Exhibit 10.1

THE PARK CENTRAL HOTEL

PURCHASE AND SALE AGREEMENT

BETWEEN

PARK CENTRAL HOTEL (DE) LLC,

a Delaware limited liability company,

and

PCH TIC OWNER LLC,

a Delaware limited liability company,

and

PCH OPERATING LESSEE OWNER CORP.,

a Delaware corporation,

COLLECTIVELY, AS SELLER

AND

LASALLE HOTEL OPERATING PARTNERSHIP, L.P.,

a Delaware limited partnership,

AS PURCHASER

As of June 3, 2011

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TABLE OF CONTENTS

 

          Page  

ARTICLE I PURCHASE AND SALE

     2   

        1.1

  

Agreement of Purchase and Sale

     2   

        1.2

  

Property Defined

     5   

        1.3

  

Permitted Exceptions

     6   

        1.4

  

Purchase Price

     6   

        1.5

  

Payment of Purchase Price

     6   

        1.6

  

Earnest Money

     7   

        1.7

  

Management Agreement

     7   

        1.8

  

Excluded Liabilities

     8   

        1.9

  

Assumed Liabilities

     8   

ARTICLE II TITLE AND SURVEY

     8   

        2.1

  

Title Report

     8   

        2.2

  

Survey

     8   

        2.3

  

Approval of Title

     9   

        2.4

  

Conveyance of Title

     10   

        2.5

  

Title Policy

     11   

        2.6

  

Assignment of Mortgage

     11   

ARTICLE III INSPECTION

     12   

        3.1

  

Right of Inspection

     12   

        3.2

  

Seller Due Diligence Materials

     13   

        3.3

  

Right of Termination

     14   

ARTICLE IV CLOSING

     15   

        4.1

  

Time and Place; Pre-Closing

     15   

        4.2

  

Seller’s Closing Obligations and Deliveries

     16   

        4.3

  

Purchaser’s Closing Obligations and Deliveries

     19   

        4.4

  

Prorations, Credits and Other Adjustments

     20   

        4.5

  

Closing Costs

     28   

        4.6

  

Conditions Precedent to Obligation of Purchaser

     30   

        4.7

  

Conditions Precedent to Obligation of Seller

     31   

        4.8

  

Failure or Waiver of Conditions Precedent

     31   

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          Page  

        4.9

  

Alcoholic Beverage License

     32   

        4.10

  

Designation Agreement

     33   

ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS

     33   

        5.1

  

Representations and Warranties of Seller

     33   

        5.2

  

Representations with respect to Lessee LLC:

     37   

        5.3

  

Limitations on Representations and Warranties

     38   

        5.4

  

Knowledge Defined

     38   

        5.5

  

Survival of Seller’s Representations and Warranties

     38   

        5.6

  

Covenants of Seller

     39   

        5.7

  

Representations and Warranties of Purchaser

     41   

        5.8

  

Survival of Purchaser’s Representations and Warranties

     43   

        5.9

  

Covenants of Purchaser and of Seller

     43   

        5.10

  

Employees

     45   

        5.11

  

No Action Letter

     52   

        5.12

  

Purchaser’s Indemnification for Post-Closing Claims

     52   

        5.13

  

Seller’s and Highgate Guarantor’s Indemnification for Certain Pre-Closing Claims

     53   

ARTICLE VI DEFAULT

     54   

        6.1

  

Default by Purchaser

     54   

        6.2

  

Default by Seller

     54   

        6.3

  

Right to Cure Defaults

     55   

ARTICLE VII RISK OF LOSS

     56   

        7.1

  

Minor Damage

     56   

        7.2

  

Major Damage

     56   

        7.3

  

Definition of “Major” Loss or Damage

     56   

        7.4

  

Business Interruption Insurance

     57   

ARTICLE VIII COMMISSIONS

     57   

        8.1

  

Brokerage Commissions

     57   

ARTICLE IX DISCLAIMERS AND WAIVERS

     57   

        9.1

  

No Reliance on Documents

     57   

        9.2

  

DISCLAIMERS

     58   

        9.3

  

Repairs, Reserves, and Capital Expenditures

     59   

        9.4

  

Duration and Claims Procedures and Limitations on Certain Obligations

     60   

 

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          Page  

        9.5

  

Effect and Survival of Disclaimers

     60   

ARTICLE X MISCELLANEOUS

     61   

        10.1

  

Confidentiality

     61   

        10.2

  

Public Disclosure

     61   

        10.3

  

Assignment

     61   

        10.4

  

Notices

     61   

        10.5

  

Modifications

     62   

        10.6

  

Calculation of Time Periods; Time is of the Essence

     63   

        10.7

  

Successors and Assigns

     63   

        10.8

  

Entire Agreement

     63   

        10.9

  

Further Assurances

     63   

        10.10

  

Counterparts; Facsimile Signatures

     63   

        10.11

  

Severability

     63   

        10.12

  

Applicable Law

     64   

        10.13

  

No Third Party Beneficiary

     64   

        10.14

  

Captions

     64   

        10.15

  

Construction

     64   

        10.16

  

Termination of Agreement

     64   

        10.17

  

Attorneys Fees

     64   

        10.18

  

No Waiver

     64   

        10.19

  

No Reservation of Property

     65   

        10.20

  

No Recordation

     65   

        10.21

  

1031 Exchange

     65   

        10.22

  

Cooperation with Auditors

     65   

 

Schedule 1.1(a) -   

Legal Description of the Hotel Unit and Common Elements Interest

Schedule 1.1(e)-1-   

Service Contracts

Schedule 1.1(e)-2-   

Equipment Leases

Schedule 1.1(f)(iii)-   

Certain Licenses, Franchises and Permits

Schedule 1.1(h) -   

Leases

Schedule 1.5(c) -   

Allocations of Real and Personal Property

Schedule 4.4.12 -   

Vouchers

Schedule 4.4.15 -   

Projection of Credit Pursuant to Section 4.4.15

Schedule 5.1(d) -   

Litigation

Schedule 5.1(f) -   

Violations

 

iii

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Schedule 5.1(j)   -

  

Collective Bargaining Agreement Matters

Schedule 5.1(n)  -

  

Financial Statements

Schedule 5.2(a)  -

  

Lessee LLC Organizational Documents

Schedule 5.4      -

  

Materials Provided to Purchaser

Schedule 5.6(a)(vi)-

  

Capital Projects

Schedule 5.10(f)-

  

Collective Bargaining Agreements

 

Exhibit A

   -   

Deed

Exhibit B

   -   

Bill of Sale

Exhibit C

   -   

Assignment of Contracts

Exhibit D

   -   

Assignment of Leases

Exhibit E

   -   

FIRPTA Certificate

Exhibit F

   -   

Common Charge Statement

Exhibit G

   -   

Designation Agreement

Exhibit H

   -   

Wire Instructions

Exhibit I

   -   

Intentionally Omitted

Exhibit J

   -   

Purchaser’s Condominium Affidavit

Exhibit K

   -   

Escrow Agreement

Exhibit L

   -   

Holdback Escrow Agreement

Exhibit M

   -   

IWA Assumption Agreement

Exhibit N

   -   

New Management Agreement

Exhibit O

   -   

Form of Tenant Estoppel Certificate

Exhibit O-1

   -   

Form of Starbucks Estoppel Certificate

Exhibit P

   -   

Form of Letter to Auditors

Exhibit Q

   -   

Form of Registration Rights Agreement

Exhibit R

   -   

Form of Assignment of Membership Interests

 

iv

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PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of June 3, 2011
(the “Effective Date”), by and between PARK CENTRAL HOTEL (DE) LLC, a Delaware
limited liability company (“PCH”), PCH TIC OWNER LLC, a Delaware limited
liability company (“TIC”), and PCH OPERATING LESSEE OWNER CORP., a Delaware
corporation (“Leaseco”, each of PCH, TIC and Leaseco, collectively referred to
herein as “Seller”), and LASALLE HOTEL OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership (“Purchaser”). In addition, PCH and TIC are sometimes
collectively referred to herein as the “TIC Sellers”.

W I T N E S S E T H:

WHEREAS, Seller desires to sell the Property (as defined below) to Purchaser and
Purchaser desires to purchase the Property from Seller, all on the terms and
conditions set forth in this Agreement;

WHEREAS, the Property is currently owned by PCH;

WHEREAS, through a series of transactions and conveyances (collectively, the
“Restructuring”) it is anticipated that prior to the Closing Date (a) an
undivided percentage interest in the Property will be owned by PCH, (b) the
remaining undivided percentage interest in the Property will be owned by TIC,
(c) Lessee LLC (as hereinafter defined) will be formed by Leaseco and the Lessee
Property (as hereinafter defined), to the extent transferable, will be conveyed
to Lessee LLC, (d) Lessee LLC will enter into a lease (the “Operating Lease”),
as lessee, with TIC Sellers, and (e) Lessee LLC, as sublessor, will enter into a
sublease the (“Sublease”) with PCH; and, if the Restructuring occurs, then each
of PCH and TIC would act in its own independent capacity in connection with this
Agreement, it being understood that each of its rights and obligations in
connection with the matters that are the subject of this Agreement are as
specified in this Agreement; and

WHEREAS, (a) the consent of the Lenders (as hereinafter defined) is required to
implement the Restructuring and (b) the TIC Sellers and their respective parent
entities must agree to the terms of the Restructuring documents ((a) and (b),
collectively, the “Restructuring Consent”); provided, however, that the
Restructuring Consent is not a condition of Closing and, if the Restructuring
Consent is not obtained as provided herein, the parties shall proceed with the
transactions set forth herein without the Restructuring, subject to the terms
and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties, Purchaser and Seller agree as
follows:

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ARTICLE I

PURCHASE AND SALE

 

1.1

Agreement of Purchase and Sale . Subject to the terms and conditions hereinafter
set forth, at the Closing, Seller agrees to sell, convey, transfer, assign and
deliver to Purchaser, and Purchaser agrees to purchase and accept from Seller,
the following:

(a)(i) the condominium unit designated as the “Hotel Unit” in that certain
Seventh Amendment to Declaration dated September 30, 2002 recorded November 20,
2003 as CRFN 2003000466814, as amended by that certain Eighth Amendment to
Declaration dated as of June 15, 2005 recorded July 28, 2005 as CFRN
2005000420712 and by that certain Ninth Amendment to Declaration dated as of
January 2, 2007 recorded March 1, 2007 as CFRN 2007000112631 (as so amended, the
“Condominium Declaration”), which is located in the building (the “Building”)
known as The Park Central situated at 870 Seventh Avenue, New York, New York,
and described on the tax maps of the Real Property Assessment Department of The
City of New York and on the Floor Plans of the Building, certified by C.K.
Architect, P.C., on December 19, 1996, and filed with the Real Property
Assessment Department of The City of New York on December 24, 1996, as
Condominium Plan No. 958 and also filed in the Register’s Office on December 27,
1996, as Map No. 5412, as further amended by Condominium Plan No. 958A filed in
the Register’s Office on August 4, 1997 as Map No. 5465, as further amended by
Condominium Plan No. 958B filed in the Register’s Office on February 26, 1998 as
Map No. 5493, as further amended by Condominium Plan No. 958C filed in the
Register’s Office on July 8, 1998 as Map No. 5522, as further amended by
Condominium Plan No. 958D filed in the Register’s Office on October 10, 2001 as
Map No. 5831, as further amended by Condominium Plan No. 958E filed in the
Register’s Office on December 13, 2001 as Map No. 5852, as further amended by
Condominium Plan No. 958F filed in the Register’s Office on June 12, 2002 as Map
No. 5900, as further amended by Condominium Plan No. 958G filed in the
Register’s Office on July 1, 2005 (such maps hereinafter collectively referred
to as the “Tax Lot Drawings”). and (ii) the Hotel Unit’s undivided interest in
the Common Elements (as such term is defined in the Condominium Declaration)
(the “Common Elements Interest”). The Hotel Unit and the Common Elements
Interest are more particularly described on Schedule 1.1(a) attached hereto and
the by-laws attached to the Condominium Declaration are herein referred to as
the “By-Laws”;

(b) that portion of the Building and any other improvements and fixtures located
in the Hotel Unit, all of which are currently being operated as that certain
hotel commonly known as “Park Central New York” (the “Hotel”), including,
without limitation, 934 hotel rooms, an owner’s suite, a general manager’s
suite, meeting facilities, conference rooms, restaurants, fitness center and
retail facilities and the office space which is currently occupied by Manager
(defined below), all as more particularly described in the Condominium
Declaration and the Tax Lot Drawings (the property described in this clause
(b) of Section 1.1 being herein referred to collectively as the “Improvements”);

 

2

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(c) subject to Section 1.2(b) below, all tangible personal property located in
the Hotel Unit or within the Improvements and used by Seller or Manager in
connection with the operation of the Hotel Unit and Improvements, including,
without limitation, appliances, furniture, furnishings, equipment, carpeting,
draperies and curtains, tools and supplies, decorations, china, glassware,
linens, silver, utensils and other items of personal property (excluding cash
and deposit accounts), in all cases subject to (i) depletion, resupply,
substitution, replacement and disposition in the ordinary course of business in
accordance with the provisions of this Agreement, and (ii) the provisions of
subparagraph (g) below (the included property set forth in this Section 1.1(c)
being herein referred to collectively as the “Personal Property”);

(d) subject to Section 4.4 below, all contracts or reservations for the use of
guest rooms, ballroom and banquet facilities, conference facilities, meeting
rooms or other facilities of the Hotel or located within the Improvements
(“Bookings”), together with any deposits collected by Seller with respect to
Bookings scheduled to occur on or after the Closing Date;

(e) all contracts and agreements (collectively, the “Service Contracts”) entered
into by Seller relating to the upkeep, repair, maintenance or operation of the
Hotel Unit, the Improvements or the Personal Property or other property used in
connection with the operation of the Hotel which are (i) listed on Schedule
1.1(e)-1 attached hereto but excluding the Management Agreement (as defined
below), and any Service Contracts that are terminated on or before Closing
pursuant to the terms of this Agreement, (ii) listed on Schedule 1.1(e)-2 (the
“Equipment Leases”), or (iii) entered into by Seller after the Effective Date in
accordance with the terms of this Agreement, in each case, to the extent the
same are transferable, which shall be jointly confirmed by Seller and Purchaser
during the Inspection Period, or the Seller and Purchaser obtain any consent
necessary to effectuate such a transfer;

(f) (i) all existing warranties and guaranties issued or assigned to Seller in
connection with the Improvements or the Personal Property, in each case, to the
extent the same are transferable or the Seller and Purchaser obtain any consent
necessary to effectuate such a transfer; (ii) all of Seller’s right, title and
interest in and to all names, marks, logos and designs, used by Seller solely in
the operation or ownership of the Hotel Unit, the Improvements or the Personal
Property or any part thereof, if any (and, except as expressly set forth herein,
Purchaser acknowledges that Seller expressly disclaims any representation or
warranty, express or implied, regarding (A) ownership, right to use or
registration of any names, marks, logos, designs or other intellectual property,
or (B) whether use of any intellectual property violates any ownership or other
rights of any third parties), in each case, to the extent the same are
transferable or the Seller and Purchaser obtain any consent necessary to
effectuate such a transfer; (iii) all licenses, franchises and permits owned by
Seller and used in or relating to the ownership, occupancy or operation of the
Hotel Unit, the Improvements or the Personal Property or any part thereof,
including those set forth in Schedule 1.1(f)(iii), subject to Purchaser’s
compliance with any limitations or restrictions on transfer or assignment of any
computer-related materials or software which are contained in any license or
similar agreement, in each case, to the extent the same are transferable or the
Seller and

 

3

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Purchaser obtain any consent necessary to effectuate such a transfer; (iv) all
of Seller’s right, title and interest in and to all telephone numbers, TWX
numbers, post office boxes, signage rights, utility and development rights and
privileges, general intangibles, business records, prepaid marketing materials,
site plans, surveys, environmental and other physical reports, plans and
specifications and operating manuals pertaining to the Hotel Unit, the
Improvements and the Personal Property, in each case, to the extent the same are
transferable or the Seller and Purchaser obtain any consent necessary to
effectuate such a transfer; and (v) all websites, domains and e-mail addresses
used exclusively for the Hotel, including access to the FTP files of the
websites to obtain website information and content pertaining to the Hotel (the
property described in this clause (f) of Section 1.1 being herein referred to
collectively as the “Intangibles”);

(g)(i) all food and beverages (subject to any legal restrictions pertaining to
the sale or transfer of alcoholic beverages) (the “Food and Beverage
Inventory”); (ii) inventory held for sale to Hotel guests and others in the
ordinary course of business including all opened and unopened retail inventory
in any area at the Hotel conducting retail sales; (iii) engineering, maintenance
and housekeeping supplies, including soap and cleaning materials, fuel and
materials; stationery and printing items and supplies; and (iv) other supplies
of all kinds, whether used, unused or held in reserve storage for future use in
connection with the maintenance and operation of the Hotel Unit, the
Improvements or the Personal Property, in each case to the extent located at the
Hotel or in storage for the benefit of the Hotel, together with any additions
thereto between the Effective Date and Closing (as defined below) and subject to
depletion, resupply, substitution, replacement and disposition in the ordinary
course of business in accordance with the provisions hereof (all of the
foregoing being referred to herein as the “Consumable Inventory”);

(h) all leases for the lease and occupancy of space at the Hotel (collectively,
the “Leases”) listed and described on Schedule 1.1(h) attached hereto and made a
part hereof, including any deposits relating to such Leases held by Seller which
are listed on Schedule 1.1(h) attached hereto or collected by Seller after the
date hereof and not refunded to the tenants. For purposes of this Agreement, the
term “Leases” does not include Bookings;

(i) all accounts receivable of the Seller with respect to the Hotel and all
related operations which are outstanding and less than ninety (90) days past due
as of the Closing Date (collectively, the “Receivables”) (which receivables are
not included in the Purchase Price and shall be purchased by Purchaser at
Closing for an amount equal to 97.5% of the amount of those accounts receivable
as set forth on the Hotel’s most current balance sheet);

(j) subject to Section 4.4.9 hereof, Seller’s interest in any cash held by
Manager (defined below) at the Hotel as of the Cut-Off Time (as defined below),
whether held in the name of Seller, the Hotel or Manager and owned by Seller
(collectively, the “House Bank Funds”). Purchaser expressly acknowledges and
agrees that the Property to be transferred to Purchaser pursuant to this
Agreement does not include any reserve or other accounts created or maintained
by or on behalf of Seller or Manager in connection with the ownership or
operation of the Hotel;

 

4

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(k) books and records located at the Hotel or in the possession of Seller or
Manager which relate exclusively to the Hotel (including guest information), but
expressly excluding all documents and other materials which (A) are legally
privileged or constitute attorney work product, (B) are subject to an applicable
law or, to the extent disclosed to Purchaser prior to Closing, confidentiality
agreement prohibiting their disclosure by Seller (unless such disclosure is not
prohibited if Purchaser agrees to comply with the terms of any such
confidentiality agreement and Purchaser so agrees), (C) constitute confidential
internal assessments, reports, studies, memoranda, notes or other correspondence
prepared by or on behalf of Seller or an Affiliate thereof or (D) accounting
records (the included books and records set forth in this Section 1.1(k), the
“Books and Records”); and

(l) If the Restructuring Consent has been obtained and the Restructuring has
been implemented, all of the limited liability company interests in PCH
Operating Lessee LLC, a Delaware limited liability company (“Lessee LLC”, and
such interests, the “Membership Interests”), whose assets will consist of its
rights under the Operating Lease and the Lessee Property.

 

1.2

Property Defined.

(a)(i) The Hotel Unit, the Common Elements Interest and the Improvements are
sometimes collectively referred to herein as the “Real Property”, (ii) the
Personal Property, the Bookings, the Service Contracts, the Intangibles, the
Consumable Inventory, the Receivables, the House Bank Funds and the Books and
Records, to the extent transferred to Lessee LLC in connection with the
Restructuring, are sometimes collectively referred to herein as the “Lessee
Property” and (iii) the Real Property, the Personal Property, the Bookings, the
Service Contracts, the Intangibles, the Consumable Inventory, the Leases, the
Receivables, the House Bank Funds, the Books and Records and (to the extent the
Restructuring Consent has been obtained and the Restructuring has been
implemented) the Membership Interests are hereinafter sometimes referred to
collectively as the “Property”; provided that, the Purchase Price does not
include, and shall be adjusted with respect to the House Bank Funds, the
Receivables, the Food and Beverage Inventory and the other adjustment items to
the extent described in Section 4.4 below.

(b) Notwithstanding anything to the contrary in Section 1.1 or Section 1.2(a)
above, the following items are expressly excluded from the Property:

 

  (i)

All cash on deposit in any operating account or other account or reserve, except
for security deposits held by Seller as landlord with respect to any Lease as of
the Closing Date and the House Bank Funds, which, in each case, are to be
transferred to Purchaser at Closing subject to the terms of this Agreement;

 

  (ii)

Subject to Section 4.4.14 below, any vehicles owned by Seller that are used in
connection with the Hotel; and

 

5

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  (iii)

Any tangible or intangible property (including, without limitations, fixtures,
personal property or intellectual property) owned by (A) the supplier, vendor,
licensor, lessor or other party under any Service Contracts, (B) the tenants
under any Leases, (C) Manager in its offices located on the second floor of the
Property or in suite 2300 at the Property, but excluding any fixtures located at
such offices (which shall be deemed to be part of the Property), (D) any
employees which constitute their personal effects, or (E) any guests or
customers of the Hotel which constitute their personal effects.

 

1.3

Permitted Exceptions . The Property shall be conveyed subject to all matters
which are, or are deemed to be, Permitted Exceptions pursuant to Article II
below.

 

1.4

Purchase Price . Seller is to sell and Purchaser is to purchase the Property for
a total of FOUR HUNDRED FIVE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($405,500,000.00) (the “Purchase Price”), which Purchase Price shall be
allocated to each of PCH, TIC and Leaseco as they shall jointly determine.

 

1.5

Payment of Purchase Price.

(a) On the Closing Date, Purchaser shall deliver to Escrow Agent (defined below)
by wire transfer an amount equal to the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, less the Earnest
Money (defined below) previously delivered to Escrow Agent.

(b) The Purchase Price (including the Earnest Money previously delivered to
Escrow Agent), as increased or decreased by prorations and adjustments as herein
provided, shall, subject to Section 1.5(d) below, be payable in full at Closing
in cash by wire transfer of immediately available federal funds to a bank
account designated by Seller in writing to Purchaser and Escrow Agent prior to
the Closing.

(c) Seller and Purchaser shall allocate the Purchase Price among the Real
Property and various items of personal property (i.e., the Property other than
the Real Property) in accordance with Schedule 1.5(c) attached hereto, and each
party agrees to file federal, state and local tax returns consistent with such
allocations.

(d) Seller shall have the option of receiving up to $20,000,000 of the Purchase
Price in limited partnership units (the “Units”) of Purchaser in lieu of cash
provided Seller notifies Purchaser of its election and the portion of the
Purchase Price to be paid in Units no later than fifteen (15) business days
prior to the Closing Date. The number of Units to be received by Seller shall
equal $20,000,000 (or such lesser amount of Units as the Seller elects to
receive) divided by the Unit Price. The “Unit Price” shall equal the greater of
(i) the average closing price for the common stock of LaSalle Hotel Properties
(the “REIT”) on the New York Stock Exchange for the ten (10) trading days
immediately preceding the Closing Date, and (ii) $27.00. If Seller elects to
receive Units pursuant to this Section 1.5(d), Purchaser shall deliver to Seller
at Closing reasonably satisfactory evidence that Purchaser’s records establish
Seller as the owner of the Units on the

 

6

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Closing Date; and the Units shall be convertible into the REIT’s common shares
(“REIT Shares”) on the terms set forth in Purchaser’s partnership agreement (the
“Partnership Agreement”). Seller shall reimburse Purchaser for all out-of-pocket
costs and expenses incurred by Purchaser in negotiating the provisions of this
Agreement relating to the Units and in delivering the Units to Seller at
Closing.

 

1.6

Earnest Money.

(a) On the first business day following the expiration of the Inspection Period,
Purchaser shall deposit with the Chicago office of First American Title
Insurance Company (“Escrow Agent”), the sum of FIFTEEN MILLION AND NO/100
DOLLARS ($15,000,000) (together with accrued interest thereon, the “Earnest
Money”) by wire transfer of immediately available funds made in accordance with
the wiring instructions set forth on Exhibit H. The full amount of the Earnest
Money is fully non-refundable to Purchaser if this Agreement is terminated due
to Purchaser’s default hereunder. If this Agreement is terminated for any other
reason, to the extent the Earnest Money has theretofore been funded by Purchaser
to Escrow Agent, the full amount of the Earnest Money shall be refunded to
Purchaser within one (1) business day after receipt of the notice of exercise of
such right or notice of such termination.

(b) Escrow Agent shall hold the Earnest Money in an interest-bearing account in
accordance with the terms and conditions of the Deposit Escrow Instructions
attached hereto as Exhibit K (the “Escrow Agreement”). All interest accruing on
such sums shall become a part of the Earnest Money and shall be distributed or
applied as Earnest Money in accordance with the terms of the Escrow Agreement.

(c) TIME IS OF THE ESSENCE for the delivery of Earnest Money under this
Agreement and the failure of Purchaser to timely deliver any portion of the same
shall be a material default, and shall entitle Seller, at Seller’s sole option,
to terminate this Agreement immediately and to pursue all remedies available to
Seller under this Agreement.

 

1.7

Management Agreement . Purchaser acknowledges that the Hotel is being operated
and managed by Park Central Management LLC, a Delaware limited liability company
(“Manager”), pursuant to that certain Hotel Management Agreement, dated as of
December 6, 2004, by and between Seller and Manager (the “Existing Management
Agreement”). Purchaser acknowledges that if the Restructuring Consent is
obtained and the Restructuring is implemented, the Hotel will be leased to
Lessee LLC pursuant to the Operating Lease and Lessee LLC will in turn sublease
the Hotel to PCH pursuant to the Sublease. At Closing: (i) the Existing
Management Agreement and (ii) if in effect prior to the Closing, the Sublease,
will each be terminated. Purchaser shall assign this Agreement to PC Festivus,
LLC, a Delaware limited liability company, prior to Closing, which shall enter
into an operating lease for the Hotel with PC Festivus Lessee, LLC, a Delaware
limited liability company, as the operating lessee; and such assignee and
operating lessee and Manager have entered into a new management agreement in the
form attached hereto as Exhibit N attached hereto (the “New Management
Agreement”), which New Management Agreement shall be effective as of the Closing
Date.

 

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1.8

Excluded Liabilities . Notwithstanding anything contained in this Agreement to
the contrary, from and after Closing, Seller shall retain and Purchaser shall
not be deemed to, assume, be liable or responsible for, or take subject to any
Liabilities arising out of the following (collectively, the “Excluded
Liabilities”): (i) events, occurrences, pending or threatened litigation, acts,
omissions and claims occurring prior to the Closing and arising from, relating
to or in connection with the Property or the operation of the Hotel (other than
Liabilities resulting from any claim by any Governmental Authority with respect
to the physical or environmental condition of the Property (regardless of
whether such condition existed prior to the Closing Date)); and (ii) income or
franchise taxes of Seller and sales or other taxes arising from and attributable
to the ownership or operation of any portion of the Property prior to the
Closing. The obligations of the Seller under this Section 1.8 shall survive the
Closing. For purposes hereof, “Liability” means any liability, obligation,
damage, loss, diminution in value, cost or expense of any kind or nature
whatsoever, whether accrued or unaccrued, actual or contingent, known or
unknown, foreseen or unforeseen.

 

1.9

Assumed Liabilities . At Closing, Purchaser shall assume all (a) Liabilities
arising from, relating to or in connection with the Property or the operation of
the Hotel, including, without limitation, all Liabilities resulting from any
claim by any Governmental Authority with respect to the physical or
environmental condition of the Property (regardless of whether such condition
existed prior to the Closing Date), but expressly excluding the Excluded
Liabilities and any liabilities of Seller under this Agreement, and (b) all
Liabilities accruing from and after the Closing Date under the property tax
certiorari agreements with respect to the Property between Ditchik & Ditchik LLP
and Seller (the “Assumed Liabilities”). The obligations of the Purchaser under
this Section 1.9 shall survive the Closing.

ARTICLE II

TITLE AND SURVEY

 

2.1

Title Report . Purchaser has obtained and delivered to Seller, a title report
dated April 7, 2011 (Title No. NCS-484105-CHI2) (the “Title Report”) covering
the Real Property from First American Title Insurance Company (the “Title
Company”) and, has delivered a copy of each document referenced in the Title
Report as an exception to title to the Real Property. Purchaser shall deliver to
Seller, within five (5) business days after receipt by Purchaser, a copy of any
updates (each a “Title Update”) to the Title Report issued by the Title Company.

 

2.2

Survey . Purchaser shall obtain and deliver to Seller and the Title Company, at
Purchaser’ expense and no later than ten (10) business days prior to the
expiration of the Inspection Period, a survey of the Real Property prepared by
Earl B. Lovell-S.P. Belcher, Inc. (the “Survey”).

 

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  2.3

Approval of Title.

(a) Purchaser hereby acknowledges and agrees that the Title Report does not
contain any exceptions that would constitute Monetary Encumbrances (defined
below), other than the lien of the Mortgage (defined below), the judgments
listed on the Title Report, Exception No. 1 in Schedule B-1 of the Title Report
and Exception No. 2 in Schedule B-2 of the Title Report.

(b) Purchaser shall have five (5) business days after receipt of the Title
Report and Survey or any Title Update, if any, to notify Seller, in writing, of
such objections as Purchaser may have to any title exception contained in the
Title Report or such Title Update which is not a Permitted Exception (a “Title
Exception”). Any Title Exceptions set forth in the Title Report or any Title
Update which are not objected to by Purchaser within such five (5) business day
period shall be deemed ‘Permitted Exceptions” hereunder. In the event Purchaser
shall notify Seller, in writing, of any Title Exception shown on a Title Update,
Survey or a Title Update, Seller shall have the right, but not the obligation,
except to the extent set forth below, to cure such Title Exception. Within five
(5) business days after receipt of Purchaser’s notice of objections, Seller
shall notify Purchaser in writing whether Seller elects to attempt to cure any
or all of such Title Exceptions. If Seller elects to attempt to cure, Seller
shall have the right to attempt to remove, satisfy or cure the same and for this
purpose Seller shall, at Seller’s election, be entitled to a reasonable
adjournment of the Closing if additional time is required, but in no event shall
the adjournment exceed thirty (30) days after the Closing Date. If Seller elects
not to cure any Title Exceptions specified in Purchaser’s notice, or if Seller
is unable to effect a cure of those Title Exceptions which it elected to cure
prior to the Closing (or any date to which the Closing has been adjourned) and
so notifies Purchaser in writing, or if Seller fails to respond to Purchaser’s
notice within said five (5) business day period, Purchaser shall have the
following options: (i) to accept a conveyance of the Property subject to the
Permitted Exceptions and any Title Exceptions which Seller is unwilling or
unable to cure (each of which shall also be deemed to be Permitted Exceptions),
without reduction of the Purchase Price other than reductions for any Title
Exceptions which Seller is obligated to cure as set forth below, by sending
written notice thereof to Seller within five (5) business days after receipt of
Seller’s notice; or (ii) to terminate this Agreement, and if Purchaser fails to
deliver such written notice to Seller accepting all Title Exceptions as provided
in clause (i) above, this Agreement shall terminate and the Earnest Money (to
the extent funded by Purchaser pursuant to Section 1.6) shall be returned to
Purchaser, and thereafter neither party hereto shall have any further rights,
obligations or liabilities hereunder except to the extent that any right,
obligation or liability set forth herein expressly survives termination of this
Agreement. If Seller notifies Purchaser that Seller does not intend to attempt
to cure any Title Exception or fails to respond to Purchaser’s notice within
said five (5) business day period; or if, having commenced attempts to cure any
Title Exception, Seller later notifies Purchaser in writing that Seller will be
unable to effect a cure thereof; Purchaser shall, within five (5) business days
after such notice has been given, notify Seller in writing whether Purchaser
shall elect to accept the conveyance under clause (i) above or to terminate this
Agreement under clause (ii) above. Purchaser’s failure to notify Seller of its
election within such five (5) business day period shall be deemed to be an
irrevocable election under clause (ii) to terminate this Agreement.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Seller have any obligation to cure any

 

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Title Exception objected to by Purchaser; provided, however, if any such Title
Exception consists of (I) any mortgages, deeds of trust or other security
interests for any financing incurred by Seller which is not assumed by Purchaser
under this Agreement, (II) taxes which constitute Title Exceptions which would
be delinquent if unpaid at Closing; provided, however, that if any such taxes
are payable in installments, such obligation shall apply only to the extent such
installments would be delinquent if unpaid at Closing, (III) the judgments
listed on the Title Report, Exception No. 1 in Schedule B-1 of the Title Report
and Exception No. 2 in Schedule B-2 of the Title Report, or (IV) any other Title
Exceptions objected to by Purchaser which may be removed in accordance with its
terms by payment of a liquidated amount which in the aggregate do not exceed
Seven Hundred Thousand and 00/100 Dollars ($700,000.00) (collectively, “Monetary
Encumbrances”), then, to that extent only, Seller shall be obligated to pay and
discharge (or cause the Title Company to commit to remove or insure over such
Title Exceptions in a manner reasonably acceptable to Purchaser without any
additional cost to Purchaser) any such Title Exceptions and Escrow Agent is
authorized to pay and discharge at Closing such Title Exception out of the
Purchase Price.

 

2.4

Conveyance of Title . At Closing, Seller shall convey and transfer to Purchaser
its interest in the Real Property subject to the Permitted Exceptions.
Notwithstanding anything contained herein to the contrary, the Real Property
shall be conveyed subject to the following matters, all of which shall be deemed
to be Permitted Exceptions:

(a) the lien of all ad valorem real estate taxes and assessments not yet due and
payable as of the Closing Date, subject to adjustment as herein provided;

(b) local, state and federal laws, ordinances or governmental regulations,
including but not limited to, building and zoning laws, ordinances and
regulations, now or hereafter in effect relating to the Real Property;

(c) all violations of laws, rules, regulations, statutes, ordinances, orders or
requirements that have been cured but not yet removed of record that are insured
over by the Title Company in a manner reasonably acceptable to Purchaser,
subject to delivery by Seller of evidence reasonably satisfactory to Purchaser
of such cure;

(d) items appearing of record or shown on the Survey and, in either case, not
objected to by Purchaser or waived or deemed waived by Purchaser in accordance
with Section 2.3 hereof;

(e) such exceptions as Title Company shall commit to insure over in a manner
reasonably satisfactory to Purchaser, without any additional cost to Purchaser,
whether such insurance is made available in consideration of payment, bonding or
indemnity by Seller or otherwise (provided that any such indemnity or other
consideration shall be in a form reasonably satisfactory to Purchaser);

(f) all matters, whether or not of record, to the extent caused solely by
Purchaser or its agents, representatives or contractors;

 

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(g) the Mortgage (defined below), to the extent it is assigned to Purchaser’s
lender pursuant to Section 2.6 hereof;

(h) the Condominium Declaration, the By-Laws and the Condominium Plan No. 958
filed in the City Register of the City of New York on December 27, 1996 as Map
No. 5412 (as since amended); and

(i) the rights of the tenants under the Leases.

