Exhibit 2.5
PURCHASE CONTRACT
between
BRIAD LODGING GROUP HAUPPAUGE, L.L.C.,
BRIAD LODGING GROUP FRANKLIN, L.L.C., and
BRIAD LODGING GROUP CRANBURY, L.L.C.
(COLLECTIVELY, "SELLER")
AND
APPLE HOSPITALITY FIVE, INC.
("BUYER")
AND
joined in by
BRIAD RESTAURANT GROUP, L.L.C.
("BRG")
DATED: April 1, 2003
TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS.......................................................1
1.1 "Property".......................................................1
1.2 "Land"...........................................................2
1.3 "Improvements"...................................................2
1.4 "Appurtenances"..................................................2
1.5 "FF&E"...........................................................2
1.6 "Supplies".......................................................2
1.7 "Leases".........................................................3
1.8 "Deposits".......................................................3
1.9 "Records"........................................................3
1.10 "Property".......................................................3
1.11 "Utility Reservations"...........................................4
ARTICLE II PURCHASE AND SALE; PURCHASE PRICE; PAYMENT; DEPOSIT;
INDEPENDENT CONSIDERATION...................................................5
2.1 Purchase and Sale................................................5
2.2 Purchase Price...................................................5
2.3 Allocation.......................................................5
2.4 Payment..........................................................5
2.5 Deposit..........................................................5
ARTICLE III REVIEW PERIOD...................................................6
3.1 Review Period....................................................6
3.2 Due Diligence Examination........................................7
3.3 Restoration......................................................7
3.4 Seller Exhibits..................................................7
ARTICLE IV SURVEY AND TITLE APPROVAL........................................8
4.1 Survey...........................................................8
4.2 Title............................................................8
4.3 Survey or Title Objections.......................................8
ARTICLE V FRANCHISE.........................................................9
ARTICLE VI COMMISSIONS......................................................9
ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS......................10
7.1 Seller's Representations, Warranties and Covenants..............10
7.2 Buyer's representations, warranties and covenants...............14
7.3 Survival........................................................15
ARTICLE VIII ADDITIONAL COVENANTS..........................................15
8.1 Subsequent Developments.........................................15
8.2 Operations......................................................15
8.3 Third Party Consents............................................16
8.4 Employees.......................................................16
8.5 Estoppel Certificates...........................................17
8.6 Management Agreement............................................17
8.7 Shadow Management...............................................17
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8.8 Liquor Licenses.................................................17
8.9 Access to Financial Information.................................18
8.10 Bulk Sales......................................................18
8.11 Indemnification.................................................18
8.12 Survival of Covenants...........................................20
ARTICLE IX CONDITIONS FOR CLOSING..........................................21
9.1 Buyer's Conditions for Closing..................................21
9.2 Seller's Conditions for Closing.................................22
9.3 Cranbury Subdivision............................................22
ARTICLE X CLOSING AND CONVEYANCE...........................................23
10.1 Closing; Construction Completion................................23
10.2 Seller's Deliveries.............................................23
10.3 Buyer's Deliveries..............................................25
ARTICLE XI COSTS...........................................................25
11.1 Seller's Costs..................................................25
11.2 Buyer's Costs...................................................25
ARTICLE XII ADJUSTMENTS....................................................26
12.1 Adjustments.....................................................26
12.2 Reconciliation and Final Payment................................27
12.3 Employees.......................................................27
ARTICLE XIII CASUALTY AND CONDEMNATION.....................................28
13.1 Risk of Loss; Notice............................................28
13.2 Buyer's Termination Right.......................................28
13.3 Procedure for Closing...........................................29
ARTICLE XIV DEFAULT REMEDIES...............................................29
14.1 Buyer Default...................................................29
14.2 Seller Default..................................................29
14.3 Attorney's Fees.................................................29
ARTICLE XV NOTICES.........................................................30
ARTICLE XVI MISCELLANEOUS..................................................31
16.1 Performance.....................................................31
16.2 Binding Effect; Assignment......................................31
16.3 Entire Agreement................................................31
16.4 Governing Law...................................................31
16.5 Captions........................................................31
16.6 Confidentiality.................................................31
16.7 Closing Documents...............................................31
16.8 Counterparts....................................................31
16.9 Severability....................................................31
16.10 Interpretation..................................................32
16.11 Business Day....................................................32
16.12 Further Acts....................................................32
16.13 Joint and Several Obligations...................................32
16.14 Like-Kind Exchange..............................................32
ARTICLE XVII JOINDER BY BRG................................................33
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SCHEDULES:
Schedule 1 Description of Hotels
Schedule 2 Description of License Agreements and Management Agreements
EXHIBITS:
Exhibit A Legal Description
Exhibit B List of FF&E
Exhibit C Escrow Agreement
Exhibit D List of Hotel Contracts
Exhibit E Consents and Approvals
Exhibit F Form of Estoppel Certificates
Exhibit G Environmental Reports
Exhibit H Form of Additional Property Escrow Agreement
Exhibit I Form of Deed
Exhibit J Form of Xxxx of Sale
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PURCHASE CONTRACT
This PURCHASE CONTRACT (this "Contract") is made and entered into as of the
1st day of April, 2003, by and between BRIAD LODGING GROUP HAUPPAUGE, L.L.C., a
New York limited liability company ("Hauppauge LLC"), BRIAD LODGING GROUP
FRANKLIN, L.L.C., a New Jersey limited liability company ("Franklin LLC"), BRIAD
LODGING GROUP CRANBURY, L.L.C., a New Jersey limited liability company
("Cranbury LLC", and, collectively with Hauppauge LLC and Franklin LLC,
"Seller"), with its principal office at 00X Xxxxxxxx Xxxx, Xxxxxxx Xxxx, Xxx
Xxxxxx 00000, and APPLE HOSPITALITY FIVE, INC., a Virginia corporation, with its
principal office at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, or its
assigns ("Buyer"), and joined in by BRIAD RESTAURANT GROUP, L.L.C., a New Jersey
limited liability company ("BRG"), with its principal office at 00X Xxxxxxxx
Xxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000.
RECITALS
A. Hauppauge LLC is the fee simple owner of a hotel property located in
Hauppauge, New York more specifically identified on Schedule 1 attached hereto
and incorporated herein by reference; Franklin LLC is the fee simple owner of a
hotel property located in Franklin, New Jersey more specifically identified on
Schedule 1; and Cranbury LLC is the fee simple owner of a hotel property located
in Cranbury, New Jersey more specifically identified on Schedule 1.
B. Buyer is desirous of purchasing such hotel properties from Seller, and
Seller is desirous of selling such hotel properties to Buyer, for the purchase
price and upon terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Property" shall mean, collectively, all of the following with respect
to the Hauppauge Hotel, the Franklin Hotel and the Cranbury Hotel, all of which
are as hereinafter defined in this Article I: the Land, Improvements,
Appurtenances, FF&E, Supplies, Leases, Deposits, Records, Service Contracts,
Warranties, Licenses, FF&E Leases, Contracts, Plans and Specs, Tradenames and
Utility Reservations, as well as all other real, personal or intangible property
of Seller related to any of the foregoing. "Real Property" shall mean,
collectively, all Land, Improvements and Appurtenances with respect to the
Hauppauge Hotel, the Franklin Hotel and the Cranbury Hotel. "Personal Property"
shall mean, collectively, all Property with respect to the Hauppauge Hotel, the
Franklin Hotel and the Cranbury Hotel other than the Real Property.
"Hauppauge Property" shall mean all of the Property constituting, associated
with or related to the Hauppauge Hotel; "Franklin Property" shall mean all of
the Property constituting, associated with or related to the Franklin Hotel; and
"Cranbury Property" shall mean all of the Property constituting, associated with
or related to the Cranbury Hotel. "Hotel Property" shall mean, individually, the
Hauppauge Property, the Franklin Property or the Cranbury Property.
1.2 "Land" shall mean, collectively, a fee simple absolute interest in the
real property more fully described in Exhibit A, which is attached hereto and
incorporated herein by reference, the same being known generally as the
"Hauppauge Residence Inn" (the "Hauppauge Hotel"), the "Franklin Residence Inn"
(the "Franklin Hotel") and the "Cranbury Residence Inn", respectively (the
"Cranbury Hotel" and, together with the Hauppauge Hotel and the Franklin Hotel,
the "Hotels"), together with all rights (including without limitation all air
rights and development rights), alleys, streets, strips, gores, waters,
privileges, appurtenances, advantages and easements belonging thereto or in any
way appertaining thereto.
1.3 "Improvements" shall mean all buildings, structures, fixtures, parking
areas and other improvements to the Land, including, without limitation, each of
the Hotels and all related improvements and amenities described on Schedule 1
and all related facilities.
1.4 "Appurtenances" shall mean all rights, titles, and interests of Seller
appurtenant to the Land and Improvements (collectively, the "Appurtenances"),
including, but not limited to, (i) all easements, rights of way, rights of
ingress and egress, tenements, hereditaments, privileges, and appurtenances in
any way belonging to the Land or Improvements, (ii) any land lying in the bed of
any alley, highway, street, road or avenue, open or proposed, in front of or
abutting or adjoining the Land, (iii) any strips or gores of real estate
adjacent to the Land, and (iv) the use of all alleys, easements and
rights-of-way, if any, abutting, adjacent, contiguous to or adjoining the Land.
1.5 "FF&E" shall mean all tangible personal property and fixtures of any
kind (other than personal property owned by guests of the Hotels or leased by
Seller pursuant to a FF&E Lease) attached to, or located upon and used in
connection with the ownership, maintenance, use or operation of the Land or
Improvements as of the date hereof (or acquired by Seller and so employed prior
to Closing, as defined below), including, but not limited to, all furniture,
fixtures, equipment, signs and related personal property; all heating, lighting,
plumbing, drainage, electrical, air conditioning, and other mechanical fixtures
and equipment and systems; all elevators, and related motors and electrical
equipment and systems; all hot water heaters, furnaces, heating controls, motors
and equipment, all shelving and partitions, all ventilating equipment, and all
disposal equipment; all spa, health club and fitness equipment; all equipment
used in connection with the use and/or maintenance of the guestrooms,
restaurants, lounges, business centers, meeting rooms, swimming pools, sport
courts and other common areas and recreational areas; all carpet, drapes, beds,
furniture, televisions and other furnishings; all stoves, ovens, freezers,
refrigerators, dishwashers, disposals, kitchen equipment and utensils, tables,
chairs, plates and other dishes, glasses, silverware, serving pieces and other
restaurant and bar equipment, apparatus and utensils. A current list of FF&E is
attached hereto as Exhibit B.
1.6 "Supplies" shall mean all merchandise, supplies, inventory and other
items used for the operation and maintenance of guest rooms, restaurants,
lounges, swimming pools, health
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clubs, spas, business centers, meeting rooms and other common areas and
recreational areas located within or relating to the Improvements, including,
without limitation, all food and beverage (alcoholic and non-alcoholic)
inventory, office supplies and stationery, advertising and promotional
materials, china, glasses, silver/flatware, towels, linen and bedding, guest
cleaning, paper and other supplies, upholstery material, carpets, rugs,
furniture, engineers' supplies, paint and painters' supplies, employee uniforms,
and all cleaning and maintenance supplies, including those used in connection
with the swimming pools, sport courts, health clubs, spas, fitness centers,
restaurants, business centers, meeting rooms and other common areas and
recreational areas.
1.7 "Leases" (collectively and individually, a "Lease") shall mean all
leases, franchises, licenses, occupancy agreements, "trade-out" agreements,
advance bookings, convention reservations, or other agreements demising space
in, providing for the use or occupancy of, or otherwise similarly affecting or
relating to the use or occupancy of, the Improvements or Land, together with all
amendments, modifications, renewals and extensions thereof, and all guaranties
by third parties of the obligations of the tenants, licensees, franchisees,
concessionaires or other entities thereunder.
1.8 "Deposits" shall mean all prepaid rents, deposits and reserves,
including, but not limited to, refundable security deposits and rental deposits,
and all other deposits for advance reservations, banquets or future services,
made in connection with the use or occupancy of the Improvements and FF&E and
other reserve accounts (if any); provided, however, that to the extent Seller
has not received or does not hold all of the prepaid rents and/or deposits
attributable to the Leases related to an Hotel Property, Buyer shall be entitled
to a credit against the cash portion of the Purchase Price allocable to such
Hotel Property in an amount equal to the amount of the prepaid rents and/or
deposits attributable to the Leases transferred at the Closing of such Hotel
Property.
1.9 "Records" shall mean all books, records, promotional material, tenant
data, guest history information (other than any such information owned
exclusively by Licensor [as hereinafter defined]), marketing and leasing
material and forms (including but not limited to any such records, data,
information, material and forms in the form of computerized files located at the
Hotels), market studies prepared in connection with Seller's annual plans or
otherwise, keys, and other materials, information, data, legal or other
documents or records of any kind owned by Seller and/or in Seller's possession
or control, or to which Seller has access or may obtain, that are used in or
relating to the development, construction, ownership and/or use and operation of
the Hotels, including the Land, the Improvements or the FF&E, but excluding
Seller's tax returns and internally generated records related to the membership
and structure of each entity constituting Seller.
1.10 "Property" shall include any and all of the following that related to
or affect in any way, the design, construction, ownership, use, occupancy,
leasing, maintenance, service, or operation of the Real Property, FF&E,
Supplies, Leases, Deposits or Records:
(a) Contracts or agreements, such as maintenance, supply, service or
utility contracts (collectively, the "Service Contracts");
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(b) Warranties, guaranties, indemnities and claims for the benefit of
Seller with respect to the Hotels, the Property or any portion thereof,
including, without limitation, all warranties and guaranties of the development,
construction, completion, installation, equipping and furnishing of the Hotels,
and all indemnities, bonds and claims of Seller related thereto (collectively,
the "Warranties");
(c) Permits, licenses, franchises, utility reservations, certificates
of occupancy, and other documents issued by any federal, state, or municipal
authority or by any private party related to the development, construction, use,
occupancy, operation or maintenance of the Hotels, including, without
limitation, all licenses, approvals and rights necessary to operate each of the
Hotels as a Residence Inn(R) by Marriott (collectively, the "Licenses");
(d) Telephone exchanges and numbers, trade names, trade styles, trade
marks, and other identifying material, and all variations thereof, together with
all related goodwill (collectively, the "Tradenames") (it being understood and
agreed that the name of the hotel chain to which the Hotel is affiliated by
franchise, license or management agreement is a protected name or registered
service xxxx of such hotel chain and cannot be transferred to Buyer by this
Contract), provided that all such license agreements and other agreements
granting a right to use the name of such hotel chain or any other trademark or
trade name and all waivers of any brand standard shall be assigned to Buyer
pursuant to the immediately preceding subsection (c));
(e) Construction and other contracts, plans, drawings, specifications,
surveys, soil reports, engineering reports, inspection reports, and other
technical descriptions and reports (collectively, the "Contracts, Plans and
Specs"); and
(f) Leases of any FF&E and other contracts permitting the use of any
FF&E at the Improvements, but only to the extent assumed by Buyer (collectively,
the "FF&E Leases").
1.11 "Utility Reservations" shall mean Seller's interest in the right to
receive immediately on and after Closing and continuously consume thereafter
water service, sanitary and storm sewer service, electrical service, gas service
and telephone service on and for the Land and Improvements in capacities that
are adequate continuously to use and operate the Improvements for the purposes
for which they were intended, including, but not limited to (i) any right to the
present and future use of wastewater, drainage, water and other utility
facilities to the extent such use benefits the Real Property, (ii) any
reservations of or commitments covering any such use in the future, and (iii)
any wastewater capacity reservations relating to the Real Property. Buyer shall
be responsible for any requests or documents to transfer the Utility
Reservations, at Buyer's sole cost and expense. Utility deposits, if any, are to
be retained by Seller, or Buyer shall give Seller a credit therefore at Closing.
All of the Property shall be conveyed, assigned, and transferred to Buyer at
Closing, free and clear of all mortgages, liens, encumbrances, licenses,
franchises, concession agreements, security interests, prior assignments or
conveyances, conditions, restrictions, rights-of-way, easements, encroachments,
claims and other matters affecting title or possession, except for the Permitted
Exceptions (as hereinafter defined).
