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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) February 27, 1998
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Realty ReFund Trust
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(Exact Name of Registrant as Specified in its Charter)
Ohio
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(State or Other Jurisdiction of Incorporation)
001-07062 34-6647590
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(Commission File Number) (I.R.S. Employer Identification No.)
925 Euclid Avenue, Suite 1750, Cleveland, Ohio 44115
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(Address of Principal Executive Offices) (Zip Code)
(216) 622-0046
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(Registrant's Telephone Number, Including Area Code)
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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.
On February 27, 1998, RRF Limited Partnership ("RRFLP"), a Delaware limited
partnership controlled by its 13% sole general partner, Realty ReFund Trust
("RRF"), acquired all of the membership interests in Tucson St. Mary's Suite
Hospitality LLC, an Arizona limited liability company ("Tucson St. Mary's LLC"),
which owns the InnSuites Hotel Tucson St. Mary's, a 297-suite hotel located in
Tucson, Arizona. The acquisition occurred pursuant to the terms of the
Contribution Agreement, dated as of February 1, 1998, among James F. Wirth,
Chairman, President, Chief Executive Officer and Trustee of RRF, Gail J. Wirth,
his wife, and RRFLP.
Pursuant to the terms of the Contribution Agreement, Mr. and Mrs. Wirth
contributed their respective 50% membership interests in Tucson St. Mary's LLC
to the capital of RRFLP. The total consideration under the Contribution
Agreement was Ten Million Eight Hundred Twenty Thousand Dollars ($10,820,000),
paid by RRFLP as follows: RRFLP assumed a Six Million Dollar ($6,000,000)
mortgage on the Tucson St. Mary's LLC property payable to JDI Tucson, L.L.C.;
RRFLP delivered a One Million Dollar ($1,000,000) promissory note to Hospitality
Corporation International, an Arizona corporation owned by Mr. and Mrs. Wirth;
and the balance of the consideration consisted of 407,703 Class B Limited
Partnership Units in RRFLP delivered to Mr. and Mrs. Wirth, 26,589 Class A
Limited Partnership Units in RRFLP delivered to Mr. Marc Berg, a Trustee of RRF,
and 8,863 Class A Limited Partnership Units in RRFLP delivered to Mr. Kenneth
Sliwa as advisory fees, and 443,155 Class B Limited Partnership Units in RRFLP
issued to Mr. and Mrs. Wirth to be held in escrow by RRFLP and released to Mr.
and Mrs. Wirth pursuant to formulas measuring the achievement of projected
operational results by Tucson St. Mary's LLC. The total consideration received
pursuant to the Contribution Agreement was determined based upon an appraisal
conducted by an independent third party. RRF intends to utilize the assets
acquired by it pursuant to the Contribution Agreement in accordance with their
use prior to the acquisition.
Item 7. Financial Statements and Exhibits
(a) - (b) Financial Statements and pro forma financial information
will be filed, pursuant to the provisions of paragraph (a)(4)
of Item 7, in an amendment to this Current Report on Form 8-K
within 60 days after the date of this filing.
(c) Exhibits.
Contribution Agreement, dated as of February 1, 1998, by and
among RRF Limited Partnership, James F. Wirth and Gail J.
Wirth.
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Exhibit
No. Document Description
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2.1 Contribution Agreement, dated as of February 1, 1998,
by and among RRF Limited Partnership, James F. Wirth
and Gail J. Wirth.
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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.
Realty ReFund Trust
(Registrant)
Dated: March 16, 1998 By: /s/ Gregory D. Bruhn
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Name: Gregory D. Bruhn
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Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
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INDEX TO EXHIBITS
Exhibit
No. Document Description
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2.1 Contribution Agreement, dated as of February 1, 1998,
by and among RRF Limited Partnership, James F. Wirth
and Gail J. Wirth.
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EXHIBIT 2.1
CONTRIBUTION AGREEMENT
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CONTRIBUTION AGREEMENT, dated as of February 1,
1998, among JAMES F. WIRTH and GAIL J. WIRTH (collectively, the "Wirths") and
RRF LIMITED PARTNERSHIP, a Delaware limited partnership (the "Operating
Partnership").