 

2.5

Title Policy . At Closing, Seller and Purchaser shall direct the Title Company
to issue an ALTA Owner’s Policy 2006 to Purchaser (“Title Policy”) insuring in
the amount of the Purchase Price that Purchaser is the fee simple owner of the
Real Property as of the Closing Date, subject only to the Permitted Exceptions,
and containing such endorsements as the Title Company has agreed to issue during
the Inspection Period; and the Title Company having issued, or being
unconditionally (subject to payment of title premiums) committed to issue, to
Purchaser the Title Policy shall be a condition to Purchaser’s obligations
hereunder to proceed with the Closing.

 

2.6

Assignment of Mortgage . Seller agrees to request that its current mortgage
lender (the “Existing Mortgage Lender”) cause the lien of such lender’s mortgage
(the “Mortgage”) to be assigned to Purchaser’s lending institution at Closing in
order to minimize mortgage recording taxes (the “Mortgage Assignment”) payable
by Purchaser. The Mortgage Assignment shall be consummated in the manner similar
to the manner in which mortgage loans are assigned to new lenders in the State
of New York, and the Mortgage Assignment shall include the delivery to
Purchaser’s lending institution of the promissory note(s) evidencing the loans
secured by the Mortgage and an endorsement to Purchaser’s lending institution of
such promissory note(s). Purchaser shall pay all reasonable legal fees and
expenses incurred by the Existing Mortgage Lender in connection therewith. If
the Mortgage is assigned to Purchaser’s lending institution at Closing,
Purchaser’s lending institution shall pay the Existing Mortgage Lender the
payoff amount agreed to between Seller and the Existing Mortgage Lender pursuant
to Section 4.7(f), such amount not to exceed the amount of the mortgage loan
from Purchaser’s lending institution to Purchaser at the Closing, which shall be
credited against the Purchase Price at Closing; and Seller in that case shall
pay (out of the Purchase Price funds received at Closing) to the Existing
Mortgage Lender any portion of the payoff amount which exceeds the amount of
such mortgage loan from Purchaser’s lending institution. Notwithstanding the
foregoing (i) Seller shall be obligated only to take reasonable additional
actions in connection with the Mortgage Assignment or assume any obligation or
liability, and (ii) the failure of Seller to obtain the Mortgage Assignment,
after using reasonable efforts, shall not be deemed a default. Obtaining the
Mortgage Assignment shall be a condition to Closing, provided that, if the
Mortgage Assignment cannot be obtained at Closing, Seller shall have the right,
but not the obligation, to elect to provide Purchaser a credit against the
Purchase Price in the amount of the mortgage recording tax savings that would
have been achieved as a result of the Mortgage Assignment and such election
shall be deemed satisfaction of such condition to Closing.

 

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ARTICLE III

INSPECTION

 

3.1

Right of Inspection . From and after the date of this Agreement until the
Closing Date or earlier termination of this Agreement, Purchaser shall, subject
to the rights of Manager under the Management Agreement, guests of the Hotel and
the tenants under the Leases, have the right to make physical inspections of the
Real Property and to examine at such place or places at the Hotel or elsewhere
as the same may be located, any operating files maintained by or for the benefit
of Seller in connection with the leasing, operation, current maintenance and/or
management of the Property (“Property Information”), including, without
limitation, the Leases, the Service Contracts, insurance policies, bills,
invoices, receipts and other general records relating to the income and expenses
of the Hotel, correspondence, surveys, plans and specifications, warranties for
services and materials provided to the Hotel, environmental audits and similar
materials, materials related to Hotel Employees (as defined below) and the Union
(as defined below), to the extent Seller is not prohibited by applicable
contracts or law from disclosing such materials, and any other documents
relating to the Property in Seller’s or Manager’s possession or control, but
excluding materials not directly related to the current ownership, maintenance
and/or management of the Property such as, without limitation, Seller’s
appraisals, company tax records, internal memoranda, correspondence and reports
and similar proprietary or confidential information. Purchaser shall keep all
Property Information strictly confidential, provided that Purchaser may deliver
copies of Property Information to its attorneys, accountants and other advisors
in connection with the acquisition of the Property and to current and
prospective lenders and partners provided that such parties agree to maintain
the confidentiality of such Property Information. Seller shall provide
reasonable access to the Property for Purchaser and its representatives to
perform physical inspections of the Property; provided, however, that
(1) Purchaser shall provide Seller with at least twenty four (24) hours prior
notice of each such physical inspection; (2) such inspecting parties shall be
accompanied by an employee, agent or representative of Seller; (3) such
inspections shall be conducted on a business day between 10:00 a.m. and 5:00
p.m. (local time); (4) neither Purchaser nor its representatives shall be
entitled to perform any drilling, coring or other invasive testing, without
Seller’s prior written consent, which consent may be withheld in Seller’s sole
discretion, and in any event any such activities shall be conducted in
accordance with standards customarily employed in the industry and in compliance
with all governmental laws, rules and regulations; (5) Purchaser’s right to
perform such inspections shall be subject to the rights of Manager and the
tenants, guests and customers at the Hotel; and (6) such inspections shall not
unreasonably interfere with the operation of the Hotel, and Purchaser and its
representatives shall comply with Seller’s requests with respect to the
Inspections to minimize such interference. Following each entry by Purchaser
with respect to inspections and/or tests on the Real Property, Purchaser shall
repair any damage to the Property caused by Purchaser or any of its agents,
consultants or representatives in connection with Purchaser’s diligence
activities at the Property, and restore the Property to the original condition
as existed prior to any such inspections and/or tests, at Purchaser’s sole cost
and expense. Seller shall reasonably cooperate with Purchaser in its due
diligence but shall not be obligated to incur any liability in

 

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connection therewith. Purchaser shall not contact Manager’s on-site employees
(except for executive committee employees of Manager), any guests of the
Property, any party to a Service Contract, any tenants under the Leases, any
lender providing financing secured by the Real Property or any governmental
authority without in each instance (a) obtaining Seller’s prior written consent,
which consent shall not be unreasonably withheld, and (b) providing Seller with
the option to either attend or participate in any meetings, conversations or
communications between Purchaser and such party or expressly waiving its right
to do so in writing (which writing may be in the form of an email) and Purchaser
shall not communicate in any manner with any such party without satisfying the
foregoing. Purchaser hereby releases Seller and the Seller Indemnitees (as
hereinafter defined) from and against any claim for liabilities, losses, costs,
expenses (including reasonable attorneys’ fees actually incurred), damages or
injuries and hereby agrees to indemnify, defend, protect and hold Seller and the
Seller Indemnitees harmless from and against any claim for liabilities, losses,
costs, expenses (including reasonable attorneys’ fees actually incurred),
damages or injuries arising out of or resulting from or in connection with the
inspection of the Property by Purchaser or its agents, employees,
representatives, consultants or contractors, except to the extent due to
Seller’s gross negligence or intentional misconduct, and notwithstanding
anything to the contrary in this Agreement, such obligation to indemnify,
defend, protect and hold harmless Seller and the Seller Indemnitees shall
survive Closing or any termination of this Agreement. All inspections shall
occur at reasonable times agreed upon by Seller and Purchaser. Purchaser agrees
(i) that prior to entering the Property to conduct any inspection, Purchaser
shall obtain and maintain, and shall cause each of its contractors and agents to
maintain (and shall deliver evidence satisfactory to Seller thereof), at no cost
or expense to Seller, commercial general liability insurance from an insurer
reasonably acceptable to Seller in the amount of Two Million Dollars
($2,000,000) with combined single limit for personal injury or property damage
per occurrence, such policies to name Seller and Manager as additional insured
parties, which insurance shall provide coverage against any claim for personal
injury or property damage caused by Purchaser or its agents, employees,
representatives or consultants in connection with any such tests and
investigations, and (ii) to keep the Property free from all liens and
encumbrances on account of any inspections and/or tests made by or for the
benefit of Purchaser. Purchaser’s insurance may not be canceled or amended prior
to Closing except upon thirty (30) days’ prior written notice to Seller.
Purchaser’s maintenance of such insurance policies shall not release or limit
Purchaser’s indemnification obligations pursuant to this Section 3.1.
Purchaser’s obligations under this Section 3.1 shall survive a termination of
this Agreement including, without limitation, pursuant to Section 3.3 below.

 

3.2

Seller Due Diligence Materials . BY EXECUTING THIS AGREEMENT, PURCHASER
ACKNOWLEDGES THAT (1) PURCHASER HAS RECEIVED COPIES OF ENVIRONMENTAL,
ENGINEERING, SOILS AND OTHER REPORTS REGARDING THE CONDITION OF THE PROPERTY
(COLLECTIVELY, THE “REPORTS”) AND (2) ANY REPORTS OR OTHER DOCUMENTS DELIVERED
OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING
MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND WITHOUT ANY
REPRESENTATION OR WARRANTY OF SELLER AS TO THEIR ACCURACY OR COMPLETENESS OF
FACTS OR

 

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OPINIONS SET FORTH THEREIN EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND
THAT ANY RELIANCE BY PURCHASER ON SUCH REPORTS OR OTHER DOCUMENTS IN CONNECTION
WITH THE PURCHASE OF THE PROPERTY IS UNDERTAKEN AT PURCHASER’S SOLE RISK, EXCEPT
TO THE EXTENT EXPRESSLY SUBJECT TO SELLER’S REPRESENTATIONS OR WARRANTIES SET
FORTH IN THIS AGREEMENT. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR
OBLIGATION WHATSOEVER FOR ANY UNINTENTIONAL INACCURACY IN OR OMISSION FROM THE
OFFERING MATERIALS PREPARED IN CONNECTION WITH THE SALE OF THE PROPERTY OR ANY
REPORTS OR OTHER DOCUMENTS MADE AVAILABLE TO PURCHASER OR ITS REPRESENTATIVES
SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT.
PURCHASER HAS CONDUCTED ITS OWN INVESTIGATION OF THE CONDITION OF THE PROPERTY
TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR
APPROPRIATE. For purposes of this Agreement, the term “Seller Due Diligence
Materials” shall mean (i) the Reports, the Property Information and all other
documents and materials provided or otherwise made available by Seller to
Purchaser pursuant to Section 3.1 and the other provisions of this Agreement or
otherwise (including, without limitation, any Tenant Estoppels), together with
any copies or reproductions of such documents or materials, or any summaries,
abstracts, compilations, or other analyses made by Purchaser based on the
information in such documents or materials, and (ii) all information set forth
in this Agreement and the exhibits and schedules attached hereto and hereby made
a part hereof.

 

3.3

Right of Termination . Seller agrees that in the event Purchaser determines
(such determination to be made in Purchaser’s sole discretion) that the Property
is not suitable for its purposes, Purchaser shall have the right to terminate
this Agreement by giving written notice thereof to Seller prior to 5:00 p.m.
(New York time) on the date which is thirty (30) days after the Effective Date
(the period ending at such time and date being referred to herein as the
“Inspection Period”). If Purchaser gives such notice of termination within the
Inspection Period, then this Agreement shall terminate and the parties shall
have no further obligations under this Agreement except for those which
expressly survive termination of this Agreement. TIME IS OF THE ESSENCE with
respect to the provisions of this Section 3.3. If Purchaser fails to give Seller
a notice of termination prior to the expiration of the Inspection Period, then
Purchaser (i) shall no longer have any right to terminate this Agreement under
this Section 3.3, (ii) shall be obligated to fund the Earnest Money on the first
business day following the expiration of the Inspection Period in accordance
with Section 1.6 above and (iii) (subject to any express right of Purchaser to
terminate this Agreement) shall be bound to proceed to Closing and consummate
the transaction contemplated hereby pursuant to the terms of this Agreement. If
Purchaser terminates this Agreement pursuant to this Section 3.3, then Purchaser
shall, at Seller’s request, (i) either promptly return (and cause any persons to
whom Purchaser has provided any Property Information to return) all Property
Information to Seller or destroy (and cause persons to whom Purchaser has
provided any Property Information to destroy) all Property Information and
(ii) certify to Seller that it has complied with its obligations set forth in
clause (i) of this sentence. The obligations of Purchaser set forth in the
preceding sentence shall survive termination of this Agreement.

 

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ARTICLE IV

CLOSING

 

4.1

Time and Place; Pre-Closing.

4.1.1 Seller shall have (a) until the 60th day following the Effective Date
(such 60th day following the Effective Date, the “Outside DPO Consent Approval
Date”) to obtain the DPO Consent and notify Purchaser in writing that it has
obtained the DPO Consent and (b) until the 90th day following the Effective Date
(such 90th day following the Effective Date, the “Outside Restructuring Approval
Date”) to obtain the Restructuring Consent and notify Purchaser in writing that
it has obtained the Restructuring Consent (Seller’s satisfaction of the
condition set forth in this clause (b) being referred to hereinafter as the
“Timely Restructuring Approval”). Subject to the provisions of Sections 4.6 and
4.7 below, the consummation of the transaction contemplated hereby (“Closing”),
as evidenced by the payment and release of the Purchase Price to Seller and the
release by Seller of the deed for recording, shall occur on or before 4:00 p.m.
(New York time) on the date (the “Closing Date”) which is (i) if the Timely
Restructuring Approval does not occur on or prior to the Outside Restructuring
Approval Date, the earlier of (x) the date selected by Purchaser on five
(5) business days prior notice to Seller; provided, however, that such date
shall be no earlier than the fifth (5th) business day following the Outside
Restructuring Approval Date, and (y) the forty-fifth (45th) day following the
Outside DPO Consent Approval Date (or if such day is not a business day, the
next business day thereafter), or (ii) if the Timely Restructuring Approval does
occur on or prior to the Outside Restructuring Approval Date, the earlier of
(x) the date selected by Purchaser on five (5) business days prior notice to
Seller; provided, however, that such date shall be no earlier than thirty
(30) days after the date on which the Timely Restructuring Approval occurred,
and (y) the forty-fifth (45th) day following the date on which the Timely
Restructuring Approval occurred (or if such day is not a business day, the next
business day thereafter). At Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3, the
performance of which obligations shall be concurrent conditions. The Closing
shall occur through an escrow administered by Escrow Agent and the Purchase
Price and all documents (unless otherwise mutually agreed) shall be deposited
with Escrow Agent as escrowee.

4.1.2 Notwithstanding anything herein to the contrary, the parties shall
“pre-close” the sale of the Property on the day before the Closing Date (the
“Pre-Closing Date”). The term “pre-close” shall mean that each of the parties
shall deliver to Escrow Agent no later than 4:00 p.m. (New York time) on the
Pre-Closing Date all of the documents and other items (other than closing
proceeds and other funds) required to be delivered by such party for Closing
(“Closing Deliveries”), including and all of the closing documents required
pursuant to Sections 4.2 and 4.3 hereof. With respect to the closing adjustments
to be made between the parties pursuant to Section 4.4 hereof, the adjustments
shall continue to be made effective as of the Cut-Off Time (defined below), but
on the closing statement executed by the parties on the Pre-Closing Date, the
parties shall in good faith estimate those adjustments which are not capable of
being finalized prior to the Cut-Off Time, and the parties shall reconcile said
estimated adjustments pursuant to Section 4.4.15 hereof.

 

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4.2

Seller’s Closing Obligations and Deliveries . At Closing, subject to Section 4.1
above, Seller shall through Escrow Agent make the following deliveries and take
the following actions:

(a) Execute and deliver to Purchaser one (1) original counterpart of a bargain
and sale deed (“Deed”), in the form attached hereto as Exhibit A and made part
hereof, conveying fee title in and to the Real Property subject only to the
Permitted Exceptions;

(b) Execute and deliver to Purchaser two (2) original executed counterparts of a
bill of sale in the form attached hereto as Exhibit B and made a part hereof
conveying the Personal Property and Consumable Inventory without warranty of use
and without warranty, expressed or implied, as to merchantability and fitness
for any purpose;

(c) Execute and deliver to Purchaser two (2) original executed counterparts of
an assignment of Seller’s interest in the Service Contracts, the Bookings, the
other Intangibles and the Books and Records (in each case to the extent
assignable) (“Assignment of Contracts”) in the form attached hereto as Exhibit C
and made a part hereof;

(d) Execute and deliver to Purchaser two (2) original executed counterparts of
an assignment of Seller’s interest in the Operating Lease and the Leases
(“Assignment of Leases”) in the form attached hereto as Exhibit D and made a
part hereof;

(e) Deliver to Purchaser and the Title Company such evidence as the Title
Company may reasonably require as to the existence, good standing and authority
of Seller and the authority of the person or persons executing documents on
behalf of Seller;

(f) Deliver to Purchaser an affidavit duly executed by Seller stating that
Seller is not a “foreign person” as defined in the Federal Foreign Investment in
Real Property Tax Act of 1980 and the 1984 Tax Reform Act, in the form attached
hereto as Exhibit E;

(g) If not already delivered to Purchaser, deliver to Purchaser, the Books and
Records and originals of the Leases, the Service Contracts and the licenses and
permits, if any, in the possession or control of Seller or Seller’s agents,
together with such leasing and property files and records which are material in
connection with the continued operation, leasing and maintenance of the Property
and the Seller’s keys to the Property and any security deposit boxes. For a
period of four (4) years after Closing in case of Seller’s need in response to
any legal requirement, a tax audit, tax return preparation or litigation
threatened or brought against Seller, Purchaser shall maintain the books and
records for the Property with respect to the period of Seller’s ownership (to
the extent that such records were provided to Purchaser and Seller did not
retain copies thereof), at Purchaser’s expense, and allow Seller and its agents
or representatives reasonable access, upon reasonable advance notice (which
notice shall identify the nature of the information sought by Seller), at all
reasonable times to examine and make copies of any and all books and records at
Seller’s cost and expense, which right shall survive the Closing;

 

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(h) Deliver to Escrow Agent an executed closing statement consistent with this
Agreement and in a customary form that has been reasonably approved by Seller
and Purchaser;

(i) Deliver two (2) original copies of the Designation Agreement (defined
below);

(j) Deliver such additional documents as shall be reasonably required to
consummate the transaction expressly contemplated by this Agreement;

(k) Deliver to Escrow Agent two (2) original executed counterpart copies of the
Combined Real Estate Transfer Tax Return and Credit Line Mortgage Certificate
(Form TP-584) completed by Seller (as completed by Seller, the “TP-584”) with
respect to the Deed;

(l) Deliver to Escrow Agent two (2) original executed counterpart copies of the
New York City Real Property Transfer Tax Return completed by Seller (as
completed by Seller, the “RPT”) with respect to the Deed;

(m) Deliver to Escrow Agent two (2) original executed counterpart copies of the
New York State Real Property Transfer Report (Form RP-5217) completed by Seller
(as completed by Seller, the “RP-5217”) with respect to the Deed;

(n) Deliver to Title Company a title affidavit in customary form that is
reasonably acceptable to Seller and the Title Company (the “Title Affidavit”);

(o) Deliver to Escrow Agent a copy of the resignation notice of any director or
officer of the Condominium appointed by Seller for the Hotel Unit;

(p) Deliver to Escrow Agent two (2) original executed counterpart copies of the
IWA Assumption Agreement in the form attached hereto as Exhibit M (“IWA
Assumption Agreement”), including and subject to any required consents of other
parties thereto;

(q) Deliver a copy of the condominium common charge statement executed by the
Condominium Board, substantially in the form attached hereto as Exhibit F (the
“Common Charge Statement”);

(r) Deliver written notice executed by Seller notifying each tenant under a
Lease that the Real Property has been conveyed to Purchaser and directing all
payments, inquiries and the like be forwarded to Purchaser at the address to be
provided by Purchaser;

(s) Deliver to Escrow Agent a termination of the Existing Management Agreement,
and, if the Sublease is in effect as of the Closing Date, a termination of the
Sublease;

(t) Deliver to Escrow Agent any non-cash security deposits received by Seller
and not returned to the tenants under the Leases (if any), together with any
documents and fees required to assign such security deposits to Purchaser;

 

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(u) Deliver to Purchaser a certificate, dated as of the Closing Date and
executed on behalf of Seller by a duly authorized officer thereof, stating that
the representations and warranties of Seller contained in this Agreement are
true and correct in all material respects as of the Closing Date (with
appropriate modifications of those representations and warranties made in
Section 5.1 hereof to reflect any changes therein including without limitation
any changes resulting from actions under Section 5.6 hereof) or identifying any
representation or warranty which is not, or no longer is, true and correct and
explaining the state of facts giving rise to the change. In no event shall
Seller be liable to Purchaser for, or be deemed to be in default hereunder by
reason of, any breach of representation or warranty which results from any
change that (i) occurs between the Effective Date and the Closing Date and
(ii) is permitted under the terms of this Agreement or is beyond the reasonable
control of Seller to prevent; provided, however, any of the foregoing (other
than those that are permitted under the terms of this Agreement) shall, if
materially adverse to Purchaser, constitute the non-fulfillment of the condition
set forth in Section 4.6(a) and Purchaser may elect to terminate this Agreement
pursuant to Section 4.8. If, despite changes or other matters described in such
certificate, the Closing occurs, Seller’s representations and warranties set
forth in this Agreement shall be deemed to have been modified by all statements
made in such certificate;

(v) If Seller elects to receive a portion of the Purchase Price in Units as
provided in Section 1.5(d) above, deliver to Purchaser a registration rights
agreement in the form attached hereto as Exhibit Q (the “Registration Rights
Agreement”), duly executed by Seller;

(w) If Seller elects to receive a portion of the Purchase Price in Units as
provided in Section 1.5(d) above, deliver to Purchaser a counterpart signature
page to the Partnership Agreement, duly executed by Seller;

(x) If the Restructuring Consent has been obtained and the Restructuring has
been implemented, execute and deliver to Purchaser two (2) original executed
counterparts of an assignment of Leaseco’s interest in Lessee LLC (the
“Assignment of Membership Interests”) in the form attached hereto as Exhibit R;
and

(y) If the Restructuring Consent has been obtained and the Restructuring has
been implemented, deliver to Purchaser releases of Purchaser from any liability
under the Operating Lease, the Sublease and the Existing Management Agreement
from the parties thereto.

Notwithstanding the provisions of this Section 4.2, if the Restructuring Consent
is obtained and the Restructuring is implemented prior to the Closing Date, the
foregoing closing obligations and deliveries shall be appropriately modified by
the parties to the extent necessary to reflect the then-current ownership of the
Property and with the intention in such case that the substantive rights and
obligations of the parties shall otherwise be equivalent to those set forth in
this Agreement.

 

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4.3

Purchaser’s Closing Obligations and Deliveries . At Closing, Purchaser shall
through Escrow Agent make the following deliveries and take the following
actions:

(a) Pay the Purchase Price, as increased or decreased by prorations and
adjustments as herein provided, to Seller in immediately available wire
transferred funds pursuant to Section 1.5 above, it being agreed that at Closing
the Earnest Money shall be applied towards payment of the Purchase Price;

(b) Deliver the same number of original executed counterparts of the instruments
described in clauses (c), (d), (h), (i), (k), (l), (m), (p) and (x) of
Section 4.2 above to Seller or Escrow Agent, as applicable;

(c) Deliver to Seller and Title Company such evidence as Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Purchaser;

(d) Deliver to Seller a certificate, dated as of the Closing Date and executed
on behalf of Purchaser by a duly authorized officer thereof, stating that the
representations and warranties of Purchaser contained in this Agreement are true
and correct in all material respects as of the Closing Date, with appropriate
modifications of those representations and warranties to reflect any changes
therein or identifying any representation or warranty which is not, or no longer
is, true and correct and explaining the state of facts giving rise to the
change. In no event shall Purchaser be liable to Seller for, or be deemed to be
in default hereunder by reason of, any breach of representation or warranty
which results from any change that (i) occurs between the Effective Date and the
Closing Date and (ii) is beyond the reasonable control of Purchaser to prevent;
provided, however, if any of the foregoing shall be materially adverse to
Seller, Seller may elect to terminate this Agreement pursuant to Section 4.8.
If, despite changes or other matters described in such certificate, the Closing
occurs, Purchaser’s representations and warranties set forth in this Agreement
shall be deemed to have been modified by all statements made in such
certificate;

(e) If Seller elects to receive a portion of the Purchase Price in Units as
provided in Section 1.5(d) above, deliver to Seller a certificate of the REIT,
duly executed by an authorized officer of the REIT in such capacity, on the
REIT’s behalf and in its capacity as general partner of Purchaser, as the case
may be, certifying that annexed thereto are the following documents:

 

  (i)

a true, correct and complete copy of (x) the Partnership Agreement and all
amendments thereto, and (y) the certificate of limited partnership of the
Partnership and all amendments thereto, if any, as filed in the State of
Delaware; and

 

  (ii)

a true and correct copy of the REIT’s declaration of trust and by-laws and all
amendments thereto;

and certifying that such documents have not been otherwise modified or amended,
and are in full force and effect as of the Closing Date;

 

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(f) If Seller elects to receive a portion of the Purchase Price in Units as
provided in Section 1.5(d) above, deliver to Seller a certificate of Purchaser
certifying to Seller that, as of the Closing Date: (i) Seller has been admitted
as a limited partner in Purchaser in respect of the Units which Seller has
elected to receive pursuant to Section 1.5(d) above, (ii) that such Units have
been duly issued to Seller, and (iii) that Purchaser’s books and records will,
as of the Closing Date, indicate that Seller is the holder of the number of
Units which it has elected to receive pursuant to Section 1.5(d) above;

(g) If Seller elects to receive a portion of the Purchase Price in Units as
provided in Section 1.5(d) above, deliver to Seller the Registration Rights
Agreement, duly executed by the REIT; and

(h) Deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.

Notwithstanding the provisions of this Section 4.3, if the Restructuring Consent
is obtained and the Restructuring is implemented prior to the Closing Date, the
foregoing closing obligations and deliveries shall be appropriately modified by
the parties to the extent necessary to reflect the then-current ownership of the
Property and with the intention in such case that the substantive rights and
obligations of the parties shall otherwise be equivalent to those set forth in
this Agreement.

 

4.4

Prorations, Credits and Other Adjustments . At Closing, Purchaser and Seller
shall prorate all items provided for below, and the net amount consequently
owing to Seller or Purchaser shall be added to or subtracted from the proceeds
of the Purchase Price payable to Seller at Closing. Beginning as close to the
anticipated Closing Date as reasonably practicable, Seller shall cause to be
prepared a prorations and credit statement (the “Preliminary Statement”), which
shall be reasonably approved by Purchaser and which shall reflect all of the
prorations, credits and other adjustments to the Purchase Price at Closing
required under this Section 4.4 or under any other provision of this Agreement.
As soon as Purchaser and Seller have agreed upon the Preliminary Statement, they
shall jointly deliver a mutually signed copy thereof to Escrow Agent. To the
extent Purchaser and Seller are unable to agree by Closing on any item on the
Preliminary Statement, the amount of any items in dispute shall be held in
escrow by the Title Company until such item shall be finally resolved on the
Final Statement (defined below) pursuant to Section 4.4.14 below. Seller shall
cause a draft of the Preliminary Statement to be delivered to Purchaser for
Purchaser’s review and approval no later than three (3) business days prior to
the Closing.

4.4.1 Proration of Taxes.

(a) All real estate ad valorem taxes, general assessments and special
assessments and all personal property ad valorem taxes assessed against the
Hotel (generically, “Taxes”) which accrue with respect to the tax year in which
Closing occurs shall be prorated between Purchaser and Seller as of the Closing
Date. If the amount of any such Taxes is not ascertainable on the Closing Date,
the proration for such Taxes shall be based on the tax rates set forth in the
most recent available bill and the latest

 

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assessed valuation of the Property; provided, however, that after the Closing,
Seller and Purchaser shall reprorate the Taxes in accordance with Section 4.4.15
below and pay any deficiency in the original proration to the other party
promptly upon receipt of the actual bill for the relevant taxable period.

(b) Seller retains the right to commence, continue and settle any proceeding to
contest any Taxes for any taxable period which precedes the tax fiscal year in
which the Closing occurs, and shall be entitled to any refunds of Taxes awarded
in such proceedings. Purchaser shall cooperate with Seller in connection with
any such proceeding and collection of any refund of Taxes awarded in such
proceedings (at no out of pocket cost or expense to Purchaser).

(c) Purchaser shall have the right to commence, continue and settle any
proceeding to contest any Taxes for any tax fiscal year in which the Closing
occurs and all subsequent tax fiscal years. Purchaser shall be entitled to any
refunds of Taxes awarded in such proceedings, in each case to the extent the
Taxes or refunds relate to periods of time from and after to the Closing Date;
and Seller shall be entitled to any refunds of Taxes awarded in such
proceedings, in each case to the extent the Taxes, refunds relate to periods of
time prior to the Closing Date, less Seller’s pro rata share of any costs
incurred to prosecute such proceedings. Seller shall cooperate with Purchaser in
connection with any such proceeding, including, to the extent requested by
Purchaser, initiating and continuing any such proceeding and assigning such
proceeding to Purchaser, and collection of any refund of Taxes awarded in such
proceedings (at no out-of-pocket cost or expense to Seller).

(d) Seller shall be responsible for paying all sales, use, occupancy and similar
taxes payable in connection with the operation of the Hotel which are assessed
in connection with any revenue paid to Seller from the operation of the Hotel;
and Seller shall cause to be filed all tax returns which are required by
applicable law to be filed in connection therewith. Purchaser shall be
responsible for paying all sales, use, occupancy and similar taxes payable in
connection with the operation of the Hotel which are assessed in connection with
any revenue paid to Purchaser from the operation of the Hotel; and Purchaser
shall cause to be filed all tax returns which are required by applicable law to
be filed in connection therewith.

4.4.2 General Proration of Expenses.

(a) The following items of expense with respect to any portion or aspect of the
Hotel shall be prorated between Seller and Purchaser as of the Closing Date:

 

  (i)

All periodic charges and expenses under any Service Contracts and all periodic
fees and charges under any license or permit (other than liquor licenses)
obtained in connection with the Property and in effect as of the Closing Date;

 

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  (ii)

All common area maintenance charges and any other charges and assessments
payable by the Hotel Unit under the Condominium Declaration;

 

  (iii)

Subject to Section 4.4.2(a)(ii) above, all utility charges (but excluding any
utility deposits). To the extent reasonably practicable, though, in lieu of
prorating the charges for any metered utility service, Purchaser and Seller
shall endeavor to have the utility read the meter as early as possible on the
Closing Date, render a final bill to Seller based on such reading and bill all
subsequent service to Purchaser;

 

  (iv)

Prepaid expenses of the Hotel which are customarily prorated in connection with
the sale of hotels in New York City, excluding insurance and prepaid marketing
expenses; and

 

  (v)

All other Hotel operating expenses, other than employment expenses (which are
covered by Section 4.4.3 below), which are customarily prorated in connection
with the sale of hotels in New York City.

4.4.3 Employment Expenses. All wages, salaries, bonuses, other compensation and
employment benefits, whether vested or unvested, for unused vacation, holiday,
sick leave and personal days if, and to the extent, that amounts are accrued and
unused prior to the Closing Date, and contributions for retirement and welfare
benefits, together with F.I.C.A., unemployment and other payroll taxes and
benefits due with respect to the employment of such Employees, shall be prorated
between Seller and Purchaser as of the Closing Date, with accrued vacation and
other benefits due to Bargaining Unit Employees (defined below) covered by the
Collective Bargaining Agreement (defined below) being determined in accordance
with the Collective Bargaining Agreement and such matters for Hotel Employees
(defined below) not covered by the Collective Bargaining Agreement being
determined in accordance with past practices. Purchaser shall pay the salaries
and related benefits that are payable to any Hotel Employees for work performed
at the Hotel on the Closing Date, whether prior to or following the time of
Closing, regardless of whether such persons are employees of Seller, Manager, or
Purchaser.

4.4.4 Hotel Revenues.

(a) At Closing, Seller and Purchaser shall each be entitled to one-half (1/2) of
all revenues from the Hotel guest rooms and facilities occupied on the evening
immediately preceding the Closing Date, including any sales taxes, room taxes,
occupancy taxes and other taxes charged to guests in such rooms, all parking
charges, sales from mini-bars, in-room food and beverage, telephone, facsimile
and data communications, in-room movie, laundry, and other service charges
allocable to such rooms with respect to the evening immediately preceding the
Closing Date. All revenues from restaurants, bars, lounges, vending machines and
other service operations conducted at the Property shall be allocated based on
whether the same accrued before or after the Cut-Off Time (defined below), and
Seller shall cause the Manager to separately record sales occurring before and
after the Cut-Off Time at the Property. The foregoing amounts are referred to

 

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collectively as “Guest Revenues”. Notwithstanding the foregoing, all revenues
collected from any bars and lounges at the Property shall be prorated based on
the actual closing time for such bar or lounge. For example, if such bar or
lounge closes at 2 a.m. on the Closing Date, Seller shall retain the revenues
collected from such bar or lounge even though such revenues were generated two
(2) hours after the Cut-Off Time.

(b) Revenues from conferences, receptions, meetings, and other functions
occurring in any conference, banquet or meeting rooms in the Hotel, or in any
adjacent facilities owned or operated by Seller, including usage charges and
related taxes, food and beverage sales, valet parking charges, equipment
rentals, and telecommunications charges, shall be allocated between Seller and
Purchaser, based on when the function therein occurred, with (i) one-day
functions commencing prior to the Cut-Off Time being allocable to Seller,
(ii) functions commencing after the Cut-Off Time being allocable to Purchaser,
and (iii) multi-day functions being allocated on a pro rata basis between Seller
and Purchaser according to when the event commences and is scheduled to end in
relation to the Cut-Off Time. The foregoing amounts are referred to collectively
as “Conference Revenues.”

(c) At Closing, all Receivables shall be assigned to Purchaser and Seller shall
receive a proration credit in an amount equal to 97.5% of face value of such
receivables as set forth on Manager’s books including, without limitation,
receivables accrued in connection with hotel reservations, the use of guest
rooms, banquet and meeting room receivables (including any cancellation fees due
to Seller in connection with any of the foregoing for use and occupancy of the
Property prior to the Cut-Off Time) as reflected on the city ledger, guest
ledger or any other receivable ledger. Purchaser shall be entitled to all
amounts collected for such accounts receivable; provided, however, such payment
shall be re-prorated ninety (90) days after Closing such that Seller shall
receive a final credit for only Receivables actually collected by Purchaser
during such 90-day period after Closing and shall refund any excess credit to
Purchaser, with Seller retaining the right to collect any receivables not
credited to Seller as a result thereof. All accounts receivable more than ninety
(90) days past due on the Closing Date (“Retained Receivables”) shall be
retained by Seller at Closing and (i) Purchaser shall cause its manager to
endeavor to collect the Retained Receivables in a manner consistent with its
efforts to collect the accounts receivable due to Purchaser, and (ii) Purchaser
and its manager shall deliver to Seller any amounts received by them after the
Closing Date on account of the Retained Receivables reasonably promptly
following receipt by Purchaser or its manager.

