SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 25, 1998
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PELICAN PROPERTIES, INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Florida 0-23075 65-0616879
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(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
12520 S.W. 195 Terrace, Miami, Florida 33177
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (305) 251-4060
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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(a) On November 25, 1998, Pelican Properties International, Inc.
(the "Company"), through its wholly owned subsidiaries, Ohio
Key I, Inc. and Ohio Key II, Inc., "Subsidiaries" purchased
the Palmer Inn Hotel located in Princeton, New Jersey for
$7,500,000. $2,500,000 was paid in cash and the remaining
balance was satisfied through debt. The consideration was
determined through internal analysis by management. The cash
was drawn from the proceeds held in the Company's 1031
exchange account that was established by the sale of the
Subsidiaries' assets in May 1998. The seller has no material
relationship with the Company or any of its affiliates,
directors or officers, or any associate of any such director
or officer.
On November 30, 1998, Pelican Properties International, Inc.
(the "Company"), through its wholly owned subsidiaries, Ohio
Key I, Inc. and Ohio Key II, Inc., "Subsidiaries" purchased
the Chamberlain Hotel located in Hampton Roads, Virginia for
$5,350,000. $2,350,00 was paid in cash and the remaining
balance was satisfied through debt. The consideration was
determined through internal analysis by management. The
purchase funds were drawn from the proceeds held in the
Company's 1031 exchange account that was established by the
sale of the Subsidiaries' assets in May 1998. The seller has
no material relationship with the Company or any of its
affiliates, directors or officers, or any associate of any
such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) (4) Financial statements required by Item 7 will be filed by the
Company on or before February 8, 1998 and February 13, 1998
respectively.
(c) 10.15 Agreement of Sale
10.16 Agreement of Sale
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PELICAN PROPERTIES INTERNATIONAL, INC.
By: /s/Timothy M. Benjamin
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Timothy M. Benjamin, CFO/Treasurer
DATED: December 11, 1998
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AGREEMENT OF SALE
THIS AGREEMENT OF SALE is dated as of November __, 1998
between KEYDOCROM, INC., a New Jersey corporation, with offices at 205 Main
Street, P.O. Box 268, Chatham, New Jersey 07928 (the "Seller") and OHIO KEY I,
INC. and OHIO KEY II, INC., both Florida corporations, 100 North Alexander
Street, Mt. Dora, Florida 32757 ("Purchaser").
IN CONSIDERATION of the Purchase Price set forth below and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Seller agrees to sell and the Purchaser agrees to
purchase the Property described below on and subject to the terms of this
Agreement.
1. Property. Seller agrees to sell to Purchaser the property
commonly known as the Palmer Inn, consisting of the following elements
(collectively, the "Property"):
a. Land. This sale includes the real property located at 3499
Brunswick Pike (US Route 1, South) West Windsor Township, New Jersey and shown
as Block 7, Lot 59 on the Official Tax Map of the Township of West Windsor and
as more particularly described on Schedule A annexed hereto (the "Land").
b. Improvements. This sale includes the 105 room hotel
building and other improvements situated on the Land (the "Improvements").
c. Personal Property. This sale includes the personal property
owned and used by Seller in the operation of the Improvements and physically
located on the Land or within the Improvements, including all of Seller's
furniture, fixtures, equipment to the extent present on the Land or Improvements
as of the date hereof and supplies and inventory to the extent present at
Closing (the "Personal Property"). Seller agrees not to deplete the supplies or
inventory except in the ordinary course of business. The Personal Property
specifically excludes the items or categories of items listed on Schedule B. The
Personal Property will be delivered in its "as is, where is" condition, without
warranty of any kind, except as to title.
d. Contract Rights. This sale includes the rights of Seller in
the Lease, the Service Contracts, and the Concession Agreement (each, as defined
below).
e. Other Rights. This sale also includes all right, title and
interest of Seller, if any, in and to (a) the land constituting any public
street, road or avenue, opened or proposed, in front of or adjoining the Land,
(b) any award made or to be made in lieu thereof and any unpaid award for
damages to the Land or the Improvements by reason of change of grade of any
street, road or avenue, (c) any condemnation claim or award paid or payable with
respect to the property interests to be conveyed hereunder, (d) all privileges
appurtenant or related to the Land or the Improvements; and (e) any rights of
Seller in the name "Palmer Inn" and to any phone numbers used by Seller in the
operation of the business.
