Exhibit 10.1

 

 

PURCHASE AND SALE AGREEMENT

 

By and Between

 

MMG-26 LLC,

a Delaware limited liability company

 

(“Seller”)

 

-and-

 

CWI CHELSEA HOTEL, LLC,

a Delaware limited liability company

 

(“Purchaser”)

 

of

 

121-125 West 26th Street

New York, New York

 

Dated April 16, 2013

 

 

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

I. DEFINITIONS; PURCHASE AND SALE; DUE DILIGENCE PERIOD

1

 

 

1.1

Definitions

1

1.2

Purchase and Sale

1

1.3

Due Diligence Period; Access; Review of Materials

4

 

 

 

II. CONSIDERATION

8

 

 

2.1

Purchase Price

8

2.2

Earnest Money

9

2.3

Allocation

9

 

 

 

III. SURVEY

10

 

 

3.1

Survey

10

 

 

 

IV. TITLE INSURANCE

11

 

 

4.1

Title Commitment

11

 

 

 

V. REPRESENTATIONS AND WARRANTIES

13

 

 

5.1

Seller’s Representations and Warranties

13

5.2

Purchaser’s Representations and Warranties

16

5.3

Remedies Prior to Closing

17

5.4

Survival

19

5.5

Indemnification

19

 

 

 

VI. COVENANTS

24

 

 

6.1

Seller’s Covenants

24

6.2

Purchaser’s Covenants

27

6.3

Franchise Agreement

27

 

 

 

VII. REMEDIES

29

 

 

7.1

Seller’s Pre-Closing Remedies

29

7.2

Purchaser’s Pre-Closing Remedies

29

7.3

Post-Closing Escrow

30

7.4

Post-Closing Defaults of Purchaser and Seller

30

7.5

Attorneys’ Fees

31

7.6

Survival

31

 

 

 

VIII. CLOSING MATTERS

31

 

 

8.1

Closing

31

8.2

Adjustment and Prorations

32

 

i

 

8.3

Guest Property in Seller’s Possession on Closing Date

35

8.4

Closing Documents

36

8.5

Closing Costs

37

8.6

Real Estate Commissions

38

8.7

Hotel Employees

38

8.8

Disbursements and Other Actions by Escrow Agent

40

8.9

Conditions Precedent to Purchaser’s Obligations

40

8.10

Conditions Precedent to Seller’s Obligations

41

 

 

 

IX. CONDEMNATION AND RISK OF LOSS

42

 

 

9.1

Notice

42

9.2

Condemnation

42

9.3

Casualty

43

 

 

 

X. DISCLAIMERS AND RELEASE

43

 

 

10.1

Independent Investigations

43

10.2

Disclaimer of Warranties

44

10.3

Condition of Hotel

44

10.4

Release

45

 

 

 

XI. MISCELLANEOUS

46

 

 

11.1

Entire Agreement

46

11.2

Binding Effect

46

11.3

Notices

47

11.4

Governing Law

48

11.5

Interpretation

48

11.6

Discharge of Obligations

48

11.7

Execution in Counterparts

48

11.8

Intentionally Omitted

49

11.9

Time of the Essence

49

11.10

Invalid Provisions

49

11.11

Computation of Time

49

11.12

Knowledge

49

11.13

Confidentiality

50

11.14

No-Offer

51

11.15

Privacy Laws

51

11.16

Further Assurances

51

11.17

WAIVER OF TRIAL BY JURY; VENUE AND JURISDICTION

51

11.18

Intentionally Omitted

52

11.19

Exhibits and Schedules

52

11.20

Assignments

52

11.21

Escrow Agent as Reporting Person

52

11.22

Exclusivity

53

11.23

No Third Party Beneficiary

53

11.24

Exculpation

53

 

ii

 

11.25

No Recordation

53

11.26

Waiver

54

11.27

Bulk Sales

54

11.28

Real Estate Tax Contests

54

 

 

 

SIGNATURE BY SELLER

56

 

 

SIGNATURE BY PURCHASER

57

 

 

SIGNATURE BY ESCROW AGENT

59

 

1.

Taxes, tax liens, tax sales, water rents, sewer rents and assessments which are
liens not yet due and payable

1

 

 

 

2.

The rights of the following tenants, as tenants only, with no purchase rights,
under unrecorded leases executed prior to the date hereof

1

 

EXHIBITS:

 

Exhibit “A”

(Definitions)

Exhibit “B”

(Legal Description of Hotel Land)

Exhibit “C”

(Escrow Instructions)

Exhibit “D”

(Material Contracts)

Exhibit “E”

(Permits)

Exhibit “F”

(Bill of Sale and Assignment)

Exhibit “G”

(Seller’s Closing Certificate)

Exhibit “H”

(Purchaser’s Closing Certificate)

Exhibit “I”

(Investigation Documents)

Exhibit “J”

(Equipment Leases)

Exhibit “K”

(Form of Post-Closing Escrow Agreement)

Exhibit “L”

(Audit Request Materials)

Exhibit “M”

(Escrow Agent’s Wiring Instructions)

Exhibit “N”

(Disclosed Violations)

Exhibit “O”

(Form of Deed)

Exhibit “P”

(FIRPTA Affidavit)

Exhibit “Q”

(Title Affidavit)

Exhibit “R”

(Additional Permitted Exceptions)

Exhibit “S”

(Form of Tenant Estoppel)

 

iii

 

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of April 16, 2013
(the “Effective Date”), is made by and between MMG-26 LLC, a Delaware limited
liability company (“Seller”), and CWI CHELSEA HOTEL, LLC a Delaware limited
liability company (“Purchaser”).

 

Recitals:

 

B.                                 Seller owns that certain hotel more commonly
known as the “Holiday Inn NYC – Manhattan 6th Avenue” and located at 121-125
West 26th Street, New York, New York on the Hotel Land (as defined below),
together with all assets and personal property located thereon as more
specifically described herein; and

 

C.                                 Seller desires to sell to Purchaser and
Purchaser desires to buy from Seller the Hotel (as defined below) on the terms
and conditions set forth herein.

 

Agreement:

 

I. DEFINITIONS; PURCHASE AND SALE; DUE DILIGENCE PERIOD

 

1.1                            Definitions.

 

For the purpose of this Agreement, capitalized terms shall have the meanings set
forth in Exhibit “A,” which is attached hereto and incorporated herein.

 

1.2                            Purchase and Sale.

 

(a)                               Real Property.  Subject to the terms and on
the conditions set forth in this Agreement, Seller hereby covenants and agrees
to sell and convey and Purchaser agrees to purchase Seller’s fee interest in the
following assets (collectively, the “Real Property”):

 

(i)        that land and all appurtenances thereto which is more particularly
described in Exhibit “B” hereto (the “Hotel Land”); and

 

(ii)       the buildings, structures (surface and sub-surface), installations
and other improvements and fixtures as shall constitute real property located on
the Hotel Land (collectively, the “Hotel Improvements”).

 

(b)                              Personal Property.  In addition to the Real
Property, and subject to the terms and on the conditions set forth in this
Agreement, Seller agrees to sell and convey and Purchaser agrees to purchase the
following assets (collectively, the “Personal Property”, and together with the
Real Property, the “Hotel”):

 

(i)        all of Seller’s and Operating Tenant’s right, title and interest in
and to all fixtures, furniture, furnishings, fittings, equipment, machinery,
apparatus, appliances, vehicles and other articles of personal property (other
than the Excluded Assets) located at, affixed or attached to the Real Property
or

 

 

held in reserve storage for future use exclusively in connection with the Hotel,
including, without limitation, Seller’s interest as lessee under an Equipment
Lease with respect to any such items, subject to such depletions, substitutions
and replacements as shall occur and be made in the Ordinary Course of Business
prior to the Closing Date (collectively, “Furnishings”);

 

(ii)       all of Seller’s and Operating Tenant’s right, title and interest in
and to all opened and unopened food and beverages whether in use or held in
reserve storage for future use exclusively in connection with the operation of
the Hotel (collectively, the “Consumables”);

 

(iii)      all of Seller’s and Operating Tenant’s right, title and interest in
and to all expendable supplies, including, without limitation, all linens,
towels, paper goods, guest supplies, cleaning supplies, operating supplies,
printing supplies, stationery, uniforms and similar items, whether in use or
held in reserve storage for future use in connection with the operation of the
Hotel (collectively, the “Expendables”);

 

(iv)                          to the extent transferable by Seller and/or
Operating Tenant, all of Seller’s and Operating Tenant’s right, title and
interest in and to all service and maintenance contracts, supply contracts, and
other contracts or agreements relating to the maintenance, operation,
provisioning or equipping of the Hotel, together with all related written
warranties and guaranties (collectively, the “Hotel Contracts”), but excluding
the Franchise Agreement, the Management Agreement and the Operating Lease;

 

(v)       all of Seller’s and Operating Tenant’s right, title and interest in
and to all equipment leases set forth on Exhibit “J” (collectively, the
“Equipment Leases”);

 

(vi)      all of Seller’s and Operating Tenant’s right, title and interest in
and to all of Seller’s books, records, files, computer data, operating reports,
plans and specifications and other documentation to the extent relating to the
ownership and operation of the Hotel, including the list of Hotel Employees and
records relating to the Bookings (collectively, the “Books and Records”), but
excluding (A) the personnel files and employment records for all Hotel Employees
not retained/rehired by Purchaser, (B) items that belong to or are proprietary
to Franchisor, Manager and either of their affiliates or other third parties,
(C) internal memoranda regarding the sale, financing and/or valuation of the
Hotel, and (D) proprietary or confidential information and materials, including
any materials and information that are covered by the attorney-client privilege
or any confidentiality agreement entered into by or binding on Seller, Operating
Tenant, Manager or their respective affiliates;

 

2

 

(vii)     all of Seller’s and Operating Tenant’s right, title and interest in
and to all contracts and reservations for the use or occupancy of guest rooms of
the Hotel after the Cut-Off Time (collectively, the “Bookings”) and the
aggregate amount of any deposits received by or on behalf of Seller or Operating
Tenant (whether paid in cash or by credit card) as a down payment for any such
Bookings (the “Advance Deposits”);

 

(viii)    to the extent transferable by Seller and/or Operating Tenant, all of
Seller’s and Operating Tenant’s right, title and interest in and to all
licenses, franchises, permits, certificates of occupancy, authorizations and
approvals used in or relating to the ownership, maintenance, occupancy,
operation or use of any part of the Hotel (collectively, the “Permits”), but
excluding any liquor license or the Franchise Agreement; and

 

(ix)                          to the extent transferable by Seller and/or
Operating Tenant, all of Seller’s and Operating Tenant’s right, title and
interest in and to, (1) all intangible personal property used in connection with
the ownership or operation of the Hotel, including, without limitation,
telephone numbers, post office boxes, warranties and guaranties, signage rights,
utility and development rights and privileges, general intangibles; and (2) all
websites and domains exclusively used for the Hotel (collectively, the
“Intangible Assets”).

 

(c)                               Excluded Assets.  Notwithstanding anything to
the contrary contained herein, but subject to Section 1.2(d), the following
items are expressly excluded from the transaction contemplated by this Agreement
(collectively, the “Excluded Assets”):

 

(i)        any fixtures, personal property or intellectual property owned by
(1) third parties (including, without limitation, equipment lessors, suppliers,
vendors and licensors) under the Hotel Contracts or Permits, (2) Franchisor,
(3) Manager, (4) any Hotel Employees, (5) the Restaurant Tenant or (6) any
guests or customers of the Hotel;

 

(ii)                              all data and information relating to guests or
customers of any hotel or lodging property (including condominium or interval
ownership properties) other than the Hotel that are owned, leased, operated,
licensed or franchised by Franchisor, Manager or an affiliate of either of them,
or any facility associated with such hotels or other properties (including
restaurants, golf courses and spas); and

 

(iii)      The Franchise Agreement, the Management Agreement, the Operating
Lease and any other items expressly excluded from Section 1.2(b).

 

(d)                             Certain Property Owned by Operating Tenant.
 Notwithstanding anything to the contrary contained herein, the parties
acknowledge and agree that (i) prior to the Effective Date, Seller entered into
the Operating Lease pursuant to which Operating Tenant operates the Hotel,
(b) Operating Tenant, rather than (or in addition to) Seller, may have rights,
title and interests in and to some of the Personal Property as of the Effective
Date and the Closing Date (collectively,

 

3

 

the “Operating Tenant Owned Property”), (c) Operating Tenant is signing this
Agreement solely for the purpose of agreeing to transfer all of its right, title
and interest in and to such Operating Tenant Owned Property to Purchaser at the
Closing, (d) the Operating Lease shall be terminated by Seller at Seller’s sole
cost and expense (and without penalty or cost to Purchaser) prior to or at
Closing, and (e) Operating Tenant shall not have any liability for or as a
result of any default or breach by Seller of any of Seller’s representations,
warranties and/or obligations hereunder.

 

1.3                            Due Diligence Period; Access; Review of
Materials.

 

(a)                               Investigations and Inspections.  Prior to or
within three (3) Business Days after the Effective Date, Seller shall provide to
Purchaser the Investigation Documents; provided, however, that (i) if any of the
Investigation Documents are not in Seller’s possession or reasonably available
to Seller, Seller shall notify Purchaser and Seller shall not be in breach or
default of this Agreement for the failure to provide such documents and
(ii) notwithstanding anything to the contrary contained herein, in no event
shall Seller be required to deliver to Purchaser any proprietary or confidential
information or materials, provided that, if Seller cannot provide any of the
Investigation Documents in accordance with this clause (ii), Seller will
promptly notify Purchaser in writing of same (but in no event later than the
above referenced three (3) Business Day period); but failure to so notify
Purchaser shall not be a breach or default of this Agreement by Seller.  From
and after the Effective Date, except to the extent that items constitute or
relate to any proprietary or confidential information or materials, or other
Excluded Assets, Seller shall promptly provide or make available to Purchaser
such additional information, documents or files relating to the Hotel and the
conduct of the Business thereon which are in Seller’s possession or control as
Purchaser may reasonably request, provided such request is not inconsistent with
any provision of this Agreement and as requested in writing.  During the Due
Diligence Period, Purchaser and its representatives, lender, consultants,
contractors and agents shall, subject to the rights of Franchisor, Manager and
the Occupants and the limitations set forth below, have the right to enter upon
the Real Property to perform such non-invasive physical inspections (including,
without limitation, Phase I environmental site assessments, engineering, tests
and studies, and other due diligence investigations of the Real Property),
surveys and studies, and review such other matters related to the Hotel
(including, without limitation, the Hotel Contracts, the Permits, and the Books
and Records), as Purchaser reasonably deems necessary for its review of the
Hotel (collectively, “Inspections and Studies”), in each case, so long as such
Inspections and Studies do not unreasonably interfere with the operation of the
Hotel.

