Common use of Replacement Franchise Agreements Clause in Contracts

Replacement Franchise Agreements. Purchaser shall use its diligent efforts to obtain a Replacement Franchise Agreement for each Hotel Asset effective as of the Closing. Prior to Closing, Purchaser may request any franchisor to disclose the terms of any existing Franchise Agreement with Sellers, and Sellers shall deliver to Purchaser any Franchise Agreement for which it receives the written consent of the applicable franchisor to disclose to Purchaser (provided, however, that, although they will not object to any such consent, Sellers shall have no obligation to pursue the same). Purchaser shall keep the applicable Seller reasonably informed of the status of all negotiations and material communications with franchisors (including their respective advisors and representatives) Purchaser shall submit all franchise agreement applications and pay all application or other fees in connection therewith as soon as reasonably practicable after Purchaser’s initial meeting with the applicable franchisor, and shall thereafter diligently pursue obtaining Replacement Franchise Agreements. Purchaser shall immediately cease and refrain from engaging in any discussions or negotiations with franchisors regarding any Hotel Asset that is an Excluded Hotel Asset; provided, however, that in the event that Purchaser has the right to exercise its rights under Section 2.6 to substitute any Hotel Asset for an Excluded Hotel Asset, Purchaser may reengage with franchisors to discuss the potential terms of a Replacement Franchise Agreement for any potential substituted Excluded Hotel Asset, and once an Excluded Hotel Asset has been substituted in accordance with Section 2.6 to negotiate a Replacement Franchise Agreement for any such substituted Excluded Hotel Asset, so long as Purchaser immediately ceases all discussions or negotiations with franchisors in regards to the substituted Hotel Asset which is then deemed an Excluded Hotel Asset for all purposes hereunder. Without limitation of Section 14.9, only for so long as this Agreement is in effect, Purchaser and Sellers shall keep the arrangements regarding Agreed PIP Allocations and credits in respect of property improvement plans required in connection with the Replacement Franchise Agreements strictly confidential, and shall not share such information with franchisors or any other third parties.

Replacement Franchise Agreements. Purchaser shall use its diligent efforts to obtain a Replacement Franchise Agreement for 4.7.1 At and effective upon each Hotel Asset effective as of the applicable Closing. Prior to Closing, Purchaser may request any franchisor to disclose the terms of any existing Franchise Agreement with Sellers, and Sellers shall deliver to Purchaser any Franchise Agreement for which it receives the written consent of the applicable franchisor to disclose to Purchaser (provided, however, that, although they will not object to any such consent, Sellers shall have no obligation terminate each of the Franchise Agreements with respect to pursue the same). Hotel Assets sold in that Closing. 4.7.2 During the Due Diligence Period, Purchaser shall keep work with the applicable Seller reasonably informed respective franchisors of the status Hotel Assets to negotiate the material terms of all negotiations and material communications with franchisors (including their respective advisors and representatives) Purchaser shall submit all franchise agreement applications and pay all application or other fees in connection therewith as soon as reasonably practicable after Purchaser’s initial meeting with the applicable franchisor, and shall thereafter diligently pursue obtaining Replacement Franchise Agreements, including (i) the term thereof (which is expected to be for 15 years from the applicable Closing Date) and (ii) the fees and charges thereunder. Purchaser shall immediately cease and refrain from engaging in any discussions or negotiations with franchisors regarding any Hotel Asset that is an Excluded Hotel Asset; provided, however, that in the event that Purchaser has the right to exercise its rights under Section 2.6 to substitute any Hotel Asset for an Excluded Hotel Asset, Purchaser may reengage with franchisors to discuss the potential terms of a Replacement Franchise Agreement for any potential substituted Excluded Hotel Asset, and once an Excluded Hotel Asset has been substituted in accordance with Section 2.6 to negotiate a Replacement Franchise Agreement for any such substituted Excluded Hotel Asset, so long as Purchaser immediately ceases all discussions or negotiations with franchisors in regards With respect to the substituted Hotel Asset which is then deemed an Excluded Hotel Asset for