EXHIBIT 10.11
Hotel Purchase and Sale Contract between
CNL Real Estate Advisors, Inc. and
Gwinnett Residence Associates, LLC relating
to the Residence Inn - Gwinnett Place
COMPLETED FACILITY
SALE/LEASEBACK
HOTEL PURCHASE AND SALE CONTRACT
by and between
CNL REAL ESTATE ADVISORS, INC.,
a Florida corporation, or assigns,
as BUYER
and
GWINNETT RESIDENCE ASSOCIATES, LLC,
a Georgia limited liability company
as SELLER
Premises: Gwinnett Residence Inn
(Tenant: )
TABLE OF CONTENTS
Page
Definitions.................................................... 1
Purchase and Sale of Premises.................................. 4
Purchase Price for Premises.................................... 4
Closing Date................................................... 6
Seller's Deliveries............................................ 6
Conditions to Buyer's Obligation to Close...................... 8
Conditions to Seller's Obligation to Close..................... 11
Deliveries at Closing.......................................... 12
Closing and Other Costs, Adjustments and Prorations............ 13
Inspections.................................................... 15
Title to Premises; State of Title to be Conveyed............... 15
Escrow Agent................................................... 15
Seller's Covenants, Representations and Warranties............. 17
Covenants of Seller Pending Closing............................ 18
Eminent Domain................................................. 19
Casualty....................................................... 19
Remedies Upon Default.......................................... 20
Notices........................................................ 20
Brokerage Commissions.......................................... 21
Seller's Indemnification....................................... 22
Hotel Operation Earn-Out....................................... 22
Miscellaneous Provisions....................................... 23
HOTEL PURCHASE AND SALE CONTRACT
THIS HOTEL PURCHASE AND SALE CONTRACT (this "Agreement") made and
entered into as of the Effective Date set forth herein, by and between GWINNETT
RESIDENCE ASSOCIATES, LLC, a Georgia limited liability company, having a mailing
address of c/o Stormont Trice Corporation, 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000 ("Seller"), and CNL REAL ESTATE ADVISORS, INC., a Florida
corporation, or its assigns, having a mailing address at 000 Xxxx Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 ("Buyer");
W I T N E S S E T H:
WHEREAS, Seller is the fee simple owner of and is willing to sell a
parcel of real property located in the City of Atlanta, unincorporated Gwinnett
County, Georgia, and Buyer is willing to purchase such real property from
Seller, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Definitions. In addition to other words and terms defined elsewhere
in this Agreement, as used herein the following words and terms shall have the
following meanings, respectively, unless the context hereof otherwise clearly
requires:
a. "Closing" shall mean the consummation of the purchase and
sale of the Premises in accordance with the terms of this Agreement.
b. "Contracts" shall mean all service, sign, maintenance,
management, operation, equipment and other personal property or service
contracts, agreements or leases relating to the operation of the Premises and
all space leases, if any, encumbering the Premises or any part thereof.
c. "Xxxxxxx Money Deposit" shall mean the Initial Xxxxxxx
Money Deposit and the Second Xxxxxxx Money Deposit, as well as all interest
earned thereon in the interest-bearing money market account in which Escrow
Agent is required to place the Xxxxxxx Money Deposit.
d. "Effective Date" of this Agreement shall mean that date
upon which the last of the Buyer, Seller and Escrow Agent has executed this
Agreement.
e. "Escrow Agent" shall mean First American Title Insurance
Company, whose address is set forth in Section below.
f. "Extension Xxxxxxx Money Deposit" shall mean the $25,000.00
deposit to be given by Buyer to Escrow Agent pursuant to Section of this
Agreement, which shall be added to and form a part of the Xxxxxxx Money Deposit,
as well as all interest earned thereon in the interest-bearing money market
account in which Escrow Agent is required to place the Extension Xxxxxxx Money
Deposit.
g. "Guarantor" shall mean, collectively, Stormont Trice
Management Corporation, Stormont Trice Corporation, and Stormont Trice
Development Corporation, each of which entities is a Georgia corporation and
each of which entities shall join in the Lease, for the purpose of guaranteeing
certain obligations under the Lease. The approval of Guarantor by Buyer shall be
subject to Buyer's (or CNL American Realty Fund, Inc.'s) credit underwriting
guidelines published from time to time, and the initial capitalization of
Guarantor.
h. "Hazardous Materials" shall mean all toxic or hazardous
materials, chemicals, wastes, pollutants or similar substances, including,
without limitation, Petroleum (as hereinafter defined), asbestos insulation
and/or urea formaldehyde insulation, which are regulated, governed, restricted
or prohibited by any federal, state or local law, decision, statute, rule,
regulation or ordinance currently in existence or hereafter enacted or rendered
(hereinafter collectively referred to as the "Hazardous Materials Laws")
including, but not limited to, those materials or substances defined as
"hazardous substances," "hazardous materials," "toxic substances" or
"pollutants" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Clean Air Act, 42
U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., and any applicable statutes, ordinances or regulations under the laws of
the State in which the Premises are located, and any rules and regulations
promulgated thereunder, all as presently or hereafter amended. "Petroleum" for
purposes of this Agreement shall include, without limitation, oil or petroleum
of any kind and in any form including but not limited to oil, petroleum, fuel
oil, oil sludge, oil refuse, oil mixed with other waste, crude oil, gasoline,
diesel fuel and kerosene.
i. "Improvements" shall mean the building consisting of a 132
suite hotel known as the Gwinnett Residence Inn and other related improvements
to be conveyed by Seller to Buyer and leased by Tenant pursuant to the terms of
this Agreement, and all appurtenances thereto, including but not limited to all
pavement, accessways, curb cuts, parking, kitchen and support facilities,
meeting and conference rooms, swimming pool facilities, recreational amenities,
office facilities, drainage systems and facilities, landscaping, air ventilation
and filtering systems and facilities and utility facilities and connections for
sanitary sewer, potable water, irrigation, electricity, telephone, cable
television and natural gas, if applicable or required by the Lease, to the
extent the same form a part of the Premises.
j. "Initial Xxxxxxx Money Deposit" shall mean the deposit of
$25,000.00 to be given by Buyer to Escrow Agent pursuant to Section of this
Agreement, as well as all interest earned thereon in the interest-bearing money
market account in which Escrow Agent is required to place the Initial Xxxxxxx
Money Deposit.
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k. "Inspection Period" shall mean that period of time starting
on the Effective Date of this Agreement and terminating forty-five (45) days
following the later of i) the date upon which Buyer has received copies of the
documents and materials regarding the Premises which Seller is required to
furnish to Buyer pursuant to Section , and of this Agreement (the receipt of
which shall be acknowledged by Buyer in writing promptly upon receipt by Buyer
of all such documents and materials), or ii) the date that Seller satisfies all
of the contingencies and conditions set forth in Section 7 of this Agreement.
l. "Lease" shall mean that certain Lease Agreement to be
entered into at Closing between Buyer, as lessor, Tenant, as lessee, and
Guarantor, pursuant to which Tenant shall lease the Premises and Improvements
from Buyer, an initial draft of which is attached hereto as Exhibit D.
m. "Permits" shall mean all of the governmental permits,
including licenses and authorizations, required for the construction, ownership
and operation of the Improvements, including without limitation certificates of
occupancy, building permits, signage permits, site use approvals, zoning
certificates, environmental and land use permits and any and all necessary
approvals from state or local authorities.
n. "Permitted Exceptions" shall mean those items described on
Exhibit B attached hereto, which are agreed upon by the Seller and Buyer within
thirty (30) days after the Effective Date of this Agreement and other matters to
which Buyer has consented during the Inspection Period.
o. "Personal Property" shall mean all of the furniture,
fixtures, equipment, machinery, furnishings, carpets, drapes, service and
maintenance equipment, tools, signs, landscaping equipment, telephone and other
communications equipment, pool equipment, television and antenna equipment,
television and video equipment, intercom equipment and systems, and any other
personal property utilized in connection with the operation of the Premises,
including, but not limited to, those items more particularly described on
Exhibit B-1, attached hereto and made a part hereof. The Personal Property shall
not include leased items or items owned by third parties which are subject to a
written contract or agreement or which are owned by guests. Further, the
Personal Property shall not include the Tenant's Personal Property, as hereafter
defined.
p. "Plans" shall mean the final "as-built" plans and
specifications for the Improvements, which are to be furnished by Seller to
Buyer pursuant to Section of this Agreement.
q. "Premises" shall mean that certain parcel of real property
containing an area of approximately 5.863 acres and being more particularly
described on Exhibit A attached hereto, together with all of the Improvements,
tenements, hereditaments and appurtenances belonging or in any way appertaining
to such real property, and all of Seller's rights, title and interest in and to
(i) any and all property lying in the bed of any street, road or avenue, open or
proposed, in front of or adjoining such real property to the center line
thereof, (ii) any strips and gores of land adjacent to, abutting or used in
connection with such real property, and (iii) any easements and rights, if any,
inuring to the benefit of such real property or to Seller in connection
therewith.