 

(b)                              Diligence Limitations and Requirements.  In
connection with the Inspections and Studies, (i) Purchaser shall provide Seller
with at least twenty-four (24) hours prior notice for any such Inspections and
Studies, and Seller shall have the right to have a representative present at all
such Inspections and Studies; (ii) such Inspections and Studies shall be subject
to the rights of the Occupants and shall be performed during normal business
hours; (iii) Purchaser shall promptly repair any damage to the Hotel or any
adjacent property(ies) caused by any actions of Purchaser or its
representatives, lender, consultants and agents and shall restore the Hotel to
the condition which existed immediately prior to such damage; (iv) Purchaser or
the applicable third-party consultant shall furnish Seller prior to conducting
any such assessment or investigation with a certificate of general liability and
property damage insurance maintained by

 

4

 

Purchaser or the applicable third-party consultant, evidencing single occurrence
coverage of at least One Million and No/100 Dollars ($1,000,000.00) (and
aggregate coverage of at least $2,000,000.00) and naming Seller, Operating
Tenant, its lender, franchisor, and hotel manager, and such other parties
indicated by Seller, as additional insureds in a manner reasonably acceptable to
Seller; (v) Purchaser shall not conduct any environmental investigations or
testing, other than a standard “Phase I” environmental assessment, or any other
invasive investigations or testing of the Real Property without the prior
written consent of Seller, which consent may be given or withheld by Seller in
its sole discretion; (vi) copies of all such test results and reports shall be
given to Seller upon receipt thereof by Purchaser (and Seller shall have the
right to retain and use such results and reports in the event Purchaser fails to
close the purchase); (vii) Purchaser shall not knowingly permit any portion of
the Hotel to have any dangerous conditions established or permitted as a result
of any Inspections and Studies conducted by or on behalf of Purchaser; and
(viii) Purchaser shall keep the Property free of any liens, and repair any
damage to the Hotel arising from the any Inspections and Studies by Purchaser or
its representatives, lender, consultants and agents and any acts or omissions of
Purchaser or its representatives, lender, consultants and agents at the Hotel. 
Without limiting the foregoing, Purchaser shall cause all reasonably adequate
safeguards and protections to be provided to protect Occupants and the general
public from harm or exposure from such Investigations and Studies.  All
information learned by Purchaser in connection with the Inspections and Studies
shall be deemed to be Confidential Information.  Further, all consultants,
representatives and agents retained by or on behalf of Purchaser shall be
promptly paid by Purchaser prior to any liens being placed upon the Real
Property.  This Section 1.3(b) shall survive the Closing or any termination of
this Agreement.

 

(c)                               Indemnity.  Purchaser shall indemnify, defend
and hold harmless Seller, Manager, Operating Tenant and their respective
lenders, affiliates, subsidiaries, officers, directors, members, shareholders,
direct and indirect owners, employees, representatives and agents from any
Claims arising from or related to Purchaser’s or its agents, representatives,
lenders, consultants or contractors entry upon the Real Property and/or any such
Inspections and Studies, except (i) for the discovery of existing conditions at
the Hotel so long as following such discovery Purchaser does not exacerbate such
conditions through its actions, and (ii) to the extent caused by Seller,
Operating Tenant or Manager, or any of their respective agents, employees or
contractors.  After any such entry, Purchaser shall promptly restore the Hotel
to its prior condition, if its condition was changed by such entry.  This
Section 1.3(c) shall survive the Closing and any termination of this Agreement.

 

(d)                             Contact with the Hotel Employees and
Governmental Officials.

 

(i)                                  Prior to the Closing, all contact by
Purchaser at the Hotel shall be coordinated through the Hotel’s General
Manager.  Prior to the expiration of the Due Diligence Period, Purchaser shall
not interview any Hotel Employees (other than the Hotel’s General Manager)
outside the presence of a representative of Seller (which may include the
Hotel’s General Manager) without Seller’s prior consent.  Between the expiration
of the Due Diligence Period and Closing, Purchaser shall have the right to
interview any such Hotel Employees for possible employment and any such
interview shall be conducted in the presence of the Hotel’s General

 

5

 

Manager (unless Seller agrees otherwise) and in accordance with Manager’s
customary policies and procedures for such interviews.

 

(ii)                              Notwithstanding anything to the contrary
contained herein, prior to Closing, in no event shall Purchaser or its agents,
representatives, lenders, consultants or contractors be permitted to meet,
correspond or otherwise discuss with any Governmental Authority concerning any
matter relating to or arising out of the Hotel without the prior written consent
of Seller, and in the event that Seller provides such consent, then Seller shall
have the right, but not the obligation, to be present for any such discussions
or meetings; it being agreed that ordering customary PZR zoning reports,
municipal violation searches, environmental reports and property condition
reports (including customary due diligence conducted by the provider of such
reports) shall not be deemed to be a violation by Purchaser of this
Section 1.3(d)(ii).  This Section 1.3(d) shall survive any termination of this
Agreement.

 

(e)                               Destruction or Return of Materials.  If
Purchaser does not acquire the Hotel for any reason whatsoever, Purchaser shall
promptly destroy (i) all materials provided to Purchaser by Seller and (ii) all
materials and documents obtained or commissioned by Purchaser in connection with
its investigation of the Hotel (with no retention by Purchaser of copies of any
such materials and documents), except as required by applicable Laws or as
reasonably required to comply with Purchaser’s internal compliance
requirements.  Purchaser agrees that the information contained in the aforesaid
documents shall be deemed confidential information subject to the terms and
conditions of Section 11.13 of this Agreement, except to the extent as required
by Laws.  This Section 1.3(e) shall survive any termination of this Agreement.

 

(f)                                Termination.  Solely, if Purchaser elects
before expiration of the Due Diligence Period, for no reason or for any reason
whatsoever, in its sole and absolute discretion, not to proceed with the
transaction contemplated by this Agreement, Purchaser will deliver written
notice of such decision to Seller and Escrow Agent, whereupon (i) this Agreement
shall automatically terminate, (ii) the Escrow Agent shall immediately release
and return the Earnest Money (including any interest accrued thereon) to
Purchaser, (iii) each party shall pay one-half (1/2) of the expenses of escrow
and (iv) neither party shall have any further obligation to the other party
hereunder, except each party shall continue to be obligated under the indemnity
and other provisions in this Agreement that survive termination (collectively,
the “Surviving Obligations”).  Subject to Section 6.3(b), if Purchaser fails to
deliver to Seller and Escrow Agent a written notice of termination on or before
the expiration of the Due Diligence Period, Purchaser shall (x) no longer have
any right to terminate this Agreement under this Section 1(f), (y) be required
to deposit the Second Deposit on or prior to the Second Deposit Date pursuant to
Section 2.2(b) hereof (the failure of which shall be deemed a material default
by Purchaser under this Agreement and Seller shall have the rights set forth in
Section 7.1, and (z) be required to proceed with the transaction contemplated
hereby.

 

(g)                              Obligation to Purchase the Hotel.  If Purchaser
does not terminate this Agreement in accordance with Sections 1.3(f) or
6.3(b) or as otherwise expressly set forth in this Agreement, then Purchaser
agrees, at Closing, to purchase the Hotel and to assume all of the Hotel
Contracts

 

6

 

and to assume and honor all of the Bookings.  Seller shall pay any transfer or
other fee or payment payable under any Hotel Contract as a result of the
assignment and assumption of such Hotel Contract in connection with the transfer
of the Hotel.  Seller shall use commercially reasonable efforts to obtain the
consent to the transfer of any Hotel Contract which requires such consent;
provided, however, Purchaser shall reasonably cooperate with Seller (at no cost
or expense to Purchaser) in obtaining any such consent.  Notwithstanding
anything to the contrary contained herein, in the event that Seller is unable to
obtain any consent to the transfer of any Hotel Contract, (i) such Hotel
Contract shall be deemed to be an Excluded Asset, (ii) Seller shall not be in
default hereunder, (iii) Seller shall remain solely liable for any and all costs
in connection with the termination of any such Hotel Contract (including,
without limitation, any break-up fees, termination fees and our damages as the
result thereof), and (iv) the parties shall consummate the Closing in accordance
with this Agreement without the transfer of such Hotel Contract to Purchaser and
without any abatement of the Purchase Price.

 

(h)                              New Management Agreement.  Purchaser has
notified Seller that it may desire to negotiate during the Due Diligence Period
a hotel management agreement with Magna Hospitality Group (or one of its
affiliates), an Affiliate of Manager and of one of the indirect owners of
Seller, for the operation of the Hotel after the Closing (the “New Management
Agreement”).  Notwithstanding anything to the contrary contained herein,
Purchaser and Seller hereby agree that (i) neither the entry of the New
Management Agreement nor the satisfaction of any condition set forth therein or
in any escrow or other agreement entered into in connection therewith, is a
condition precedent to Closing, and (ii) neither Purchaser nor Seller shall have
the right to terminate this Agreement or adjourn Closing on account of or
relating to the New Management Agreement (including the failure of any party
thereto to enter into the New Management Agreement for any reason).

 

(i)                                  Tenant Estoppel.  Seller shall use
commercially reasonable efforts to deliver to Purchaser an estoppel in the form
attached hereto as Exhibit “S” from Restaurant Tenant prior to the expiration of
the Due Diligence Period.  Notwithstanding anything to the contrary contained
herein, if Seller, despite its commercially reasonably efforts, shall fail to
obtain such estoppel from Restaurant Tenant prior to the expiration of the Due
Diligence Period, Seller shall continue to cooperate with Purchaser and use
commercially reasonably efforts to obtain such estoppel prior to the Closing;
however, such failure to deliver such estoppel shall (x) not be a default by
Seller, (y) give Purchaser any right to adjourn the Closing or (z) relieve
Purchaser from its obligation to proceed to Closing in accordance with this
Agreement.

 

(j)                                  Violations.  Subject to and without
limiting the representation and warranty of Seller set forth in
Section 5.1(k) (as remade pursuant to Section 8.9(a)), Purchaser shall take
title to the Hotel subject to any and all violations of law or municipal
ordinances, orders or requirements issued by the departments of buildings, fire,
labor, health or other Federal, State, County, Municipal or other departments
and governmental agencies having jurisdiction against or affecting the Hotel,
and any outstanding work orders, received by Seller or its affiliates, managers,
agents or contractors that exist as of the Closing Date; and whether noted of
record on, before or after the expiration of the Due Diligence Period, (together
with any resulting liens or penalties, each, a “Violation”), other than (i) any
Violation(s) which Purchaser has objected to, and Seller has committed to cure,
each in accordance with Section 4.1(a); provided that, if Seller fails to cure
any such Violations which it has so elected to cure prior to the Closing Date,
Seller

 

7

 

shall be deemed in breach of this Agreement and Purchaser shall have the right
to terminate this Agreement pursuant to Section 8.9; and (ii) any Violation that
Seller obtains knowledge of after the expiration of the Objection Period which
would result in (or is reasonably likely to result in) actual out-of-pocket
liability in excess of (y) $100,000 per occurrence or (z) $600,000 in the
aggregate, in each case, which are noted by a Governmental Authority (such
violations described in this clause (ii) shall be referred to herein as, a
“Material Violation”), if such Material Violations are not cured by Seller prior
to Closing; provided, however, Seller shall have the right, but not the
obligation, to provide Purchaser with a credit at Closing in an amount necessary
to reduce the actual out-of-pocket liability which would result (or would
reasonably like to result) from any Violation in order to prevent such Violation
from becoming a Material Violation (the Violations referred to in clauses
(i) and (ii) above shall be referred to herein as “Specified Violations”).  By
way of example only, in the event that a Violation that Seller obtains knowledge
of after the expiration of the Objection Period would result in actual-of-pocket
liability of $150,000, Seller shall have the right, but not the obligation, to
provide Purchaser with a credit at Closing in amount equal to $50,000 in order
to prevent such Violation from being a Material Violation, in which case, such
Violation would not be covered by clause (ii) above and Purchaser shall be
required to take title subject to such Violation.   In the event that either
Seller or Purchaser obtains knowledge of a Material Violation, then such party
shall, within seven (7) Business Days after obtaining such knowledge, but in no
event later than the Closing Date, notify the other party of same.  If Seller
does not or is unable to cure such Material Violation as of the Closing, then
Seller shall not be in default under this Agreement but Purchaser shall have the
right to terminate this Agreement upon notice to Seller prior to 5:00 p.m. (EST)
on the fifth (5th) Business Days following receipt by Purchaser of written
notice from Seller notifying Purchaser of such failure or election not to cure
such Material Violation whereupon (w) this Agreement shall automatically
terminate, (x) the Escrow Agent shall immediately release and return the Earnest
Money (including any interest accrued thereon) to Purchaser, (y) each party
shall pay one-half (1/2) of the expenses of escrow and (z) neither party shall
have any further obligation to the other party hereunder, except each party
shall continue to be obligated under the indemnity and other provisions in this
Agreement that survive termination.  Without limiting the rights of Seller
pursuant to the proviso above to prevent a Violation from being a Material
Violation, and without limiting any other means of curing a Specified
Violations, if Seller provides Purchaser with a credit at Closing in an amount
equal to the actual out-of-pocket liability which would result from (or is
reasonably likely to result from) such Specified Violation, such Specified
Violation shall be deemed to be cured and waived by Purchaser for all purposes
set forth in this Agreement.

 

II. CONSIDERATION

 

2.1                            Purchase Price.

 

The total purchase price for the Hotel shall be One Hundred Thirteen Million and
No/100 Dollars ($113,000,000.00) (the “Purchase Price”), as increased or
decreased by prorations and adjustments pursuant to and in accordance with this
Agreement, and will be paid by Purchaser by wire transfer of immediately
available federal funds to Escrow Agent on the Closing Date pursuant to the
wiring instructions attached as Exhibit “M” hereto (“Escrow Agent’s Wiring
Instructions”).