all purposes hereunder. Without limitation scope of Section 14.9, only for so long as this Agreement is in effect, Purchaser and Sellers shall keep the arrangements regarding Agreed PIP Allocations and credits in respect of property improvement plans required in connection with the Replacement Franchise Agreements, Sellers and Purchaser shall work collectively with the respective franchisors of the Hotel Assets to negotiate the material terms thereof. Schedule 4.7.2 sets forth, for each Hotel Asset, an estimate of the costs of the property improvements plans projected as of the Effective Date to be required under the Replacement Franchise Agreements, which schedule was prepared by Sellers in consultation with Purchaser based on Sellers’ good faith estimation of the work that will be required (each, a “Seller PIP Estimate”). The aggregate amount of the Seller PIP Estimates for all of the Hotel Assets equals $7,542,450, but if this Agreement is terminated as to any Hotel Asset then such Hotel Asset shall be removed from Schedule 4.7.2 and the Seller PIP Estimate and the Project Firm PIP Estimate of such Hotel Asset shall both be reduced to zero. 4.7.3 Purchaser shall lead the negotiations with the respective franchisors of the Hotel Assets, but Sellers shall cooperate with and assist Purchaser in such negotiations as Purchaser may request. If such negotiations are successful, then prior to the end of the Due Diligence Period, Purchaser will agree on letters of intent, term sheets, memoranda of understanding or other non-binding preliminary documents reflecting the material terms upon which Purchaser and the franchisor would agree to enter into Replacement Franchise Agreements strictly confidential(the “Replacement Franchise Terms”). 4.7.4 If, for any reason or no reason, Purchaser, in its sole and absolute discretion, is not satisfied with or unable or unwilling to agree with the franchisors on the Replacement Franchise Terms, Purchaser may terminate this Agreement in its entirety pursuant to Section 8.1.3 prior to the end of the Due Diligence Period and receive a return of the Deposit (and the interest thereon). 4.7.5 If Purchaser does not terminate this Agreement pursuant to Section 8.1.3 then, after determining the scope of the property improvement plans (as reflected in the Replacement Franchise Terms agreed during the Due Diligence Period or in other formal or informal arrangements agreed following the Due Diligence Period) (the “Required PIPs”), Purchaser shall, at its sole cost and expense, engage nationally recognized project management firms to price out the negotiated Required PIPs. Purchaser agrees to work in good faith with the franchisors on the scope and timing of such Required PIPs. Sellers may suggest project management firms and shall have reasonable approval rights over Purchaser’s choice of firms. 4.7.6 At least 45 days prior to the First Pool Closing, the project management firms selected by Purchaser and approved by Sellers shall provide their pricing estimates for the Required PIPs for each of the Hotel Assets in a written report to Purchaser and Sellers. If the aggregate estimated costs for the Required PIPs (each, a “Project Firm PIP Estimate”) for all of the Hotel Assets (i.e., the First Pool Assets and the Second Pool Assets) purchased or to be purchased at the First Closing and Second Closing, are less than or equal to 148.387097% of the Seller PIP Estimates for all such Hotel Assets (i.e., initially $11,192,023, subject to reduction if this Agreement is terminated as to any Hotel Asset), then the Purchase Price shall be reduced in accordance with Section 4.7.8(a) by an amount equal to the product of (i) 50% and (ii) the difference between (x) the aggregate Project Firm PIP Estimates for all such Hotel Assets and (y) the aggregate Seller PIP Estimates for all such Hotel Assets (unless otherwise agreed to by Purchaser and Sellers, such reduction to be allocated among the Hotel Assets by multiplying such amount by a fraction the numerator of which is the Allocated Purchase Price in respect of such Hotel Assets and the denominator of which is the Allocated Purchase Price for all the Hotel Assets, and Schedule 2 shall be amended accordingly to reflect such reduction in the Purchase Price). If the aggregate Project Firm PIP Estimates for all of the Hotel Assets (i.e., the First Pool Assets and Second Pool Assets) purchased or to be purchased at the First Closing and Second Closing exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets, then Sellers shall have 10 days to exercise their right to cure by notifying Purchaser in writing that Sellers have elected to reduce the Purchase Price in accordance with Section 4.7.8(c) by the amount by which the aggregate Project Firm