performance must satisfy an
obligation of promisee to pay money to the beneficiary or the circumstances
5
R.
indicate that the promisee intends to give the beneficiary the promised benefit.
Plaintiffs argue that have fulfilled the first portion of the test because in
Paragraph 9(b) of the Franchise Agreement, Franchisor grants defendants the
right to assign the agreement to a third party, with the Franchisor's permission.
Paragraph 9(b) also recognizes that the Franchise Agreement binds a third party.
Plaintiffs then argue that they have fulfilled the second portion of the test
because defendants represented that the Franchise fees had been paid in full.
Thus, plaintiffs argue, defendants intended that the plaintiffs receive the benefits
of the fully paid franchise fees. Plaintiffs assert that defendants are using privity
of contract to shield themselves from fraudulent misrepresentation liability, which
is prohibited by Pennsylvania common law.
With regard to third party beneficiaries, Pennsylvania has adopted the
Restatement (Second) of Contracts § 302, as set forth in Guy v. Liederbach,
501 Pa. 47, 459 A.2d 744 (1983):
§ 302. Intended and Incidental Beneficiaries .
(1) Unless otherwise agreed between promisor and promisee, a
beneficiary of a promise is an intended beneficiary if recognition of a right
to performance in the beneficiary is appropriate to effectuate the intention
of the parties and either (a) the performance of the promise will satisfy an
obligation of the promisee to pay money to the beneficiary; or (b) the
circumstances indicate that the promisee intends to give the beneficiary
the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an intended
beneficiary.
Guy v. Liederbach, 501 Pa. 47, 61, 459 A.2d 744, 751-52 (1983).
6
The first sentence of § 302 undermines the plaintiffs' theory of third party
beneficiary, as in High-Tech-Enterprises, Inc. v. General Accident Insurance
Co., 430 Pa.Super. 605, 611, 635 A.2d 639, 643 ('1993). In High-Tech-
Enterprises, Inc. v. General Accident Insurance, an insurer had "otherwise
agreed" that no assignment of insurance policy benefits could be effected without
the insurer's written consent. Id. The lack of such consent undermined the third
party's claim that the third party was a third party beneficiary. Id. Here, the
Franchise Agreement between Choice Hotels, International, Inc. (hereinafter
"Franchisor") and S.A.C. Enterprises, Inc. (hereinafter "S.A.C.") contains the
following provision:
9 b. Your Assignment Your rights and duties under this Agreement are
personal to you. ... You may not sell, assign, transfer, or otherwise
encumber any direct or indirect interest that you have in the Hotel, in you,
or in any rights or obligations created by this Agreement without giving us
a least 15 days prior written notice and obtaining our prior written consent.
... If you assign or transfer the Hotel or this Agreement without our written
consent, you breach this Agreement and we may terminate this
Agreement.
S.A.C.'s Franchise Agreement
in order for S.A.C. to sell an interest in the Franchise to Plaintiff Paras,
Franchise Agreement section 9(b) requires that S.A.C. first obtain Franchisor's
written consent. Plaintiffs' complaint does not state that S.A.C. obtained such
consent. Nothing in the complaint indicates that Franchisor gave consent to
S.A.C. for S.A.C.'s sale of the Franchise to Plaintiff Paras. Plaintiffs must aver
this fact to have a legally sufficient claim under a third party beneficiary theory.
7
Thus, the plaintiffs' complaint as it now stands fails to state a legally sufficient
claim against Defendant Patel. Consequently, we uphold defendants' preliminary
objection to the legal sufficiency of plaintiffs' third party beneficiary claim for
breach of contract against Defendant Patel.
Defendants' third preliminary objection is that plaintiffs fail to set forth a
legally sufficient cause of action against S.A.C. and/or Patel for fraudulently
misrepresenting the cost and nature of renovations required under the Franchise
Agreement. Defendants contend that to plead fraudulent misrepresentation,
plaintiffs must plead with particularity: 1) a misrepresentation, 2) a fraudulent
utterance, 3) the maker's intention to induce recipient by the misrepresentation,
4) justifiable reliance by the recipient on the misrepresentation, and 5) that the
damages were proximately the result of the misrepresentation. As to element 4,
defendants argue that plaintiffs did not justifiably rely upon the alleged $20,000
amount to renovate in light of Paragraph 5(b) of the Franchise Agreement, which
provides that the Franchise Agreement itself will be void if renovations exceed
$20,000. Defendants also raise the point that Paragraph 6 of the Agreement
allows plaintiffs to inspect the property.
Plaintiffs respond that they have satisfactorily pleaded each element of
fraudulent misrepresentation. Specifically addressing Paragraph 5(b) of the
Franchise Agreement, an integration clause does not preclude plaintiffs' claim of
8
s
fraud. Plaintiffs contend that they reasonably could not discover that the fees
were unpaid and renovations would exceeO $20,000, through a simple property
inspection. Plaintiffs contend that they had no reason to disbelieve defendants'
representations and that time had been of the essence in closing. Only after
taking possession did defendants discover the cost of the renovations and the
unpaid fees. Plaintiffs state that in an allegation of fraud, parole evidence is
admissible and sufficient to deny preliminary objections.