W I T N E S S E T H
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WHEREAS, the Wirths each own fifty percent
(50%) membership interests (collectively, the "Interests") in Tucson St. Mary's
Suite Hospitality LLC, an Arizona limited liability company (the "Company") that
owns the real property identified on the Property Schedule attached hereto as
SCHEDULE I (the "Hotel"); and
WHEREAS, on the terms and subject to the
conditions set forth herein, the Wirths desire to contribute the Interests as a
contribution to the capital of the Operating Partnership, and the Operating
Partnership desires to accept such contributions in exchange for admitting the
Wirths as a limited partner in the Operating Partnership in accordance with the
terms and subject to the conditions set forth in the First Amended and Restated
Limited Partnership Agreement of the Operating Partnership (as the same may be
amended, modified or supplemented from time to time in accordance with its
terms, the "OP Agreement").
NOW, THEREFORE, in consideration of the
premises, mutual agreements, provisions and covenants contained herein, and for
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby expressly acknowledged, the Wirths and the Operating
Partnership do hereby covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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Section 1.1. CERTAIN DEFINITIONS. Capitalized
terms used but not otherwise defined herein shall have the meanings specified in
the OP Agreement.
ARTICLE II
CONTRIBUTION AND ADMISSION; APPORTIONMENTS
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Section 2.1. CONTRIBUTION AND ASSIGNMENT.
Subject to the satisfaction of the conditions specified in Sections 5.2 and 5.4,
the Wirths shall contribute the Interests ("Contributed Interests") to the
Operating Partnership by assigning all of the Wirths' right, title
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and interest in and to (i) the Company, together with any and all rights,
privileges, benefits, obligations and liabilities appertaining thereto,
including but not limited to all of the Wirths' right, title and interest as a
member of the Company in and to, subject to Section 2.3 hereof, the profits,
surplus, losses, capital, cash flow, rentals, contract rights, cash, accounts,
receivables, escrows, claims, chooses in action and other assets of such
Company, and (ii) all partner loans made by the Wirths to such Operating
Partnership except for the HCI Note (as hereinafter defined). The assignment and
transfer of Contributed Interests shall be accomplished by the execution and
delivery of an Assignment of Membership Interest, substantially in the form
attached hereto as EXHIBIT A, with respect to the Contributed Interests (the
"Assignment").
Section 2.2. ADMISSION AS A LIMITED PARTNER;
LIMITED PARTNERSHIP INTEREST. Subject to the satisfaction of the conditions
specified in Sections 5.2 and 5.3 and in consideration of the contribution of
the Contributed Interests to the Operating Partnership pursuant to the terms of
the OP Agreement, the Operating Partnership shall admit the Wirths as a limited
partner in the Operating Partnership in accordance with the terms and subject to
the conditions set forth in the OP Agreement. The Percentage Interest of the
aggregate Partnership Interest in the Operating Partnership to be received by
the Wirths in the Operating Partnership in respect of the Contributed Interests
shall be calculated and determined as specified on SCHEDULE II attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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Section 3.1. REPRESENTATIONS AND WARRANTIES OF
THE WIRTHS. The Wirths hereby represent and warrant,
jointly and severally, to the Operating Partnership that:
(a) the Company is a limited liability company
validly existing and in good standing under the laws of the
State of Arizona;
(b) they have all necessary right, power and
authority to enter into this Agreement and to perform their
obligations hereunder;
(c) they have duly executed and delivered this
Agreement and this Agreement constitutes a legal, valid and binding obligation
of the Wirths, enforceable against the Wirths in accordance with the terms
hereof, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium and other laws affecting
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enforceability of creditors' rights generally and general
principles of equity;
(d) the Wirths will acquire the limited
partnership interests in the Operating Partnership on the Closing Date for
investment and not with a view to the distribution (within the meaning of
section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"))
thereof;
(e) as of the date hereof, the Wirths are the
sole owners of the Interests in the Company and have good
title to such Interests, free and clear of all liens and
encumbrances;
(f) except as may be set forth in this
Agreement, there are no rights, subscriptions, options, warrants, conversion
rights or agreements of any kind outstanding (including rights of first offer
and rights of first refusal) to purchase or to otherwise acquire the Interests;
(g) the execution, delivery and performance of
this Agreement by the Wirths will not, with or without the giving of notice,
lapse of time or both, (i) violate, conflict with or constitute a default under
any term or condition of any term or provision of any judgment, decree, order,
statute, injunction, rule or regulation of a governmental unit applicable to the
Wirths, or of any material contract, agreement or instrument to which the Wirths
are a party or by which any of their properties or assets may be bound (the
violation of which would have a material adverse effect upon the Wirths or the
Operating Partnership) or (ii) result in the creation of any lien upon the
Interests other than in favor of the Operating Partnership.
