Exhibit 10.23
PURCHASE
AGREEMENT
THIS PURCHASE AGREEMENT (this
“Agreement”) is made as of the
day of
,
2006 by and between RIVERFRONT INN, LLC, An Indiana Limited
Liability Company (“Seller”), and MHI HOSPITALITY
CORPORPATION, a Delaware Corporation, or its permitted assigns
(“Buyer”).
W I T N E S S E T
H:
WHEREAS, Buyer desires to purchase
and Seller desires to sell the property described
herein;
NOW, THEREFORE, in consideration of
Ten Dollars ($10.00) paid by Buyer to Seller, and the mutual
covenants of Seller and Buyer contained herein, Seller and Buyer
hereby agree as follows:
1. Agreement to Purchase and
Sell . Seller hereby agrees to sell and convey to Buyer, and
Buyer hereby agrees to purchase from Seller:
A. Certain real property consisting
of approximately +/- 3.3 acres of land located in Jeffersonville,
Indiana, and the hotel improvements located thereon (“the
Property”) consisting of a 186 room hotel trading as the
Ramada Inn Riverfront (“the Hotel”) and attached leased
restaurants (“the Leased Restaurants”);
B. All of the personal property and
equipment owned by Seller and located in or at the Hotel and used
in connection therewith, including but not limited to, cleaning
equipment, furniture, fixtures, carpets, rugs, draperies,
mechanical and electrical equipment, office equipment, china,
glassware, silver, cooking utensils, flatware, linens, and uniforms
(collectively, the “Personal Property”).
C. To the extent owned by Seller and
relating to or located on or in the Hotel and transferable by
Seller, the telephone number for the Hotel, Hotel directory
listings, surveys, plans and specifications, licenses and permits,
contractor and maintenance files, service manuals, notices of
compliance with state
and federal and all governmental agencies and
regulations, estoppel certificates or affidavits, and guaranties
and warranties as to Personal Property which pertain to the Hotel
or are used in connection therewith;
D. Inventory at Closing, including
without limitation, merchandise held for sale and reserve stocks of
operating supplies on hand at Closing (“the
Inventory”);
E. To the extent assignable by
Seller, all leases (including the leases on the Leased Restaurants,
attached as Exhibits A and B, hereto), lease-purchase agreements
and purchase contracts (the “Operating Agreements”)
under which Seller, currently or at Closing, holds the use of or
has the right to acquire any tangible personal property in
connection with the maintenance, use of occupancy of the Hotel.
Notwithstanding any agreement to purchase and sell found in
Paragraph 1 herein, or in any other Paragraph of this Agreement,
Buyer reserves the right not to assume any equipment leases
associated with the Hotel, but this must be determined during the
Inspection Period; and
F. Except as otherwise provided in
this Agreement, all franchise rights, warranties, and all other
contracts and agreements held by Seller relating exclusively to the
Hotel will be terminated at Closing.
2. Purchase Price . The
Purchase Price for the Assets is Seven Million Six Hundred Thousand
and 00/l00th Dollars ($7,600,000.00) (the “Purchase
Price”). The term “Assets” as used herein shall
mean and include the Property, the Hotel, the Leased Restaurants,
the Personal Property, the Inventory, the Operating Agreements and
such other assets used in connection with the operation of the
Hotel as required by Buyer.
A. Within five (5) days
following the execution of this Agreement by both Seller and Buyer,
a refundable deposit of One Hundred Thousand
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Dollars ($100,000.00) (the
“Deposit”) will be paid by Buyer to Chicago Title
Insurance Company (the “Escrow Agent”) as a good faith
deposit, which Deposit shall be applied to the Purchase Price at
Closing.
B. The sum of Seven Million Five
Hundred Thousand ($7,500,000.00) shall be paid by Buyer to Seller
at Closing in cash or by wire transfer of funds immediately
available to Seller.
3. Escrow of Deposit . The
One Hundred Thousand Dollar ($100,000.00) Deposit shall be held in
escrow by the Escrow Agent as a good faith deposit. Buyer and
Seller will execute the escrow agent’s standard escrow
agreement document. In the event the Buyer elects to extend the
Inspection Period as set forth herein under Paragraph 4(A), the
additional non-refundable deposit of $50,000.00 will also be held
by the Escrow Agent.