The Pennsylvania Rules of Civil Procedure require that fraud must be
averred with "particularity." Pa.R.Civ.P. Rule 1019(b). A cause of action for
fraudulent misrepresentation is comprised of the following elements: (1) a
misrepresentation, (2) a fraudulent utterance thereof, (3) an intention by the
maker that the recipient will thereby be induced to act, (4) justifiable reliance by
the recipient upon the misrepresentation and (5) damage to the recipient as the
proximate result. Martin v. Lancaster Battery Co., Inc., 530 Pa. 11, 19, 606
A.2d 444, 448 (1992) (citations omitted).
Here, the plaintiffs' complaint contains each of the necessary elements for
a claim of fraudulent misrepresentation. While plaintiffs' justifiable reliance as to
the alleged misrepresentation is in contention, such contention need not be
resolved in the pleadings. Thus, we cannot sustain plaintiffs' demurrer as to this
claim.
9
SHRI PARAS, INC., a Pennsylvania IN THE COURT OF COMMON PLEAS
Corporation, and PRAFUL C. OF CUMBERLAND COUNTY,
SANGHANI, an adult individual, PENNSYLVANIA
Plaintiffs CIVIL ACTION - LAW
NO: 99-7262
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants JURY TRIAL DEMANDED
. NOTICE TO THE PLAINTIFFS
You have been sued in Court. If you wish to defend against the claims set forth in the
following pages, you must take action within twenty (20) days after this Answer with New
Matter and Notice are served by entering a written appearance personally or by an attorney and
filing in writing with the Court your defenses or objections to the claims set forth against you.
You are warned that if you fail to do so the case may proceed without you and ajudgment may
be entered against you by the Court without further notice for any money claimed in the Answer
with New Matter or for any other claim or relief requested by the Defendants. You may lose
money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU
CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO
FIND OUT WHERE YOU CAN GET LEGAL HELP.
LAWYER REFERRAL SERVICE
CUMBERLAND COUNTY BAR ASSOCIATION
2 Liberty Avenue
Carlisle, PA 17013
Phone: (800) 990-9108
nneth Mi lman, Esquire
Attorney I.D. No. 75272
2201 Ridgewood Road, Suite 400
Wyomissing, PA 19610
(610) 372-3500
Attorney for Defendants
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
JURY TRIAL DEMANDED
ANSWER WITH NEW MATTER OF DEFENDANTS, S.A.C. ENTERPRISES, INC.
AND SHANTILAL N. PATEL, TO PLAINTIFFS, SHRI PARAS, INC. AND
PRAFUL C. SANGHANI'S COMPLAINT
The allegations of paragraph I are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
2. The allegations of paragraph 2 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
Admitted.
4. Admitted.
5. The allegations of paragraph 5 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
6. The allegations of paragraph 6 are admitted in part and denied in part. It is
admitted that, on or about April 13, 1999, Plaintiff, Praful C. Sanghani, and Defendant, S.A.C.
Enterprises, Inc., entered into the Agreement of Sale (the "Agreement") and the Agreement,
minus page 8, is attached to Plaintiffs' Complaint as Exhibit "A." By way of further answer, it is
averred that page 8 is missing from Exhibit "A" of Plaintiff's Complaint and strict proof thereof
is demanded at trial. The remainder of the allegations of this paragraph are denied as they are
interpretations of a legal document which speaks for itself and is incorporated herein by
reference.
Admitted.
8. Admitted. By way of further answer, said agreement was also executed by
Hemant J. Patel, Ranchhod B. Patel, Babu C. Patel and Bharat Patel, individually, jointly and
severally.
9. Admitted.
10. The allegations of paragraph 10 are denied as stated. To the contrary, it is averred
that the agreement is a legal document which speaks for itself and is incorporated herein by
reference.
11. The allegations of paragraph 11 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
12. The allegations of paragraph 12 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph
pertaining to what Defendant, Shri Paras, Inc., learned upon operating the motel and strict proof
thereof is demanded at trial. By way of further answer, it is averred that the franchise fees owed
to the motel's Franchiser, Choice Hotels, by Defendant, S.A.C. Enterprises, Inc., were paid by
said Defendant and were not approximately two (2) years delinquent.
13. The allegations of paragraph 13 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
14. The allegations of paragraph 14 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
15. The allegations of paragraph 15 are denied. To the contrary, it is averred that,
upon signing the Agreement, Defendants did not indicate to Plaintiff, Shri Paras, Inc., that, if
renovations required by the Franchiser exceeded $20,000.00, the agreement could be voided. By
way of further answer, it is averred that the Agreement was entered into between Defendant,
S.A.C. Enterprises, Inc., and Plaintiff, Praful C. Sanghani, and no representations were made to
Plaintiff, Shri Paras, Inc., at that time. By way of further answer, it is averred that the Agreement
was not assigned to Plaintiff, Shri Paras, Inc., until April 19, 1999. By way of further answer, it
is averred that the representations made by Defendants with regard to renovations can be found
in paragraph 5(b) of the agreement which pertinently provides as follows:
Any obligations by reason of Franchise Agreement with roadway
in, with the exception that in the event that any renovations are
required under the Franchise Agreement by reason of the transfer
of the Franchise, they shall not exceed $20,000.00, or either party
may declare this Agreement null and void.