 

8

 

2.2                            Earnest Money.

 

(a)                               Good Faith Deposit.  No later than 5:00 p.m.
(Eastern Time) three (3) Business Days after the Effective Date (the “Good Faith
Deposit Date”), Purchaser shall deposit the sum of One Million Nine Hundred
Thousand and No/100 Dollars ($1,900,000.00) in cash as an earnest money deposit
(together with any interest earned thereon, the “Good Faith Deposit”) by wire
transfer of immediately available federal funds to Escrow Agent pursuant to the
Escrow Agent’s Wiring Instructions.  If the Good Faith Deposit is not timely
made, Seller may terminate this Agreement at any time prior to receipt by the
Title Company of the Good Faith Deposit, in which case this Agreement shall
terminate (in which case neither party shall have any further obligation to the
other party hereunder, except for the Surviving Obligations).

 

(b)                              Second Deposit.  If the Due Diligence Period
expires without Purchaser having terminated this Agreement, then no later than
5:00 p.m. (Eastern Time) three (3) Business Days after the expiration of the Due
Diligence Period (the “Second Deposit Date”), Purchaser shall deposit an
additional Two Million and No/100 Dollars ($2,000,000.00) in cash as an earnest
money deposit (together with any interest earned thereon, the “Second Deposit”)
by wire transfer of immediately available federal funds to Escrow Agent pursuant
to the Escrow Agent’s Wiring Instructions (the Good Faith Deposit, the Second
Deposit, and if deposited pursuant to Section 8.1(c), the Additional Deposit,
and any interest earned thereon are collectively referred to herein as the
“Earnest Money”).  Failure of Purchaser to make the Second Deposit as required
pursuant to this Section 2.2(b) shall be deemed a material default by Purchaser
under this Agreement and Seller shall have the rights set forth in Section 7.1.

 

(c)                               Earnest Money.  The Earnest Money shall be
delivered to and held by Escrow Agent in escrow in an interest-bearing account
pursuant to the terms of this Agreement and the escrow instructions attached
hereto as Exhibit “C” (the “Escrow Instructions”).  If the Closing occurs in
accordance with the terms and provisions of this Agreement, the Earnest Money
shall be paid to Seller and credited against the Purchase Price.  If the Closing
does not occur, the Earnest Money (including interest accrued thereon) shall be
held and delivered as expressly provided herein.

 

2.3                            Allocation.

 

(a)                               Purchaser and Seller hereby agree that they
shall use good faith commercially reasonable efforts to agree upon the
allocation (the “Purchase Price Allocation”) of the Purchase Price among the
Real Property and the Personal Property and other property related to the Hotel
on or prior to April 15, 2013 (the “Allocation Outside Date”) for federal, state
and local tax purposes which agreement on the Purchase Price Allocation shall be
confirmed in an amendment (the “Allocation Amendment”) to this Agreement setting
forth the Purchase Price Allocation.  In the event that Purchaser and Seller do
not agree on the Purchase Price Allocation and enter into the Allocation
Amendment on or prior to the Allocation Outside Date, then either Purchaser or
Seller may terminate this Agreement upon two (2) Business Days prior written
notice to the other party, whereupon if the parties cannot agree upon the
Purchase Price Allocation within such two (2) Business Day period, (i) this
Agreement shall automatically terminate, (ii) the Escrow Agent shall immediately
release and return the Earnest Money to Purchaser, (iii) each party shall pay
one-half (1/2) of the expenses of escrow and (iv) neither

 

9

 

party shall have any further obligation to the other party hereunder, except
that each party shall continue to be obligated for the Surviving Obligations.

 

(b)                              Purchaser and Seller shall report the federal,
state and local income and other tax consequences of the transactions
contemplated by this Agreement and in particular, the information required by
Section 1060(b) of the Internal Revenue Code of 1986, as amended (the “IRC”),
and shall file all tax returns and related tax documents, in a manner consistent
with such allocation, and neither Purchaser nor Seller shall take any position
inconsistent with such agreed upon allocation of the Purchase Price in any tax
return or otherwise.

 

(c)                               Subject to Section 8.5, at the Closing,
Purchaser shall pay one hundred percent (100%) of any applicable sales, use or
other similar tax payable in connection with the conveyance of the Personal
Property pursuant to this Agreement, but expressly excluding Transfer Taxes
which are the obligation of Seller (collectively, “Sales Taxes”).  At the
written request of Seller, Purchaser shall provide written evidence of its
remittance of applicable Sales Taxes.  Purchaser shall indemnify, defend and
hold harmless Seller for any claims, losses, liabilities and expenses, including
reasonable attorneys’ fees, arising out of Purchaser’s failure to pay all
applicable Sales Taxes.

 

(d)                             This Section 2.3 shall survive the Closing.

 

III. SURVEY

 

3.1                            Survey.

 

Seller shall, as part of the Investigation Documents required hereunder, deliver
to Purchaser a copy of the existing ALTA survey with respect to the Real
Property.  Purchaser shall have the right, at its sole cost and expense, to have
an updated survey prepared (the “Survey”), a copy of which Survey shall also be
promptly delivered by Purchaser to Seller.  Purchaser shall on or before
April 24, 2013 (the “Objection Period”), object in writing to any matters shown
on the Survey, which objection must be accompanied by a copy of the Survey. 
Notwithstanding anything to the contrary contained herein, in the event that
Purchaser fails to deliver any objections to the Survey prior to the expiration
of the Objection Period, Purchaser shall be deemed to have waived its right to
object to any matters set forth on the Survey, and all matters set forth on the
Survey shall be deemed to be Permitted Exceptions.  Within five (5) Business
Days after the timely delivery of a notice of objection pursuant to this
Section by Purchaser, Seller shall notify Purchaser in writing whether Seller
elects to attempt to cure such objections.  If Seller elects to attempt to cure
any such objections, Seller shall have until the Closing Date to attempt to
remove, satisfy or cure such objections and for this purpose Seller shall be
entitled to a adjourn the Closing pursuant to Section 8.1(b).  If Seller elects
not to attempt to cure any such objections, or if Seller is unable to effect a
cure of such objections prior to the Closing Date (including any such
adjournment), Purchaser shall elect, within three (3) Business Days after
receipt of written notice from Seller that Seller has elected not to attempt to
cure any such objections or that Seller is unable to effect a cure of such
objections, as the case may be, one of the following options:  (i) to accept a
conveyance of the Hotel subject to the applicable Permitted Exceptions and any
such objections that Seller is unwilling or unable to cure (in which case such
objections shall become a Permitted Exception), and without reduction of the
Purchase Price; or

 

10

 

 

(ii) to terminate this Agreement by delivering to Seller a written notice of
termination, whereupon (A) this Agreement shall automatically terminate, (B) the
Escrow Agent shall immediately release and return the Earnest Money (including
any interest accrued thereon) to Purchaser, (C) each party shall pay one-half
(1/2) of the expenses of escrow and (D) neither party shall have any further
obligation to the other party hereunder, except for the Surviving Obligations. 
If Purchaser shall fail to notify Seller in writing of Purchaser’s election of
option (i) or (ii) referred to above in this Section within the applicable
period, Purchaser shall be deemed to have elected to accept the conveyance of
the Hotel under clause (i) above.

 

IV. TITLE INSURANCE

 

4.1                            Title Commitment.

 

(a)                               Title Objections.  Seller shall, as part of
the Investigation Documents required hereunder, deliver to Purchaser a copy of
the existing title insurance policy with respect to the Real Property, together
with complete and legible copies of all instruments and documents referred to
therein which are in Seller’s possession.  Purchaser, at its sole cost and
expense, shall obtain a commitment for an owner’s title insurance policy with
respect to the Real Property (the “Commitment”) issued by First American Title
Insurance Company (the “Title Company”), together with complete and legible
copies of all instruments and documents referred to therein (collectively, the
“PTR Exceptions”), which Commitment shall obligate the Title Company to issue,
at Purchaser’s sole cost and expense on owner’s title insurance policy at
Closing (the “Title Policy”).  Purchaser shall provide to Seller the contact
information of the Title Company as soon as practicable.  Purchaser shall on or
before the expiration of the Objection Period, object in writing to any PTR
Exceptions or any other matter or encumbrance set forth on the Commitment. 
Notwithstanding anything to the contrary contained herein, but subject to
Section 8.1(b), in the event that Purchaser fails to deliver any objections to
the PTR Exceptions or the Commitment prior to the expiration of the Objection
Period, Purchaser shall be deemed to have waived its right to object to any PTR
Exceptions or any matters or encumbrances set forth on the Commitment, and all
PTR Exceptions and any matters or encumbrances set forth on the Commitment shall
be deemed to be Permitted Exceptions.  Subject to Sections 1.3(j) and 4.1(b), in
the event that that any liens, easements or encumbrances to title are recorded
of record after the expiration of the Due Diligence Period and which arise by,
under or through a third party, (I) Purchaser shall have the right to object to
same by delivering a written objection letter to Seller within three
(3) Business Days after Purchaser obtaining knowledge of same and (II) if
Purchaser fails to object to same by within such three (3) Business Day period
referred to in clause (I) above, Purchaser shall be deemed to have waived its
right to object to same and same shall be deemed to be Permitted Exceptions. 
Within five (5) Business Days after the timely delivery of a notice of objection
pursuant to this Section by Purchaser, Seller shall notify Purchaser in writing
whether Seller elects to attempt to cure such objections.  If Seller elects to
attempt to cure any such objections, Seller shall have until the Closing Date to
attempt to remove, satisfy or cure such objections to the satisfaction of
Purchaser (in Purchaser’s reasonable discretion) and shall use commercially
reasonable efforts to attempt to remove, satisfy or cure such objections, and
for this purpose Seller shall be entitled to adjourn the Closing pursuant to
Section 8.1(b).  If Seller elects not to cure any such objections, Purchaser
shall elect, within three (3) Business Days after receipt of written notice from
Seller that Seller has elected not attempt to cure any such objections or that
Seller is unable to effect a cure of such objections, as the case may be, one of

 

11

 

the following options:  (i) to accept a conveyance of the Hotel subject to the
applicable Permitted Exceptions and any such objections that Seller is unwilling
or unable to cure (in which case such objections shall become a Permitted
Exception), and without reduction of the Purchase Price; or (ii) to terminate
this Agreement by delivering to Seller a written notice of termination,
whereupon (A) this Agreement shall automatically terminate, (B) the Escrow Agent
shall immediately release and return the Earnest Money (including any interest
accrued thereon) to Purchaser, (C) each party shall pay one-half (1/2) of the
expenses of escrow and (D) neither party shall have any further obligation to
the other party hereunder, except for the Surviving Obligations.  If Purchaser
shall fail to notify Seller in writing of Purchaser’s election of option (i) or
(ii) referred to above in this Section within the applicable period, Purchaser
shall be deemed to have elected to accept the conveyance of the Hotel under
clause (i) above.

 

(b)                              Title Objection Overrides.  Notwithstanding
Section 3 and 4.1(a), (i) Seller shall be required and obligated to remove and
cure all (y) Monetary Encumbrances or (z) any easements or encumbrance on title
to the Hotel which were intentionally created, consented to or affirmatively
permitted by Seller, Operating Tenant or their respective affiliates (and not by
Restaurant Tenant, Purchaser or any other Person) from and after the expiration
of the Due Diligence Period in violation of Section 6.1(d), and in each case
Seller’s failure to so remove and cure the foregoing shall constitute a breach
by Seller under this Agreement; and (ii) subject to clause (i) of this Section,
Seller shall have no obligation to cure any objection to the Survey or to any
PTR Exception or any matter or encumbrance set forth in the Commitment (other
than Monetary Encumbrance) and Seller’s failure to cure any such objections,
despite using commercially reasonable efforts to attempt to remove, satisfy or
cure any title objections which Seller has elected to attempt to cure pursuant
Section 4.1(a), shall in no event constitute a breach by Seller under this
Agreement (but the failure to so remove, satisfy or cure such objections to the
reasonable satisfaction of Purchaser shall nevertheless give Purchaser, prior to
or at Closing, the right to terminate this Agreement pursuant to Section 8.9);
provided, however, solely in the event that (A) a judgment or a mechanic’s,
materialman’s or broker’s lien which is intentionally created, consented to or
affirmatively permitted by Seller, Operating Tenant or their respective
affiliates (and not by Restaurant Tenant, Purchaser or any other Person) is
filed against the Real Property after the expiration of the Due Diligence Period
which is an amount that exceeds $2,500,000 (each, a “Material Intervening
Lien”), (B) Seller elects not to cure or does not cure, such Material
Intervening Lien to Purchaser’s satisfaction (in Purchaser’s reasonable
discretion) by the Closing which failure shall give Purchaser the right to
terminate this Agreement, and (C) Purchaser terminates this Agreement by giving
Seller written notice of such election or within three (3) Business Days after
notice from Seller of Seller’s failure or inability to cure a Material
Intervening Lien, then Seller shall reimburse Purchaser within ten (10) Business
Days following written demand by Purchaser for all of Purchaser’s documented
out-of-pocket costs of the transaction contemplated hereunder actually incurred
to third parties, including reasonable attorney’s fees and costs incurred in
connection with this Agreement and the investigation of the Hotel, not to exceed
a total of Two Hundred Thousand and No/100 Dollars ($200,000.00).

 

(c)                               Right to Use Earnest Money and Closing Payment
to Cure or Discharge Title and Survey Objections.  If on the Closing Date the
Hotel continues to be encumbered by any Monetary Encumbrances or any other
objections timely raised by Purchaser pursuant to Section 3.1, 4.1(a) or
4.1(b) which Seller is obligated to or has elected to attempt to cure, pay or
discharge, Seller may, in addition to any other methods available to it, use any
portion of the

 

12

 

Earnest Money and the Purchase Price to satisfy the same, provided that Seller
shall simultaneously either deliver to Purchaser at the Closing instruments in
recordable form, sufficient to satisfy such Monetary Encumbrances or such other
objections of record, together with the cost of recording or filing said
instruments, and arrange with the Title Company for the issuance of the Title
Policy to Purchaser free and clear of any such Monetary Encumbrances or such
objections.