PIP Estimates for all such Hotel Assets exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets (which reduction shall be in addition to the reduction pursuant to the preceding sentence with respect to the portion of the Project Firm PIP Estimates that are less than or equal to 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets but greater than the Seller PIP Estimates) (unless otherwise agreed to by Purchaser and Sellers, such reduction to be allocated among the Hotel Assets by multiplying such amount by a fraction the numerator of which is the Allocated Purchase Price in respect of such Hotel Assets and the denominator of which is the Allocated Purchase Price for all the Hotel Assets, and Schedule 2 shall be amended accordingly to reflect such reduction in the Purchase Price). 4.7.7 If Sellers do not share elect to cure by delivering written notice to Purchaser within the 10-day period referred to in Section 4.7.6, then Purchaser shall be permitted to terminate this Agreement in its entirety upon written notice to Sellers so long as the notice is provided at least 30 days prior to the First Pool Closing, whereupon Purchaser shall receive a return of the Deposit (and the interest thereon). If Sellers do not elect to cure and Purchaser proceeds to the applicable Closing (subject to the terms of this Agreement), then the Purchase Price shall be reduced in accordance with Section 4.7.8(b). Notwithstanding anything to the contrary set forth herein, if the Project Firm PIP Estimates are not completed by July 15, 2015, each of the Closing Dates shall be extended by one day for each day after July 15, 2015 that such information Project Firm PIP Estimates are completed, but not later than the date set forth in Section 4.1; provided, however, that if, as a result of such extension, the Closing Date falls on a day which is not a Business Day, such Closing Date shall be extended to the next succeeding Business Day. 4.7.8 Since the Hotel Assets are to be acquired in multiple closings, the Purchase Price adjustment pursuant to Section 4.7.6 shall be made as follows: (a) If the aggregate Project Firm PIP Estimates for all of the Hotel Assets (e.g., the First Pool Assets and Second Pool Assets) purchased or to be purchased at the First Closing and Second Closing do not exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets, then at each Closing, the applicable Purchase Price shall be reduced in accordance with franchisors the following formula: (b) If the aggregate Project Firm PIP Estimates for all of the Hotel Assets (e.g., the First Pool Assets and Second Pool Assets) purchased or any other third partiesto be purchased at the First Closing and Second Closing exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets, Sellers have not agreed to cure as provided in Section 4.7.6 and Purchaser has not terminated this Agreement pursuant to Section 4.7.7, then at each Closing, the applicable Purchase Price shall be reduced in accordance with the following formula: (c) If the aggregate Project Firm PIP Estimates for all of the Hotel Assets (e.g., the First Pool Assets and Second Pool Assets) purchased or to be purchased at the First Closing and Second Closing exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets and Sellers have agreed to cure as provided in Section 4.7.6, then at each Closing, the applicable Purchase Price shall be reduced in accordance with the following formula: Where: N = Amount of applicable Purchase Price adjustment at such Closing. N will be calculated on a cumulative basis at each Closing. There will be no increase or decrease to the Purchase Price if N is a negative number and in no event or circumstance will this Section 4.7 result in an increase in the Purchase Price, but a true-up will be made at the Second Closing if and to the extent the aggregate net reductions to the Purchase Price at the First Closing (if any) pursuant to this Section 4.7 exceed or are less than N. In no event will N exceed $1,824,787 pursuant to Section 4.7.8(a) or (b), but there shall be no such limitation pursuant to Section 4.7.8(c). S = With respect to the First Closing, the aggregate amount of Seller PIP Estimates for the Hotel Assets purchased or to be purchased at the First Closing. With respect to the Second Closing, the aggregate amount of Seller PIP Estimates for the Hotel Assets purchased or to be purchased at the First Closing and Second Closing. P = With respect to the First Closing, the aggregate amount of Project Firm PIP Estimates for the Hotel Assets purchased or to be purchased at the First Closing. With respect to the Second Closing, the aggregate amount of Project Firm PIP Estimates for the Hotel Assets purchased or to be purchased as the First Closing and Second Closing.