Section 3.2. REPRESENTATIONS AND WARRANTIES OF
THE OPERATING PARTNERSHIP. The Operating Partnership
hereby represents and warrants to the Wirths that:
(a) it is duly organized as a limited
partnership and validly existing under the laws of the State of Delaware and is,
or at the Closing will be, duly qualified in each state in which it conducts
business;
(b) it has all necessary legal and contractual
right, power and authority to enter into this Agreement and to perform its
obligations hereunder, including the execution, delivery and performance of all
other Documents;
(c) it has duly authorized, executed and
delivered this Agreement and will have at the Closing duly authorized, executed
and delivered the other Documents and this Agreement constitutes, and at the
Closing, each of the
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other Documents will constitute, a legal, valid and binding obligation of the
Operating Partnership, enforceable against the Operating Partnership in
accordance with the terms hereof and thereof, except as such enforceability may
be limited by applicable bankruptcy, insolvency, moratorium and other laws
affecting enforceability of creditors' rights generally and general principles
of equity;
(d) none of the execution, delivery or
performance of this Agreement or the other Documents by the Operating
Partnership will, with or without the giving of notice, lapse of time or both,
violate, conflict with or constitute a default under any term or condition of
(A) the OP Agreement or (B) any term or provision of any judgment, decree,
order, statute, injunction, rule or regulation of a governmental unit applicable
to the Operating Partnership or any material contract, agreement or instrument
to which the Operating Partnership is a party or by which its properties or
assets may be bound (the violation of which, in the case of either (A) or (B),
would have a material adverse effect upon the Operating Partnership);
(e) upon execution of the OP Agreement by the
Wirths, the Wirths will be duly admitted as a limited
partner of the Operating Partnership; and
(f) the Operating Partnership will acquire the
Contributed Interests in the Company for investment and not with a view to the
distribution (within the meaning of section 2(11) of the Securities Act)
thereof.
ARTICLE IV
COVENANTS
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Section 4.1. RESTRICTIONS ON TRANSFER. The
Wirths shall not pledge, encumber, hypothecate, transfer, assign or convey any
Interest in any way prior to the Closing Date (or the termination of this
Agreement pursuant to Section 5.1 in the absence of a Closing).
Section 4.2. TRANSFER TAXES. The Operating
Partnership and, upon the specific request of the Operating Partnership, the
Wirths shall take any and all actions necessary in order to comply with the
provisions of any transfer tax laws and regulations applicable to this Agreement
or the conveyance of any Contributed Interest, including, without limitation,
the payment of any transfer tax which may be determined to be due in respect of
such Contributed Interest under any such law or regulation and the preparation,
execution and filing of any and all affidavits and questionnaires required by
any such law or regulation. The Wirths shall cooperate with the Operating
Partnership in the preparation of any such affidavits or questionnaires and
shall make available to the Operating
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Partnership any books and records of the Wirths used in the preparation of any
such affidavits or questionnaires. The Wirths shall pay any such tax which may
be determined to be due under any such law or regulation and, in the event any
such tax is paid by the Wirths, the Wirths shall be reimbursed at the Closing by
the Operating Partnership.
Section 4.3. FURTHER ASSURANCES. The Wirths
and the Operating Partnership agree, at any time and from time to time after the
Closing, to execute, acknowledge where appropriate and deliver such further
instruments and documents and to take such other action as any other party to
this Agreement may reasonably request in order to carry out the intents and
purposes of this Agreement.