 

(d)                             Assignment of Mortgages.  At the request of
Purchaser, Seller agrees to use commercially reasonable efforts to cause its
mortgage lender to assign the mortgage held by Seller’s mortgage lender to
Purchaser’s mortgage lender with respect to the Hotel at the Closing pursuant to
Seller’s mortgage lender’s standard form of assignment documents and in
accordance with all applicable laws.  Purchaser shall be responsible for all
costs and expenses reasonably incurred by Seller, Seller’s mortgage lender,
Purchaser and/or Purchaser’s mortgage lender in connection with such assignment
referred to in this Section 4.1(d).  Purchaser shall be the sole beneficiary of
any mortgage recording tax savings resulting from any assignment of any existing
mortgage to Purchaser’s lender. If Purchaser does not request an assignment of
the existing mortgage, then Seller shall be obligated, notwithstanding anything
herein to the contrary, to obtain a satisfaction or release of the existing
mortgage from the Property with its own funds at or prior to Closing (and Seller
may use or instruct Escrow Agent to use any cash portion of the Purchase Price
for the Property to satisfy the existing mortgages).

 

V. REPRESENTATIONS AND WARRANTIES

 

5.1                            Seller’s Representations and Warranties.

 

Seller represents and warrants to Purchaser, as of the Effective Date, that:

 

(a)                               Organization.  Seller is a duly organized and
validly existing limited liability company, is in good standing in the State of
Delaware, is qualified to transact business in the State of New York, and has
full power to enter into this Agreement and to perform its obligations under
this Agreement.

 

(b)                              Authorization.  The execution and delivery of
this Agreement has been duly authorized by all necessary and appropriate action
of Seller and Operating Tenant.

 

(c)                               Consents and Conflicts.  No consent or
approval of any Person, entity, or governmental authority is required with
respect to the execution and delivery of this Agreement by Seller and Operating
Tenant or to authorize the consummation by Seller and Operating Tenant of the
transactions contemplated hereby or the performance by Seller and Operating
Tenant of its obligations under this Agreement.  The execution, delivery and
performance of this Agreement by Seller and Operating Tenant and the
consummation of the transactions contemplated hereby by Seller and/or Operating
Tenant (i) will not violate any provision of the Seller’s or Operating Tenant’s
organizational or governing documents; (ii) will not violate any Laws;
(iii) will not result in the creation or imposition of any lien or encumbrance
on the Hotel or any portion thereof; and (iv) is not prohibited by or otherwise
violates any material agreement to which Seller or Operating Tenant is a party
or may be bound which would restrict or adversely

 

13

 

affect Seller’s or Operating Tenant’s ability to consummate the transactions
contemplated by this Agreement.

 

(d)                             Solvency.  Neither Seller, Operating Tenant, nor
any of their respective members or managers, has made or filed, with respect to
any Person or entity, any general assignment for the benefit of creditors,
become insolvent or filed a petition for voluntary bankruptcy or filed a
petition or answer seeking reorganization or an arrangement or composition,
extension or readjustment of its indebtedness or consented, in any creditors’
proceeding, to the appointment of a receiver or trustee of Seller, Operating
Tenant or the Hotel or any part thereof of either of them or been named in an
involuntary bankruptcy proceeding and to Seller’s knowledge, no such actions are
contemplated or have been threatened.

 

(e)                               Space Leases.  There are no Space Leases
affecting all or any portion of the Hotel other than the Restaurant Lease and
(i) the Restaurant Lease is in full force and effect, (ii) neither Seller nor
Operating Tenant has received nor delivered any written notice of default under
the Restaurant Lease, (iii) Seller has provided Purchaser with a true, correct
and complete copy of the Restaurant Lease, and (iv) no security deposits are
currently held by Seller and/or Operating Tenant or otherwise owed to the tenant
under the Restaurant Lease and (v) no rent under the Restaurant Lease has been
paid more than thirty (30) days in advance.

 

(f)                                Equipment Leases.  There are no Equipment
Leases affecting the Hotel except as set forth in Exhibit “J” to this
Agreement.  True, correct and complete copies of such Equipment Leases
(including all amendments), have been provided to Purchaser or will be provided
to Purchaser pursuant to Section 1.2(b).  All of the Equipment Leases described
in Exhibit “J” are in full force and effect, and neither Seller nor Operating
Tenant has received nor delivered any written notice of default under any of the
Equipment Leases described in Exhibit “J” and, to Seller’s knowledge, there are
no material defaults by any party thereunder except as disclosed in Exhibit “J”.

 

(g)                              Material Contracts.  There are no Material
Contracts affecting the Hotel except as set forth in Exhibit “D” to this
Agreement.  True, correct and complete copies of such Material Contracts
(including all amendments), have been provided to Purchaser or will be provided
to Purchaser pursuant to Section 1.2(b).  All of the Material Contracts
described in Exhibit “D” are in full force and effect, and neither Seller nor
Operating Tenant has received nor delivered any written notice of default under
any of the Material Contracts described in Exhibit “D” and, to Seller’s
knowledge, there are no material defaults by any party thereunder except as
disclosed in Exhibit “D”.

 

(h)                              Permits.  True and complete copies of the
Permits set forth on Exhibit “E”, to the extent in Seller’s, Operating Tenant’s
or Manager’s possession or control, have been provided to Purchaser or will be
provided to Purchaser pursuant to Section 1.3(a).  As of the Effective Date,
except as otherwise disclosed to Purchaser on Exhibit “E,” (i) neither Seller
nor Operating Tenant has received any written notice of any uncured violations
of any Permit, and (ii) to Seller’s knowledge, all of the Permits described in
Exhibit “E” are in full force and effect.

 

(i)                                  Title to Personal Property.  Seller or
Operating Tenant has good and valid title to all Personal Property, which shall
be free and clear of all liens and encumbrances as of the

 

14

 

Closing, except for the Equipment Leases, which shall be subject only to the
ownership interest of the lessor thereunder.

 

(j)                                  Condemnation.  Neither Seller nor Operating
Tenant has received written notice of any pending condemnation proceeding or
other proceeding in eminent domain.  To Seller’s knowledge, no condemnation
proceeding or eminent domain proceeding is threatened affecting the Real
Property or any portion thereof.

 

(k)                              Compliance with Applicable Law.  During the two
(2) year period ending on the Effective Date, to Seller’s knowledge, neither
Seller nor Operating Tenant has received written notice from any governmental
authority of any violation of any applicable Law with respect to the Hotel which
has not been cured or dismissed, except for the violations described in
Exhibit “N” (collectively, the “Disclosed Violations”).

 

(l)                                  Litigation.  Neither Seller nor Operating
Tenant is involved in any litigation, administrative action, arbitration or
similar adjudicatory proceeding with respect to the Hotel which has not been
resolved, settled or dismissed nor, to Seller’s knowledge, have any of the
foregoing been threatened which, if, adversely determined, could reasonably be
expected to have a material adverse effect on the ownership or operation of the
Hotel or the Business.

 

(m)                          Employees.  Neither Seller nor Operating Tenant has
any employees nor is either party a party to any written employment, collective
bargaining agreement or compensation agreement.  To Seller’s knowledge, as of
the Effective Date, there are no union organization efforts pending or
threatened with respect to any of the Hotel Employees.

 

(n)                              Sales and Use Taxes.  To Seller’s knowledge,
all sales and use taxes (other than those sales taxes, if any, arising from the
sale of the Real Property and the Personal Property from Seller to Purchaser),
hotel/motel occupancy taxes, real and personal property taxes, employer
withholding taxes and similar taxes that are due as of the Closing have been
paid in full (or will be provided for at the Closing pursuant to the provisions
of Section 8.2), and all required reports and returns relating thereto have
been, or will be, timely filed.  To Seller’s knowledge, as of the Effective
Date, (i) neither Seller nor Operating Tenant has received written notice of any
special tax assessment relating to the Hotel or any portion thereof, and
(ii) there are no tax agreements in place affecting the Real Property.

 

(o)                              Financial Statements.  Seller has provided or
will provide to Purchaser prior to the expiration of the Due Diligence Period
all books and records, financial reports, profit and loss statements, financial
statements pertaining to the Hotel for Seller’s period of ownership and any
year-to-date financial statements and operating budgets prepared for the Hotel
for the current year.  To Seller’s knowledge, all financial statements are in
all material respects true and complete and fairly represent the financial
condition of Seller and the Hotel as of the dates stated therein.

 

(p)                              Environmental Notices.  Neither Seller nor
Operating Tenant has received written notice from any governmental authority
alleging or otherwise asserting that the Hotel or their operation are in
violation of any law, rule or regulation relating to Hazardous Substances, other
than the Disclosed Violations (if applicable).

 

15

 

(q)                              Environmental Matters.  Neither Seller nor
Operating Tenant has received written notice from any governmental authority
that any of the Real Property or Seller or Operating Tenant is not in compliance
with all Hazardous Waste Laws.  As of the Effective Date, to Seller’s knowledge,
neither Seller nor Operating Tenant has received written notice from any
governmental agency, board or department that Seller does not have all required
governmental permits and licenses, if any, relating to Hazardous Substances,
other than the Disclosed Violations (if applicable).

 

(r)                                 Foreign Person.  Neither Seller nor
Operating Tenant is a “foreign person” as defined in the Foreign Investment in
Real Property Tax Act of 1980, as amended.

 

(s)                                Foreign Corrupt Practices.  Neither Seller,
Operating Tenant nor any of their respective affiliates, or their respective
employees, officers, directors, representatives or agents is, nor will they
become, (i) a Person or entity with whom U.S. persons or entities are restricted
from doing business under any OFAC regulations (including those named on OFAC’s
Specially Designated Nationals and Blocked Persons List any other similar list
maintained by the Office of Foreign Assets Control, Department of the Treasury
or the Department of Foreign Affairs and International Trade (Canada), pursuant
to any authorizing statute, executive order or regulation) or under any statute,
executive order (including the September 24, 2001, Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism, as the same has been from time to time updated and
amended), or other governmental action and is not and will not assign or
otherwise transfer this Agreement to, contract with or otherwise engage in any
dealings of transactions or be otherwise associated with such persons or
entities; or (ii) a Person either (a) included within the term “designated
national” as defined in the Cuban Assets Control Regulations, 31 C.F.R.
Part 515; or (b) designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive
Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) or a person
similarly designated under any related enabling legislation or any other similar
Executive Orders.

 

The representations and warranties of Seller shall survive the Closing as and to
the extent provided in Sections 5.4 and 5.5.

 

5.2                            Purchaser’s Representations and Warranties.

 

Purchaser represents and warrants to Seller, as of the Effective Date, that:

 

(a)                               Organization.  Purchaser is a duly organized
and validly existing limited liability company, is in good standing in the State
of Delaware and has full power to enter into this Agreement and to perform its
obligations under this Agreement.

 

(b)                              Authorization.  The execution and delivery of
this Agreement has been or will be, prior to the expiration of the Due Diligence
Period, duly authorized by all necessary and appropriate action of Purchaser.

 

(c)                               Consents and Conflicts.  No consent or
approval of any Person, entity, or governmental authority is required with
respect to the execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transactions contemplated hereby or the

 

16

 

performance by Purchaser of its obligations under this Agreement except for such
consents as shall be obtained by Purchaser prior to the Closing.

 

(d)                             Foreign Corrupt Practices.  Neither Purchaser
nor any of its affiliates, or their respective employees, officers directors,
representatives or agents is, nor will they become, (i) a Person or entity with
whom U.S. persons or entities are restricted from doing business under any OFAC
regulations (including those named on OFAC’s Specially Designated Nationals and
Blocked Persons List any other similar list maintained by the Office of Foreign
Assets Control, Department of the Treasury or the Department of Foreign Affairs
and International Trade (Canada), pursuant to any authorizing statute, executive
order or regulation) or under any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism,
as the same has been from time to time updated and amended), or other
governmental action and is not and will not assign or otherwise transfer this
Agreement to, contract with or otherwise engage in any dealings of transactions
or be otherwise associated with such persons or entities; or (ii) a Person
either (a) included within the term “designated national” as defined in the
Cuban Assets Control Regulations, 31 C.F.R. Part 515; or (b) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg.
49079 (published September 25, 2001) or a Person similarly designated under any
related enabling legislation or any other similar Executive Orders.

 

The representations and warranties of Purchaser shall survive the Closing as and
to the extent provided in Sections 5.4 and 5.5.

 

5.3                            Remedies Prior to Closing.

 

By executing and delivering the Seller’s Certificate, Seller shall be deemed to
have made all of the representations and warranties of Seller in Section 5.1
above and elsewhere in this Agreement and as of the Closing.  Should Seller
obtain knowledge that any of such representations and warranties are incorrect
in any material respect prior to the Closing, Seller shall promptly advise
Purchaser in writing of the same and Seller shall have the option, but not the
obligation, to cure same to Purchaser’s satisfaction (in Purchaser’s reasonable
discretion) by the Closing Date, and upon Seller’s election to attempt such cure
as evidenced by written notice to Purchaser, the Closing shall, at Purchaser’s
option, be postponed until Purchaser’s receipt of proof satisfactory to
Purchaser (in Purchaser’s reasonable discretion) that such matters have been
cured; provided, however, if Purchaser elects not to extend the Closing Date or
Seller is unable or unwilling to cure the same within fifteen (15) days after
the scheduled Closing Date, Purchaser shall have the option either to (a) waive
the same by proceeding to close the transaction contemplated hereunder without
any abatement of the Purchase Price, or (b) to terminate this Agreement, in
which case, (w) this Agreement shall automatically terminate, (x) the Escrow
Agent shall immediately release and return the Earnest Money (including any
interest accrued thereon) to Purchaser, (y) each party shall pay one-half (1/2)
of the expenses of escrow and (z) neither party shall have any further
obligation to the other party hereunder, except each party shall continue to be
obligated under the indemnity and other provisions in this Agreement that
survive termination; provided, however, solely in the event that Purchaser
elects to terminate this Agreement pursuant to this Section 5.3 as a result of
any breach of representation which is not correct in all material respects as of
the Effective Date (and not as the result of any changes

 

17

 

in facts or circumstances which occur after the Closing Date), Seller shall
reimburse Purchaser within ten (10) Business Days following written demand by
Purchaser for all of Purchaser’s documented out-of-pocket costs of the
transaction contemplated hereunder actually incurred to third parties, including
reasonable attorney’s fees and costs incurred in connection with this Agreement
and the investigation of the Hotel, not to exceed a total of Two Hundred
Thousand and No/100 Dollars ($200,000.00).