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r. "Property" shall mean collectively the Premises, the
Improvements and the Personal Property.
s. "Purchase Price" shall mean $11,400,000.00.
t. "Second Xxxxxxx Money Deposit" shall mean the deposit of
$89,000.00 to be given by Buyer to Escrow Agent pursuant to Section of this
Agreement, as well as all interest earned thereon in the interest bearing money
market account in which the Escrow Agent is required to place the Second Xxxxxxx
Money Deposit.
u. "Tenant" shall mean Seller, in its capacity as lessee under
the Lease, or a newly-created entity affiliated with Seller or Stormont Trice
Corporation, which Seller may cause to enter into the Lease, as assignee or
designee of Seller for such purpose, at Seller's option, but subject to the
prior written approval of Buyer, which approval shall not be unreasonably
withheld but may be based upon a review by Buyer or its attorneys of such
entities organization documents including partnership agreements, bylaws,
articles of incorporation, as appropriate and other reasonable criteria.
v. "Tenant's Personal Property" shall mean all of the
inventory of food and beverages (opened and unopened excluding alcoholic
beverages) as well as all operating supplies such as guest supplies, linens,
uniform, towels, paper goods, soaps, cleaning supplies, uniforms, food,
beverages, consumables, guest supplies, china, glassware, silverware, vehicles,
vehicle supplies, gasoline, fuel oil, working capital, bank account balances,
software and other miscellaneous supplies and consumables utilized in connection
with the operation of the Premises, including, but not limited to those items
more particularly described on Exhibit B-2, attached hereto and made a part
hereof.
w. "Title Company" shall mean First American Title Insurance
Company, which shall issue the owner's policy of title insurance required
hereunder by and through such agent as it shall select.
2. Purchase and Sale of Premises. Subject to the terms, provisions and
conditions set forth herein, Seller hereby agrees to sell the Property to Buyer,
and Buyer hereby agrees to purchase the Property from Seller.
3. Purchase Price for Premises. The Purchase Price for the Property
shall be payable in the following manner:
a. Initial Xxxxxxx Money Deposit. Not later than five (5) days
following the date on which Buyer shall receive a counterpart of this Agreement
fully executed by Buyer, Seller and Escrow Agent, Buyer shall deposit with
Escrow Agent the Initial Xxxxxxx Money Deposit hereunder, to be held and
disbursed in accordance with the terms of this Agreement.
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b. Second Xxxxxxx Money Deposit. In the event this Agreement
has not been previously terminated on or before the last day of the Inspection
Period, then within two (2) business days after the expiration of the Inspection
Period, Buyer shall deposit with Escrow Agent the Second Xxxxxxx Money Deposit
hereunder, to be held and disbursed in accordance with the terms of this
Agreement.
x. Xxxxxxx Money Deposit. After clearance of funds, Escrow
Agent shall hold the Xxxxxxx Money Deposit in an interest bearing money market
account at a federally insured financial institution reasonably acceptable to
Seller, Buyer and Escrow Agent, and interest earned thereon shall be reported
under the United States Taxpayer Identification Number
of CNL American Realty Fund, Inc., a Maryland corporation, being a
proposed assignee of Buyer as contemplated in Section hereof. All interest
earned on the Xxxxxxx Money Deposit, or any portion thereof, shall be deemed to
constitute a portion of the Xxxxxxx Money Deposit and shall be disbursed in
accordance with the terms of this Agreement. The Xxxxxxx Money Deposit shall be
credited to the cash due from Buyer at Closing and shall be paid over to Seller
at Closing.
Buyer shall have the right, at its option during the term of this
Agreement, to substitute one or more letters of credit for all or any portion of
the Xxxxxxx Money Deposit. The letter(s) of credit shall be drawn on Colonial
Bank, N.A., or any other financial institution reasonably acceptable to Seller
and shall name Escrow Agent as beneficiary. The letter(s) of credit shall not
impose any conditions to the drawing thereof other than a certificate from the
Escrow Agent that Escrow Agent is entitled to draw upon the letter of credit
pursuant to the terms of this Agreement. If any letter(s) of credit do not have
an expiration date of at least thirty (30) days after the Closing Date, then
Buyer shall renew or extend such letter(s) of credit at least fifteen (15) days
prior to the expiration thereof. If Buyer fails to deliver proper renewals or
extension documentation prior to the deadline for same, then Escrow Agent shall
draw upon the letter(s) of credit which have not been timely renewed or extended
and hold the proceeds thereof as the Xxxxxxx Money Deposit under this Agreement.
The letter(s) of credit shall be held and disbursed in the same fashion as the
Xxxxxxx Money Deposit under this Agreement. Except when the proceeds of any
letter of credit shall be promptly deposited into the registry of the court
pursuant to the terms of this Agreement, the letter(s) of credit shall not be
drawn upon by Escrow Agent until the Escrow Agent is otherwise authorized to
deliver the Xxxxxxx Money Deposit to Seller pursuant to this Agreement (i.e.,
the letter(s) of credit may not be drawn upon until after the expiration of any
applicable notice provisions set forth in Section of this Agreement); provided,
however, that notwithstanding any notice requirements in this Agreement, Escrow
Agent shall be entitled to draw upon any expiring letter(s) of credit which are
not timely renewed or extended pursuant to the terms of this Section, in which
event Escrow Agent will hold and disburse the proceeds thereof in the manner set
forth in this Agreement. At Closing, the letter(s) of credit shall be returned
to Buyer and not credited against the Purchase Price otherwise due from Buyer at
Closing.
d. Balance of Purchase Price. The balance of the Purchase
Price, less any apportionments set forth in Section hereof shall be paid in full
by Buyer at the Closing by wire transfer of immediately available federal funds,
as Seller shall direct.
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4. Closing Date.
a. The Closing shall take place on a date (the "Closing Date")
which is on, or at Buyer's option, before thirty (30) days following the
expiration of the Inspection Period. If Buyer desires to close prior to the
thirtieth (30th) day following the expiration of Inspection Period then Buyer
may do so provided that Buyer provide Seller with at least five (5) business
days prior written notice (the "Closing Notice") of the Closing Date (with a
copy to Escrow Agent), and the Closing shall occur at the offices of the Title
Company or Seller's Counsel at such time and at such location as is mutually
acceptable to Buyer and Seller. TIME IS OF THE ESSENCE HEREUNDER.
b. Notwithstanding the foregoing, Buyer shall be entitled to
extend the Closing Date above for an additional period of thirty (30) days by
(i) delivering to Seller (with a copy to Escrow Agent) on or before the then
scheduled Closing Date a written notice of Buyer's intent to so extend the
Closing Date, and (ii) simultaneously delivering to the Escrow Agent the
Extension Xxxxxxx Money Deposit hereunder. Thereafter if Buyer desires to close
prior to the thirtieth (30th) day of such extension then Buyer may do so by
providing to Seller the Closing Notice.
5. Seller's Deliveries.
a. Within ten (10) days after the Effective Date of this
Agreement:
i. Seller shall deliver to Buyer (at no cost to
Buyer) copies of any and all tests, surveys, examinations, plans, appraisals,
permits, licenses, environmental studies or reports and other studies or
investigations regarding the Premises which the Seller may have in its
possession or control, specifically including, without limitation, the
following:
(1) All existing environmental reports,
studies or surveys of the Premises which are in the possession, custody or
control of Seller, Seller's legal counsel (provided that such documents required
from Seller's legal counsel are non-privileged) or Seller's employees. Seller
shall in good faith also attempt to obtain and deliver any other reports,
studies, or surveys of the Premises which are in the possession, custody or
control of Seller's contractors, agents or consultants. Seller shall in good
faith also request a letter or certificate from the issuer of each report as may
be requested by Buyer, certifying the same to Buyer and CNL American Realty
Fund, Inc. or otherwise stating that Buyer and CNL American Realty Fund, Inc.
are entitled to rely on the same; provided that such certificates shall be at no
cost to Seller.
(2) If Tenant is a different entity than
Seller, a current operating statement (if applicable), profit and loss statement
(if applicable), balance sheet and other financial information for Tenant
reasonably requested by Buyer, certified as true, correct and complete by
Tenant, reflecting Tenant's ability to pay rent and perform its other Lease
obligations. Further, the financial information of Guarantor shall also be
expressly subject to review by Buyer for the purposes of satisfying Buyer's (or
CNL American Realty Fund, Inc.'s credit underwriting guidelines, as published
from time to time.
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(3) A current letter or certificate from an
appropriate municipal, county or other governmental representative confirming
the zoning classification for the Premises and, if possible, identifying the
permitted uses under such classification.
(4) Final "as-built" Plans for the
Improvements;
(5) All Permits, including without
limitation, a certificate of occupancy for the use and occupancy of the Premises
by Tenant and a current, valid liquor license.