4. Conditions .
A. Buyer shall have a period
(“Inspection Period”) beginning on the date this
Agreement is executed by all parties and expiring forty five
(45) calendar days thereafter. During the Inspection Period,
Buyer may notify Seller that Buyer does not wish to close on the
purchase of the Assets, in which event this Agreement shall
terminate, the Deposit shall be refunded to Buyer, and neither
party shall have any further obligation to the other with respect
to this Agreement. If Buyer elects to proceed forward to closing,
unless otherwise expressly provided herein, Buyer’s Deposit
will become non-refundable as of 5:00 p.m. on the forty fifth
calendar day subsequent to the execution of this Agreement by both
Seller and Buyer. Closing will occur not later than thirty
(30) calendar days subsequent to the expiration of the
Inspection Period. If, prior to 5:00 p.m. on the forty fifth
calendar day subsequent to the execution of this Agreement, Buyer
notifies Seller in writing that Buyer needs an additional thirty
(30) days for the Inspection Period,
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Seller shall grant Buyer said additional thirty
(30) days and closing will be extended to account for this
additional thirty (30) days to the Inspection Period, upon
Buyer’s submitting an additional non-refundable deposit of
Fifty Thousand Dollars ($50,000.00) to the Escrow Agent. In the
event Buyer elects to terminate this Agreement anytime after the
expiration of the initial Inspection Period, and any subsequent
additions thereto, the initial Deposit of $100,000 shall be
refunded to Buyer, Seller shall receive the additional Deposit of
$50,000.00 as liquidated damages, and neither party shall have any
further obligation to the other with respect to this Agreement;
provided, however, that if Seller is unable to deliver good title
to the Assets, Escrow Agent shall refund the entire Deposit to
Buyer if this Agreement is terminated by Buyer.
B. Seller agrees:
(i) At any reasonable time and from
time to time during the Inspection Period, Buyer shall have the
right to fully inspect the Assets and to satisfy itself that the
Assets, as of the date of such inspection, are in good operating
condition and repair, all guest rooms are fully equipped and
suitable for rental in the ordinary course of business; to the best
of Seller’s knowledge, there are no material defects in the
improvements constituting part of the Hotel; the roof, all
plumbing, heating, electrical and air conditioning and the water
and sewer systems are in good working order and condition. Seller
shall use its best efforts to assure that Buyer has access to the
Assets during normal business hours, and Seller shall provide all
available information concerning the Assets that Buyer may
reasonably request to assist Buyer in making such determinations.
Buyer may only contact Seller’s designated representative
when seeking access to the Hotel. Buyer may not contact any
employee of the Hotel directly to seek access to the Hotel. The
subject transaction is confidential and shall not be communicated
to Seller’s employees other than the designated
representative.
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(ii) At any reasonable time and from
time to time during the Inspection Period, Buyer shall have the
right to fully examine all accounting ledgers, audit materials,
bonds, operating reports, files and other materials relating to the
financial condition and the operation of the Hotel as are available
to Seller. Buyer shall bear the cost of all inspections referred to
in this Paragraph. Buyer shall indemnify and hold Seller harmless
from any physical damage to the Property occurring by Buyer or
Buyer’s agents during said inspections.
(iii) Seller shall furnish to Buyer
within ten (10) days of this Agreement being signed by both
parties year-end financial statements and federal tax returns for
2003, 2004, and 2005, plus 2006 year-to-date financial
statements.
(iv) Seller shall furnish to Buyer
within ten (10) days of this Agreement being signed by both
parties a copy of any title insurance examinations or policies, all
environmental studies and reports, and all surveys, architectural
plans and drawings, engineering reports, elevator reports, and any
and all other reports relating to the roof, structure, mechanical,
electrical, plumbing, heating or air-conditioning systems, and
environmental reports.
(v) Seller shall furnish to Buyer
copies of all existing contracts (e.g. cleaning service, waste
disposal contracts, outside payroll service, etc.), employment
agreements and personal service contracts relating to the operation
of the Hotel within ten (10) days of this Agreement being
signed by both parties.
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(vi) Seller shall furnish to Buyer
within ten (10) days of this Agreement being signed by both
parties a copy of the Ramada License Agreement and the most recent
inspection report.
(vii) Seller shall terminate its
current franchise license agreement and deliver the Asset to buyer
free and clear of any franchise encumbrances, except that they
Buyer shall pay the lesser of 50% or $50,000.00 of the liquidated
damages for early termination of the franchise license.
5. Closing . Closing shall
take place in accordance with Paragraph 4.A., above, but in no
event will occur after October 1st, 2006, which includes any
extensions to the Inspection Period defined in Paragraph
4.
6. Title and Conveyances
.
A. At Closing, Seller shall convey
good and marketable fee simple title to the Property to Buyer by
general warranty deed, clear of any and all deeds of trust,
mortgages or other liens or indebtedness, encumbrances, conditions,
easements, rights-of-way, assessments, and restrictions except the
following (collectively, the “Permitted
Exceptions”):
(i) General real estate taxes for
the year in which Closing occurs and subsequent tax
years;
(ii) All easements