 

Notwithstanding the foregoing, Seller shall have no obligation to cure,
Purchaser shall be deemed to have waived and Purchaser shall have no right to
terminate this Agreement on account of, a breach of, or supplement or amendment
to Seller’s representations and warranties which (i) results from the taking of
any action or occurrence of any event which is permitted under Section 6.1(c) or
which is otherwise consented to in writing by Purchaser, (ii) relates to or
arises out of the failure of the Restaurant Lease to be in effect, any
amendment, extension, restatement or other modification to the Restaurant Lease
which is entered into in accordance with this Section 6.1(c)(ii), the occurrence
of any breach or default by the tenant under the Restaurant Lease or the failure
of the tenant under the Restaurant to operate the restaurant and/or to serve
liquor; or (iii) results in (or is reasonably likely to result in) actual
out-of-pocket liability in excess of (y) $250,000 per occurrence or (z) $600,000
in the aggregate if such breach or supplement or amendment is not cured by
Seller prior to Closing (a “Material Representation Breach”); provided, however,
Seller shall have the right, but not the obligation, to provide Purchaser with a
credit at Closing in an amount necessary to reduce the actual out-of-pocket
liability which would result (or would reasonably like to result) from any
breach of, or supplement or amendment to, Seller’s representations and
warranties in order to prevent such breach or supplement or amendment from
becoming a Material Representation Breach.  By way of example only, in the event
that a breach of, or supplement or amendment to, Seller’s representations and
warranties arises which would result in actual-of-pocket liability of $350,000,
Seller shall have the right, but not the obligation, to provide Purchaser with a
credit at Closing in amount equal to $100,000 in order to prevent such breach or
supplement or amendment from being a Material Representation Breach, in which
case, such breach or supplement or amendment would not be covered by clause
(iii) above and Seller shall have no obligation to cure, Purchaser shall be
deemed to have waived, and Purchaser shall have no right to terminate this
Agreement on account of such breach or supplement or amendment.  Without
limiting the rights of Seller pursuant to the proviso above to prevent a breach
of, or supplement or amendment to, Seller’s representations and warranties from
being a Material Representation Breach, and without limiting any other means of
curing any such breach or amendment or supplement, if Seller provides Purchaser
with a credit at Closing in an amount equal to the actual out-of-pocket
liability which would result from (or is reasonably likely to result from) such
breach or supplement or amendment, then such breach or supplement or amendment
shall be deemed to be cured and waived by Purchaser for all purposes set forth
in this Agreement; provided, however, in the event that a breach of, or
supplement or amendment to, Seller’s representations and warranties shall occur
as a result of a breach of the Restaurant Lease by Seller, in lieu of providing
Purchaser with a credit at Closing pursuant to this sentence, Seller shall have
the right to deposit the actual out-of-pocket liability which would result from
(or is reasonably likely to result from) such breach or supplement or amendment
into escrow with Escrow Holder, in which case, the Seller, Purchaser and Escrow
Agent shall enter into an escrow agreement at Closing substantially in the same
form as the Post-Closing Escrow Agreement which shall govern how such escrowed
funds shall be held and disbursed.

 

18

 

In the event Purchaser expressly waives in writing or is deemed to have waived a
breach of, or amendment or supplement to, Seller’s representations and
warranties in accordance with this Section 5.3 and proceeds to Closing, such
waiver shall be deemed to include any and all Claims associated with the same,
including any post-closing survivability or post-closing indemnity, and Seller
shall have no liability with respect thereto.  If, prior to the Closing, to
Purchaser’s knowledge, any representation or warranty of Seller is inaccurate or
incorrect and Purchaser nonetheless proceeds with the Closing, Seller shall have
no liability for any such inaccurate or incorrect representation or warranty.

 

5.4                            Survival.

 

The representations and warranties of Seller and Purchaser as set forth herein
expressly survive the Closing for a period of nine (9) months and thereafter
will automatically expire unless (a) Purchaser or Seller, as applicable, has
given written notice to the other of a breach of any such representation or
warranty prior to the expiration of such nine (9) month period following the
Closing Date, in which case only such representation or warranty which is the
subject of such notice shall survive beyond such nine (9) month period, and
(b) any litigation or other action with respect to such breach of any such
representation and warranty which was the subject of such notice, is commenced
within thirty (30) days after the delivery of such notice.  This Section 5.4
shall survive the Closing.

 

5.5                            Indemnification.

 

(a)                               Seller’s Indemnification Obligations.

 

(i)        Subject to Section 5.4, Seller hereby acknowledges, covenants and
unconditionally, absolutely and irrevocably, agrees to indemnify, protect,
defend and hold harmless, as well as reimburse, Purchaser and its affiliates and
their respective parents, affiliates, shareholders, officers, directors,
members, partners, trustees, agents, representatives and employees
(collectively, the “Related Parties”) to the fullest extent provided by law,
from and against, and for, any and all Claims brought by or otherwise commenced
on behalf of any third party, and all actual, out-of-pocket and/or, subject to
the terms of this Agreement, economic damages, liabilities, any amounts
reasonably incurred to settle any Claims, and losses (including, without
limitation, reasonable attorneys’ fees and costs)(collectively, “Losses”) (but
in all cases without duplication with respect to any and all payments made by or
on behalf of Seller for a breach or default under the certificates and
declarations provided to the Title Company in connection with the Closing
hereunder) actually incurred by Purchaser or any of Purchaser’s Related Parties
as a direct result of such Claims, to the extent the Closing occurs and such
Claims and Losses result from any of the following (collectively, all items
referred to in items (1) - (7) below shall be collectively referred to herein
as, the “Seller’s Indemnity Obligations”; and all items referred to below as
items (2) - (7) (specifically excluding the matters set forth in item (1) below)
shall be collectively referred to herein as, the “Seller’s Non-R&W

 

19

 

Indemnity Obligations”):  (1) any one or more breach by Seller of Seller’s
representations or warranties; (2) any one or more breach by Seller of any
covenant of Seller contained in this Agreement; (3) any failure of Seller to
have reported and/or paid any and all Transfer Taxes and/or Sales Taxes, but
with respect to Sales Taxes, solely if such Sales Taxes were required to be paid
by Seller pursuant to Section 8.5, in each case, together with any and all
penalties and interest related to any such Transfer Taxes and/or Sales Taxes, if
applicable as permitted above; (4) the Excluded Assets; (5) any Employee Claim
to the extent attributable to their employment at the Hotel prior to the Closing
Date, (6) any physical or personal injury or death caused to any Person, or
damage to property of unaffiliated third parties, to the extent such injury,
death or damage occurred prior to the Closing Date in connection with the Hotel,
and (7) except (A) as may be the obligation of Purchaser pursuant to an express
provision of this Agreement or (B) for any item for which Purchaser receives a
credit at Closing (to the extent of such credit), any Claims or Losses to the
extent arising from acts, omissions or occurrences that occur or accrue in
connection with the Hotel prior to the Closing Date, including, without
limitation, with respect to the Hotel Contracts, but, in each case under clauses
(1) through (7), only to the extent that such Claims in the aggregate exceed
Fifty Thousand and No/100 Dollars ($50,000.00) (the “Threshold”) (provided that
if the Threshold is exceeded, such indemnity shall be for the aggregate Losses
incurred thereby measured by the first dollar of Loss notwithstanding such
Threshold).  Notwithstanding anything to the contrary contained herein, to the
extent that any of Seller’s Non-R&W Indemnity Obligations would be covered
directly or indirectly by any representations and/or warranty, such Seller’s
Non-R&W Indemnity Obligations shall not be deemed to be a Seller’s Non-R&W
Indemnity Obligations; it being agreed that any Seller’s Indemnity Obligations
arising out of a breach of any representation or warranty is intended to
(I) fall within item (1) of Seller’s Indemnity Obligations and be covered by the
Post-Closing R&W Liability Cap only, and not (II) be included as part of
Seller’s Non-R&W Indemnity Obligations or covered by the Post-Closing Non-R&W
Liability Cap.

 

(ii)                              Notwithstanding anything to the contrary
contained herein, including Section 5.5(a)(i), (1) Purchaser shall have no right
to file an action for rescission in connection with any breaches of Seller’s
representations or warranties or any of Seller’s Indemnity Obligations;
(2) Seller’s aggregate liability to Purchaser with respect to any and all such
breaches of Seller’s representations or warranties, and breaches of any of
Seller’s covenants that expressly survive the Closing, but excluding Seller’s
Non-R&W Indemnity Obligations, or in any Seller closing document shall not
exceed One Million Six Hundred Thousand and No/100 Dollars ($1,600,000.00) (the
“Post-Closing R&W Liability Cap”) and Purchaser hereby waives any damages, costs
and expenses in excess of said amount; provided, however, such Post-Closing R&W
Liability Cap shall not apply with

 

20

 

 

respect to any damages incurred by Purchaser as a result of Seller’s commission
of fraud in connection with providing the representations of Seller set forth
herein; (3) Seller’s aggregate liability to Purchaser with respect to any and
all such breaches of Seller’s Non-R&W Indemnity Obligations shall not exceed One
Million Six Hundred Thousand and No/100 Dollars ($1,600,000.00) (the
“Post-Closing Non-R&W Liability Cap”) and Purchaser hereby waives any damages,
costs and expenses in excess of said amount; provided, however, such
Post-Closing Non-R&W Liability Cap shall not apply with respect to any damages
incurred by Purchaser as a result of Seller’s commission of fraud in connection
with any matters which are covered by Seller’s Non-R&W Indemnity Obligations;
(4) except for Claims arising based on any breach of the express representations
and warranties of Seller set forth in Section 5.1 and elsewhere in this
Agreement or in any closing documents to be delivered by Seller to Purchaser at
Closing, neither Claims for change to or remediation of the physical, structural
or environmental condition of the Hotel nor Claims of any government or
governmental agency or authority relating to the physical, structural or
environmental condition of the Hotel are subject to indemnification by Seller
under Section 5.5(a)(i); or (5) Seller shall not be liable, without limiting
Section 7.5, for any incidental, consequential, indirect, punitive, special or
exemplary damages, or for lost profits, unrealized expectations or other similar
claims except those of third parties against which Seller has indemnified
Purchaser.  In the event that Purchaser actually recovers any insurance
proceeds, including title insurance proceeds, or any indemnity, contribution or
other similar payment from any insurance company (including the Title Company),
tenant, or other third party for damages against which Seller indemnified and
actually paid Purchaser under this Agreement, then to the extent Purchaser’s
damages did not exceed the amount actually paid by Seller to Purchaser,
Purchaser shall promptly reimburse Seller to the extent of any such
double-recovery.  For the avoidance of doubt, (A) the Post-Closing R&W Liability
Cap shall be separate and distinct from the Post-Closing Non-R&W Liability Cap,
(B) in the event that Purchaser makes a claim under the Post-Closing Escrow
Agreement on account of a Seller’s R&W Warranty Obligation in accordance with
the terms set forth herein and therein, such claim shall be applied against the
Post-Closing R&W Liability Cap and (C) in the event that Purchaser makes a claim
under the Post-Closing Escrow Agreement on account of a Seller’s Non-R&W
Warranty Obligations in accordance with the terms set forth herein and therein,
such claim shall be applied against the Post-Closing Non-R&W Liability Cap.  In
addition, (I) in the event that Seller actually receives payment from its
insurance company after Closing on account of any Seller’s Non-R&W Indemnity
Obligations and such amounts are paid to Purchaser (or are used to reimburse
Seller for a payment previously paid to Purchaser), then such amount shall not
be counted towards the Post-Closing Non-R&W Liability Cap, and (II) in the

 

21

 

event that a claim is made by Purchaser with respect to Seller’s Non-R&W
Indemnity Obligations which would be covered by Seller’s insurance policies,
Seller agrees to tender such claim to its insurance company (but Seller shall
have no further obligations to pursue such tendered claim).

 

(b)                              Purchaser’s Indemnification Obligations.

 

(i)                                  Subject to Section 5.4, Purchaser hereby
acknowledges, covenants and unconditionally, absolutely and irrevocably, agrees
to indemnify, protect, defend and hold harmless, as well as reimburse, Seller
and Seller’s Related Parties to the fullest extent provided by law, from and
against, and for, any and all Claims brought by or otherwise commenced on behalf
of any third party, and all Losses actually incurred by Seller or any of
Seller’s Related Parties as a direct result of such Claims, to the extent the
Closing occurs and such Claims and Losses result from any of the following
(collectively, all items referred to in items (1) - (6) below shall be
collectively referred to herein as, the “Purchaser’s Indemnity Obligations” and
all items referred to below as items (2) - (6) (specifically excluding the
matters set forth in item (1) below) shall be collectively referred to herein
as, the “Purchaser’s Non-R&W Indemnity Obligations”):  (1) any one or more
breach by Purchaser of Purchaser’s representations or warranties, (2) any one or
more breach by Purchaser of any covenant of Purchaser contained in this
Agreement; (3) any failure of Purchaser to have reported and/or paid any and all
Sales Taxes, but with respect to Sales Taxes, solely if such Sales Taxes were
required to be paid by Purchaser pursuant to Section 8.5, together with any and
all penalties and interest related to any such Sales Taxes; (4) Employee Claims
to the extent attributable to their employment at the Hotel from and after the
Closing Date, but only to the extent that such claims result from events which
occur on or after the Closing Date, (5) any physical or personal injury or death
caused to any Person, or damage to property of unaffiliated third parties, to
the extent such injury, death or damage occurred on or after the Closing Date in
connection with the Hotel, and (6) except (A) as may be the obligation of Seller
pursuant to an express provision of this Agreement and with respect to which
Purchaser did not receive a credit at Closing or (B) for any item for which
Seller receives a credit at Closing (to the extent of such credit), any Claims
brought by a third party to the extent arising from acts, omissions, or
occurrences that occur or accrue in connection with the Hotel on or after the
Closing Date, including, without limitation, with respect to the Hotel Contracts
and Space Leases, but, in each case under clauses (1) through (6), only to the
extent that such Claims in the aggregate exceed the Threshold (provided that if
the Threshold is exceeded, such indemnity shall be for the aggregate Losses
incurred thereby measured by the first dollar of Loss notwithstanding such
Threshold).  Notwithstanding anything to the contrary contained herein, to the
extent that any of Purchaser’s Non-R&W Indemnity Obligations would be covered
directly or indirectly by any representations and/or

 

22

 

warranty, such Purchaser’s Non-R&W Indemnity Obligations shall not be deemed to
be a Purchaser’s Non-R&W Indemnity Obligations; it being agreed that any
Purchaser’s Indemnity Obligations arising out of a breach of any representation
or warranty is intended to (I) fall within item (1) of Purchaser’s Indemnity
Obligations and be covered by the Post-Closing R&W Liability Cap only, and not
(II) be included as part of Purchaser’s Non-R&W Indemnity Obligations or covered
by the Post-Closing Non-R&W Liability Cap.