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ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;
DEPOSIT; INDEPENDENT CONSIDERATION
2.1 Purchase and Sale. Seller agrees to sell and convey to Buyer or its
assigns, and Buyer agrees to purchase or cause its assigns to purchase from
Seller, the Property, in consideration of the Purchase Price and upon the terms
and conditions hereof.
2.2 Purchase Price. Buyer agrees to pay, and Seller agrees to accept, as
consideration for the conveyance of the Property, subject to the adjustments
provided for in this Contract, the amount of Forty-Two Million Five Hundred
Thousand and No/100 Dollars ($42,500,000.00) (the "Purchase Price").
2.3 Allocation. The Purchase Price shall be allocated among each Hotel
Property as set forth on Schedule 1. In addition, Buyer and Seller shall attempt
to agree, prior to the expiration of the Review Period, on an allocation of the
Purchase Price between the Real Property and Personal Property related to each
Hotel Property. In the event Buyer and Seller do not agree, each party shall be
free to allocate the Purchase Price to such items as they desire, subject to and
in accordance with applicable laws.
2.4 Payment. The Purchase Price of the Property, less the Deposit and
interest earned thereon, if any, which Buyer elects to have applied against the
Purchase Price (as provided below), shall be paid to Seller in cash, certified
funds or wire transfer, at the Closing of the Property. At the Closing of the
Property, the Deposit, together with interest earned thereon, if any, shall, at
Buyer's election, be returned to Buyer or shall be paid over to Seller by Escrow
Agent to be applied to the Purchase Price on behalf of Buyer.
2.5 Deposit.
(a) Within two (2) business days following the full execution and
delivery of this Contract, Buyer shall deposit the sum of Five Hundred Thousand
and No/100 Dollars ($500,000.00) in cash, certified bank check or by wire
transfer of immediately available funds (the "Initial Deposit") with the Title
Company (as hereinafter defined) ("Escrow Agent"). If, pursuant to the
provisions of Section 3.1 of this Contract, the Buyer elects to terminate this
Contract at any time prior to the expiration of the Review Period, then the
Escrow Agent shall return the Initial Deposit to the Buyer promptly upon written
notice to that effect from the Buyer.
(b) If the Buyer has not elected to terminate this Contract on or
before the expiration of the Review Period, the Buyer, within two (2) business
days after the expiration of the Review Period, shall deposit with the Escrow
Agent the additional sum of Five Hundred Thousand and No/100 Dollars
($500,000.00) in cash, certified bank check or by wire transfer of immediately
available funds, which sum shall be held by Escrow Agent, together with the
Initial Deposit, as xxxxxxx money (the Initial Deposit and Additional Deposit,
together with all interest earned thereon, are collectively referred to as the
"Deposit").
(c) The Deposit shall be held by Escrow Agent subject to the terms and
conditions of an Escrow Agreement, a copy of which is attached hereto as Exhibit
C, and shall be paid or applied as provided in this Contract. The Deposit shall
be held in an interest-bearing
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account in a federally insured bank or savings institution reasonably acceptable
to Seller and Buyer, with all interest to accrue to the benefit of the party
entitled to receive it and to be reportable by such party for income tax
purposes. Buyer's Federal Tax Identification Number is 00-0000000. The Federal
Tax Identification Number for each entity constituting Seller is set forth in
Schedule 1.
ARTICLE III
REVIEW PERIOD
3.1 Review Period. Buyer shall have a period through 6:00 p.m. Eastern Time
on the date that is thirty (30) days after the date of execution of this
Contract by Buyer and Seller (the "Review Period") to evaluate the legal, title,
survey, construction, physical condition, structural, mechanical, environmental,
economic, permit status, franchise status, financial and other documents and
information related to the Property. Within five (5) business days following the
date of this Contract, Seller, at Seller's sole cost and expense, will deliver
to Buyer (or make available at the Hotels) for Buyer's review, to the extent not
previously delivered to Buyer, true, correct and complete copies of the
following, together with all amendments, modifications, renewals or extensions
thereof owned by Seller, in the possession of Seller or Licensor or obtainable
by Seller on a best efforts basis:
(a) All Warranties and Licenses relating to the Hotels or any part
thereof;
(b) Financial statements and budgets for each of the Hotels, for the
current year to date and all prior years (or partial years) in which any Hotel
Property was operational (the "Financial Statements");
(c) All real estate and personal property tax statements with respect
to each of the Hotels and notices of appraised value for the Real Property for
the current year (if available) and each of the two (2) calendar years prior to
the current year;
(d) Engineering, mechanical, architectural and construction plans,
drawings, specifications and contracts, payment and performance bonds, title
policies, reports and commitments, zoning information and marketing and economic
data relating to the Hotels and the construction, development, installation and
equipping thereof, as well as copies of all environmental reports and
information, topographical, boundary or "as built" surveys, engineering reports,
subsurface studies and other Contracts, Plans and Specs relating to or affecting
the Hotels. If any Hotel is purchased by Buyer, all such documents and
information relating to such Hotel shall thereupon be and become the property of
Buyer without payment of any additional consideration therefor;
(e) All FF&E Leases, Services Contracts, Leases and, if applicable, a
schedule of such Leases of space in each of the Hotels, and all agreements for
real estate commissions, brokerage fees, finder's fees or other compensation
payable by Seller in connection therewith; and
(f) All notices received from governmental authorities in connection
with each of the Hotels for the current year and all prior years.
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Seller shall, upon request of Buyer, make available to Buyer and Buyer's
representatives and agents, for inspection and copying during normal business
hours, Records located at Seller's corporate offices, and Seller agrees to
provide Buyer copies of all other reasonably requested information that is
relevant to the management, ownership, operation, use, occupancy, construction
or leasing of the Hotels. At any time during the Review Period, Buyer may, in
its sole and absolute discretion, elect not to proceed with the purchase of the
Property for any reason whatsoever by giving written notice thereof to Seller,
in which event: (i) the Initial Deposit shall be promptly returned by Escrow
Agent to Buyer together with all accrued interest, if any, (ii) this Contract
shall be terminated automatically, (iii) all materials supplied by the Seller to
the Buyer shall be returned promptly to the Seller, and (iv) both parties will
be relieved of all other rights, obligations and liabilities hereunder, except
for the parties' obligations pursuant to Sections 3.3 and 16.6 below. If Buyer
has not elected to terminate this Contract on or before expiration of the Review
Period, Buyer shall deposit the Additional Deposit with Escrow Agent as provided
in Section 2.5(b), above, and thereafter the Deposit shall be paid or applied as
provided in this Contract.
3.2 Due Diligence Examination. At any time during the Review Period, and
thereafter through Closing of each Hotel Property, Buyer and/or its
representatives and agents shall have the right to enter upon each Hotel
Property at all reasonable times upon reasonable notice to Seller for the
purposes of reviewing all Records and other data, documents and/or information
relating to the Property and conducting such surveys, appraisals, engineering
tests, soil tests (including, without limitation, Phase I and Phase II
environmental site assessments), inspections of construction and other
inspections and other studies as Buyer deems reasonable and necessary or
appropriate to evaluate the Property, subject to providing advance or concurrent
notice to Seller (the "Due Diligence Examination").
3.3 Restoration. Buyer covenants and agrees not to damage or destroy any
portion of the Property in conducting its examinations and studies of the
Property during the Due Diligence Examination and, if closing does not occur,
shall repair or restore any portion of the Property damaged by the conduct of
Buyer, its agents, contractors or employees, to substantially the condition such
portion(s) of the Property were in immediately prior to such examinations or
studies. Buyer agrees to exercise reasonable care when visiting the Property, in
a manner which shall not unreasonably interfere with Seller's operation of the
Property, nor with the rights of any guests at the Property.
3.4 Seller Exhibits. Seller agrees to provide complete copies of Exhibits
B, D, E and G for review by Buyer not later than five (5) days after the date of
this Contract. Buyer shall have until the end of the Review Period to review and
approve the information on all such Exhibits. In the event Buyer does not
approve any such Exhibit or the information contained therein, Buyer shall be
entitled to terminate this contract by notice to Seller and the Deposit shall be
returned to Buyer with all interest thereon and both parties shall be relieved
of all rights, obligations and liabilities hereunder except for the parties'
obligations pursuant to Sections 3.3 and 16.6.
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ARTICLE IV
SURVEY AND TITLE APPROVAL
4.1 Survey. To the extent not previously delivered to Buyer, within two (2)
days after execution of this Contract by Buyer and Seller, Seller shall deliver
to Buyer true, correct and complete copies of the most recent surveys of the
Real Property. In the event that an update of the surveys or new surveys
(collectively, the "Survey") are desired by Buyer, then Buyer shall be
responsible for all costs related thereto.
4.2 Title. Within two (2) days after execution of this Contract by Buyer
and Seller, Seller shall deliver to Buyer Seller's existing title insurance
policy, including copies of all documents referred to therein, for the Real
Property. Buyer's obligations under this Contract are conditioned upon Buyer
being able to obtain (i) Commitments for Title Insurance (collectively, the
"Title Commitment") issued by LandAmerica - Dallas National Division, 0000
Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxx Xxxx (the "Title
Company"), for the most recent form of ALTA owner's policy, covering the Real
Property, setting forth the current status of the title to the Real Property,
showing all liens, claims, encumbrances, easements, rights of way,
encroachments, reservations, restrictions and any other matters affecting the
Real Property and pursuant to which the Title Company agrees to issue to Buyer
at Closing Owner's Policies of Title Insurance on the most recent form of ALTA
owner's policy available in the states in which the Land is located, with
extended coverage and, to the extent applicable and available in such
endorsements as may be required by Buyer (collectively, the "Title Policy"); and
(ii) true, complete, legible and, where applicable, recorded copies of all
documents and instruments (the "Exception Documents") referred to or identified
in the Title Commitment, including, but not limited to, all deeds, lien
instruments, leases, plats, surveys, reservations, restrictions, and easements
affecting the Real Property. Buyer shall promptly provide Seller with a copy of
the Title Commitment issued by the Title Company.
4.3 Survey or Title Objections. If Buyer discovers any title or survey
matter which is objectionable to Buyer, Buyer may provide Seller with written
notice of its objection to same at least ten (10) business days after Buyer's
receipt of the Surveys, Title Commitments and Exception Documents for all of the
Hotel Properties (the "Title Review Period"). If Buyer fails to so object in
writing to any such matter set forth in the Survey or Title Commitment, it shall
be conclusively assumed that Buyer has approved same. If Buyer disapproves any
condition of title, survey or other matters by written objection to Seller on or
before the expiration of the Title Review Period, Seller shall elect either to
attempt to cure or not cure any such item by written notice sent to Buyer within
five (5) days after Seller's receipt of notice from Buyer, and if Seller commits
in writing to attempt to cure any such item, Seller shall be given until the
Closing Date to cure any such defect. In the event Seller shall fail to cure a
defect which Seller has committed in writing to cure prior to Closing, or if a
new title defect affecting any Hotel Property arises after the date of Buyer's
Title Commitment or Survey, as applicable, but prior to Closing, then Buyer may
elect, in Buyer's sole and absolute discretion: (i) to waive such objection and
proceed to Closing on the affected Hotel Property, or (ii) to terminate this
Contract in its entirety or, at Buyer's election, as to the affected Hotel
Property and receive a return of the Deposit (if Buyer terminates this Contract
in its entirety) or the pro rata amount of the Deposit allocated to the affected
Hotel Property (if Buyer terminates solely as to the affected Hotel Property),
and any interest thereon. Items shown on the Title Commitment which are not
objected to by Buyer as
8
set forth above (other than exceptions and title defects arising after the date
of Buyer's Title Commitment or Survey, as applicable, and other than those
standard exceptions which are ordinarily and customarily omitted in the state in
which the applicable Hotel is located, so long as Seller provides the
appropriate owner's affidavit, gap indemnity or other documentation reasonably
required by the Title Company for such omission) are hereinafter referred to as
the "Permitted Exceptions." In no event shall Permitted Exceptions include
liens, or documents evidencing liens, securing any indebtedness or any
mechanics' or materialmen's liens or any claims or potential claims therefor
covering any Hotel Property or any portion thereof ("Seller Liens"), which shall
be paid in full by Seller and released at Closing on the affected Hotel
Property.
ARTICLE V
FRANCHISE
Seller has entered into a License Agreement with Marriott International
("Licensor"), more particularly described on Schedule 2 for the Hauppauge
Property (the "Hauppauge License Agreement"), for the Franklin Property (the
"Franklin License Agreement") and for the Cranbury Property (the "Cranbury
License Agreement" and, collectively with the Hauppauge License Agreement and
the Franklin License Agreement, the "License Agreements"). Seller acknowledges
that it is a condition to Buyer's obligations under this Contract that Buyer
shall have entered into a satisfactory license agreement with Licensor. Buyer
agrees to apply for and use reasonable efforts, and Seller shall cooperate with
Buyer, to obtain Licensor's written consent to the assignment to Buyer of the
License Agreement, with such amendments as may be required by Buyer, or the
issuance of a new franchise agreement between Licensor and Buyer. Except as
expressly provided below, Seller shall be responsible for all costs related to
such transfer and amendment or new license agreement, including but not limited
to, the payment of license, application, transfer and similar fees thereunder,
and all costs to complete the improvements set forth in any product improvement
plan for the Hotels, or otherwise as may be required by Licensor.
Notwithstanding the foregoing, any fees payable to Licensor for the transfer or
assignment of the License Agreements or the issuance of new License Agreements
shall be the responsibility of Buyer, provided that all fees payable under any
License Agreement and attributable to any period prior to Closing shall be the
sole responsibility of Seller. Buyer shall be responsible for any termination
fee attributable to the termination, if applicable, of Seller's license
agreement. Seller agrees to immediately provide all information required by
Licensor in connection with such transfer and amendment or new license
agreement, and Seller and Buyer shall diligently pursue obtaining such transfer
and amendment or new license agreement. Buyer shall diligently and in good faith
negotiate with Licensor for the transfer and amendment of the License Agreement
or for new license agreements, as applicable, on terms reasonably similar to the
terms of Buyer's existing license agreements with Licensor applicable to other
hotels owned by Buyer and under license from Licensor.
ARTICLE VI
COMMISSIONS
Seller and Buyer each represents and warrants to the other that it has not
engaged any broker, finder or other party in connection with the transaction
contemplated by this Contract. Buyer and Seller each agree to save and hold the
other harmless from any and all losses,
9
damages, liabilities, costs and expenses (including, without limitation,
attorneys' fees) involving claims made by any other agent, broker, or other
person by or through the acts of Buyer or Seller, respectively, in connection
with this transaction.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 Seller's Representations, Warranties and Covenants. Each entity
constituting Seller hereby jointly and severally represents, warrants and
covenants to Buyer as follows:
(a) Authority; No Conflicts. Hauppauge LLC is a New Jersey limited
liability company duly formed, validly existing and in good standing in the
State of New Jersey and authorized to do business and in good standing in the
State of New York. Each of Franklin LLC and Cranbury LLC is a limited liability
company duly formed, validly existing and in good standing in the State of New
Jersey. Each entity constituting Seller has obtained all necessary consents to
enter into and perform this Contract and is fully authorized to enter into and
perform this Contract and to complete the transactions contemplated by this
Contract. No consent or approval of any person, entity or governmental authority
is required for the execution, delivery or performance by each entity
constituting Seller of this Contract, except as set forth in Exhibit E, and this
Contract is hereby binding and enforceable against each entity constituting
Seller. Neither the execution nor the performance of, or compliance with, this
Contract by any entity constituting Seller has resulted, or will result, in any
violation of, or default under, or acceleration of, any obligation under any
existing corporate charter, certificate of incorporation, bylaw, articles of
organization, limited liability company agreement or regulations, partnership
agreement, mortgage indenture, lien agreement, promissory note, contract, or
permit, or any judgment, decree, order, restrictive covenant, statute, rule or
regulation, applicable to Seller or to the Hotels.
(b) FIRPTA. No entity constituting Seller is a foreign corporation,
foreign partnership, foreign trust or foreign estate (as those items are defined
in the Internal Revenue Code and Income Tax Regulations).