(6) All warranties and guaranties pertaining
to the Improvements, specifically including the manufacturer's roof membrane
warranty issued with respect to the building comprising the Improvements.
ii. Seller shall deliver to Buyer (at no cost to
Buyer) true and correct copies of all Contracts and any operation, management
and/or franchise agreements in connection with the operation of the Premises or
any part thereof, including without limitation, a copy of that certain Franchise
Agreement by and between Seller and Marriott International, Inc. for the
operation of a Residence Inn by Marriott franchised hotel at the Premises (the
"Franchise Agreement").
iii. Seller shall provide to Buyer a copy of the most
recent tax xxxx (and paid receipt therefor) with respect to ad valorem real
property taxes and assessments levied or assessed with respect to the Premises.
iv. Seller shall conduct an inventory of the Personal
Property and Tenant's Personal Property and provide Buyer with notice of the
date and time for the conducting of such inventory. Buyer shall be entitled to
have a representative present to monitor and participate in such inventory.
Thereafter Seller shall provide to Buyer the written results of such inventory
identifying the type, quantity and Seller's purchase price and/or cost basis for
each item of Personal Property and Tenant's Personal Property.
v. Seller shall provide to Buyer copies of all of
Seller's insurance policies currently in effect with respect to the Premises
together with copies of all claim's logs, loss runs, claim's notices and similar
documents which catalog and chronicle the status of all claims or potential
claims threatened or made against Seller, its manager or the Premises.
vi. Seller shall deliver to Buyer true, correct and
complete copies of all operating and income statements and reports effecting or
relating to the operation of the Premises.
Such documents and information shall be utilized solely for the purpose
of evaluating Buyer's proposed acquisition of the Property. By accepting
delivery of such documents and information, Buyer shall have acknowledged that
Seller has made, and is making, no representation or warranty, express or
implied, as to the accuracy of completeness of such documents and information
which were prepared by third parties other than that Seller represents and
warrants that it is not aware of any inaccuracy, omission or misstatement with
respect to the same except as specifically disclosed by Seller in writing to
Buyer, and Seller shall incur no
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liability to Buyer or any other third party by reason of furnishing or making
such document and information available to Buyer consistent with the foregoing
understanding. Buyer agrees that it will make its own independent investigations
and studies with respect to the Property and all aspects thereof, and will rely
thereon and on the advice of its consultants concerning its proposed acquisition
of the Property. Seller agrees to reasonably cooperate with Buyer in Buyer's
investigations and studies with respect to the Property; provided, however,
Seller shall not be obligated to expend funds to third parties (other than its
legal counsel) in doing so, unless expressly provided otherwise in this
Agreement. In the event the Closing does not occur, Buyer shall return all such
documents and information provided by Seller. Buyer's obligation to return such
documents and information provided by Seller shall survive the termination or
cancellation of this Agreement.
6. Conditions to Buyer's Obligation to Close. Buyer's obligation to
purchase the Property on the Closing Date is subject to the satisfaction of the
following contingencies and conditions in the manner and within the time limits
herein specified:
a. Within twenty (20) days after the Effective Date of this
Agreement: Seller shall have obtained and delivered a copy to Buyer, the written
consent of Marriott International, Inc. in a form reasonably satisfactory to
Buyer, to the purchase, sale and lease transactions contemplated by this
Agreement.
b. Within forty-five (45) days after the Effective Date of
this Agreement:
i. Buyer shall obtain a current appraisal of the
Premises prepared by an MAI appraiser acceptable to Buyer, complying with all
applicable statutory requirements, specifically including the Appraisal
Standards for Federally-Regulated Transactions, as required by the Federal
Financial Institutions Reform Recovery and Enforcement Act of 1989 ("FIRREA")
and related or subsequent regulations.
ii. Buyer shall obtain a current Environmental
Assessment of the Premises, prepared by a licensed environmental engineer
acceptable to Buyer, certified to Buyer and CNL American Realty Fund, Inc. and
stating whether there is any evidence of Hazardous Materials contamination on or
affecting the Premises. Said Environmental Assessment shall meet then current
protocols established by the American Society for Testing and Materials under
Designation E-1527 (Standard Practices for Environmental Site
Assessments/Transaction Screen Process).
iii. Buyer shall, at its option, obtain an "as-built"
survey for the Premises with the seal and signature of a registered engineer or
surveyor, which survey shall (a) include the metes and bounds description of all
parcels comprising the Premises, (b) indicate that all parcels comprising the
Premises are contiguous, (c) be certified to Buyer and the Title Company, (d)
show the location and dimension together with recording information of all
easements which encumber or are appurtenant to the Premises, and whether the
same are encroached upon by the Improvements or shall interfere with the use of,
or access to, the Premises and the Improvements thereon, or cross the property
of others in the absence of properly recorded easements therefor, (e) show the
location and dimension of the Improvements (including
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the location and number of any parking spaces), (f) indicate whether there
exists any violation of height and building restrictions and setback and parking
requirements and (g) shall be accompanied by a certificate from the Surveyor in
the form attached as Exhibit C.
iv. Buyer shall obtain a UCC-11 search for Seller and
each Guarantor.
c. Within the Inspection Period:
i. The terms of this Agreement and Buyer's
obligations hereunder shall have been approved by the Board of Directors of CNL
American Realty Fund, Inc., a Maryland corporation.
ii. Buyer shall have approved the zoning of the
Premises and its compliance with applicable zoning and subdivision laws,
including without limitation the documents which Seller is required to furnish
Buyer pursuant to Section 5.a.1.(3) above.
iii. Buyer and Tenant shall have mutually agreed upon
all of the terms and conditions of the Lease to be entered into at Closing. In
connection therewith, Buyer and Tenant shall, during the first thirty (30) days
of the Inspection Period, negotiate the terms and provisions of the Lease on the
basis of (but shall in no way be bound by) the form of Lease attached hereto as
Exhibit D, and shall act in a commercially reasonable manner in such
negotiations.
iv. Buyer shall have obtained, reviewed and approved
a Commitment from the Title Company for an owner's title insurance policy (ALTA
form) with respect to the Premises, naming Buyer as the Proposed Insured in the
amount of the Purchase Price (the "Title Commitment"), together with the
following:
(1) All exceptions and appurtenances to
title referred to in the Title Commitment;
(2) All proposed exceptions and
appurtenances to title which are intended to be of record as of the Closing
Date;
(3) A 50-year chain of title report
evidencing the record ownership of the Premises during the preceding 50 years,
accompanied by copies of the deeds and other instruments evidencing such record
ownership.
v. Buyer shall have approved any financial
information on the Tenant which Seller is required to furnish to Buyer pursuant
to Section above.
vi. Buyer and Tenant (if different than Seller) shall
have approved the Plans which Seller is required to furnish to Buyer pursuant to
Section 5.a.i above.
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vii. Buyer shall have received a certificate from an
inspecting architect acceptable to Buyer substantially in the form attached
hereto as Exhibit E (or otherwise reasonably acceptable to Buyer), and a
certificate from an inspecting civil engineer acceptable to Buyer substantially
in the form attached hereto as Exhibit F (or otherwise reasonably acceptable to
Buyer). Seller shall pay all costs in connection with obtaining the aforesaid
certificates.
viii. Buyer shall have approved the Permits,
warranties, guaranties, Contracts, and agreements, copies of which Seller is
required to furnish to Buyer pursuant to Section 5.a.i.(5), 5.a.i.(6) and 5.a.ii
above, the originals of which shall be delivered to Buyer at the Closing.
ix. Buyer shall have received evidence that legally
sufficient parking is available on the Premises without the benefit of any
parking easements created on adjacent property to comply with applicable zoning
requirements and that all utilities are available to and in service at the
Improvements.
x. Buyer shall have otherwise determined, in its sole
and absolute discretion, that the Property is satisfactory to Buyer.
In the event that Buyer does not terminate this Agreement prior to the
expiration of the Inspection period, Buyer shall, within two (2) business days
after the expiration of the Inspection Period, deliver the Second Xxxxxxx Money
Deposit to the Escrow Agent to be held and disbursed by Escrow Agent together
with the Initial Deposit.
d. On or before the Closing Date:
i. Tenant shall have approved and accepted the
completed Improvements and all utility services thereto and agreed to execute
and deliver the Lease and accept possession of the Premises in their existing
condition at Closing, any other conditions precedent to the Tenant's execution
of the Lease and obligation to begin paying rent pursuant to the Lease shall
have been satisfied, Tenant shall in fact be paying rent, and there shall exist
no event which, with the giving of notice or the passage of time or both, would
constitute an Event of Default under the Lease.
ii. The representations and warranties of Seller set
forth in Section 13 hereof shall be true, correct and complete in all material
respects on and as of the Closing Date.
iii. Tenant shall not, at any time during the term of
this Agreement, file or have filed against it a petition seeking relief under
the bankruptcy or other similar laws of the United States or any state thereof.
iv. There have been no material adverse changes to
the environmental condition of the Premises from that set forth in the
Environmental Assessment obtained by Buyer during the Inspection Period.