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2. Purchase Price. Purchaser agrees to pay Seller a purchase
price of SEVEN MILLION FIVE HUNDRED THOUSAND ($7,500,000.00) DOLLARS (the
"Purchase Price"). The Purchase Price shall be paid as follows:
a. Deposit. Upon the signing of this Agreement, Purchaser
shall pay a deposit of ONE HUNDRED THOUSAND ($100,000.00) DOLLARS (the
"Deposit"). The Deposit shall be paid to Lawyers Title Insurance Corp. (the
"Title Company"). The Deposit shall be held in escrow until Closing and passing
of title or default by Purchaser, or returned to Purchaser if (a) any
contingency in this Agreement is not satisfied or waived by the party benefitted
within the time period specified, (b) Purchaser properly terminates this
Agreement or (c) Seller defaults or is otherwise unable to deliver title to the
Property under this Agreement. The Title Company's service as escrow agent is
solely as an accommodation to the parties and no liability shall attach to or
against the Title Company for its acts taken in good faith as long as it
complies with the provisions of this Agreement. The Deposit shall be held in a
segregated FDIC insured money market account and all interest or earnings
thereon shall belong to the Purchaser except in the case of a breach by
Purchaser.
b. Cash at Closing. At Closing (defined below), Purchaser
shall pay TWO MILLION FOUR HUNDRED THOUSAND ($2,400,000.00) DOLLARS in
immediately available funds.
c. Assumption of First Mortgage. At Closing, Purchaser shall
assume Seller's obligations under the existing first mortgage (the "Existing
Mortgage") held by PNC Bank ("PNC"), the outstanding principal balance of which
will be THREE MILLION ONE HUNDRED NINETY THOUSAND FOUR HUNDRED AND TWELVE
($3,190,412.00) DOLLARS as of November 1, 1998, bearing interest at PNC's prime
rate and being payable in equal monthly installments of principal in the amounts
of $13,576.22 together with interest on the unpaid principal balance. The
Purchaser will supply all necessary information and will pay all commercially
reasonable application and other fees and expenses requested by PNC in
connection with the transfer of the Property and Purchaser's assumption of the
Existing Mortgage. The Purchaser shall indemnify and save the Seller and any
guarantor of the Existing Mortgage harmless from and against any and all claims,
damages, costs and expenses, including reasonable attorneys fees arising out of
any default by Purchaser under the Existing Mortgage. The foregoing indemnity
shall survive the Closing.
d. Purchase Money Second Mortgage. At Closing, Purchaser shall
execute and deliver a promissory note in the form annexed hereto as Schedule C
(the "Note"), secured by a second purchase money mortgage and assignment of
leases, rents and profits upon the
Property, in the form annexed hereto as Schedule D (the "Second Mortgage"). The
Note shall bear interest at the annual rate of seven and one-half (7 1/2%)
percent for the first six (6) months of its term and at the annual rate of eight
(8%) percent thereafter. The Note shall mature eighteen (18) months following
the date of Closing. The amount of the Note shall be ONE MILLION EIGHT HUNDRED
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AND NINE THOUSAND FIVE HUNDRED AND EIGHTY-EIGHT ($1,809,588.00) DOLLARS as such
amount may be adjusted to reflect the actual principal balance of the Existing
Mortgage at the time of Closing. The Second Mortgage shall also secure
Purchaser's indemnity obligations to Seller and any guarantor of the Existing
Mortgage arising under this Agreement.
3. Title. Seller will convey marketable title of record to the
Property such as will be insurable at regular rates by the Title Company subject
to easements, conditions and restrictions of record, if any and such items as a
careful inspection and an accurate survey of the Property would reveal, provided
none of the same would render title unmarketable or impair Purchaser's use of
the Property as a hotel. Title shall be expressly subject to the following
("Permitted Exceptions"):
a. all present zoning, building, environmental and other laws,
ordinance, codes, restrictions and regulations of all governmental authorities
having jurisdiction;
b. that certain lease agreement dated August 11, 1987 (the
"Lease") between Seller and Charlie Brown's of West Windsor, Inc. (the "Tenant")
a copy of which is annexed hereto as Schedule E;
c. that certain hotel management agreement dated August 1,
1986 (the "Management Agreement") between Seller and The Boyle Company (the
"Manager") a copy of which is annexed hereto as Schedule F;
d. those service contracts listed on Schedule G (the "Service
Contracts");
e. that certain concession agreement dated September 19, 1997
between Seller, Tenant and Manager (the "Concession Agreement") a copy of which
is annexed hereto as Schedule H;
f. current taxes or liens for taxes and assessments to the
extent not yet due and payable;
g. the Existing Mortgage;
h. the items listed on Schedule I; and
i. that certain equipment lease dated as of December 7, 1994
between Mitel Financial Services, a Division of Mitel, Inc. ("Equipment Lessor")
and Seller (the "Equipment Lease") relating to certain equipment described
therein. A copy of the Equipment Lease is annexed hereto as Schedule J.
Purchaser agrees to assume the Seller's obligations under the Equipment Lease
and to use its best efforts to obtain the written consent of the Equipment
Lessor prior to Closing.
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Purchaser shall have the right to conduct a title examination
at its cost and expense and to obtain a survey. If Purchaser obtains a survey,
Purchaser shall have the survey certified to the Seller. If the title report or
survey reveal title defects other than Permitted Exceptions ("Title Problems"),
it shall immediately give Seller copies of the title report and survey together
with written notice identifying the matters to be addressed before Closing.