By way of further answer, it is averred that, pursuant to paragraph 6 of the agreement, Plaintiffs
possessed the right to inspect the Premises and accepted it in "as is" condition. By way of further
answer, it is averred that both Plaintiffs failed to exercise their rights to inspect the premises prior
to settlement on or about April 19, 1999.
16. The allegations of paragraph 16 are denied. To the contrary, it is averred that the
Agreement was executed between Defendant, S.A.C. Enterprises, Inc., and Plaintiff, Praful C.
Sanghani. By way of further answer, it is averred that the agreement was assigned to Defendant,
Shri Paras, Inc. on or about April 19, 1999, the same date on which closing occurred. By way of
further answer, it is averred that Defendants did not fail to disclose to any person and/or entity
any facts which they were legally obligated to disclose pursuant to the Agreement.
17. The allegations of paragraph 17 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph and
strict proof thereof is demanded at trial.
COUNTI
(Breach of Contract)
18. Paragraph 18 is an incorporation paragraph to which no responsive pleading is
required.
19. The allegations of paragraph 19 are conclusions of law to which no responsive
pleading is required and strict proof thereof is demanded at trial. By way of further answer and
to the extent that such an answer is required, it is averred that Defendant, S.A.C. Enterprises,
3
Inc., paid all Franchise fees. By way of further answer, it is averred that Defendant, S.A.C.
Enterprises, Inc., did not breach any covenants, representations and/or warranties of the
Agreement.
20. No responsive pleading to the allegations of this paragraph is necessary as
Defendant, Shantilal N. Patel's Preliminary Objections to Plaintiffs' breach of contract action
against him individually have been granted by Order dated June 28, 2000. By way of further
answer and to the extent that such an answer is necessary, it is averred that the Franchise
Agreement is a legal document which speaks for itself and is incorporated herein by reference.
21. No responsive pleading to the allegations of this paragraph is necessary as
Defendant, Shantilal N. Patel's Preliminary Objections to Plaintiffs' breach of contract action
against him individually have been granted by Order dated June 28, 2000. By way of further
answer and to the extent that such an answer is necessary, it is averred that Defendants are
without sufficient knowledge or information to form a belief as tot he truth of the averments of
this paragraph and strict proof thereof is demanded at trial.
22. The allegations of paragraph 22 are denied as conclusions of law to which no
responsive pleading is required and strict proof thereof is demanded at trial. By way of further
answer and to the extent that such a responsive pleading is required, it is averred that Defendant,
S.A.C. Enterprises, Inc., did not breach the agreement. By way of further answer, it is averred
that Plaintiffs breach of contract action against Defendant, Shantilal N. Patel, has been
dismissed by virtue of the Order dated June 28, 2000 granting his Preliminary Objections thereto
and it is therefore unnecessary for him to respond to the allegations of this paragraph directed to
him individually. By way of further answer, it is averred that Defendant, S.A.C. Enterprises,
Inc., is without sufficient knowledge or information to form a belief as to the truth of the
remainder of the averments of this paragraph and strict proof thereof is demanded at trial.
WHEREFORE, Defendant, S.A.C. Enterprises, Inc., respectfully requests that the
allegations set forth in Count I of Plaintiffs' Complaint be dismissed with prejudice and
judgment be entered in its favor.
COUNT II
(Fraudulent Misrepresentation)
23. Paragraph 23 is an incorporation paragraph to which no responsive pleading is
required.
24. The allegations of paragraph 24 are denied. Defendants are without sufficient
knowledge or information to form a belief as to the truth of the averments of this paragraph
pertaining to what Defendant, Shri Paras, Inc. relied upon and strict proof thereof is demanded at
trial. By way of further answer and to the extent that such an answer is required, it is averred that
all monies owed by Defendant, S.A.C. Enterprises, Inc., pursuant to the Franchise Agreement
were paid by said Defendant and the Agreement contained no misrepresentations and/or
fraudulent misrepresentations by said Defendant.
25. The allegations of paragraph 25 are denied. To the contrary, it is averred that
Defendant, Shantilal N. Patel, did not make any misrepresentations and/ or fraudulent
misrepresentation and/or lead Plaintiffs to believe that the franchise fees as well as all other
contracts were not paid in full. By way of further answer, said fees and contracts were paid by
Defendant, S.A.C. Enterprises, Inc.