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v. Buyer shall have received the Title Commitment
"marked-up" and effectively dated as of the Closing, deleting all requirements
thereunder so as to obligate the Title Company unconditionally to issue to Buyer
an original owner's policy of title insurance in the amount of the Purchase
Price subject only to the Permitted Exceptions.
vi. Title Company shall deliver to Buyer a "closing
protection" or "insured closing" letter, evidencing the authority of any agent
of Title Company which conducts the Closing and issues the Buyer's owner's
policy of title insurance for or on behalf of Title Company.
vii. Buyer shall have received an updated appraisal
of the Premises meeting the requirements of Section 6.b.i above and reflecting
that the value of the Premises is equal to or greater than the Purchase Price;
provided, however, that any such updated appraisal shall only be required if
there has been a condemnation or casualty which has been repaired or restored
pursuant to Sections 15 or 16, respectively, of this Agreement prior to Closing.
If the foregoing contingencies are not satisfied or waived in writing
by Buyer within the respective time periods set forth above, then in addition to
any rights afforded by Section 4 and Section 17 of this Agreement, Buyer shall
be entitled to terminate this Agreement by delivering written notice thereof to
Seller and Escrow Agent in accordance with and subject to the provisions of
Section 12.b below, whereupon the Xxxxxxx Money Deposit shall be returned to
Buyer and this Agreement shall terminate and become null and void and all
parties hereto shall be relieved of all obligations hereunder except as
expressly provided in this Agreement.
7. Conditions to Seller's Obligation to Close. Seller's obligation to
sell the Property on the Closing Date shall be subject to the satisfaction of
the following contingencies and conditions in the manner and within the time
limits herein specified:
a. Within ten (10) days after the Effective Date of this
Agreement, Seller shall have obtained from all of its members written
consent to the purchase, sale and lease transactions contemplated by
this Agreement;
b. Within twenty (20) days after the Effective Date of this
Agreement, Seller shall have obtained from Marriott International,
Inc., written consent to the purchase, sale and lease transactions
contemplated by this Agreement, which consent shall provide for the
recognition and continuation of the Franchise Agreement after Closing;
and
c. Within thirty (30) days after the Effective Date of this
Agreement Seller shall have obtained written consent from Berkeley
Federal Bank & Trust, FSB, and Xxxxxx Financial, Inc., to the purchase,
sale and lease transactions contemplated by this Agreement.
If and when each of the foregoing contingencies and conditions are
satisfied, Seller shall provide Buyer with written notice of the same together
with a copy of any and all such documents evidencing the consent or approval so
obtained by Seller. In the event that Seller does not satisfy the contingency
and condition set forth in Section 7.c. above within the prescribed period of
time, Seller shall be entitled to a twenty (20) day extension of said time
period in order
11
to satisfy said contingency and condition. Seller shall be entitled to such an
extension upon Seller's written notice to Buyer prior to the expiration of the
original thirty (30) day time period. If each of the foregoing contingencies and
conditions are not satisfied or waived in writing by Seller within the
respective time periods set forth above, as the same may be extended as
specifically set forth herein, Seller shall be entitled to terminate this
Agreement by delivering written notice thereof to Buyer and Escrow Agent in
accordance with and subject to the provisions of Section 12.b below, whereupon
the Xxxxxxx Money Deposit shall be returned to Buyer, Seller shall pay to Buyer
a termination fee equal to the amount of Buyer's out-of-pocket costs and
expenses including attorneys fees and costs incurred hereunder from and after
the Effective Date of this Agreement (the "Termination Fee") and this Agreement
shall thereafter terminate and become null and void and the parties hereto shall
be relieved of all obligations hereunder, except as expressly provided in this
Agreement.
8. Deliveries at Closing. At Closing the parties shall deliver to each
other the documents and items indicated below:
a. Seller shall deliver to Buyer:
i. An appropriate "Seller's Affidavit" or other
acceptable evidence attesting to the absence of liens, lien rights, rights of
parties in possession (other than Tenant) and other encumbrances arising under
Seller (other than the Permitted Exceptions) naming both Buyer and Title Company
as benefitted parties, so as to enable Title Company to delete the "standard"
exceptions for such matters from Buyer's owner's policy of title insurance and
otherwise insure any "gap" period occurring between the Closing and the
recordation of the closing documents.
ii. A duly executed Limited Warranty Deed with
respect to the Premises, subject to no exceptions other than the Permitted
Exceptions, in substantially the form attached as Exhibit G.
iii. A duly executed Limited Assignment of Licenses,
Permits, Plans, Contracts and Warranties with respect to the Premises in the
form attached as Exhibit H, together with all of the documents assigned thereby.
iv. A duly executed Limited Warranty Xxxx of Sale
(the "Xxxx of Sale") transferring all of Seller's rights, title and interest in
the Personal Property including Seller's right, title and interest in any
telephone numbers, P.O. Boxes and numbers associated therewith so as to assure a
continuity in operation and communication in the form attached as Exhibit "I".
v. Duly executed counterparts of the closing
statement.
vi. Duly executed counterpart of the Lease.
vii. An opinion from Seller's counsel, in form and
substance reasonably acceptable to Buyer and Buyer's legal counsel, relating to
due organization and good standing of Seller, the due authorization, execution
and delivery of the closing documents by Seller and
12
the enforceability of the Lease against Tenant. Buyer and Seller will finalize
the form and content of the opinion from Seller's counsel within the first
thirty (30) days of the Inspection Period.
viii. An appropriate FIRPTA Affidavit or Certificate
by Seller, evidencing that Seller is not a foreign person or entity under
Section 1445(f)(3) of the Internal Revenue Code, as amended.
ix. All certificates of insurance, insuring Buyer as
the owner of the Premises, which are required by the Lease to be furnished by
the Tenant to the landlord.
x. Such other closing documents as are reasonably or
legally necessary and proper in order to consummate the transaction contemplated
by this Agreement.
b. Buyer shall deliver to Seller:
i. The Purchase Price, less all the deductions,
prorations, and credits provided for herein.
ii. Duly executed counterparts of the closing
statement.
iii. Duly executed counterpart of the Assignment.
iv. Duly executed counterpart of the Lease.
9. Closing and Other Costs, Adjustments and Prorations. The Closing
costs shall be allocated and other closing adjustments and prorations made
between Seller and Buyer as follows:
a. The Buyer shall be charged with the following items, all of
which shall be added to the Purchase Price payable to Seller at the Closing for
purposes of determining Lessor's Investment and the annual rent due under the
Lease as noted above: (i) all recording charges including recording the deed;
(ii) the cost of the survey and any updated survey required hereunder; (iii) the
cost of the owner's policy of title insurance (ALTA Form, including any
additional premiums to delete the "standard" exceptions for parties in
possession, matters of survey and construction lien claims, and to issue such
Endorsements as Buyer may request, provided the same are permitted by law and
customary in similar transactions); (iv) all costs and fees charged by the
Escrow Agent or the Title Company; (v) environmental assessment and update chain
of title report and appraisal required hereunder; and (vi) legal fees and
expenses of Buyer and Seller (which legal fees of Seller shall not exceed
$25,000.00).
b. The Seller shall be charged with the following items at
Closing: the usual and customary costs and expenses set forth in a settlement
statement with respect to the conveyance of a commercial property (excluding
only those expenses specifically described above as the responsibility of Buyer)
and including without limitation (i) costs of removing any lien or assessment of
a liquidated sum required to be discharged hereunder or other encumbrance which
Seller has agreed to discharge hereunder in order to convey title to the
Premises, the Personal Property as herein provided, including, without
limitation, any prepayment penalties or fees
13
incurred in connection therewith, and (ii) all real estate conveyance taxes and
other transfer taxes, if any, imposed by state or local authorities (including
those transfer taxes customarily paid by a grantor); (iii) the cost of the
architect's and engineer's certificates; (iv) cost penalty or fee in connection
with obtaining the approval by the franchisor of the transfer of the Franchise
Agreement or title to the Premises and (v) the brokerage commission due to the
Broker (as hereafter defined).
c. As the Lease is to be entered into between Buyer and Tenant
effective as of the Closing Date, it shall not be necessary for rent or any
other charges payable under the Lease to be prorated at Closing, and all rent
and other charges payable by Tenant under the Lease shall be the property of
Buyer.
d. Taxes, assessments, utility charges and other charges and
assessments shall be not prorated as of Closing, as Seller shall be responsible
for such matters relating to the period prior to Closing, and Tenant shall be
responsible for such matters from and after Closing. Certified, confirmed and
ratified special assessments liens as of the Closing Date are to be paid by
Seller. Seller shall also pay and be responsible for any "rollback" taxes or
retroactively assessed taxes which arise out of or relate to any prior use of
the Premises or any improper or inadequate assessment of the Premises for the
period prior to the Closing, which obligation shall expressly survive the
Closing.