(d) Any operating revenues from “package deals” provided to guests at the Hotel
shall be allocated on an equitable basis, as reasonably agreed between Purchaser
and Seller.

(e) Any operating revenues not otherwise provided for in this Section 4.4, shall
be prorated between Purchaser and Seller as of Closing.

 

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4.4.5 Rent. Rent and other payments payable by tenants, licensees,
concessionaires, and other persons using or occupying the Real Property or any
part thereof under a Lease or otherwise, if any, for or in connection with such
use or occupancy, including, without limitation, fixed monthly rentals,
additional rentals, percentage rentals, escalation rentals, retroactive rentals,
operating cost pass-throughs, common area maintenance charges, HVAC charges,
payments of taxes and insurance expenses, promotional/marketing charges,
construction receivables and other sums and charges payable by the tenants under
the Leases (collectively, “Rent”) shall be prorated as of the Closing Date such
that Seller will be entitled to Rent attributable to periods prior to the
Closing Date and Purchaser will be entitled to Rent attributable to periods from
and after the Closing Date, all as more particularly set forth below:

(a) All Rent, including estimated payments of Percentage Rent (as defined
below), which have been paid under the Leases as of Closing for the month in
which the Closing occurs (“Current Rent”) shall be prorated as of the Closing
Date.

(b) There shall be no proration at Closing of any Rent which has not been
collected as of the Closing (“Rent Arrears”). In the event that either Purchaser
or Seller receives Rent from a tenant after the Closing Date, such Rent shall be
applied in the following order of priority (after deduction of actual
out-of-pocket costs of collection paid by Purchaser to third parties): (i) first
to Rents owed by such tenant for all periods following the Closing Date, and
(ii) second to Rents owed by such tenant for all periods prior to the Closing
Date. Any sums owed to Seller or Purchaser, as the case may be, pursuant to the
foregoing shall be paid by to the party entitled hereunder to receive such sum
within fifteen (15) days following receipt thereof by the other party. Purchaser
shall deliver to Seller by the twentieth (20th) day of the first full calendar
month after the Closing and every month thereafter through the 6th month
following Closing, a statement of the collection status of each Rent Arrear
until the collection of all Rent Arrears. Purchaser shall use its commercially
reasonable efforts to pursue all Rent Arrears in the ordinary course of
business, provided that Purchaser shall not be obligated to commence a lawsuit
against any tenant in respect thereof. For one (1) year following the Closing,
Seller shall have the right, upon reasonable notice, but no more often than
twice in such twelve (12) month period, to audit Purchaser’s books and records
to verify the amount of Rent Arrears which has actually been collected by
Purchaser. Until the one-year anniversary of the Closing Date, Purchaser shall
not waive any Rent Arrears or modify, amend or waive any Lease so as to reduce
the Rent Arrears for any period (or any portion thereof) in which Seller is
entitled to receive such Rent Arrears, without first obtaining Seller’s prior
written consent. Seller reserves all rights with regard to all Rent Arrears
(including, without limitation, initiating and prosecuting a lawsuit against
such tenant), subject to the limitations that (i) Seller shall not have the
right to bring or maintain any action to either dispossess any tenant that is in
then in possession or terminate any of the Leases and (ii) Seller shall not
commence any such action for a period of 90 days after the Closing Date.

(c) Percentage rent or overage rent (referred to herein as “Percentage Rent”)
under each Lease shall be prorated between Purchaser and Seller for the Lease
Year (as defined below) in which the Closing occurs (the “Subject Lease Year”)
in proportion to the relative periods of ownership of Seller and Purchaser
during such Lease Year, with an adjustment to be made post-Closing upon
completion of each applicable Lease Year to account for any Percentage Rent paid
after Closing Date occurs. As used herein, the term “Lease Year” means the
twelve (12) month period (or, as to tenants for which the Closing occurs during
a partial Lease Year, such applicable shorter period) as to which annual
Percentage Rent is owed under each Lease.

 

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(d) As soon as reasonably possible after the end of the year in which the
Closing occurs, but in any event within ninety (90) days following the end of
the year, Purchaser shall prepare and deliver to Seller for Seller’s approval
(which shall not be unreasonably withheld, delayed or conditioned) a good faith
reconciliation of any payments by tenants under the Leases for operating
expenses and taxes, together with the supporting documentation therefor. If
Seller collected more from the tenants under the Leases for operating expenses
and taxes than was due Seller under the Leases (as shown on such approved
reconciliation), Seller shall refund such excess to Purchaser within ten
(10) days after such reconciliation is approved, which approval shall not be
unreasonably withheld; and Purchaser shall pay such refund to the applicable
tenants; and, if tenants paid less to Seller than was due under the Leases as
shown on such reconciliation, Purchaser shall use reasonable efforts to collect
such deficiency from the tenants and remit such collection to Seller upon
receipt. Seller shall notify Purchaser of any objections to the reconciliation
within five (5) business days after receipt by Seller.

4.4.6 Hotel Payables. At Closing, Purchaser shall receive a proration credit
equal to the aggregate amount of all accrued accounts payable for the Hotel as
of the Closing Date (“Hotel Payables”) as set forth in a schedule attached to
the Preliminary Statement and Purchaser shall assume the obligation to satisfy
all Hotel Payables for which Purchaser received such credit at Closing. Without
duplication of any amounts for which Seller receives a credit pursuant to
Section 4.4.2 above, Seller shall receive a credit for all advance payments or
deposits made with respect to Hotel Payables ordered, but not delivered to the
Hotel prior to the Closing Date, as set forth in such schedule. After Closing,
before paying any amount in excess of $10,000 that is invoiced or otherwise
claimed by a third party due with respect to the Hotel operations prior to
Closing which is not included on such schedule (or is claimed in an amount
larger than that shown on such schedule), Purchaser shall first submit such
invoice or claim to Seller. Unless Seller, within fifteen (15) days after
receiving such submission, objects to such invoice or claim (thereby making it a
“Seller Disputed Payable”), Purchaser may pay the same and take a credit for
such payment on the Final Statement. Seller shall make commercially reasonable
efforts to resolve any Seller Disputed Payables in a timely manner; provided,
however, that Purchaser shall have the right to pay any invoice or claim the
non-payment of which does or could, in Purchaser’s reasonable judgment
(i) result in the withholding of goods or services to the Hotel, or
(ii) constitute a lien against the Property. Notwithstanding the foregoing, upon
Closing Purchaser shall assume all obligations of Seller to pay for any
consumables or other items ordered by or for the benefit of Seller in the
ordinary course of business but which are not yet received as of the Closing
Date; provided that, there shall not be any adjustment to the Purchase Price in
connection with Purchaser’s assumption of the liabilities described in clauses
(i) and (ii) of this sentence.

4.4.7 Credit for Certain Inventories. At Closing, Seller shall receive an
aggregate credit in the amount of fifty percent (50%) of the value of the Food
and Beverage Inventory as of the Closing Date, as such value is reflected in the
financial books of the Hotel; provided, however, in no event shall such credit
exceed $60,000.

 

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4.4.8 Credit for Reservation Deposits. Purchaser shall receive a proration
credit equal to the aggregate amount of advance deposits that shall have been
received by Seller on account of reservations for use or occupancy of the
Property after the Cut-Off Time, including any such advance deposits that may
have been forfeited prior to the Cut-Off Time. Purchaser shall also be entitled
to collect any cancellation fees owed for reservations for use and occupancy of
the Property after the Cut-Off Time.

4.4.9 Credit for Cash Banks. Seller shall receive a credit at Closing in an
amount equal to all House Bank Funds.

4.4.10 Lease Deposits; Leasing Expenses. Seller shall give Purchaser a credit at
Closing for any security and other deposits listed on Schedule 1.1(h) attached
hereto or collected by Seller after the date hereof and not refunded to tenants
in accordance with the terms of their Leases; Seller shall give Purchaser a
credit at Closing for any outstanding leasing expenses in connection with the
Leases, including any outstanding brokerage commissions and tenant improvement
allowances.

4.4.11 Regarding Hotel Prorations Generally. Unless this Section 4.4 expressly
provides otherwise: (a) all prorations hereunder with respect to the Hotel shall
be made as of 12:00:01 a.m., local time at the Hotel (“Cut-Off Time”) on the
Closing Date, (b) all prorations shall be made on an actual daily basis, and
(c) for purposes of such prorations, all items of revenue and expense with
respect to the Hotel’s operations shall be classified and determined in
accordance with the Uniform System of Accounts for the Lodging Industry, as
modified to reflect that travel and external audit fees are listed as
extraordinary items, and otherwise in accordance with generally accepted
accounting principles. Except as otherwise expressly provided herein, in any
case in which Purchaser receives a credit at Closing on account of any
obligation of Seller hereunder, Seller shall have no further liability for such
obligation to the extent of the credit so given, and Purchaser shall pay and
discharge the same.

4.4.12 Vouchers. Purchaser shall (a) honor all outstanding unexpired gift
certificates, coupons or other writings issued by Seller set forth in Schedule
4.4.12 attached hereto and incorporated herein by this reference, as updated as
of the Closing Date, that entitles the holder or bearer thereof to a credit
(whether in a specified dollar amount or for a specified item, such as room
night or meals) to be applied against the usual charge for rooms, meals and/or
goods and services at the Hotel (collectively, “Vouchers”) and shall assume all
liability, if any, for all outstanding Vouchers as of the Closing Date which
have been credited to Purchaser as set forth herein, regardless of any purported
expiration, (b) receive a credit against the Purchase Price payable at Closing
as set forth in Schedule 4.4.12 attached hereto and incorporated herein by this
reference, as updated as of the Closing Date, and (c) indemnify, defend and hold
Seller harmless from and against all claims, liabilities, costs and expenses
accruing after the Closing and arising out of the Vouchers which have been
credited to Purchaser.

4.4.13 Utility and Other Deposits. At Closing, Seller shall receive a credit for
all refundable cash or other deposits posted with utility companies serving the
Property or any governmental agencies or authorities or posted pursuant to any
Service Contract, or, at Seller’s option, Seller shall be entitled to receive
and retain such refundable cash and deposits.

 

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4.4.14 Vehicles. As provided in Section 1.2(b)(ii) above, the 2008 Mercedes Benz
used at the Hotel shall not be included in the Property that is subject to the
sale to Purchaser hereunder. At Closing, Purchaser shall receive a credit in the
amount of the Kelley Blue Book value as of the Closing Date for such vehicles.

4.4.15 Credit for Hotel Income. In the event the Closing does not occur prior to
September 3, 2011, then, at Closing, Seller shall give Purchaser a credit in an
amount equal to (a) earnings before interest, taxes, depreciation and
amortization from the Hotel commencing on September 2, 2011, through the date
preceding the Closing Date, less (b) interest expense incurred by the Hotel on
its mortgages during such period, and less (c) emergency capital expenses
approved by Purchaser during such period and not listed on Schedule 5.6(a)(vi)
attached hereto. Attached hereto as Schedule 4.4.15 is a projection of what such
amount will be during such period.

4.4.16 Final Statement; Post-Closing Adjustments. Except for prorations for real
estate taxes and other assessments, which shall be adjusted within fifteen
(15) business days of receipt of the tax bill for the tax year in which the
Closing occurs, prorations of Percentage Rent in accordance with Section 4.4.5
hereof and year-end reconciliations in accordance with the terms of the Leases,
Purchaser and Seller shall make a one-time post-Closing adjustment of any item
of income and expense subject to adjustment as provided above which was either
incomplete or incorrect (whether as a result of an error in calculation or a
lack of complete and accurate information) as of the Closing. Purchaser will
prepare and deliver to Seller for its review and approval a statement of
prorations (the “Final Statement”) within ninety (90) days following the Closing
Date, and the party in whose favor the original incorrect adjustment or error
was made (“Adjusting Party”) shall pay to the other party (“Requesting Party”)
the sum necessary to correct such prior incorrect adjustment or error within ten
(10) days after completion of the Final Statement. Notwithstanding any provision
of this Agreement to the contrary, all items required to be adjusted pursuant to
this Section 4.4 shall be adjusted within ninety (90) days of Closing (except
real estate taxes and year-end reconciliations and percentage rents under the
Leases, which shall be re-adjusted within the period set forth above), and such
adjustment shall be final and no further adjustment to the prorations or the
Purchase Price shall be made.

4.4.17 Resolution of Disputes. In the case of a dispute, the parties shall
attempt to resolve such dispute, but if for any reason such dispute is not
resolved by the date that is thirty (30) days after the delivery of the original
notice of the claimed adjustment by Purchaser or Seller, then the parties shall,
upon the written request of either party to the other, submit such dispute to an
independent accounting firm appointed jointly by KPMG LLP and
PriceWaterhouseCoopers LLP (such appointed firm, the “Outside Accountants”), and
the determination of the Outside Accountants, which shall be made within a
period of fifteen (15) days after such submittal by the parties, shall be
conclusive. The fees and expenses of the Outside Accountants shall be paid
equally by Purchaser and Seller. At such time as the amount of any adjustment or
dispute shall be determined (either by agreement or by determination of the
Outside Accountants), any amount that shall be payable by the Requesting Party
to the Adjusting Party as a result of such adjustment or determination shall be
paid within ten (10) business days after the date on which such agreement or
determination shall have been made.

4.4.18 Survival. The provisions of this Section 4.4 shall survive Closing.

 

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4.4.19 Modification. Notwithstanding the provisions of this Section 4.4, if the
Restructuring Consent is obtained and the Restructuring is implemented prior to
the Closing Date and the Membership Interests in Lessee LLC are transferred to
Purchaser, the foregoing prorations shall be appropriately modified by the
parties if and to the extent necessary to reflect the transfer of the Membership
Interests in Lessee LLC to Purchaser and with the intention in such case that
the substantive rights and obligations of the parties, including the amounts
owed by each party under this Section 4.4, shall otherwise be equivalent to
those set forth in this Agreement.

4.4.20 Operating Lease. There shall be no prorations of rent or other amounts
due under the Operating Lease, and Seller and Lessee LLC shall settle between
themselves all amounts due and owing prior to the Closing under the Operating
Lease.

 

4.5

Closing Costs.

4.5.1 State Transfer Tax. At Closing, Seller and Purchaser shall complete, sign
and acknowledge any and all forms required for this transaction with respect to
Article 31 of the New York State Tax Law, as the same may be amended from time
to time (the “State Transfer Tax Law”). Seller shall pay the taxes all state
transfer taxes imposed in connection with the consummation of the transactions
contemplated by this Agreement on the Closing Date, including any such taxes
imposed under the State Transfer Tax Law. All such taxes shall be paid by
official bank check to the order of the appropriate governmental office of the
Title Company or by wire transfer of immediately available funds to such
governmental office or the title Company, all in accordance with the
instructions of the Title Company. The obligations of Seller under this
Section 4.5.1 shall survive the Closing.

4.5.2 City Transfer Tax. At Closing, Seller and Purchaser shall complete, sign
and acknowledge any and all forms required for this transaction with respect to
Chapter 21 of Title 11 of the Administrative Code of the City of New York, as
the same may be amended from time to time (the “City Transfer Tax Law”). Seller
shall pay all local transfer taxes imposed in connection with the consummation
of the transactions contemplated by this Agreement, including any such taxes
imposed under the City Transfer Tax Law, and any filing fees in connection
therewith on the Closing Date. All such taxes shall be paid by official bank
check to the order of the appropriate governmental office of the Title Company
or by wire transfer of immediately available funds to such governmental office
or the title Company, all in accordance with the instructions of the Title
Company. The obligations of Seller under this Section 4.5.2 shall survive the
Closing.

4.5.3 Seller Closing Costs. At Closing, Seller shall also pay (a) the fees of
any counsel representing it in connection with this transaction, (b) one-half of
the escrow fees charged by Escrow Agent, and (c) all recording and filing fees
relating to clearance of any title matter which is not a Permitted Exception. In
addition, as provided in Section 1.5(d) above, Seller shall reimburse Purchaser
for all out-of-pocket costs and expenses incurred by Purchaser in negotiating
the provisions of this Agreement relating to the Units and in delivering the
Units to Seller at Closing. Jefferson MM 150, L.P., a Delaware limited
partnership (“Highgate Guarantor”), shall reimburse Purchaser at Closing for any
out-of-pocket costs and expenses incurred by Purchaser in connection with the
Restructuring.

 

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4.5.4 Purchaser Closing Costs. At Closing, Purchaser shall also pay (a) the fees
of any counsel representing Purchaser in connection with this transaction,
(b) 100% of the (i) premium for the Title Policy, (ii) cost of any endorsements
to the Title Policy, and (iii) cost of any title insurance provided to
Purchaser’s lender, (c) the cost of the Survey and any modifications or updates
to the Survey, (d) all sales tax (including bulk sales taxes) on the sale of the
Personal Property (or any part thereof) imposed in connection with this
transaction and any taxes or filing fees due in connection with any loan
obtained by Purchaser in connection with this transaction, (e) one-half of the
escrow fees charged by Escrow Agent, (f) the cost of any third party due
diligence reports ordered by or on behalf of Purchaser, including the property
condition report and the Phase I environmental report, and (g) the fees for
recording the Deed and any other recordable documents (other than documents
relating to clearance of any title matter which is not a Permitted Exception).

4.5.5 Other Costs. All other costs and expenses incident to this transaction and
the closing thereof shall be paid in a manner consistent with custom for similar
transactions in New York, New York. Notwithstanding the foregoing, in the event
that this Agreement is terminated as a result of a party’s default, such
defaulting party shall pay all escrow and title cancellation fees charged in
connection with such cancellation.

4.5.6 Security for Transfer Taxes. If Seller or Purchaser receives any written
notice from the State of New York or City of New York for additional transfer
taxes due as a result of the transaction set forth herein, Seller shall pay such
taxes and agrees to indemnify, defend and hold Purchaser harmless from all loss,
liability and expenses, including reasonable attorneys’ fees, in connection with
such taxes. If Seller has elected to accept Units pursuant to Section 1.5(d)
above, then at Closing, Seller shall pledge Units to Purchaser having a value
equal to at least $11,800,000 (based on the Unit Price, as determined in
accordance with Section 1.5(d)), as security for Seller’s obligations under this
Section 4.5.6 (the “Pledged Units”); provided, however, in no event shall the
Pledged Units be deemed a limit on Seller’s liability under this Section 4.5.6.
Seller hereby pledges to and grants Purchaser a continuing security interest in
the Pledged Units, including all distributions payable on account of the Pledged
Units, as security for Seller’s obligations under this Section 4.5.6; and
Purchaser is authorized to file a UCC-1 financing statement with the Delaware
Secretary of State to perfect such security interest. If Seller fails to pay any
such transfer taxes when due (except to the extent such transfer taxes are being
contested by Seller and such contest has the legal effect of deferring the due
date for such transfer taxes until such contest is resolved), Purchaser may pay
such transfer taxes and shall then have the rights, options and remedies of a
secured party under the Delaware Uniform Commercial Code (the “Code”). Without
limiting the foregoing, upon the occurrence of any such failure, Purchaser may
proceed immediately to exercise each and all of the powers, rights and
privileges reserved or granted under the Code to sell the Pledged Units and
collect and receive any and all proceeds in respect of the Pledged Units and all
avails thereof (including any and all distributions thereon). Any requirement of
the Code for reasonable notice to Seller shall be met if such notice is mailed
postage prepaid to Seller, at least ten (10) business days prior to the date of
sale, disposition or other event giving rise to the requirement of notice. No
delay of Purchaser in the exercise of any right or power arising from any
default on the part of Seller hereunder shall exhaust or impair any such right
or power or prevent its exercise during the continuance of such default. No
waiver by Purchaser of any default of Seller hereunder whether such waiver be
full or partial, shall extend to or be construed to effect any subsequent
default or

 

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to impair the rights resulting therefrom. Seller shall pay any and all fees,
costs and expenses (including reasonable attorneys’ fees), incurred by Purchaser
in enforcing or realizing upon the obligations of Seller hereunder. Seller shall
have the option, at any time following the second anniversary of the Closing
Date, to obtain a release of the Pledged Units and to instead deposit with
Purchaser cash in an amount equal to the number of Pledged Units multiplied by
the then unit price of such Pledged Units (which unit price shall be calculated
based on the average closing price for the common stock of the REIT on the New
York Stock Exchange for the ten (10) trading days immediately preceding such
date), which cash shall be held as security for Seller’s obligations under this
Section 4.5.6 (the “Pledged Cash”) on the same terms and conditions applicable
to the Pledged Units. On the third anniversary of the Closing Date, the Pledged
Cash or Pledged Units (including the amount of any distributions paid with
respect to the Pledged Units), less 125% of the amount, if any, of any
additional transfer taxes then being claimed by the State of New York or the
City of New York on the transaction set forth herein (which amount shall be
calculated based on the average closing price for the common stock of the REIT
on the New York Stock Exchange for the ten (10) trading days immediately
preceding such third anniversary), shall be released to Seller or its designee.

 

4.6

Conditions Precedent to Obligation of Purchaser. The obligation of Purchaser to
consummate the transaction hereunder shall be subject to the fulfillment on or
before the Closing Date of all of the following conditions, any or all of which
may be waived by Purchaser in its sole discretion:

(a) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date, as remade on the Closing Date pursuant to the certificate described in
Section 4.2(u) above.

(b) Seller shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Seller as of the Closing Date.

(c) Seller shall have delivered to Purchaser or deposited with Escrow Agent all
of the items required to be delivered to Purchaser or deposited with Escrow
Agent pursuant to the terms of this Agreement, including, but not limited to,
those provided for in Section 4.2 (as may be modified as set forth therein),
including, without limitation, the Common Charge Statement.

(d) Title Company shall have issued, or be unconditionally (subject to payment
of title premiums) committed to issue, the Title Policy.

(e) Seller shall have delivered to Purchaser a Tenant Estoppel from Starbucks
substantially in the form required under Section 5.6(b) or a Seller Estoppel in
lieu thereof in accordance with Section 5.6(b).

(f) The Mortgage Assignment shall have been obtained or, if the Mortgage
Assignment has not been obtained, Seller shall have affirmatively elected to
provide to Purchaser a credit against the Purchase Price in amount of the
mortgage recording tax savings that would have been achieved thereby in
accordance with Section 2.6.

 

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4.7

Conditions Precedent to Obligation of Seller. The obligation of Seller to
consummate the transaction hereunder shall be subject to the fulfillment on or
before the Closing Date of all of the following conditions, any or all of which
may be waived by Seller in writing in its sole discretion:

(a) Purchaser shall have deposited with Escrow Agent the Purchase Price as
adjusted pursuant to and payable in the manner provided for in this Agreement.

(b) All of the representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date, as remade on the Closing Date pursuant to the certificate described in
Section 4.3(d) above.

(c) Purchaser shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the Closing Date.

(d) Seller shall have received, and provided Purchaser a copy of, the No Action
Letter.

(e) Purchaser shall have deposited with Escrow Agent all of the items required
to be delivered to Seller or deposited with Escrow Agent pursuant to the terms
of this Agreement, including, but not limited to, those provided for in
Section 4.3 (as may be modified as set forth therein).

(f) Seller shall have received and provided Purchaser notice of its receipt of
(i) the written consent of the Existing Mortgage Lender, the mezzanine lenders
and/or any servicer acting upon their behalf (collectively, the “Lenders”) to
the transactions contemplated herein and an agreement by the Lenders to accept a
discounted payoff of their loans in an aggregate amount equal to $382,800,000
less Seller’s closing expenses (such consent, the “DPO Consent”), Seller
agreeing to request the DPO Consent from its lenders within four (4) business
days after the execution of this Agreement and to use commercially reasonable
efforts to obtain same as soon as reasonably possible and (ii) written
confirmation from PC TWC LLC (“Rockpoint”) within five (5) business days after
its receipt of the request for the DPO Consent, confirming the portion of the
Mortgage owned by Rockpoint and its affiliates and confirming that Rockpoint
will vote in favor of the transaction set forth therein.

 

4.8

Failure or Waiver of Conditions Precedent. In the event any of the conditions
set forth in subsections (d) or (f) of Section 4.7 are not fulfilled or waived
on or before the Outside DPO Consent Approval Date or in the event any of the
other conditions set forth in Sections 4.6 or 4.7 are not fulfilled or waived on
or before the Closing Date, the party benefited by such condition may, by
written notice to the other party, terminate this Agreement, whereupon, as set
forth in the Agreement, to the extent the Earnest Money has been funded by
Purchaser pursuant to Section 1.6 above, the Earnest Money shall, as provided
herein, either be refunded to Purchaser (less, if Seller is not in default under
this Agreement, Purchaser’s share of any escrow charges) or the Earnest Money
shall be delivered to Seller and all rights and obligations hereunder of each
party shall terminate

 

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except those that expressly survive any termination of this Agreement. In the
event that (i) the only condition or conditions to Closing that have not been
fulfilled or waived on or before the Outside DPO Consent Approval Date are the
conditions set forth in Section 4.7 (d) or (f) and Seller has elected not to
waive such condition and (ii) Purchaser is not otherwise in default of its
obligations under this Agreement, Seller shall: (a) pay to Purchaser a break-up
fee in the amount of $1,000,000 and (b) reimburse Purchaser for its reasonable,
out-of-pocket, third-party costs and expenses actually incurred by Purchaser in
connection with its attempt to acquire and finance the Property (including for
any costs or expenses payable by Seller pursuant to Section 1.5(d) above) in an
amount not to exceed $600,000 (provided Purchaser provides documentation
reasonably satisfactory to Seller evidencing the nature and amount of such costs
and expenses). Either party benefited by a condition set forth in Sections 4.6
and 4.7 above may, at its election, at any time or times on or before the date
specified for the satisfaction of the condition, waive in writing the benefit of
such condition. The parties’ consummation of the Closing pursuant to this
Agreement shall waive any remaining unfulfilled conditions and any liability on
the part of the other party for breaches of representations and warranties of
which such party had actual knowledge as of the Closing.

 

4.9

Alcoholic Beverage License.

(a) Purchaser acknowledges that PCH is the current licensee under the existing
alcoholic beverage license for the Hotel (the “Existing Liquor License”). Seller
shall cooperate with Purchaser in arranging for the transfer of the Existing
Liquor License to Purchaser (including, if requested by Purchaser, Seller
depositing its license in safekeeping with the New York State Liquor Authority
during the pendency of Purchaser’s temporary retail permit), provided that such
transfer and cooperation shall (i) not create any potential liability for Seller
and (ii) be at no cost or expense to Seller. In no event shall Seller be
required to transfer to Purchaser any alcoholic beverage inventory which is
located at or held for use in the Hotel unless and until Purchaser has obtained
a valid and effective license entitling Purchaser to sell alcoholic beverages at
the Hotel and only to the extent that Seller is permitted to transfer such
inventories pursuant to applicable law.

(b) Promptly following the expiration of the Inspection Period, Purchaser shall
file all necessary applications and supporting materials with the New York State
Liquor Authority as may be required to obtain a temporary liquor license for the
Hotel, and shall diligently pursue the issuance of such liquor license. If
Purchaser has not secured a temporary or permanent liquor license or the
transfer of the Existing Liquor License as of the Closing Date, then Purchaser’s
obligation to close the purchase of the Hotel shall not be excused or delayed or
in any other way be affected thereby, the Purchase Price shall not be reduced
and Seller shall have no additional obligation as a result thereof. If this
Agreement is terminated and Purchaser has filed an application or otherwise
commenced the processing of obtaining new licenses and permits, Purchaser shall
withdraw all such applications and cease all other activities with respect to
such new license and permits. Purchaser’s obligations under this Section 4.9(b)
shall survive the termination of this Agreement.

 

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4.10

Designation Agreement. On or before the Closing Date, Seller and Purchaser shall
each execute an original counterpart of a Designation Agreement, substantially
in the form of Exhibit G attached hereto, which Designation Agreement names the
Title Company as the “Reporting Person” under Section 6045(e) of the Internal
Revenue Code (the “Designation Agreement”).

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

5.1

Representations and Warranties of Seller. Each of PCH, TIC and Leaseco on its
own behalf, and not on behalf of any other entity (for the avoidance of doubt,
subject to the last sentence of Section 9.4(d) below, the term “Seller” as used
in this Section 5.1 shall refer only to such individual entity), hereby make the
following representations and warranties to Purchaser as of the Effective Date,
subject to the qualifications and exceptions set forth below:

(a) Organization and Authority. Seller has been duly organized and is validly
existing and in good standing under the laws of Delaware and, to the extent
required by law, is qualified to do business in the State of New York. Seller
has all corporate or limited liability company right, power and authority to
enter into this Agreement, to transfer the Property to Purchaser pursuant
hereto, to consummate or cause to be consummated the transactions contemplated
herein and to otherwise perform its obligations under this Agreement; and all of
the foregoing have been authorized by all necessary corporate or limited
liability company action on the part of Seller. The person signing this
Agreement on behalf of Seller is authorized to do so.

(b) Enforceability. This Agreement constitutes, and all other documents required
by this Agreement to be executed by Seller shall constitute when so executed,
the valid and binding obligation of Seller, enforceable against Seller in
accordance with their respective terms, except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency, moratorium and other
principles relating to or limiting the rights of contracting parties generally.

(c) No Breach. The execution, delivery and performance of this Agreement by
Seller and the consummation of the transaction contemplated herein will not:
(i) result in a breach or acceleration of or constitute a default or event of
termination under the provisions of any material agreement or instrument by
which the Property is bound or affected or by which Seller is affected;
(ii) result in the creation or imposition of any lien, charge or encumbrance,
against the Property or any portion thereof; or (iii) constitute or result in
the violation or breach by Seller of any judgment, order, writ, injunction or
decree issued against or imposed upon Seller or result in the violation of any
applicable law, rule or regulation of any governmental authority affecting the
Property.

(d) Litigation/Condemnation. Except as set forth on Schedule 5.1(d) attached
hereto, to Seller’s knowledge, Seller has not received written notice of any
action, suit, condemnation or eminent domain proceeding, or other litigation or
proceeding which has

 

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been filed against Seller or with respect to the Property. In addition, to
Seller’s knowledge, there is no action, suit, condemnation or eminent domain
proceeding, or other litigation or proceeding that has been threatened in
writing that arises out of the ownership of the Property that is not covered by
insurance.

(e) Leases. The list of Leases attached hereto as Schedule 1.1(h) is accurate
and lists all Leases currently affecting the Hotel, including the dates thereof
and the dates of all amendments and modifications; and Seller has delivered a
true and correct copy of such Leases to Purchaser. Except as set forth on
Schedule 1.1(h), no written notice of any uncured default has been delivered by
Seller or received by Seller with respect to any Leases and, to Seller’s
knowledge, there are no material defaults under the Leases. Schedule 1.1(h) sets
forth all security deposits currently being held by Seller in connection with
the Leases, and Schedule 1.1(h) lists all leasing expenses, including brokerage
commissions and tenant improvement allowances, outstanding with respect to the
Leases.

(f) No Violations; No Special Assessments. Except as set forth on Schedule
5.1(f) attached hereto, to Seller’s knowledge, Seller has not received any
written notification from any governmental authority that the Property is in
violation of any applicable fire, health, building, use, occupancy or zoning
laws or other statute, ordinance, law or code (including without limitation
Environmental Laws (defined below) and the Americans with Disabilities Act, as
amended) bearing on the construction, operation or use of the Property or any
part thereof where such violation remains outstanding. Seller has not received
any written notice of any pending or, to Seller’s knowledge, threatened special
assessments with respect to the Property.

(g) Service Contracts and Equipment Leases. There are no Service Contracts or
Equipment Leases which will affect the Property after the Closing Date except as
set forth on the Schedule 1.1(e)-1 and Schedule 1.1(e)-2, respectively, and no
Service Contracts or Equipment Leases have been amended except as set forth in
said Schedules. Except as set forth on the Schedule 1.1(e)-1 and Schedule
1.1(e)-2, respectively, no written notice of any uncured material default has
been delivered by Seller or, to Seller’s knowledge, received by Seller with
respect to any Service Contracts or Equipment Leases and, to Seller’s knowledge,
there are no material defaults under the Service Contracts or Equipment Leases.
The copies of Service Contracts and Equipment Leases delivered or made available
to Purchaser by Seller are true and complete.

(h) No Consents. Other than in connection with the debt payoff of the Lenders,
no consent, approval or action of, filing with or notice to any governmental or
regulatory authority or any other person or entity on the part of Seller is
required in connection with the execution, delivery and performance of Agreement
or the consummation of the transactions contemplated.

(i) Patriot Act Compliance. Neither Seller nor any individual or entity having
an interest in Seller or controlled by Seller (i) is in violation of any
applicable anti-money laundering or anti-bribery laws and regulations, (ii) is a
person or entity listed on the Specially Designated Nationals and Blocked
Persons List maintained by the Office of

 

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Foreign Assets Control, Department of the Treasury (“OFAC”) pursuant to
Executive Order No. 13224, 66 Fed. Reg. 49079 (September 25, 2001) (the “Order”)
and/or on any other list of terrorists or terrorist organizations maintained
pursuant to any of the rules and regulations of OFAC or pursuant to any other
applicable orders (such lists are collectively referred to as the “Lists”);
(iii) is a person or entity who has been determined by competent authority to be
subject to the prohibitions contained in the Order; or (iv) is owned or
controlled by, or acts for or on behalf of, any person or entity on the Lists or
any other person or entity who has been determined by competent authority to be
subject to the prohibitions contained in the Order.

(j) Employees. There are no employees of the Hotel other than those Hotel
Employees (defined below) who are employed by Manager with respect to the Hotel.
Except for the Collective Bargaining Agreement (defined below), there are no
union contracts or employment agreements in effect with respect to Hotel
Employees; and the Collective Bargaining Agreement has not been modified or
amended. Seller has delivered a true and complete copy of the Collective
Bargaining Agreement and any Manager-sponsored benefit plans affecting the Hotel
Employees to Purchaser. To Seller’s knowledge, except as listed in Schedule
5.1(j), there are no grievances or material defaults under the Collective
Bargaining Agreement and there are no unfair labor practice charges or other
labor actions pending or threatened with respect to the Hotel Employees.

(k) Vouchers. Attached as Schedule 4.4.12 hereto is a list of all outstanding
Vouchers. There are no frequent guest or other reward programs in effect with
respect to the Hotel.

(l) ERISA. Seller is not and is not acting on behalf of an “employee benefit
plan” within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA,
a “plan” within the meaning of Section 4975 of the Internal Revenue Code of
1986, as amended (the “Code”), that is subject to Section 4975 of the Code, or
an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §
2510.3-101 (as modified by Section 3(42) of ERISA) of any such employee benefit
plan or plans.