26. The allegations of paragraph 26 are denied. To the contrary, it is averred that no
false representations were made by Defendants pertaining to the monies owed on the Franchise
Agreement. By way of further answer, it is averred that the remainder of the allegations of this
paragraph are conclusions of law to which no responsive pleading is required and strict proof
thereof is demanded at trial. By way of further answer and to the extent that such a responsive
pleading is required, it is averred that Defendants made no fraudulent misrepresentations to
Plaintiffs.
27. The allegations of paragraph 27 are denied. The allegations of this paragraph are
either conclusions of law to which no responsive pleading is required or aver facts to which
Plaintiffs do not possess sufficient knowledge or information to form a belief as to the truth
thereof and strict proof thereof is demanded at trial. By way of further answer and to the extent
that such a responsive pleading is required, it is averred that Defendants made no fraudulent
misrepresentations to Plaintiffs.
WHEREFORE, Defendants, S.A.C. Enterprises, Inc. and Shantilal N. Patel, respectfully
requests that the allegations set forth in Count H of Plaintiffs' Complaint be dismissed with
prejudice and judgment be entered in their favor.
COUNT III
(Fraudulent Misrepresentation)
26. Paragraph 26 is an incorporation paragraph to which no responsive pleading is
required.
27. The allegations of paragraph of paragraph 27 are denied. To the contrary, it is
averred that the representations made by Defendants pertaining to renovations required by the
Franchiser of which Defendant, had knowledge are set forth in paragraph 5(b) of the agreement.
By way of further answer, Defendants are without sufficient knowledge or information to form a
belief as to the truth of the remainder of the averments of this paragraph and strict proof thereof
is demanded at trial.
28. The allegations of paragraph 28 are denied. To the contrary, it is averred that
Defendants made no false representations to Plaintiffs pertaining to the renovations required. By
way of further answer, Defendants are without sufficient knowledge or information to form a
belief as to the truth of the remainder of the averments of this paragraph and strict proof thereof
is demanded at trial.
WHEREFORE, Defendant, S.A.C. Enterprises, Inc. and Shantilal N. Patel, respectfully
requests that the allegations set forth in Count III of Plaintiffs' Complaint be dismissed with
prejudice and judgment be entered in their favor.
NEW MATTER
29. Defendants incorporate by reference the averments set forth in their answers to
paragraphs 1 through 28 above by reference as though more fully set forth herein.
30. Defendant, S.A.C. Enterprises, Inc., did not breach the Agreement.
31. Defendants, S.A.C. Enterprises, Inc., and Shantilal N. Patel, timely complied with
all aspects of the Franchise Agreement, including the payment of Franchise fees.
32. Neither Defendant, S.A.C. Enterprises, Inc., nor Defendant, Shantilal N. Patel,
made any misrepresentations of fact and/or fraudulent misrepresentations to Plaintiffs pertaining
to any aspect of the Agreement and/or the Franchise Agreement.
33. Even if Defendant, S.A.C. Enterprises, Inc., and/or Defendant, Shantilal N. Patel,
had made fraudulent misrepresentations and/or misrepresentations of fact to Plaintiffs pertaining
to the Agreement, which said Defendants emphatically deny doing, Plaintiffs could not have
and/or did not justifiably rely thereon.
34. Any revenues lost and/or damages incurred by Plaintiffs relating to the allegations
set forth in their Complaint occurred as a result of their own conduct.
35. Plaintiffs waived and/or are estopped from pursuing their claims of fraudulent
misrepresentation.
36. Plaintiffs' Complaint fails to set forth claims against Defendants, S.A.C.
Enterprises, Inc. and Shantilal N. Patel, upon which relief can be granted.
37. Plaintiffs' claims are otherwise barred by the doctrine of estoppel.
38. Plaintiffs' claims are barred by the doctrine of lathes.
39. Plaintiffs' claims are barred by the doctrine of release.
40. Plaintiffs' claims are barred by the applicable statute of limitations.
41. Plaintiffs' claims are otherwise barred by the doctrine of waiver.
WHEREFORE, Defendant, S.A.C. Enterprises, Inc. and Shantilal N. Patel, respectfully
requests that this Honorable Court dismiss with prejudice all allegations set forth in Plaintiffs'
Complaint and enter judgment in their favor.
Respectfully submitted,
Kenneth Millman, Esquire
I.D. No. 75272
Leisawitz Heller Abramowitch Phillips, P.C.
2201 Ridgewood Road
Wyomissing, PA 19610-1193
(610) 372-3500
Attorney for Defendants
VERIFICATION
I, SHANTILAL N. PATEL, individually and as President of S.A.C. Enterprises, Inc.,
verify that the attached Answer with New Matter is based upon information which I have
furnished to my counsel and information which have been gathered by counsel in the preparation
of the prosecution of the within action. The language of the Answer with New Matter is that of
counsel. I have read the attached Answer with New Matter and to the extent that it is based upon
information which I have given to my counsel, it is true and correct to the best of my
knowledge, information and belief. To the extent that the content of the attached Answer with
New Matter is that of counsel, I have relied upon counsel in making this verification. I
understand that false statements herein are made subject to the penalties of 18 PA. C.S. Section
4904 relating to unsworn falsification to authorities.