Seller shall not be required to bring any action or incur any expense, except
for the payment of any encumbrance in a fixed or liquidated amount to correct
any Title Problem. If Seller is unable in good faith to convey title as required
under this Agreement, Purchaser, as its sole remedy, may terminate this
Agreement, in which event the Title Company shall return the Deposit plus
interest earned thereon to Purchaser.
4. Closing. The closing of the transfer of title to the
Property (the "Closing") shall take place at 10 a.m. in the offices of [Schenck,
Price, Smith & King, 10 Washington Street, Morristown, New Jersey] on the __th
business day following satisfaction or waiver of all contingencies contained
herein, but in no event later than December 1, 1998, WHICH TIME AND DATE IS OF
THE ESSENCE OF THIS AGREEMENT. If Purchaser fails to close title on the date set
for Closing, the parties agree to make all closing adjustments as of the
scheduled date for Closing, and Purchaser further agrees to reimburse Seller for
its insurance, tax, and interest on the Existing Mortgage and other costs of
ownership of the Property such as described in Section 5 during the period
between such date and the actual date of Closing. At Closing, Purchaser shall
assume the Existing Mortgage, cause the delivery of the Deposit and deliver the
balance of the cash portion of the Purchase Price, the Note and the Second
Mortgage and Seller shall deliver the following items duly executed by Seller:
a. A Bargain and Sale Deed with Covenant against Grantor's
Acts, in recordable form, containing a legal description in accordance with
Schedule A.
b. A certified copy of its corporate resolutions authorizing
this Agreement and the transactions contemplated hereby and a corporate
affidavit of title.
c. A quitclaim Bill of Sale, without warranty of any kind
except as to title, with respect to any Personal Property and an assignment
without recourse of any manufacturer's warranties or Service Contracts owned by
Seller and relating to any Personal Property or the Improvements.
d. An assignment and assumption agreement relating to the
Lease and the Concession Agreement together with a letter directing the Tenant
therein to make future rental and concession payments to Purchaser.
e. An assignment and assumption agreement relating to the
Management Agreement.
f. An estoppel certificate from the tenant in accordance with
Section 4.01 of the Lease.
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g. A certification of non-foreign status.
h. A letter of non-applicability issued by the New Jersey
Department of Environmental Protection under the Industrial Site Recovery Act
("ISRA").
i. Any keys, existing plans, specifications, engineering
drawings, manuals, service and maintenance logs, paid invoices and similar
documents relating to the Improvements or Personal Property, to the extent
within Seller's possession or control.
j. Certificates of inspection and registration with the
Department of Community Affairs, certificate of occupancy, elevator inspection
certificates and other similar governmental inspection certificates.
k. A non-disturbance agreement in favor of the Tenant.
l. An assignment of Seller's rights under the Equipment Lease,
and any right of Seller to purchase the equipment covered by the Equipment
Lease.
m. An assignment or other appropriate instrument of conveyance
transferring rights set forth in Section 1e.
5. Adjustments. At Closing, the following items shall be
apportioned between the parties as of 11:59 p.m. on the day preceding the date
of Closing:
a. Real estate taxes, water and sewer assessments, if any, on
the basis of the fiscal year for which assessed. If there is any refund or other
benefit as a result of any appeal of taxes for 1998, the parties agree to
apportion same as of the date of Closing, based upon their periods of ownership
during that year.
b. Any water and sewer charges, according to a final reading,
or if unmetered, prorated on the basis of the applicable billing period.
c. Prepaid charges, fees or escrows for transferable licenses,
permits or applications which are transferred to Purchaser at Closing.
d. Fuel on the Property, if any, at current market prices.
e. Charges or fees under the Service Contracts or the
Management Agreement.
f. Base rents, additional rents, other lease or occupancy
payments, deposits received or receivable relating to the Lease, the Concession
Agreement and the operation of the hotel business at the Property.
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g. The parties agree that all deposits, if any, made by Seller
as security under any public or private service or utility contract shall be
credited to Seller if such amounts remain on deposit after the Closing for the
benefit of Purchaser.
h. The annual fee associated with any permit or certificate
for the 12 month period which has not expired as of the Closing.
i. Any other items normally adjusted between purchasers and
sellers in such transactions. Any errors, omissions or estimations in computing
apportionments at Closing, including any corrections to any payoff amounts owing
on the Existing Mortgage, shall be corrected as soon as practicable thereafter.
The provisions of this Section 5 shall survive the Closing.