(m) Bankruptcy. No voluntary or involuntary actions are pending against Seller
under the bankruptcy laws of the United States or any state thereof, and Seller
has not made any general assignment for the benefit of creditors or permitted
the appointment of a receiver of its business or assets.

(n) Financial Statements. The financial statements listed on Schedule 5.1(n)
were prepared in accordance with the Uniform System of Accounts for the Lodging
Industry as modified pursuant to Section 4.4.11, and (2) fairly present in all
material respects the financial performance of the Hotel for the periods
reflected therein, except as may be reflected on any footnotes to such
statements or supplemental materials relating thereto.

(o) Names and Trademarks. The “Park Central Hotel” name used in connection with
the operation of the Hotel, is not registered with any governmental authorities;
and, to Seller’s knowledge, no person is alleging that the use of such name in
connection with the Hotel violates any ownership or other rights of any third
parties.

 

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(p) Condominium. The Condominium Declaration and By-Laws have not been modified
or amended except as set forth in the definition of the Condominium Declaration
above, and Seller has provided Purchaser with a true, correct and complete copy
of the Condominium Declaration and By-Laws. There are no rules and regulations
in effect with respect to the Building. The owner of the Hotel Unit is not
deemed to be a sponsor of the Timeshare Units (as defined in the Condominium
Declaration). Seller has paid all assessments which are currently due and
payable by the Hotel Unit to the Condominium; and, to Seller’s knowledge, there
are no special assessments pending, threatened or contemplated by the
Condominium. To Seller’s knowledge, no party is currently in default under the
Condominium Declaration. To Seller’s knowledge, there has been no meeting of the
Condominium Board since the date Seller acquired the Hotel Unit.

(q) Seller’s Unit Representations. If Seller elects to receive a portion of the
Purchase Price in Units as provided in Section 1.5(d) above, Seller also hereby
makes the following representations and warranties to Purchaser as of the
Effective Date, subject to the qualifications and exceptions set forth below:

 

  (i)

Upon the issuance of the Units to Seller, Seller shall become subject to, and
shall be bound by, the terms and provisions of the Partnership Agreement,
including the terms of the power of attorney contained in Section 15.11 thereof,
as the Partnership Agreement may be amended and restated from time to time in
accordance with its terms.

 

  (ii)

Seller has had a reasonable opportunity to ask questions of and receive
information and answers from a person or persons acting on behalf of the REIT
and Purchaser concerning their business and the transactions contemplated by
this Agreement. Seller has reviewed and is familiar with the Partnership
Agreement and the REIT’s SEC reports, including the information contained under
“Risk Factors” in the REIT’s annual report on Form 10-K for the year ended
December 31, 2010, and in its quarterly report on Form 10-Q for the year ended
March 31, 2011.

 

  (iii)

Seller is acquiring the Units solely for its own account as principal, for
investment and not with a view to, or in connection with, any resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Seller otherwise than in transactions pursuant to a registration statement filed
by Purchaser (which Purchaser has no obligation to file), or that are exempt
from the registration requirements of the 1933 Act and all applicable state and
foreign securities registration, and the REIT may refuse to transfer any Units
as to which evidence of such registration or exemptions of such registration
requirements reasonably satisfactory to the REIT is not provided to it (such
ability to refuse being in addition to the transfer restrictions contained in
the Partnership Agreement), which

 

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evidence may include the requirement of legal opinions regarding the exemption
from such registration. If the REIT elects, in its sole discretion, to deliver
to Seller REIT Shares upon redemption of any Units, such shares will be acquired
for its own account as principal, for investment and not with a view to, or in
connection with, any resale or distribution, and such shares may not be
transferred or otherwise disposed of by Seller otherwise than in transactions
pursuant to a registration statement filed by the REIT with respect to the REIT
Shares (which it has an obligation to file only pursuant to the Registration
Rights Agreement) or that are exempt from the registration requirements of the
1933 Act and all applicable state and foreign securities laws, and the REIT may
refuse to transfer any of the REIT Shares as to which evidence of such
registration or exemptions of such registration reasonably satisfactory to the
REIT is not provided to it, which evidence may include the requirements of legal
opinions regarding the exemption from such registration.

 

  (iv)

Seller is an Accredited Investor and has sufficient knowledge and experience in
financial, tax or business matters to enable Seller to evaluate the merits and
risks of an investment in Units. Seller has the ability to bear the economic
risk of acquiring the Units and holding such units indefinitely and is able to
afford the complete loss of its investment therein.

 

5.2

Representations with respect to Lessee LLC. If the Restructure Consent has been
obtained, the Restructuring has been implemented and Leaseco is conveying to
Purchaser its Membership Interests in Lessee LLC, Highgate Guarantor makes,
effective as of the Closing Date and as of the Closing, the following
representations and warranties with regard to Lessee LLC:

(a) Title and Ownership. Leaseco is the record and beneficial owner of 100% of
the Membership Interests in Lessee LLC and has good, valid, and indefeasible
title to the Membership Interests free and clear of any Encumbrances. For
purposes of this Agreement, an “Encumbrance” means any liability, debt,
mortgage, deed of trust, pledge, security interest, encumbrance, option, right
of first refusal, agreement of sale, adverse claim, easement, lien, assessment,
restrictive covenant, encroachment, burden or charge of any kind or nature
whatsoever. Set forth on Schedule 5.2(a) is a list of the organizational
documents (the “Lessee LLC Documents”) of Lessee LLC in effect as of the
Effective Date. Leaseco has furnished to Purchaser true, correct, and complete
copies of the Lessee LLC Documents (including all amendments or modifications
thereto) as in effect on the Effective Date.

(b) No Options, Rights, or Warrants. There are no existing options, rights,
warrants, commitments, agreements, or instruments or any type to which Leaseco
is bound, or to which the Membership Interests are subject, under or pursuant to
which any person or entity shall be given, provided or otherwise afforded the
right, option, occasion, possibility, or opportunity to purchase any portion of
the Membership Interests.

 

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(c) No Assets. As of the Effective Date, Lessee LLC has no assets and as of the
Closing Date (to the extent the Restructuring Consent is obtained and the
Restructuring implemented) it shall have only those assets as permitted by
Section 5.6(a) below.

(d) No Contracts or Liabilities. As of the Closing, Lessee LLC shall have no
(A) contracts or agreements other than those which Seller is permitted to have
hereunder as of the Closing and (B) liabilities other than those for which
Purchaser is reimbursed for at Closing; and there shall be no pending or
threatened litigation with respect to Lessee LLC.

(e) No Employees. Lessee shall have no employees.

 

5.3

Limitations on Representations and Warranties. Notwithstanding the foregoing
representations and warranties in Sections 5.1 and 5.2 hereof, if Purchaser has
knowledge of a breach of any representation or warranty made by Seller or
Highgate Guarantor in this Agreement prior to Closing and Purchaser nevertheless
proceeds to close the purchase of the Property, such representation or warranty
by Seller or Highgate Guarantor shall be deemed to be qualified or modified to
reflect Purchaser’s knowledge of such breach and Seller shall have no liability
whatsoever respecting the same.

 

5.4

Knowledge Defined. For purposes of this Agreement, “knowledge” means (a) with
respect to Seller, the actual knowledge of Vann Avedisian, Steve Barick and
Louis Llach (provided that, in no event shall such person have any personal
liability arising under this Agreement), without any duty of inquiry or
investigation, and expressly excluding the knowledge of any other shareholder,
partner, member, trustee, beneficiary, director, officer, employee, agent or
representative of Seller, Manager or any of its affiliates, and (b) with respect
to Purchaser, (i) the actual knowledge of Alfred L. Young and Ian M. Gaum
(provided that, in no event shall such person(s) have any personal liability
arising under this Agreement), (ii) any matter disclosed in any exhibits or
schedules to this Agreement, (iii) any matter disclosed in any of the Seller Due
Diligence Materials or any other documents or materials provided or made
available by Seller or its agents to Purchaser prior to Closing that are listed
on Schedule 5.4 attached hereto (it being agreed that Seller shall have the
right to amend such Schedule 5.4 from time to time to the extent additional
Seller Due Diligence Materials or any other documents or materials are provided
or made available by Seller or its agents to Purchaser prior to the Closing)
(iv) any matter disclosed by Purchaser’s inspections or investigations of the
Property, and (v) any matter disclosed by a Tenant Estoppel (defined below).

 

5.5

Survival of Seller’s Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall survive Closing for a
period of twelve (12) months. No claim for a breach of any representation or
warranty of Seller shall be actionable or payable after Closing unless each of
the following conditions is satisfied: (a) the breach in question results from
or is based on a condition, state of facts or other matter which was not
actually known to Purchaser prior to Closing, (b) the valid claims for all such
breaches, if any, collectively aggregate more than Twenty Five Thousand and
00/100 Dollars ($25,000), in which event the total amount of such claims shall
be actionable, and (c) written notice containing a description of the specific
nature of such

 

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breach shall have been given by Purchaser to Seller prior to the expiration of
said 12-month period. As used herein, the term “Cap” shall mean the total
aggregate amount of Eight Million Two Hundred Thousand and 00/100 Dollars
($8,200,000.00). All claims by Purchaser for losses due to Seller’s breach of
any representation or warranty hereunder shall be made in accordance with the
terms of Section 9.4 and the Holdback Escrow Agreement (as hereinafter defined).
Notwithstanding any provision of this Agreement to the contrary, in no event
shall (i) Seller’s aggregate liability to Purchaser for breach of any
representation or warranty of Seller in this Agreement, taken in the aggregate
with any other claims by Purchaser against Seller for each other breach of any
representation or warranty of Seller in this Agreement, exceed the amount of the
Cap, or (ii) Seller be liable for any punitive, exemplary, statutory or treble
damages or any incidental or consequential damages.

 

5.6

Covenants of Seller.

 

  (a)

Seller hereby covenants as follows:

 

  (i)

From the Effective Date hereof until the Closing or earlier termination of this
Agreement, Seller shall, and shall use commercially reasonable efforts to cause
Manager to, operate and maintain the Hotel in a manner generally consistent with
the manner in which Seller and Manager have operated and maintained the Hotel
during the twelve (12) month period prior to the date hereof and in a manner
consistent with the current operating and capital plan for the Property (a copy
of which has been previously provided to and approved by Purchaser), in good
condition consistent with past practice, reasonable wear and tear excepted and
so as to maintain levels of Consumable Inventory consistent with past practice.
Without limiting the foregoing, with respect to all notices from any
governmental authority of any legal violations at the Property for which Seller
receives notice copies of prior to Closing, Seller shall cause such violations
to be removed from record or deliver evidence reasonably satisfactory to
Purchaser and its mortgage lender that such violations have been cured prior to
Closing.

 

  (ii)

From the Effective Date hereof until Closing or the earlier termination of this
Agreement, Seller shall perform its obligations under the Existing Management
Agreement in all material respects.

 

  (iii)

From and after the Effective Date, Seller shall not sell, assign or enter into
any agreement to sell or transfer the Hotel or any portion thereof, except for:
(i) agreements executed in connection with the Restructuring and (ii) the
provision of hotel rooms and facilities in the ordinary course.

 

  (iv)

From and after the Effective Date, the Lessee LLC shall not enter into or be a
party to any agreements, except (i) the Operating Lease and the Sublease,
(ii) any loan documents which will either be paid off and released at the
Closing or assigned to Purchaser’s lender at the Closing,

 

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(iii) any other agreement reasonably required to be executed in connection with
the Restructuring which have been approved by Purchaser, such approval not to be
unreasonably withheld as long as such agreement does not increase Purchaser’s
obligations or liabilities, and (iv) any agreement permitted under the terms of
this Agreement in connection with the operation of (or Manager’s operation of),
the Hotel in the ordinary course.

 

  (v)

From and after the Effective Date, Seller shall not (i) enter into any new
management agreement, Leases or Service Contracts or other agreements or
encumbrances with respect to the Property, nor shall Seller enter into any
agreements modifying the Service Contracts or Leases unless (A) any such
agreement or modification will not bind Purchaser or the Property after the
Closing Date or is subject to termination on not more than thirty (30) days’
notice without fee or penalty, (B) Seller has obtained Purchaser’s prior written
consent to such agreement or modification, or (C) with respect to Service
Contracts, such Service Contracts are entered into in the ordinary course and
are consistent with Seller and/or Manager’s prior operation of the Hotel and do
not have a term of more than one (1) year and do not have a cost of more than
$50,000 per annum, or (ii) grant its consent to any action described in clause
(i) by Manager. Service Contracts, Leases and other similar agreements entered
into or modified after the Effective Date in accordance with this
Section 5.6(a)(iv) shall constitute “Service Contracts” or “Leases” as
applicable and be deemed listed on the appropriate schedules to this Agreement
at Closing, and assigned pursuant to, the Assignment of Contracts and Assignment
of Leases, as applicable.

 

  (vi)

Seller shall deliver audited financial statements for the Property for calendar
year 2010 to Purchaser on or before the date which is five (5) business days
before the end of the Inspection Period.

 

  (vii)

Seller shall complete the capital projects set forth on Schedule 5.6(a)(vi) to
the reasonable satisfaction of Purchaser prior to the Closing.

(b) Following the Effective Date, Seller shall endeavor in good faith to obtain
from each tenant under a Lease an estoppel in the form required under the
applicable Lease (or, if neither a form nor the contents of any estoppel is
specified, in the form attached hereto as Exhibit O (each such estoppel being
referred to herein as a “Tenant Estoppel”). Each such Estoppel Certificate shall
be completed by Seller and delivered to Purchaser for Purchaser’s reasonable
approval prior to delivery to the applicable tenant; provided, however, the
Tenant Estoppel sent to Starbucks shall be in the form attached hereto as
Exhibit O-1. Failure of Seller to obtain from any tenant or deliver any Tenant
Estoppel shall not be deemed a Seller default, nor failure of a condition
precedent to Purchaser’s obligations to consummate the purchase of the Property
pursuant to this Agreement, provided that failure to obtain a Tenant Estoppel
substantially in the form attached hereto as Exhibit O-1 from Starbucks shall be
deemed a failure of a condition precedent to Purchaser’s obligations to
consummate the purchase of the Property pursuant to this

 

40

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Agreement, but not a Seller default hereunder. In the event that Seller is
unable to obtain a Tenant Estoppel from Starbucks meeting the requirements of
this Section 5.6 on or prior to the Closing, Seller shall have the right, in
lieu thereof and in satisfaction of the condition to Closing in respect of such
Tenant Estoppel, to deliver a seller estoppel certificate (a “Seller Estoppel”)
for such Tenant Estoppel.

(c) Seller shall use commercially reasonable efforts to obtain any consents
necessary to transfer any of the items described in Sections 1.1(e) or
(f) hereto to Purchaser hereunder.

(d) Seller shall maintain all of its current insurance policies in place until
Closing.

 

5.7

Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants to Seller:

(a) ERISA. Purchaser is not acquiring the Property with the assets of an
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974.

(b) Organization and Authority. Purchaser has been duly organized and is validly
existing and in good standing under the laws of Delaware and is or will be
qualified to do business in the State of New York. Purchaser has all limited
partnership right, power and authority to enter into this Agreement, to acquire
the Property from Seller pursuant hereto, to consummate or cause to be
consummated the transactions contemplated herein and to otherwise perform its
obligations under this Agreement; and all of the foregoing have been authorized
by all necessary limited partnership action on the part of Purchaser. The person
signing this Agreement on behalf of Purchaser is authorized to do so.

(c) Enforceability. This Agreement constitutes, and all other documents required
by this Agreement to be executed by Purchaser shall constitute when so executed,
the valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with their respective terms, except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency, moratorium and other
principles relating to or limiting the rights of contracting parties generally.

(d) No Breach. The execution, delivery and performance of this Agreement by
Purchaser and the consummation of the transaction contemplated herein will not:
(i) result in a breach or acceleration of or constitute a default under any
agreement or instrument by which Purchaser is bound or affected which would have
a material adverse impact on the ability of Purchaser to timely close the
acquisition of the Property pursuant to the terms of this Agreement; or
(ii) constitute or result in the violation or breach by Purchaser of any
judgment, order, writ, injunction or decree issued against or imposed upon
Purchaser or result in the violation of any applicable law, rule or regulation
of any governmental authority which, with respect to any of the foregoing, would
have a material adverse impact on the ability of Purchaser to timely complete
the acquisition of the Property pursuant to this Agreement.

 

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(e) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part
of Purchaser is required in connection with the execution, delivery and
performance of Agreement or the consummation of the transactions contemplated.

(f) Pending Actions. There is no action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending against Purchaser
which, if adversely determined, could individually or in the aggregate
materially interfere with the consummation of the transaction contemplated by
this Agreement.

(g) Patriot Act Compliance. Neither Purchaser nor any individual or entity
having an interest in Purchaser or controlled by Purchaser (i) is in violation
of any applicable anti-money laundering or anti-bribery laws and regulations,
(ii) is a person or entity listed on the Lists; (iii) is a person or entity who
has been determined by competent authority to be subject to the prohibitions
contained in the Order; or (iv) is owned or controlled by, or acts for or on
behalf of, any person or entity on the Lists or any other person or entity who
has been determined by competent authority to be subject to the prohibitions
contained in the Order.

(h) Tax Identification Number. Purchaser’s valid tax identification number is
36-4217399.

(i) Bankruptcy. No voluntary or involuntary actions are pending against
Purchaser under the bankruptcy laws of the United States or any state thereof,
and Purchaser has not made any general assignment for the benefit of creditors
or permitted the appointment of a receiver of its business or assets.

(j) No Financing Contingency. Purchaser expressly acknowledges that this
transaction is not subject to any financing contingency.

(k) Purchaser’s Unit Representations. If Seller elects to receive a portion of
the Purchase Price in Units as provided in Section 1.5(d) above, Purchaser also
hereby makes the following representations and warranties to Seller as of the
Effective Date, subject to the qualifications and exceptions set forth below:

 

  (i)

The reports required to be filed by the REIT under the securities laws and the
rules and regulations adopted by the Securities and Exchange Commission (“SEC”)
thereunder (the “REIT Reports”) have been timely filed by the REIT with the SEC.
The REIT Reports were, and all reports filed by the REIT after the date hereof
through the Closing Date (“Subsequent REIT Reports”) will be, prepared and filed
in compliance with the 1934 Act and the rules and regulations promulgated by the
SEC thereunder, and did not, or will not, as of their respective dates, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made or will be made, not misleading. The
consolidated financial statements and the interim

 

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consolidated financial statements of the REIT included in the REIT Reports were
prepared, and the consolidated financial statements of the REIT that will be
included in any Subsequent REIT Reports will be prepared, in accordance with
GAAP (except as may be indicated in the notes thereto) and fairly presented, or
will fairly present, in all material respects the consolidated financial
condition and results of operations of the REIT and its subsidiaries as at the
dates thereof and for the periods then ended, subject, in the case of the
interim consolidated financial statements, to normal year-end adjustments and
any other adjustments described therein; and no material adverse change has
occurred therein for the respective dates thereof to the date hereof.

 

  (ii)

Purchaser has delivered to Seller true, correct and complete copies of the
Partnership Agreement, and the Partnership Agreement provided to Seller has not
since been amended or modified.

 

  (iii)

The REIT controls all of the activities of Purchaser as its sole general
partner, and substantially all of the assets described in the REIT Reports are
held directly or indirectly by Purchaser.

Notwithstanding the foregoing, if Seller has knowledge of a breach of any
representation or warranty made by Purchaser in this Agreement prior to Closing
and Seller nevertheless proceeds to close the sale of the Property, such
representation or warranty by Purchaser shall be deemed to be qualified or
modified to reflect Seller’s knowledge of such breach and Purchaser shall have
no liability whatsoever respecting the same.

 

5.8

Survival of Purchaser’s Representations and Warranties. The representations and
warranties of Purchaser set forth in Section 5.7 shall survive Closing for a
period of twelve (12) months.

 

5.9

Covenants of Purchaser and of Seller.

(a) Purchaser may at its election (but subject to the limitations of Section 3.1
above), inspect the Property for the presence of Hazardous Substances (as
defined below), and, at Seller’s request if and when this Agreement is
terminated, shall furnish to Seller without representation or warranty copies of
any reports received by Purchaser in connection with any such inspection.
Purchaser shall, if and when this Agreement is terminated, also furnish to
Seller without representation or warranty copies of any other reports received
by Purchaser relating to any other physical inspections of the Property
conducted on Purchaser’s behalf, if any (including, specifically, without
limitation, any reports analyzing compliance of the Property with the provisions
of the Americans with Disabilities Act (“ADA”), 42 U.S.C. §12101, et seq., if
applicable). As used herein, “Hazardous Substances” means all hazardous or toxic
materials, substances, pollutants, contaminants, or wastes currently or
hereafter identified as a hazardous substance or waste in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (commonly known
as “CERCLA”), as amended, the Superfund Amendments and Reauthorization Act
(commonly known as “SARA”), the Resource Conservation and Recovery Act (commonly
known as “RCRA”), or any other federal, state or local legislation or ordinances
applicable to the Property (collectively, “Environmental Laws”).

 

43

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(b) Purchaser hereby assumes full responsibility for its inspections of the
Property regarding Hazardous Substances and irrevocably waives any claim against
Seller and releases Seller from all liability arising from the presence of
Hazardous Substances on the Property, except to the extent subject to the
express representations, warranties and covenants set forth in this Agreement.

(c) Not later than three (3) days prior to the Closing, Seller shall send, or
cause the Manager to send, written notice to guests or other persons who have
safe deposit boxes at the Hotel advising of the sale of the Hotel and requesting
verification or removal of the contents within two (2) days. The safe deposit
boxes of guests or other persons not responding to said written notice shall be
opened only in the presence of a representative of Purchaser and a
representative of either Seller or Manager on the morning of the Closing Date.
The contents of all boxes opened as aforesaid shall be listed at the time such
boxes are opened and each such list shall be signed by or on behalf of Purchaser
and either the Manager or Seller, and Purchaser shall not be liable or
responsible for any items claimed to have been in said boxes unless such items
are included in such list. Seller agrees to indemnify, defend and hold Purchaser
harmless from and against any liability or responsibility for any items claimed
to have been in said boxes but not included on such list or any damage noted on
such list to such items; and Purchaser agrees to indemnify, defend and hold
Seller harmless from and against any liability or responsibility for items
claimed to have been in said boxes and included in such list (other than for any
damage to such items noted on such list) and all claims, losses and liabilities
with respect thereto arising out of the acts or omissions of Purchaser after the
Closing Date.

(d) All baggage or other property of guests of the Hotel which has been checked
with or left in the care of Seller and remains in Seller’s care as of the
Cut-Off Time shall be inventoried and tagged jointly by Seller and Purchaser.
Purchaser hereby agrees to defend, indemnify and hold harmless Seller against
any claims, losses or liabilities in connection with such tagged baggage and
property arising out of the acts or omissions of Purchaser from and after the
Closing Date. Seller hereby agrees to defend, indemnify and hold harmless
Purchaser against all claims, losses and liabilities with respect to such tagged
baggage and property arising out of the acts or omissions of Seller prior to the
Closing Date. Seller also agrees to defend, indemnify and hold harmless
Purchaser against all claims, losses and liabilities with respect to any baggage
and property claimed to have been left at the Property before such list was
prepared and not appearing on such list.

(e) Purchaser shall honor (and shall cause Manager to honor) all reservations
made in the ordinary course of business at the Hotel (including honoring the
rates at which such reservations were made), or for any related conference,
banquet, or meeting space or any other facilities in connection with the Hotel
made by Seller on or prior to the Cut-Off Time for periods on or after the
Closing Date.

 

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(f) Within five (5) business days after the expiration of the Inspection Period,
Purchaser shall execute and file with the State of New York Department of
Taxation and Finance the Notification of Sale, Transfer or Assignment in Bulk
(“Bulk Sales Report”) required under Section 1141(c), Article 28 of the New York
State Sales and Use Tax Law prior to Closing with respect to the Seller and
Lessee LLC. Except in the event such failure to file is due to Seller’s or
Lessee LLC’s failure to comply with its obligations under this Section 5.9(f),
(i) Purchaser shall not withhold payment of any portion of the Purchase Price in
the event of its failure to file or to complete the filing of the Bulk Sales
Report prior to Closing, and (ii) Closing is not contingent on filing the Bulk
Sales Report. Seller and Lessee LLC shall reasonably cooperate with Purchaser,
at no material out-of-pocket cost to Seller or Lessee LLC, in filing the Bulk
Sales Report. Seller and Purchaser hereby acknowledge and agree that the
Purchase Price shall be allocated in accordance with Section 1.5 hereof for
purposes of completing the Bulk Sales Report and any other tax filings required
under the State Transfer Tax Law, the City Transfer Tax Law and any other
applicable local, state or federal laws. Except in the event such failure to
file is due to Seller’s or Lessee LLC’s failure to comply with its obligations
under this Section 5.9(f), Purchaser shall be liable, and shall indemnify and
hold Seller and Lessee LLC harmless, for any claims any state or county taxing
authority may make (including costs, penalties and interest associated
therewith) as a result of Purchaser’s failure to file, or untimely filing, of
the Bulk Sales Report. If, in response to the Bulk Sales Report, the State of
New York (the “State”) notifies Seller, Lessee LLC or Purchaser that any taxes
are or may be due from Seller or Lessee LLC for the period prior to the Closing
Date, other than any taxes due on the transaction set forth herein; the amount
of such taxes (if not paid or resolved by Seller or Lessee LLC, as the case may
be, prior to Closing) shall be placed in escrow with the Title Company by Seller
at Closing; and Seller and Lessee LLC shall work diligently to resolve the
amount of such taxes and pay them to the State. Upon such resolution and
payment, any remaining funds in such escrow shall be released to Seller. If the
State makes a demand on Purchaser at any time for payment of such taxes and all
rights of Seller or Lessee LLC, as the case may be, which would legally preclude
payment of such taxes have been exhausted, an amount equal to such demand shall
be either paid directly from the Title Company to the State out of such escrow
or released out of such escrow to Purchaser for payment to the State as a credit
against Seller’s tax obligation to the State.

(g) The provisions of this Section 5.9 shall survive Closing or any earlier
termination of this Agreement.

 

5.10

Employees.

(a) For purposes of this Agreement, (i) “Hotel Employees” means, collectively,
all individuals employed at the Hotel by Manager or Seller as of the Closing
Date, irrespective of whether such individuals are active, on layoff, on leaves
of absence, or otherwise inactive but still employed at the Hotel, and
(ii) “Bargaining Unit Employees” shall mean all employees of Seller who work at
the Hotel and are covered by the Collective Bargaining Agreement (defined
below). The provisions of this Agreement set forth in Sections 5.10(b) through
Section 5.10(f) will apply to Purchaser to the extent and only to the extent
that Seller immediately before the Closing has a corresponding and

 

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direct obligation to employ the Hotel Employees or to employ the Bargaining Unit
Employees and to their Union (defined below), the obligation of Purchaser
thereunder will be only to the same extent as the obligation of Seller. The
provisions of Section 5.10(f), and any obligation of Purchaser thereunder shall
be to the same extent and have the same nature as that of Seller immediately
before the Closing. The provisions of Section 5.10(h) will operate and be
applied, if and only to the extent that Seller has an obligation to contribute
to the Retirement Plan that runs directly to such plan. Nothing in this
Section 5.10 is intended by its own force and without the consent of Purchaser
to enlarge any obligation or commitment of Purchaser beyond the obligation or
commitment that Seller has immediately before the Closing.

(b) Purchaser agrees that it will, or it will cause Manager to, extend offers to
hire or retain, effective at and upon Closing, a sufficient number of the Hotel
Employees (“Rehired Employees”) so that Seller shall not be required to give any
layoff, closing or other termination notices or otherwise incur any liability
pursuant to the provisions of the Federal Worker Adjustment and Retraining
Notification Act. 29 U.S.C. 2101-2109 (the “Federal WARN Act”), the New York
State Worker Adjustment and Retraining Notification Act, N.Y. Labor Law §860 et
seq. and 12 NYCRR Part 921 (“New York WARN Act”) and the Displaced Building
Service Workers Act set forth in Section 22-505 of the Administrative Code of
the City of New York (the “Displaced Building Service Workers Act”). Purchaser
further agrees that (i) Bargaining Unit Employees shall be offered employment or
retained by the Manager in accordance with Section 5.10(e) below, (ii) Purchaser
shall be required to assume and discharge all obligations and liabilities of
Seller (which Purchaser may satisfy in full by addressing such obligations under
the terms of its new management agreement with Manager) with respect to costs of
termination of any Hotel Employees who are not Bargaining Unit Employees
(“Non-Union Employees”) incurred after the Closing including, without
limitation, any severance claim made after the Closing by any Non-Union Employee
that is not offered employment by Purchaser (or Purchaser’s Manager).

(c) From and after the Closing, Purchaser (i) shall be solely responsible for
complying or causing compliance with all applicable provisions of federal, state
and municipal laws and regulations relating to Rehired Employees to the extent
relating to the period from and after the Closing Date, including Purchaser’s
covenants set forth in this Section 5.10, including without limitation
compliance with any applicable provisions of the Federal WARN Act or the New
York WARN Act, the Displaced Building Service Workers Act or similar law and
(ii) hereby agrees to indemnify, defend, protect and hold Seller and its
respective affiliates harmless from and against any and all claims, liabilities,
debts, costs, expenses, damages, attorneys’ fees and disbursements arising out
of any violation of the Federal WARN Act or the New York WARN Act or the
Displaced Building Service Workers Act or similar law in connection with the
transaction contemplated by this Agreement. Seller agrees to indemnify, defend,
protect and hold Purchaser and its affiliates harmless from and against any and
all claims, liabilities, debts, costs, expenses, damages, attorneys’ fees and
disbursements arising out of any violation of the Federal WARN Act or the New
York WARN Act or the Displaced Building Service Workers Act or similar law for
any period prior to the Closing (excluding any matters arising from the
transaction contemplated by this Agreement).

 

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(d) During the period prior to Closing, the parties agree to reasonably
cooperate and also to consult on a regular basis and coordinate their activities
relating to employee matters so as to facilitate a smooth transition of Hotel
operations and the continued proper performance by the Hotel Employees of their
respective duties up to Closing other than in the ordinary course of operations,
Seller and/or Manager shall not replace, layoff or terminate any of the Hotel
Employees, without Purchaser’s prior written consent, which consent may not be
unreasonably withheld. Seller shall promptly deliver to Purchaser copies of any
written materials delivered or received relating to Union representation of
Hotel Employees, and Seller shall keep Purchaser updated with respect to the
status of any discussions with respect thereto. Except for the Collective
Bargaining Agreement (defined below), Seller represents and warrants that it has
not executed any agreements with a labor organization or collective bargaining
agreements applicable to Hotel Employees or any other employment contracts or
similar arrangements with respect to the Hotel Employees. Notwithstanding the
foregoing, Seller and/or Manager shall advise the Purchaser of, and consult with
the Purchaser with regard to, the negotiation of any collective bargaining
agreement or any other employment agreement entered into with respect to Hotel
Employees; and such agreements shall be subject to Purchaser’s consent before
execution, which consent shall not be unreasonably withheld, conditioned or
delayed.

(e) Purchaser shall: (i) to the extent within its control, cause the Manager to
credit Rehired Employees with their original date of hire with the Hotel for
purposes of any length of service requirements, waiting periods, or vesting
periods, or differential benefits based on length of service in any benefit plan
established or maintained by or on behalf of Purchaser for which such Hotel
Employees may be eligible after the Closing; (ii) cause the Manager to provide,
subject to the consent of any third-party insurer or other similar third party
having liability for benefit payments, that any pre-existing conditions,
restrictions or waiting periods under any benefit plan established by or on
behalf of Manager providing medical, dental, vision, or prescription drug
coverage or benefits are waived to the extent necessary and possible under the
applicable plans to provide immediate coverage for Rehired Employees; and
(iii) indemnify, defend and hold Seller harmless from and against all loss,
expense (including reasonable attorneys’ fees and disbursements incurred to
enforce this indemnity), damage and liability resulting from any COBRA
obligations arising in respect of Rehired Employees for qualifying events
incurring after the Closing Date and any obligations respecting Rehired
Employees regarding employee benefits offered by Purchaser arising from and
after the Closing Date.

(f) Without limiting any other provision of this Section 5.10, (i) Seller has
informed Purchaser that Seller is a party to and is bound by the terms of that
certain Industry Wide Agreement between Hotel Association of New York, Inc. and
New York Hotel and Motel Trades Council, AFL-CIO (“Union”),which is in effect
through June 30, 2012, including any related written memorandum of understanding
and other related agreements identified on Schedule 5.10(f), as provided by
their terms (collectively, the “Collective Bargaining Agreement”), (ii) a copy
of the Collective Bargaining Agreement had previously been delivered or made
available to Purchaser for its review, and (iii) Purchaser shall (or cause
Manager to) offer to retain all Bargaining Unit Employees and,

 

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if they accept their offers, their employment will continue uninterrupted
without loss of seniority, compensation, benefits or other terms and conditions
of employment subject to the Collective Bargaining Agreement and applicable law,
and (iii) the Purchaser will recognize the Union and assume and be bound by the
Collective Bargaining Agreement from and after the Closing Date. Purchaser
further agrees to an assumption agreement in the form of the IWA Assumption
Agreement attached hereto as Exhibit M and made a part hereof to effectuate an
assumption of the Collective Bargaining Agreement in its name (without
modification or amendment). To the extent required by the Collective Bargaining
Agreement, Purchaser shall also cause its designated manager that becomes the
employer of the Bargaining Unit Employees to be a party to the IWA Assumption
Agreement.

(g) Under the Collective Bargaining Agreement, Seller currently contributes, on
a monthly basis, various amounts under the (A) New York Hotel Trades Council and
Hotel Association of New York City, Inc. Health Benefits Fund, (B) New York
Hotel Trades Council and Hotel Association of New York City, Inc. Pension Fund,
(C) New York Hotel Trades Council and Hotel Association of New York City, Inc.
Prepaid Legal Services Fund, and (D) New York Hotel Trades Council and Hotel
Association of New York City, Inc. Industry Training and Scholarship Fund
(collectively, the “Union Employee Benefit Funds”). At Closing, amounts paid or
payable with respect to the Union Employee Benefit Funds shall be prorated, with
the appropriate party receiving a credit to the Purchase Price, on a pro rata
basis based on the date Closing occurs (i.e., Purchaser will only be liable for
contributions to the Employee Benefit Funds for the Bargaining Unit Employees it
employs for the period from and after the Closing Date).

(h) Retirement Plan.