Section 4.4. CLOSING COSTS; FEES AND EXPENSES.
Except as expressly provided herein, each party hereto shall bear all costs and
expenses incurred by such party in connection with the negotiation, preparation
and/or review of this Agreement and the OP Agreement and any other agreement or
instrument contemplated hereby and thereby, including the fees and expenses of
their respective auditors and attorneys. The Operating Partnership shall bear
all closing costs, including all filing and recordation fees, title insurance
premiums and charges, costs of legal opinions (other than those of the Wirths'
counsel), transfer taxes, all Hart-Scott costs whether incurred by the Wirths or
the Operating Partnership, costs incurred in connection with obtaining the
consent of any third parties, document production, duplication costs and other
similar costs and expenses incurred by them in connection with the Closing and
shall pay and reimburse the Wirths for all reasonable closing costs, including
all filing and recordation fees, document production, duplication costs and
other similar costs directly incurred by them (other than attorneys' fees,
except for attorneys' fees in the event that it is determined that the Wirths
shall be required to make a filing under Hart-Scott with respect to the
transactions contemplated by this Agreement) in connection with the Closing.
ARTICLE V
CLOSING
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Section 5.1. CLOSING. The closing of the
transactions contemplated hereby (the "Closing") shall occur as of 12:01 a.m.
(MST) on February 1, 1998, or such later date as the Operating Partnership shall
specify (the "Closing Date"), at the offices of Thompson Hine & Flory LLP, 3900
Key Center, 127 Public Square, Cleveland, Ohio 44114, or at such other location
as the Operating Partnership shall specify. The Operating Partnership agrees
that any such notice of a change in the Closing Date or in the proposed location
of the Closing shall be
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effective only if given in writing and delivered to Wirths not less that the
second business day prior to (a) the date on which the Closing was to have
occurred, in the case of a change in the proposed Closing Date, and (b) the
Closing Date, in the case of a change in the proposed location of the Closing.
Section 5.2. CONDITIONS TO ALL OBLIGATIONS.
The obligations of the Wirths and the Operating Partnership to consummate the
transactions contemplated hereby are subject to fulfillment or waiver (by means
of a written instrument signed by each of the Operating Partnership and the
Wirths) of all of the following conditions on or prior to the Closing Date:
(a) all consents and waivers of third parties
requisite to the consummation of the Closing and the effectiveness of the OP
Agreement (including waivers of requirements, puts, options, rights of first
refusal and other similar rights, if any), shall have been obtained by the
Operating Partnership.
Section 5.3. CONDITIONS TO OBLIGATIONS OF THE
OPERATING PARTNERSHIP. The obligations of the Operating Partnership to
consummate the transactions contemplated hereby is subject to fulfillment or
waiver (by means of a written instrument signed by the Operating Partnership) of
all of the following conditions on or prior to the Closing Date:
(a) the Wirths shall have executed and
delivered to the Operating Partnership one fully completed
Assignment with respect to all of the Contributed
Interests;
(b) the REIT shall have received an original
OP Agreement executed and delivered by each other party
thereto;
(c) The Operating Partnership shall have
received a certificate, dated the Closing Date, to the effect that all of the
representations and warranties of the Wirths set forth in Section 3.1 are true
and correct as of the Closing Date as if made again on and (except to the extent
any such representation and warranty expressly specifies otherwise) as of such
date.
Section 5.4. CONDITIONS TO OBLIGATIONS OF THE
WIRTHS. The obligations of Wirths to consummate the transactions contemplated
hereby are subject to fulfillment or waiver (by means of a written instrument
signed by the Wirths) of all of the following conditions on or prior to the
Closing Date:
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(a) the Wirths shall have received an original,
fully completed Assignment with respect to each of the Contributed Interests
executed by each party thereto other than the Wirths;
(b) the Wirths shall have received an original
OP Agreement executed and delivered by each party thereto
other than the Wirths;
(c) the Wirths shall have received a
certificate, dated the Closing Date, of an authorized officer of the REIT to the
effect that (i) all of the conditions set forth in Sections 5.2 and 5.3 have
been satisfied or waived as provided therein, and (ii) all of the
representations and warranties of the Operating Partnership set forth in Section
3.2 are true and correct as of the Closing Date as if made again on and (except
to the extent any such representation and warranty expressly specifies
otherwise) as of such date. Upon delivery thereof, such certificate shall
constitute the representation and warranty with respect to the matters stated
therein of the Operating Partnership to the Wirths for the purposes of this
Agreement;
ARTICLE VI
MISCELLANEOUS
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Section 6.1. TIME OF THE ESSENCE. Time of
performance is of the essence of this Agreement.