6. Inspections. Purchaser shall have the right for fifteen
(15) days following the date hereof to have the Property inspected by a licensed
engineer, architect, contractor, environmental consultant and/or other
reasonably qualified experts of Purchaser's selection. If such inspections
reveal any condition unsatisfactory to Purchaser affecting the structural
integrity of the Improvements, or any unsatisfactory condition impairing the
proper functioning of any building component or mechanical system, or any
unsatisfactory environmental condition, any or all of which would require an
expenditure of more than $50,000 to correct, Purchaser shall have the right to
terminate this Agreement by simultaneously delivering to Seller a notice of
termination and a copy of all inspection reports, including those specifying any
unsatisfactory condition or environmental condition. In case of such termination
by Purchaser, the Deposit and all interest shall be returned to Purchaser and
neither party shall have any further right or liability hereunder.
Notwithstanding the foregoing, Seller may negate Purchaser's notice of
termination under this Section by notifying Purchaser in writing within 24 hours
of receipt of the notice that Seller will (a) at its own cost and expense prior
to Closing, or as soon thereafter as is reasonable, correct and remediate any
such unsatisfactory condition by making all reasonably necessary structural and
nonstructural repairs, or (b) allow to Purchaser's account at Closing such sums
as are reasonably necessary to do so. Purchaser agrees to indemnify, save,
defend and hold Seller harmless from any and all causes of action, claims,
demands, losses, liabilities, judgments, costs and expenses (including
reasonable attorney's fees) relating to any injury or death to person or damage
to property resulting from Purchaser's investigation activities on the Property,
or due to Purchaser's failure to comply with applicable law. Purchaser also
agrees to restore the Property to its condition existing immediately prior to
the investigations. Purchaser shall obtain and maintain in full force and effect
at all times during the investigations a policy of public liability insurance in
a minimum amount of $1,000,000 per occurrence (plus $3 million in excess
coverage, with aggregate coverage of $4 million for all policy claims within the
policy period). The policy shall name Seller as an additional insured and as
loss payee and shall require the carrier to furnish 30 days advance written
notice of reduction or cancellation of coverage to Seller. Purchaser shall
furnish a certificate of insurance to Seller prior to entering the Property to
conduct any investigations.
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7. Financing. Purchaser's obligation to closing title
hereunder is contingent upon the Purchaser's obtaining a written agreement from
PNC permitting Purchaser to assume the Existing Mortgage without amendment of
its rates or terms and consenting to the placement of the Second Mortgage on the
Property. Purchaser agrees to pay all costs and fees required by PNC in order
for it to consider permitting the assumption as well as any fees required by it
for allowing the assumption. Seller agrees that it will not seek a release from
PNC on behalf of Seller or any guarantor of the Existing Mortgage, but Seller
shall not be obligated to increase the liability of Seller or any guarantor with
regard to the Existing Mortgage. Purchaser shall provide the holder of the
Existing Mortgage with personal guaranties of its principals to the extent
required to secure a permitted assumption.
8. Environmental. Seller agrees that it will apply, diligently
pursue and obtain and deliver at Closing a letter of non-applicability of ISRA.
If, for any reason, Seller is unable to obtain a letter of non-applicability of
ISRA by the Closing, Purchaser's sole and exclusive remedy shall be to terminate
the Agreement and receive back the Deposit with interest.
9. Risk of Loss. The risk of loss, which shall not exceed the
net proceeds of sale due to damage to the Property beyond ordinary wear and tear
prior to the Closing shall be upon Seller. If the Property is damaged beyond
normal wear and tear prior to Closing, the Seller may, at Seller's sole option,
(a) before Closing or as reasonably soon thereafter as is feasible, repair or
remediate the damage to the satisfaction of any governmental authority having
jurisdiction and the reasonable satisfaction of Purchaser, or (b) at Closing
give Purchaser a credit against the Purchase Price in the amount of the
estimated cost of such repair or remediation, or (c) if the loss was insured
against, assign to Purchaser at Closing any insurance proceeds received or
receivable by Seller on account of any damage. If Seller elects to repair the
Property, all such repairs shall be completed within a reasonable period of
time, allowing for the recovery of insurance proceeds and the obtaining of any
required approvals. Any repairs made by Seller shall be done in a good and
workmanlike manner, by reputable contractors.
10. Post-Closing Refinancing. Purchaser agrees that,
immediately following the Closing, it shall make application for permanent
financing of the Property in the amount of $5,000,000 and shall be obligated to
accept any commitment letter for financing of $4,500,000 or more provided that
the proposed loan has an amortization rate of 25 years, a term of at least 7
years and an interest rate of not greater than 8.5% (the "New Loan"). The
proceeds of the New Loan shall be used to satisfy the Existing Mortgage and the
Note. In the event that the proceeds of the New Loan are less than $5,000,000,
Seller agrees to refinance the remaining principal balance of the Note (up to
$500,000) with a new note (the "Replacement Note"). The Replacement Note shall
be secured by a pledge of 100% of the capital stock of the Purchaser pursuant to
a stock pledge and escrow agreement in form and substance reasonably acceptable
to the Seller's counsel. The Replacement Note shall be convertible, at any time
prior to repayment into shares of the Purchaser's capital stock having a value
equal to the unpaid principal balance of the Replacement Note at the time of
conversion, with the value to be established by independent appraisal at the
Purchaser's expense. The Replacement Note shall bear interest at the greater of
8% per annum or 1% above the rate applicable to the New Loan. The Replacement
Note shall have a three (3) year term and a ten (10) year amortization rate. In
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the event of a sale of the Property by Purchaser or a refinance of the New Loan,
the Replacement Note shall become immediately due and payable. The Replacement
Note shall be personally guaranteed by C. John Knorr, Jr. and James Barggren.