 

  (i)

The Seller is not currently an “employer” with respect to the Hotel for purposes
of Title IV of ERISA, and subsequent to the Closing Date, the Purchaser will
also not be an “employer” with respect to the Hotel for purposes of Title IV of
ERISA. The “employer” with respect to the Hotel for purposes of Title IV of
ERISA is, as to each of the parties, the manager of the Hotel. As a result,
neither the Seller has nor, subsequent to the Closing Date, the Purchaser shall
have, an obligation to contribute to the New York Hotel Trades Council and Hotel
Association of New York City, Inc. Pension Fund (the “Retirement Plan”) with
respect to the Hotel. The parties recognize, however, that the Retirement Plan
may contend otherwise, and accordingly, the parties have agreed to include
provisions herein sufficient to comply with Section 4204 of ERISA as if the
Seller had an obligation to contribute to the Retirement Plan with respect to
the Hotel. In doing so, neither the Seller nor the Purchaser admits or
acknowledges that it is an “employer” with respect to the Hotel for purposes of
Title IV of ERISA, or has an obligation to contribute to the Retirement Plan
with respect to the Hotel.

 

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  (ii)

Seller and Purchaser agree that during the Contribution Period (as defined
below), Purchaser (to the extent Seller has had an obligation to contribute)
shall make contributions to the Retirement Plan in accordance with the
Collective Bargaining Agreement, for substantially the same number of
contribution base units, within the meaning of Section 4001(a)(11) of ERISA, for
which Seller (or the manager of the Hotel) had an obligation to contribute with
respect to the Hotel. If, as a result of a failure to comply with the foregoing
requirements or as a result of any other action by Purchaser, Seller incurs any
withdrawal liability under the Retirement Plan with respect to the Hotel, the
Purchaser shall indemnify, defend, and hold Seller and any of its ERISA
affiliates harmless from and against any such liability and all related costs
and expenses, including reasonable attorneys’ fees.

 

  (iii)

Purchaser agrees to reasonably cooperate with Seller and/or Retirement Plan
representatives with respect to any inquiry or reasonable request for
information and assistance in order to facilitate the transfer of the
contribution obligation with respect to the Retirement Plan from Seller (or the
manager of the Hotel) to Purchaser (or the manager of the Hotel). The parties
agree that they will notify the Retirement Plan of their intention that this
transaction comply with Section 4204 of ERISA.

 

  (iv)

Subject to Section 5.10(h)(vii), during the period commencing on the first day
of the plan year following the Closing Date and ending on the expiration of the
fifth such plan year (the “Contribution Period”), Purchaser shall provide to the
Retirement Plan either a bond, letter of credit, or an escrow in an amount and
manner meeting the requirements of Section 4204 of ERISA. The cost of any bond,
letter of credit, or escrow provided under this Section 5.10(h)(iv) shall be
paid by Purchaser.

 

  (v)

To the extent required pursuant to Section 4204(a)(3) of ERISA, Seller shall
provide to the Retirement Plan a bond or escrow equal to the present value of
the withdrawal liability Seller would have had to the Retirement Plan with
respect to the assets acquired by Purchaser pursuant to this Agreement (but for
the provisions of Section 4204 of ERISA), reduced to the extent provided under
Section 4204(a)(3) of ERISA in the event only a portion of Seller’ assets are
distributed during the Contribution Period.

 

  (vi)

If Purchaser at any time withdraws from the Retirement Plan in a complete or
partial withdrawal with respect to the assets acquired by Purchaser pursuant to
this Agreement during the Contribution Period, Purchaser shall be primarily
liable and pay, and Seller shall be secondarily liable for any withdrawal
liability Seller would have had to the Retirement Plan with respect to the Hotel
(but for the provisions of Section 4204 of ERISA) if any withdrawal liability of
Purchaser with respect to such Retirement Plan is not paid. Purchaser shall
indemnify and hold Seller harmless for any withdrawal liability incurred by
Seller pursuant to the preceding sentence. Purchaser shall promptly furnish
Seller with a copy of any notice or other communication received from the
Retirement Plan with respect to

 

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withdrawal liability. If any such withdrawal liability shall be assessed against
Purchaser, Purchaser further agrees to provide Seller with reasonable advance
notice of any intention on the part of Purchaser not to make full payment of any
withdrawal liability when the same shall become due. Purchaser shall furnish
Seller with a copy of any notice or communication to the Retirement Plan
relating to Purchaser’s obligations under this Section and Purchaser and Seller
agree to cooperate with each other in the defense of any such claim for
withdrawal liability.

 

  (vii)

Notwithstanding anything contained in Section 5.10(h)(iv) to the contrary,
Purchaser shall not be obligated to provide any bond, letter of credit, or
escrow in the event and to the extent Purchaser obtains from the Retirement Plan
or the Pension Benefit Guaranty Corporation a proper variance or exemption under
Section 4204(c) of ERISA and the applicable regulations thereunder, provided any
and all requirements of said variance or exemption are met and Purchaser
approves such exception. Upon Purchaser’s request, Seller agrees to reasonably
cooperate with Purchaser in providing the Retirement Plan with notice of the
parties’ intention that this transaction be covered by Section 4204 of ERISA.

(i) Purchaser agrees to indemnify, defend and hold harmless Seller and its
officers, directors, members, owners and affiliates (herein, the “Seller-Related
Parties”) from and against any claim, liability, or judgment asserted against
any of the Seller-Related Parties on account of or with respect to any of the
following: (i) any causes of action, damages, complaints, judgments, orders,
notices, payments, fines or assessments and/or claims, whatsoever, and all costs
and expenses (including, without limitation, reasonable attorneys’ fees and
costs) incurred in connection therewith, which may be asserted against any of
the Seller-Related Parties on account of any violation of the National Labor
Relations Act, Title VII of the Civil Rights Act, the Civil Rights Act of 1991,
the Fair Labor Standards Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family and Medical Leave Act, the
Vocational Rehabilitation Act of 1973, the Health Insurance Portability and
Accountability Act, the Older Workers’ Benefit Protection Act, Consolidated
Omnibus Budget Reconciliation Act, Occupational Safety and Health Act, the
Immigration Reform and Control Act, the Fair Credit Reporting Act, the Federal
WARN Act and/or the New York WARN Act, or the Displaced Building Service Workers
Act, New York Labor Law, the New York Human Rights Law, the New York State
Constitution, the New York Civil Rights Law, the New York City Human Rights Law,
New York State Wage and Hour Laws, the retaliation provisions of the New York
State Workers’ Compensation and Disability Laws, New York State and City Human
Rights Law, the New York City Administrative Code; and/or any other applicable
federal, state or city employment statutes, laws, rules and regulations relating
to immigration, the payment of wages or salaries or other compensation, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, federal contracting, workers’ compensation and occupational safety, and
any other laws or statutes regulating the terms and conditions of employment),
and any rule, regulation or ordinance promulgated under any such law or statute,
the common law or in equity (including any claims for wrongful discharge or
otherwise) (collectively, “Employment

 

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Laws”) by Purchaser, or any designee or management company engaged by Purchaser
to employ Hotel personnel, except to the extent such are based on the acts of
any Seller Related Parties or the operative facts occur prior to the Closing
Date, (ii) any claims or liabilities arising (A) under the federal Employee
Retirement Income Security Act, as amended, and/or any other applicable federal
or state law or regulation concerning employee benefit plans with respect to the
employment of employees by Purchaser or such designee or management company from
and after the Closing Date, or (B) from or under any employee benefit plan
applicable to any Rehired Employee or any other employee hired by Purchaser or
such designee or management company to perform services at or for the Hotel, to
the extent that any such claim or liability relates to any period of employment
from and after the Closing Date, (iii) salaries, wages, and benefits
attributable to services performed for the period from and after the Closing
Date, and (iv) any breach of a representation of Purchaser contained in this
Section 5.10.

(j) Seller agrees to indemnify, defend and hold harmless Purchaser and its
officers, directors, members, owners and affiliates (herein, the
“Purchaser-Related Parties”) from and against any claim, liability, or judgment
asserted against any of the Purchaser-Related Parties on account of or with
respect to any of the following: (i) any causes of action, damages, complaints,
judgments, orders, notices, payments, fines or assessments and/or claims,
whatsoever, and all costs and expenses (including, without limitation,
reasonable attorneys’ fees and costs) incurred in connection therewith, which
may be asserted against any of the Purchaser-Related Parties on account of any
violation of the Employment Laws occurring prior to the Closing Date by
Seller-Related Parties, except to the extent such are based on the acts of any
Purchaser-Related Parties or the operative facts occur from and after the
Closing Date, (ii) any claims or liabilities arising (A) under the federal
Employee Retirement Income Security Act, as amended, and/or any other applicable
federal or state law or regulation concerning employee benefit plans with
respect to the employment of employees by Seller-Related Parties prior to the
Closing Date, or (B) from or under any employee benefit plan applicable to any
Rehired Employee or any other employee hired by Purchaser or such designee or
management company to perform services at or for the Hotel, to the extent that
any such claim or liability relates to any period of employment prior to the
Closing Date, (iii) salaries, wages, and benefits attributable to services
performed for the period prior to the Closing, and (iv) any breach of a
representation of Seller contained in this Section 5.10.

(k) Seller shall leave with Manager all personnel files of Hotel Employees on
the Closing Date, employment agreements, offer letters, I-9 Employment
Eligibility Verification Forms, curriculum vitae, information as to last change
of status of employees (promotion, salary increase), copies of pay slips for the
2010-11 calendar years, tax records relating to said Hotel Employees, social
security identities and information as to unused accrued vacation time, holiday,
sick leave, personal days and other accrued benefits for the 2010-11 calendar
years, in each case with respect to the Hotel Employees as of the Closing Date.
Nothing herein shall prohibit Seller from retaining copies of such personnel
files to the extent permitted by law.

 

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(l) In the event a claim, lawsuit, charge or other legal action is filed against
the Seller, Manager and/or Purchaser alleging a violation of any law or for an
omission which is/was otherwise required by law, Seller and Purchaser mutually
agree to cooperate with each other in the defense of any such claim, lawsuit or
charge. Seller and Purchaser will make available to each other, as required,
personnel and documents that either party has in its possession which relate to
any such claim, lawsuit or charge. Neither party shall have the duty to
cooperate with the other if the dispute is between the parties themselves,
except as required by law or other provisions of this Agreement.

(m) Purchaser’s and Seller’s obligations under this Section 5.10 shall survive
Closing.

 

5.11

No Action Letter. In connection with the sale of the Hotel Unit to Purchaser,
Seller will be making an application (“Application”) to the NYS Department of
Law (“DOL”) for the issuance of a no-action, no-jurisdiction or no-filing
required letter or similar advice (collectively, a “No Action Letter”), based
upon Purchaser’s acknowledgement that Purchaser is a sophisticated real estate
investor who does not require the protections of the Martin Act and Seller shall
use commercially reasonable efforts to obtain the No Action Letter. On the
Effective Date, Purchaser shall execute an affidavit, in the form attached
hereto as Exhibit J (“Purchaser’s Condominium Affidavit”), and deliver the
original executed Purchaser’s Condominium Affidavit to Seller by personal
delivery or overnight courier for Seller’s receipt no later than one
(1) business day following the Effective Date. Provided that Seller has received
the original executed Purchaser’s Condominium Affidavit no later than one
(1) business day following the Effective Date, within five (5) business days
following the Effective Date, Seller shall submit the Application to the DOL.
Purchaser shall cooperate with Seller in connection with Seller’s efforts to
obtain the No Action Letter, including, without limitation, supplying additional
documentation or information requested by the DOL or reasonably requested by
Seller. Receipt of a No Action Letter prior to the Outside DPO Consent Approval
Date shall be a condition to Seller’s obligation to sell the Property to
Purchaser, and in the event a No Action Letter is not received by Seller on or
before the Outside DPO Consent Approval Date, Seller may elect to either proceed
to Closing or terminate this Agreement by delivery of written notice to
Purchaser in which event this Agreement shall terminate, the Earnest Money shall
be refunded to Purchaser, Seller shall pay Purchaser any amounts due pursuant to
Section 4.8 above, and neither party hereto shall have any further obligations
hereunder, except those provisions that expressly survive a termination of this
Agreement.

 

5.12

Purchaser’s Indemnification for Post-Closing Claims.

(a) To the fullest extent permitted by law, Purchaser covenants to defend,
indemnify and save harmless Seller and its Affiliates, and their respective
employees, contractors, officers, directors, and agents (collectively, “Seller
Indemnitees”) from and against any and all losses, injuries, claims, penalties,
liabilities, fines, damages, costs or expenses (including, without limitation,
reasonable attorneys’ fee and costs) accruing after Closing Date and arising
from any injury to or death of any person or persons or damage to or destruction
of any property owned by a third-party, arising out of or in any manner directly
or indirectly connected with the Hotel and accruing or arising out of events
occurring from and after the Closing Date in respect thereof (unless caused by a
Seller Indemnitee).

 

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(b) The provisions of this Section 5.12 shall survive the Closing through that
date that is sixty (60) days following the expiration of the applicable statute
of limitations (including any extension thereof) with respect to all claims that
may be brought hereunder.

 

5.13

Seller’s and Highgate Guarantor’s Indemnification for Certain Pre-Closing
Claims.

(a) To the fullest extent permitted by law, Seller covenants to defend,
indemnify and save harmless Purchaser, and its Affiliates, and their respective
employees, contractors, officers, directors, and agents (collectively,
“Purchaser Indemnitees”) from and against any and all losses, injuries, claims,
penalties, liabilities, fines, damages, costs or expenses (including, without
limitation, reasonable attorneys’ fee and costs) arising from any injury to or
death of any person or persons or damage to or destruction of any property owned
by a third-party, arising out of or in any manner directly or indirectly
connected with the Hotel and having accrued or arising out of events occurring
prior to the Closing Date (unless caused by a Purchaser Indemnitee).

(b) If the Restructuring occurs, then to the fullest extent permitted by law,
Highgate Guarantor covenants to defend, indemnify and save harmless the
Purchaser Indemnitees from and against any and all losses, injuries, claims,
penalties, liabilities, fines, damages, costs or expenses (including, without
limitation, reasonable attorneys’ fee and costs) arising from any liabilities of
the Lessee LLC which have accrued or arisen out of events occurring prior to the
Closing and which would not have been assumed, directly or indirectly, by
Purchaser but for the Restructuring, except to the extent Highgate Guarantor has
reimbursed Purchaser for such liabilities in accordance with the terms of this
Agreement. Each party shall immediately notify the other party if it receives
notice of any claim which might be subject to the indemnification set forth in
this Section 5.13(b). Highgate Guarantor agrees to maintain a net worth
(determined under GAAP) (“GAAP Net Worth”) of at least $2,000,000, and will
maintain a minimum liquidity amount (“Liquidity Amount”) of at least $2,000,000,
for a period of three (3) years following the Closing Date; and if any claims
are made which are subject to the indemnification set forth in this
Section 5.13(b) during such three (3) year period which have not been resolved
by the end of such three (3) year period, Highgate Guarantor shall continue to
maintain a GAAP Net Worth and Liquidity Amount after the end of such three
(3) year period equal to the aggregate amount of such claims, not to exceed
$2,000,000, until such claims are resolved.

(c) The provisions of this Section 5.13 shall survive the Closing through that
date that is sixty (60) days following the expiration of the applicable statute
of limitations (including any extension thereof) with respect to all claims that
may be brought hereunder.

 

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ARTICLE VI

DEFAULT

 

6.1

Default by Purchaser. If Purchaser defaults under this Agreement, Seller shall
be entitled, as its sole and exclusive remedy (without limiting Seller’s rights
with respect to any indemnification obligations of Purchaser under this
Agreement or under Section 10.17 below), to terminate this Agreement and, to the
extent the Earnest Money has theretofore been funded by Purchaser to Escrow
Agent pursuant to Section 1.6, receive the Earnest Money as liquidated damages
for the breach of this Agreement, it being agreed between the parties hereto
that the actual damages to Seller in the event of such breach are impractical to
ascertain and the amount of the Earnest Money is a reasonable estimate thereof.
THEREFORE THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES AND
AS SELLER’S EXCLUSIVE REMEDY AGAINST PURCHASER, AT LAW OR IN EQUITY, IN THE
EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF PURCHASER. THE PARTIES
ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
SELLER.

Nothing contained in this Section 6.1 shall limit or prevent Seller after
Closing has occurred from (a) asserting any legal or equitable claims against
Purchaser for Purchaser’s obligation to pay attorneys’ fees and other amounts
under Section 10.17, or (b) enforcing any indemnity obligation of Purchaser
under this Agreement or preclude Seller from obtaining a damage award in
connection therewith, or (c) enforcing Purchaser’s other obligations and
liabilities which survive Closing.

Notwithstanding the foregoing, if the conditions set forth in the last sentence
of Section 6.2 are not satisfied and Purchaser interferes with or makes any
attempt to interfere with Seller selling the Property to another party,
including, without being limited to, the recording of a lis pendens or other
lien against the Property, or the seeking of an injunction or similar relief,
Seller shall have the right to recover its actual damages caused by such action
of Purchaser in addition to the liquidated damages referred to above due to the
default of Purchaser in purchasing the Property.

 

6.2

Default by Seller. In the event that Seller fails to consummate this Agreement
for any reason other than Purchaser’s default or the permitted termination of
this Agreement by Seller or Purchaser as herein expressly provided, Purchaser
shall be entitled, as its sole remedy, either (a) to terminate this Agreement
and receive the return of the Earnest Money and reimbursement by Seller of
Purchaser’s reasonable, out-of-pocket, third-party costs and expenses actually
incurred by Purchaser in connection with its attempt to acquire the Property in
an amount not to exceed $600,000 (provided Purchaser provides documentation
reasonably satisfactory to Seller evidencing the nature and amount of such
expenses), in which event Seller shall be released from any and all other
liability hereunder, or (b) to enforce specific performance of Seller’s
obligations hereunder.

 

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Purchaser expressly waives its rights to seek damages in the event of Seller’s
default hereunder. Purchaser shall be deemed to have elected to terminate this
Agreement and receive back the Earnest Money if Purchaser fails to file suit for
specific performance against Seller in a court having jurisdiction in the county
and state in which the Property is located, on or before thirty (30) days
following the date upon which Closing was to have occurred. As material
consideration to Seller’s entering into this Agreement with Purchaser, Purchaser
expressly waives any right under statutory or common law or otherwise to record
or file a lis pendens or a notice of pendency of action or similar notice
against all of any portion of the Property unless (i) all conditions precedent
to Seller’s obligation to proceed to Closing have been satisfied and (ii) Seller
defaults in its obligation to proceed to Closing.

Nothing contained in this Section 6.2 shall limit or prevent Purchaser after
Closing has occurred from (a) asserting any legal or equitable claims against
Seller for Seller’s obligation to pay attorneys’ fees and other amounts under
Section 10.17, or (b) enforcing any indemnity obligation of Seller under this
Agreement or preclude Purchaser from obtaining a damage award in connection
therewith, or (c) enforcing Seller’s other obligations and liabilities which
survive Closing.

 

6.3

Right to Cure Defaults.

(a) Notwithstanding anything to the contrary in this Agreement except as
otherwise provided in the immediately following sentence, Purchaser shall not
have the right to exercise its remedies under Section 6.1 for a Seller default
unless Purchaser has provided written notice to Seller specifying in reasonable
detail the nature of the Seller default and Seller has not cured such Seller
default within fifteen (15) days after Seller’s receipt of such notice (the
“Seller Cure Period”), in which case the Closing Date shall be extended until
the date which is five (5) Business Days after the expiration of the Seller Cure
Period. Notwithstanding the foregoing, in no event shall Seller have the right
to delay the Closing pursuant to this Section 6.3(a) if such delay will result
in Purchaser losing any financing for the purchase of the Hotel or result in
Purchaser paying more in connection with such financing, such as extension fees
or higher interest rates (unless Seller agrees, at its election, to give
Purchaser a credit against the Purchase Price in the amount of such excess
amounts payable by Purchaser as a result of such extension).

(b) Notwithstanding anything to the contrary in this Agreement, Seller shall not
have the right to exercise its remedies under Section 6.2 for a non-monetary
Purchaser default, unless Seller has provided written notice to Purchaser
specifying in reasonable detail the nature of the non-monetary Purchaser default
and Purchaser has not cured such non-monetary Purchaser default within fifteen
(15) days after Purchaser’s receipt of such notice (the “Purchaser Cure
Period”), in which case the Closing Date shall be extended until the date which
is five (5) Business Days after the expiration of the Purchaser Cure Period.

 

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ARTICLE VII

RISK OF LOSS

 

7.1

Minor Damage. In the event of loss or damage to the Real Property or any portion
thereof which is not “major” (as hereinafter defined) and which was not caused
by Purchaser or its representatives, this Agreement shall remain in full force
and effect and Seller shall give Purchaser a credit at Closing for the cost to
repair such damage and Seller shall retain the right to any insurance proceeds
which may be payable to Seller on account of such loss or damage. Upon Closing,
full risk of loss with respect to the Property shall pass to Purchaser.

 

7.2

Major Damage. In the event of a “major” loss or damage to the Real Property
which was not caused by Purchaser or its representatives, Seller shall promptly
provide written to Seller of same and Purchaser may thereafter elect, by written
notice to Seller, either to (a) terminate this Agreement, in which event the
Earnest Money shall be returned to Purchaser, or (b) to proceed with Closing and
accept the Property in its then condition, in which event Seller shall assign to
Purchaser all of Seller’s right, title and interest to any claims and proceeds
Seller may have with respect to any casualty insurance policies or condemnation
awards relating to the premises in question (other than business interruption
proceeds attributable to the period prior to Closing) and the Purchase Price
shall be reduced by an amount equal to the deductible amount under Seller’s
insurance policy. If Purchaser fails for any reason to deliver written notice of
its election pursuant to the immediately preceding sentence within ten (10) days
after Seller sends Purchaser written notice of the occurrence of major loss or
damage, then Purchaser shall be deemed to have elected to terminate this
Agreement, in which event the Earnest Money shall be returned to Purchaser. Upon
Closing, full risk of loss with respect to the Property shall pass to Purchaser.

 

7.3

Definition of “Major” Loss or Damage. For purposes of Sections 7.1 and 7.2,
“major” loss or damage refers to the following: (a) loss or damage to the Real
Property or any portion thereof such that either (i) the cost of repairing or
restoring the premises in question to a condition substantially identical to
that of the premises in question prior to the event of damage would be, in the
opinion of an architect selected by Seller and reasonably approved by Purchaser,
equal to or greater than Five Million and No/100 Dollars ($5,000,000.00), or
(ii) access to or use of the lobby or other common areas of the Hotel is
materially impaired for a period likely to equal or exceed fifteen
(15) consecutive days following the Closing Date, and (b) any loss due to a
condemnation which permanently and materially modifies or impairs the current
use of the Real Property. If Purchaser does not give notice to Seller of
Purchaser’s reasons for disapproving an architect within five (5) business days
after receipt of notice of the proposed architect, Purchaser shall be deemed to
have approved the architect selected by Seller. The provisions of this
Section 7.3 are intended to supersede those of Section 5-1311 of the General
Obligations Law of New York.

 

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7.4

Business Interruption Insurance. In the event of loss or damage to the Real
Property or any portion thereof which is not “major” (as hereinafter defined)
and which was not caused by Purchaser or its representatives, Seller shall
(without duplication of any credit provided under Section 7.2 above) reimburse
Purchaser for the amount of any lost revenue at the Property resulting from such
loss or damage and Seller shall retain the right to any insurance proceeds which
may be payable to Seller on account of such loss or damage.

ARTICLE VIII

COMMISSIONS

 

8.1

Brokerage Commissions. In the event the transaction contemplated by this
Agreement is consummated, but not otherwise, Seller agrees to pay to Hodges Ward
Elliott (“Broker”) at Closing a brokerage commission pursuant to a separate
written agreement between Seller and Broker and Seller shall indemnify and hold
Purchaser harmless with respect to any payments due and owing to Broker in
connection with this transaction under such agreement. Each party agrees that
should any claim be made for brokerage commissions or finder’s fees by any
broker or finder other than the Broker by, through or on account of any acts of
said party or its representatives, said party will indemnify, defend, protect
and hold the other party free and harmless from and against any and all loss,
liability, cost, damage and expense in connection therewith. The provisions of
this Section 8.1 shall survive Closing or earlier termination of this Agreement
(including a termination pursuant to Section 3.3 above).

ARTICLE IX

DISCLAIMERS AND WAIVERS

 

9.1

No Reliance on Documents. Except as expressly set forth in this Agreement,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by or on behalf of
Seller or its brokers to Purchaser in connection with the transaction
contemplated hereby including, without limitation, the Reports and other Seller
Due Diligence Materials, provided, however, that Seller shall not intentionally
alter any material, data or information for the purpose of misleading Purchaser.
Purchaser acknowledges and agrees that all materials, data and information
delivered by Seller to Purchaser in connection with the transaction contemplated
hereby are provided to Purchaser as a convenience only and that any reliance on
or use of such materials, data or information by Purchaser shall be at the sole
risk of Purchaser, except as otherwise expressly stated herein. Without limiting
the generality of the foregoing provisions, Purchaser acknowledges and agrees
that (a) any environmental or other report with respect to the Property which is
delivered by Seller to Purchaser shall be for general informational purposes
only, (b) Purchaser shall not have any right to rely on any such report
delivered by Seller to Purchaser, but rather will rely on its own inspections
and investigations of the Property and any reports commissioned by Purchaser
with respect thereto, and (c) except for matters expressly set forth in this
Agreement, neither Seller nor any affiliate of Seller nor the person or entity
which prepared any such report delivered by Seller to Purchaser shall have any
liability to

Purchaser for any inaccuracy in or omission from any such report or other
materials provided to Purchaser in connection with this Agreement.

 

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9.2

DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT: IT IS UNDERSTOOD
AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES
OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT
TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR
ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION,
GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS,
THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER
INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER
OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON
CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE
PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS”, EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED OTHERWISE IN THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY
ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY AND ANY
ACTUAL OR PROPOSED BUDGETS FOR THE REAL PROPERTY) MADE OR FURNISHED BY SELLER,
THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR
INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS
AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER IS A SOPHISTICATED
INSTITUTIONAL INVESTOR WITH SUBSTANTIAL EXPERIENCE AND EXPERTISE WITH INVESTMENT
PROPERTIES AND HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH
INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF
AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR
CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON
OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY
INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH
RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE DOCUMENTS DELIVERED
AT CLOSING. UPON CLOSING AND SUBJECT TO

 

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THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS
AGREEMENT AND THE DOCUMENTS DELIVERED AT CLOSING, PURCHASER SHALL ASSUME THE
RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS
AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER’S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER’S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF
ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF
ANY APPLICABLE LAWS RELATING TO THE CONDITION OF THE PROPERTY (INCLUDING,
WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS,
OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT FOR
FRAUD AND OBLIGATIONS OF SELLER UNDER THIS AGREEMENT OR ANY AGREEMENTS EXECUTED
AND DELIVERED BY SELLER AT CLOSING. PURCHASER AGREES THAT SHOULD ANY CLEANUP,
REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS
ON THE PROPERTY BE REQUIRED AFTER THE CLOSING DATE, SUCH CLEAN-UP, REMOVAL OR
REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE
COST AND EXPENSE OF PURCHASER.

The waivers and releases set forth in Sections 5.7(a) and (b) and in the
immediately preceding paragraph include claims of which Purchaser is presently
unaware or which Purchaser does not presently suspect to exist which, if known
by Purchaser, would materially affect Purchaser’s waiver or release of Seller
and the other parties referenced in this Section.

 

9.3

Repairs, Reserves, and Capital Expenditures. Purchaser acknowledges and agrees
that except as provided in Section 5.6 of this Agreement, (a) Seller shall have
no obligation to make any repairs, replacements, improvements or alterations to
the Property or to expend any funds therefor, including, without limitation, any
reserves that may be held for such purpose, and (b) Purchaser shall not be
entitled to a credit to the Purchase Price at Closing in the event capital
expenditures actually made at the Hotel for any year are less than the budgeted
amount as of the date of the Closing.

 

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9.4

Duration and Claims Procedures and Limitations on Certain Obligations.

(a) Notwithstanding any provision in this Agreement to the contrary, all express
representations and warranties contained in this Agreement (collectively, the
“Reps and Warranties”) shall survive for twelve (12) months after the Closing
Date (the “R&W Survival Period”) and shall not merge into any of the closing
documents; provided, however, that no person, firm, or entity shall have any
liability or obligation with respect to any Reps and Warranties unless on or
prior to the expiration of the R&W Survival Period, the party seeking to assert
liability under such Reps and Warranties shall have notified the other party in
writing setting forth specifically the claim being made and a detailed
description and supporting documentation of the claim and Purchaser’s losses
(such notice being a “R&W Claims Notice”).

(b) In the event either Seller or Purchaser (the “Claiming Party”) has actual
knowledge on or before the Closing that any representation or warranty of the
other is incorrect (either through independent investigation or through
information and materials provided to the Claiming Party) and the Claiming Party
proceeds to Closing, then the Claiming Party shall not be permitted to assert a
claim for such matters following the Closing Date.

(c) All liabilities and obligations under the Reps and Warranties shall lapse
and be of no further force or effect after the expiration of the R&W Survival
Period, except with respect to any matter contained in a R&W Claims Notice
delivered on or prior to the expiration of the R&W Survival Period.

(d) To secure Seller’s potential liabilities and obligations (including, without
limitation, liabilities with respect to Reps and Warranties) which survive
Closing under this Agreement and to secure Highgate Guarantor’s obligations
under Section 5.13(b) above (collectively, “Seller’s Post-Closing Obligations”),
at Closing, Purchaser, Seller and Escrow Agent shall enter into a Holdback
Escrow Agreement in the form attached hereto as Exhibit L (the “Holdback Escrow
Agreement”), pursuant to which Seller shall cause to be retained with Escrow
Agent, out of the proceeds from the Purchase Price to be paid by Purchaser at
Closing or otherwise (as determined in the sole discretion of Seller), the sum
of Eight Million Two Hundred Thousand and 00/100 Dollars ($8,200,000.00) (such
amount hereinafter referred to as the “Holdback”). The full amount of the
Holdback (and any other contractual rights Seller might have with respect to the
Property after Closing, including any rights under any insurance policies which
have been in effect with respect to the Property) shall be available to satisfy
any of Seller’s [and Highgate’s] liabilities hereunder which survive the
Closing, regardless of which entity is responsible under this Agreement for such
liability.

 

9.5

Effect and Survival of Disclaimers. Seller and Purchaser acknowledge that the
compensation to be paid to Seller for the Property has been decreased to take
into account that the Property is being sold subject to the provisions of this
Article IX. Seller and Purchaser agree that the provisions of this Article IX
shall survive Closing.

 

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ARTICLE X

MISCELLANEOUS

 

10.1

Confidentiality. This Agreement, the terms hereof and the Property Information
shall be treated in accordance with that certain Confidentiality Agreement
executed by Purchaser in favor of Seller (the “Confidentiality Agreement”) until
the Closing. The provisions of this Section 10.1 shall survive any termination
of this Agreement, but shall not survive the Closing.

 

10.2

Public Disclosure. Except to the extent required by law, including the
regulations of the Securities and Exchange Commission, any release to the
public, at any time prior to or after Closing, of information with respect to
the sale contemplated herein or any matters set forth in this Agreement shall be
made only in the form approved by Purchaser and Seller. The provisions of this
Section 10.2 shall survive the Closing.

 

10.3

Assignment. Purchaser may not assign its rights under this Agreement without
first obtaining Seller’s written approval which may be given or withheld in
Seller’s sole discretion; provided that, Purchaser may assign all or any portion
of this Agreement to one or more entities which are directly or indirectly
controlled by, or under common control with, Purchaser. Any assignment by
Purchaser of this Agreement shall not relieve Purchaser of its obligations under
this Agreement and any permitted assignee must expressly assume the obligations
of Purchaser in writing. Without limiting the foregoing, in no event shall
Purchaser assign this Agreement to any assignee which, in the reasonable
judgment of Seller, will cause the transaction contemplated hereby or any party
thereto to violate the requirements of ERISA.

 

10.4

Notices. Any notice pursuant to this Agreement shall be given in writing by
(a) personal delivery, or (b) reputable overnight delivery service with proof of
delivery, or (c) United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) legible facsimile transmission completed
before 5:00 p.m. (New York time) on a business day sent to the intended
addressee at the address set forth below, or to such other address or to the
attention of such other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have been given
either at the time of personal delivery, or, in the case of expedited delivery
service or mail, as of the date of first attempted delivery at the address and
in the manner provided herein, or, in the case of facsimile transmission, as of
the date of the facsimile transmission. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to this Agreement
shall be as follows:

If to Seller:

Goldman Sachs & Co.

200 West Street, 28th Floor

New York, NY 10282

Attention: Jeffrey Fine

Facsimile No.: (212) 357-5505

 

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And to:

Highgate Hotels

545 E. John Carpenter Freeway #1400

Irving, TX 75062

Attention: Steve Barick

     Chief Operating Officer

Facsimile No.: (972) 401-2400

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention: Anthony J. Colletta, Esq.

Facsimile No. (212) 291-9029

If to Purchaser:

c/o LaSalle Hotel Properties

3 Bethesda Metro Center, Suite 1200

Bethesda, Maryland 20814

Attention: Chief Operating Officer

Facsimile No. (301) 941-1553

With a copy to:

Hagan & Vidovic LLP

200 East Randolph, 43rd Floor

Chicago, Illinois 60601

Attention: R.K. Hagan

Facsimile No. (312) 228-0982

If to Highgate Guarantor:

Highgate Hotels

545 E. John Carpenter Freeway #1400

Irving, TX 75062

Attention: Steve Barick

     Chief Operating Officer

Facsimile No.: (972) 401-2400

 

10.5

Modifications. Except as provided in Section 5.2 above, this Agreement cannot be
changed orally, and no executory agreement shall be effective to waive, change,
modify or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.

 

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10.6

Calculation of Time Periods; Time is of the Essence. Unless otherwise specified,
in computing any period of time described in this Agreement, the day of the act
or event after which the designated period of time begins to run is not to be
included and the last day of the period so computed is to be included, unless
such last day is a Saturday, Sunday or legal holiday under the laws of the State
of New York, in which event the period shall run until the end of the next day
which is neither a Saturday, Sunday or legal holiday. The final day of any such
period shall be deemed to end at 5:00 p.m., New York time. Time is of the
essence with respect to each and every term and provision of this Agreement.

 

10.7

Successors and Assigns. Subject to the limitations on assignment set forth in
Section 10.3 above, the terms and provisions of this Agreement are to apply to
and bind the permitted successors and assigns of the parties hereto.

 

10.8

Entire Agreement. This Agreement, including the Exhibits and the Schedules
contain the entire agreement between the parties pertaining to the subject
matter hereof and fully supersedes all prior written or oral agreements and
understandings between the parties pertaining to such subject matter.