(c) Bankruptcy. No entity constituting Seller, nor any of its or their
partners or members, is insolvent or the subject of any bankruptcy proceeding,
receivership proceeding or other insolvency, dissolution, reorganization or
similar proceeding.
(d) Property Agreements. A complete list of all FF&E Leases, Service
Contracts and Leases used in or otherwise relating to the operation and business
of each Hotel is attached hereto as Exhibit D. Except for the License Agreements
and Management Agreements, the assets constituting each "Hotel" to be conveyed
to Buyer hereunder constitute all of the property and assets of Seller used in
connection with the operation and business of the Hotels. There are no leases,
management agreements, leasing agent's agreements, equipment leases, building
service agreements, maintenance contracts, suppliers contracts, warranty
contracts, operating agreements, or other agreements (i) to which any entity
constituting Seller is a party or an assignee, or (ii) binding upon any Hotel,
relating to the ownership, occupancy, operation or maintenance of the Real
Property, FF&E, Supplies or Tradenames, except for those Service Contracts,
Leases, Warranties and FF&E Leases except as disclosed on Exhibit D, copies of
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which are to be delivered to Buyer pursuant to Section 3.1. Seller agrees to
obtain prior to the expiration of the Review Period a waiver reasonably
satisfactory in form and substance to Buyer of Manager's right of first refusal
with respect to each of the Hotels, such waiver to be satisfactory to Buyer in
form and substance. No party, other than Manager pursuant to such right of first
refusal, has any right or option to acquire the Hotels or any portion thereof,
other than Buyer.
(e) Pending Claims. Seller has not received any written notice of: (i)
any claims, demands, litigation, proceedings or governmental investigations
pending or threatened against any entity constituting Seller or related to the
business or assets of any of the Hotels, (ii) any special assessments or
extraordinary taxes, and (iii) any pending or threatened condemnation or eminent
domain proceeding which would affect the Property or any part thereof. There are
no: pending arbitration proceedings or unsatisfied arbitration awards, or
judicial proceedings or orders respecting awards, which might become a lien on
the Property or any portion thereof, pending unfair labor practice charges or
complaints, unsatisfied unfair labor practice orders or judicial proceedings or
orders with respect thereto, pending charges or complaints with or by city,
state or federal civil or human rights agencies, unremedied orders by such
agencies or judicial proceedings or orders with respect to obligations under
city, state or federal civil or human rights or antidiscrimination laws or
executive orders affecting any Hotel, or other pending, actual or, to the best
of Seller's knowledge, threatened litigation claims, charges, complaints,
petitions or unsatisfied orders by or before any administrative agency or court
which affect any Hotel or might become a lien on any Hotel (collectively, the
"Pending Claims").
(f) Environmental. With respect to environmental matters, to the best
of Seller's knowledge, (i) there has been no Release or threat of Release of
Hazardous Materials in, on, under, to or from the Real Property, except as
disclosed in the reports set forth on Exhibit G attached hereto and incorporated
herein by reference, (ii) no portion of the Real Property is being used for the
treatment, storage, disposal or other handling of Hazardous Materials or
machinery containing Hazardous Materials other than standard amounts of cleaning
supplies and chlorine for the swimming pool, all of which are stored on the Real
Property in strict accordance with applicable Environmental Requirements (as
hereinafter defined) and do not exceed limits permitted under applicable laws,
including without limitation Environmental Requirements, (iii) no underground
storage tanks are currently located on or in the Real Property or any portion
thereof, and (iv) no environmental investigation, administrative order,
notification, consent order, litigation, claim, judgment or settlement with
respect to the Real Property or any portion thereof is pending or threatened. As
used in this Contract: "Hazardous Materials" means (1) "hazardous wastes" as
defined by the Resource Conservation and Recovery Act of 1976, as amended from
time to time ("RCRA"), (2) "hazardous substances" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. 9601 et seq.), as amended by the Superfund Amendment and Reauthorization
Act of 1986 and as otherwise amended from time to time ("CERCLA"); (3) "toxic
substances" as defined by the Toxic Substances Control Act, as amended from time
to time ("TSCA"), (4) "hazardous materials" as defined by the Hazardous
Materials Transportation Act, as amended from time to time ("HMTA"), (5)
asbestos, oil or other petroleum products, radioactive materials, urea
formaldehyde foam insulation, radon gas and transformers or other equipment that
contains dielectric fluid containing polychlorinated biphenyls and (6) any
substance whose presence is detrimental or hazardous to health or the
environment, including, without limitation, microbial or
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fungal matter or mold, or is otherwise regulated by federal, state and local
environmental laws (including, without limitation, RCRA, CERCLA, TSCA, HMTA),
rules, regulations and orders, regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Materials (collectively,
"Environmental Requirements"). As used in this Contract: "Release" means
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing.
(g) Title and Liens. Except for Seller Liens to be released at
Closing, Seller has good and marketable fee simple absolute title to the Real
Property, subject only to the Permitted Exceptions. Except for the FF&E subject
to the FF&E Leases, Seller has good and marketable title to the Personal
Property, free and clear of all liens, claims, encumbrances or other rights
whatsoever (other than Seller Liens to be released at Closing), and there are no
other liens, claims, encumbrances or other rights pending or of which Seller has
received notice or which are otherwise known to Seller related to any other
Personal Property.
(h) Utilities. All appropriate utilities, including sanitary and storm
sewers, water, gas, telephone, cable and electricity, are currently sufficient
and available to service each Hotel and all installation, connection or "tap-on"
and usage fees have been paid.
(i) Licenses, Permits and Approvals. To the best of Seller's
knowledge, the Property complies with applicable licenses, permits and approvals
and federal, state or local statutes, laws, ordinances, rules, regulations,
requirements and codes including, without limitation, those regarding land use,
building, fire, health, safety, environmental, subdivision, water quality,
sanitation controls and the Americans with Disabilities Act, and similar rules
and regulations relating and/or applicable to the ownership, use and operation
of the Property as it is now operated. Seller has received all licenses, permits
and approvals required or needed for the lawful conduct, occupancy and operation
of the business of each Hotel, and each license and permit, including without
limitation each of the License Agreements, is in full force and effect. No
licenses, permits or approvals necessary for the lawful conduct, occupancy or
operation of the business of each Hotel requires any approval of a governmental
authority for transfer of the Property except as set forth in Exhibit E.
(j) Financial Statements. Seller has delivered copies of all prior and
current (i) financial statements prepared by Crossroads Hospitality Management
Company for each of the Hotels, (ii) operating statements prepared by Seller for
the Hotels, and (iii) monthly financial statements for the Hotels. Each of such
statements is complete and accurate in all material respects and fairly presents
the results of operations of each Hotel for the respective periods represented
thereby. Seller has relied upon such financial statements in connection with its
ownership and operation of the Hotels.
(k) Employees. All employees employed at each Hotel are the employees
of Seller or its existing manager. There are no (i) unions organized at any
Hotel, (ii) union organizing attempts, strikes, organized work stoppages or slow
downs, or any other labor disputes pending or, to Seller's knowledge, threatened
with respect to any of the employees at any Hotel, or (iii) collective
bargaining or other labor agreements to which Seller or the Manager or any Hotel
is bound with respect to any employees employed at any Hotel.
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(l) Construction.
(i) To the best of Seller's knowledge, each of the Hotels has
been and will be constructed in a good and workmanlike manner without
encroachments and in accordance with the Contracts, Plans and Specs, and
each Hotel is finally completed (as contemplated in Section 10.1) and open
for business as a Residence Inn(R). To the best of Seller's knowledge, all
construction and the contemplated use and occupancy of each Hotel as a
Residence Inn(R)with the number of rooms for each Hotel specified on
Schedule 1 is in conformity with all building permits and certificates of
occupancy therefor and all applicable health, safety and similar laws,
rules, regulations, ordinances and codes. Each of the Hotels has been
"finally completed," and Seller agrees to deliver to Buyer prior to the
expiration of the Review Period "Evidence of Final Completion" satisfactory
to Buyer, for each of the Hotels, together with evidence satisfactory to
Buyer of compliance of each of the Hotels with all zoning, subdivision and
platting laws, rules, regulations, ordinances and codes (collectively,
"Land Use Compliance"). "Evidence of Final Completion" of each Hotel shall
mean: (a) Buyer shall have received satisfactory certificates of final
completion from the architect(s) and/or engineer(s) and the general
contractor(s) for each Hotel; and (b) Buyer shall have received
satisfactory evidence that (i) all final and unconditional consents,
approvals, licenses, certificates of occupancy ("C/O's") and operating
permits necessary or appropriate for each Hotel to open for business to the
public and operate as a Residence Inn(R)have been issued by and obtained
from all applicable governmental and regulatory authorities; (ii) each
Hotel is fully furnished, fitted and equipped and ready to open for
business to the public and operate as a Residence Inn(R); (iii) all
contractors, subcontractors, suppliers, mechanics, materialmen and other
persons or entities providing labor or materials for the construction and
development of each Hotel have been paid, including without limitation
final and unconditional releases of liens satisfactory to Buyer and the
Title Company; and (iv) all of the conditions set forth in the License
Agreement for each Hotel have been satisfied and such License Agreement is
in full force and effect.
(ii) All Personal Property:
(x) is owned by Seller and conveyed to Buyer free from
liens, encumbrances, security interests and the claims of any lessors
or other parties whatsoever (other than the FF&E subject to the FF&E
Leases); and
(y) was new as of the opening date of each Hotel and is in
good condition and operating order.
(iii) All necessary easements for ingress and egress, drainage,
signage and utilities serving each Hotel have either been dedicated to the
public, conveyed to the appropriate utility or will be conveyed to Buyer
along with the applicable Hotel Property.
(iv) To the best of Seller's knowledge, all drawings, plans and
specifications for the Improvements have been prepared in accordance with
good architectural practice and engineering and in accordance with
applicable laws, rules, regulations, ordinances and codes. Seller warrants
that the Contracts, Plans and Specs for
13
each Hotel provided to Buyer are the same contracts, drawings, plans and
specifications approved by the applicable governmental authorities having
jurisdiction over such Hotel and that all required approvals thereof have
been obtained form such authorities and form all third parties.
(v) Seller shall indemnify and hold Buyer harmless from all
costs, expenses, claims, liens and liability arising out of or related to
all construction of the Improvements and acquisition and installation of
the FF&E and all other Personal Property furnished, performed or completed
prior to the Closing Date. In the event of the filing of a mechanic's or
materialmen's lien against any portion of any Hotel Property, Seller shall
cause the same to be released at least ten (10) days prior to Closing on
the affected Hotel Property.
(vi) Seller warrants (x) that all materials and equipment
furnished with respect to the Improvements, FF&E and other Personal
Property were new as of the opening date of each Hotel, (y) that all
Improvements, FF&E and other Personal Property are of good quality and, to
the best of Seller's knowledge, free from faults and defects and (z) at
Closing, title to all Improvements, FF&E and Personal Property will vest in
Buyer, free and clear of all liens, claims, security interests or
encumbrances except for Permitted Exceptions and applicable FF&E Leases.
(vii) In addition to, but not in limitation of, other warranties
set forth herein or in any Warranties, Contracts, Plans and Specs, if,
within (I) one (1) year after the date of Closing in the case of the
Cranbury Hotel and the Franklin Hotel and (II) six (6) months after the
date of Closing in the case of the Hauppauge Hotel, any of the construction
(whether materials or workmanship) is found to be defective or not in
accordance with the approved Contracts, Plans and Specs in any material
respect, upon notice from Buyer, Seller shall, at its sole cost and
expense, promptly cause any such defect or nonconforming work to be
corrected. As to FF&E and other Personal Property, Seller warrants the same
to be free from defects for a period of (x) one (1) year from the date of
Closing in the case of the Cranbury Hotel and the Franklin Hotel and (y)
six (6) months from the date of Closing in the case of the Hauppauge Hotel.
(m) Operations. Each Hotel is being and through the Closing Date will
be operated in accordance with all applicable laws, rules, regulations,
ordinances and codes.
As used herein, "Seller's knowledge" or "known to Seller" or similar statements
include, without limitation, reasonable inquiry by Seller of Xxxxx Xxxxx and
Xxxxxxx Xxxxxxx and of the general manager and the chief engineer of the
management company for each of the Hotels.
7.2 Buyer's representations, warranties and covenants. Buyer represents,
warrants and covenants:
(a) Authority. Buyer is a corporation duly formed, validly existing
and in good standing in the Commonwealth of Virginia. Buyer has received or will
have received on or before the expiration of the Review Period all necessary
consents of the Board of Directors of Buyer that Buyer is fully authorized to
complete the transactions contemplated by this Contract.
14
No other consent or approval of any person, entity or governmental authority is
required for the execution, delivery or performance by Buyer of this Contract,
and this Contract is hereby binding and enforceable against Buyer.
(b) Bankruptcy. Buyer is not insolvent nor the subject of any
bankruptcy proceeding, receivership proceeding or other insolvency, dissolution,
reorganization or similar proceeding.
7.3 Survival. All of the representations and warranties set forth in this
Contract are true, correct and complete as of the date hereof and the statements
set forth therein (without qualification or limitation as to a party's knowledge
thereof) shall be true, correct and complete as of the Closing Date. All of the
representations and warranties made herein shall survive Closing on each Hotel
Property for a period of eighteen (18) months and shall not be deemed to merge
into or be waived by any Seller's Deed or any other closing documents.
ARTICLE VIII
ADDITIONAL COVENANTS
8.1 Subsequent Developments. After the date of this Contract and until the
Closing Date, Seller shall keep Buyer fully informed of all subsequent
developments of which Seller has knowledge ("Subsequent Developments") which
would cause any of Seller's representations or warranties contained in this
Contract to be no longer accurate in any material respect.
8.2 Operations. Seller shall, from and after the date hereof through the
Closing on each Hotel Property:
(a) Continue to maintain the Property generally in accordance with
past practices of Seller and in compliance with the License Agreements,
including, without limitation, (i) using reasonable efforts to keep available
the services of all present employees at each Hotel and to preserve its
relations with guests, suppliers and other parties doing business with Seller
with respect to each Hotel, (ii) accepting booking contracts for the use of the
Hotels' facilities on terms not less favorable than the terms typically arranged
by Seller for its other properties and retaining such bookings, (iii)
maintaining the current level of advertising and other promotional activities
for the Hotels' facilities, (iv) maintaining the present level of insurance with
respect to each Hotel in full force and effect until the Closing Date for such
Hotel and (v) remaining in substantial compliance with all current Licenses;
(b) Keep, observe, and perform all its obligations under the Leases,
the Service Contracts, the FF&E Leases, the License Agreements, the Management
Agreements, the Contracts, Plans and Specs, the Warranties and all other
applicable contractual arrangements relating to each Hotel;
(c) Not cause or permit the removal of FF&E from any Hotel except for
the purpose of discarding worn, damaged, defective and valueless items that have
been replaced with new, non-defective FF&E of equal or better quality; timely
make all repairs, maintenance, and replacements to keep all FF&E and all other
Personal Property and all Real Property in good operating condition; keep and
maintain each Hotel in a good state of repair and condition,
15
reasonable and ordinary wear and tear excepted; and not commit waste of any
portion of any Hotel;
(d) Maintain the levels and quality of the Personal Property generally
at the levels and quality existing on the date hereof and keep merchandise,
supplies and inventory adequately stocked, consistent with good business
practice, as if the sale of the Hotels hereunder were not to occur, including,
without limitation, maintaining linens and bath towels at least at a 2-par level
for all suites of each Hotel;
(e) Advise Buyer promptly of any litigation, arbitration, or
administrative hearing before any court or governmental agency concerning or
affecting any Hotel which is instituted or threatened after the date of this
Contract or if any representation or warranty contained in this Contract shall
become false;
(f) Not take, or purposefully omit to take, any action that would have
the effect of violating any of the representations, warranties, covenants or
agreements of Seller contained in this Contract;
(g) Pay or cause to be paid all taxes, assessments and other
impositions levied or assessed on each Hotel or any part thereof prior to the
delinquency date, and comply with all federal, state, and municipal laws,
ordinances, regulations and orders relating to each Hotel;
(h) Not sell or assign, or enter into any agreement to sell or assign,
or create or permit to exist any lien or encumbrance (other than a Permitted
Exception and sales of food and beverages in the ordinary course of business)
on, the Property or any portion thereof; and
(i) Not allow any permit, receipt, license, franchise or right
currently in existence with respect to the operation, use, occupancy or
maintenance of any Hotel to expire, be canceled or otherwise terminated.