11. Brokerage. Purchaser and Seller respectively represent to
each other that no broker has been involved in connection with any aspect of
this sale other than CHK Realty Associates and The Lefferts Group, Inc.
(collectively, the "Broker"), whose commissions shall be paid by Seller pursuant
to a separate written agreement. Each party agrees to indemnify the other from
and against any loss, damage or expenses arising from or relating to the sale of
the Property (including litigation costs and reasonable attorney's fees) by
reason of any claim for compensation or commission by any broker other than the
Broker based upon an allegation of relations or negotiations between the
claimant and the indemnitor inconsistent with the representations herein made.
This representation, warranty and covenant shall survive the Closing or
termination of this Agreement.
12. Notices. Any notices or other communications provided for
hereunder may be given by the party or its attorney, shall be in writing and
shall be either (a) hand-delivered or telecopied to the other party, (b)
deposited with a nationwide, overnight courier delivery service for delivery to
the other party at the address first set forth above or (c) mailed by certified
mail, return receipt requested, postage prepaid to the other party at the
address first set forth above. All notices shall be deemed to have been given
either when hand-delivered or telecopied, 1 day after having been deposited with
a nationwide, overnight courier delivery service or 2 days following the date of
mailing. In order to be effective, copies of any notice having to do with the
Deposit or other duties of the Title Company must be sent in the manner
aforesaid to the Title Company at its address set forth on the signature page
hereof.
13. Assessments. All assessments for public improvements which
have been completed or initiated on or before the date of this Agreement are to
be paid in full or allowed by Seller at the Closing. All other assessments shall
be Purchaser's responsibility. Unconfirmed assessments or improvements, if any,
shall be paid and allowed by the Seller on account of the Purchase Price if the
improvement or work has been completed or initiated on or before the date of
this Agreement. Seller represents to its knowledge that no unpaid assessments
for public improvements are presently pending against the Property and that it
knows of no unconfirmed assessments or improvements planned, completed or under
construction as of the date hereof with respect to the Property. If Seller is
responsible for unconfirmed assessments or improvements as above provided,
Seller shall deposit such sums in escrow with the Title Company as in the
reasonable estimation of the Title Company may be required to satisfy the
unconfirmed assessments or improvements in full. However, Seller shall continue
to remain liable in full for any deficiency which may arise if the escrowed
amount proves insufficient. The Title Company shall pay such sums in discharge
of the liability once the same becomes fixed and promptly refund any excess to
Seller. The provisions of this Section shall survive the Closing.
14. Condemnation. Seller represents that it has not received
any notice of taking or other notification of anticipated or pending
condemnation proceedings affecting the Property. If proceedings to condemn the
Property or any part thereof as would materially impair the use of the Property
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as a hotel commence before the Closing, then Purchaser shall have the right to
terminate this Agreement, in which event Seller shall return to the Purchaser
the Deposit together with all interest earned thereon. If Purchaser does not
elect to terminate this Agreement or if the proceedings to condemn relate to a
part of the Property as would not, in Purchaser's sole but reasonable judgment,
materially impair the use of the Property as a hotel, then Purchaser shall
purchase the Property, in which event at the Closing, Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any claim Seller
may have or award or settlement Seller may be entitled to receive in the
condemnation proceedings and credit Purchaser with the amount of any
condemnation proceeds theretofore paid to or on behalf of Seller. If Purchaser
purchases the Property as above provided and an award is rendered to or
settlement reached by and paid to Seller before Closing, then the Purchase Price
to be paid hereunder shall be reduced by the full amount thereof. Seller agrees
to advise Purchaser in writing of any notice of taking or other notification of
anticipated or pending condemnation proceedings promptly upon Seller's receipt
of same and further agrees to permit Purchaser to participate in any such
condemnation proceeding as a "contract purchaser" if this Agreement is not
terminated.
15. Successors and Assigns. This Agreement shall inure to the
benefit of and shall bind the parties hereto, their successors and permitted
assigns. Purchaser may not assign this Agreement except to an entity under
common control with Purchaser. In the event of any assignment, Purchaser shall
remain directly liable, jointly and severally with the assignee under this
Agreement and under the Note.
16. Recording. Purchaser may file a notice of settlement in
relation to this Agreement but no copy of this Agreement or memorandum hereof
shall be recorded by either party.