Replacement Franchise Agreements. Purchaser shall use its diligent efforts to obtain a Qualified Replacement Franchise Agreement for each Hotel Asset with the existing franchisor as of the Effective Date effective as of the ClosingClosing (or, in the case of the Specified Hampton Inn Assets, a Replacement Franchise Agreement). Prior to Closing, Purchaser may request any franchisor to disclose the terms of any existing Franchise Agreement with Sellers, and Sellers shall deliver to Purchaser any Franchise Agreement for which it receives the written consent of the applicable franchisor to disclose to Purchaser (provided, however, that, although they will not object to any such consent, Sellers shall have no obligation to pursue the same). Purchaser shall keep the applicable Seller reasonably informed of the status of all negotiations and material communications with franchisors (including their respective advisors and representatives); provided, however, that in the event that any franchisor informs Purchaser that it may not be, or is not, willing to enter into a franchise agreement for any Hotel Asset with a term of at least ten (10) years, Purchaser shall promptly (and in no event later than five (5) Business Days after becoming aware of such franchisor’s position) notify Sellers in writing of such fact and Sellers shall thereafter have the right to engage directly with such franchisor to attempt to negotiate for a franchise agreement with a term of at least ten (10) years (provided that Sellers shall keep Purchaser involved in such negotiations). Purchaser shall negotiate the scope of work and timing for all Change of Control PIP with the applicable franchisors upon the receipt thereof and shall keep the applicable Seller reasonably informed of the status of all negotiations and material communications with franchisors with respect thereto. Purchaser shall submit all franchise agreement applications and pay all application or other fees in connection therewith as soon as reasonably practicable after Purchaser’s initial meeting with the applicable franchisor, and shall thereafter diligently pursue obtaining Replacement Franchise Agreements, scopes of work and the amounts of all Change of Control PIP from the applicable franchisors. Purchaser “Change of Control PIP” shall immediately cease and refrain from engaging in any discussions or negotiations with franchisors regarding any Hotel Asset that is an Excluded Hotel Asset; provided, however, that in mean the aggregate estimated cost of the property improvement plans for the two (2) year period following the Closing Date required under the Replacement Franchise Agreements. In the event that Purchaser has Change of Control PIP (based on estimates by independent third parties who are national hotel project managers with extensive experience managing so-called property improvement program work for the right to exercise its rights under Section 2.6 to substitute any Hotel Asset for an Excluded Hotel Assetrespective brands, selected by Purchaser) exceeds One Hundred Five Million and No/100ths Dollars ($105,000,000.00) in the aggregate (the “Change of Control PIP Cap”), but is less than One Hundred Thirty-Five Million and No/100ths Dollars ($135,000,000.00) in the aggregate, Purchaser may reengage shall pay one-half of any such excess and Sellers shall pay the other one-half of any such excess (with franchisors to discuss the potential terms of a Replacement Franchise Agreement for any potential substituted Excluded Hotel Asset, and once an Excluded Hotel Asset has been substituted such payment allocated amongst Sellers in accordance with Section 2.6 the ratio of the Change of Control PIP for each Seller’s respective Hotel Assets to negotiate a Replacement Franchise Agreement the total Change of Control PIP for any such substituted Excluded all Hotel AssetAssets). In the event the Change of Control PIP exceeds One Hundred Thirty-Five Million and No/100ths Dollars ($135,000,000.00) in the aggregate, either Purchaser or Sellers may terminate this Agreement, in which event the Xxxxxxx Money shall be returned to Purchaser so long as Sellers have not delivered written notice of a material default hereunder to Purchaser immediately ceases all discussions or negotiations with franchisors in regards and Sellers are theretofore exercising their available remedies to terminate this Agreement and retain the substituted Hotel Asset which is then deemed an Excluded Hotel Asset for all purposes hereunderXxxxxxx Money. For the avoidance of doubt, Purchaser shall pay (and be solely responsible for) the Change of Control PIP up to and including the Change of Control PIP Cap. Without limitation of Section 14.9, only for so long as this Agreement is in effect, Purchaser and Sellers shall keep the amount of the Change of Control PIP Cap and the arrangements regarding Agreed for the payment of excess Change of Control PIP Allocations and credits in respect of property improvement plans required in connection with the Replacement Franchise Agreements strictly confidential, and shall not share such information with franchisors or any other third parties. For the purposes of this Section 13.1, the parties specifically acknowledge that Purchaser may seek Replacement Franchise Agreements with a term of fifteen (15) years for certain Hotel Assets under the “Hampton Inn” brand, and the parties agree that any portion of the estimated cost of property improvement plans discernibly levied as a result of any such Replacement Franchise Agreement having a term in excess of ten (10) years (i.e., the portion of the property improvement plans for bathroom renovations required for a fifteen (15) year term as opposed to a ten (10) year term) shall not constitute Change of Control PIP for purposes of this Agreement and shall not be counted towards the Change of Control PIP Cap.