Seller shall not, without first obtaining the written approval of Buyer, which
approval shall not be unreasonably withheld, enter into any new FF&E Leases,
Service Contracts, Leases or other contracts or agreements (other than bookings
made in the ordinary course of business) related to any Hotel, or extend any
existing such agreements, unless such agreements (x) can be terminated, without
penalty, upon thirty (30) days' prior notice or (y) will expire prior to the
Closing Date of the affected Hotel.
8.3 Third Party Consents. Prior to the Closing Date for any Hotel, Seller
shall, at Seller's expense, obtain any and all third party consents and
approvals required in order to transfer such Hotel to Buyer, including, without
limitation, all consents and approvals referred to on Exhibit E (collectively,
the "Third Party Consents").
8.4 Employees. Buyer and its employees, representatives and agents shall
have the right to communicate with the corporate staff of each entity
constituting Seller, the Hotels and the Manager, including without limitation,
the general manager of each Hotel, at any time before Closing. Buyer shall not
unreasonably interfere with the operations of the Hotels while engaging in such
communication.
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8.5 Estoppel Certificates. Seller shall obtain from (i) each tenant (if
any) under any Lease affecting any Hotel (but not from current or prospective
occupants of hotel rooms and suites within the Hotel), (ii) each lessor under
each FF&E Lease for each Hotel designated by Buyer as a material FF&E Lease,
(iii) the Licensor, and (iv) the Manager, deliver to Buyer not less than five
(5) days before the Closing of the affected Hotel, estoppel certificates
substantially in the forms attached hereto as Exhibit F (with respect to the
estoppel certificates from tenants, if any, and lessors under FF&E Leases) and
otherwise in form and substance reasonably acceptable to Buyer.
8.6 Management Agreement. Seller is a party to existing Management
Agreements with Crossroads Hospitality Management Company ("Manager"), more
particularly described on Schedule 2 for the Hauppauge Hotel Property (the
"Hauppauge Management Agreement"), for the Franklin Hotel Property (the
"Franklin Management Agreement") and for the Cranbury Hotel Property (the
"Cranbury Management Agreement" and collectively with the Hauppauge Management
Agreement and the Franklin Management Agreement, the "Existing Management
Agreements"), each of which shall be terminated effective as of the Closing, at
no liability, cost or expense to Buyer. Seller shall be responsible for
negotiating with Manager terminations of each of the Existing Management
Agreements acceptable to Buyer, including waivers by Manager of any and all
rights of first refusal and/or other purchase rights or options ("Purchase
Rights") with respect to each of the Hotels. As a condition to Buyer's
obligations hereunder, each of the Existing Management Agreements shall have
been terminated as provided herein and Buyer shall have entered into a new
management agreement with a manager satisfactory to Buyer ("Buyer's Manager")
for each Hotel, such new agreements to be satisfactory in form and substance to
Buyer. Seller will be solely responsible for paying any applicable termination
costs, expenses, fees and liabilities under the Existing Management Agreements.
8.7 Shadow Management. No sooner than thirty (30) days prior to Closing,
Seller and Manager shall permit Buyer and/or Buyer's Manager to establish and
maintain a shadow management operation with respect to each Hotel prior to the
Closing Date for such Hotel; provided, however, that Buyer may observe but may
not give any directions or instructions to any of such Hotel's employees prior
to Closing on such Hotel. Personnel from any such shadow management operation
shall have reasonable access during normal business hours to all books, records
and other information in the possession or control of Seller and Manager or its
or their agents concerning the Hotel; provided, however, that Buyer and its
shadow management operation and employees (a) shall not unreasonably interfere
with the normal management and operation of the Hotels, (b) shall hold all
information acquired from such books and records confidential in accordance with
the provisions of this Contract, and (c) shall not be deemed to have assumed
management responsibilities by virtue of such shadow management.
8.8 Liquor Licenses. Seller represents, warrants and covenants that no
liquor or alcoholic beverages are sold, and none will be sold, at any of the
Hotels prior to Closing. Seller agrees to assist Buyer and/or Buyer's Manager in
obtaining liquor licenses and alcoholic beverage licenses necessary or desirable
in connection with the operation of any restaurants, bars and lounges located
within each Hotel (the "Liquor Licenses") in the event Buyer or Buyer's Manager
elects to apply for any such Liquor Licenses.
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8.9 Access to Financial Information. Buyer's representatives shall have
access to all financial and other information relating to the Hotels to the
extent necessary to enable Buyer's representatives to prepare audited financial
statements in conformity with Regulation S-X of the Securities and Exchange
Commission (the "SEC") and to enable them to prepare a registration statement,
report or disclosure statement for filing with the SEC on behalf of Buyer.
Seller shall also provide to Buyer's representative a signed representation
letter in form and substance reasonably acceptable to Seller sufficient to
enable an independent public accountant to render an opinion on the financial
statements related to the Hotels.
8.10 Bulk Sales. At Seller's risk and expense, Seller shall take all steps
reasonably necessary to comply with the requirements of a transferor under all
bulk transfer laws applicable to the transactions contemplated by this Contract.
8.11 Indemnification. If the transactions contemplated by this Contract are
consummated as provided herein, with respect to any Hotel Property sold by
Seller to Buyer :
(a) Indemnification of Buyer. Without in any way limiting or
diminishing the warranties, representations or agreements herein contained or
the rights or remedies available to Buyer for a breach hereof, Seller hereby
agrees to indemnify, defend and hold harmless Buyer and its respective
designees, successors and assigns from and against all losses, judgments,
liabilities, claims, damages or expenses (including reasonable attorneys' fees)
of every kind, nature and description in existence before, on or after Closing,
whether known or unknown, absolute or contingent, joint or several, arising out
of or relating to:
(i) any claim made or asserted against Buyer or any of the
Property by a creditor of Seller, including any claims based on or alleging
a violation of any bulk sales act or other similar laws;
(ii) the breach of any representation, warranty, covenant or
agreement of Seller contained in this Contract;
(iii) any liability or obligation of Seller not expressly assumed
by Buyer pursuant to this Contract;
(iv) any claim made or asserted by Manager or any employee of
Seller or Manager arising out of Seller's decision to sell the Property
and/or the termination of any of the Existing Management Agreements and/or
any employment agreements;
(v) the conduct and operation by Seller of the Hotels or the
ownership, use or operation of the Property prior to Closing;
(vi) losses arising with respect to the employee benefit
liabilities and obligations retained, and agreements made, by Seller
pursuant to this Contract; and
(vii) losses arising out of the funding, operation,
administration, amendment or termination by Seller, or the withdrawal or
partial withdrawal of Seller from, any employee plan or arrangement
maintained or contributed to by Seller whether arising out of or relating
to an event or state of facts occurring or existing before, on or
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after Closing Date (including, but not limited to losses arising under
ERISA or the Internal Revenue Code).
(b) Indemnification of Seller. Without in any way limiting or
diminishing the warranties, representations or agreements herein contained or
the rights or remedies available to Seller for a breach hereof, Buyer hereby
agrees, with respect to this Contract, to indemnify, defend and hold harmless
Seller from and against all losses, judgments, liabilities, claims, damages or
expenses (including reasonable attorneys' fees) of every kind, nature and
description in existence before, on or after Closing, whether known or unknown,
absolute or contingent, joint or several, arising out of or relating to:
(i) the breach of any representation, warranty, covenant or
agreement of Buyer contained in this Contract; and
(ii) the conduct and operation by Buyer of its business at each
Hotel purchased by Buyer after the Closing.
(c) Indemnification Procedure for Claims of Third Parties.
Indemnification, with respect to claims resulting from the assertion of
liability by those not parties to this Contract (including governmental claims
for penalties, fines and assessments), shall be subject to the following terms
and conditions:
(i) The party seeking indemnification (the "Indemnified Party")
shall give prompt written notice to the party or parties from which it is
seeking indemnification (the "Indemnifying Party") of any assertion of
liability by a third party which might give rise to a claim for
indemnification based on the foregoing provisions of this Section 8.11,
which notice shall state the nature and basis of the assertion and the
amount thereof, to the extent known; provided, however, that no delay on
the part of the Indemnified Party in giving notice shall relieve the
Indemnifying Party of any obligation to indemnify unless (and then solely
to the extent that) the Indemnifying Party is prejudiced by such delay.
(ii) If in any action, suit or proceeding (a "Legal Action") the
relief sought is solely the payment of money damages, and if the
Indemnifying Party specifically agrees in writing to indemnify such
Indemnified Party with respect thereto and demonstrates to the reasonable
satisfaction of such Indemnified Party its financial ability to do so, the
Indemnifying Party shall have the right, commencing thirty (30) days after
such notice, at its option, to elect to settle, compromise or defend,
pursuant to this paragraph, by its own counsel and at its own expense, any
such Legal Action involving such Indemnified Party's asserted liability. If
the Indemnifying Party does not undertake to settle, compromise or defend
any such Legal Action, such settlement, compromise or defense shall be
conducted in the sole discretion of such Indemnified Party, but such
Indemnified Party shall provide the Indemnifying Party with such
information concerning such settlement, compromise or defense as the
Indemnifying Party may reasonably request from time to time. If the
Indemnifying Party undertakes to settle, compromise or defend any such
asserted liability, it shall notify such Indemnified Party in writing of
its
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intention to do so within thirty (30) days of notice from such Indemnified
Party provided above.
(iii) Notwithstanding the provisions of the previous subsection
of this Contract, until the Indemnifying Party shall have assumed the
defense of the Legal Action, the defense shall be handled by the
Indemnified Party. Furthermore, (x) if the Indemnified Party shall have
reasonably concluded that there are likely to be defenses available to it
that are different from or in addition to those available to the
Indemnifying Party; (y) if the Legal Action involves other than money
damages and seeks injunctive or other equitable relief; or (z) if a
judgment against Buyer, as the Indemnified Party, in the Legal Action will,
in the good faith opinion of Buyer, establish a custom or precedent which
will be adverse to the best interest of its continuing business, the
Indemnifying Party, shall not be entitled to assume the defense of the
Legal Action and the defense shall be handled by the Indemnified Party. If
the defense of the Legal Action is handled by the Indemnified Party under
the provisions of this subsection, the Indemnifying Party shall pay all
legal and other expenses reasonably incurred by the Indemnified Party in
conducting such defense.
(iv) In any Legal Action initiated by a third party and defended
by the Indemnified Party (w) the Indemnified Party shall have the right to
be represented by advisory counsel and accountants, at its own expense, (x)
the Indemnifying Party shall keep the Indemnified Party fully informed as
to the status of such Legal Action at all stages thereof, whether or not
the Indemnified Party is represented by its own counsel, (y) the
Indemnifying Party shall make available to the Indemnified Party and its
attorneys, accounts and other representatives, all books and records of
Seller relating to such Legal Action and (z) the parties shall render to
each other such assistance as may be reasonably required in order to ensure
the proper and adequate defense of such Legal Action.
(v) In any Legal Action initiated by a third party and defended
by the Indemnifying Party, the Indemnifying Party shall not make settlement
of any claim without the written consent of the Indemnified Party, which
consent shall not be unreasonably withheld. Without limiting the generality
of the foregoing, it shall not be deemed unreasonable to withhold consent
to a settlement involving injunctive or other equitable relief against
Buyer or its respective assets, employees, affiliates or business, or
relief which Buyer reasonably believes could establish a custom or
precedent which will be adverse to the best interests of its continuing
business.
8.12 Survival of Covenants. Unless waived or terminated as provided herein,
all of the covenants and agreements made by Seller and Buyer in this Contract
and in the Schedules and Exhibits hereto shall be continuing and shall survive
Closing on the applicable Hotel Property, notwithstanding any investigation at
any time made by or on behalf of any party, and shall terminate with respect to
each Hotel Property acquired by Buyer eighteen (18) months after Closing on such
Hotel Property.
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ARTICLE IX
CONDITIONS FOR CLOSING
9.1 Buyer's Conditions for Closing. Unless otherwise waived in writing, and
without prejudice to Buyer's right to cancel this Contract during the Review
Period, the duties and obligations of Buyer to proceed to Closing on each Hotel
Property under the terms and provisions of this Contract are and shall be
expressly subject to strict compliance with, and satisfaction or waiver of, each
of the conditions and contingencies set forth in this Contract, each of which
shall be deemed material to this Contract. In the event of the failure of any of
the conditions set forth in this Section 9.1 or of any other condition to
Buyer's obligations provided for in this Contract, which condition is not waived
in writing by Buyer, Buyer shall have the right at its option to declare this
Contract terminated, in which case the Deposit and any interest thereon shall be
immediately returned to Buyer and each of the parties shall be relieved from
further liability to the other, except as otherwise expressly provided herein,
with respect to this Contract.
(a) All of Seller's representations and warranties contained in or
made pursuant to this Contract shall be true and correct in all material
respects as if made again on each Closing Date.
(b) Buyer shall have received all of the instruments and conveyances
listed in Section 10.2.
(c) Seller shall have performed, observed and complied in all material
respects with all of the covenants, agreements, closing requirements and
conditions required by this Contract to be performed, observed and complied with
by Seller, as and when required hereunder.
(d) The Existing Management Agreements shall have been terminated by
Seller, and Manager shall have waived all Purchase Rights with respect to each
of the Hotels, all at no cost, liability and expense to Buyer, and all pursuant
to agreements in form and substance reasonably acceptable to Buyer, and Buyer
shall have entered into new management agreements with Buyer's Manager on terms
and conditions satisfactory to Buyer.
(e) Seller shall have provided to Buyer C/O's and other Evidence of
Final Completion and evidence of Land Use Compliance for each of the Hotels, all
in form and substance reasonably satisfactory to Buyer.
(f) The License Agreements shall have been assigned, amended and
transferred to Buyer with Licensor's consent, such License Agreements,
assignment, amendment and consent to be satisfactory to Buyer in form and
substance, or Buyer shall have entered into new license and franchise agreements
with Licensor on terms and conditions reasonably satisfactory to Buyer.
(g) Third Party consents in form and substance reasonably satisfactory
to Buyer shall have been obtained and furnished to Buyer.
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(h) Additional Property Escrow Agreement. Buyer and certain affiliates
of Seller (collectively, "Briad"), shall have entered into an escrow agreement
(the "Additional Property Escrow Agreement") in the form attached hereto as
Exhibit H with respect to certain hotel properties identified therein, which
hotel properties are currently under, or proposed for, development by Briad.
9.2 Seller's Conditions for Closing. Unless otherwise waived in writing,
and without prejudice to Seller's right to cancel this Contract during the
Review Period, the duties and obligations of Seller to proceed to Closing under
the terms and provisions of this Contract are and shall be expressly subject to
strict compliance with, and satisfaction or waiver of, each of the conditions
and contingencies set forth in this Section 9.2, each of which shall be deemed
material to this Contract. In the event of the failure of any of the conditions
set forth in this Section 9.2, which condition is not waived in writing by
Seller, Seller shall have the right at its option to declare this Contract
terminated and null and void, in which case the remaining Deposit and any
interest thereon shall be immediately returned to Buyer and each of the parties
shall be relieved from further liability to the other, except as otherwise
expressly provided herein, with respect to this Contract.
(a) All of Buyer's representations and warranties contained in or made
pursuant to this Contract shall be true and correct in all material respects as
if made again on the Closing Date.
(b) Seller shall have received all of the money, instruments and
conveyances listed in Section 10.3.
(c) Buyer shall have performed, observed and complied in all material
respects with all of the covenants, agreements, closing requirements and
conditions required by this Contract to be performed, observed and complied with
by Buyer, as and when required hereunder.
(d) Additional Property Escrow Agreement. Buyer and Briad shall have
entered into an escrow agreement (the "Additional Property Escrow Agreement") in
the form attached hereto as Exhibit H with respect to certain hotel properties
identified therein, which hotel properties are currently under, or proposed for,
development by Briad.