 

(ii)                              Notwithstanding anything to the contrary
contained herein, including Section 5.5(b)(i), (1) Seller shall have no right to
file an action for rescission in connection with any breaches of Purchaser’s
representations or warranties or Purchaser’s Indemnity Obligations,
(2) Purchaser’s aggregate liability to Seller with respect to any and all such
breaches of Purchaser’s representations or warranties, and breaches of any of
Purchaser’s covenants that expressly survive the Closing, but excluding
Purchaser’s Non-R&W Indemnity Obligations, or in any Purchaser closing document
shall not exceed the Post-Closing R&W Liability Cap and Seller hereby waives any
damages, costs and expenses in excess of said amount; provided, however, such
Post-Closing R&W Liability Cap shall not apply with respect to any damages
incurred by Seller as a result of Purchaser’s commission of fraud in connection
with providing the representations of Purchaser set forth herein;
(3) Purchaser’s aggregate liability to Seller with respect to any and all such
breaches of Purchaser’s Non-R&W Indemnity Obligations shall not exceed the
Post-Closing Non-R&W Liability Cap and Seller hereby waives any damages, costs
and expenses in excess of said amount; provided, however, such Post-Closing
Non-R&W Liability Cap shall not apply with respect to any damages incurred by
Seller as a result of Purchaser’s commission of fraud in connection with any
matters which are not covered by the Purchaser’s Non-R&W Indemnity Obligations;
and (4) Purchaser shall not be liable for any incidental, consequential,
indirect, punitive, special or exemplary damages, or for lost profits,
unrealized expectations or other similar claims except those of third parties
against which Purchaser has indemnified Seller.  In the event that Seller
actually recovers any insurance proceeds or any indemnity, contribution or other
similar payment from any insurance company, tenant, or other third party for
damages against which Purchaser indemnified and actually paid Seller under this
Agreement, then to the extent Seller’s damages did not exceed the amount paid by
Purchaser to Seller, Seller shall promptly reimburse Purchaser to the extent of
any such double-recovery.  In addition, (I) in the event that Purchaser actually
receives payment from its insurance company after Closing on account of any
Purchaser’s Non-R&W Indemnity Obligations and such amounts are paid to Seller
(or are used to reimburse Purchaser for a payment previously paid to Seller),
then such amount shall not be counted towards the Post-Closing Non-R&W Liability
Cap, and (II) in the event that a claim is made by Seller with respect to
Purchaser’s Non-R&W Indemnity

 

23

 

Obligations which would be covered by Purchaser’s insurance policies, Purchaser
agrees to tender such claim to its insurance company (but Purchaser shall have
no further obligations to pursue such tendered claim).

 

(c)                               Survival.  The obligations of Seller and
Purchaser under this Section 5.5 shall survive the Closing for a period of nine
(9) month and thereafter will automatically expire unless (i) Purchaser or
Seller, as applicable, has given written notice to the party which is to provide
indemnification prior to the expiration of the nine (9) month period following
the Closing and (ii) any litigation or other action with respect to such
indemnification obligation which was the subject of such notice, is commenced
within ten (10) Business Days after the delivery of such notice.  This
Section 5.5 shall survive the Closing

 

VI. COVENANTS

 

6.1                            Seller’s Covenants.

 

Seller covenants and agrees to perform (and where applicable, Seller agrees to
cause Operating Tenant to perform and agrees to use commercially reasonable
efforts to cause Manager to perform) the following covenants from the Effective
Date to the Closing:

 

(a)                               Cooperation.  Seller shall assist Purchaser
and Purchaser’s agents, on or before Closing, in acquiring all information
reasonably necessary to enable Purchaser’s agents and Seller’s agents to compute
the prorations described in Section 8.2.

 

(b)                              Personal Property.  Seller will not, without
the prior approval of Purchaser (in its sole and absolute discretion), sell,
exchange, assign, transfer, convey, lease or otherwise dispose of all or any
part of the Personal Property or any interest therein except for Furnishings,
Consumables and Expendables, in the Ordinary Course of Business; provided,
however, that in the event Purchaser fails to respond to Seller within three
(3) Business Days after Purchaser is notified of such desired disposition, such
failure to respond shall be deemed to constitute Purchaser’s approval of same.

 

(c)                               Material Contracts, Permits and Space Leases.

 

(i)                                  From and after the expiration of the Due
Diligence Period, Seller shall not (y) amend, extend or terminate any Material
Contracts or Space Leases (other than the Restaurant Lease), and/or Permits
without the prior approval of Purchaser (which approval shall not be
unreasonably withheld or delayed); or (z) enter into new Material Contracts or
any Space Leases (other than the Restaurant Lease), without the prior approval
of Purchaser (in its sole and absolute discretion); provided, however, that in
the event Purchaser fails to respond to Seller within three (3) Business Days
after Purchaser is notified of Seller’s intention to take such actions, such
failure shall be deemed to constitute Purchaser’s approval of same.

 

(ii)                              Purchaser acknowledges that the Restaurant
Lease expires on June 30, 2013, and Seller is in the process of negotiating an
extension and amendment of the Restaurant Lease.  Prior to the expiration of the
Due

 

24

 

Diligence Period, Seller shall (y) keep Purchaser reasonably informed as to
Seller’s progress with respect to such negotiations and (z) in the event that
any amendment, extension, restatement or other modification to the Restaurant
Lease is entered into prior to the expiration of the Due Diligence Period,
Seller shall promptly deliver a copy of same to Purchaser.  From and after the
expiration of the Due Diligence Period, Seller shall not amend, extend, restate
or otherwise modify the Restaurant Lease without Purchaser’s prior approval,
which approval shall not be unreasonably withheld or delayed.  For the avoidance
of doubt, the failure of Seller to enter into an amendment, extension,
restatement or other modification of the Restaurant Lease shall not be deemed to
be a default by Seller, result in an adjournment of the Closing or excuse the
obligation of Purchaser or Seller to consummate the Closing in accordance with
this Agreement.

 

(d)                             Liens.  From and after the expiration of the Due
Diligence Period, except as set forth in Section 6.1(c)(ii), Seller will not
enter into any contracts, licenses, easements or other agreements relating to
the Hotel which will obligate Purchaser or be a charge or lien against the
Hotel, except those necessary to continue the Business and operation of the
Hotel in the Ordinary Course of Business and which are terminable without
penalty on no more than thirty (30) days notice, without the prior approval of
Purchaser, which approval shall not be unreasonably withheld or delayed;
provided, however, that in the event Purchaser fails to respond to Seller within
three (3) Business Days after Purchaser is notified of Seller’s intention to
take such proposed actions, such failure to respond shall be deemed to
constitute Purchaser’s approval of same.  Seller shall promptly provide written
notice to Purchaser of any new agreements entered into by Seller pursuant to
this Section 6.1, along with a copy of any such agreements.

 

(e)                               Operations in Ordinary Course of Business. 
Seller will cause the Hotel to be operated and maintained in the Ordinary Course
of Business which undertaking includes, but is not limited to, (i) maintaining
the levels of inventories of Expendables, Furnishings and Consumables in the
Ordinary Course of Business, including without limitation all linens,
(ii) instructing Manager to enter into Bookings and otherwise take guest room
reservations, on Seller’s behalf in the Ordinary Course of Business, and
(iii) performing maintenance and repairs for the Hotel in the Ordinary Course of
Business, subject however, in each case, to any change in such operations and
policies which Seller determines is reasonably necessary or prudent as a result
of changes in market, economic or other conditions.  Seller acknowledges that
the Purchase Price includes the transfer of Bookings after the Closing Date in
accordance with the terms of this Agreement.  Notwithstanding anything to the
contrary contained herein,  neither (A) the termination of, or breach by the
tenant under, the Restaurant Lease, nor (B) the failure of the tenant under the
Restaurant Lease to operate the restaurant and/or to serve liquor, shall be
deemed to be a violation of Seller’s obligation to operate the Hotel in the
Ordinary Course of Business or otherwise be deemed to be a default by Seller
hereunder, result in an adjournment of the Closing or excuse the obligation of
Purchaser or Seller to consummate the Closing in accordance with this Agreement.

 

(f)                                Insurance.  Seller will maintain until the
Closing Date the existing (or substantially equivalent) insurance coverage for
the Hotel.

 

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(g)                              Books and Records.

 

(i)                                  Seller agrees to make available to
Purchaser or Purchaser’s accountants, at Seller’s (or its affiliate’s) offices,
and during the week of April 15 - April 19, 2013, all of the audit request
materials listed on Exhibit “L-1”.  Seller also agrees to make available to
Purchaser or Purchaser’s accountants, at Seller’s (or its affiliate’s) offices,
all of the audit request materials listed on Exhibit “L-2” on or before June 10,
2013, to the extent same are in Seller’s possession and not marked as “N/A” on
such exhibit; provided, however, Seller shall use good faith efforts to provide
to Purchaser or Purchaser’s accountants all such additional materials listed on
Exhibit “L-2” that are within its possession (or which are otherwise reasonably
accessible to Seller as of the Effective Date) as soon as reasonably possible
after the expiration of the Due Diligence Period; provided further, if the
Closing occurs prior to June 10, 2013, Seller shall use good faith efforts to
make available to Purchaser or Purchaser’s accountants, at Seller’s (or its
affiliate’s) offices, all of the audit request materials listed on Exhibit “L-2”
as soon as reasonably possible.  Seller also agrees to use commercially
reasonable efforts to provide Purchaser with 2012 audited financial statements
with respect to the ownership and operation of the Hotel on or before April 29,
2013; provided that, in the event that Seller fails or is unable to provide 2012
audited financial statements by said date, Seller shall provide Purchaser with
the NOI Review Information listed on Exhibit “L-3” not later than April 29,
2013.

 

(ii)                              Seller acknowledges and agrees at Purchaser’s
sole cost and expense to (i) use its good faith efforts to also provide such
additional information which is deemed relevant and reasonably necessary (as
reasonably determined by Purchaser) to enable Purchaser and the accountants to
prepare financial statements in compliance with (A) Rule 3-05 of Regulation S-X
of the Securities and Exchange Commission which audit will commence immediately
upon Closing and which is required to be completed and filed with the Securities
and Exchange Commission within seventy-five (75) days after Closing; (B) any
other rule issued by the Securities and Exchange Commission and applicable to
Purchaser; and (C) any registration statement, report or disclosure statement
filed with the Securities and Exchange Commission by, or on behalf of,
Purchaser; and (ii) engage (at Purchaser’s sole cost and expense) McGladrey LLP
to commence any and all such required audits.  Seller acknowledges and agrees
that the foregoing is a representative description of the information and
documentation that Purchaser and its accountants may require in order to comply
with (A), (B) and (C) above.  In connection with the foregoing post-Closing
audit(s), and in furtherance of Seller’s obligations to assist Purchaser
pursuant to this Section 6.1(g)(ii), Seller covenants and agrees to execute and
deliver to McGladrey LLP an audit representation letter, in substantially the
form attached hereto as Exhibit “L-4” with such changes as agreed to between
Seller and McGladrey LLP.

 

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(iii)                          The items required under this Section 6.1(g) are
being provided by Seller merely for the administrative convenience of
Purchaser.  Notwithstanding anything to the contrary contained herein, neither
providing the information set forth in this section or delivery of the audit
representation letter, shall (y) be deemed to increase or supplement any of the
representations and warranties made by Seller hereunder or be deemed to be a
representation or warranty made by Seller or (z) give rise to liability or
entitle Purchaser to seek recourse against Seller as a result of any inaccuracy
therein.

 

(iv)                          This Section 6.1(g) shall survive Closing for a
period of twelve (12) months.

 

(h)                              Operating Lease and Management Agreement.  At
or prior to Closing, Seller shall cause the Operating Lease and the Management
Agreement to be terminated, in each case, without any liability assumed by or
cost or expense to Purchaser, and Seller agrees to indemnify Purchaser and the
Hotel against, any and all Claims brought by Operating Tenant and/or Manager or
any of their respective affiliates.

 

6.2                            Purchaser’s Covenants.

 

Without limiting Sections 10.2, 10.3 and 10.4, Purchaser represents, warrants
and covenants that Purchaser or its affiliate, is an experienced purchaser,
owner and operator of hotels and real property such as the Hotel, and Purchaser
acknowledges and agrees that Purchaser has made, or will make prior to Closing,
such independent investigations, inspections, analyses and research as Purchaser
has deemed necessary or appropriate (or, in the alternative, Purchaser has
elected at its risk not to make such investigations, inspections, analyses and
research), concerning the condition, ownership, use and operation of the Hotel,
including, but not limited to, investigations, inspections, analyses and
research of:  (a) present and future Laws and restrictions concerning the use,
location and suitability of the Hotel or any existing or proposed development or
build-out or condition thereof, including, but not limited to, zoning,
environmental, barrier removal and other such Laws; (b) the necessity and
availability of any building permits, environmental impact reports, or any other
governmental permits, approvals, entitlements or acts in respect of the Hotel;
(c) the necessity or existence of any dedications, fees, charges, costs or
assessments that may be imposed in connection with any Laws or the obtaining of
any items set forth in subsection (b); (d) the economic value of the Hotel;
(e) the seismic and structural integrity of the Hotel Improvements; (f) any
surface, soil, subsoil, geologic or ground water conditions or other physical
conditions of or affecting the Hotel; (g) the extent or condition of title to
the Hotel and the extent of existing encumbrances against the Hotel, as
reflected in the Survey and Commitment; (h) the operation and management of the
Hotel; (i) any employment matters affecting the Hotel; and (j) the presence,
use, transportation or storage of Hazardous Substances on, over, under or nearby
the Real Property.

 

6.3                            Franchise Agreement.

 

(a)                               During the Due Diligence Period, Purchaser
shall, at its sole cost and expense, promptly apply for and pursue in good faith
a New Franchise Agreement with Franchisor to

 

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continue to operate the Hotel as a Holiday Inn, which New Franchise Agreement
shall be entered into at or immediately after Closing.  Purchaser shall use good
faith efforts to submit a completed franchise application (the “Application”) to
Franchisor within three (3) Business Days after the Effective Date, and shall
thereafter diligently pursue the Application in good faith with Franchisor.  As
part of the application process, Purchaser shall promptly provide all
information and documentation that Franchisor requests (including, without
limitation, financial statements, organizational documents, background
information regarding direct and indirect owners of Purchaser and other
documentation supporting its Application).  Without limiting the foregoing,
Purchaser shall use prompt, diligent and good faith efforts to cause the
Application to be approved by Franchisor.  Purchaser shall keep Seller informed
of the status of Purchaser’s efforts to cause the Application to be approved by
Franchisor.