Section 6.2. SUCCESSORS AND ASSIGNS. This
Agreement shall be binding on the parties hereto and their respective heirs,
executors, administrators, successors and assigns. The Operating Partnership may
not assign this Agreement without the prior written consent of the Wirths.
Section 6.3. GOVERNING LAW. This Agreement
shall be governed by and construed in accordance with the
internal laws of the State of Arizona.
Section 6.4. NOTICES. All notices, demands or
requests made pursuant to, under or by virtue of this Agreement must be in
writing and mailed to the party to which the notice, demand or request is being
made by certified or registered mail, return receipt requested, postage prepaid,
as follows:
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To the Wirths:
James F. Wirth and
Gail J. Wirth
c/o InnSuites Hotels LLC
1615 East Northern Avenue
Suite 105
Phoenix, Arizona 85020-3998
To the Operating Partnership:
c/o Realty ReFund Trust
1750 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44114
Attn: Executive Vice President
With a copy to:
James B. Aronoff, Esq.
Thompson Hine & Flory LLP
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
Any notice given in accordance with the provisions of this Section 6.4 shall be
deemed given when actually delivered or when proper delivery is refused by the
addressee.
Section 6.5. EXCULPATION. No partner (other
than any party hereto and the REIT in its capacity as general partner of the
Operating Partnership), shareholder, officer, director, agent or employee of a
party hereto, shall have any individual or personal liability hereunder.
Section 6.6. ENTIRE AGREEMENT; MODIFICATION OR
AMENDMENT. This Agreement together with the exhibits hereto and all agreements
referred to herein and therein, contains the entire understanding of the parties
with respect to its subject matter, and the parties hereto may amend this
Agreement only by a writing signed by each party against whom such amendment may
be enforced.
Section 6.7. CAPTIONS. The Article and
Section captions herein are for convenience of reference only, do not constitute
part of this Agreement and shall not be deemed to limit or otherwise affect any
of the provisions hereof.
Section 6.8. COUNTERPARTS. This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same Agreement, and shall become effective when one or more counterparts
have been signed by
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each of the parties hereto and delivered to each of the
other parties.
Section 6.9. SURVIVAL. This Agreement will
survive the Closing.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed and delivered on the
day and year first above written.
/S/ JAMES F. WIRTH
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James F. Wirth
/S/ GAIL J. WIRTH
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Gail J. Wirth
RRF LIMITED PARTNERSHIP
By: Realty ReFund Trust, its general
partner
By: /S/ GREGORY D. BRUHN
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Gregory D. Bruhn,
Executive Vice President
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SCHEDULE I
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Legal Description of the Hotel
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Schedule I
Those parts of Blocks 3, 4, 7 and 8 of Goldschmidt's Addition, to the City of
Tucson, Pima County, Arizona, according to the Plat of record in the Office of
the Pima County Recorder in Book 1 of Maps, Page 3 and of Lots 16 and 17 of
Section 11, Township 14 South, Range 13 East, Gillla and Salt River Base and
Meridian, Pima County, Arizona, described as follows:
Beginning at the Southeast corner of Lot 10, Block 7 of said
Goldschmidt's Addition;
Thence South 73 degrees 36 minutes 40 seconds West (South 73 degrees 36 minutes
38 seconds West, measured), along the North right of way of Franklin Street, a
distance of 743.97 feet (744.29 feet measured) to the East right of way of the
Tucson Controlled Access Highway, Arizona State Highway Project F. I. 141,
according to the map filed in the Pima County Recorder's Office on March 3, 1949
in instrument No. 6675;
Thence Northerly along said East right of way on a Spiral Curve, a distance of
442.05 feet (441.74 feet measured);
Thence along a curve to the right having a central angle of 47 degrees 30
minutes 00 seconds a radius of 641.20 feet, a distance of 531.58 feet;
Thence Northeasterly along a spiral curve, a distance of 158.87 feet (158.55
feet measured) to the West right of way of the alley running North and South
through said Blocks 3, 4 and 7 of Goldschmidt's Addition;
Thence South 14 degrees 32 minutes 18 seconds East (South 14 degrees 33 minutes
24 seconds East, measured), along the West line of said alley, a distance of
695.11 feet (695.23 feet measured) to the Point of Beginning;
and