9.3 Cranbury Subdivision. Buyer and Seller acknowledge that the description
of the Cranbury Property attached hereto as Exhibit A-3 will result from a
subdivision that is currently pending to subdivide the land constituting the
Cranbury Property from a pad site more particularly described on Exhibit A-4
(the "Cranbury Pad Site"). Seller anticipates selling the Cranbury Pad Site
pursuant to a contract with Tower Investments, L.L.C., a New Jersey limited
liability company, as buyer ("Pad Buyer"), dated July 16, 2002 (the "Pad
Contract"). Seller acknowledges that it is a condition to Closing by Buyer
hereunder that (a) the Cranbury Pad Site and the Cranbury Property be separately
subdivided and that Buyer shall have approved the subdivision, (b) Buyer shall
not incur any loss, cost, expense or liability in connection with either the
subdivision or the sale of the Cranbury Pad Site, (c) the use and development of
the Cranbury Pad Site shall be restricted in a manner reasonably satisfactory to
Buyer pursuant to restrictive covenants that run with the land and that shall be
approved by Buyer before the sale of the
22
Cranbury Pad Site to the Pad Buyer and shall be recorded by Seller at Seller's
expense (the "Pad Restrictions"), and (d) any cross-easement agreement providing
access to the Cranbury Pad Site shall have been approved by Buyer. Any
adjustments in the property lines of the Cranbury Property or the Cranbury Pad
Site and any amendments to the cross-easement agreement reviewed by Buyer during
the Review Period shall be subject to Buyer's reasonable prior written approval.
In the event that Buyer elects (in its sole discretion) to close on the purchase
of the Cranbury Property prior to the subdivision of the Cranbury Pad Site and
the closing of the sale of the Cranbury Pad Site to the Pad Buyer pursuant to
the Pad Contract, Buyer and Seller shall cooperate to effect the sale of the
Cranbury Property to Buyer such that Seller retains (x) all obligations and
liabilities with respect to the subdivision of the Cranbury Pad Site and (y) the
benefits, obligations and liabilities under the Pad Contract, and Buyer shall
incur no liability in connection therewith, and Seller shall indemnify and hold
Buyer harmless in connection therewith. In the event the Cranbury Pad Site is
separately subdivided from the Cranbury Property but the sale of the Cranbury
Pad Site to the Pad Buyer is not consummated, the Cranbury Pad Site shall remain
subject to the Pad Restrictions.
ARTICLE X
CLOSING AND CONVEYANCE
10.1 Closing; Construction Completion. Unless otherwise agreed by Buyer and
Seller in writing, closing on the Property shall occur on a date selected by
Buyer that is not later than sixty (60) days after expiration of the Review
Period, provided that all conditions to Closing by Buyer hereunder have been
satisfied. Buyer will provide Seller at least five (5) days prior written notice
of the Closing Date selected by Buyer.
The date on which the Closing on the Property is to occur as provided in
this Section 10.1, or such other date as may be agreed upon by Buyer and Seller,
is referred to in this Contract as the "Closing Date". The Closing shall be held
at 10:00 a.m. at the offices of the Title Company, or as otherwise determined by
Buyer and Seller.
10.2 Seller's Deliveries. At Closing, Seller shall deliver to Buyer the
following, and, as appropriate, all instruments shall be properly executed and
conveyance instruments to be acknowledged in recordable form (the terms,
provisions and conditions of all instruments not attached hereto as Exhibits
shall be mutually agreed upon by Buyer and Seller prior to Closing).
(a) Deed. A Special Warranty Deed or Bargain and Sale Deed with
covenants against grantor's acts in the form attached as Exhibit I, conveying to
Buyer fee simple title to the Real Property constituting part of each Hotel
Property, subject only to the Permitted Exceptions (the "Deed").
(b) Bills of Sale. Bills of Sale, in the form attached hereto as
Exhibit J, to Buyer and/or its designated Lessee, conveying title to the
tangible Personal Property constituting part of each Hotel Property.
(c) General Assignments. Assignments of all of Seller's right, title
and interest in and to all FF&E Leases, Service Contracts and Leases identified
on Exhibit D hereto applicable to each Hotel (the "Hotel Contracts"). The
Assignment shall also be a general
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assignment and shall provide for the assignment of all of Seller's right, title
and interest in all Records, Warranties, Licenses, Tradenames, Contracts, Plans
and Specs and all other intangible Personal Property applicable to each Hotel.
(d) FIRPTA; 1099. A FIRPTA Affidavit or Transferor's Certificate of
Non-Foreign Status as required by Section 1445 of the Internal Revenue Code and
an IRS Form 1099.
(e) Title Company Documents. All affidavits, gap indemnity agreements
(if required by the Title Company) and other documents reasonably required by
the Title Company. At Buyer's sole expense, Buyer shall have obtained an
irrevocable commitment directly from the Title Company (or in the event the
Title Company is not willing to issue said irrevocable commitment, then from
such other national title company as may be selected by either Buyer or Seller)
for issuance of an Owner's Policy of Title Insurance to Buyer insuring good and
marketable fee simple absolute title to the Real Property constituting part of
each Hotel Property, subject only to the Permitted Exceptions in the amount of
the Purchase Price allocated to each Hotel Property.
(f) Possession; Estoppel Certificates. Possession of each Hotel
Property, subject only to rights of guests in possession and tenants pursuant to
written leases included in the Leases, and estoppel certificates from tenants
(if any) under Leases and the lessors under FF&E Leases in the forms attached
hereto as Exhibit F.
(g) Vehicle Titles. The necessary certificates of titles duly endorsed
for transfer together with any required affidavits and other documentation
necessary for the transfer of title from Seller to Buyer of any motor vehicles
used in connection with each related Hotel's operations.
(h) Authority Documents. Copies of resolutions, certified by the
managing member or officer reasonably acceptable to Buyer and the Title Company
of the members and managers of Seller authorizing the sale of each Hotel
Property contemplated by this Contract, and/or other evidence reasonably
satisfactory to Buyer and the Title Company that the person or persons executing
the closing documents on behalf of Seller have full right, power and authority
to do so, along with a certificate of good standing of Seller from the State in
which each Hotel Property is located.
(i) Miscellaneous. Such other instruments as are contemplated by this
Contract to be executed or delivered by Seller, reasonably required by Buyer or
the Title Company, or customarily executed in the jurisdiction in which each
Hotel Property is located, to effectuate the conveyance of property similar to
the related Hotel, with the effect that, after the Closing, Buyer will have
succeeded to all of the rights, titles, and interests of Seller related to each
Hotel and Seller will no longer have any rights, titles, or interests in and to
any Hotel, except for liabilities retained by Seller as contemplated by this
Contract.
(j) Plans, Keys, Records, Etc. To the extent not previously delivered
to and in the possession of Buyer, all Contracts, Plans and Specs, all keys for
each Hotel (which keys shall be properly tagged for identification), all
Records, including, without limitation, all Warranties, Licenses, Leases, FF&E
Leases and Service Contracts for each Hotel.
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(k) Closing Statements. Seller's Closing Statement, and a certificate
confirming the truth of Seller's representations and warranties hereunder as of
the Closing Date.
10.3 Buyer's Deliveries. At Closing of each Hotel, Buyer shall deliver the
following
(a) The balance of the Purchase Price allocated to the Property.
(b) Authority Documents. Certified copy of resolutions of the Board of
Directors of Buyer authorizing the purchase of the Property contemplated by this
Contract, and/or other evidence satisfactory to Seller and the Title Company
that the person or persons executing the closing documents on behalf of Buyer
have full right, power and authority to do so.
(c) Miscellaneous. Such other instruments as are contemplated by this
Contract to be executed or delivered by Buyer, reasonably required by Seller or
the Title Company, or customarily executed in the jurisdiction in which each
Hotel Property is located, to effectuate the conveyance of property similar to
the related Hotel, with the effect that, after the Closing, Buyer will have
succeeded to all of the rights, titles, and interests of Seller related to each
Hotel and Seller will no longer have any rights, titles, or interests in and to
any Hotel, except for liabilities retained by Seller as contemplated by this
Contract.
(d) Closing Statements. Buyer's Closing Statement, and a certificate
confirming the truth of Buyer's representations and warranties hereunder as of
the Closing Date.
ARTICLE XI
COSTS
All Closing costs shall be paid as set forth below:
11.1 Seller's Costs. In connection with the sale of the Property
contemplated under this Contract, Seller shall be responsible for all transfer
and recordation taxes (other than recordation taxes imposed on any mortgage
obtained by Buyer as of Closing encumbering any Hotel Property), including,
without limitation, all transfer, sales or bulk transfer taxes or like taxes on
or in connection with the transfer of the Personal Property constituting part of
the Property being conveyed pursuant to the Xxxx of Sale, in each case except as
otherwise provided in Section 12 and all accrued taxes of Seller prior to
Closing and income taxes and other such taxes of Seller attributable to the sale
of the Property to Buyer. Seller shall also be responsible for the costs and
expenses of its attorneys, accountants, appraisers and other professionals,
consultants and representatives. Except as expressly set forth herein, Seller
shall be responsible for all costs related to the transfer and amendment of the
License Agreement for each Hotel or issuance of a new license agreement to
Buyer, including the satisfaction of any improvements contemplated in the
product improvement plan, if any is required by the Licensor in connection with
the transfer and amendment or issuance of such new license agreement, payment of
all prepayment penalties and other amounts payable in connection with the
pay-off of any liens and/or indebtedness encumbering the Hotel Property being
conveyed and termination of the Existing Management Agreements.
11.2 Buyer's Costs. In connection with the purchase of an Hotel Property
contemplated under this Contract, Buyer shall be responsible for the costs and
expenses of its
25
attorneys, accountants and other professionals, consultants and representatives.
Buyer shall also be responsible for the costs and expenses in connection with
the preparation of any environmental report, any update to the survey and the
costs and expenses of preparation of the title insurance commitment and the
issuance of the title insurance policy contemplated by Article IV, the per page
recording charges for the Deed (if applicable) and costs (if any) expressly
provided as being paid by Buyer pursuant to Article V of this Contract.
ARTICLE XII
ADJUSTMENTS
12.1 Adjustments. Unless otherwise provided herein, at Closing on each
Hotel Property, adjustments between the parties shall be made as of 12:01 a.m.
on the Closing Date (the "Cutoff Time"), with the income and expenses accrued
prior to the Closing Date being allocated to Seller and the income and expenses
accruing on and after the Closing Date being allocated to Buyer, all as set
forth below. All of such adjustments and allocations shall be made in cash at
such Closing. Except as otherwise expressly provided herein, all apportionments
and adjustments shall be made on an accrual basis in accordance with generally
accepted accounting principles.
(a) Taxes. All real estate taxes, personal property taxes, or any
other taxes and special assessments (special or otherwise) of any nature upon
each Hotel Property, levied, assessed or pending for the calendar year in which
the Closing on each Hotel Property occurs (including the period prior to
Closing, regardless of when due and payable) shall be prorated as of the Cutoff
Time and, if no tax bills or assessment statements for such calendar year are
available, such amounts shall be estimated on the basis of the best available
information for such taxes and assessments that will be due and payable on the
related Hotel for the calendar year in which such Closing occurs.
(b) Utilities. All suppliers of utilities shall be instructed to read
meters or otherwise determine the charges owing as of such Closing Date for
services prior thereto, which charges shall be allocated to Seller. Charges
accruing after Closing shall be allocated to Buyer. If elected by Seller, Seller
shall be given credit, and Buyer shall be charged, for any utility deposits
transferred to and received by Buyer at Closing.
(c) Income/Charges. All rents, income and charges receivable or
payable under any Leases and Hotel Contracts applicable to each Hotel Property,
and any deposits, prepayments and receipts thereunder, shall be prorated between
Buyer and Seller as of the Cutoff Time.
(d) Accounts. All operating accounts, xxxxx cash, cash in cash
registers and cash in vending machines of the Seller as of the Cutoff Time shall
remain the property of Seller. At Buyer's election, Buyer shall give Seller a
credit for any or all such items other than funds deposited in a bank account,
in which event such credited items shall become the property of Buyer. All FF&E
and other reserve accounts (if any) shall become the property of Buyer without
charge to Buyer.
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(e) Guest Ledger. Subject to (f) below, all accounts receivable of
registered guests at the Hotel Property being conveyed who have not checked out
and were occupying rooms as of the Cutoff Time (the "Guest Ledger"), shall be
prorated as provided herein.
(f) Room Rentals. All receipts from guest room rentals and other suite
revenues for the night in which the Cutoff Time occurs shall belong to Seller,
but Seller shall provide Buyer credit at Closing equal to the reasonable
expenses to be incurred by Buyer to clean such guests' rooms.
(g) Advance Deposits. All prepaid rentals, room rental deposits, and
all other deposits for advance registration, banquets or future services to be
provided on and after the Closing Date shall be credited to Buyer.
(h) Accounts Receivable. Subject to (e) and (f) above, all accounts
receivable and credit card claims as of the Cutoff Time shall remain the
property of Seller. Seller and Buyer agree that the monies received by Buyer
from debtors owing such accounts receivable balances after Closing shall be
applied as expressly provided in such remittance, or if not specified then to
the Seller's outstanding invoices to such account debtors in chronological order
beginning with the oldest invoices, and thereafter, to Buyer's account.
(i) Accounts Payable. Any indebtedness, accounts payable, liabilities
or obligations of any kind or nature related to Seller or any Hotel Property for
the periods prior to the Closing Date shall be allocated to Seller and promptly
paid by or for the account of Seller and evidence thereof shall be provided to
Buyer, and Buyer shall not be or become liable therefor, except as expressly
assumed by Buyer pursuant to this Contract. Invoices received by Seller in the
ordinary course of business prior to Closing shall be paid by or for the account
of Seller at or prior to Closing and evidence thereof shall be provided to
Buyer.
(j) Restaurants, Bars, Machines, Other Income. All monies received in
connection with bar, restaurant, banquet and similar and other services at each
Hotel Property being conveyed (other than amounts due from any guest and
included in room rentals) prior to the close of business for each such operation
for the night in which the Cutoff Time occurs shall be credited to the account
of Seller, and all other receipts and revenues (not previously described in this
Section 12.1) from the operation of any department of the related Hotel shall be
prorated between Seller and Buyer at Closing.
12.2 Reconciliation and Final Payment. Seller and Buyer shall reasonably
cooperate after Closing of each Hotel Property to make a final determination of
the allocations and prorations required under this Contract within one hundred
twenty (120) days after the Closing Date for each Hotel Property. Upon the final
reconciliation of the allocations and prorations under this Section, the party
which owes the other party any sums hereunder shall pay such party such sums
within ten (10) days after the reconciliation of such sums. The obligations to
calculate such prorations, make such reconciliations and pay any such sums shall
survive the Closing on each Hotel Property.
12.3 Employees. All employees at each Hotel shall remain employees of
Seller or Manager as of the Closing Date, and Seller shall not give notice under
any applicable federal or
27
state plant closing or similar act, including, if applicable, the Worker
Adjustment and Retraining Notification Provisions of 29 U.S.C., Section 2102,
the parties having agreed that a mass layoff, as that term is defined in 29
U.S.C., 2101(a)(3), will not have occurred. Any liability for payment of all
wages, salaries and benefits, including, without limitation, accrued vacation
pay, sick leave, bonuses, pension benefits, COBRA rights, and other benefits
accrued or earned by and due to employees at each Hotel through the Cutoff Time,
together with F.I.C.A., unemployment and other taxes and benefits due with
respect to such employees for such period, shall be allocated to Seller. Buyer's
Manager shall be responsible for the wages, salaries and benefits of its
employees attributable to the period from and after Closing on each Hotel;
provided, however, that Seller shall be responsible for all employees for (or,
at Buyer's option, Buyer shall receive a credit at Closing for) all accrued
payroll (and bonuses, if any), earned or accrued vacation pay and sick pay
unpaid at Closing of each Hotel.
ARTICLE XIII
CASUALTY AND CONDEMNATION
13.1 Risk of Loss; Notice. Prior to Closing and the delivery of possession
of each Hotel Property to Buyer in accordance with this Contract, all risk of
loss to such Hotel Property (whether by casualty, condemnation or otherwise)
shall be borne by Seller. In the event that (a) any loss or damage to an Hotel
shall occur prior to the Closing Date for such Hotel as a result of fire or
other casualty, or (b) Seller receives notice that a governmental authority has
initiated or threatened to initiate a condemnation proceeding affecting an
Hotel, Seller shall give Buyer immediate written notice of such loss, damage or
condemnation proceeding (which notice shall include a certification of (i) the
amounts of insurance coverages in effect with respect to the loss or damage and
(ii) if known, the amount of the award to be received in such condemnation).