Replacement Franchise Agreements. Purchaser shall use its diligent efforts to obtain a Replacement Franchise Agreement for each Hotel Asset 4.7.1 At and effective as of upon the Closing. Prior to Closing, Purchaser may request any franchisor to disclose the terms of any existing Franchise Agreement with Sellers, and Sellers shall deliver to Purchaser any Franchise Agreement for which it receives the written consent of the applicable franchisor to disclose to Purchaser (provided, however, that, although they will not object to any such consent, Sellers shall have no obligation terminate each of the Franchise Agreements with respect to pursue the same). Hotel Assets sold in the Closing. 4.7.2 During the Due Diligence Period, Purchaser shall keep work with the applicable Seller reasonably informed respective franchisors of the status Hotel Assets to negotiate the material terms of all negotiations and material communications with franchisors (including their respective advisors and representatives) Purchaser shall submit all franchise agreement applications and pay all application or other fees in connection therewith as soon as reasonably practicable after Purchaser’s initial meeting with the applicable franchisor, and shall thereafter diligently pursue obtaining Replacement Franchise Agreements, including (i) the term thereof (which is expected to be for 15 years from the Closing Date) and (ii) the fees and charges thereunder. Purchaser shall immediately cease and refrain from engaging in any discussions or negotiations with franchisors regarding any Hotel Asset that is an Excluded Hotel Asset; provided, however, that in the event that Purchaser has the right to exercise its rights under Section 2.6 to substitute any Hotel Asset for an Excluded Hotel Asset, Purchaser may reengage with franchisors to discuss the potential terms of a Replacement Franchise Agreement for any potential substituted Excluded Hotel Asset, and once an Excluded Hotel Asset has been substituted in accordance with Section 2.6 to negotiate a Replacement Franchise Agreement for any such substituted Excluded Hotel Asset, so long as Purchaser immediately ceases all discussions or negotiations with franchisors in regards With respect to the substituted Hotel Asset which is then deemed an Excluded Hotel Asset for all purposes hereunder. Without limitation scope of Section 14.9, only for so long as this Agreement is in effect, Purchaser and Sellers shall keep the arrangements regarding Agreed PIP Allocations and credits in respect of property improvement plans required in connection with the Replacement Franchise Agreements, Sellers and Purchaser shall work collectively with the respective franchisors of the Hotel Assets to negotiate the material terms thereof. Schedule 4.7.2 sets forth, for each Hotel Asset, an estimate of the costs of the property improvements plans projected as of the Effective Date to be required under the Replacement Franchise Agreements, which schedule was prepared by Sellers in consultation with Purchaser based on Sellers’ good faith estimation of the work that will be required (each, a “Seller PIP Estimate”). The aggregate amount of the Seller PIP Estimates for all of the Hotel Assets equals $4,857,550, but if this Agreement is terminated as to any Hotel Asset then such Hotel Asset shall be removed from Schedule 4.7.2 and the Seller PIP Estimate and the Project Firm PIP Estimate of such Hotel Asset shall both be reduced to zero. 4.7.3 Purchaser shall lead the negotiations with the respective franchisors of the Hotel Assets, but Sellers shall cooperate with and assist Purchaser in such negotiations as Purchaser may request. If such negotiations are successful, then prior to the end of the Due Diligence Period, Purchaser will agree on letters of intent, term sheets, memoranda of understanding or other non-binding preliminary documents reflecting the material terms upon which Purchaser and the franchisor would agree to enter into Replacement Franchise Agreements strictly confidential(the “Replacement Franchise Terms”). 4.7.4 If, for any reason or no reason, Purchaser, in its sole and absolute discretion, is not satisfied with or unable or unwilling to agree with the franchisors on the Replacement Franchise Terms, Purchaser may terminate this Agreement in its entirety pursuant to Section 8.1.3 prior to the end of the Due Diligence Period and receive a return of the Deposit (and the interest thereon). 4.7.5 If Purchaser does not terminate this Agreement pursuant to Section 8.1.3 then, after determining the scope of the property improvement plans (as reflected in the Replacement Franchise Terms agreed during the Due Diligence Period or in other formal or informal arrangements agreed following the Due Diligence Period) (the “Required PIPs”), Purchaser shall, at its sole cost and expense, engage nationally recognized project management firms to price out the negotiated Required PIPs. Purchaser agrees to work in good faith with the franchisors on the scope and timing of such Required PIPs. Sellers may suggest project management firms and shall have reasonable approval rights over Purchaser’s choice of firms. 4.7.6 At least 45 days prior to the Closing, the project management firms selected by Purchaser and approved by Sellers shall provide their pricing estimates for the Required PIPs for each of the Hotel Assets in a written report to Purchaser and Sellers. If the aggregate estimated costs for the Required PIPs (each, a “Project Firm PIP Estimate”) for all of the Hotel Assets purchased at the Closing are less than or equal to 148.387097% of the Seller PIP Estimates for all such Hotel Assets (i.e., initially $7,207,977, subject to reduction if this Agreement is terminated as to any Hotel Asset), then the Purchase Price shall be reduced by an amount equal to the product of (i) 50% and (ii) the difference between (x) the aggregate Project Firm PIP Estimates for all such Hotel Assets and (y) the aggregate Seller PIP Estimates for all such Hotel Assets (unless otherwise agreed to by Purchaser and Sellers, such reduction to be allocated among the Hotel Assets by multiplying such amount by a fraction the numerator of which is the Allocated Purchase Price in respect of such Hotel Assets and the denominator of which is the Allocated Purchase Price for all the Hotel Assets, and Schedule 2 shall be amended accordingly to reflect such reduction in the Purchase Price). If the aggregate Project Firm PIP Estimates for all of the Hotel Assets purchased at the Closing exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets, then Sellers shall have 10 days to exercise their right to cure by notifying Purchaser in writing that Sellers have elected to reduce the Purchase Price by the amount by which the aggregate Project Firm PIP Estimates for all such Hotel Assets exceed 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets (which reduction shall be in addition to the reduction pursuant to the preceding sentence with respect to the portion of the Project Firm PIP Estimates that are less than or equal to 148.387097% of the aggregate Seller PIP Estimates for all such Hotel Assets but greater than the Seller PIP Estimates) (unless otherwise agreed to by Purchaser and Sellers, such reduction to be allocated among the Hotel Assets by multiplying such amount by a fraction the numerator of which is the Allocated Purchase Price in respect of such Hotel Assets and the denominator of which is the Allocated Purchase Price for all the Hotel Assets, and Schedule 2 shall be amended accordingly to reflect such reduction in the Purchase Price). 4.7.7 If Sellers do not elect to cure by delivering written notice to Purchaser within the 10-day period referred to in Section 4.7.6, then Purchaser shall be permitted to terminate this Agreement in its entirety upon written notice to Sellers so long as the notice is provided at least 30 days prior to the Closing, whereupon Purchaser shall receive a return of the Deposit (and the interest thereon). If Sellers do not elect to cure and Purchaser proceeds to the Closing (subject to the terms of this Agreement), then the Purchase Price shall be reduced in accordance with Section 4.7.6, but, in such case, any Purchase Price reduction shall not share exceed $1,175,213. Notwithstanding anything to the contrary set forth herein, if the Project Firm PIP Estimates are not completed by July 15, 2015, the Closing Date shall be extended by one day for each day after July 15, 2015 that such information with franchisors or any other third partiesProject Firm PIP Estimates are completed, but not later than the date set forth in Section 4.1; provided, however, that if, as a result of such extension, the Closing Date falls on a day which is not a Business Day, the Closing Date shall be extended to the next succeeding Business Day. 4.7.8 [Reserved]