 

(b)                              From and after the Effective Date, Purchaser
shall work in good faith using commercially reasonable efforts to cause
Franchisor to commit in writing, in form and substance reasonable acceptable to
the parties, to at Closing allow Purchaser to receive a license to operate the
Hotel as a Holiday Inn after the Closing pursuant to the New Franchise Agreement
in the form and substance acceptable to Purchaser (in Purchaser’s reasonable
discretion) (collectively, the “Franchisor Approval”).  Solely in the event that
Franchisor has not granted Franchisor Approval by the expiration of the Due
Diligence Period, Purchaser shall have an additional fifteen (15) days after the
expiration of the Due Diligence Period (the “Franchisor Approval Period”) solely
to allow Purchaser to obtain the Franchisor Approval, provided that Purchaser
shall be obligated to (i) deposit the Second Deposit in accordance with
Section 2.2(b), and (ii) notify Seller in writing, prior to the expiration of
the Due Diligence Period, of its intent to utilize the Franchisor Approval
Period.  For the avoidance of doubt, the additional Franchisor Approval Period
pursuant to this Section 6.3(b) shall not result in any extension of the Closing
Date.  Upon receipt of the Franchisor Approval during the Franchisor Approval
Period, (A) the Franchisor Approval Period shall automatically expire, and
(B) Purchaser shall have no further right to terminate this Agreement pursuant
to this Section 6.3(b); provided, however, solely in the event that Purchaser
has not obtained the Franchisor Approval by 5:00 p.m. (EST) on the last day of
the Franchisor Approval Period, Purchaser shall have the right to terminate this
Agreement by delivery of written notice to Seller and Escrow Agent, whereupon,
(1) this Agreement shall automatically terminate, (2) the Escrow Agent shall
immediately release and return the Earnest Money (including any interest accrued
thereon) to Purchaser, (3) each party shall pay one-half (1/2) of the expenses
of escrow and (d) neither party shall have any further obligation to the other
party hereunder, except for the Surviving Obligations.  If Purchaser fails to
deliver to Seller and Escrow Agent a written notice of termination on or before
the expiration of the Franchise Approval Period, Purchaser shall (x) no longer
have any right to terminate this Agreement pursuant to this Section 6.3(b), and
(y) be required to proceed with the transaction contemplated hereby.

 

(c)                               Purchaser shall, at its sole cost and expense,
cause Franchisor to deliver at or prior to Closing a signed counterpart of a
voluntary notice of termination and a release of the guarantors under the
Franchise Agreement from all liability thereunder (collectively, a “Voluntary
Notice of Franchise Termination”) on Franchisor’s customary form with respect to
the Hotel, with no cost or expense to Seller or Operating Tenant or any of their
affiliates; provided, however, Purchaser shall be deemed to have satisfied this
obligation if Franchisor delivers the Voluntary Notice of Franchise Termination
in escrow with Escrow Holder subject

 

28

 

only to the occurrence of the Closing and the delivery of the executed deed to
Franchisor.  In no event shall Purchaser be liable for any amounts owed to
Franchisor by Seller which accrued and were owing prior to termination of the
Franchise Agreement.

 

(d)                             Notwithstanding anything to the contrary
contained herein:  (i) neither the entry into a New Franchise Agreement by
Purchaser nor the satisfaction of any conditions set forth in the Franchisor
Approval or any other conditions imposed upon Purchaser by Franchisor shall be a
condition to Purchaser’s obligation to consummate the transactions contemplated
hereunder; (ii) Seller shall have no obligation to perform and/or pay for any
modernization, renovation or other upgrading or PIP work at the Hotel (expressly
excluding any such amounts due and owing from Seller to Franchisor); and
(iii) Purchaser shall have no right to extend the Closing Date on account of the
Franchise Agreement, including Purchaser’s failure to enter into a New Franchise
Agreement on the Closing Date.

 

VII. REMEDIES

 

7.1                            Seller’s Pre-Closing Remedies.

 

Due to the fluctuation in land values, the unpredictable state of the economy
and of governmental regulations, the fluctuating money market for real estate
loans of all types, and other factors which directly affect the value and
marketability of the Hotel, the parties recognize that it would be extremely
difficult and impracticable, if not impossible, to ascertain with any degree of
certainty the amount of damages which would be suffered by Seller in the event
of Purchaser’s failure to perform its obligations under this Agreement to
purchase the Hotel.  Accordingly, the parties agree that a reasonable estimate
of Seller’s damages in such event is the amount of the Earnest Money, and if
Purchaser defaults in any material respect in performing the obligations under
this Agreement to close the purchase of the Hotel, including, but not limited
to, its obligations under Section 8.4(b), then Seller, after delivery of written
notice to Purchaser of such failure and the expiration of a five (5) Business
Day cure period from delivery of such notice (which for the avoidance of doubt
shall extend the Closing Date until the expiration of such five (5) Business Day
cure period), shall be entitled to immediately terminate this Agreement by
giving Purchaser written notice to such effect, and receive and retain the
Earnest Money (including interest accrued thereon) as liquidated damages which
retention thereof shall be Seller’s sole and exclusive remedy under this
Agreement, at law or in equity, for such breach of default to close the
transaction contemplated under this Agreement.  In addition, (i) Purchaser shall
pay the expenses of escrow, and (ii) each party shall continue to be obligated
under the Surviving Obligations.  Upon the occurrence of a Purchaser default
entitling Seller to receive and retain the Earnest Money (including interest
accrued thereon) as liquidated damages and following the proper termination of
the Agreement by Seller pursuant to this Section 7.1, Purchaser hereby waives
and releases all rights to purchase the Hotel and upon demand from Seller,
Purchaser agrees to evidence such waiver and release in written form
satisfactory to Seller.

 

7.2                            Purchaser’s Pre-Closing Remedies.

 

If Seller defaults in any material respect in performing its obligations under
this Agreement to close the sale of the Hotel, including but not limited to its
obligations under Section 8.4(a), then

 

29

 

Purchaser shall have the right, after delivery of written notice to Seller of
such failure and the expiration of a five (5) Business Day cure period from
delivery of such notice (which for the avoidance of doubt shall extend the
Closing Date until the expiration of such five (5) Business Day cure period), to
exercise any one of the following as Purchaser’s sole and exclusive remedy:

 

(a)                               proceed to Closing without any reduction in or
set-off against the Purchase Price, in which case Purchaser shall be deemed to
have waived Seller’s default in performing its obligations and covenants under
this Agreement or Seller’s incorrect representations and warranties and such
waiver will be deemed to include any and all Claims associated with the same,
including any post-closing survivability or post-closing indemnity, and Seller
shall have no liability with respect thereto; or

 

(b)                              terminate this Agreement by giving Seller
written notice of such election prior to or at the Closing whereupon (i) Escrow
Agent shall immediately return the Earnest Money (including interest accrued
thereon) to Purchaser, (ii) Seller shall reimburse Purchaser within ten
(10) Business Days following written demand by Purchaser for all of Purchaser’s
documented out-of-pocket costs of the transaction contemplated hereunder
actually incurred to third parties, including reasonable attorney’s fees and
costs incurred in connection with this Agreement and the investigation of the
Hotel, not to exceed a total of Two Hundred Thousand and No/100 Dollars
($200,000.00), and (iii) neither party to this Agreement shall thereafter have
any further rights or liabilities under this Agreement, except that (A) Seller
shall pay the expenses of escrow, and (B) each party shall continue to be
obligated under the Surviving Obligations; or

 

(c)                               pursue the remedy of specific performance to
the extent available as a legal or equitable remedy.

 

Notwithstanding the foregoing, if Purchaser fails to elect, by written notice to
Seller, any of the foregoing remedies within thirty (30) days after Purchaser’s
delivery of the default notice contemplated by this Section 7.2, Purchaser shall
conclusively be deemed to have elected the remedy set forth in Section 7.2(a).

 

7.3                            Post-Closing Escrow.

 

At the Closing, (i) Seller, Purchaser and Escrow Agent shall enter into an
agreement (the “Post-Closing Escrow Agreement”), which Post-Closing Escrow
Agreement shall be in the form attached as Exhibit “K” hereto and (ii) Seller
shall deposit with Escrow Agent an amount equal to $1,600,000, which amount
shall be held in escrow, and disbursed, by Escrow Agent pursuant to the terms of
the Post-Closing Escrow Agreement.

 

7.4                            Post-Closing Defaults of Purchaser and Seller.

 

Subject to the limitations set forth in this Agreement, including Section 5.4
and 5.5, if Purchaser or Seller defaults under this Agreement after the Closing
with respect to any obligation of Purchaser or Seller first arising after, and
surviving, the Closing Date, then Purchaser (if Seller is the defaulting party)
or Seller (if Purchaser is the defaulting party) shall have all rights and
remedies available to Purchaser against Seller, or Seller against Purchaser, as
applicable, hereunder, and neither Section 7.1 or 7.2 shall apply.

 

30

 

 

7.5                            Attorneys’ Fees.

 

If any litigation or other enforcement proceeding is commenced in connection
with this Agreement, then the prevailing party shall be entitled to receive
payment of its reasonable attorneys’ fees and expenses and court costs from the
other party (and in addition to any liquidated damages under Section 7.1).

 

7.6                            Survival.

 

The provisions of this Article VII shall survive the Closing or earlier
termination of this Agreement.

 

VIII. CLOSING MATTERS

 

8.1                            Closing.

 

(a)                               Closing Date.  The Closing shall be held on
June 6, 2013 (as same may be adjourned or extended in accordance with this
Agreement, the “Closing Date”).  The Closing shall be effected through the
escrow with Escrow Agent on terms reasonably acceptable to Seller, Purchaser and
Escrow Agent (including that all of the funds and documents to be transferred
hereunder shall be delivered through the escrow with Escrow Agent).  Purchaser
and Seller shall execute appropriate instructions to implement the closing of
such escrow.

 

(b)                              Postponement by Seller.  Notwithstanding any
provision of this Agreement to the contrary, (A) if Seller (i) despite using its
commercially reasonable efforts to remove, satisfy or cure the following, fails
to cure (a) any item under Sections 3.1, or 4.1(a) that Seller has elected to
attempt to cure to Purchaser’s satisfaction (in Purchaser’s reasonable
discretion) on or prior to Closing or (b) any item under Section 4.1(b) that
Seller is obligated to cure to Purchaser’s satisfaction (in Purchaser’s
reasonable discretion) on or prior to Closing, or (B) Seller elects to adjourn
the Closing in order to cure any condition set forth in this Agreement,
including Sections 5.3 or 8.9(c), then in either instance under clauses (i) and
(ii) of this Section 8.1(b), Seller shall have the right to postpone the Closing
for up to (y) fifteen (15) days in the aggregate in the case of Section 5.3 and
(z) thirty (30) days in the aggregate in the case of Sections 3.1, 4.1(a) or
8.9(c), in each case, by providing prior written notice to Purchaser; provided,
however, although the parties acknowledge that there is no financing contingency
provided herein and this Closing is not conditioned on Purchaser (or any other
Person) obtaining any financing, in the event that Purchaser notifies Seller at
least ten (10) days prior to the Closing Date of the date on which Purchaser’s
mortgage commitment initially expires (notwithstanding any extension rights
granted or otherwise available to Purchaser for additional consideration or
penalty) (such date, the “Mortgage Commitment Expiration Date”), then the cure
rights of Seller set forth in this Section 8.1 shall be limited to and deemed to
expire on the later of (I) ten (10) Business Days after the Closing Date or
(II) the Mortgage Commitment Expiration Date.  If such items are not cured to
Purchaser’s satisfaction by the Closing Date (as extended pursuant to this
Agreement), Purchaser’s sole and exclusive remedy shall be to either
(y) terminate this Agreement pursuant to Section 8.9 by delivering to Seller a
written notice of termination prior to the Closing; or (z) waive its objection
to the condition or disapproved items that Seller has not cured to Purchaser’s
satisfaction, which objection shall then become Permitted Exceptions, as
applicable.

 

31

 

Notwithstanding the foregoing, Purchaser’s failure to timely deliver to Seller
and Escrow Agent a written notice of termination within five (5) Business Days
of receipt of a notice from Seller (and in no event later than the Closing)
pursuant to this Section 8.1(b), shall be deemed to constitute Purchaser’s
election of option (z) above.

 

(c)                               Postponement by Purchaser.  Purchaser shall
have a one-time right to adjourn the Closing Date for a period of up to thirty
(30) days upon written notice (the “Extension Election Notice”) from Purchaser
to Seller delivered at least two (2) days prior to the scheduled Closing Date,
provided that within one (1) Business Day following the delivery of the
Extension Election Notice, Purchaser shall deposit an additional One Hundred
Thousand and No/100 Dollars ($100,000.00) of Earnest Money with Escrow Agent
(the “Additional Deposit”) pursuant to Escrow Holder’s Wiring Instructions. 
Upon payment of the Additional Deposit, the Additional Deposit shall be deemed
included with and a part of the Earnest Money for all purposes of this Agreement
and shall be credited to the Purchase Price at Closing.

 

8.2                            Adjustment and Prorations.

 

The assets and liabilities of the Hotel specified in this Section 8.2,
determined in accordance with the Uniform System of Accounts (provided that all
other non-Hotel assets and liabilities, if any, shall be determined in
accordance with GAAP), shall be prorated as of the Cut Off Time.  In connection
with the foregoing:

 

(a)                               Closing Statements.

 

(i)                                  Not later than five (5) Business Days prior
to the Closing Date, Seller will prepare and deliver to Purchaser a preliminary
statement of prorations and adjustments required under this Section 8.2, or
under any other provisions of this Agreement, with such supporting documentation
as the parties hereto may reasonably require being attached thereto (the
“Preliminary Closing Statement”); and

 

(ii)                              On the day prior to Closing, Purchaser and
Seller will conduct inventories, examinations and audits of the Hotel as may be
necessary to verify and/or make revisions to the Preliminary Closing Statement
based on such audits, examinations and inventories, and conducted on the night
preceding the Closing Date.  Seller and Purchaser will prepare a settlement
statement, which will show the net amount due either to Seller or to Purchaser
as the result thereof, and such net amount will be added to, or subtracted from,
the payment of the Purchase Price to be paid to Seller pursuant to this
Agreement (the “Closing Statement”).