17. Limitation of Liability. If Seller is unable to close
title under this Agreement, Seller's sole liability shall be to cause the return
of the Deposit plus all interest earned thereon, and thereafter this Agreement
shall be null and void and neither party shall have any further rights against
the other.
18. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute the original
hereof. If separately executed counterparts of this Agreement or its signature
page(s) have been executed by and delivered to all parties hereto, or their
counsel, they shall have the same effect as if the signatures were all on the
same copy hereof.
19. Tax Deferred Exchange. Purchaser requests that this
transfer be treated as an Internal Revenue Code Section 1031 Tax Deferred
Exchange. The parties agree to cooperate in effecting the exchange in accordance
with Section 1031 of the Internal Revenue Code, including execution of any
documents that may be reasonably necessary to effect the exchange; provided that
(1) Purchaser shall bear all additional costs incurred in connection with the
exchange; (2) Seller shall not be obligated to delay the Closing or execute any
note, contract or other document providing for any personal liability which
would survive the exchange.
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IN WITNESS WHEREOF, the parties have executed or caused their
authorized representatives to execute this Agreement as of the date first set
forth above.
KEYDOCROM, INC.
By: /s/ Robert Cronheim
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ROBERT CRONHEIM, President
OHIO KEY I, INC.
By: /s/ C. John Knorr, Jr.
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C. JOHN KNORR, JR., President
OHIO KEY II, INC.
By: /s/ C. John Knorr, Jr.
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C. JOHN KNORR, JR., President
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SALE/PURCHASE OF ASSETS AGREEMENT
This Sale/Purchase of Assets Agreement (the "Agreement") is entered
into this 30th day of November, 1998, by and among Chamberlin Hotel, L.L.C., a
Virginia limited liability company ("Seller"), and Ohio Key I, Inc., a Florida
corporation, and Ohio Key II, Inc., a Florida corporation, (collectively the
"Purchaser").
WHEREAS, Seller owns a leasehold interest, equipment, inventories,
contract rights, and miscellaneous assets (the "Assets"); and
WHEREAS, Purchaser desires to acquire substantially all of the Assets
of Seller, and Seller desires to sell the Assets to Purchaser.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Assets Purchased; Liabilities Assumed.
1.1 Assets Purchased. Seller agrees to sell to Purchaser and Purchaser
agrees to purchase from Seller, on the terms and conditions set forth in this
Agreement, all of the assets of Seller, including, but not limited to, that
certain leasehold interest owned by Seller in the proeprty known as the
Chamberlin Hotel (the "Hotel"), consisting of a 282 room hotel, together with
all buildings, improvements, attachments and appurtenances thereon and thereunto
belonging together with all furniture, furnishings, equipment, linen and supply
inventory, and all other personal property owned by Seller and used in
connection with the ownership, operations, and maintenance of the Hotel
(hereinafter together call the "Personalty"), excepting cash, receivables (less
advance deposits), utility deposits, food and beverage inventories, which are to
be purchaser at cost from the Seller at Closing.
1.2 Liabilities Assumed. Purchaser shall accept the assignment and
assume responsibility for the payment of the following outstanding liens: (a)
Deed of Trust Note dated January 22, 1998, in the original principal amount of
$2,000,000.00, executed by James C. Barggren and secured by a Deed of Trust on
the Hotel; and (b) Deed of Trust Note dated January 22, 1998, in the original
principal amount of $1,000,000.00, executed by James C. Barggren and secured by
a Deed of Trust on the Hotel.
Section 2. Purchase Price. The purchase price for the Assets shall be Five
Million Three Hundred Fifty Thousand and 00/100 Dollars ($5,350,000.00), which
shall be payable in full at closing.
Section 3. Payment of Purchase Price. The price for the Assets shall be paid as
follows:
3.1 Deposit. No deposit shall be required to be made in connection with
this Agreement.
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3.2 Balance of Purchase Price. At Closing, Purchaser shall pay the
entire purchase price to Seller by cash, cashier's check, certified check, wire
transfer or other immediately available funds, subject to credit for the
outstanding loans assumed by Purchaser.
Section 4. Seller's Representations and Warranties. Seller represents and
warrants to Purchaser as follows:
4.1 Existence. Seller is now and on the Closing Date will be a limited
liability company duly organized and validly existing and in good standing under
the laws of the State of Virginia. Seller has all requisite power and authority
to own the Assets and to carry on its business as now being conducted.
4.2 Authorization. The execution, delivery, and performance of this
Agreement have been or will be prior to Closing duly authorized and approved by
the members of Seller, and this Agreement constitutes a valid and binding
Agreement of Seller in accordance with its terms. If such authorization is not
duly given, then either party shall be entitled to terminate this Agreement.