 

10.9

Further Assurances. Each party agrees that it will without further consideration
execute and deliver such other documents and take such other action, whether
prior or subsequent to Closing (in each case, at no cost or expense to such
party, other than any de minimis cost or expense or any cost or expense which
the requesting party agrees in writing to reimburse), as may be reasonably
requested by the other party to consummate more effectively the purposes or
subject matter of this Agreement. Without limiting the generality of the
foregoing, Purchaser shall, if requested by Seller, (a) execute acknowledgments
of receipt with respect to any materials delivered by Seller to Purchaser with
respect to the Property, and (b) obtain sellers’ permits for any sales
activities conducted at the Property prior to Closing and/or obtain “sale for
resale certificates” for any Personal Property that may be sold after the
Closing. The provisions of this Section 10.9 shall survive Closing.

 

10.10

Counterparts; Facsimile Signatures. This Agreement may be executed in
counterparts, and all such executed counterparts shall constitute the same
agreement. It shall be necessary to account for only one such counterpart in
proving this Agreement. In order to expedite the transaction contemplated
herein, facsimile or other electronic signatures may be used in place of
original signatures on this Agreement. Seller and Purchaser intend to be bound
by the signatures on the telecopied document, are aware that the other party
will rely on the telecopied signatures, and hereby waive any defenses to the
enforcement of the terms of this Agreement based on the form of signature.

 

10.11

Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement shall nonetheless remain in full force and effect.

 

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10.12

Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF SUCH STATE. SELLER
AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED
IN A STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK. PURCHASER AND
SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 10.12 SHALL SURVIVE THE CLOSING
OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.

 

10.13

No Third Party Beneficiary. The provisions of this Agreement and of the
documents to be executed and delivered at Closing are and will be for the
benefit of Seller and Purchaser only and are not for the benefit of any third
party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.

 

10.14

Captions. The section headings appearing in this Agreement are for convenience
of reference only and are not intended, to any extent and for any purpose, to
limit or define the text of any section or any subsection hereof.

 

10.15

Construction. The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any exhibits,
schedules or amendments hereto. Singular words shall connote the plural as well
as the singular, and plural words shall connote the singular as well as the
plural, and the masculine shall include the feminine and the neuter, as the
context may require.

 

10.16

Termination of Agreement. It is understood and agreed that if either Purchaser
or Seller terminates this Agreement pursuant to a right of termination granted
hereunder, such termination shall operate to relieve Seller and Purchaser from
all obligations under this Agreement, except for such obligations as are
specifically stated herein to survive the termination of this Agreement.

 

10.17

Attorneys Fees. If any action or proceeding is commenced by either party to
enforce their rights under this Agreement or to collect damages as a result of
the breach of any of the provisions of this Agreement, the prevailing party in
such action or proceeding, including any bankruptcy, insolvency or appellate
proceedings, shall be entitled to recover all reasonable costs and expenses,
including, without limitation, reasonable attorneys’ fees and court costs, in
addition to any other relief awarded by the court.

 

10.18

No Waiver. Failure of either party at any time to require performance of any
provision of this Agreement shall not limit the party’s right to enforce the
provision. Waiver of any breach of any provision shall not be a waiver of any
succeeding breach of the provision or a waiver of the provision itself or any
other provision.

 

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10.19

No Reservation of Property. The preparation and/or delivery of unsigned drafts
of this Agreement shall not create any legally binding rights in the Property
and/or obligations of the parties, and Purchaser and Seller acknowledge that
this Agreement shall be of no effect until it is duly executed by both Purchaser
and Seller. From and after the date of this Agreement until its termination,
Seller shall discontinue marketing the Property and negotiating with other
potential purchasers of the Property.

 

10.20

No Recordation. Purchaser shall not record this Agreement, nor any memorandum or
other notice of this Agreement, in any public records.

 

10.21

1031 Exchange. Each party agrees that, at the request of the other party, it
shall reasonably cooperate with the other party in effecting an exchange
transaction by the other party which includes the Property pursuant to
Section 1031 of the United States Internal Revenue Code, provided that any
exchange initiated by either party shall be at such party’s sole cost and
expense and shall not delay the Closing; and neither party shall be obligated to
accept title to any other property as a result of such exchange.

 

10.22

Cooperation with Auditors. Following the Closing, Seller agrees that it shall
reasonably cooperate with Purchaser’s auditors in connection with any audit or
examination of the financial statements or records of Purchaser or the Property,
all at no cost or expense to Seller, including providing the letter attached
hereto as Exhibit P.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the Effective Date.

SELLER:

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company  

By:

 

W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

    By:   

W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

      

By:

  

W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

         

By:

  

Park Central Owner LLC, its Managing Member

            

By:

  

W2001 Park Central Hotel Realty, L.L.C., its Managing Member

               

By:

  

Whitehall Street Global Real Estate Limited Partnership 2001, a Managing Member

                  

By:

  

WH Advisors, L.L.C. 2001, its General Partner

                     

By:

  

/s/ Alan S. Kava

                         Name: Alan S. Kava                          Title: Vice
President  

 

PCH TIC OWNER LLC, a Delaware limited liability company

By:   

/s/ Alan S. Kava

  Name: Alan S. Kava   Title: PCH OPERATING LESSEE OWNER CORP., a Delaware
corporation By:   

/s/ Alan S. Kava

  Name: Alan S. Kava   Title:

[Signatures continue on following page]

Signature Page

--------------------------------------------------------------------------------

PURCHASER:

LASALLE HOTEL OPERATING PARTNERSHIP, L.P.,

a Delaware limited liability company

 

By: LaSalle Hotel Properties, its general partner By:   /s/ Al Young   Name: Al
Young   Title: COO

HIGHGATE GUARANTOR:

JEFFERSON MM 150, L.P.,

a Delaware limited liability company

 

By: Grosvenor, L.C., a Texas limited liability company,

its general partner

By:   /s/ Mahmood Khimji   Name: Mahmood Khimji   Title: Manager

Signature Page

--------------------------------------------------------------------------------

Schedule 1.1(a)

LEGAL DESCRIPTION OF

THE HOTEL UNIT AND

THE COMMON ELEMENTS INTEREST

The Hotel Unit known as the Hotel Unit in the building (“Building”)· known as
The Park Central Condominium (“Condominium”) and by the street number 870
Seventh Avenue, Borough of Manhattan, County of New York, City and State of New
York, such Hotel Unit being designated and described by the Hotel Unit
designation in a certain declaration of condominium dated November 20, 1996,
made by T. Park Central LLC, o. Park Central LLC, H. Park Central LLC and R.
Park Central LLC (“Declarants”) pursuant to Article 9-B of the Real Property Law
of the State of New York (“Condominium Act”) establishing a plan for condominium
ownership of the Building and the Land (“Land”) upon which the Building is
situate, which declaration of condominium was recorded in the New York County
Office of the Register of The -City of New York (“Register’s Office”) on
December 27, 1996, in Reel 2406, page 1498 and amended by First Amendment to
Declaration recorded August 4, 1997 in Reel 2482 page 1956 as amended and
restated by Amended Restated and Consolidated Declaration of Condominium dated
December 30, 1997 recorded February 26, 1998 in -Reel 2549 page 192; as further
amended by Third Amendment to Declaration, dated May 1, 1998 recorded July 8,
1998 in Reel 2614 page 604; Fourth Amendment to Declaration dated November 15,
1999 recorded October 10, 2001 in Reel 3370 page 2485; Fifth Amendment to
Declaration dated as of November 15, 2001 recorded December 13, 2001 in Reel
3409 page 79; Sixth Amendment to Declaration dated as of July 19, 2001 recorded
June 12, 2002 in Reel 3537 page 896; Seventh Amendment to Declaration dated
September 30, 2002 recorded November 20, 2003 as CRFN 2003000466814, Eighth
Amendment to Declaration dated as of June 15, 2005 recorded July 28, 2005 as
CFRN 2005000420712 and by Ninth Amendment to Declaration dated as of January 2,
2007 recoded March 1, 2007 as CFRN 2007000112631 (as so amended, the
“Condominium Declaration”). The Hotel Unit is designated as Tax Lot No. 1101 in
Block 1027 of Section 4 of the Borough of Manhattan on the Tax Map of the Real
Property Assessment Department of The City of New York and on the Floor Plans of
the Building, certified by C.K. Architect, P .C., on December 19, 1996, and
filed with the Real Property Assessment Department of The City of New York on
December 24, 1996, as Condominium Plan No. 958 and also filed in the Register’s
Office on December 27, 1996, as Map No. 5412, as further amended by Condominium
Plan No. 958A filed in the Register’s Office on August 4, 1997 as Map No. 5465,
as further amended by Condominium Plan No. 958B filed in the Register’s Office
on February 26, 1998 as Map No. 5493, as further amended by Condominium Plan
No. 958C filed in the Register’s Office on July 8, 1998 as Map No. 5522, as
further amended by Condominium Plan No. 958D filed in the Register’s Office on
October 10, 2001 as Map No. 5831, as further amended by Condominium Plan
No. 958E filed in the Register’s Office on December 13,2001 as Map No. 5852, as
further amended by Condominium Plan No. 958F filed in the Register’s Office on
June 12, 2002 as Map No. 5900, as further amended by Condominium Plan No. 958G
filed in the Register’s Office on July 1, 2005.

TOGETHER WITH an undivided 69.317 percent interest in the Common Elements (as
such term is defined in the Condominium Declaration).

--------------------------------------------------------------------------------

The land upon which the Hotel Unit is located is more particularly described as
follows:

BEGINNING at the comer formed by the Intersection of the northerly side of West
55th Street with the westerly side of Seventh Avenue;

RUNNING THENCE westerly along the northerly side of West 55th Street, 175 feet;

THENCE northerly on a line parallel with the westerly side of Seventh Avenue,
200 feet 10 inches to the southerly side of West 56th Street;

THENCE easterly along said southerly side of West 56th Street, 175 feet to the
westerly side of Seventh Avenue;

THENCE southerly along the westerly side of Seventh Avenue, 200 feet 10 inches
to the point or place of BEGINNING.

--------------------------------------------------------------------------------

Schedule 1.1(e)-1

SERVICE CONTRACTS

--------------------------------------------------------------------------------

Schedule 1.1(e)-2

EQUIPMENT LEASES

--------------------------------------------------------------------------------

Schedule 1.1(f)(iii)

CERTAIN LICENSES, FRANCHISES AND PERMITS

--------------------------------------------------------------------------------

Schedule 1.1(h)

LEASES

--------------------------------------------------------------------------------

Schedule 4.4.12

VOUCHERS

--------------------------------------------------------------------------------

Schedule 4.4.15

PROJECTION OF SECTION 4.4.15 CREDIT

--------------------------------------------------------------------------------

Schedule 5.1(d)

LITIGATION

--------------------------------------------------------------------------------

Schedule 5.1(f)

PROPERTY VIOLATIONS

--------------------------------------------------------------------------------

Schedule 5.1(j)

COLLECTIVE BARGAINING AGREEMENT MATTERS

--------------------------------------------------------------------------------

Schedule 5.1(n)

FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

Schedule 5.2(a)

LESSEE LLC ORGANIZATIONAL DOCUMENTS

--------------------------------------------------------------------------------

Schedule 5.4

MATERIALS PROVIDED TO PURCHASER

--------------------------------------------------------------------------------

Schedule 5.6(vi)

CAPITAL PROJECTS

--------------------------------------------------------------------------------

Schedule 5.10(f)

COLLECTIVE BARGAINING AGREEMENTS

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF DEED

[attached hereto]

--------------------------------------------------------------------------------

 

 

UNIT DEED

from

PARK CENTRAL HOTEL (DE) LLC,

a Delaware limited liability company

Grantor

to

[                    ],

a [                    ]

Grantee

Affecting the Commercial Condominium Unit in

the Building known as The Park Central Condominium

Section: 4

Block: 1027

Lot: 1101

Borough of Manhattan, New York, New York

 

 

 

After recording, please return by mail to:

[                    ]

[                    ]

[                    ]

Attention: [                    ]

--------------------------------------------------------------------------------

UNIT DEED

THIS INDENTURE, is made as of                     , 2011, from PARK CENTRAL
HOTEL (DE) LLC, a Delaware limited liability company, having an address at 200
West Street, New York, New York 10282 (the “Grantor”), to
[                    ], a [                    ], having an address at 3
Bethesda Metro Center, Suite 1200, Bethesda, Maryland 20814 (the “Grantee”).

W I T N E S S E T H :

That the Grantor, in consideration of Ten and 00/100 Dollars ($10.00) and other
good and valuable consideration paid by the Grantee, does hereby grant and
release unto the Grantee, the heirs or successors and assigns of the Grantee,
forever:

The Unit known as the Hotel Unit (the “Hotel Unit”) in the condominium known as
The Park Central Condominium (“Condominium”) in the building having the street
number 870 Seventh Avenue, Borough of Manhattan, County of New York, City and
State of New York building (the “Building”), such Hotel Unit being designated
and described in that certain declaration of condominium dated as of
November 20, 1996, made by T. Park Central LLC, O. Park Central LLC, H. Park
Central LLC and R. Park Central LLC, pursuant to Article 9-B of the Real
Property Law of the State of New York, which declaration of condominium was
recorded in the New York County Office of the Register of The City of New York
(“Register’s Office”) on December 27, 1996, in Reel 2406, page 1498 and amended
by First Amendment to Declaration recorded August 4, 1997 in Reel 2482 page 1956
as amended and restated by Amended Restated and Consolidated Declaration of
Condominium dated December 30, 1997 recorded February 26, 1998 in -Reel 2549
page 192; as further amended by Third Amendment to Declaration, dated May 1,
1998 recorded July 8, 1998 in Reel 2614 page 604; Fourth Amendment to
Declaration dated November 15, 1999 recorded October 10, 2001 in Reel 3370 page
2485; Fifth Amendment to Declaration dated as of November 15, 2001 recorded
December 13, 2001 in Reel 3409 page 79; Sixth Amendment to Declaration dated as
of July 19, 2001 recorded June 12, 2002 in Reel 3537 page 896; Seventh Amendment
to Declaration dated September 30, 2002 recorded November 20, 2003 as CRFN
2003000466814, Eighth Amendment to Declaration dated as of June 15, 2005
recorded July 28, 2005 as CFRN 2005000420712 and by Ninth Amendment to
Declaration dated as of January 2, 2007 recoded March 1, 2007 as CFRN
2007000112631 (as so amended, the “Condominium Declaration”). The Hotel Unit is
designated as Tax Lot No. 1101 in Block 1027 of Section 4 of the Borough of
Manhattan on the Tax Map of the Real Property Assessment Department of The City
of New York and on the Floor Plans of the Building, certified by C.K. Architect,
P.C., on December 19, 1996, and filed with the Real Property Assessment
Department of The City of New York on December 24, 1996, as Condominium Plan
No. 958 and also filed in the Register’s Office on December 27, 1996, as Map
No. 5412, as further amended by Condominium Plan No. 958A filed in the
Register’s Office on August 4, 1997 as Map No. 5465, as further amended by
Condominium Plan No. 958B filed in the Register’s Office on February 26, 1998 as
Map No. 5493, as further amended by Condominium Plan No. 958C filed in the
Register’s Office on July 8, 1998 as Map No. 5522, as further amended by
Condominium Plan No. 958D filed in the Register’s Office on October 10, 2001 as
Map No. 5831, as further amended by Condominium Plan No. 958E filed in the
Register’s

--------------------------------------------------------------------------------

Office on December 13, 2001 as Map No. 5852, as further amended by Condominium
Plan No. 958F filed in the Register’s Office on June 12, 2002 as Map No. 5900,
as further amended by Condominium Plan No. 958G filed in the Register’s Office
on July 1, 2005. The land upon which the Building (within which the Hotel Unit
is located) is more particularly described in Exhibit A attached hereto and made
a part hereof (such land, the Building, the “Property”) below. All capitalized
terms herein which are not separately defined herein shall have the meanings
given to those terms in the Condominium Declaration or in the By-Laws of
Condominium. (Said By-Laws, as the same may be amended from time to time, are
hereinafter referred to as the “By-Laws”.)

TOGETHER WITH the Hotel Unit Owner’s undivided interest in the Common Elements
(as such term is defined in the Condominium Declaration).

TOGETHER with the appurtenances and all the estate and rights of Grantor in and
to the Hotel Unit;

TOGETHER with, and subject to, the rights, obligations, easements, restrictions
and other provisions set forth in the Condominium Declaration and the By-Laws,
all of which shall constitute covenants running with the Land and shall bind any
person having at any time any interest or estate in the Hotel Unit, as though
recited and stipulated at length herein.

TOGETHER with the benefits and easements granted pursuant to and described in,
and subject to the burdens, if any, contained in the following documents
recorded in the City Register’s Office: (1) Subway Stairway Consent recorded
March 27, 1917 in Liber 3010 cp 136; and (ii) Subway Entrance and Stairway
Agreement recorded July 27, 1926 in Liber 3565 cp 36.

TO HAVE AND TO HOLD the same unto the Grantee and the heirs or successors and
assigns of the Grantee forever.

If any provision of the Condominium Declaration or the By-Laws is invalid under,
or would cause the Condominium Declaration or the By-Laws to be insufficient to
submit the Property to, the provisions of the New York Condominium Act, or if
any provision which is necessary to cause the Condominium Declaration and the
By-Laws to be sufficient to submit the Property to the provisions of the New
York Condominium Act is missing from the Condominium Declaration or the By-Laws,
or if the Condominium Declaration and the By-Laws are insufficient to submit the
Property to the provisions of the New York Condominium Act, the applicable
provisions of the Condominium Declaration shall control.

Grantor, in compliance with Section 13 of the Lien Law of the State of New York,
covenants that Grantor will receive the consideration for this conveyance and
will hold the right to receive such consideration as a trust fund to be applied
first for the purpose of paying the cost of the improvement and will apply the
same first to the payment of the cost of the improvement before using any part
of the same for any other purpose.

The term “Grantee” shall be read as “Grantees” whenever the sense of this
indenture so requires.

[SIGNATURE PAGE FOLLOWS]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Grantor has executed this Indenture as of the date set
forth above.

GRANTOR

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

  

By: W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

     

By: W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By: W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By: Park Central Owner LLC, its Managing Member

              

By: W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                 

By: Whitehall Street Global Real Estate Limited Partnership 2001, a Managing
Member

                    

By: WH Advisors, L.L.C. 2001, its General Partner

                       

By:

                             

Name:

                         

Title:

--------------------------------------------------------------------------------

STATE OF NEW YORK

  

)

     

)

  

ss.:

COUNTY OF NEW YORK

  

)

  

On the                      day of                     , 2011, before me, the
undersigned, a Notary Public in and for said State, personally appeared
                    , personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature, on the instrument, the individual(s), or
the person upon behalf of which the individual(s) acted, executed the
instrument.

 

  Notary Public

--------------------------------------------------------------------------------

SCHEDULE A

DESCRIPTION OF THE LAND

The land upon which the Building containing the Hotel Unit is situated is more
particularly described as follows:

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan City, County and State of New York bounded and described as
follows:

BEGINNING at the corner formed by the intersection of the northerly side of West
55th Street with the westerly side of Seventh Avenue;

RUNNING THENCE westerly along the northerly side of West 55th Street, 175 feet;

THENCE northerly on a line parallel with the westerly side of Seventh Avenue,
200 feet 10 inches to the southerly side of West 56th Street;

THENCE easterly along said southerly side of West 56th Street, 175 feet to the
westerly side of Seventh Avenue;

THENCE southerly along the westerly side of Seventh Avenue, 200 feet 10 inches
to the point or place of BEGINNING.

--------------------------------------------------------------------------------

EXHIBIT B

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company
(“Seller”), in connection with the sale of certain real property located in New
York, New York, which is more particularly described in that certain Purchase
and Sale Agreement dated as of June 3, 2011 (the “Purchase Agreement”), between
Park Central Hotel (DE) LLC, a Delaware limited liability company (“PCH”), PCH
TIC Owner LLC, a Delaware limited liability company, (“TIC”), and PCH Operating
Lessee Owner Corp., a Delaware corporation (“Leaseco”), and
                    , a Delaware limited liability company (“Purchaser”), as
successor to LaSalle Hotel Operating Partnership, L.P., a Delaware limited
partnership, under the Purchase Agreement, hereby grants, assigns, transfers,
conveys and delivers to Purchaser, without recourse and without any
representation or warranty (except to the extent expressly provided in the
Purchase Agreement), the “Personal Property” and “Consumable Inventory”, as such
terms are defined in the Purchase Agreement. Subject to the limitations set
forth in the Purchase Agreement with respect to its indemnification obligations
in respect of breaches of representations and warranties, Seller hereby
represents and warrants that it owns the Personal Property free and clear of all
liens and encumbrances, except for the Equipment Leases (as such term is defined
in the Purchase Agreement) which shall be subject only to the ownership interest
of the lessor thereunder. This Bill of Sale shall be governed by the laws of the
State of New York.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
                    , 2011.

SELLER:

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

  

By: W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

     

By: W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By: W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By: Park Central Owner LLC, its Managing Member

              

By: W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                 

By: Whitehall Street Global Real Estate Limited Partnership 2001, a Managing
Member

                    

By: WH Advisors, L.L.C. 2001, its General Partner

                       

By:

                             

Name:

                         

Title:

--------------------------------------------------------------------------------

EXHIBIT C

ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,

BOOKINGS AND INTANGIBLES

THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, BOOKINGS AND INTANGIBLES
(this “Assignment”) is made as of                     , 2011, by PARK CENTRAL
HOTEL (DE) LLC, a Delaware limited liability company (“Seller”), in favor of
[                    ], a [                    ] (“Purchaser”).

RECITALS

A. Seller is the owner of certain property commonly known as the “Park Central
New York” located in New York, New York.

B. Seller and Purchaser have entered into that certain Purchase and Sale
Agreement dated as of                     , 2011 (as amended, the “Purchase
Agreement”), pursuant to which Seller has agreed to sell and Purchaser has
agreed to purchase the real property described in Exhibit A attached thereto and
the improvements located thereon, on the terms and conditions stated in the
Purchase Agreement. All terms not otherwise defined herein shall have the
meaning assigned to them in the Purchase Agreement.

C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser
all of Seller’s right, title and interest to (a) the Service Contracts described
in Exhibit B attached hereto, (b) the Bookings, (c) the Intangibles and (d) the
Books and Records.

NOW, THEREFORE, Seller and Purchaser agree as follows:

1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty (except to the extent
expressly provided in the Purchase Agreement), all of Seller’s right, title and
interest in and to (a) the Service Contracts described on Exhibit B attached
hereto, (b) Bookings, (c) the Intangibles and (d) Books and Records.

2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and
agrees to be bound by all of the covenants, obligations, liabilities, and
burdens of Seller under or in connection with the Service Contracts described on
Exhibit B attached hereto, the Bookings and the Intangibles that accrue or arise
from events occurring on and after the date of this Assignment. Seller shall
remain liable for its covenants, obligations, liabilities and burdens of Seller
under or in connection with such Service Contracts, the Bookings and the
Intangibles to the extent that accrue or arose from events occurring prior to
the date of this Assignment.

3. Indemnification.

(a) Seller shall indemnify and defend Purchaser against and hold Purchaser
harmless from all claims, demands, liabilities, losses, damages, costs and
expenses, including, without limitation, reasonable attorneys’ fees and
disbursements, that are caused by any failure by Seller

--------------------------------------------------------------------------------

to perform its obligations under or in connection with such Service Contracts,
the Bookings or the Intangibles that accrues or arises out of events occurring
before the date of this Assignment, subject to the limitations set forth in the
Purchase Agreement, which shall apply to any indemnification obligations of
Seller hereunder and any indemnification obligation of Seller under the Purchase
Agreement.

(b) Purchaser shall indemnify and defend Seller against and hold Seller harmless
from all claims, demands, liabilities, losses, damages, costs and expenses,
including, without limitation, reasonable attorneys’ fees and disbursements,
that are caused by any failure by Purchaser to perform its obligations under or
in connection with such Service Contracts, the Bookings or the Intangibles that
accrues or arises out of events occurring on or after the date of this
Assignment.

4. Successors. This Assignment shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, legal representatives, successors
and assigns.

5. Governing Law. This Assignment shall be governed by the laws of the State of
New York.

6. Further Assurances. Seller and Purchaser agree to execute such other
documents and perform such other acts as may be reasonably necessary or proper
and usual to effect this Assignment.

7. Attorneys’ Fees. If any action or proceeding is commenced by either party to
enforce their rights under this Assignment or to collect damages as a result of
the breach of any of the provisions of this Assignment, the prevailing party in
such action or proceeding, including, without limitation, any bankruptcy,
insolvency or appellate proceedings, shall be entitled to recover all reasonable
costs and expenses, including, without limitation, reasonable attorneys’ fees
and court costs actually incurred, in addition to any other relief awarded by
the court.

8. Counterparts. This Assignment may be executed in counterparts, each of which
shall be deemed an original, and both of which together shall constitute one and
the same instrument.

[Signature pages follow]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the
date first above written.

SELLER:

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

  

By: W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

     

By: W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By: W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By: Park Central Owner LLC, its Managing Member

              

By: W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                

By: Whitehall Street Global Real Estate Limited Partnership 2001, a Managing
Member

                   

By: WH Advisors, L.L.C. 2001, its General Partner

                      

By:

                            

Name:

                        

Title:

 

PURCHASER: [                    ] BY:       

Name:

 

Title:

--------------------------------------------------------------------------------

EXHIBIT D

ASSIGNMENT AND ASSUMPTION OF LEASES

THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made as of
                    , 2011 (the “Effective Date”), by PARK CENTRAL HOTEL (DE)
LLC, a Delaware limited liability company (“Seller”), in favor of
[                    ], a [                    ] (“Purchaser”).

RECITALS

A. Seller is the owner of certain property commonly known as the “Park Central
New York” located in New York, New York.

B. Seller and Purchaser have entered into that certain Purchase and Sale
Agreement dated as of                     , 2011 (as amended, the “Purchase
Agreement”), pursuant to which Seller has agreed to sell and Purchaser has
agreed to purchase the real property described in Exhibit A attached thereto and
the improvements located thereon, on the terms and conditions stated in the
Purchase Agreement. All terms not otherwise defined herein shall have the
meaning assigned to them in the Purchase Agreement.

C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser
all of Seller’s right, title and interest to those certain leases described in
Exhibit A attached hereto (collectively, the “Leases”).

NOW, THEREFORE, Seller and Purchaser agree as follows:

1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty (except to the extent
expressly provided in the Purchase Agreement), all of Seller’s right, title and
interest in and to the Leases.

2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and
agrees to be bound by all of the covenants, obligations, liabilities, and
burdens of Seller under the Leases that accrue or arise out of events occurring
from and after the date of this Assignment. Seller shall remain liable for its
covenants, obligations, liabilities and burdens of Seller under the Leases to
the extent they accrued or arose out of events occurring prior to the date of
this Assignment.

3. Indemnification.

(a) Seller shall indemnify and defend Purchaser against and hold Purchaser
harmless from all claims, demands, liabilities, losses, damages, costs and
expenses, including, without limitation, reasonable attorneys’ fees and
disbursements, that are caused by any failure by Seller to perform the
obligations of the landlord under the Leases that accrues or arises out of
events occurring before the date of this Assignment, subject to the limitations
set forth in the Purchase Agreement, which shall apply to any indemnification
obligations of Seller hereunder and any indemnification obligation of Seller
under the Purchase Agreement.

--------------------------------------------------------------------------------

(b) Purchaser shall indemnify and defend Seller against and hold Seller harmless
from all claims, demands, liabilities, losses, damages, costs and expenses,
including, without limitation, reasonable attorneys’ fees and disbursements,
that are caused by any failure by Purchaser to perform the obligations of the
landlord under the Leases that accrues or arises out of events occurring on or
after the date of this Assignment.

4. Successors. This Assignment shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, legal representatives, successors
and assigns.

5. Governing Law. This Assignment shall be governed by the laws of the State of
New York.

6. Attorneys’ Fees. If any action or proceeding is commenced by either party to
enforce their rights under this Assignment or to collect damages as a result of
the breach of any of the provisions of this Assignment, the prevailing party in
such action or proceeding, including, without limitation, any bankruptcy,
insolvency or appellate proceedings, shall be entitled to recover all reasonable
costs and expenses, including, without limitation, reasonable attorneys’ fees
and court costs actually incurred, in addition to any other relief awarded by
the court.

7. Counterparts. This Assignment may be executed in counterparts, each of which
shall be deemed an original, and both of which together shall constitute one and
the same instrument.

[Signature pages follow]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the
date first above written.

SELLER:

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

  

By: W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

     

By: W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By: W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By: Park Central Owner LLC, its Managing Member

              

By: W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                 

By: Whitehall Street Global Real Estate Limited Partnership 2001, a Managing
Member

                    

By: WH Advisors, L.L.C. 2001, its General Partner

                       

By:

                             

Name:

                         

Title:

[Signatures continue on following page]

--------------------------------------------------------------------------------

PURCHASER: [                    ] BY:       

Name:

 

Title:

--------------------------------------------------------------------------------

Exhibit A to Assignment of Leases

List of Leases

--------------------------------------------------------------------------------

EXHIBIT E

FIRPTA CERTIFICATE

CERTIFICATIONS OF NON-FOREIGN STATUS

A. Federal FIRPTA Certificate

To inform [                    ], a [                    ] (“Transferee”), that
withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as
amended (the “Code”), will not be required upon the transfer of certain real
property located in New York, New York by PARK CENTRAL HOTEL (DE) LLC, a
Delaware limited liability company (“Transferor”), Transferor hereby certifies
to Transferee, as of [                    ], 2011:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Code and the Income Tax
Regulations promulgated thereunder);

2. Transferor’s U.S. tax identification number is                     ; and

3. Transferor’s office address is 200 West Street, New York, New York 10282.

Transferor understands that this Certification may be disclosed to the Internal
Revenue Service by Transferee and that any false statement contained herein
could be punished by fine, imprisonment, or both.

Transferor understands that Transferee is relying on this Certification in
determining whether withholding is required upon said transfer.

Under penalty of perjury the undersigned declare that they have examined this
Certification and to the best of their knowledge and belief it is true, correct
and complete, and they further declare that they have authority to sign this
Certification on behalf of Transferor.

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SELLER:

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

  

By: W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

     

By: W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By: W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By: Park Central Owner LLC, its Managing Member

              

By: W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                 

By: Whitehall Street Global Real Estate Limited Partnership 2001, a Managing
Member

                    

By: WH Advisors, L.L.C. 2001, its General Partner

                       

By:

                             

Name:

                         

Title:

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EXHIBIT F

FORM OF COMMON CHARGE STATEMENT

                    , 2011

“Purchaser”:

[                    ]

[                    ]

[                    ]

Attn: [            ]

“Agent”:

Citigroup Global Markets Realty Corp.,

as Administrative Agent and Collateral Agent

388 Greenwich Street

New York, New York 10013

RE: The Park Central Condominium (the “Condominium”)

Ladies and Gentlemen:

Reference is hereby made to (i) that certain Declaration of Condominium, dated
November 20, 1996, establishing a plan for condominium ownership of the premises
known as The Park Central Condominium and having a street address at 870 Seventh
Avenue, New York, New York, pursuant to Article 9-B of the Real Property Law of
the State of New York (as it has been amended from time to time, the
“Declaration”), and (ii) those certain By-Laws of The Park Central Condominium
attached to the Declaration (the “By-Laws,” and together with the Declaration,
collectively, the “Condominium Documents”). Capitalized terms used herein but
not otherwise defined shall have the meanings ascribed to such terms in the
Condominium Documents.

The Board of Managers (the “Board”) of The Park Central Condominium (the
“Condominium”) has been informed that (i) pursuant to a certain Loan Agreement
dated on or about the date hereof (the “Loan Agreement”), by and between
Purchaser, as borrower, Agent, as administrative and collateral agent and the
other parties listed therein, the lenders (as more particularly set forth in the
Loan Agreement) are making a loan (the “Loan”) to Borrower in connection with
its acquisition of the Hotel Unit, which Hotel Unit is subject to the
Condominium Documents and (ii) Purchaser has executed or intends to execute in
favor of Agent a mortgage securing its obligations under the Loan Agreement (the
“Mortgage”).

The Board hereby certifies to Purchaser and Agent as follows:

1. The Declaration and By-Laws have not been amended except as set forth in
Exhibit A attached hereto and are in full force and effect.

--------------------------------------------------------------------------------

2. All Common Charges, Special Assessments and any other fees, dues, charges,
and assessments, whether annual, monthly, regular, special or otherwise required
to be paid in respect of the Condominium by the Hotel Unit Owner under the
Declaration and the By-Laws have been paid through the date hereof, and there
are no special assessments pending or contemplated with respect to the
Condominium.

3. To the knowledge of the Board, the Hotel Unit Owner is not in default under
the Declaration or the By-Laws as of the date hereof.

4. There are no rules and regulations in effect with respect to the Condominium.

5. The Condominium has no outstanding loans or contracts.

6. There are no lawsuits pending or, to the knowledge of the Board, threatened
with respect to the Condominium.

7. No voluntary actions, or to the Board’s best knowledge, involuntary actions
are pending against the Board or the Condominium under the bankruptcy or
insolvency laws of the United States or any state thereof.

8. The members of the Board are Stuart Eichner, Scott Lager, Joshua Wirshba,
                     and                     , and the following persons serve
as officers of the Condominium:                    . There are no committees of
the Board, and the Board has not engaged a managing agent for the Condominium.

9. The Condominium has no financial statements for calendar years 2009 and 2010.

10. Attached hereto as Exhibit B is the Condominium’s budget for calendar year
2011.

11. The Board hereby recognizes Agent as a “Permitted Mortgagee” and the
Mortgage as a “Permitted Mortgage” (as defined in the Condominium Documents) and
Agent as such shall be entitled to the rights and privileges of a Permitted
Mortgagee subject to the terms and provisions and requirements of the
Condominium Documents.

12. Unless and until otherwise instructed in writing by Agent, the Board shall
deliver to Agent at the address set forth above (or such other address as may be
designated by Agent from time to time) any notices to which Agent, as a
Permitted Mortgagee, is entitled under the Condominium Documents.

13. The owners of the Timeshare Units and the Tower Unit are current in the
payment of common charges and any assessments under the Declaration and By-Laws;
and, to the best of the Board’s knowledge, the owners of the Timeshare Units and
the Tower Unit are not in default under the Declaration or By-Laws.

--------------------------------------------------------------------------------

14. The Board acknowledges that Agent does hereby request:

(i) That the Board provide to Agent all financial statements and information to
which Agent is entitled under the Condominium Documents, and

(ii) That the Board provide to Agent notices of any unpaid Common Charges,
Special Assessments and any other charges owed by the Hotel Unit Owner and which
are delinquent as well as notice of any other default by Hotel Unit Owner under
the Condominium Documents.

The Board represents and warrants that the execution and delivery of this Common
Charge Statement has been duly authorized by all requisite entity action on its
part and the signatories executing this Common Charge Statement on its behalf
are duly authorized to so execute this Common Charge Statement.