SHANTILAL N. PATEL
Dated: I C I 2000
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SHRI PARAS, INC., and
PRAFUL C. SANGHANI
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
V.
S.A.C. ENTERPRISES, INC.
and SHANTILAL N. PATEL
NO. 99-7262 CIVIL TERM
CIVIL ACTION -LAW
AND NOW, this 25" day of AUGUST, 2000, a Rule is issued upon defendants
to Show Cause, if any they have, why Receivers Should Not be Appointed Pursuant to
the Fraudulent Conveyance Act.
Rule returnable ten (10) days after service.
By the Cou ,
Edward E. Guido, J.
James N. Clymer, Esquire
For the Plaintiffs
Kenneth Millman, Esquire
For the Defendants
:sld
C l `Lh?
g a s -00
R6
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AUG 1 5 200a
G'
IN THE COURT OF COMMON PLEAS Of CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
SHRI PARAS, INC., and 1111A<:UL C.
SANGIIANI,
Plaintiffs
V. No: 1999-7262
S.A.C. ENTERPRISES, INC. and
SHANTILAL N. PATEL,
Defendants
RULE
AND NOW, this day of , 2000, upon consideration of
Plaintiff's' Petition, a Rule is entered upon S.A.C. Enterprises. Inc. and Shantilal N. Patel to show
cause, if any they have. why Receivers Should Not be Appointed Pursuant to the Fraudulent
Conveyance Act, 12 Pa. C.S.A. Section 5101 ct seq.
Rule Returnable
BY T1IE COURT:
J.
AT,ms,r:
IN THE COURT OP COMMON PLEAS 01' CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
SHRI PARAS, INC., and PRAFUL C.
SANGHANI,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC. and
SHANTILAL N. PATEL,
Defendants
No: 1999-7262
ORDER
AND NOW this day of , 2000, upon consideration of the
within Petition, Clymer & Musser, P.C. and Leisawitz Heller Abramowitch Phillips, P.C. are
appointed joint receivers of the escrow fund currently held solely by Clymer & Musser, P.C. The
receivers shall deposit the funds in a federally insured depository institution. The account may be
an interest bearing account if S.A.C. Enterprises, Inc. provides the receivers with a federal tax
identification number. The funds in the account shall not be disbursed to S.A.C. Enterprises, Inc.
until further Order of Court.
BY THE COURT
J.
ATTEST:
IN THE COURT OF COMMON PL VIL F ACTION - CUMBERLAND I COUNTY. PENNSYLVANIA
SHRI PARAS, INC., and PRAFUL C.
SANGHAN19
Plaintiffs
No: 1999-7262
V.
S.A.C. ENTERPRISES, INC. and
SHANTILAL N. PATEL,
Defendants
PETITION FOR RULE TO SHOW CAUSE WHY RECEIVERS
SHOULD NOT BE APPOINTED PURSUANT TO
THE UNIFORM FRAUDULENT CONVEYANCE ACT
12 PA C S A Section 5101 et. sea.
AND NOW COMES Plaintiffs, by and through their attorney, James N. Clymer, Esquire,
and Clymer & Musser, P.C. and in support of this Petition allege the following:
1. The Plaintiffs and Defendants are engaged in legal action docketed to 1999-7262 in
the Court of Common Pleas in and for the County of Cumberland. Commonwealth of Pennsylvania.
The action consists of three counts for relief: one for breach of contract and two counts of fraudulent
misrepresentation.
2. Plaintiffs' action seeks damages of at least $150.000.00 together with interest and
costs. A trial date for the action has not yet been set.
3. "file action arose out of the sale of a motel property known as the Rodeway Int. from
S.A.C. Enterprises. Inc. (hereinafter referred to as the "Corporation") to Shri Paras, Inc.
4. As part of the transaction, there was escrowed $20.000.00, held jointly by Buyers
attorney, James N. Clymer and Seller's attomcy. John W. Purcell, .Ir. pending receipt of a Corporate
Clearance Certificate from the Pennsylvania Department of Revenue.
5. The parties have now received the Corporate Clearance Certificate and under the
terms of the escrow agreement the escrowed funds are immediately due and payable to Corporation.
The Corporation has threatened to bring action against Clymer & Musser. P.C. for failure to remit
the funds.
6. Plaintiffs believe and over that the Rodeway Inn was the only asset owned by the
Corporation and since its sale, the Corporation has been out of business and is believed to have
disbursed its assets except for the $20,000.00 in escrow.
7. Should Clymer & Musser, P.C. remit the funds to the Corporation and the funds be
transferred to Defendant Patel, or otherwise disbursed, the Corporation will be rendered insolvent,
leaving no assets with which to satisfy a judgment obtained by Plaintiffs.
8. Plaintiffs have no knowledge whatsoever of the assets of Defendant Shantilal N.
Patel except that he is a shareholder of the Corporation.