Those parts of Blocks 3 and 4 of Goldschmidt's Addition to the City of Tucson,
Pima County, Arizona, according to the plat of record in the office of the Pima
County Recorder in Book 1 of Maps, Page 3, described as follows:
Beginning at a point on the East line of said Block 4, said point being 42.00
feet Southerly from the Northeast corner of Lot 1, Block 4;
Thence South 75 degrees 17 minutes 00 seconds West (South 75 degrees 34 minutes
37 seconds West, measured), a distance of 170.09 feet (170.13 feet measured) to
the West line of Block 4;
Thence North 14 degrees 32 minutes 18 seconds West (North 14 degrees 30 minutes
16 seconds West, measured), along the West line of said Block 4, a distance of
37.00 feet to the Northwest corner of Lot 1, Block 4;
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Thence continue North 14 degrees 32 minutes 18 seconds West (North 14 degrees 30
minutes 77 seconds West measured), along the West line of Block 3, a distance of
93.84 feet (93.77 feet measured) to the South right of way of the Tucson
Controlled Access Highway, Arizona State Highway Project F.I. 141, according to
the map filed in the Pima County Recorder's Office on March 3, 1949 as
instrument No. 6675;
Thence Easterly along said South right of way on a spiral curve, a distance of
124.62 feet (124.57 feet measured);
Thence North 77 degrees 23 minutes 51 seconds East (North 77 degrees 45 minutes
26 seconds East measured), a distance of 45.51 feet (45.54 feet measured) to the
East line of Block 3;
Thence South 14 degrees 32 minutes 26 seconds East (South 14 degrees 32 minutes
59 seconds East, measured), along the East line of said Blocks 3 and 4, a
distance of 126.25 feet (126.75 feet measured) to the Point of Beginning.
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SCHEDULE II
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Calculation of Units
1. The consideration payable by the Operating
Partnership for the Hotel shall be Ten Million
Eight Hundred Twenty Thousand Dollars
($10,820,000).
2. The Consideration shall be payable as follows:
a. The Operating Partnership shall assume a
$6,000,000 mortgage loan payable to JDI
Tucson, L.L.C.
b. The Operating Partnership shall deliver to
Hospitality Corporation International, or an
affiliate corporation wholly-owned by James F.
Wirth, a promissory note (the "HCI Note") in
the principal amount of $1,000,000. The
principal balance of the Note shall be due and
payable on February 1, 1999. Interest only
shall be paid monthly at seven percent (7%).
c. The balance of Consideration shall consist of
Class B Partnership Units in the Operating
Partnership. The number of Class B
Partnership Units to be delivered at closing
shall be equal to 50% of the above-calculated
balance of the Consideration, less 3% of such
balance to be delivered to Marc Berg and 1% of
such balance of the consideration to be
delivered to Kenneth Sliwa pursuant to
paragraph 2(d) below, divided by 4.31. The
balance of the Class B Partnership Units shall
be issued and held in escrow by the Operating
Partnership, provided, that such Units shall
not be entitled to distributions from the
Operating Partnership so long as they are held
in escrow. The terms of this escrow shall
provide that on the 90th day following the
close of the first and second fiscal years
(1998 & 1999) following the Closing: (i) the
number of Units held in escrow shall be
reduced by any amount, if any, by which the
Hotel's Net Operating Income is less than the
amount projected for that year times the
discount factor used in the in the Appraisal
of the Hotel prepared by Charles V. Singleton,
dated January 19, 1998 (the "Appraisal")
divided by 4.31 or (ii) in each case, one-
third (1/3) of the Units held in escrow shall
be released by the Operating Partnership in
the event that for such fiscal year, the
Hotel's Net Operating Income meets or exceeds
the amount projected for such year in the
Appraisal and provided further that if the
Hotel shall produce sufficient Net Operating
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Income for such fiscal year to exceed the amount of Net
Operating Income projected by the Appraisal for the
following fiscal year then an additional one-third (1/3)
of the Units held in escrow shall be released at such
time. Ninety (90) days after the close of the third fiscal
year, the number of Units held in escrow shall be reduced
by the sum of: (i) any amount, if any, by which the
Hotel's Net Operating Income is less than the amount
projected for that year, times the discount factor used in
the Appraisal for that year divided by 4.31, and (ii) any
amount, if any, by which a recalculation of the Appraisal
using the first three years' actual Net Operating Income
would be less than the total consideration furnished for
the Hotel ($10,820,000), divided by 4.31.