e. Accounts payable and accounts receivable shall be the
responsibility and property of Seller for all such accounts relating to the
period prior to Closing, and of Tenant for all such accounts relating to the
period from and after the Closing.
f. Seller shall be responsible for payment of all wages and
salaries payable to, and all vacation pay, pension and welfare benefits and
other fringe benefits accrued with respect to all individuals employed by Seller
at the Premises relating to the period prior to Closing and Tenant shall be
responsible for payment of all wages and benefits relating to the period at,
upon and after Closing. At no time hereunder, upon Closing or under the Lease
shall any of the employees at the Premises be deemed the employees of Buyer or
deemed to be transferred to Buyer and Seller shall be responsible to the extent
necessary or required, for causing all employees at the Premises to be
terminated as of Closing and rehired by Tenant as of the Closing, and, if
required, Seller will comply with the notice requirements under the Worker
Adjustment Retraining and Notification Act ("WARN Act"), the Consolidated
Omnibus Budget Reconciliation Act ("COBRA") or any similar state or local
legislation with respect to such employee matters. It is expressly understood
and agreed that Buyer is not responsible or liable, directly or indirectly, for
payment of any benefits, severance liability, compensation, pay or other
obligations, of whatever nature, due or alleged to be due to any employee of the
Premises or of Seller attributable to any time period up to, upon and after
Closing. There shall be no union agreements, pension plans, health plans,
benefit plans, deferred compensation plans, bonus plans or vacation plans or
similar agreements that shall survive Closing which shall be binding upon Buyer
or enforceable against the Premises. In connection with the foregoing matters,
Seller shall indemnify, save, insure and hold harmless Buyer from and against
any and all liability, loss, damage, cost and expense, including, without
limitation reasonable attorney's fees and costs, in connection with or arising
out of any claims by or related to the employees at the Premises which indemnity
and hold harmless agreement shall survive the Closing.
14
10. Inspections. Buyer through its agents, employees and independent
contractors shall have the right from time to time during the Inspection Period
and continuing through the Closing Date, upon prior notice to Seller, to enter
the Premises for the purpose of inspecting the same and performing environmental
and other tests thereon. Buyer shall indemnify and hold harmless Seller and its
contractors, agents, employees and affiliates from and against any claims,
losses, damages and costs arising out of any inspection of and testing at the
Premises by Buyer, its agents and representatives which indemnity and hold
harmless agreement shall survive the Closing, rescission, expiration,
cancellation or termination of this Agreement. Buyer shall not, and shall not
permit its agents or representatives to, disrupt Seller's activities at the
Premises.
11. Title to Premises; State of Title to be Conveyed. At the Closing,
Seller shall convey fee simple title to the Premises to Buyer, free from all
liens, encumbrances, restrictions, rights-of-way and other matters, excepting
only the Permitted Exceptions and any other matters consented to in writing by
Buyer pursuant to Sections 6.c.iv and 14.a hereof.
12. Escrow Agent. By its execution hereof, Escrow Agent shall accept
the escrow contemplated herein. The Xxxxxxx Money Deposit shall be held by the
Escrow Agent, in trust, on the terms hereinafter set forth.
a. After clearance of funds, the Xxxxxxx Money Deposit shall
be held by Escrow Agent in an account meeting the requirements of Section 3.c
above, and shall not be commingled with any funds of the Escrow Agent or others.
Escrow Agent shall promptly advise Seller and Buyer that the Xxxxxxx Money
Deposit is made and the account number under which it has been deposited
following clearance of funds.
b. The Escrow Agent shall deliver the Xxxxxxx Money Deposit to
Seller or to Buyer, as the case may be, under the following conditions:
i. To Buyer upon receipt of notice of termination of
this Agreement by Buyer and/or Seller at any time prior to the expiration of the
Inspection Period.
ii. To Seller at Closing.
iii. To Seller upon receipt of written demand
therefor ("Seller's Demand for Deposit") stating that Buyer has defaulted in the
performance of Buyer's obligation to close under this Agreement and the facts
and circumstances underlying such default, provided, however, that the Escrow
Agent shall not honor such demand until more than ten (10) days after the Escrow
Agent shall have sent a copy of such demand to Buyer in accordance with the
provisions of Section 12.c of this Agreement nor thereafter, if the Escrow Agent
shall have received a "Notice of Objection" (as hereinafter defined) from Buyer
within such ten (10) day period.
iv. To Buyer upon receipt of written demand therefor
("Buyer's Demand for Deposit") stating that this Agreement has been terminated
in accordance with the provisions hereof for any reason other than as provided
in Section 12.b.i above, or that Seller has defaulted in the performance of any
of Seller's obligations under this Agreement and the facts and circumstances
underlying the same; provided, however, that the Escrow Agent shall not honor
such demand until more than ten (10) days after the Escrow Agent shall have sent
a copy of such
15
demand to Seller in accordance with the provisions of Section 12.c of this
Agreement nor thereafter, if the Escrow Agent shall have received a Notice of
Objection from Seller within such ten (10) day period.
c. Within two (2) business days of the receipt by the Escrow
Agent of a Seller's Demand for Deposit or a Buyer's Demand for Deposit the
Escrow Agent shall send a copy thereof to the other party in the manner provided
in Section 16 of this Agreement. The other party shall have the right to object
to the delivery of the Deposit by sending written notice (the "Notice of
Objection") of such objection to the Escrow Agent in the manner provided in
Section 16 of this Agreement, which Notice of Objection shall be deemed null and
void and ineffective if such Notice of Objection is not received by the Escrow
Agent within the time periods prescribed in Section 12.b of this Agreement. Such
notice shall set forth the basis for objecting to the delivery of the Deposit.
Upon receipt of a Notice of Objection, the Escrow Agent shall promptly send a
copy thereof to the party who sent the written demand.
d. In the event the Escrow Agent shall have received the
Notice of Objection within the time periods prescribed in Section 12.b of this
Agreement, the Escrow Agent shall continue to hold the Xxxxxxx Money Deposit
until (i) the Escrow Agent receives written notice from Seller and Buyer
directing the disbursement of the Xxxxxxx Money Deposit, in which case the
Escrow Agent shall then disburse the Xxxxxxx Money Deposit in accordance with
such joint direction, or (ii) litigation shall occur between Seller and Buyer,
in which event the Escrow Agent shall draw upon the letter(s) of credit and
deliver the Xxxxxxx Money Deposit to the clerk of the court in which said
litigation is pending, or (iii) the Escrow Agent takes such affirmative steps as
the Escrow Agent may, at the Escrow Agent's option, elect in order to terminate
the Escrow Agent's duties including, but not limited to, drawing upon the
letter(s) of credit and depositing the Xxxxxxx Money Deposit in the appropriate
court for the County in which the Premises is located, and bringing an action
for interpleader, the costs thereof to be deducted from the amount so deposited
into the registry of the court; provided, however, that upon disbursement of the
deposited amount pursuant to court order or otherwise, the prevailing party
shall be entitled to collect from the losing party the amount of such costs and
expenses so deducted by the Escrow Agent.
e. The duties of the Escrow Agent are only as herein
specifically provided, and Escrow Agent shall incur no liability whatever except
for willful misconduct or gross negligence as long as the Escrow Agent has acted
in good faith. The Seller and Buyer each release the Escrow Agent from any act
done or omitted to be done by the Escrow Agent in good faith in the performance
of its duties hereunder.
f. Upon making delivery of the Xxxxxxx Money Deposit in the
manner herein provided, the Escrow Agent shall have no further liability
hereunder.
g. The Escrow Agent shall either execute this Agreement or
indicate in writing that it has accepted the role of Escrow Agent pursuant to
this Agreement which in either case will confirm that the Escrow Agent is
holding and will hold the Xxxxxxx Money Deposit in escrow, pursuant to the
provisions of this Agreement.