9. Plaintiffs believe that Defendants have no insurance or other source of funds with
which to satisfy their claim.
10. The Uniform Fraudulent Transfer Act provides that a creditor with a non-matured
claim such as Plaintiffs', may proceed in a Court of competent jurisdiction against the Defendants
as if their claims had matured, and the Court may restrain the Defendant from disposing of their
property or appoint a receiver to hold assets, as set forth in 12 Pa. C.S.A. Section 5107(a)(3)(i).
WHEREFORE, Plaintiffs respectfully request this Honorable court enter a Rule Returnable
on Defendants S.A.C. Enterprises, Inc. and Shantilal N. Patel to show cause why an Order should
not be entered appointing Clymer & Musser, P.C. and Lcisawitz Heller Abramowitch Phillips, P.C.
as receivers and/or escrow agents to hold the funds in escrow until the action has been resolved.
Respectfully Submitted.
CLYMER & MUSSER, P.C.
.lames N. lyma , ire
Attorney for Plaintiffs
23 North Lime Street
Lancaster, PA 17602-2912
(717) 299-7101
I.D.#27151
Dated: August It, 2000
VERIFICATION
PURSUANT TO PA. R.C.P. NO. 1024 (c)
James N. Clymer, Esquire, states that he is the attorney for the party filing the foregoing
document; that he makes this affidavit as an attorney, because the party he represents lacks sufficient
knowledge or information upon which to make a verification and/or because he has greater personal
knowledge of the information and belief than that of the party for whom he makes this affidavit;
and/or because the party for whom he makes this affidavit is outside the jurisdiction of the Court,
and verification of none of them can be obtained within the time allowed for the filing of the
pleading; and that he has sufficient knowledge of information and belief, based upon his
investigation of the matter averred or denied in the foregoing document; and that this statement is
made subject to the penalties of 18 Pa. C.S. Section 4904, relating to unswom falsification to
authorities.
Jame . ,squire
Dated: August 11, 2000
CERTIFICATION
I hereby certify that I all this day serving a copy of the foregoing Petition for Rule to Show
Cause Why Receivers Should Not be Appointed Pursuant to the Uniform Fraudulent Conveyance
Act 12 Pa.C.S.A. Section 5101 el. seq. to the persons and in the manner indicated below, which
service satisfies the requirement of Pa.R.C.P. 440.
Service by first class mail, postage prepaid, addressed as follows:
Kenneth Millman, Esquire
Leisawitz Heller Abramowitch Phillips, P.C.
Berkshire Commons
Suite 400
2201 Ridgewood Road
Wyomissing, PA 19610-1193
CLYMER & MUSSER, P.C.
.IAM? R
Attorney for Plaintiffs
23 North Lime Street
Lancaster, PA 17602
(717) 299-7101
Attorney ID# 27151
Dated: August 11, 2000
..
SHRI PARAS, INC., and IN THE COURT OF COMMON PLEAS OF
PRAFUL C. SANGHANI CUMBERLAND COUNTY, PENNSYLVANIA
V.
S.A.C. ENTERPRISES, INC.: NO. 99-7262 CIVIL TERM
and SHANTILAL N. PATEL:
AND NOW, this 13TH day of SEPTEMBER, 2000, it having been related to the
Court that the parties have agreed upon the disposition of the escrowed funds, and at the
request of Petitioner, the Rule to Show Cause dated August 25, 2000, is VACATED.
By the
James N. Clymer, Esquire
For the Plaintiffs
Ce un qk, [«( 9 .00
Kenneth Millman, Esquire
For the Defendants
:sld
1 4;n.
JAMES N. CLYMER
ROBERT F. MUSSER
JEFFREY D. M0I4 LER
IRA WAGLER
LEONARD G. BROWN m
CLYMER 8 MUSSER, P. C.
ATTORNEY5 AT LAW
23 NORTH LIME STREET
POST OFFICE BOX 1766
LANCA5TER,PA 17608.1766
(717) 299.7101
FAX (717) 299.5115
E-MAIL IawUclymer.nat
September 7, 2000
The Honorable Edward E. Guido
Cumberland County Courthouse
1 Courthouse Square
Carlisle, PA 17013-3387
210 NORTH STATE STREET
EPHRATA,PA 17522
(717) 733.7471
3535 OLD PHILADELPHIA PIKE
P05T OFFICE BOX 106
INTERCOURSE, PA 17534
(717) 768-3423
DIRECT ALL CORRESPONDENCE
TO THE LANCASTER OFFICE
RE: SHRI PARRS, INC. and PRAFUL C. SANGHANI v. S.A.C. ENTERPRISES, INC.
and SHANTILAL N. PATEL
NO. 1999-7262
Dear Judge Guido:
Please be advised that the parties have worked out an amicable resolution for the
disposition of the escrowed funds that were the subject of the Petition for Rule to Show Cause
Why Receivers Should Not be Appointed Pursuant to the Uniform Fraudulent Conveyance Act,
for which a Rule returnable was issued. Consequently, Plaintiff hereby withdraws the Petition
and asks that the Rule be vacated.