4.3 Title to Assets. Seller holds good and marketable title to the
Assets, free and clear of restrictions on or conditions to transfer or
assignment, and free and clear of liens, pledges, charges, or encumbrances,
excepting only the outstanding loans being assumed by the Purchaser. Seller has
not previously assigned its interest in the Assets.
4.4 Transfer Subject to Third-Party Approval. The parties understand
that assignment of the current lease relating to the Hotel requires the consent
of the Department of the Army and of Chamberlin Hotel Company.
4.5 Accuracy of Representations and Warranties. None of the
representations or warranties of Seller contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make statements in this Agreement not misleading. Seller
knows of no fact that has resulted or will result in a material change in the
business, operations, or assets of Seller that has not been set forth in this
Agreement or otherwise disclosed to Purchaser.
Section 5. Representations of Purchaser. Purchaser represents and warrants as
follows:
5.1 Corporate Existence. Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Virginia.
Purchaser has all requisite corporate power and authority to enter into this
Agreement and perform its obligations hereunder.
5.2 Authorization. The execution, delivery, and performance of this
Agreement have been duly authorized and approved by the board of directors and
shareholders of Purchaser, and this Agreement constitutes a valid and binding
Agreement of Purchaser in accordance with its terms.
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5.3 Accuracy of Representations and Warranties. None of the
representations or warranties of Purchaser contain or will contain any untrue
statement of a material fact or omit or will omit or misstate a material fact
necessary in order to make the statements contained herein not misleading.
Section 6. Covenants of Seller. Seller covenants and agrees as follows:
6.1 Seller's Operation of Business Prior to Closing. Seller agrees that
between the date of this Agreement and the Closing, Seller will not assign,
sell, lease, or otherwise transfer or dispose of any of the Assets, except in
the normal and ordinary course of business and in connection with its normal
operation.
6.2 Conditions and Best Efforts. Seller will use its best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions of the obligations of Seller under this Agreement, and will do
all acts and things as may be required to carry out its obligations under this
Agreement and to consummate and complete this Agreement.
Section 7. Covenants of Purchaser. Purchaser covenants and agrees as follows:
7.1 Conditions and Best Efforts. Purchaser will use its best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions of Purchaser's obligations under this Agreement, and shall do all
acts and things as may be required to carry out Purchaser's obligations and to
consummate this Agreement.
Section 8. Conditions Precedent to Purchaser's Obligations. The obligation of
Purchaser to purchase the Assets is subject to the fulfillment, prior to or at
the Closing, of each of the following conditions, any one or more of which may
be waived in writing by Purchaser:
8.1 Representations, Warranties, and Covenants of Seller. All
representations and warranties made in this Agreement by Seller shall be true as
of the Closing as fully as though such representations and warranties had been
made on and as of the Closing and, as of the Closing, Seller shall not have
violated or have failed to perform in accordance with any covenant contained in
this Agreement.
8.2 Conditions of the Assets. There shall have been no material adverse
change in the manner or character of the Assets prior to the Closing.
Section 9. Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, any one or more of which may be waived in writing by Seller;
9.1 Representations, Warranties, and Covenants of Purchaser. All
representations and warranties made in this Agreement by Purchaser shall be true
as of the Closing as fully as though such representations and warranties had
been made on and as of the Closing, and Purchaser shall not have violated or
shall not have failed to perform in accordance with any covenant contained in
this Agreement.
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Section 10. Purchaser's Acceptance. Purchaser represents and acknowledges that
it has entered into this Agreement on the basis of its own examination, personal
knowledge, and opinion of the value of the Assets. Purchaser has not relied on
any representations made by Seller other than those specified in this Agreement.
Seller makes no representation as to the value of the Assets or the status of
any of the choses in action being assigned to Purchaser. All of the Assets are
being sold by Seller and accepted by Purchaser "AS IS, WHERE IS, WITHOUT
WARRANTY, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT."
Section 11. Indemnification and Survival.
11.1 Survival of Representations and Warranties. All representations
and warranties made in this Agreement shall survive the Closing of this
Agreement, except that any party to whom a representation or warranty has been
made in this Agreement shall be deemed to have waived any misrepresentation or
breach of representation or warranty of which such party had knowledge prior to
Closing. Any party learning of a misrepresentation or breach of representation
or warranty under this Agreement shall immediately give written notice thereof
to all other parties to this Agreement.
11.2 Seller's Indemnification. Seller hereby agrees to indemnify and
hold Purchaser, its successors, and assigns harmless from and against:
11.2.1 Any and all claims, liabilities, and obligations of
every kind and description, contingent or otherwise, arising out of or
related to the operation of Seller's business prior to the close of
business on the day before the Closing, except for claims, liabilities,
and obligations of Seller expressly assumed by Purchaser under this
Agreement or paid by insurance maintained by Seller or Purchaser.
11.2.2 Any and all damage or deficiency resulting from any
material misrepresentation, breach of warranty or covenant, or
nonfulfillment of any agreement on the part of Seller under this
Agreement.