We understand that Purchaser will be purchasing the Hotel Unit in the
Condominium and that Agent will be acting as administrative agent and collateral
agent for the lenders that will be financing such purchase, and accordingly,
Purchaser and Agent, along with their respective successors and assigns, shall
be entitled to rely on the statements set forth herein.

 

THE BOARD OF MANAGERS OF THE

PARK CENTRAL CONDOMINIUM

By:     Name:   Title:   By:     Name:   Title:  

--------------------------------------------------------------------------------

EXHIBIT G

DESIGNATION AGREEMENT

THIS DESIGNATION AGREEMENT (the “Agreement”) is entered into on and as of
                    , 2011, by and among PARK CENTRAL HOTEL (DE), LLC, a
Delaware limited liability company (“Seller”), [                    ], a
[                    ] (“Purchaser”), and FIRST AMERICAN TITLE INSURANCE
COMPANY, a [                    ] (“Title Company”).

RECITALS

A. Seller and Purchaser have entered into that certain Purchase and Sale
Agreement dated as of             , 2011 (the “Purchase Agreement”), pursuant to
which Seller has agreed to sell and Purchaser has agreed to purchase the real
property described in Exhibit A attached thereto and the improvements located
thereon (the “Property”), on the terms and conditions stated in the Purchase
Agreement. All terms not otherwise defined herein shall have the meaning
assigned to them in the Purchase Agreement. The purchase and sale of Seller’s
interest in the Property pursuant to the Purchase Agreement is sometimes
referred to below as the “Transaction”.

B. Section 6045(e) of the United States Internal Revenue Code and the
regulations promulgated thereunder (collectively, the “Reporting Requirements”)
require an information return to be made to the United States Internal Revenue
Service, and a statement to be furnished to Seller, in connection with the
Transaction.

C. Pursuant to the Purchase Agreement, an escrow has been opened with Title
Company through which the Transaction will be or is being closed. Title Company
is either (i) the person responsible for closing the Transaction (as described
in the Reporting Requirements) or (ii) the disbursing title or escrow company
that is most significant in terms of gross proceeds disbursed in connection with
the Transaction (as described in the Reporting Requirements).

D. Seller, Purchaser and Title Company desire to designate Title Company as the
“Reporting Person” (as defined in the Reporting Requirements) with respect to
the Transaction as permitted by Treas. Reg. § 1.6045-4(e)(5).

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Seller, Purchaser and Title Company agree as
follows:

1. Title Company is hereby designated as the Reporting Person for the
Transaction. Title Company shall perform all duties that are required by the
Reporting Requirements to be performed by the Reporting Person for the
Transaction.

--------------------------------------------------------------------------------

2. Title Company hereby requests Seller to furnish to Title Company Seller’s
correct taxpayer identification numbers. Pursuant to such request, Seller hereby
certifies to Title Company, under penalties of perjury, that Seller’s correct
taxpayer identification number is                     . Seller acknowledges that
any failure by Seller to provide Title Company with Seller’s correct taxpayer
identification numbers may subject Seller to civil or criminal penalties imposed
by law.

3. The names and addresses of the parties hereto are as follows:

 

Seller:

   Park Central Hotel (DE), LLC    200 West Street    New York NY 10282

Purchaser:

   [                        3 Bethesda Metro Center, Suite 1200    Bethesda,
Maryland 20814

Title Company:

   First American Title Insurance Company    [                    ]   
[                    ]

4. Each of the parties hereto shall retain this Agreement for a period of four
years following the calendar year during which the date of closing of the
Transaction occurs.

[Signatures on next page]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have entered into this Agreement.

 

SELLER: [PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company]   
By:    W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member      
By:   

W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By:

  

W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By:

  

Park Central Owner LLC, its Managing Member

              

By:

  

W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                 

By:

  

Whitehall Street Global Real Estate Limited Partnership 2001, a Managing Member

                    

By:

  

WH Advisors, L.L.C. 2001, its General Partner

                    

By:

  

 

                       

Name:

                       

Title:

[Signatures continue on following page]

--------------------------------------------------------------------------------

PURCHASER:

[                    ]

By:       Name:   Title:

[Signatures continue on following page]

--------------------------------------------------------------------------------

TITLE COMPANY:

FIRST AMERICAN TITLE INSURANCE COMPANY

 

By:     Name:     Its:    

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EXHIBIT H

WIRE INSTRUCTIONS

First American Title Insurance

NCS Chicago

30 North LaSalle Street, Suite 2700, Chicago, Illinois 60602

(312) 553-0471 (800) 333-3993 (Fax) 553-0480

ARTICLE XIWIRE TRANSFER INSTRUCTIONS

 

Wire to:

   First American Trust, FSB    5 First American Way    Santa Ana, CA 92707

ABA Number:

     

Account Name:

   First American Title Insurance Company

Account Number:

     

Reference:

   Escrow No:    NCS 484105    Attention:    Jennifer Logan

IMPORTANT:

PLEASE REFERENCE THE ESCROW NUMBER IN YOUR WIRE TRANSMITTAL; Failure to
reference all of the above information may result in a delay of your funds being
applied to your file.

It is imperative that the individual who is responsible for initiating the wire
transfer contact Jennifer Logan at (800) 333-3993 ext. 7208 or
jelogan@firstam.com to advise that a wire is en route.

--------------------------------------------------------------------------------

EXHIBIT I

INTENTIONALLY OMITTED

--------------------------------------------------------------------------------

EXHIBIT J

PURCHASER’S CONDOMINIUM AFFIDAVIT

[attached hereto]

--------------------------------------------------------------------------------

AFFIDAVIT IN SUPPORT OF A REQUEST FOR A NO-ACTION LETTER

 

State of New York

     }      s.:     

County of            

    

                    , being duly sworn to, deposes and says:

 

1.

I am a                      of                     , a                     
organized under the laws of the State of                      (“Purchaser”).

 

2.

Park Central Hotel (DE), LLC owns the Hotel Unit located in the Park Central
Condominium located at 870 Seventh Avenue, New York, New York. The Hotel Unit
contains approximately [    ] hotel rooms, [a restaurant, and retail space] (the
“Property”).

 

3.

Park Central Hotel (DE), LLC and Purchaser entered into that certain Purchase
and Sale Agreement dated as of                     , 2011 (“Contract”) for the
purchase and sale of the Hotel Unit for a purchase price of $            .

 

4.

Prior to the closing under the Contract, Park Central Hotel (DE), LLC may
restructure its ownership of the Hotel Unit by transferring or otherwise
conveying or assigning all or a portion of the Hotel Unit to entities related to
it in accordance with the terms of the Contract. Park Central Hotel (DE), LLC
and such related entities are collectively referred to herein as the “Hotel Unit
Owner”.

 

5.

The closing under the Contract is conditioned upon the issuance of a new
No-Action Letter by the Department of Law (“DOL”) to Hotel Unit Owner in
connection with the purchase and sale of the Hotel Unit.

 

6.

Purchaser is a sophisticated investor, owner and operator of real estate and is
fully familiar with the condition of the Hotel Unit. Purchaser is also
represented by experienced counsel. Purchaser understands that no offering plan
will be provided by Hotel Unit Owner to Purchaser and that Purchaser will be
relying on Purchaser’s own experience and due diligence and other sources with
respect to the purchase of the Hotel Unit.

 

7.

Based upon the facts set forth herein, Purchaser supports Hotel Unit Owner’s
request that the DOL issue a “No-Action Letter” to Hotel Unit Owner stating that
the DOL will not take enforcement action based upon the transaction described
herein occurring without the filing of an offering plan pursuant to
Section 352-e of the General Business Law (“GBL”) because the filing of an
offering plan pursuant to GBL is not necessary to effectuate the purpose of GBL
Article 23-A or to protect the public interest.

 

8.

To the extent required by law, Purchaser acknowledges and agrees that no further
conveyance of the Hotel Unit will be made by Purchaser unless pursuant to an
offering plan or a No-Action Letter.

--------------------------------------------------------------------------------

9.

To the best of my knowledge, neither Purchaser nor any of its principals have
participated, within the preceding five years, in any other Application for a
No-Action Letter, nor have they made any other offerings which are not pursuant
to an offering plan filed with the DOL.

--------------------------------------------------------------------------------

PURCHASER: [                    ] By:       Name:   Title:

Sworn to before me this

             day of                    , 2011

   Notary Public

--------------------------------------------------------------------------------

EXHIBIT K

ESCROW INSTRUCTIONS

            [             ], 2011

[                    ]

[                    ]

[                    ]

Attention:                     

 

  Re:

Deposit under that certain Purchase and Sale Agreement dated             , 2011
(the “Agreement”), by and between Park Central Hotel (DE) LLC, a Delaware
limited liability company (“PCH”), PCH TIC Owner LLC, a Delaware limited
liability company, (“TIC”), and PCH Operating Lessee Owner Corp., a Delaware
corporation (“Leaseco”, each of PCH, TIC and Leaseco, collectively referred to
herein as the “Seller”), and LaSalle Hotel Operating Partnership, L.P., a
Delaware limited partnership (“Purchaser”); Escrow No.             (“Escrow”).

Gentlemen and Ladies:

Purchaser and Seller have entered into the Agreement pursuant to which Purchaser
agrees to purchase the Property (as defined in the Agreement). A copy of the
Agreement has been delivered to you concurrently herewith.

In accordance with Section 1.6 of the Agreement, Purchaser will be delivering
within one (1) business day following the expiration of the Inspection Period
cash in the amount of Fifteen Million and 00/100 Dollars ($15,000,000.00)
(which, along with any interest earned thereon, is hereinafter referred to as
the “Earnest Money”) for deposit in the Escrow. You are to place the Earnest
Money in an interest bearing account (for this purpose, Purchaser’s Federal
Employer I.D. number is 36-4217399) and hold the Earnest Money in the Escrow and
deliver it to Seller or Purchaser in accordance with these instructions.

In the event that (i) you receive written notice from Seller or Purchaser (the
party that delivers such written notice is referred to herein as the “Notice
Party”) stating that the Notice Party is terminating the Agreement and is
entitled to the Earnest Money under the terms of the Agreement (the “Notice”),
you shall promptly deliver a copy the Notice to the other party (the “Other
Party”), and (ii) you have not received a notice from the Other Party within ten
(10) business days after delivery of the Notice by you to the Other Party,
objecting to the release of the Earnest Money to the Notice Party, you shall
deliver the Earnest Money (by delivering cash, certified check or some other
form of immediately available funds) to the Notice Party at the address or
pursuant to the wiring instructions provided in the Notice; provided that, if
you receive written notice from the Other Party or the Other Party’s counsel
within ten (10) business days after the Other Party received a copy of the
Notice from you, that the Other Party disputes the Notice Party’s right to
receive the Earnest Money and directs you not to make the foregoing

--------------------------------------------------------------------------------

delivery, you shall not deliver the Earnest Money to the Notice Party but shall
instead retain it or, if appropriate, interplead the Earnest Money in a court of
competent jurisdiction in the State of New York.

You are not to disclose to any person (other than the parties hereto, their
employees, agents or independent contractors) any information about the
Agreement or its existence or this letter of instructions (except if requested
by either party or as may be required by court in any litigation or by law).

You are to maintain the Earnest Money in federally-insured interest-bearing
accounts, each with a deposit not to exceed Two Hundred Fifty Thousand Dollars
($250,000.00) or otherwise in major banking institutions, e.g. Bank of America,
Wells Fargo or JP Morgan Chase, as Purchaser and Seller may mutually approve,
and all interest accruing thereon shall be paid to the party entitled to the
Earnest Money under the terms of the Agreement. We understand that you assume no
responsibility for, nor will we hold you liable for, any loss accruing due to
bank failure and/or takeover by a federal regulatory agency. Nor shall you be
required to institute legal proceedings of any kind pursuant to these
instructions, nor be required to defend any legal proceedings which may be
instituted against you with respect to the subject matter of these instructions
unless you are requested to do so by Purchaser or Seller and arrangements
reasonably satisfactory to you have been made to indemnify you against the cost
and expense of such defense by the party making such request. If any dispute
shall arise with respect to these instructions, whether such dispute arises
between the parties hereto or between the parties hereto and other persons, you
may interplead such disputants. You shall be responsible only for the
performance of such duties as are strictly set forth herein and in no event
shall you be liable for any act or failure to act under the provisions of this
letter except where such action or inaction is the result of your willful
misconduct or negligence.

Seller and Purchaser each hereby agrees to indemnify you and hold you harmless
against any loss, liability or damage (including the cost of litigation and
reasonable counsel fees) incurred in connection with the performance of your
duties hereunder except as a result of your willful misconduct or negligence.

In the event of any dispute between Seller and Purchaser respecting these
instructions, the parties may elect to submit such dispute to any court of
competent jurisdiction in the State of New York in accordance with Section 10.12
of the Agreement. The prevailing party in any such dispute shall be entitled to
recover its legal fees and expenses incurred in connection with such dispute.

Any notice pursuant to these instructions shall be given in writing by
(a) personal delivery, or (b) reputable overnight delivery service with proof of
delivery, or (c) United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) legible facsimile transmission completed
before 5:00 p.m. (New York time) on a business day sent to the intended
addressee at the address set forth below, or to such other address or to the
attention of such other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have been given
either at the time of personal delivery, or, in the case of expedited delivery
service or mail, as of the date of first attempted delivery at the address and
in the manner provided herein, or, in the case of facsimile transmission, as of
the

--------------------------------------------------------------------------------

date of the facsimile transmission. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to these
instructions shall be as follows:

 

If to Seller, to:

   Goldman Sachs & Co.    200 West Street, 28th Floor    New York, NY 10282   
Attn. Jeffrey Fine    Facsimile No.: (212) 357-5505

And to:

   Highgate Hotels    545 E. John Carpenter Freeway #1400    Irving, TX 75062   
Attention: Steve Barick    Facsimile No.: (972) 401-2400

And to:

   Sullivan & Cromwell LLP    125 Broad Street    New York, New York 10004   
Attention: Anthony J. Colletta, Esq.    Facsimile No. (212) 291-9029

If to Purchaser, to:

   c/o LaSalle Hotel Properties    3 Bethesda Metro Center, Suite 1200   
Bethesda, Maryland 20814    Attention: Chief Operating Officer    Facsimile No.
(301) 941-1553

And to:

   Hagan & Vidovic LLP    200 East Randolph, 43rd Floor    Chicago, Illinois
60601    Attention: R.K. Hagan    Facsimile No. (312) 228-0982

If to Escrow Agent:

   [                    ]    [                    ]    [                    ]   
Attention. [                    ]    Facsimile No.: [                    ]   

Please indicate your agreement to comply with the foregoing instructions by
executing at least three (3) copies of this letter and returning, by overnight
courier, one to [            ], as counsel for Seller, and one to
[            ], as counsel for Purchaser.

--------------------------------------------------------------------------------

Very truly yours,

 

SELLER: PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company    By:
   W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member       By:
  

W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

        

By:

  

W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

           

By:

  

Park Central Owner LLC, its Managing Member

              

By:

  

W2001 Park Central Hotel Realty, L.L.C., its Managing Member

                 

By:

  

Whitehall Street Global Real Estate Limited Partnership 2001, a Managing Member

                    

By:

  

WH Advisors, L.L.C. 2001, its General Partner

                    

By:

  

 

                       

Name:

                       

Title:

 

PCH TIC OWNER LLC By:        Name:   Title: PCH OPERATING LESSEE OWNER CORP.
By:        Name:   Title:

[Signatures continue on next page.]

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PURCHASER [                    ] By:       Name:   Title:

--------------------------------------------------------------------------------

ACKNOWLEDGED AND AGREED: [            ] By:     Name:     Title:     Date:
                    , 2011

--------------------------------------------------------------------------------

EXHIBIT L

FORM OF HOLDBACK ESCROW AGREEMENT

HOLDBACK ESCROW AGREEMENT

THIS HOLDBACK ESCROW AGREEMENT (this “Agreement”) is made as of
                    , 2011, by and among PARK CENTRAL HOTEL (DE) LLC, a Delaware
limited liability company (“Seller”), [                    ], a
[                    ] (“Purchaser”), and [                    ], a
[                    ] (“Escrow Agent”).

RECITALS

A. Pursuant to that certain Purchase and Sale Agreement dated             , 2011
between Seller and Purchaser (the “Purchase Agreement”), Purchaser has
concurrently herewith purchased certain real and personal property commonly
known as the “Park Central New York” located in New York, New York (the
“Hotel”).

B. Pursuant to Section 9.4 of the Purchase Agreement, Seller has agreed to
deposit Eight Million Two Hundred Thousand and 00/100 Dollars ($8,200,000.00)
(the “Escrow Sum”) with Escrow Agent as security for Seller’s Post-Closing
Obligations (as defined in the Purchase Agreement).

NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Seller,
Purchaser and Escrow Agent agree as follows:

1. Capitalized Terms; Parties; Definitions.

(a) Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement.

(b) “Claim” means any claim made in good faith by Purchaser (i) against Seller
with respect to any of Seller’s Post-Closing Obligations or (ii) by Purchaser
pursuant to Section 5.11 of the Purchase Agreement.

(c) “Claims Deadline” means, for purposes of this Agreement, the date that is
twelve (12) months following the date hereof.

(d) “Parties” means Seller and Purchaser together, and “Party” may mean either
Seller or Purchaser, as the case may be.

(e) “Pending Claim” means a Claim with respect to which Purchaser has delivered
a written notice that it is asserting a Claim (a “Claims Notice”) conforming to
the description of such notice in Section 9.4 of the Purchase Agreement prior to
the Claims Deadline that is either pending or has been disputed by Seller.

--------------------------------------------------------------------------------

(f) “Seller’s Post-Closing Obligations” has the meaning given to such term in
Section 9.4 of the Purchase Agreement.

2 Escrow Sum. At the Closing of the sale and purchase of the Hotel in accordance
with the Purchase Agreement, Seller shall deposit the Escrow Sum from the
settlement proceeds with Escrow Agent to secure Seller’s Post-Closing
Obligations. Escrow Agent shall hold the Escrow Sum in an interest bearing
demand deposit account at a federally insured bank and shall keep Seller and
Purchaser informed concerning the identification, location and activity of such
account. Any interest earned on the Escrow Sum shall become part of the Escrow
Sum. Seller may request Escrow Agent, at any time and from time to time, to
invest the Escrow Sum in U.S. Treasury Bills, certificates of deposit with
federally insured banking institutions or in such other interest bearing
accounts with federally insured banking institutions selected by Seller, and
Escrow Agent hereby agrees to promptly comply with any such request. The Parties
acknowledge and agree that in no event shall Seller be required to fund any
additional amounts with Escrow Agent to increase the amount of the Escrow Sum.

3. Payment of Claims. At any time and from time to time prior to the Claims
Deadline, Purchaser may deliver a Claims Notice to Escrow Agent with respect to
any Claim. Such Claims Notice shall include a detailed description of the
subject Claim, together with supporting documentation of such Claim to the
extent available, and Purchaser’s calculation of the amount that Purchaser
believes it is entitled to recover from Seller in connection therewith. Within
three (3) business days following Escrow Agent’s receipt a Claims Notice from
Purchaser, Escrow Agent shall give Seller written notice of Purchaser’s demand
accompanied by a copy of Purchaser’s Claims Notice and all supporting
documentation provided by Purchaser in connection therewith, and Escrow Agent
shall include in such written notice an express statement that Escrow Agent will
pay Purchaser from the Escrow Sum in accordance with the Claims Notice unless
Seller objects to Escrow Agent within fifteen (15) business days after receipt
of Escrow Agent’s written notice and a copy of Purchaser’s Claims Notice,
together with all supporting documentation provided by Purchaser in connection
therewith. If Seller fails to timely object to Purchaser’s Claims Notice, Escrow
Agent shall pay the amount set forth in the Claims Notice from the Escrow Sum.
If Seller timely objects to Purchaser’s Claims Notice, then Escrow Agent shall
deliver to Purchaser a written notice of Seller’s objection within three
(3) business days following Escrow Agent’s receipt of such objection from
Seller.

4. Objection Notice Procedure. If Seller timely objects to any Purchaser Claims
Notice, the following shall apply:

(a) During the period commencing on the date of Purchaser’s receipt of the
written notice from Escrow Agent regarding Seller’s objection to Purchaser’s
Claims Notice and continuing through the thirtieth (30th) calendar day
thereafter, Seller and Purchaser may exchange relevant information regarding the
matters at issue in the applicable Claims Notice. If prior to or upon the
conclusion of such thirty (30) calendar day period, Seller and Purchaser agree
in writing that some or all of the Escrowed Sum should be disbursed, Seller and
Purchaser shall promptly deliver a copy of such written agreement to Escrow
Agent, and within three (3) business days following Escrow Agent’s receipt
thereof, Escrow Agent shall disburse to Purchaser such agreed upon amount,
without prejudice to the rights of either Seller or Purchaser as to the
remaining Escrowed Sum (if any).

--------------------------------------------------------------------------------

(b) If Seller and Purchaser are not able to mutually and consensually resolve
Seller’s objection to Purchaser’s Claims Notice by the conclusion of the 30-day
period described in Section 4(a) above, either Seller or Purchaser may bring a
claim against the other party in court. Escrow Agent is expressly authorized to
comply with any and all court orders, judgments or decrees entered or issued by
such court, and in case Escrow Agent complies with such order, judgment or
decree, it shall not be liable to either Seller or Purchaser by reason of such
compliance. In the event a dispute between Purchaser and Seller is not resolved
within such thirty (30) day period, Escrow Agent shall be authorized to deposit
the remaining balance of the Escrowed Sum with a court of competent jurisdiction
in the State of New York and Escrow Agent shall be thereafter relieved of its
duties hereunder.

5. Disbursement to Seller. On the Claims Deadline, Escrow Agent shall disburse
to Seller the excess (if any) of (a) the undisbursed portion of the Escrow Sum
over (b) the aggregate amount of all Pending Claims, and Escrow Agent shall
thereafter continue to hold the remaining portion of the Escrow Sum, if any,
until all Pending Claims are finally resolved or settled pursuant to Section 4
above.

6. Escrow Fees. The fees of Escrow Agent shall be paid one-half by Buyer and
one-half by Seller.

7. Enforcement Costs. In the event of any litigation to enforce this Agreement,
the prevailing party shall be entitled to recover all reasonable costs and
expenses incurred therein, including without limitation, reasonable attorney’s
fees and expenses and court costs.

8. Counterparts. This Agreement, and any amendment hereto, may be executed in
any number of counterparts and by each party on separate counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.

9. Notices. Any notice pursuant to this Agreement shall be given in writing by
(a) personal delivery, or (b) reputable overnight delivery service with proof of
delivery, or (c) United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) legible facsimile transmission completed
before 5:00 p.m. (New York time) on a business day sent to the intended
addressee at the address set forth below, or to such other address or to the
attention of such other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have been given
either at the time of personal delivery, or, in the case of expedited delivery
service or mail, as of the date of first attempted delivery at the address and
in the manner provided herein, or, in the case of facsimile transmission, as of
the date of the facsimile transmission. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to this Agreement
shall be as follows:

 

        If to Seller, to:

   Goldman Sachs & Co.    200 West Street, 28th Floor    New York, NY 10282   
Attn. Jeffrey Fine    Facsimile No.: (212) 357-5505

--------------------------------------------------------------------------------

        And to:

   Highgate Hotels    545 E. John Carpenter Freeway #1400    Irving, TX 75062   
Attention: Steve Barick    Facsimile No.: (972) 401-2400

        And to:

      Sullivan & Cromwell LLP    125 Broad Street    New York, New York 10004   
Attention: Anthony J. Colletta, Esq.    Facsimile No. (212) 291-9029

If to Purchaser, to:

   c/o LaSalle Hotel Properties    3 Bethesda Metro Center, Suite 1200   
Bethesda, Maryland 20814    Attn: Chief Operating Officer    Facsimile No. (301)
941-1553

        And to:

   Hagan & Vidovic LLP    200 East Randolph, 43rd Floor    Chicago, Illinois
60601    Attn: R.K. Hagan    Facsimile No. (312) 228-0982

        If to Escrow Agent:

   [                    ]    [                    ]    [                    ]   
Attn. [                    ]    Facsimile No.: [                    ]

10. Severability. If any provision of this Agreement is held unenforceable, such
holding shall not invalidate the remaining provisions hereof.

11. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, and their respective successors and assigns;
provided, however, none of the parties hereto shall have any right to assign its
obligations hereunder without the prior written consent of the other parties
hereto.

12. Modifications. This Agreement cannot be changed orally, and no executory
agreement shall be effective to waive, change, modify or discharge it in whole
or in part unless such executory agreement is in writing and is signed by the
parties against whom enforcement of any waiver, change, modification or
discharge is sought.

--------------------------------------------------------------------------------

13. GOVERNING LAW; VENUE. THIS AGREEMENT IS PERFORMABLE IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF SUCH STATE. SELLER
AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED
IN A STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK.

14. WAIVER OF JURY TRIAL. IN ANY ACTION BROUGHT BY ANY PARTY HERETO UNDER OR
OTHERWISE RELATING TO THIS AGREEMENT, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY OR ALL ISSUES ARISING IN SUCH ACTION.

[SIGNATURES FOLLOW]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers or managers as of the date first
above written.

 

PURCHASER:

 

[                     ]

By:

     

Name:

Title:

[signatures continue on the next page]

--------------------------------------------------------------------------------

SELLER:

 

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

  By:   W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member    
    By:   W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing
Member           By:   W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing
Member             By:   Park Central Owner LLC, its Managing Member          
    By:   W2001 Park Central Hotel Realty, L.L.C., its Managing Member          
      By:   Whitehall Street Global Real Estate Limited

Partnership 2001, a Managing Member

              By:  

WH Advisors, L.L.C. 2001, its General

Partner

              By:                     Name:                 Title:

[signatures continue on the next page]

--------------------------------------------------------------------------------

ESCROW AGENT:

[                    ]

By:     Name:     Title:    

--------------------------------------------------------------------------------

EXHIBIT M

FORM OF ASSIGNMENT AND ASSUMPTION

OF THE COLLECTIVE BARGAINING AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT N

NEW MANAGEMENT AGREEMENT

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EXHIBIT O

FORM OF TENANT ESTOPPEL CERTIFICATE

To: LaSalle Hotel Operating Partnership, L.P.

3 Bethesda Metro Center, Suite 1200

Bethesda, Maryland 20814

Attention: Chief Operating Officer

Re: Property Address:

                             ,                                    

                (the “Property”)

      Premises at Property:                      (the “Premises”)

The undersigned tenant (the “Tenant”) hereby certifies to you and your lenders
as follows:

1) Tenant is a tenant at the Property under a lease (the “Lease”) dated
                , 20        , for the Premises; the Lease has not been
cancelled, modified, assigned, extended or amended except as follows:
                    ; and there are no other agreements, written or oral,
affecting or relating to Tenant’s lease of the Premises or any other space at
the Property. A copy of the Lease and all amendments and modifications thereto
are attached hereto.

2) Tenant took possession of the Premises on                  and commenced to
pay rent on                 . Base rent is currently payable in the amount of
$                 per month, and Tenant is currently making estimated payments
of additional rent of $                 per month.

3) All base rent, rent escalations and additional rent under the Lease has been
paid through                 , 20        . There is no prepaid rent, except
$            , and the amount of security deposit is $            . Tenant
currently has no right to any future rent abatement under the Lease.

4) The base year for pass-throughs of operating expenses and taxes is
            , or the base amount for taxes is $            , and the base amount
for operating expenses is $            .

5) The Lease terminates on             , and Tenant has the following renewal
option(s)             . The renewal options for the following periods have been
exercised:                     .

--------------------------------------------------------------------------------

6) All work to be performed for Tenant under the Lease has been performed as
required under the Lease and has been accepted by Tenant, except
                    , and all allowances to be paid to Tenant, including
allowances for tenant improvements, moving expenses or other items, have been
paid.

7) The Lease is: (a) in full force and effect; (b) free from default and free
from any event which could become a default under the Lease; and (c) Tenant has
no claims against the landlord or offsets or defenses against rent, and there
are no disputes with the landlord.

8) The Tenant has received no notice of prior sale, transfer or assignment,
hypothecation or pledge of the Lease or of the rents payable thereunder except
                    .

9) The Tenant has full possession of the Premises, has not assigned the Lease or
sublet any part of the Premises and does not hold the Premises under an
assignment or sublease, except:                     .

10) The Tenant has the following expansion rights or options for the Property:
                    .

11) The Tenant has no rights or options to purchase the Property.

12) The Tenant has no right to remove any property from the Premises except for
its personal property and trade fixtures.

13) The Tenant is not insolvent or bankrupt and is not contemplating seeking
relief under any insolvency or bankruptcy statutes.

14) The Tenant represents that no hazardous wastes have been generated, treated,
stored, or disposed of by the Tenant or to the best of the Tenant’s knowledge by
anyone else on the Premises.

The undersigned has executed this Estoppel Certificate with the knowledge and
understanding that an advisee of LaSalle Hotel Operating Partnership, L.P., and
its successors assigns (the “Purchaser”) are acquiring the Property in reliance
on this Estoppel Certificate and that the Purchaser’s lenders and their
successors and assigns (the “Lender”) will be providing loans in reliance on
this Estoppel Certificate. Purchaser and Lender may rely on this Estoppel
Certificate and the undersigned will be bound by this Estoppel Certificate.

Dated this              day of                 , 20        .

 

    By:      

Name:

Title:

--------------------------------------------------------------------------------

EXHIBIT O-1

FROM OF ESTOPPEL CERTIFICATE

STARBUCKS CORPORATION

LaSalle Hotel Operating Partnership, L.P.

3 Bethesda Metro Center, Suite 1200

Bethesda, Maryland 20814

Ladies and Gentlemen:

The undersigned certifies to LaSalle Hotel Operating Partnership, L.P. and its
successors and assigns (collectively, the “Purchaser”) and Purchaser’s lenders
and their successors and assigns (collectively, the “Lender”) as of the date
hereof as follows:

1. It is the tenant under a lease dated January 12, 2005 (the “Lease”) between
PARK CENTRAL HOTEL (DE) REALTY, LLC, as landlord (together with its successors
and assigns, “Landlord”), and the undersigned, as tenant (“Tenant”), for
premises (the “Leases Premises”) at the Park Central Hotel, 870 Seventh Avenue,
New York, New York (the “Property”). All capitalized terms not otherwise defined
herein shall have the meanings provided in the Lease.

2. The Lease is in full force and effect. The Lease has not been amended,
modified or supplemented except as follows: Letter agreement dated June 23, 2005
and Commencement Date and Expiration Date Agreement. There are no other
agreements or understandings, whether written or oral, between Tenant and
Landlord with respect to the Lease, the Leased Premises or the Property.

3. Tenant has accepted possession of and occupies the entire Leased Premises
under the Lease. The term of the Lease commenced on April 26, 2005, and expires
on April 30, 2015, subject to the following renewal options: one term of 5
years.

4. The monthly fixed, minimum or basic rent under the Lease is $21,028.33 and
has been paid through May 31, 2011. As additional rent, Tenant is obligated to
pay its proportionate share of real estate taxes, insurance and common area
maintenance charges.

5. The amount of the security deposit is $0.

6. Landlord is not currently in default and Tenant is not aware of any event
which with the giving of notice, the passage of time or both would constitute a
default by Landlord.

7. Tenant currently has no claim against Landlord and no current offset or
defense to enforcement of any of the terms of the Lease. Tenant has not advanced
any funds for or on behalf of Landlord for which Tenant has a right to deduct
from or offset against future rent payments, with the exception of additional
rent, Tenant’s share of real estate taxes and insurance, common area maintenance
charges and all other sums or charges which shall be reconciled at year end.

--------------------------------------------------------------------------------

8. All initial improvements required to be completed by Landlord have been
completed and there are no sums due to Tenant from Landlord. Landlord has not
agreed to grant Tenant any free rent or rent rebate or to make any contribution
to tenant improvements except as set forth in the lease. Landlord has not agreed
to reimburse Tenant for or to pay Tenant’s rent obligation under any other lease
except as set forth in the Lease.

9. Tenant has not assigned the Lease and has not subleased the Leased Premises
or any part thereof.

10. Tenant has no right or option pursuant to the Lease or otherwise to purchase
all or any part of the Leased Premises or the Property except as set forth in
the Lease. Tenant does not have any right or option for additional space in the
Property except as set forth in the Lease.

11. No voluntary actions or, to Tenant’s knowledge, involuntary actions are
pending against Tenant under the bankruptcy laws of the United States or any
state thereof.

12. Attached hereto as Exhibit A is a true copy of the Lease and all amendment,
modifications and supplements thereto.

The undersigned individual hereby certifies that he or she is duly authorized to
sign, acknowledge and deliver this letter on behalf of Tenant.

Tenant acknowledges that the Purchaser will rely on this letter in purchasing
the Property and that Lender will rely on this letter in providing financings
for the Property. The information contained in this letter shall be for the
benefit of Purchaser and Lender.

 

Very truly yours, STARBUCKS CORPORATION By:       Name:   Title:

--------------------------------------------------------------------------------

EXHIBIT P

FORM OF LETTER TO AUDITORS

(Letterhead of Hotel)

[Date]

KPMG LLP

303 E. Wacker Drive

Chicago, IL 60601

Ladies and Gentlemen:

We are providing this letter in connection with your audits of the balance
sheets of [name of property] (the Company) as of [current and prior balance
sheet date], and the related statements of earnings, equity, and cash flows for
each of the years then ended, for the purpose of expressing an opinion as to
whether these financial statements present fairly, in all material respects, the
financial position, results of operations, and cash flows of the Company in
conformity with U.S. generally accepted accounting principles.

Certain representations in this letter are described as being limited to matters
that are material. Items are considered material, regardless of size, if they
involve an omission or misstatement of accounting information that, in the light
of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by
the omission or misstatement.

We confirm, to the best of our knowledge and belief, the following
representations made to you during your audits:

 

1.

The financial statements referred to above are fairly presented in conformity
with U.S. generally accepted accounting principles.

 

2.

We have made available to you:

 

  a.

All financial records and related data.

 

  b.

All agreements or amendments to agreements which would have a material impact on
the financial statements

 

3.

Except as disclosed to you in writing, there have been no:

 

  a.

Circumstances that have resulted in communications from the Company’s external
legal counsel to the Company reporting evidence of a material violation of
securities law or breach of fiduciary duty, or similar violation by the Company
or any agent thereof.

 

  b.

Communications from regulatory agencies concerning noncompliance with, or
deficiencies in, financial reporting practices.

--------------------------------------------------------------------------------

4.

There are no:

 

  a.

Violations or possible violations of laws or regulations, whose effects should
be considered for disclosure in the financial statements or as a basis for
recording a loss contingency.

 

  b.

Unasserted claims or assessments that our lawyers have advised us are probable
of assertion and must be disclosed in accordance with FASB Accounting Standards
Codification (ASC) 450, Contingencies.

 

  c.

Other liabilities or gain or loss contingencies that are required to be accrued
or disclosed by FASB ASC 450, Contingencies.