Very truly yours.
JNC:JF
PC: Shri Paras, Inc.
Kenneth Millman, Esquire
SEP 1 1 2000)
ymer
James
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I, Kenneth Millman, Esquire, do hereby certify that a true and correct copy of
the "Interrogatories of Defendants, S.A.C. Enterprises, Inc. and Shantilal N. Patel
Addressed to Plaintiffs, Shri Paras, Inc. and Praful C. Sanghani" and "Request for
Production of Documents of Defendants, S.A.C. Enterprises, Inc. and Shantilal N. Patel,
Addressed to Plaintiffs, Shri Paras, Inc. and Praful C. Sanghani" were served on the
following person, at the following address, via United States First Class Mail, postage
prepaid.
James N. Clymer, Esquire
23 N. Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
I understand that statements herein are made subject to the penalties of 18 PA.
C.S. 4904 relating to unsworn falsification to authorities.
E ETH MILLMAN, ESQUIRE
Attorney I.D. Number 75272
Leisawitz Heller Abramowitch Phillips, P.C
2201 Ridgewood Road
Suite 400
Wyomissing, PA 19610
Dated: October 18, 2000
Iii
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C.
11
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I, Kenneth Millman, Esquire, do hereby certify that a true and correct copy of
the Reply of Defendants to Plaintiffs' First Request for Admissions; Response of
Defendants to Plaintiffs' Interrogatories Requesting Information Concerning Experts;
Response of Defendants to Plaintiffs' First Set of Requests for Production of
Documents; and Response of Defendants to Plaintiff's First Set of Interrogatories were
served on the following person, at the following address, via United States First Class
Mail, postage prepaid.
James N. Clymer, Esquire
23 N. Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
I understand that statements herein are made subject to the penalties of 18 PA.
C.S. 4904 relating to unsworn falsification to authorities.
EN H MILLMAN, ESQUIRE
Attorney I.D. Number 75272
Leisawitz Heller Abramowitch Phillips, P.C
2201 Ridgewood Road
Suite 400
Wyomissing, PA 19610
Dated: November 7, 2000
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SHRI PARRS, INC., a Pennsylvania
Corporation, and PRAFUL C. SANGHANI
an adult indivicual,
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
Plaintiffs,
V.
NO. 99-7262 CIVIL
S.A.C. ENTERPRISES, INC., a Pennsylvania
Corporation, and SFIANTILAL N. PATEL,
an adult individual,
Defendants.
CIVIL ACTION - LAW
CERTIFICATE
PREREQUISITE TO SERVICE OF A SUBPOENA
PURSUANT 1.0 RULE 4009.22
As a prerequisite to service of a subpoena for documents and things pursuant to Rule
4009.22, plaintiffs certify that:
(1) a notice of intent to serve the subpoena with a copy of the subpoena attached
thereto was mailed or delivered to each party and each party has waived the
twenty-day notice requirement;
(2) a copy of the notice of intent, including the proposed subpoena, is attached
to this certificate;
(3) no objection to the subpoena has been received; and,
(4) the subpoena which will be served is identical to the subpoena which is
attached to the notice of intent to serve the subpoena.
CLYMER & MUSSER, P.C.
By: ?G ?JW f 1 z
Leonard G. Brown III
Attorney for Plaintiffs
23 North Lime St.
Lancaster, PA 17602
ID # 83207
(717) 299-7101
Dated: 0- (r-JODQ
SHRI PARRS, INC., a Pennsylvania
Corporation, and PRAFUL C. SANGHANI,
an adult individual,
Plaintiffs,
V.
S.A.C. ENTERPRISES, INC., a Pennsylvania
Corporation, and SHANTILAL N. PATEL,
an adult individual,
Defendants.
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
1
NO. 99-7262 CIVIL
CIVIL ACTION - LAW
SUBPOENA TO PRODUCE DOCUMENTS
OR THINGS FOR DISCOVERY
PURSUANT TO RULE 4009.22
TO: Choice Hotels International, 10750 Columbia Pike, Silver Spring, Maryland 20901.
Within twenty (20) days after service of this subpoena, you are ordered by the court to
produce the following documents and things:
I. All correspondence between Choice Hotels International, Inc. (or Rodeway Inn) and
defendants from 1995 to the present relating to the property located at 1239 Harrisburg Pike,
Carlisle, Pennsylvania 17013 ("the Property").
2 Copies of all letters, memoranda, correspondence, records, and all other written materials
pertaining to contracts or agreements between Choice Hotels International, Inc. (or Rodeway
Inn) and defendants and relating in any way to the Property .
3. All bills paid by or due from defendants relating to tite Property for the years 1998 - 1999.
4. All results, reports, notes, internal memorandums, correspondence or any other writing
relating to inspections of any kind involving the Property between January 1, 1995 and
December 31, 1999.