Seller's indemnity obligations under this Section 11.2 shall be subject
to the following: If any claim is asserted against Purchaser that would give
rise to a claim by Purchaser against Seller for indemnification under the
provisions of this Section, then Purchaser shall promptly give written notice to
Seller concerning such claim and Seller shall, at no expense to Purchaser,
defend the claim.
11.3 Purchaser's Indemnification. Purchaser agrees to defend,
indemnify, and hold harmless Seller from and against:
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11.3.1 Any and all claims, liabilities, and obligations of
every kind and description arising out of or related to the operation
of the business following Closing or arising out of Purchaser's failure
to perform obligations of Seller assumed by Purchaser pursuant to this
Agreement.
11.3.2 Any and all damage or deficiency resulting from any
material misrepresentation, breach of warranty or covenant, or
nonfulfillment of any agreement on the part of Purchaser under this
Agreement.
Purchaser's indemnity obligations under this Section 11.3 shall be
subject to the following: If any claim is asserted against Seller that would
give rise to a claim by Seller against Purchaser for indemnification under the
provisions of this Section, then Seller shall promptly give written notice to
Purchaser concerning such claim and Purchaser shall, at no expense to Seller,
defend the claim.
Section 12. Closing.
12.1 Time and Place. This Agreement shall be closed at Diamonstein,
Becker & Staley, P.L.C., at 5:00 p.m. on November 30, 1998, or at such other
time as the parties may agree in writing. If Closing has not occurred on or
prior to midnight, November 30, 1998, then any party may elect to terminate this
Agreement
12.2 Obligations of Seller at the Closing. At the Closing Seller shall
deliver to Purchaser one or more bills of sale and/or assignments conveying to
Purchaser all of Seller's interest in the Assets.
12.3 Obligations of Purchaser at the Closing. At the Closing Purchaser
shall deliver to Seller the Purchase Price.
12.4 Books and Records. This sale includes the books of account and
records of Seller's business.
12.5 Seller's Right to Pay. In the event Purchaser fails to make any
payment that Purchaser is required to pay to third parties under this Agreement,
Seller shall have the right, but not the obligation, to pay the same. Purchaser
will reimburse Seller for any such payment immediately upon Seller's demand. Any
such payment by Seller shall not constitute a waiver by Seller of any remedy
available by reason of Purchaser's default for failure to make the payments.
Section 13. Default.
13.1 Remedies. If Purchaser fails to perform any of the terms,
covenants, conditions, or obligations of this Agreement, time of payment and
performance being of the essence, then Seller, subject to the requirements of
the notice provided in this Agreement, may have any or all of the following
remedies:
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13.1.1 The right to retake control of the Assets and all
choses in action without any payment or compensation to Purchaser.
13.1.2 The right to exercise any other remedy available to the
Seller at law or in equity.
13.2 Notice of Default. Purchaser shall not be deemed in default for
failure to perform the terms, covenants, and conditions of this Agreement until
notice of the default has been given to Purchaser and Purchaser has failed to
remedy the default within thirty (30) days after the notice.
Section 14. Bulk Transfers. Intentionally Omitted.
Section 15. Miscellaneous Provisions.
15.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by a written agreement
signed by all of the parties hereto.
15.2 Notices. All notices, requests, demands, and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by hand or two days after being mailed by
certified or registered mail, return receipt requested, with postage prepaid to
the parties at their respective addresses.
15.3 Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of Virginia.
15.4 Computation of Time. In computing any period of time pursuant to
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall be included, unless it is a Saturday, Sunday
or a legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday or legal holiday.
15.5 Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor affect the interpretation of this Agreement.
15.6 Pronouns and Plurals. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons may require.
15.7 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement. Any
amendments to this Agreement must be in writing and signed by the party against
whom enforcement of that amendment is sought.
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15.8 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
15.9 Presumption. This Agreement or any Section thereof shall not be
construed against any party due to the fact that said Agreement or any Section
thereof was drafted by said party.
15.10 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purpose of the Agreement.
15.11 Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
15.12 Parties in Interest. Nothing herein shall be construed to be to
the benefit of any third party, nor is it intended that any provision shall be
for the benefit of any third party.
15.13 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
15.15 Tax Deferred Exchange. Purchaser and Seller request that this
transfer be treated as an Internal Revenue Code Section 1031 Tax Deferred
Exchange. The parties agree to cooperate in effecting the exchange in accordance
with Section 1031 of the Internal Revenue Code, including execution of any
documents that may be reasonably necessary to effect the exchange.
WITNESS, the following signatures as of the date first set forth above.
Ohio Key I, Inc.
By: /s/ C. John Knorr, Jr.
----------------------------
Its: President
Ohio Key II, Inc.
By: /s/ C. John Knorr, Jr.
----------------------------
Its: President
Chamberlin Hotel, L.L.C.
By: /s/ James Barggren
----------------------------
Its: President
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