16
13. Seller's Covenants, Representations and Warranties. In order to
induce Buyer to enter into this Agreement and purchase the Property, Seller
makes the following covenants, agreements, representations and warranties, all
of which shall survive the Closing and the purchase and sale of the Property for
a period of one year after the Closing Date.
a. Subject to the provisions of Section 7, Seller has obtained
all necessary authorizations and consents to enable it to execute and deliver
this Agreement and to consummate the transaction contemplated hereby.
b. Seller holds fee simple title to the Premises, free of all
liens, assessments and encumbrances except for the Permitted Exceptions, and
liens and encumbrances, if any, which will be paid and discharged at or prior to
the Closing. Seller has no knowledge of any condition or state of facts which
would preclude, limit or restrict the business operations contemplated, pursuant
to the terms of the Lease, to be conducted by Tenant at the Premises.
c. Except for construction warranties with respect to the
Improvements, there are no service or maintenance contracts affecting the
Property to which Buyer will be bound upon Closing.
d. To the best of Seller's knowledge, the Premises and the
proposed use thereof by Tenant and the condition thereof do not violate any
applicable deed restrictions, zoning or subdivision regulations, urban
redevelopment plans, local, state or federal environmental law or regulation or
any building code or fire code applicable to the Premises, and are not
designated by any governmental agency to be in a flood plain area.
e. As of the Closing Date (i) there shall exist no event
which, with the giving of notice or the passage of time or both, would
constitute an Event of Default under the Lease; (ii) Tenant shall not have any
defense, set-off or counterclaim in respect of its obligations under the Lease
arising as a result of Seller's actions or activities, or those of Seller's
employees, agents or contractors; and (iii) all leasing commissions and fees
with respect to the Lease, if any, have been paid in full by Seller or Tenant.
f. There is no pending or, to Seller's knowledge, threatened
litigation or other proceeding affecting the title to or the use or operation of
the Property.
g. Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and Seller
shall certify its taxpayer identification number at Closing.
h. To the best of Seller's knowledge, there are no federal,
state, county or municipal plans to restrict or change access from any highway
or road to the Premises.
i. The Premises are a separate parcel for real estate tax
assessment purposes.
j. All of the financial data regarding the construction,
ownership and operation of the Property that Seller has provided to Buyer is
true, complete and correct.
17
k. To the best of Seller's knowledge, the Improvements have
been constructed in accordance with (i) the Plans and (ii) applicable building
codes, laws and regulations in a good, substantial and workmanlike manner.
l. To the best of Seller's knowledge, no Hazardous Materials
are, will be, have been, stored, treated, disposed of or incorporated into, on
or around the Premises in violation of any applicable statutes, ordinances or
regulations; the Premises are in material compliance with all applicable
environmental, health and safety requirements; any business currently or, to the
best of Seller's knowledge, heretofore operated on the Premises has disposed of
its waste in accordance with all applicable statutes, ordinances and
regulations; and Seller has no notice of any pending or, to the best of Seller's
knowledge, threatened action or proceeding arising out of the condition of the
Premises or any alleged violation of environmental, health or safety statutes,
ordinances or regulations.
m. As of the date hereof and the Closing Date there is, to the
best of Seller's knowledge and shall exist no event which is or would, with the
giving of notice or passage of time or both, constitute an event of default
under the Franchise Agreement.
n. Seller specifically acknowledges and understands that where
Seller actually knows of any fact(s) materially, adversely affecting the value
of the Property, whether said fact(s) is/are readily observable or not, Seller
hereby assumes and accepts a duty to disclose said fact(s) to Buyer. Seller
warrants that, other than as may be disclosed in the foregoing representations
and warranties, and except with respect to general market conditions applicable
to the Property to which Seller makes no representation and warranty, Seller has
no knowledge of any other fact(s) materially adversely affecting the value of
the Property whether or not said fact(s) is/are readily observable.
All of the representations, warranties and agreements of Seller set
forth herein and elsewhere in this Agreement shall be true upon the execution of
this Agreement and shall be reaffirmed and repeated in writing at and as of the
Closing Date, but not subsequent to the Closing Date, and shall survive the
Closing Date for a period of one year.
14. Covenants of Seller Pending Closing. Between the date hereof and
the Closing Date:
a. Seller shall not enter into any contracts for services or
otherwise that may be binding upon the Property or upon the Buyer subsequent to
Closing, nor grant any easements or licenses affecting the Premises, nor take
any legal action in connection with the Property which will affect Buyer's title
to the Property, nor enter into any leases of space in the Premises, without the
express prior written consent of Buyer. Buyer's consent may be withheld at
Buyer's sole option; however, Buyer's response to any of the foregoing shall not
be unreasonably delayed and, if denied, shall be accompanied by a reasonably
detailed explanation of the reason for such denial.
18
b. Seller shall within two (2) business days following receipt
thereof (or the day of receipt if received the day prior to the Closing Date)
provide Buyer with copies of any letters or notices received by Seller relating
to or in any manner affecting the Property in a material, adverse manner.
c. Seller shall, at no expense to Seller, reasonably cooperate
with Buyer in connection with Buyer's obtaining any insurance which may be
required to be maintained by Buyer with respect to the Premises following the
Closing.
d. Seller will continue operating the hotel operation at the
Premises in as good or better manner as it has been operating since opening.
Seller will maintain adequate levels of Personalty items necessary to operate
the hotel. Seller will comply with all laws and contracts affecting the Premises
and will maintain all Permits, Contracts and the Franchise Agreement in good
standing. Seller will maintain and repair the Premises and Improvements in the
ordinary course of business. Seller agrees to promptly notify Buyer in writing
of any material change in the condition of the Premises, Improvements or the
operation of the hotel.
15. Eminent Domain. If prior to the date of the Closing, Seller
acquires knowledge of any pending or threatened action, suit or proceeding to
condemn or take all or any part of the Premises under the power of eminent
domain, then Seller shall immediately give notice thereof to Buyer. If such
condemnation gives Tenant, or will upon execution of the Lease, give Tenant the
option to terminate the Lease and if Tenant exercises such option or refuses to
modify the form of the Lease to specifically acknowledge and accept such
condemnation, this Agreement shall be null and void, whereupon the full amount
of the Xxxxxxx Money Deposit shall be paid by Escrow Agent to Buyer, and all
parties shall thereupon be relieved of all further liability hereunder except as
expressly provided in this Agreement. If such condemnation does not give Tenant
the option to terminate the Lease, or if it gives Tenant the option to terminate
the Lease and Tenant waives such option in writing, and if Seller or Seller's
lender, if any, agrees to make the proceeds of any condemnation award available
for reconstruction of the Improvements, then Seller will promptly commence the
reconstruction and the parties shall proceed with the Closing in accordance
with, and subject to, the terms hereof. All excess proceeds of such condemnation
shall be delivered to Buyer at closing or credited against the Purchase Price.
16. Casualty. If prior to the date of the Closing the Premises, or any
portion thereof, shall be damaged or destroyed by reason of fire, storm,
accident or other casualty, then Seller shall immediately give notice thereof to
Buyer. If such casualty will upon execution of the Lease, give Tenant the option
to terminate the Lease and if Tenant exercises such option or refuses to modify
the form of the Lease to specifically acknowledge and accept such casualty, this
Agreement shall be null and void, whereupon the full amount of the Xxxxxxx Money
Deposit shall be paid by Escrow Agent to Buyer, and all parties shall thereupon
be relieved of all further liability hereunder. If such casualty does not give
Tenant the option to terminate the Lease, or if it gives Tenant the option to
terminate the Lease and Tenant waives such option in writing, and if Seller or
Seller's lender, if any, agrees to make the proceeds of insurance available for
reconstruction of the Improvements, then the parties shall proceed with the
Closing in accordance with, and subject to the terms hereof. In such event, all
such proceeds of any insurance will be applied toward reconstruction subject to
the rights of Tenant in such proceeds under the Lease and the rights of Seller's
lender, if any, to receive and disburse the proceeds of any insurance.
19
In the event Buyer, at its option, elects to close this transaction prior to the
completion of restoration, then the proceeds of any insurance will be assigned
to Buyer and Seller will credit Buyer at Closing with an amount equal to the
deductible under the applicable insurance policy and any amounts reasonably
determined by Buyer to constitute the difference between (i) the amount of the
insurance proceeds (and deductible) and (ii) the cost of reconstruction.
17. Remedies Upon Default.
a. In the event Buyer breaches or defaults under any of the
terms of this Agreement prior to or on the Closing Date, the sole and exclusive
remedy of Seller shall be to receive from Escrow Agent the full amount of the
Xxxxxxx Money Deposit, and Buyer shall have no right therein. Buyer and Seller
acknowledge and agree that (i) the aggregate amount of the Initial Xxxxxxx Money
Deposit, the Second Xxxxxxx Money Deposit and the Extension Xxxxxxx Money
Deposit (but only if and to the extent the same has been delivered by Buyer to
Escrow Agent) is a reasonable estimate of and bears a reasonable relationship to
the damages that would be suffered and costs incurred by Seller as a result of
having withdrawn the Premises from sale and the failure of Closing to occur due
to a default of Buyer under this Agreement; (ii) the actual damages suffered and
costs incurred by Seller as a result of such withdrawal and failure to close due
to a default of Buyer under this Agreement would be extremely difficult and
impractical to determine; (iii) Buyer seeks to limit its liability under this
Agreement to the amount of the Initial Xxxxxxx Money Deposit, the Second Xxxxxxx
Money Deposit and the Extension Xxxxxxx Money Deposit (but only if and to the
extent the same has been delivered by Buyer to Escrow Agent), and any interest
earned thereon if the transaction contemplated by this Agreement does not close
due to a default of Buyer under this Agreement; and (iv) such amount shall be
and constitute valid liquidated damages.
b. In the event Seller defaults under any of the terms of this
Agreement on or prior to the Closing Date (including, without limitation, by
failing or refusing to deliver any items required to be delivered pursuant to
Section 5 or Section 6 of this Agreement), Buyer as its sole and exclusive
remedies (except as specified below) shall be entitled to (i) receive a refund
of the Xxxxxxx Money Deposit and terminate this Agreement, or (ii) compel
specific performance of this Agreement, or (iii) if specific performance is not
possible or if Buyer elects not to pursue specific performance, recover damages
incurred as a result of such default, which shall include damages resulting from
a breach of any warranty or representation of Seller as of the Closing even if
the same is not discovered until after the Closing, to the extent the same
survive the Closing. If Buyer desires to elect the remedy described in the
foregoing clause (i), Buyer shall give Seller written notice of any alleged
default and Seller shall have a period of fifteen (15) days, but not later than
the Closing Date, to cure such default.