 

  d.

Material transactions that have not been properly recorded in the accounting
records underlying the financial statements.

 

  e.

Events that have occurred subsequent to the balance sheet date and through the
date of this letter that would require adjustment to or disclosure in the
financial statements.

 

  f.

Minutes of meetings of stockholders or directors of which we are aware.

 

5.

We believe that the effects of the uncorrected financial statement misstatements
summarized in the accompanying schedule are immaterial, both individually and in
the aggregate, to the financial statements taken as a whole. We have quantified
misstatements in accordance with the requirements of FASB ASC paragraph
250-10-S99-S99-2.

 

6.

We acknowledge our responsibility for the design and implementation of programs
and controls to prevent, deter and detect fraud. We understand that the term
“fraud” includes misstatements arising from fraudulent financial reporting and
misstatements arising from misappropriation of assets.

Misstatements arising from fraudulent financial reporting are intentional
misstatements, or omissions of amounts or disclosures in financial statements to
deceive financial statement users. Misstatements arising from misappropriation
of assets involve the theft of an entity’s assets where the effect of the theft
causes the financial statements not to be presented in conformity with U.S.
generally accepted accounting principles.

 

7.

We have no knowledge of any fraud or suspected fraud affecting the entity
involving:

 

  a.

Management

 

  b.

Employees who have significant roles in internal control over financial
reporting, or

 

  c.

Others where the fraud could have a material effect on the financial statements.

--------------------------------------------------------------------------------

8.

We have no knowledge of any allegations of fraud or suspected fraud affecting
the entity received in communications from employees, former employees,
regulators, or others.

 

9.

The Company has no plans or intentions that may materially affect the carrying
value or classification of assets and liabilities.

 

10.

We have no knowledge of any officer or director of the Company, or any other
person acting under the direction thereof, having taken any action to
fraudulently influence, coerce, manipulate or mislead you during your audit.

 

11.

The following have been properly recorded or disclosed in the financial
statements:

 

  a.

Related party transactions including sales, purchases, loans, transfers, leasing
arrangements, guarantees, ongoing contractual commitments and amounts receivable
from or payable to related parties.

The term “related party” refers to affiliates of the enterprise; entities for
which investments in their equity securities would, absent the election of the
fair value option under FASB ASC 850, Financial Instruments, be required to be
accounted for by the equity method by the enterprise; trusts for the benefit of
employees, such as pension and profit-sharing trusts that are managed by or
under the trusteeship of management; principal owners of the enterprise; its
management; members of the immediate families of principal owners of the
enterprise and its management; and other parties with which the enterprise may
deal if one party controls or can significantly influence the management or
operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. Another party
also is a related party if it can significantly influence the management or
operating policies of the transacting parties or if it has an ownership interest
in one of the transacting parties and can significantly influence the other to
an extent that one or more of the transacting parties might be prevented from
fully pursuing its own separate interests.

 

  b.

Guarantees, whether written or oral, under which the Company is contingently
liable, including guarantee contracts and indemnification agreements pursuant to
FASB ASC 460, Guarantees.

 

  c.

Significant estimates and material concentrations known to management that are
required to be disclosed in accordance with FASB ASC 275, Risks and
Uncertainties.

Significant estimates are estimates at the balance sheet date, which could
change materially within the next year. Concentrations refer to volumes of
business, revenues, available sources of supply, or markets or geographic areas
for which it is reasonably possible that events could occur which would
significantly disrupt normal finances within the next year.

--------------------------------------------------------------------------------

Concentrations include material sources of financing, including off-balance
sheet arrangements and transactions with unconsolidated, limited purpose
entities, and contingencies inherent in the arrangements, that are reasonably
likely to affect the continued availability of liquidity and financing.

 

  e.

Significant common ownership or management control relationships requiring
disclosure.

 

  g.

Arrangements with financial institutions involving compensating balances or
other arrangements involving restrictions on cash balances and lines of credit
or similar arrangements.

 

  h.

Agreements to repurchase assets previously sold, including sales with recourse.

 

  i.

Changes in accounting principle affecting consistency.

 

12.

The Company has satisfactory title to all owned assets, and there are no liens
or encumbrances on such assets, nor has any asset been pledged as collateral,
except as disclosed in the financial statements or footnotes to the financial
statements.

 

13.

The Company has complied with all aspects of contractual agreements that would
have a material effect on the financial statements in the event of
noncompliance.

 

14.

We have disclosed to you all deficiencies in the design or operation of internal
control over financial reporting Of which we are aware, which could adversely
affect the Company’s ability to initiate, authorize, record, process, or report
financial data. We have separately disclosed to you all such deficiencies that
we believe to be significant deficiencies or material weaknesses in internal
control over financial reporting, as those terms are defined in Statement on
Auditing Standards No. 115, Communicating Internal Control Related Matters
Identified in an Audit.

 

15.

Receivables reported in the financial statements represent valid claims against
debtors for sales or other charges arising on or before the balance-sheet date
and have been appropriately reduced to their estimated net realizable value.

 

16.

The following information about financial instruments with off-balance-sheet
risk and financial instruments with concentrations of credit risk has been
properly disclosed in the financial statements:

 

  a.

Extent, nature, and terms of financial instruments with off-balance-sheet risk;

 

  b.

The amount of credit risk of financial instruments with off-balance-sheet credit
risk, and information about the collateral supporting such financial
instruments; and

--------------------------------------------------------------------------------

  c.

Significant concentrations of credit risk arising from all financial instruments
and information about the collateral supporting such financial instruments.

 

17.

The Company is responsible for determining the fair value of financial
instruments as required by FASB ASC 825, Financial Instruments. The amounts
disclosed represent the Company’s best estimate of fair value of financial
instruments required to be disclosed under FASB ASC 825. The Company also has
disclosed the methods and significant assumptions used to estimate the fair
value of financial instruments and any changes to those methods and significant
assumptions, if any, as required by FASB ASC 825.

 

18.

The Company has accounted for asset retirement obligations in accordance with
FASB ASC 410-20, Asset Retirement and Environmental Obligations — Asset
Retirement Obligations. All legal obligations, including those under the
doctrine of promissory estoppel, associated with the retirement of tangible
long-lived assets have been recognized. The Company recognized the obligations
when incurred at fair value.

 

19.

The Company has appropriately grouped long-lived assets together for purposes of
assessing impairment in accordance with FASB ASC 360, Property, Plant and
Equipment. We have reviewed long-lived assets, including amortizable intangible
assets, to be held and used for impairment whenever events or changes in
circumstances have indicated that the carrying amount of the assets might not be
recoverable. Provision has been made for any material adjustments to long-lived
assets including amortizable intangible assets

 

20.

We are responsible for making the fair value measurements and disclosures
included in the financial statements in accordance with FASB ASC 820, Fair Value
Measurements and Disclosures, including determining the fair value of assets and
liabilities for which there has been a significant decrease in the volume and
level of activity in relation to the normal market activity for those assets or
liabilities (or similar assets or liabilities) or for which transactions are
deemed not orderly. As part of fulfilling this responsibility, we have
established an accounting and financial reporting process for determining the
fair value measurements and disclosures, in accordance with the fair value
techniques included in FASB ASC 820, considered the appropriateness of valuation
techniques [including circumstances in which a practical expedient may be used
to estimate fair value], adequately supported any significant assumptions used,
and ensured that the presentation and disclosure of the fair value measurements
are in accordance with generally accepted accounting principles including the
disclosure requirements of FASB ASC 820. We believe the assumptions and
techniques used by us, including those used by specialists engaged by us, are in
accordance with the definition of fair value in FASB ASC 820,and the disclosures
adequately describe the level of the inputs used in the fair value measurement,
in accordance with the fair value hierarchy in FASB ASC 820.

 

21.

We believe that all material expenditures that have been deferred to future
periods will be recoverable.

--------------------------------------------------------------------------------

22.

The Company has accounted for its derivatives and hedging activities in
accordance with FASB ASC 815, Derivatives and Hedging, including the requirement
for contemporaneous documentation of the hedging relationship and the Company’s
risk management objective and strategy for entering into the hedge as well as
initial and periodic effectiveness assessments. Further, the Company has
disclosed all material information about its derivative and hedging arrangements
in accordance with FASB ASC 815.

 

23.

Uncertain tax positions have been accounted for in accordance with the
provisions of FASB ASC 740, Income Taxes.

 

24.

We have disclosed to you all accounting policies and practices we have adopted
that, if applied to significant items or transactions, would not be in
accordance with U.S. generally accepted accounting principles (GAAP). We have
evaluated the impact of the application of each such policy and practice, both
individually and in the aggregate, on the Company’s current period financial
statements, and the expected impact of each such policy and practice on future
periods’ financial reporting. We believe the effect of these policies and
practices on the financial statements is not material. Furthermore, we do not
believe the impact of the application of these policies and practices will be
material to the financial statements in future periods.

 

25.

Allocations of individual member interests are in accordance with the respective
agreements.

Further, we confirm that we are responsible for the fair presentation in the
financial statements of financial position, results of operations, and cash
flows in conformity with U.S. generally accepted accounting principles.

 

Very truly yours, [Company Name]    [Signing Officer 1 Name] Chief Financial
Officer    [Signing Officer 2 Name] Chief Accounting Officer

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EXHIBIT Q

FORM OF REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT is made and entered into as of
                    , 2011, by and between LaSalle Hotel Properties, a Maryland
real estate investment trust (the “REIT”), and [Park Central Hotel (DE) LLC], a
Delaware limited liability company (“PCH”).

WHEREAS, PCH will be issued Common Units (as defined below) by LaSalle Hotel
Operating Partnership, L.P. (the “Operating Partnership”) in connection with its
sale of the Park Central Hotel in New York, New York, pursuant to the terms of
the Purchase and Sale Agreement (defined below);

WHEREAS, pursuant to the Amended and Restated Agreement of Limited Partnership,
dated as of April 29, 1998, as amended, of LaSalle Hotel Operating Partnership,
L.P., the Common Units may be redeemable for Common Shares (defined below); and

WHEREAS, in connection with the issuance of the Common Units, the REIT has
agreed to grant to the Holders (as defined below) certain registration rights
pursuant to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

 

1. Certain Definitions.

In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:

“Affiliate” of any Person means any other Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) as used with respect to any
Person means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to this Registration Rights Agreement as the same may
be in effect at the time such reference becomes operative.

“Common Shares” means the Common Shares of Beneficial Interest, $.01 par value
per share, of the REIT.

--------------------------------------------------------------------------------

“Common Units” means the Class A Units of the Operating Partnership issued
pursuant to the Purchase and Sale Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Holder” means any holder of record of Registrable Shares (as defined below) and
any transferees of such Registrable Shares or the right to receive such
Registrable Shares from such Holders, provided such transferee agrees in writing
to be bound by all of the provisions hereof. For purposes of this Agreement, the
REIT may deem and treat the registered holder of Registrable Shares as the
Holder and absolute owner thereof, and the REIT shall not be affected by any
notice to the contrary.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof)
or any other entity.

“Prospectus” means the prospectus or prospectuses (including, without
limitation, any preliminary prospectus, any final prospectus and any prospectus
that discloses information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A or 430B under the
Securities Act) included in any Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Shares covered by such Registration
Statement and by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.

“Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of
                    , 2011, by and between PCH and the Operating Partnership.

“Redemption Shares” means any of the Common Shares issuable upon redemption of
the Common Units.

“Registrable Shares” means the Redemption Shares upon original issuance thereof
and at all times subsequent thereto, including upon the transfer thereof by the
original Holder or any subsequent Holder and any securities issued in respect of
such securities by reason of or in connection with any exchange for or
replacement of such securities or any stock dividend, stock distribution, stock
split, purchase in any rights offering or in connection with any combination of
shares, recapitalization, merger or consolidation, or any other equity
securities issued pursuant to any other pro rata distribution with respect to
the Redemption Shares, until, in the case of any such security, the earliest to
occur of (i) the date on which it has been registered effectively pursuant to
the Securities Act and disposed of in accordance with the Registration Statement
relating to it, or (ii) the date on which either it is sold pursuant to, or is
saleable without volume limitation pursuant to, Rule 144 (or any successor rule
then in force) promulgated by the SEC pursuant to the Securities Act. All
references herein to a “Holder” or “Holder of Registrable Shares” shall include
the holder or holders of Common Units to the extent of the Redemption Shares
then underlying such Common Units. For purposes of determining the number of
shares

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of Registrable Shares held by a Holder and the number of shares of Registrable
Shares outstanding, for purposes of this Agreement (including the definition of
“Holder”) but not for any other purpose, any holder of record of Common Units
shall be deemed to be a Holder of the number of Redemption Shares then issuable
upon conversion of such Common Units.

“Registration Statement” means any registration statement of the REIT which
covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such Registration Statement.

“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar Rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such rule.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

 

2. Shelf Registration.

On or before the first anniversary of the issuance of the Common Units, the REIT
shall file with the SEC a shelf Registration Statement (or a Prospectus
supplement with respect to the REIT’s then effective automatic shelf
registration statement) registering the non-underwritten resale by the Holders
of the Registrable Shares on an appropriate form for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act (the “Shelf
Registration Statement”). The REIT shall thereafter use its commercially
reasonable efforts to cause the Shelf Registration Statement to become effective
with the SEC and to keep the Shelf Registration Statement effective until the
Registrable Shares covered thereby are no longer deemed to be Registrable
Shares.

Section 3. Registration Procedures

(a) In connection with the Shelf Registration under Section 2, the REIT shall
use its commercially reasonable efforts to effect the registration and the sale
of the Registrable Shares in accordance with the intended methods of disposition
thereof (it being understood and agreed that the intended methods of disposition
may not include an underwritten offering), and, pursuant thereto, the REIT shall
as expeditiously as possible:

(i) prepare and file with the SEC a Registration Statement (or a Prospectus
supplement with respect to the REIT’s then effective automatic shelf
registration statement) with respect to such Registrable Shares and use its
commercially reasonable efforts to cause such Registration Statement to become
effective as soon as practicable thereafter; and, if requested by the Holders of
Registrable Shares before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the Holders of Registrable Shares
covered by such Registration Statement copies of all such documents proposed to
be filed, including documents incorporated by reference in the Prospectus and
the exhibits incorporated by

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reference, and such Holders shall have the opportunity to object to any
information pertaining to them that is contained therein and the REIT will make
the corrections reasonably requested by them with respect to such information
prior to filing any Registration Statement or amendment thereto or any
Prospectus or any supplement thereto;

(ii) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for the required period
described in Section 2 above, as applicable, and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during such period in accordance with the intended
methods of disposition (other than through an underwritten offering) by the
Holders thereof set forth in such Registration Statement;

(iii) furnish to each Holder of Registrable Shares such number of copies of such
Registration Statement, each amendment and supplement thereto, the Prospectus
included in such Registration Statement (including each preliminary Prospectus)
and such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by such Holder;

(iv) use its commercially reasonable efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions in the United States where an exemption does not apply as any
Holder reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Shares owned by such Holder
(provided, that the REIT will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph (iv), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction);

(v) promptly notify each Holder of such Registrable Shares, at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and
the REIT shall prepare a supplement or amendment to such Prospectus (including a
post-effective amendment, if necessary) so that, as thereafter delivered to the
purchasers of such Registrable Shares, such Prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein in light of the circumstances under which they
were made, not misleading;

(vi) to use its commercially reasonable efforts to cause all such Registrable
Shares to be listed on the primary securities exchange on which securities of
the same class issued by the REIT may then be listed;

(vii) provide a CUSIP number, a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such Registration
Statement;

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(viii) cooperate with the selling Holders of the Registrable Shares to
facilitate the timely preparation and delivery of certificates not bearing any
restrictive legends representing the Registrable Shares upon sale pursuant to
the Shelf Registration Statement, and cause such Registrable Shares to be issued
in such denominations and registered in such names in accordance with the
instructions of the selling Holders of the Registrable Shares;

(ix) make generally available to its stockholders a consolidated earnings
statement (which need not be audited) for the 12 months beginning within 3
months after the effective date of a Registration Statement as soon as
reasonably practicable after the end of such period, which earnings statement
shall satisfy the requirements of an earning statement under Section 11(a) of
the Securities Act;

(x) promptly notify (and if so requested, in the case of an event described in
clause (B), (C) and (D) below, provide copies of correspondence with the SEC or
other regulatory agency relating thereto to) each Holder of Registrable Shares:

(A) when the Registration Statement, any pre-effective amendment, the Prospectus
or any Prospectus supplement or post-effective amendment to the Registration
Statement has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;

(B) of any written request by the SEC for amendments or supplements to the
Registration Statement or Prospectus relating to the offering of the Registrable
Shares;

(C) of the notification to the REIT by the SEC of its initiation of any
proceeding with respect to the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement and take all reasonable actions
required to remove any such stop order as soon as reasonably practicable; and

(D) of the receipt by the REIT of any notification with respect to the
suspension of the qualification of any Registrable Shares for sale under the
applicable securities or blue sky laws of any jurisdiction.

(b) The REIT may require each Holder of Registrable Shares as to which any Shelf
Registration Statement is being effected to furnish to the REIT any other
information regarding such Holder and the distribution of such securities as the
REIT may from time to time reasonably request in writing. In addition, each
Holder of Registrable Shares agrees to provide the REIT annually a written
notice setting forth such Holder’s current address, telephone number and e-mail
address and the number of Common Units owned by such Holder.

(c) Each Holder of Registrable Shares agrees by having its Redemption Shares
treated as Registrable Shares hereunder that, upon notice by the REIT of the
happening of any event as a result of which the Prospectus included in such
Registration Statement contains an untrue statement of a material fact or omits
any material fact necessary to make the statements therein not misleading (a
“Suspension Notice”), such Holder will forthwith discontinue disposition of
Registrable Shares until such Holder is advised in writing by the REIT that the
use of the Prospectus may be resumed and is furnished with a supplemented or
amended Prospectus

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as contemplated by Section 3(a)(v) hereof, and, if so directed by the REIT, such
Holder will deliver to the REIT (at the REIT’s expense, unless the untrue
statement or omission was made in reliance upon and in conformity with
information relating to a Holder, the Registrable Shares or the distribution of
the Registrable Shares furnished in writing to the REIT by a Holder or on a
Holder’s behalf expressly for use in the Registration Statement or the
Prospectus) all copies, other than permanent file copies then in such Holder’s
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of such notice; provided, however, that such postponement of
sales of Registrable Shares by the Holders shall not exceed one hundred eighty
(180) days in the aggregate in any one year. If the REIT shall give any notice
to suspend the disposition of Registrable Shares pursuant to a Prospectus, the
REIT shall extend the period of time during which the REIT is required to
maintain the Registration Statement effective pursuant to this Agreement by the
number of days during the period from and including the date of the giving of
such notice to and including the date such Holder either is advised by the REIT
that the use of the Prospectus may be resumed or receives the copies of the
supplemented or amended Prospectus contemplated by Section 3(a)(v). Each Holder
agrees to maintain at all times as confidential information the existence and
contents of each Suspension Notice.

 

4. Registration Expenses

(a) All reasonable third-party expenses incident to the REIT’s performance of or
compliance with this Agreement, including all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, listing application
fees (but not annual listing fees) and expenses, printing expenses, transfer
agent’s and registrar’s fees, cost of distributing Prospectuses in preliminary
and final form as well as any supplements thereto, and fees and disbursements of
counsel for the REIT and fees and expenses for all independent certified public
accountants and other Persons retained by the REIT (all such expenses being
herein called “Registration Expenses”) incurred in connection with the Shelf
Registration Statement and evidenced by reasonably detailed documentation, but
excluding the REIT’s indemnification obligations pursuant to Section 5, shall be
borne by the Holders. Notwithstanding the foregoing, no Holder shall be
obligated to pay such third-party fees or expenses if (i) the REIT fails to use
commercially reasonable efforts to cause the Registrable Shares to be registered
for resale pursuant to an effective Registration Statement under the Securities
Act or to be listed for trading on The New York Stock Exchange (the “NYSE”), in
accordance with the terms of this Agreement or (ii) the Holder (or other selling
shareholder) incurs liability under applicable securities law in connection with
the registration or sale of the Registrable Shares (other than any such
liability arising solely out of information provided by the Holder (or other
selling shareholder) expressly for inclusion in the Registration Statement
covering the Registrable Shares).

(b) In addition, in connection with each registration hereunder, the Holders of
Registrable Shares covered by such registration or sale shall be responsible for
the payment of any brokerage and sales commissions, fees and disbursements of
Holders’ counsel, out-of-pocket expenses of the Holders (or the agents who
manage their accounts) and any transfer taxes relating to the sale or
disposition of the Registrable Shares by the Holders.

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(c) Notwithstanding the foregoing, the Registration Expenses for any withdrawn
Registration Statements or any voluntarily withdrawn supplements or amendments
to a Registration Statement or Prospectus resulting from any untrue statement or
omission or alleged untrue statement or omission made therein (except any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to a Holder, the Registrable
Shares or the distribution of the Registrable Shares furnished in writing to the
REIT by a Holder or on a Holder’s behalf expressly for use in the Registration
Statement or the Prospectus) shall be borne by the REIT.

(d) All Registration Expenses shall be paid by PCH (or other applicable Holders)
upon the later of the date the Registration Statement is declared effective by
the SEC and the date on which the Registrable Shares are listed for trading on
the NYSE, or if incurred thereafter, promptly upon request and delivery of
reasonably detailed evidence of such expenses.

 

5. Indemnification.

(a) The REIT shall indemnify, to the fullest extent permitted by law, each
Holder, its officers, directors and Affiliates and each Person who controls such
Holder (within the meaning of the Securities Act) against (i) all losses,
claims, damages, liabilities and expenses arising out of or based upon any
untrue or alleged untrue statement of material fact contained in any
Registration Statement, Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading or any
violation or alleged violation by the REIT of the Securities Act, the Exchange
Act or applicable “blue sky” laws, (ii) any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of the REIT, which shall not be unreasonably withheld or delayed; and
(iii) any and all expense whatsoever, as incurred (including reasonable fees and
disbursements of counsel), reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each case whether or
not a party, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under subparagraph (i) or (ii) above; provided
however, that the indemnity provided pursuant to this Section 5(a) does not
apply to a Holder with respect to any loss, liability, claim, damage or expense
arising out of (i) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information relating to
any Holder, its Registrable Shares or its distribution of the Registrable Shares
furnished in writing to the REIT by the Holder or on the Holder’s behalf
expressly for use in the Registration Statement or the Prospectus (it being
expressly understood and agreed that the Holders shall not be deemed to have
provided any description of the attributes of the Registrable Shares), or
(ii) any Holder’s failure to deliver to such Holder’s immediate purchaser a copy
of the Registration Statement or Prospectus or any amendments or supplements
thereto (if the same was required by applicable law to be so delivered) after
the REIT has furnished such Holder with a sufficient number of copies of the
same.

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(b) In connection with any Registration Statement in which a Holder of
Registrable Shares is participating, the Holder shall furnish to the REIT in
writing such information as the REIT reasonably requests for use in connection
with any such Registration Statement or Prospectus and, shall indemnify, to the
fullest extent permitted by law, the REIT, its officers, directors, Affiliates,
and each Person who controls the REIT (within the meaning of the Securities Act)
against (i) all losses, claims, damages, liabilities and expenses arising out of
or based upon any untrue or alleged untrue statement of material fact contained
in the Registration Statement, Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading;
(ii) any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Holder, which shall not
be unreasonably withheld or delayed; and (iii) any and all expense whatsoever,
as incurred (including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, in each case whether or not a party, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under subparagraph
(i) or (ii) above; provided however, that the indemnity provided pursuant to
this Section 5(b) shall only apply to any Holder with respect to any loss,
liability, claim, damage or expense to the extent arising out of (i) any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to such Holder, the Registrable
Shares or the distribution of the Registrable Shares furnished in writing to the
REIT by such Holder or on such Holder’s behalf expressly for use in the
Registration Statement or the Prospectus (it being expressly understood and
agreed that the Holders shall not be deemed to have provided any description of
the attributes of the Registrable Shares) or (ii) such Holder’s failure to
deliver to such Holder’s immediate purchaser a copy of the Registration
Statement or Prospectus or any amendments or supplements thereto (if the same
was required by applicable law to be so delivered) after the REIT has furnished
such Holder with a sufficient number of copies of the same. In no event shall
the liability of any selling Holder be greater in amount than the amount of net
proceeds received by such Holder upon the sale of Registrable Shares.

(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party’s reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of an indemnified party there are
one or more legal or equitable defenses available to such indemnified party
which are in conflict with those available to another indemnified party with
respect to such claim. Failure to give prompt written notice shall not release
the indemnifying party from its obligations hereunder.

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(d) The indemnification provided for under this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.

(e) If the indemnification provided for in or pursuant to this Section 5 is due
in accordance with the terms hereof, but is held by a court to be unavailable or
unenforceable in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which result
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
on the one hand and of the indemnified party on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party, and by such party’s relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. In no event shall
the liability of any selling Holder be greater in amount than the amount of net
proceeds received by such Holder upon such sale or the amount for which such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Section 5(a) or Section 5(b) hereof had
been available under the circumstances.

 

6. Rule 144.

The REIT covenants that, so long as there are Registrable Shares, it will use
its commercially reasonable efforts to file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder. Upon the request of any Holder, the REIT will
deliver to such Holder a written statement as to whether it has complied with
such information and requirements.

 

7. Miscellaneous.

(a) Notices.

All notices, requests and other communications to any party hereunder shall be
in writing (including facsimile or similar writing) and shall be given,

If to the REIT:

LaSalle Hotel Properties

3 Bethesda Metro Center

Suite 1200

Bethesda, Maryland 20814

Attention: Chief Financial Officer

Facsimile No.: (301) 941-1553

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with a copy to:

DLA Piper LLP (US)

4141 Parklake Avenue, Suite 300

Raleigh, North Carolina 27612-2350

Attention: Jeffrey M. Sullivan, Esq.

Facsimile No.: (919) 786-2200

If to the initial Holder:

Goldman Sachs & Co.

200 West Street, 28th Floor

New York, NY 10282

Attention: Robert C. Springer

Facsimile No.: (212) 357-5505

with a copy to:

Highgate Hotels

545 E. John Carpenter Freeway #1400

Irving, TX 75062

Attention: Steve Barick

                     Chief Operating Officer

Facsimile No.: (972) 401-2400

with a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention: Anthony J. Colletta, Esq.

Facsimile No. (212) 291-9029

or such other address or facsimile number as such party (or transferee) may
hereafter specify for the purpose by notice to the other parties. Each such
notice, request or other communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section and the appropriate facsimile confirmation is received or
(ii) if given by any other means, when delivered at the address specified in
this Section.

(b) No Waivers.

No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

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(c) Successors and Assigns.

The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto, their respective permitted successors and assigns and to
transferees of Registrable Shares or the right to receive Registrable Shares who
agree in writing to be bound by all of the provisions hereof.

(d) Governing Law.

This Agreement shall be construed in accordance with and governed by the law of
the State of New York, without regard to principles of conflicts of law.

(e) Jurisdiction.

Any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may be brought in any federal or state court
located in the County and State of New York, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 7(a) shall be deemed effective service of process on such
party.

(f) Waiver of Jury Trial.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

(g) Counterparts; Effectiveness.

This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.

(h) Entire Agreement.

This Agreement constitutes the entire agreement between the parties with respect
to the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
transactions contemplated herein. No provision of this Agreement or any other
agreement contemplated hereby is intended to confer on any Person other than the
parties hereto any rights or remedies.

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(i) Captions.

The captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.

(j) Severability.

If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

(k) Amendments.

The provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given without the prior written consent of
the REIT and the Holders of a majority of the Registrable Shares (as constituted
on the date hereof).

(l) Equitable Relief.

The parties hereto agree that legal remedies may be inadequate to enforce the
provisions of this Agreement and that equitable relief, including specific
performance and injunctive relief, may be used to enforce the provisions of this
Agreement.

(m) Further Assurances.

Each party hereto shall do or cause to be done all such further acts and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and purposes of this Agreement and the consummation of the
transactions contemplated hereby.

[Execution Page Follows]

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IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by
each of the parties hereto as of the date first written above.

 

LASALLE HOTEL PROPERTIES By:     Name:   Bruce A. Riggins Title:   Executive
Vice President, Chief Financial Officer, and Treasurer

PARK CENTRAL HOTEL (DE) LLC, a Delaware limited liability company

 

By:

W2001 Park Central Hotel Senior Mezz, L.L.C., its Managing Member

 

  By:

W2001 Park Central Hotel Intermediate Mezz, L.L.C., its Managing Member

 

  By:

W2001 Park Central Hotel Sub Mezz, L.L.C., its Managing Member

 

  By:

Park Central Owner LLC, its Managing Member

 

  By: W2001 Park Central Hotel Realty, L.L.C., its Managing Member

 

  By: Whitehall Street Global Real Estate Limited Partnership 2001, a Managing
Member

 

  By: WH Advisors, L.L.C. 2001, its General Partner

By:     Name: Title:

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EXHIBIT R

ASSIGNMENT OF MEMBERSHIP INTERESTS

THIS ASSIGNMENT OF MEMBERSHIP INTERESTS (this “Assignment”) is made and entered
into as of [            ] [    ], 2011 (the “Effective Date”), between [Leaseco
Corp.], a Delaware corporation, as assignor (“Assignor”), and LaSalle Hotel
Operating Partnership, L.P., a Delaware limited partnership, as assignee
(“Assignee”). All terms used herein but not otherwise defined herein shall have
the meanings set forth in that certain Limited Liability Company Agreement of
[Lessee LLC], dated as of [            ], 2011 (the “Company Agreement”).

RECITALS

A. Assignor owns a 100.00% membership interest in [Lessee LLC], a Delaware
limited liability company (the “Company”).

B. Assignor desires to assign and transfer to Assignee, and Assignee desires to
receive and accept from Assignor, all of Assignor’s right, title and interest in
and to a 100.00% membership interest in the Company (i.e., all of Assignor’s
interest in the Company) and all rights and interests of Assignor, as a member,
that exist pursuant to the Company Agreement in connection with such 100.00%
membership interest (all of such membership interest and related rights and
interest being collectively referred to as the “Assigned Interest”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by all parties, the parties agree as follows:

AGREEMENT

1. Transfer and Assignment. Assignor hereby transfers, grants, bargains, sells,
conveys, and assigns to Assignee the Assigned Interest. Assignor and Assignee
agree that this Assignment includes all rights, interests, and obligations that
may be allocable to the Assigned Interest, including all of Assignor’s
proportionate right, title, and interest in and to the business, properties,
liabilities and assets of the Company allocable or attributable to the Assigned
Interest, and to the capital, distributions, profits, and losses of the Company
or its successors allocable or attributable to the Assigned Interest.

2. Assumption. Assignee hereby assumes all obligations to be performed by the
owner of the Assigned Interest and all liabilities with respect to the Assigned
Interest.

3. Assignee’s Representations and Warranties. Assignee hereby makes the
following representations and warranties to Assignor:

(a) Organization and Authority. Assignee has been duly organized and is validly
existing and in good standing under the laws of Delaware. Assignee has all
limited partnership right, power and authority to enter into this Agreement, to
acquire the Assigned Interest from Assignor pursuant hereto and to otherwise
perform its obligations under this Agreement; and all of the foregoing have been
authorized by all necessary limited partnership action on the part of Assignee.
The person signing this Agreement on behalf of Assignee is authorized to do so.

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(b) Enforceability. This Assignment constitutes the valid and binding obligation
of Assignee, enforceable against Assignee in accordance with their respective
terms, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or limiting
the rights of contracting parties generally.

(c) No Breach. The execution, delivery and performance of this Assignment by
Assignee will not: (i) result in a breach or acceleration of or constitute a
default under any agreement or instrument by which Assignee is bound or affected
which would have a material adverse impact on the ability of Assignee to assume
the Assigned Interest pursuant to the terms of this Assignment; or
(ii) constitute or result in the violation or breach by Assignee of any
judgment, order, writ, injunction or decree issued against or imposed upon
Assignee or result in the violation of any applicable law, rule or regulation of
any governmental authority which, with respect to any of the foregoing, would
have a material adverse impact on the ability of Assignee to assume the Assigned
Interest pursuant to this Assignment.

(d) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part
of Assignee is required in connection with the execution, delivery and
performance of this Assignment.

4. Assignor’s Representations and Warranties. Assignor hereby makes the
following representations and warranties to Assignee:

(a) Assignor been duly organized and is validly existing and in good standing
under the laws of Delaware. Assignor has all limited liability company right,
power and authority to enter into this Agreement, to assign the Assigned
Interest to Assignee pursuant hereto, and to otherwise perform its obligations
under this Assignment; and all of the foregoing have been authorized by all
necessary limited liability company action on the part of Assignor. The person
signing this Assignment on behalf of Assignor is authorized to do so.

(b) Enforceability. This Assignment constitutes the valid and binding obligation
of Assignor, enforceable against Assignor in accordance with their respective
terms, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or limiting
the rights of contracting parties generally.

(c) No Breach. The execution, delivery and performance of this Assignment by
Assignor will not: (i) result in a breach or acceleration of or constitute a
default under any agreement or instrument by which Assignor is bound or affected
which would have a material adverse impact on the ability of Assignor to assume
the Assigned Interest pursuant to the terms of this Assignment; or
(ii) constitute or result in the violation or breach by Assignor of any
judgment, order, writ, injunction or decree issued against or imposed upon
Assignor or result in the violation of any applicable law, rule or regulation of
any governmental authority which, with respect to any of the foregoing, would
have a material adverse impact on the ability of Assignor to assign the Assigned
Interest pursuant to this Assignment.

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(d) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part
of Assignor is required in connection with the execution, delivery and
performance of this Assignment.

5. Counterparts. This Assignment may be executed in one or more counterparts,
each of which will be deemed an original, but all of which will constitute one
and the same instrument and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.

6. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable conflicts of laws thereof.

7. Headings: Certain Interpretive Matters. The headings used in this Assignment
have been inserted for convenience and do not constitute matters to be construed
or interpreted in connection with this Assignment.

8. Severability. This Assignment is intended to be performed in accordance with,
and only to the extent permitted by, applicable law. If any provision of this
Assignment or the application thereof or circumstance shall be invalid or
unenforceable, then neither the remainder of this instrument nor the application
of such provision or circumstances shall be affected thereby, but rather shall
be enforced to the greatest extent permitted by law.

9. Further Assurances. From time to time, as and when requested by any party
hereto, any other party will execute and deliver, or cause to be executed and
delivered, all such documents and instruments as may be reasonably necessary to
consummate the transactions contemplated by this Assignment.

10. Binding Effect. This Assignment shall be binding upon the parties hereto and
their respective successors and assigns.

[THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the
Effective Date.

 

ASSIGNOR:

[LEASECO CORP.],

A Delaware Corporation

BY:      Name:     Title:    

ASSIGNEE:

 

[                                 ]

 

BY:      Name:     Title: