SECOND MODIFICATION OF PURCHASE AGREEMENT
This SECOND MODIFICATION OF PURCHASE AGREEMENT (hereinafter referred to
as the "Second Modification") is entered into by and between Xxxx, Inc.
(hereinafter referred to as "Seller"), and INN-Vestors, Inc., as the Successor
to Hospitality Plus Corporation (hereinafter referred to as "Purchaser"), for
the purpose of reviving, ratifying and modifying some of the terms of that
certain PURCHASE AGREEMENT (hereinafter referred to as the "Agreement") dated
April 18, 2002, entered into by and between Seller and Purchaser, as previously
modified by that certain MODIFICATION OF PURCHASE AGREEMENT dated July 30, 2002
(the "First Modification").
RECITALS
WHEREAS, the parties have agreed to further modify the manner of
payment, to extend the Closing Date and to make other related changes to the
Agreement and the First Modification.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, agreements and obligations set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged
and confirmed, Seller and Purchaser do hereby agree as set forth below.
AGREEMENT
1. PURCHASE PRICE. The terms for the payment of the Purchase Price
under Section 2.1 of the Agreement and Section 3 of the First Modification are
hereby changed as follows:
(a) Cash. Purchaser will pay cash in the amount of $300,000.00 at Closing.
(b) Stock. Two Million Two Hundred Thousand and No/100ths Dollars
($2,200,000.00) of the Purchase Price will be paid at Closing by the
transfer of Two Million Two Hundred Thousand and No/100ths Dollars
($2,200,000.00) in shares, based on book value at Closing, of stock in
INN-Vestors, Inc. (the "Stock"). Within 100 days after the Closing Date,
Seller will register the Stock making it readily marketable on a national
securities exchange. Purchaser agrees that the Stock will be the only
registered shares of Purchaser for a period of one (1) year after the
Closing. If the Stock is not registered within 100 days, Seller, at its
sole option, shall have the right to (i) retain the Stock; (ii) deliver the
Stock back to Purchaser in exchange for shares of registered stock in
Covenant Financial Corporation, a Delaware corporation, with a market value
at the date of the exchange of Two Million Two Hundred Thousand Dollars; or
(iii) deliver the Stock back to Purchaser in exchange for shares of
registered stock in AmeriFirst Financial Corporation, a Delaware
corporation, with a market value at the date of the exchange of Two Million
Two Hundred Thousand Dollars.
(c) Notwithstanding the terms of the First Modification, Xxxxxxx Xxxxxxxxx
shall not be required to deliver a guaranty at Closing.
2. STOCK. Simultaneously with its execution of this Second
Modification, Purchaser will provide Seller with a prospectus for INN-Vestors,
Inc., Covenant Financial Corporation and AmeriFirst Financial Corporation.
3. BRIDGE LOAN. Purchaser acknowledges that the primary asset of
INN-vestors, Inc. will be the Hotel, and thus the value of the Stock to Seller
is largely dependent upon Purchaser's ability to remodel the Hotel and reopen it
for business. In connection therewith, Purchaser acknowledges that Seller agreed
to accept the Stock as a substantial part of the Purchase Price on the
assumption and understanding that Purchaser has arranged for a bridge loan in
the amount of $3.5 million (the "Bridge Loan") to begin remodeling the Hotel and
that Seller will be substantially harmed if Purchaser is unable to proceed with
remodeling the Hotel. Therefore, notwithstanding anything to the contrary in the
Agreement or the First Modification, Purchaser agrees that, if it has not closed
the Bridge Loan within ninety (90) days after Closing, Seller shall, by delivery
of written notice to Purchaser prior to Closing the Bridge Loan, have the right
and option to purchase the Hotel back from Purchaser, free and clear of liens
and encumbrances, solely in consideration of Seller's delivery of the Stock back
to Purchaser, it being understood and agreed that Seller shall be entitled to
retain the cash consideration paid by Purchaser at Closing. In the event Seller
gives Purchaser notice of its intent to repurchase the Property, the Closing of
the repurchase will occur within thirty (30) days. Prior to closing the Bridge
Loan, except as to a $400,000 loan to provide furniture, fixtures and equipment
to the Property (the "FFE Loan"), Purchaser agrees that it will not allow any
liens, claims or encumbrances to attach to the Hotel. Purchaser will use all of
the proceeds from the FFE Loan to provide improvements to the Property.
Purchaser shall maintain extended fire and casualty insurance coverage insuring
the full replacement value of the improvements and personal property located on
the Property. At Closing, Purchaser shall provide Seller with a certificate of
insurance naming Seller as an additional named insured and indicating that the
premiums for such coverage have been paid in advance for a period of ninety (90)
days commencing on the Closing Date. Any insurance or condemnation award that is
paid prior to the Bridge Loan Closing will be paid to Seller; however, all such
proceeds will be used to improve the Property unless the Seller exercises its
right to repurchase the Property under Section 3, in which case Seller may apply
the proceeds at its discretion.
4. RATIFICATION. By execution of this Second Modification, the
Agreement and the First Modification are hereby revived, ratified and confirmed
on the same terms and conditions as set forth therein except as expressly
amended and modified by the terms and conditions of this Second Modification.
5. SURVIVAL. This Second Modification and the First Modification shall
survive the Closing of the sale of the Hotel by Seller to Purchaser.
6. MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts which collectively will be deemed an original.
EXECUTED to be effective as of July 30, 2002.
SELLER:
XXXX, INC.,
a Texas corporation
By: /s/ Xxxxx X. Xxxxx
--------------------------
Xxxxx X. Xxxxx
Its: President
PURCHASER:
INN-Vestors, Inc.
By: /s/ Xxxxxxx Xxxxxxxxx
Printed Name: Xxxxxxx Xxxxxxxxx
Title: Vice President