13.2 Buyer's Termination Right. If, prior to Closing and the delivery of
possession of an Hotel Property to Buyer in accordance with this Contract, (a)
any condemnation proceeding shall be pending against a substantial portion of
the related Hotel or (b) there is any substantial casualty loss or damage to the
related Hotel, Buyer shall have the option to terminate this Contract as to the
affected Hotel Property or, at Buyer's election, terminate this Contract as to
all of the Property not purchased by Buyer, provided Buyer delivers written
notice to Seller of its election within twenty (20) days after the date Seller
has delivered Buyer written notice of any such loss, damage or condemnation as
provided above, and in such event the Deposit (if Buyer elects to terminate this
Contract as to the Property) or the pro rata portion thereof allocable to the
affected Hotel Property (if Buyer elects to terminate only as to the affected
Hotel Property) and any interest thereon, shall be delivered to Buyer and
thereafter, except as expressly set forth herein, no party shall have any
further obligation or liability to the other under this Contract with respect to
the affected Hotel Property unless Buyer elects to terminate this Contract in
its entirety, in which event Seller and Buyer shall have no obligation or
liability under this Contract with respect to any Property. In the context of
condemnation, "substantial" shall mean condemnation of such portion of an Hotel
(or access thereto) as could, in Buyer's reasonable judgment, render use of the
remainder impractical or unfeasible for the uses herein contemplated, and, in
the context of casualty loss or damage, "substantial" shall mean a loss or
damage in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00)
in value.
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13.3 Procedure for Closing. If Buyer shall not timely elect to terminate
this Contract under Section 13.2 above, or if the loss, damage or condemnation
is not substantial, Seller agrees to pay to Buyer at the Closing all insurance
proceeds or condemnation awards which Seller has received as a result of the
same, plus an amount equal to the insurance deductible, and assign to Buyer all
insurance proceeds and condemnation awards payable as a result of the same, in
which event the Closing shall occur without Seller replacing or repairing such
damage. In the case of damage or casualty, at Buyer's election, Seller shall
repair and restore the affected Hotel Property to its condition immediately
prior to such damage or casualty and shall assign to Buyer all excess insurance
proceeds.
ARTICLE XIV
DEFAULT REMEDIES
14.1 Buyer Default. If Buyer defaults under this Contract after the Review
Period, and such default continues for ten (10) days following written notice
from Seller (provided no notice shall extend the time for Closing), then at
Seller's election by written notice to Buyer, this Contract shall be terminated
and of no effect, in which event the remaining Deposit, including any interest
thereon, shall be paid to and retained by the Seller as Seller's sole and
exclusive remedy hereunder, and as liquidated damages for Buyer's default or
failure to close, and both Buyer and Seller shall thereupon be released from all
obligations hereunder.
14.2 Seller Default. If Seller defaults under this Contract and such
default continues for ten (10) days following written notice from Buyer, Buyer
may elect as Buyer's sole and exclusive remedy, either (i) to terminate this
Contract as to the Property or, at Buyer's election, the affected Hotel
Property, by written notice to Seller delivered to Seller at any time prior to
the completion of such cure, in which event the Deposit, or pro rata portion
thereof allocable to the affected Hotel Property, including any interest
thereon, shall be returned to the Buyer, and thereafter both the Buyer and
Seller shall thereupon be released from all obligations with respect to this
Contract or the affected Hotel Property, as applicable, except as otherwise
expressly provided herein; or (ii) to treat this Contract as being in full force
and effect by written notice to Seller delivered to Seller at any time prior to
the completion of such cure, in which event the Buyer shall have the right to an
action against Seller for damages and for specific performance.
14.3 Attorney's Fees. Anything to the contrary herein notwithstanding, if
it shall be necessary for either the Buyer or Seller to employ an attorney to
enforce its rights pursuant to this Contract because of the default of the other
party, and the non-defaulting party is successful in enforcing such rights, then
the defaulting party shall reimburse the non-defaulting party for the
non-defaulting party's reasonable attorneys' fees, costs and expenses.
29
ARTICLE XV
NOTICES
All notices required herein shall be deemed to have been validly given, as
applicable: (i) if given by telecopy, when the telecopy is transmitted to the
party's telecopy number specified below and confirmation of complete receipt is
received by the transmitting party during normal business hours or on the next
business day if not confirmed during normal business hours, (ii) if hand
delivered to a party against receipted copy, when the copy of the notice is
receipted or rejected, (iii) if given by certified mail, return receipt
requested, postage prepaid, two (2) business days after it is posted with the
U.S. Postal Service at the address of the party specified below or (iv) on the
next delivery day after such notices are sent by recognized and reputable
commercial overnight delivery service marked for next day delivery, return
receipt requested or similarly acknowledged:
If to Buyer: Apple Hospitality Five, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President
Fax No.: (000) 000-0000
with a copy to: McGuireWoods LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
If to Seller or BRG: c/o The Briad Group
00X Xxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxxx, President
Fax No.: 000-000-0000
with a copy to: The Briad Group
00X Xxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Fax No.: 000-000-0000
Addresses may be changed by the parties hereto by written notice in accordance
with this Section.
30
ARTICLE XVI
MISCELLANEOUS
16.1 Performance. Time is of the essence in the performance and
satisfaction of each and every obligation and condition of this Contract.
16.2 Binding Effect; Assignment. This Contract shall be binding upon and
shall inure to the benefit of each of the parties hereto, their respective
successors and assigns.
16.3 Entire Agreement. This Contract and the Exhibits constitute the sole
and entire agreement between Buyer and Seller with respect to the subject matter
hereof. No modification of this Contract shall be binding unless signed by both
Buyer and Seller.
16.4 Governing Law. The validity, construction, interpretation and
performance of this Contract shall in all ways be governed and determined in
accordance with the laws of the Commonwealth of Virginia (without regard to
conflicts of laws principles).
16.5 Captions. The captions used in this Contract have been inserted only
for purposes of convenience and the same shall not be construed or interpreted
so as to limit or define the intent or the scope of any part of this Contract.
16.6 Confidentiality. Except as otherwise required by law (including
without limitation laws and regulations applicable to Buyer or its affiliates
who may be public companies): (i) prior to Closing, Buyer and Seller shall not
disclose the existence of this Contract or their respective intentions to
purchase and sell the Property or generate or participate in any publicity or
press release regarding this transaction, except to Buyer's counsel, consultants
and agents and except as necessitated by Buyer's Due Diligence Examination
and/or shadow management, unless both Buyer and Seller agree in writing and as
necessary to effectuate the transactions contemplated hereby and (ii) following
Closing on each Hotel Property, the parties shall coordinate any public
disclosure or release of information related to the transactions contemplated by
this Contract, and no such disclosure or release shall be made without the prior
written consent of Buyer, provided that Buyer shall not issue any press releases
with respect to acquisition of the Property involving the use of the "Briad"
name without consent of the applicable entity constituting Seller, such consent
not to be unreasonably withheld, delayed or conditioned.
16.7 Closing Documents. To the extent any Closing documents are not
attached hereto at the time of execution of this Contract, Buyer and Seller
shall negotiate in good faith with respect to the form and content of such
Closing documents prior to Closing.
16.8 Counterparts. This Contract may be executed in counterparts by the
parties hereto, and by facsimile signature, and each shall be considered an
original and all of which shall constitute one and the same agreement.
16.9 Severability. If any provision of this Contract shall, for any reason,
be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Contract but shall be confined in its operation to the
provision or provisions hereof directly involved in the controversy in which
such judgment
31
shall have been rendered, and this Contract shall be construed as if such
provision had never existed, unless such construction would operate as an undue
hardship on Seller or Buyer or would constitute a substantial deviation from the
general intent of the parties as reflected in this Contract.
16.10 Interpretation. For purposes of construing the provisions of this
Contract, the singular shall be deemed to include the plural and vice versa and
the use of any gender shall include the use of any other gender, as the context
may require.
16.11 Business Day. "Business day" shall mean any day other than a
Saturday, Sunday or legal holiday in the Commonwealth of Virginia or the State
of New Jersey.
16.12 Further Acts. In addition to the acts, deeds, instruments and
agreements recited herein and contemplated to be performed, executed and
delivered by Buyer and Seller, Buyer and Seller shall perform, execute and
deliver or cause to be performed, executed and delivered at the Closing or after
the Closing, any and all further acts, deeds, instruments and agreements and
provide such further assurances as the other party or the Title Company may
reasonably require to consummate the transaction contemplated hereunder.
16.13 Joint and Several Obligations. Each person or entity constituting
Seller (including without limitation Briad) shall be jointly and severally
liable with respect to the obligations of Seller under this Contract.
16.14 Like-Kind Exchange. Seller intends to exchange the Property for
like-kind property pursuant to Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code").
(a) Seller may assign its interest in this Contract to a "qualified
intermediary" within the meaning of Section 1.1031(k)-1(g) (4) (iii) of the
income tax regulations promulgated under the Code ("Intermediary"). However,
notwithstanding any such assignment and exchange, Seller shall remain fully
liable for its obligations hereunder. In the event of such assignment, Buyer
agrees, at no cost or liability to Buyer, to provide reasonable cooperation to
Seller to complete such assignment and the exchange. Seller shall reimburse
Buyer, upon demand, for any expense incurred by Buyer relating to any such
assignment and exchange, and Buyer shall not be required to take title to any
property other than the Property. No such assignment or exchange shall delay
Closing, and the accomplishment of any such exchange shall not be a condition to
Seller's obligations under this Contract. Seller's failure to locate an exchange
property or exchange properties or to consummate an exchange for any reason
shall not relieve Seller of any of its obligations under this Contract.
(b) Buyer assumes no responsibility for ensuring that the exchange
transaction contemplated by this Section 16.14 will comply under Section 1031 of
the Code or that Seller will receive the income tax treatment it desires as the
result of any exchange transaction.
32
ARTICLE XVII
JOINDER BY BRG
BRG joins in this Contract and hereby covenants and agrees that (i) BRG is
and shall be jointly and severally liable with Seller for the performance of all
of Seller's obligations and liabilities under this Contract, including, without
limitation, all of Seller's obligations and liabilities that survive Closing,
(ii) BRG's obligations hereunder shall not be limited, diminished or impaired in
any way by virtue of any right or remedy Buyer may have against Seller under
this Contract or by virtue of any other provision of this Contract, (iii) Buyer
shall not be obligated to proceed first against Seller before resorting to BRG
for payment or performance and (iv) BRG shall not be entitled to assert as a
defense to the enforceability of its covenants and agreements hereunder any
defense of Seller with respect to any liabilities or obligations of Seller to
Buyer. BRG further represents, warrants and covenants to Buyer as follows:
(a) Authority; No Conflicts. BRG is a limited liability company duly
formed, validly existing and in good standing in the State of New Jersey. BRG
has obtained all necessary consents to enter into and perform this Contract and
is fully authorized to enter into and perform this Contract and to complete the
transactions contemplated by this Contract. No consent or approval of any
person, entity or governmental authority is required for the execution, delivery
or performance by BRG of this Contract, except as set forth in Exhibit E, and
this Contract is hereby binding and enforceable against BRG. Neither the
execution nor the performance of, or compliance with, this Contract by BRG has
resulted, or will result, in any violation of, or default under, or acceleration
of, any obligation under any existing corporate charter, certificate of
incorporation, bylaw, articles of organization, limited liability company
agreement or regulations, partnership agreement or other organizational
documents and under any, mortgage indenture, lien agreement, promissory note,
contract, or permit, or any judgment, decree, order, restrictive covenant,
statute, rule or regulation, applicable to BRG.
(b) Bankruptcy. Neither BRG nor any of its partners or members is
insolvent or the subject of any bankruptcy proceeding, receivership proceeding
or other insolvency, dissolution, reorganization or similar proceeding.
The covenants, agreements, representations and warranties of BRG set forth
herein shall be continuing, and shall not be deemed to merge into or be waived
by any Seller's Deed or other closing documents, and shall survive Closing on
the Property for a period of eighteen (18) months after Closing.
[Signatures Begin on Following Page]
33
IN WITNESS WHEREOF, this Contract has been executed, to be effective as of
the date first above written, by the Buyer and Seller and joined in by BRG.
SELLER:
BRIAD LODGING GROUP HAUPPAUGE,
L.L.C., a New Jersey limited liability company
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------------
Xxxx Xxxxxxxxx, Sole Member
BRIAD LODGING GROUP FRANKLIN, L.L.C.,
a New Jersey limited liability company
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------------
Xxxx Xxxxxxxxx, Sole Member
BRIAD LODGING GROUP CRANBURY, L.L.C.,
a New Jersey limited liability company
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------------
Xxxx Xxxxxxxxx, Sole Member
BUYER:
APPLE HOSPITALITY FIVE, INC., a Virginia
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxx,
President
BRG:
BRIAD RESTAURANT GROUP, L.L.C.,
a New Jersey limited liability company
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------------
Xxxx Xxxxxxxxx, Sole Member
34
SCHEDULE 1
DESCRIPTION OF HOTELS
Allocable
Other Improvements/ Portion of
Hotel Rooms Amenities Purchase Price Opening Date Seller Entity and TIN
---------------------------------------------------------------------------------------------------------------------------------
Hauppauge Residence Inn 100 69,258 sq., ft, aggregate $18,500,000 April 26, 2002 Briad Lodging Group Hauppauge,
meeting room space; indoor L.L.C.
swimming pool, exercise room, Tax Iden. #00-0000000
spa, business center, water
treatment facilities
Franklin Residence Inn 108 75,816 sq., ft, aggregate $13,000,000 September 16, 2002 Briad Lodging Group Franklin,
meeting room space; indoor L.L.C.
swimming pool, exercise room, Tax Iden. #00-0000000
spa, business center
Cranbury Residence Inn 108 76,888 sq., ft, aggregate $11,000,000 October 29, 2002 Briad Lodging Group Cranbury,
meeting room space; indoor L.L.C.
swimming pool, exercise room, Tax Iden. #00-0000000
spa, business center
Schedule 1-1
SCHEDULE 2
DESCRIPTION OF LICENSE AGREEMENTS AND MANAGEMENT AGREEMENTS
1. Hauppauge Residence Inn:
a. Franchise Agreement between Briad Hotel, L.L.C. and Marriott
International, Inc. dated February 19, 2000, amended October 26, 2000 and
assigned February 20,2001 from Briad Hotel.L.L.C. to Briad Lodging Group
Hauppauge, L.L.C. acknowledged by Marriott.
b. Management Agreement between Briad Lodging Group Hauppauge, LLC and
Crossroads Hospitality Management Company, dated October 5, 2001, amended April
, 2002.
--
2. Franklin Residence Inn:
a. Agreement dated April 14, 2000 between Marriott International, Inc and
Briad Hotel, L.L.C., assigned from Briad Hotel, L.L.C. to Briad Lodging Group
Franklin, L.L.C. by Assignment and Assumption of Franchise Agreement dated July
25, 2001, consented to by Marriott International.
b. Management Agreement between Briad Lodging Group Franklin, LLC and
Crossroads Hospitality Management Company, April , 2002.
--
3. Cranbury Residence Inn:
a. Franchise Agreement date September 19, 2000 between Marriott
International, Inc. and Briad Hotel, L.L.C., assigned by Briad Hotel, L.L.C. to
Briad Lodging Group Cranbury, X.X.X.xx Assignment and Assumption of Franchise
Agreement date July 26, 2001, consented to by Marriott International.
b. Management Agreement between Briad Lodging Group Cranbury, LLC and
Crossroads Hospitality Management Company, dated October 5, 2001, amended April
, 2002.
--
Schedule 2-1
EXHIBIT A
LEGAL DESCRIPTION
[ omitted ]
X-0
XXXXXXX X-0
HAUPPAUGE HOTEL LIST OF FF&E
[ omitted ]
B-1
EXHIBIT B-2
FRANKLIN HOTEL LIST OF FF&E
[ omitted ]
B-2
EXHIBIT B-3
CRANBURY HOTEL LIST OF FF&E
[ omitted ]
B-3
EXHIBIT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") made the 1st day of April, 2003 by
and among BRIAD LODGING GROUP HAUPPAUGE, L.L.C., a New Jersey limited liability
company ("Hauppauge LLC"), BRIAD LODGING GROUP FRANKLIN, L.L.C., a New Jersey
limited liability company ("Franklin LLC"), BRIAD LODGING GROUP CRANBURY,
L.L.C., a New Jersey limited liability company ("Cranbury LLC", and collectively
with Hauppauge LLC and Franklin LLC, "Seller"), APPLE HOSPITALITY FIVE, INC. or
its assigns ("Buyer"), and LANDAMERICA - DALLAS NATIONAL DIVISION ("Escrow
Agent").
R E C I T A L S
WHEREAS, pursuant to the provisions of Section 2.5 of that certain Purchase
Contract dated April 1, 2003 (the "Contract") between Seller and Buyer (the
"Parties"), the Parties have requested Escrow Agent to hold in escrow in
accordance with the provisions, upon the terms, and subject to the conditions,
of this Agreement, the Deposit (as defined in the Contract); and
WHEREAS, the Deposit shall be delivered to Escrow Agent in accordance with
the terms of the Contract and this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Parties hereto agree as follows:
1. Seller and Buyer hereby appoint Escrow Agent to serve as escrow
agent hereunder, and the Escrow Agent agrees to act as escrow agent hereunder in
accordance with the provisions, upon the terms and subject to the conditions of
this Agreement. The Escrow Agent hereby acknowledges receipt of the Deposit.
Escrow Agent shall invest the Deposit as directed by Buyer.
2. Subject to the rights and obligations to transfer, deliver or
otherwise dispose of the Deposit, Escrow Agent shall keep the Deposit in Escrow
Agent's possession pursuant to this Agreement.
3. A. Buyer shall be entitled to an immediate return of the Deposit at
any time prior to the expiration of the Review Period (as defined in Section 3.1
of the Contract) by providing written notice to Escrow Agent stating that Buyer
has elected to terminate the Contract pursuant to Section 3.1.
B. If at any time after the expiration of the Review Period,
Buyer claims entitlement to all or any portion of the Deposit, Buyer shall give
written notice to Escrow Agent stating that Seller has defaulted in the
performance of its obligations under the Contract beyond the applicable grace
period, if any, or that Buyer is otherwise entitled to the return of the Deposit
or applicable portion thereof and shall direct Escrow Agent to return the
Deposit or applicable portion thereof to Buyer (the "Buyer's Notice"). Escrow
Agent shall promptly deliver a copy of Buyer's Notice to Seller. Seller shall
have three (3) days after receipt of the copy of
C-1
Buyer's Notice to deliver written notice to Escrow Agent and Buyer objecting to
the release of the Deposit or applicable portion thereof to Buyer ("Seller's
Objection Notice"). If Escrow Agent does not receive a timely Seller's Objection
Notice, Escrow Agent shall release the Deposit or applicable portion thereof to
Buyer. If Escrow Agent does receive a timely Seller's Objection Notice, Escrow
Agent shall release the Deposit or applicable portion thereof only upon receipt
of, and in accordance with, written instructions signed by Seller and Buyer, or
the final order of a court of competent jurisdiction.
C. If, at any time after the expiration of the Review Period,
Seller claims entitlement to the Deposit (which term shall include the
Additional Deposit if deposited by Buyer pursuant to the terms of the Contract)
or applicable portion thereof, Seller shall give written notice to Escrow Agent
stating that Buyer has defaulted in the performance of its obligations under the
Contract, and shall direct Escrow Agent to release the Deposit or applicable
portion thereof to Seller (the "Seller's Notice"). Escrow Agent shall promptly
deliver a copy of Seller's Notice to Buyer. Buyer shall have three (3) days
after receipt of the copy of Seller's Notice to deliver written notice to Escrow
Agent and Seller objecting to the release of the Deposit or applicable portion
thereof to Seller ("Buyer's Objection Notice"). If Escrow Agent does not receive
a timely Buyer's Objection Notice, Escrow Agent shall release the Deposit or
applicable portion thereof to Seller. If Escrow Agent does receive a timely
Seller's Objection Notice, Escrow Agent shall release the Deposit or applicable
portion thereof only upon receipt of, and in accordance with, written
instructions signed by Buyer and Seller, or the final order of a court of
competent jurisdiction.
4. In the performance of its duties hereunder, Escrow Agent shall be
entitled to rely upon any document, instrument or signature purporting to be
genuine and purporting to be signed by and of the Parties or their successors
unless Escrow Agent has actual knowledge to the contrary. Escrow Agent may
assume that any person purporting to give any notice or instructions in
accordance with the provisions hereof has been duly authorized to do so.
5. A. Escrow Agent shall not be liable for any error of judgment, or
any action taken or omitted to be taken hereunder, except in the case of Escrow
Agent's willful, bad faith misconduct or negligence, nor shall Escrow Agent be
liable for the conduct or misconduct of any employee, agent or attorney thereof.
Escrow Agent shall be entitled to consult with counsel of its choosing and shall
not be liable for any action suffered or omitted in accordance with the advice
of such counsel.
B. In addition to the indemnities provided below, Escrow Agent
shall not be liable for, and each of the Parties jointly and severally hereby
indemnify and agree to save harmless and reimburse Escrow Agent from and against
all loss, cost, liability, damage and expense, including outside counsel fees in
connection with its acceptance of, or the performance of its duties and
obligations under, this Agreement, including the costs and expenses of defending
against any claim arising hereunder unless the same are caused by the willful,
bad faith misconduct or negligence of Escrow Agent.
C. Escrow Agent shall not be bound or in any way affected by any
notice of any modification or cancellation of this Agreement, or of any fact or
circumstance affecting or alleged to affect rights or liabilities hereunder
other than as is herein set forth, or
C-2
affecting or alleged to affect the rights and liabilities of any other person,
unless notice of the same is delivered to Escrow Agent in writing, signed by the
proper parties to Escrow Agent's satisfaction and, in the case of modification,
unless such modification shall be approved by Escrow Agent in writing.
6. A. Escrow Agent and any successor escrow agent, as the case may be,
may resign his or its duties and be discharged from all obligations hereunder at
any time upon giving five (5) days' prior written notice to each of the Parties
hereto. The Parties hereto will thereupon jointly designate a successor escrow
agent hereunder within said five (5) day period to whom the Deposit shall be
delivered. In default of such a joint designation of a successor escrow agent,
Escrow Agent shall retain the Deposit as custodian thereof until otherwise
directed by the Parties hereto, jointly, or until the Deposit is released in
accordance with clause (B) below, in each case, without liability or
responsibility.
B. Anything in this Agreement to the contrary notwithstanding,
(i) Escrow Agent, on notice to the Parties hereto, may take such other steps as
the Escrow Agent may elect in order to terminate its duties as Escrow Agent
hereunder, including, but not limited to, the deposit of the Deposit with a
court of competent jurisdiction in the Commonwealth of Virginia and the
commencement of an action of interpleaders, and (ii) in the event of litigation
between any of the Parties with respect to the Deposit, Escrow Agent may deposit
the Deposit with the court in which said litigation is pending and, in any such
event, Escrow Agent shall be relieved and discharged from any liability or
responsibility to the Parties hereto. Escrow Agent shall not be under any
obligation to take any legal action in connection with this Agreement or its
enforcement or to appear in, prosecute or defend any action or legal proceeding
which, in the opinion of Escrow Agent, would or might involve Escrow Agent in
any cost, expense, loss, damage or liability, unless and as often as requested,
Escrow Agent shall be furnished with security and indemnity satisfactory to
Escrow Agent against all such costs, expenses (including attorney's fees),
losses, damages and liabilities.
7. All notices required herein shall be deemed to have been validly
given, as applicable: (i) if given by telecopy, when the telecopy is transmitted
to the party's telecopy number specified below and confirmation of complete
receipt is received by the transmitting party during normal business hours or on
the next business day if not confirmed during normal business hours, (ii) if
hand delivered to a party against receipted copy, when the copy of the notice is
receipted or rejected, (iii) if given by certified mail, return receipt
requested, postage prepaid, two (2) business days after it is posted with the
U.S. Postal Service at the address of the party specified below or (iv) on the
next delivery day after such notices are sent by recognized and reputable
commercial overnight delivery service marked for next day delivery, return
receipt requested or similarly acknowledged:
C-3
(i) If addressed to Seller, to:
c/o The Briad Group
00X Xxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxxx, President
Fax No.: 000-000-0000
(ii) If addressed to Buyer, to:
Apple Hospitality Five, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Fax No.: (000) 000-0000
(iii) If addressed to Escrow Agent, to:
LandAmerica - Dallas National Division
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxx
Fax No.: (000) 000-0000 or (000) 000-0000
or such other address or addresses as may be expressly designated by any party
by notice given in accordance with the foregoing provisions and actually
received by the party to whom addressed.
8. This Agreement may be executed in any number of counterparts each
of which shall be deemed an original and all of which, together, shall
constitute one and the same Agreement.
9. The covenants, conditions and agreements contained in this
Agreement shall bind and inure to the benefit of each of the Parties hereto and
their respective successors and assigns.
10. Terms used herein and not otherwise defined shall have the meaning
provided therefor in the Contract.
C-4
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day
and year first above written.
SELLER:
BRIAD LODGING GROUP HAUPPAUGE, L.L.C.
By:
---------------------------------
Xxxx Xxxxxxxxx, Sole Member
BRIAD LODGING GROUP FRANKLIN, L.L.C.
By:
---------------------------------
Xxxx Xxxxxxxxx, Sole Member
BRIAD LODGING GROUP CRANBURY, L.L.C.
By:
---------------------------------
Xxxx Xxxxxxxxx, Sole Member
BUYER:
APPLE HOSPITALITY FIVE, INC.
By:
---------------------------------
Xxxxx X. Xxxxxx,
President
ESCROW AGENT:
LANDAMERICA - DALLAS NATIONAL DIVISION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
C-5
EXHIBIT D-1
HAUPPAUGE HOTEL CONTRACTS
[ omitted ]
D-1
EXHIBIT D-2
FRANKLIN HOTEL CONTRACTS
[ omitted ]
D-2
EXHIBIT D-3
CRANBURY HOTEL CONTRACTS
[ omitted ]
D-3
EXHIBIT E
CONSENTS AND APPROVALS
EXHIBIT E-1: Hauppauge Hotel
A. Consent of Crossroads Hospitality Management Company to termination of
Management Agreement with Briad Lodging Group Hospitality, LLC and
waiver of first right of refusal.
B. Consent of Residence Inn by Marriott, Inc. under Franchise Agreement
between Briad Hotel, L.L.C. and Marriott International, Inc. dated
February 19, 2000, amended October 26, 2000 and assigned February
20,2001 from Briad Hotel.L.L.C. to Briad Lodging Group Hauppauge,
L.L.C. acknowledged by Marriott.
EXHIBIT E-2: Franklin Hotel
A. Consent of Crossroads Hospitality Management Company to termination of
Management Agreement with Briad Lodging Group Hospitality, LLC and
waiver of first right of refusal.
B. Consent of Residence Inn by Marriott, Inc. under Agreement dated April
14, 2000 between Marriott International, Inc and Briad Hotel, L.L.C.,
assigned from Briad Hotel, L.L.C. to Briad Lodging Group Franklin,
L.L.C. by Assignment and Assumption of Franchise Agreement dated July
25, 2001, consented to by Marriott International.
EXHIBIT E-3: Cranbury Hotel
A. Consent of Crossroads Hospitality Management Company to termination of
Management Agreement with Briad Lodging Group Hospitality, LLC and
waiver of first right of refusal.
B. Consent of Residence Inn by Marriott, Inc. under Franchise Agreement
date September 19, 2000 between Marriott International, Inc. and Briad
Hotel, L.L.C., assigned by Briad Hotel, L.L.C. to Briad Lodging Group
Cranbury, X.X.X.xx Assignment and Assumption of Franchise Agreement
date July 26, 2001, consented to by Marriott International.
E-1
EXHIBIT F
FORM OF ESTOPPEL CERTIFICATES
EXHIBIT F-1: Form of Tenant Estoppel Certificate - Not applicable
EXHIBIT F-2: Form of FF&E Estoppel Certificate - Not applicable
F-1
EXHIBIT G
ENVIRONMENTAL REPORTS
EXHIBIT G-1: Letter dated September 19, 2000 from Xxxx Environmental to Xxxxxx
Xxxxxxxx with 1024 Construction Corp. regarding the update of a May 27, 1998
Phase I environmental assessment report, together with backup documentation.
EXHIBIT G-2: Phase I Environmental Site Assessment Report dated April, 2000,
prepared by Luzt Environmental Co.
EXHIBIT G-3: Phase I Environmental Site Assessment Report dated August, 1999,
prepared by Luzt Environmental Co.
G-1
EXHIBIT H
FORM OF ADDITIONAL PROPERTY ESCROW AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of April 1, 2003 by and
among BRIAD LODGING GROUP SOMERSET, LLC, a New Jersey limited liability company,
BRIAD LODGING GROUP WALLINGFORD, LLC, a New Jersey limited liability company,
BRIAD DEVELOPMENT WEST, LLC, a New Jersey limited liability company, BRIAD
DEVELOPMENT EAST, LLC, a New Jersey limited liability company, and BRIAD
RESTAURANT GROUP, LLC, a New Jersey limited liability company (collectively,
"Sellers"); BRIAD RESTAURANT GROUP, LLC, a New Jersey limited liability company
("BRG"); APPLE HOSPITALITY FIVE, INC., a Virginia corporation ("Buyer";
collectively with Sellers and BRG, the "Parties"); and LANDAMERICA - DALLAS
NATIONAL DIVISION ("Escrow Agent").
R E C I T A L S
WHEREAS, pursuant to the Purchase Contract dated as of April 1, 2003 (the
"Original Contract") among Briad Lodging Group Hauppauge, LLC, Briad Lodging
Group Franklin, LLC and Briad Lodging Group Cranbury, LLC (the "Original
Sellers"), BRG and Buyer, the Original Sellers agreed to sell and Buyer agreed
to purchase certain hotel properties, more particularly described therein;
WHEREAS, as contemplated by the Original Contract, Sellers and Buyer agreed
to enter into this Agreement, pursuant to which Sellers will grant to Buyer an
exclusive right to negotiate with Sellers for the purchase of certain additional
hotel properties, more particularly described hereinafter, and Buyer will
deposit with Escrow Agent the sum of $500,000 to be held in escrow upon the
terms and conditions of this Agreement; and
WHEREAS, Escrow Agent has agreed to act as escrow agent in accordance with
the provisions, upon the terms, and subject to the conditions, of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Parties and Escrow Agent agree as follows:
1. Appointment of Escrow Agent. Sellers and Buyer hereby appoint
Escrow Agent to serve as escrow agent hereunder, and the Escrow Agent agrees to
act as escrow agent hereunder in accordance with the provisions, upon the terms
and subject to the conditions of this Agreement.
2. The Deposit. Upon the closing of the transactions contemplated by
the Original Contract, Buyer shall deliver the sum of $500,000 (the "Deposit")
to Escrow Agent. Subject to the rights and obligations of the Parties to direct
the investment, transfer, delivery or otherwise disposition of the Deposit
pursuant to this Agreement, Escrow Agent shall keep the
Deposit in Escrow Agent's possession, in escrow, pursuant to this Agreement.
Escrow Agent shall invest the Deposit as directed by Buyer. Any interest or
other sums earned on investments of the Deposit shall belong solely to Buyer.
3. Term. The term of this Agreement (the "Term") shall commence on the
date hereof and shall expire six (6) months thereafter; provided, however, that
(i) if the Original Contract is terminated on account of the failure of the
Parties to close the transactions contemplated thereby, the Term shall expire on
the date of such termination and (ii) if the closing occurs under the Original
Contract but the Parties fail to enter into the "Initial Purchase Contract"
within the "Initial Purchase Period" (as such terms are defined hereinafter),
the Term of this Agreement shall expire upon the expiration of the Initial
Purchase Period. However, the expiration of the Term shall not affect any rights
or obligations of the Parties that may have accrued hereunder before the date of
such expiration or the rights or obligations of the Parties under any provisions
of this Agreement other than Section 4 below.