5. All results, reports, notes, internal memorandums, correspondence or any other writing
relating to discussions or decisions regarding: (1) termination of the franchise agreement
between Choice Hotels Inc. and plaintiffs or defendants; (2) participation in the "Quality
Assurance Corrective Action Plain" or, (3) failure of the Property to meet minimum
standards and requirements of the "Choice System's Rules and Regulations."
6. The name and current address and telephone number of cacti person involved in the Quality
Assurance Reviews of the Property from January 1, 1998, to the present to include, but not
limited to the following individuals: Parnie Verenis, Kevin Rooney, Bill Hutchison, Helen
Donelan, Fran Toloricco, and Bill Wymer.
Please produce the above documents and things at Clymer & Musser, P.C., 23 North Lime St.,
Lancaster, PA 17602.
You may deliver or mail legible copies of the documents or produce things requested by this
subpoena, together with the certificate of compliance, to the party making this request at the address
listed above. You have the right to seek in advance the reasonable cost of preparing the copies or
producing the things sought.
If you fail to produce the documents or things required by this subpoena within twenty (20)
days after its service, the party serving this subpoena may seek a court order compelling you to
comply with it.
This subpoena was issued at the request of the following person
Leonard G. Brown III
Attorney for Plaintiffs
23 North Lime St.
Lancaster, PA 17602
ID # 83207
(717) 299-7101
BY THE COURT:
By
(Prothonotary)
DATE:
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Doc # 41083
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
JURY TRIAL DEMANDED
NOTICE OF TAKING DEPOSITION
TO: Praful C. Sanghani
c/o: Leonard G. Brown, III, Esquire
Clymer & Musser, P.C.
23 North Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
PLEASE TAKE NOTICE that starting at 10:00 a.m., Thursday, February 1, 2001, at the
Wyomissing Law Offices of Leisawitz Heller Abramowitch Phillips P.C., 2201 Ridgewood Road,
Suite 400, Wyomissing, PA 19610, the Defendant in the above-entitled action will take the oral
depositions of PRAFUL C. SANGHANI, Plaintiff, pursuant to the Pennsylvania Rules of Civil
Procedure, before a Notary Public or before another officer authorized by law to administer
oaths.
Respectfully submitted,
BY:
KENNETH MILLMAN, ESQUIRE
Attorney I.D. No.75272
2201 Ridgewood Road, Suite 400
Wyomissing, PA 19610-1193
(610) 372-3500
Attorney for Plaintiff
Dated: December 26, 2000
cc: Computerized Reporting Services
Doc # 41067
SHRI PARAS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs
V.
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
NO: 99-7262
S.A.C. ENTERPRISES, INC.
a Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the "Notice of Deposition" was this
day served by U.S. First Class Mail, postage pre-paid, upon the following:
Leonard G. Brown, III, Esquire
Clymer & Musser, P.C.
23 North Lime Street
P.O. Box 1766
Lancaster, PA 17608-1766
Computerized Reporting Services, Inc.
49 Penn Avenue
Sinking Spring, PA 19608
I understand that statements herein are made subject to the penalties of 18 Pa.
C.S. 4904 relating to unsworn falsification to authorities.
Respectfully Submitted:
BY:
KENNETH MILLMAN, ESQUIRE
Attorney for Plaintiff
Dated: December 26, 2000
C )N
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SIIRI PARRS, INC., it Pennsylvania
Corporation, and PRAFUL C.
SANGHAIVI, an adult individual,
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
Plaintiffs,
V.
NO. 99-7262 CIVIL
S.A.C. ENTERPRISES, INC., a Pennsylvania
Corporation, and SHANTILAL N. PATEL,
an adult individual,
Defendants.
CIVIL ACTION - LAW
CERTIFICATE OF COMPLIANCE
WITH SUBPOENA TO PRODUCE DOCUMENTS AND THINGS
PURSUANT TO RULE 4009.23
on behalf ofChoice Hotels International, certify to
the best of my knowledge, information and belief that all documents or things required to be
produced pursuant to the subpoena issued on I x)11_ 166 lhave been produced.
LSL?
Date: 12 1 o-R) Do
Signature
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SHRI PARRS, INC., a Pennsylvania
Corporation, and PRAFUL C.
SANGHANI, an adult individual,
Plaintiffs,
V.
S.A.C. ENTERPRISES, INC., a
Pennsylvania Corporation, and
SHANTILAL N. PATEL, an adult
individual,
Defendants.
TO THE PROTHONOTARY:
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
NO. 99-7262 CIVIL
CIVIL ACTION - LAW
Please mark the above matter settled, ended, discontinued and costs paid,
Leonard G. Brown, III
Clymer & Musser
Attorney for Plaintiffs
23 North Lime Street
Lancaster, PA 17602-2912
(717) 299-7101
I.D.#83207
DISCONTINUANCE CERTIFICATE
AND NOW,
?2?./? suit has been marked as direc above.
PROTHONOTARY