d. James F. and Gail Wirth shall direct that
three percent (3%) and one percent (1%),
respectively, of the balance of the
consideration shall be paid by the issuance to
Marc Berg and Kenneth Sliwa of Class A
Partnership Units, as an advisory fee. The
number of Class A Partnership Units to be
delivered shall be equal to the 4% balance
divided by 4.31.
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EXHIBIT A
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Form of Assignment and Assumption of Membership Interest
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ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTEREST
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Tucson Saint Mary's Suite Hospitality L.L.C.
THIS ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP
INTEREST ("Assignment") is made as of the 1st day of February, 1998 by and
between ______________ (the "Assignor") and RRF LIMITED PARTNERSHIP, a Delaware
limited partnership ("Assignee").
W I T N E S S E T H:
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WHEREAS, Assignor holds a fifty percent (50%)
membership interest in Tucson Saint Mary's Suite Hospitality L.L.C., an Arizona
limited liability company (the "Company"), which is governed by the certain
Operating Agreement of Tucson Saint Mary's Suite Hospitality L.L.C. dated as of
April 29, 1997 (the "Operating Agreement");
WHEREAS, the Company and Assignee have entered
into that certain option agreement dated as of January 30, 1998 (the "Option
Agreement") pursuant to which the Company has agreed to sell to Assignee the
InnSuites Hotel located in Tucson, Arizona owned by the Company (the "Hotel") in
consideration of the delivery to Assignee of, among other things, limited
partnership units in Assignee; and
WHEREAS, the Option Agreement provides for the
sale of the Hotel through the transfer of the membership
interests in the Company to Assignee;
NOW, THEREFORE, Assignor and Assignee hereby agree
as follows:
1. ASSIGNMENT. The Assignor hereby sells,
conveys and assigns to Assignee, without recourse, all of Assignor's right,
title and interest in the Company and the Operating Agreement.
2. ASSUMPTION. Assignee, by its execution
hereof, agrees to accept the foregoing assignment and to assume, subject to the
terms of the Operating Agreement, all of Assignor's rights, title and
obligations of Assignor under the Operating Agreement.
3. INDEMNIFICATION. Assignee indemnifies and
agrees to defend and hold Assignor harmless from and against any and all costs,
expenses (including, without limitation, reasonable attorneys' fees and
expenses) damages, claims or liabilities that Assignor may suffer or incur and
that arise out of this Company from and after the date of this Assignment.
4. GOVERNING LAW. This Assignment shall be
governed by and construed in accordance with Arizona law.
<PAGE> 17
5. SUCCESSORS AND ASSIGNS. This Assignment
shall be binding upon and inure to the benefit of, the parties hereto and their
respective successors and assigns.
6. COUNTERPARTS. This Assignment may be
executed in multiple counterparts each of which shall be deemed an original and
all of which shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have
executed this Assignment and Assumption of Membership Interest as of the date
first above written.
ASSIGNOR:
-------------------------------
------------------
ASSIGNEE:
RRF LIMITED PARTNERSHIP, a
Delaware limited partnership
By: REALTY REFUND TRUST, an
unincorporated Ohio business
trust, its general partner
By: ________________________
Title: __________________