18. Notices. All notices, elections, requests and other communication
hereunder shall be in writing and shall be deemed given (i) when personally
delivered, or (ii) two (2) business days after being deposited in the United
States mail, postage prepaid, certified or registered, or (iii) the next
business day after being deposited with a recognized overnight mail or courier
delivery service, or (iv) when transmitted by facsimile or telecopy
transmission, with receipt acknowledge upon transmission; addressed as follows
(or to such other person or at such other address, of which any party hereto
shall have given written notice as provided herein):
20
If to Seller: Gwinnett Residence Associates, LLC
c/o Stormont Trice Corporation
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx X. Xxxxxxxxxx, Esquire
King & Spalding
000 Xxxxxxxxx Xx. X.X.
Xxxxxxx, Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Buyer: CNL Real Estate Advisors, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxxxx, Esquire or
Xxxxxxx X. Xxxxxx, Esquire
Lowndes, Drosdick, Doster, Xxxxxx &
Xxxx, P.A.
000 Xxxxx Xxxx Xxxxx
Post Office Box 2809
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Escrow Agent: First American Title Insurance Company
National Division
0000X Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
19. Brokerage Commissions. Seller and Buyer each warrant to the other
party that no finders or brokers have been involved with the introduction of
Buyer and Tenant and/or the execution and delivery of the Lease and the leasing
of the Premises pursuant thereto. Seller and Buyer each warrant to the other
party that no finders or brokers have been involved with the introduction of
Seller and Buyer and/or the purchase and sale of the Premises except for Xxxxxx
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Xxxx Xxxxxxx, Inc. (the "Broker") to whom Seller has agreed, by separate
agreement, to pay a commission if and only if the transaction contemplated by
the Agreement closes. Seller acknowledges and warrants that Buyer shall have no
obligation or liability for any commission or fee to Broker hereunder or under
the Lease. In the event of a breach of the foregoing warranties, the breaching
party agrees to save, defend, indemnify and hold harmless the non-breaching
party from and against any claims, losses, damages, liabilities and expenses,
including but not limited to attorneys' fees. The obligations of this Section
shall survive the Closing or earlier termination of this Agreement.
20. Seller's Indemnification. Seller acknowledges and agrees that Buyer
does not intend to become an operator of the Premises or the hotel business
conducted thereon following the Closing and accordingly agrees to, along with
Stormont Trice Management Corporation, indemnify, save, insure and hold harmless
Buyer from and against any and all loss, cost, damage, injury or other liability
including, without limitation, reasonable attorneys' fees and costs, arising out
of or in any way connected with Seller's ownership and operation of the Premises
including the operation of a Residence Inn by Marriott Suite Hotel whether
arising before or after the Closing, but excluding specifically the intentional
or willful acts of Buyer, its agents, officers, employees and contractors, if
any, in the direct operation of the Premises. The obligation of Seller and
Stormont Trice Management Corporation hereunder shall survive the Closing.
21. Hotel Operation Earn-Out. Seller and Buyer agree that Seller,
through the efforts of Tenant and/or Stormont Trice Management Corporation,
shall have an opportunity following the Closing hereunder to earn additional
sale proceeds (the "Earn-Out") in an amount not to exceed in the aggregate ONE
MILLION AND NO/100 DOLLARS ($1,000,000.00) (the "Maximum Earn-Out") on the terms
and subject to the conditions set forth hereinbelow. The Seller's right to
receive Earn-Out shall be based upon and calculated in accordance with the
following:
a. On the date which is twelve (12) months from and after the
Closing hereunder and each six (6) month period thereafter through and including
the six (6) month period ending with the thirty-sixth (36th) month following the
Closing hereunder, Seller shall cause the Tenant to provide to Buyer a certified
operating statement for the preceding twelve (12) month period which reflects
the earnings before interest, taxes, depreciation and amortization for the
Premises during such period (the "EBITDA"). The EBITDA shall be calculated in
accordance with the Uniform System of Accounts for Hotels, as published from
time to time by the International Association of Hotel Accountants and adopted
by the American Hotel-Motel Association currently in its 9th edition, and shall
specifically contemplate as expenses, management fees, franchise fees and other
fees and costs and shall be consistent with the operating statements for the
Premises. The parties agree, however, that for purposes of this calculation the
management fees which are subordinated to the rental payments under the Lease,
shall be added back in to EBITDA. The EBITDA shall be combined with the net
operating income for the Buckhead Residence Inn calculated in the same manner
and for the same time period (the "Buckhead EBITDA") which Buckhead Residence
Inn is to be simultaneously purchased by Buyer pursuant to that certain Hotel
Purchase and Sale Contract by and between Buckhead Residence Associate, LLC and
Buyer of event date herewith (the "Buckhead Contract"). The combined EBITDA and
Buckhead EBITDA shall be called the "Gross EBITDA" hereunder. The parties shall
then apply a factor of 7.44 times Gross EBITDA to determine the level of
22
investment/purchase price that is supported by the existing EBITDA assuming a
10.75% lease rate with a 1.25 lease coverage ratio (e.g. Gross EBITDA x 7.44 =
Investment/Purchase Price). To the extent that the resulting level of
investment/purchase price supported by the EBITDA as determined above exceeds
the combined amount which Buyer has paid as the purchase price for the Premises
and the Buckhead Residence Inn (the "Actual Investment") then Buyer will advance
Earn-Out equal to said amount up to the Maximum Earn-Out. For purposes hereof
the Actual Investment shall be the sum of the purchase price paid for the
Premises and the Buckhead Residence Inn together with all closing costs and
expenses paid by Buyer hereunder or under the Buckhead Contract including those
costs and expenses set forth in Section 9 hereunder.
b. Buyer and Seller agree that Seller shall be responsible for
and shall pay when due any and all costs and expenses in connection with the
payment of Earn-Out including, without limitation, real estate conveyance and
other transfer taxes, the cost of endorsing Buyer's title policy to increase the
amount of insurance thereunder and any brokerage commissions or fees.
c. From and after each payment of Earn-Out as contemplated
hereunder the "Base Lease Rate" as more particularly defined in the Lease shall
be recalculated based upon the new investment level of Buyer in the Premises.
The new investment level shall include the portion of the Earn-Out paid to date
which is attributable to the Premises. The parties agree that the portion of
Earn-Out attributable to the Premises shall be based upon the same percentage
that the percentage of the original investment level of Buyer in the Premises
(i.e., purchase price plus all costs and expenses incurred in Closing) bears to
the Actual Investment. The Lease shall specifically contemplate the obligations
of Tenant to prepare and provide certified operating statements including the
calculation of EBITDA hereunder as well as the obligation to increase the Base
Lease Rate and rental payments as contemplated above.
d. Nothing herein shall obligate the Buyer to pay Earn-Out
except specifically in accordance with the provisions hereof. Under no
circumstances shall Buyer have an obligation to pay Earn-Out hereunder for any
period after the thirty-six (36) month period following the date of Closing or
in excess of the maximum Earn-Out in the aggregate.
The provisions of this Section 21 shall survive the Closing hereunder.