4. Exclusive Right of Negotiation. Sellers hereby grant to Buyer an
exclusive right during the Term to negotiate with Sellers for the purchase of
the six (6) properties described in Exhibit A attached hereto (collectively, the
"Properties"; individually, a "Property"). During the Term, each of the Parties
will use all commercially reasonable, diligent and good faith efforts to
negotiate the terms and conditions under which Sellers will sell and Buyer will
purchase the Properties, such terms and conditions to be set forth in one or
more definitive contracts of purchase as the Parties may agree, substantially
upon the same terms and conditions as set forth in the Original Contract, except
for matters specific to each of the Properties and except as otherwise noted
herein. In addition, during the Term, Sellers will use all commercially
reasonable, diligent and good faith efforts (i) to keep all outstanding purchase
or option contracts for any of the Properties in full force and effect, in each
case so as to enable Sellers to comply with their obligations under this
Agreement, (ii) to consummate the purchase of the three Properties designated on
Exhibit A as "Homewood Suites-Somerset, NJ," "Homewood Suites-Wallingford, CT"
and "Residence Inn-Mount Olive, NJ," respectively (collectively, the "Initial
Properties"), (iii) upon execution by Buyer and Sellers of the Initial Purchase
Contract, to construct the hotels on the Initial Properties as indicated in
Exhibit A, (iv) to keep any franchise agreements with any of the hotel chains
indicated on Exhibit A, which Sellers may enter into in advance of closing the
sale of any of the Properties, in full force and effect and (v) to obtain all
permits, approvals and authorizations as may be required to develop each of the
remaining Properties and to construct thereon the hotels indicated in Exhibit A.
Notwithstanding anything contained in this Agreement to the contrary, the
Parties agree that (a) the purchase price for any Property shall not exceed the
product of $120,000 times the number of rooms in the hotel constructed on the
Property, (b) in the event that Sellers enter into any franchise agreements
before closing on the sale of the Properties to Buyer, Buyer shall pay for any
transfer or assumption fee charged by the franchisor and (c) Sellers shall pay
for any prepayment or similar fee in connection with the payoff of any mortgage
loan on the Properties and shall pay any real estate transfer and recordation
taxes and fees. During the Term, Sellers shall not solicit, entertain or accept
any offers from third parties to purchase or lease any of the Properties or
negotiate with any third party for the purchase and sale or lease of any of the
Properties, nor shall Sellers list any of the Properties with a real estate
broker or agent or otherwise advertise the same for sale.
5. Initial Purchase Contract.
2
B. If, within the period beginning on the date hereof and ending
four (4) months thereafter (the "Initial Purchase Period"), the Parties enter
into a definitive, written contract (the "Initial Purchase Contract") to sell
and purchase not less than all of the Initial Properties, then the Deposit shall
be disbursed to Escrow Agent to be held as an xxxxxxx money deposit under the
Initial Purchase Contract and to be applied to the purchase price of the Initial
Properties, or disbursed to Sellers or Buyer, in accordance with the terms and
conditions of the Initial Purchase Contract.
C. If, before the expiration of the Initial Purchase Period, the
Parties fail to enter into a definitive, written contract to sell and purchase
the Initial Properties and such failure is not on account of a default by any of
Sellers of its obligations under this Agreement, then the Deposit shall be
disbursed to Sellers upon its request, and thereafter neither Party shall have
any further obligation under this Agreement with respect to the sale or purchase
of the Properties.
D. If, before the expiration of the Initial Purchase Period, the
Parties fail to enter into a definitive, written contract to sell and purchase
the Initial Properties and such failure is on account of a default by any of
Sellers of its obligations under this Agreement, then the Deposit shall be
disbursed to Buyer upon its request, and thereafter neither Party shall have any
further obligation under this Agreement with respect to the sale or purchase of
the Properties.
6. Procedure for Claiming Deposit.
B. If, at any time after the Initial Purchase Period, Sellers
claim entitlement to the Deposit, Sellers shall give written notice to Escrow
Agent stating that it is entitled to the Deposit in accordance with the terms of
this Agreement, and shall direct Escrow Agent to release the Deposit to Sellers
(the "Seller's Notice"). Escrow Agent shall promptly deliver a copy of Seller's
Notice to Buyer. Buyer shall have three (3) days after receipt of the copy of
Seller's Notice to deliver written notice to Escrow Agent and Sellers objecting
to the release of the Deposit to Sellers ("Buyer's Objection Notice"). If Escrow
Agent does not receive a timely Buyer's Objection Notice, Escrow Agent shall
release the Deposit or applicable portion thereof to Sellers. If Escrow Agent
does receive a timely Seller's Objection Notice, Escrow Agent shall release the
Deposit only upon receipt of, and in accordance with, written instructions
signed by Buyer and Sellers, or the final order of a court of competent
jurisdiction.
C. If, at any time after the Initial Purchase Period, Buyer
claims entitlement to the Deposit, Buyer shall give written notice to Escrow
Agent stating that Buyer is entitled to the return of the Deposit in accordance
with the terms of this Agreement and shall direct Escrow Agent to return the
Deposit to Buyer (the "Buyer's Notice"). Escrow Agent shall promptly deliver a
copy of Buyer's Notice to Sellers. Sellers shall have three (3) days after
receipt of the copy of Buyer's Notice to deliver written notice to Escrow Agent
and Buyer objecting to the release of the Deposit to Buyer ("Seller's Objection
Notice"). If Escrow Agent does not receive a timely Seller's Objection Notice,
Escrow Agent shall release the Deposit to Buyer. If Escrow Agent does receive a
timely Seller's Objection Notice, Escrow Agent shall release the Deposit only
upon receipt of, and in accordance with, written instructions signed by Sellers
and Buyer, or the final order of a court of competent jurisdiction.
3
7. Limitations on Liability and Duties of Escrow Agent.
B. In the performance of its duties hereunder, Escrow Agent shall
be entitled to rely upon any document, instrument or signature purporting to be
genuine and purporting to be signed by the Parties or their successors unless
Escrow Agent has actual knowledge to the contrary. Escrow Agent may assume that
any person purporting to give any notice or instructions in accordance with the
provisions hereof has been duly authorized to do so.
C. Escrow Agent shall not be liable for any error of judgment, or
any action taken or omitted to be taken hereunder, except in the case of Escrow
Agent's willful, bad faith misconduct or negligence, nor shall Escrow Agent be
liable for the conduct or misconduct of any employee, agent or attorney thereof.
Escrow Agent shall be entitled to consult with counsel of its choosing and shall
not be liable for any action suffered or omitted in accordance with the advice
of such counsel.
D. In addition to the indemnities provided below, Escrow Agent
shall not be liable for, and each of the Parties jointly and severally hereby
indemnify and agree to save harmless and reimburse Escrow Agent from and against
all loss, cost, liability, damage and expense, including outside counsel fees in
connection with its acceptance of, or the performance of its duties and
obligations under, this Agreement, including the costs and expenses of defending
against any claim arising hereunder unless the same are caused by the willful,
bad faith misconduct or negligence of Escrow Agent.
E. Escrow Agent shall not be bound or in any way affected by any
notice of any modification or cancellation of this Agreement, or of any fact or
circumstance affecting or alleged to affect rights or liabilities hereunder
other than as is herein set forth, or affecting or alleged to affect the rights
and liabilities of any other person, unless notice of the same is delivered to
Escrow Agent in writing, signed by the proper parties to Escrow Agent's
satisfaction and, in the case of modification, unless such modification shall be
approved by Escrow Agent in writing.
F. Escrow Agent and any successor escrow agent, as the case may
be, may resign his or its duties and be discharged from all obligations
hereunder at any time upon giving five (5) days' prior written notice to each of
the Parties hereto. The Parties hereto will thereupon jointly designate a
successor escrow agent hereunder within said five (5) day period to whom the
Deposit shall be delivered. In default of such a joint designation of a
successor escrow agent, Escrow Agent shall retain the Deposit as custodian
thereof until otherwise directed by the Parties hereto, jointly, or until the
Deposit is released in accordance with subsection (f) below, in each case,
without liability or responsibility.
G. Anything in this Agreement to the contrary notwithstanding,
(i) Escrow Agent, on notice to the Parties hereto, may take such other steps as
the Escrow Agent may elect in order to terminate its duties as Escrow Agent
hereunder, including, but not limited to, the deposit of the Deposit with a
court of competent jurisdiction in the Commonwealth of Virginia and the
commencement of an action of interpleaders, and (ii) in the event of litigation
between any of the Parties with respect to the Deposit, Escrow Agent may deposit
the Deposit with the court in which said litigation is pending and, in any such
event, Escrow Agent shall be
4
relieved and discharged from any liability or responsibility to the Parties
hereto. Escrow Agent shall not be under any obligation to take any legal action
in connection with this Agreement or its enforcement or to appear in, prosecute
or defend any action or legal proceeding which, in the opinion of Escrow Agent,
would or might involve Escrow Agent in any cost, expense, loss, damage or
liability, unless and as often as requested, Escrow Agent shall be furnished
with security and indemnity satisfactory to Escrow Agent against all such costs,
expenses (including attorney's fees), losses, damages and liabilities.
8. Notices. All notices required herein shall be deemed to have been
validly given, as applicable: (i) if given by telecopy, when the telecopy is
transmitted to the party's telecopy number specified below and confirmation of
complete receipt is received by the transmitting party during normal business
hours or on the next business day if not confirmed during normal business hours,
(ii) if hand delivered to a party against receipted copy, when the copy of the
notice is receipted or rejected, (iii) if given by certified mail, return
receipt requested, postage prepaid, two (2) business days after it is posted
with the U.S. Postal Service at the address of the party specified below or (iv)
on the next delivery day after such notices are sent by recognized and reputable
commercial overnight delivery service marked for next day delivery, return
receipt requested or similarly acknowledged:
(i) If addressed to Sellers, to:
c/o The Briad Group
00X Xxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxxx, President
Fax No.: 000-000-0000
(ii) If addressed to Buyer, to:
Apple Suites Realty Group, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Fax No.: (000) 000-0000
(iii) If addressed to Escrow Agent, to:
LandAmerica - Dallas National Division
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxx
Fax No.: (000) 000-0000 or (000) 000-0000
or such other address or addresses as may be expressly designated by any party
by notice given in accordance with the foregoing provisions and actually
received by the party to whom addressed.
5
9. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and all of which,
together, shall constitute one and the same Agreement.
10. Successors and Assigns. The covenants, conditions and agreements
contained in this Agreement shall bind and inure to the benefit of each of the
Parties hereto and their respective successors and assigns. Buyer acknowledges
that certain of the Sellers may assign existing purchase contracts for the
Properties to affiliates of such Sellers, but any assignee shall assume the
assigning Seller's obligations under this Agreement and any such assignment
shall not relieve BRG from any of its obligations under Section 11 of this
Agreement.
11. Joinder by BRG. BRG joins in this Agreement and hereby covenants
and agrees that (i) BRG is and shall be jointly and severally liable with
Sellers for the performance of all of Sellers' obligations and liabilities under
this Agreement, (ii) BRG's obligations hereunder shall not be limited,
diminished or impaired in any way by virtue of any right or remedy Buyer may
have against Sellers under this Agreement or any other provision of this
Agreement, (iii) Buyer shall not be obligated to proceed first against Sellers
before resorting to BRG for payment or performance and (iv) BRG shall not be
entitled to assert as a defense to the enforceability of its covenants and
agreements hereunder any defense of Sellers with respect to any liabilities or
obligations of Sellers to Buyer. BRG shall also join in the Initial Contracts
and any other contracts of sale for the Properties for the same purpose that BRG
has joined in this Agreement.
6
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day
and year first above written.
SELLERS:
BRIAD LODGING GROUP SOMERSET, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
BRIAD LODGING GROUP WALLINGFORD, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
BRIAD DEVELOPMENT WEST, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
BRIAD DEVELOPMENT EAST, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
BRIAD RESTAURANT GROUP, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
BRG:
BRIAD RESTAURANT GROUP, LLC
7
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
BUYER:
APPLE HOSPITALITY FIVE, INC.
By:
------------------------------------
Xxxxx X. Xxxxxx,
President
ESCROW AGENT:
LANDAMERICA - DALLAS NATIONAL DIVISION
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
8
EXHIBIT A
Properties
Owner/Contract
Property Rooms Purchaser Location
------------------------------------------------------------------------------------------------------------------------
Homewood Suites - Somerset, NJ 123 Briad Lodging Group Located at the SW quadrant of I-287
Somerset, LLC (Exit 00, Xxxxx 000 Xxxxxx Xxxxxx) and Worlds
Fair Drive on Xxxxxx Street
Homewood Suites - Wallingford, CT 104 Briad Lodging Group Located at the SW quadrant of I-91
Wallingford, LLC and Xxxxx 00 (Xxxxxx Xxxx, Xxxx 00)
Residence Inn - Rocky Hill, CT 96 Briad Development West, Located at the NW quadrant of I-91
LLC and West Street (Exit 23) at Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxx - Xxxxx Xxxxx, XX 123 Briad Development East, Located at the NW quadrant of I-80
LLC and Xxxxx 000 (Xxxx 00)
Xxxxxxxxx Xxx - Xxxxxxxxxxx, XX 120 Briad Development East, Located at the SW quadrant of I-287
LLC and Route 22
Courtyard by Marriott - Xxxxxxxxxx, XX 000 Briad Restaurant Group, Located at the SE quadrant of I-84 and
LLC Xxxxx 00 (Xxxx 00)
H-1
EXHIBIT I
FORM OF DEED
[ omitted ]
I-1
EXHIBIT J
FORM OF XXXX OF SALE
XXXX OF SALE
Dated:
-----------
Effective Date:
--------------
WHEREAS, by bargain and sale deed of even date herewith,
, a ("Seller") conveyed to
----------------------- ----------------------------
, a ("Purchaser"), whose mailing
---------------------- ---------------------
address is 00 X. Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, that certain real
property more particularly described in Exhibit "A" attached hereto and made a
part hereof, together with all improvements located thereon (the "Real
Property"); and
WHEREAS, in connection with the above described conveyance, Seller desires
to sell, transfer and assign to Purchaser certain items of personal property as
hereinafter described, pursuant to the terms of that certain Purchase Contract
dated April 1, 2003 (the "Contract")
NOW, THEREFORE, in consideration of the receipt of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller has GRANTED, SOLD, TRANSFERRED, SET
OVER and DELIVERED and by these presents does hereby GRANT, SELL, TRANSFER, SET
OVER and DELIVER to Purchaser, and its successors and assigns, all of its right,
title and interest in and to all items of Personal Property owned by Seller and
located on, attached to, or used in connection with, the operation of the Real
Property, including without limitation all FF&E described in Exhibit B hereto,
Supplies, Leases, Deposits, Records, Warranties, Licenses, Service Contracts,
Plans and Specs, Tradenames, FF&E Leases and Utility Reservations, to have and
to hold, all and singular, the Personal Property unto Purchaser forever and
Seller further agrees as follows:
1. Capitalized terms not defined herein shall have the meanings set forth
in the Contract.
2. Seller hereby agrees to WARRANT and FOREVER DEFEND title to the
Personal Property unto Purchaser, and its successors and assigns,
against every person whomsoever lawfully claiming or to claim the same
or any part thereof, by, through or under Seller, but not otherwise.
3. Seller hereby warrants to Purchaser that the Personal Property is free
and clear of all mortgages, liens, encumbrances, licenses, franchises,
concession agreements, security interests, prior assignments or
conveyances, conditions, restrictions, claims and other matters
affecting title or possession, except for the Permitted Exceptions.
I-2
4. This Xxxx of Sale shall be governed by the laws of the State of
.
----------------
I-3
IN WITNESS WHEREOF, the undersigned has executed this Xxxx of Sale as of
the date first above written.
SELLER
,
-----------------------------------
a
-------------------------
By:
--------------------------------
Name (print):
Title:
J-1
EXHIBIT "A"
LEGAL DESCRIPTION
J-2
EXHIBIT "B"
LIST OF FF&E
J-3