22. Miscellaneous Provisions.
a. Assignment; Binding Effect. Buyer may assign all of its
rights and obligations hereunder without the written consent of Seller to (i)
CNL American Realty Fund, Inc., a Maryland corporation, or its affiliate, or any
other entity which is owned, controlled, managed or advised by Buyer or any
affiliate of Buyer, or (ii) with the prior written consent of Seller to any
other third party which has the financial wherewithal in the reasonable business
judgement of Seller to perform the obligations of Buyer hereunder; provided,
however, that any assignee of Buyer assumes all of the obligations of Buyer
hereunder. In the event of any permitted assignment hereunder Buyer shall
thereupon be relieved of all further liability under this Agreement; except that
the Xxxxxxx Money Deposit shall not be released or otherwise adversely affected
as a result of any such assignment. Seller shall not have the right to assign
its rights and obligations hereunder, except to the extent expressly permitted
in Section 1.t above,
23
in which event Seller shall deliver written notice thereof to Buyer and shall
nonetheless remain liable for any breach of the representations and warranties
and performance of the covenants set forth herein. Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of Seller
and Buyer and their respective successors and assigns.
b. Captions. The several headings and captions of the Sections
and subsections used herein are for convenience of reference only and shall in
no way be deemed to limit, define or restrict the substantive provisions of this
Agreement.
c. Entire Agreement. This Agreement constitutes the entire
agreement of Buyer and Seller with respect to the purchase and sale of the
Premises, and supersedes any prior or contemporaneous agreement with respect
thereto. No amendment or modification of this Agreement shall be binding upon
the parties unless made in writing and signed by both Seller and Buyer.
d. Time of Essence. Time is of the essence with respect to the
performance of all of the terms, conditions and covenants of this Agreement.
e. Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws and
customs of the State of Georgia.
f. Termination. This Agreement shall be void and of no force
and effect unless signed by Seller and Escrow Agent and delivered to Buyer no
later than five (5) business days following the date of Buyer's execution of
this Agreement.
g. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
h. Attorneys' Fees. In the event any party to this Agreement
should bring suit against the other party in respect to any matters provided for
herein, the prevailing party shall be entitled to recover from the
non-prevailing party its costs of court, legal expenses and reasonable
attorneys' fees based upon standard hourly rates for services rendered. As used
herein, the "prevailing party" shall include, without limitation, any party who
dismisses an action for recovery hereunder in exchange for payment of the sums
allegedly due, performance of covenants allegedly breached or consideration
substantially equal to the relief sought in the action.
i. Certain References. As used in this Agreement, the words
"hereof," "herein," "hereunder" and words of similar import shall mean and refer
to this entire Agreement and not to any particular article, section or paragraph
of this Agreement, unless the context clearly indicates otherwise.
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j. Time Periods. Unless otherwise expressly provided herein,
all periods for performance, approval, delivery or review and the like shall be
determined on a "calendar" day basis. If any day for performance, approval,
delivery or review shall fall on a Saturday, Sunday or legal holiday, the time
therefor shall be extended to the next business day.
k. Authority. Subject to the provisions of Section 6.c.i and
7.a, each person executing this Agreement, by his or her execution hereof,
represents and warrants that they are fully authorized to do so, and that no
further action or consent on the part of the party for whom they are acting is
required to the effectiveness and enforceability of this Agreement against such
party following such execution.
l. Severability. If any provision of this Agreement should be
held to be invalid or unenforceable, the validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
m. Waiver. One or more waivers of any covenant, term or
condition of this Agreement by either party shall not be construed as a waiver
of any subsequent breach of the same covenant, term or condition. The consent or
approval by either party to or of any act by the other party requiring such
consent or approval shall not be deemed to waiver or render unnecessary consent
to or approval of any subsequent similar act.
n. Relationship of the Parties. Nothing herein contained shall
be deemed or construed by the parties hereto, nor by any third party, as
creating the relationship of principal and agent or of partnership or of joint
venture between the parties hereto, it being understood and agreed that no
provision contained herein, nor any acts of the parties hereto shall be deemed
to create the relationship between the parties hereto other than the
relationship of seller and buyer.
IN WITNESS WHEREOF, the parties hereto have executed this Real Estate
Purchase and Sale Contract on the date first above written.
BUYER:
CNL REAL ESTATE ADVISORS, INC.,
a Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
Title: President
Date: April 20, 1998
25
SELLER:
GWINNETT RESIDENCE ASSOCIATES,
LLC, a Georgia limited liability company
By: Stormont Trice Development Corporation
a Georgia corporation
Title: Managing Member
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
Title: Chief Financial Officer
Date: April 17 , 1998
ESCROW AGENT:
FIRST AMERICAN TITLE INSURANCE
COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Title: Office Manager
Date: April 17 , 1998
26
JOINDER
The undersigned hereby joins in the execution of this Agreement for the
sole purpose of agreeing to the provisions of Paragraph 20 hereunder.
STORMONT TRICE MANAGEMENT
CORPORATION, a Georgia corporation
By: /s/ Xxxxxx X. Xxxxx
Title: Chairman
Date: April 17, 1998
27
FIRST AMENDMENT TO HOTEL PURCHASE AND SALE CONTRACT
THIS FIRST AMENDMENT TO HOTEL PURCHASE AND SALE CONTRACT (this
"Amendment") is made and entered into this 31st day of July, 1998, by and
between GWINNETT RESIDENCE ASSOCIATES, L.L.C., a Georgia limited liability
company, having a mailing address of c/o Stormont Trice Corporation, One
Riverside, Suite 300, 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000 ("Seller"),
and CNL REAL ESTATE ADVISORS, INC., a Florida corporation, having a mailing
address of 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 ("Buyer");
W I T N E S S E T H:
WHEREAS, Seller and Buyer are parties to that certain Hotel Purchase
and Sale Agreement, dated as of April 24, 1998, regarding the purchase and sale
of certain improved real property known as the Gwinnett Residence Inn by
Marriott (the "Agreement"); and
WHEREAS, Seller and Buyer are desirous of modifying and amending
certain terms and provisions of the Agreement, as more particularly set forth
herein.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, all of which each party hereto respectively agrees constitutes
sufficient consideration received at or before the execution and delivery
hereof, Seller and Buyer, intending to be legally bound, do hereby covenant and
agree as follows:
1. Definitions. Except as otherwise defined herein, all terms utilized
herein with an initial capital letter shall have the meaning ascribed to such
terms in the Agreement. Section 1 is hereby modified and amended by adding the
following definition as subparagraph "s" thereof, and relettering the subsequent
subparagraphs in Section 1:
"s. "Retained Funds" shall mean the sum of Five
Hundred Ninety Eight Thousand Five Hundred and No/100 Dollars
($598,500.00)."
2. Payment of Purchase Price. Section 3.d of the Agreement shall be and
is hereby modified and amended in its entirety to read as follows:
"d. Balance of Purchase Price. At the Closing, the
balance of the Purchase Price, less the Retained Funds and any
apportionments set forth in Section 7.a hereof shall be paid
in full by Buyer by wire transfer of immediately available
funds, as Seller shall direct. The Retained Funds shall be
retained by Buyer and shall be held and disbursed as provided
herein. The Retained Funds shall be payable to Seller by wire
transfer of immediately available federal funds within ten
(10) days after the expiration or sooner termination of the
Lease (other than any termination arising
28
from the occurrence of any "Event of Default" (as such term is
defined in the Lease) by STC Leasing Associates, LLC, a
Georgia limited liability company, or its successors, legal
representatives or assigns ("Tenant") in which event the terms
of the Lease shall govern its disposition. Transfer of the
Retained Funds shall be to an account or accounts to be
designated by Seller or Seller's designee prior to such date.
The Retained Funds shall be held by Buyer as the property of
Seller; provided, however, at the Closing, Seller shall be
deemed to have delivered the Retained Funds to Buyer as
security for the faithful observance and performance by Tenant
of all of the terms, covenants and conditions under the Lease
to be observed and performed by Tenant, including, without
limitation, the surrender of possession of the Property to
Buyer as provided in the Lease and provided further Buyer
shall retain and own all interest on the Retained Funds.
Seller hereby acknowledges, ratifies and confirms (which
acknowledgment, ratification and confirmation shall be deemed
remade at the Closing) that it shall receive at Closing good
and valuable consideration (including, without limitation, the
financial benefits that will inure to Seller by virtue of
Tenant's occupancy and operation of the Property under the
Lease) in exchange for its delivery of the Retained Funds for
the benefit of Tenant as security for the observance and
performance by Tenant of its duties and obligations under the
Lease. The provisions of this Section 3.d shall survive the
Closing and shall remain in full force and effect until such
time as the Retained Funds have been remitted pursuant to the
provisions of this Section 3.d or the provisions of Section
4.13 of the Lease."
3. Governing Law. This Amendment shall be construed, interpreted and
enforced in accordance with the laws of the State of Georgia.
4. Counterparts. This Amendment may be executed in several
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
5. Ratification and Confirmation. Except as expressly modified and
amended hereby and by the amendments referenced herein, all terms, conditions
and provisions of the Agreement remain unamended and unmodified and the
Agreement, as modified and amended hereby, is hereby ratified and confirmed by
Seller and Purchaser.
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IN WITNESS WHEREOF, the parties have executed this Amendment under seal
as of the date first above written.
SELLER:
GWINNETT RESIDENCE ASSOCIATES, L.L.C.,
a Georgia limited liability company
By: Stormont Trice Development Corporation, a
Georgia corporation, as Managing Member
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
Xxxxx X. Xxxxxxxx, Xx.
Vice President
BUYER:
CNL REAL ESTATE ADVISORS, INC., a Florida
corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