 

The matters and items set forth below shall be apportioned between Seller and
Purchaser or, where applicable, credited in total to a particular party, as
follows:

 

(b)                              Taxes.  All real and personal property taxes
and special assessments, if any, whether payable in installments or not, shall
be prorated as of the Cut-Off Time and Seller shall be responsible for all such
amounts attributable to the period prior to the Cut-Off Time, and Purchaser
shall be responsible for all such amounts attributable to the period after the
Cut-Off

 

32

 

Time.  If such taxes for the tax year in which the Closing occurs or any
previous tax year have not been finally determined on the Closing Date, then
such taxes shall be prorated on an estimated basis using the most current
information available.  When such taxes have been finally determined, the
parties shall recalculate such prorations and any amount payable by Seller or
Purchaser shall be paid to the other party within fifteen (15) days after such
taxes are finally determined.

 

(c)                               Revenues.  Revenues and expenses from room
rentals and from the Restaurant Tenant attributable to the period prior to the
Cut-Off Time shall be Seller’s and all revenues and expenses from room rentals
and from the Restaurant Tenant attributable to the period after the Cut-Off Time
shall be Purchaser’s; provided that, all such revenues and expenses from room
rentals on the date immediately preceding the Cut-Off Time, including any Sales
Taxes, room taxes and other taxes charged to guests in such rooms and all
parking charges allocable to such rooms with respect to the evening immediately
preceding the Cut-Off Time, shall be divided 50:50 between Seller and Purchaser
(where a complete meeting package (“CMP”) guest is staying on a CMP rate, the
food and beverage revenues shall be allocated based on whether the applicable
meal or service occurred before or after the Cut-Off Time); provided, however,
that to the extent that either Seller or Manager, as applicable, records in the
ordinary course the times at which food and beverage sales, telephone, facsimile
or data communication, in-room movie, laundry, and other services are ordered by
guests, then the same shall be prorated when orders for the same were received.

 

(d)                             Bookings.  Prepaid and unearned reservation
deposits and other such third party prepaid items for Bookings relating to
periods after the Cut-Off Time shall be transferred to Purchaser, or the amounts
thereof credited to Purchaser, at the Closing.  All commissions to
third-parties, including travel agencies and booking agencies, already paid by
Seller on account thereof shall prorated based on the remaining term of such
agreement and Seller shall be credited for such pre-paid amounts, if any.

 

(e)                               Utility Charges.  Utility charges for
telephone, gas, electricity, sewer, water and other services shall not be
prorated to the extent that Seller can make arrangements for the rendering of
final bills based on meter readings as of the Cut-Off Time.  Seller shall be
responsible for the payment at the Closing of all bills for utility charges up
to and including the Cut-Off Time.  To the extent that utility bills cannot be
rendered as of the Closing Date, such charges for the period through the Cut-Off
Time shall be prorated as of the Cut-Off Time based upon the most recent
available bills and readjusted on the basis of the actual bills as and when
received.  Any utility deposits which are required to be transferred to
Purchaser or which Purchaser elects to assume (in Purchaser’s sole and absolute
discretion) shall be transferred to Purchaser and credited to Seller at the
Closing.

 

(f)                                Operating Expenses and Trade Accounts.  At
Closing, Seller shall receive a credit for all unconsumed portions of prepaid
expenses; provided, Seller shall, concurrently with the delivery of the
Preliminary Closing Statement, deliver to Purchaser a certified list of all
prepaid expenses which, subject to Sections 5.4 and 5.5, Seller shall represent
and warrant to be a materially true, correct and complete list thereof.  Seller
shall be responsible for all operating expenses and trade accounts of the Hotel
(including, without limitation, charges and fees payable under the Hotel
Contracts and all hotel/motel sales and occupancy taxes, but excluding Sales

 

33

 

Taxes) up to and including the Cut-Off Time; provided, however, that Purchaser
shall be responsible for all purchase orders (“Purchase Orders”) made by Seller
in the Ordinary Course of Business for Expendables and/or Consumables not
delivered to the Hotel as of the Closing Date and Seller shall be responsible
for all Purchaser Orders for Expendables and/or Consumables which are delivered
to the Hotel prior to the Closing Date; provided, further, Seller shall,
concurrently with the delivery of the Preliminary Closing Statement, deliver to
Purchaser a certified list of all Purchase Orders with liabilities in excess of
Ten Thousand and No/100 Dollars ($10,000.00) which Seller shall, subject to
Sections 5.4 and 5.5, represent and warrant to be a materially true, correct and
complete list thereof.  All operating expenses and trade accounts accruing after
the Cut-Off Time (“Post-Closing Expenses”) shall be the responsibility of
Purchaser and Purchaser agrees to indemnify, defend and hold Seller harmless
from and against any Claims or other matters relating to (i) the Purchase
Orders, and (ii) the Post-Closing Expenses.

 

(g)                              Employees.  Seller shall, or shall cause
Manager to, pay to Hotel Employees, as required under Section 8.7, provided,
that with regard to any Hotel Employees retained by Purchaser or its manager,
Seller shall have the right, but not the obligation, to provide a credit to
Purchaser equal to any amounts to be paid to any retained Hotel Employees (or
any portion thereof) pursuant to Section 8.7 (but excluding any delinquent
amounts owed by Seller to any Hotel Employees) in which case, Purchaser shall be
solely responsible to pay such amounts to such Hotel Employees after the Closing
Date.

 

(h)                              Cash.  All cash on hand in house banks
(including any petty cash fund, if any) on the morning of the Closing Date shall
become the property of Purchaser and the amount thereof shall be credited to
Seller at the Closing.  All other funds of Seller and Operating Tenant shall
remain their property and shall be withdrawn by or transferred or credited to
Seller or Operating Tenant at Closing.

 

(i)                                  Ledger and Other Receivables.  All accounts
receivable of any kind attributable to guests in the Hotel with respect to the
evening immediately preceding the Cut-Off Time, shall be divided 50:50 between
Seller and Purchaser, and Seller’s share shall be credited to Seller at
Closing.  All other accounts receivable of Seller for the period prior to
Closing shall remain the property of Seller (“Retained Accounts”), and within
three (3) Business Days after Closing, Seller shall provide Purchaser a list of
the Retained Accounts as of Closing.  If any receivables specifically identified
for Retained Accounts shall be collected by Purchaser, Purchaser shall remit the
same to Seller within fifteen (15) days after receipt.  Any monies collected by
Purchaser from any customer after the Closing Date who then owes amounts both on
a Retained Account and on an account with the Hotel accruing after Closing (a
“Current Account”), shall be applied to the invoices specified by the payor or
to which such payment (by the amount thereof or other indicia) plainly applies,
and, if the payor makes such payment without reference to a specific invoice and
the applicable invoice is not otherwise obvious, then such payment shall be
allocated to the Current Accounts first until paid in full and thereafter to the
Retained Accounts, on a pro-rata basis based on the amounts then currently owed
to each.  Notwithstanding the foregoing, the Parties acknowledge and agree that
Seller shall have the right to collect any and all Retained Accounts at no cost
to Purchaser and/or the Hotel.

 

34

 

(j)                                  Existing Consumables Inventory.  There
shall be no adjustment or credit at Closing for the value of the Hotel’s
existing inventory of unopened containers of Consumables.

 

(k)                              Further Assurance.  Such other items which have
not been addressed above and which are customarily prorated and adjusted in the
sale of a hotel in New York City shall be prorated on the Cutoff Date in
accordance with standard industry practices in New York City.

 

To the extent that any of the items described above cannot be finally determined
on the Closing Date, then such items shall be prorated on an estimated basis
using the most current information.  Within ninety (90) days after the Closing
Date, Seller and Purchaser shall recalculate such prorations and any amount
payable by Seller or Purchaser shall be paid to the other party within fifteen
(15) days after such recalculation.  This Section 8.2 shall survive the Closing
for one (1) year.

 

8.3                            Guest Property in Seller’s Possession on Closing
Date.

 

Property of guests of the Hotel in Seller’s care, possession or control
(excluding that in guest rooms) on the Closing Date shall be handled in the
following manner:

 

(a)                               Safe Deposit Boxes.  On the day prior to the
Closing Date, Seller shall notify all guests of the Hotel who have safe deposit
boxes advising them of the pending sale of the Hotel and requesting the removal
and verification of the contents of such safe deposit boxes within three days
thereafter.  Seller may have a representative present at the Hotel during such
period for the purpose of viewing such removal and verification.  Boxes of
guests not responding to the written notice shall be listed at the end of such
three day period.  Such boxes shall be opened on the following day in the
presence of representatives of Seller and Purchaser to be agreed upon between
Seller and Purchaser and the contents thereof shall be recorded.  Any property
contained in the safe deposit boxes and so recorded and thereafter remaining in
the hands of Purchaser shall be the responsibility of Purchaser; and Purchaser
hereby agrees to indemnify, defend and save and hold Seller harmless from and
against any Claim or obligation arising out of or with respect to such recorded
property.  Seller shall be responsible for, and shall indemnify, defend and hold
Purchaser harmless from and against, any Claim arising with respect to property
placed in the safe deposit boxes before the Closing that is not listed in said
inventory.  Subject to Sections 5.4 and 5.5, the indemnities set forth in this
Section 8.3(a) shall survive the Closing.

 

(b)                              Baggage Inventory.  All guest baggage and other
guest property checked and left in the possession, care and control of Seller
shall be listed in an inventory to be prepared in duplicate and signed by
Seller’s and Purchaser’s representatives on the day prior to the Closing Date
(the “Baggage Inventory List”).  Purchaser shall be responsible from and after
the Closing Date for all baggage (and the contents thereof) and other guest
property listed on the Baggage Inventory List.  Purchaser agrees to indemnify,
defend and save and hold Seller harmless from and against any Claim arising out
of or with respect to the baggage listed on the Baggage Inventory List, and
Seller agrees to indemnify, defend and save and hold Purchaser harmless from and
against any Claim arising prior to the Closing Date, out of or with respect to
any guest baggage or other guest property not listed on the Baggage Inventory
List.  Subject to Sections 5.4 and 5.5, the indemnities set forth in this
Section 8.3(b) shall survive the Closing.

 

35

 

8.4                            Closing Documents.

 

(a)                               Seller’s Closing Deliveries.  On or before the
Closing Date, Seller shall deliver or cause to be delivered to Escrow Agent or
to Purchaser, as appropriate, executed and, where applicable, notarized,
originals of the following, dated as of the Closing Date (as applicable):

 

(i)                                  a deed in the form of Exhibit “O” hereto
(the “Deed”);

 

(ii)                              two (2) counterparts of a Bill of Sale and
Assignment and Assumption Agreement (the “Bill of Sale and Assignment”), in the
form attached hereto as Exhibit “F”, together with original certificates of
title for all vehicles that are part of the Hotel, if any, endorsed to transfer
same to Purchaser (and any necessary governmental forms to effect the transfer);

 

(iii)                          a certificate executed by Seller (the “Seller’s
Certificate”), in the form attached hereto as Exhibit “G”;

 

(iv)                          evidence of termination of the Operating Lease and
the Management Agreement signed by all parties to both with no liability or
expense to Purchaser;

 

(v)                              possession of the Hotel and any and all keys,
access codes and plans and specifications for the Hotel Improvements in Seller’s
possession;

 

(vi)                          a certified copy of such authorizations and
approvals of Seller as the Title Company shall reasonably require;

 

(vii)                      a FIRPTA Affidavit executed by Seller in form
required by the Internal Revenue Service in the form attached hereto as
Exhibit “P”;

 

(viii)                  the Closing Statement, the form and substance of which
has been mutually approved by Purchaser and Seller;

 

(ix)                          if applicable, the Tax Certificates required by
Section 8.5(c) of the Agreement;

 

(x)                              to the extent not previously delivered to
Purchaser, copies (or originals if available) of the Hotel Contracts and
assignable Permits, and all Books and Records, which shall be deemed to be
delivered to Purchaser upon delivery of possession of the Hotel if located at
the Hotel on the Closing Date, in each case, other than any Excluded Assets;

 

(xi)                          the Post-Closing Escrow Agreement;

 

(xii)                      a title affidavit (the “Required Title Affidavit”) of
Seller in favor of the Title Company in the form attached hereto as Exhibit “Q”;
and

 

36

 

(xiii)                  any other agreements, documents and/or instruments as
may be reasonably required or requested by the Title Company to consummate the
transaction contemplated hereunder.

 

(b)                              Purchaser’s Closing Deliveries.  On or before
the Closing Date, Purchaser shall deliver or cause to be delivered to Escrow
Agent or to Seller, as appropriate, executed and where applicable, notarized
originals of the following, dated as of the Closing Date (as applicable):

 

(i)                                  immediately available federal funds
evidencing the Purchase Price (as adjusted by the application of the Earnest
Money), plus or minus costs and adjustments and prorations as set forth herein
and any other funds needed to satisfy Purchaser’s obligations hereunder;

 

(ii)                              two (2) counterparts of the Bill of Sale and
Assignment;

 

(iii)                          such authorizations, approvals and incumbency as
Seller or the Title Company shall reasonably require;

 

(iv)                          a certificate executed by Purchaser (the
“Purchaser’s Certificate”), in the form attached hereto as Exhibit “H”;

 

(v)                              if applicable, the Tax Certificates required by
Section 8.5(c) of the Agreement;

 

(vi)                          subject to the proviso in Section 6.3(c), the
Voluntary Notice of Franchise Termination;

 

(vii)                      the Post-Closing Escrow Agreement;

 

(viii)                  the Closing Statement, the form and substance of which
has been mutually approved by Purchaser and Seller; and

 

(ix)                          any other agreements, documents and/or instruments
as may be reasonably required or requested by the Title Company or Seller to
consummate the transaction contemplated hereunder.

 

8.5                            Closing Costs.

 

(a)                               Seller’s Closing Costs.  In addition to the
other costs and expenses to be paid by Seller set forth elsewhere in this
Agreement, Seller shall pay for the following costs in connection with the
transaction contemplated hereunder:  (i) the fees and expenses of its own
accountants and attorneys; (ii) one hundred percent (100%) of all state and
local transfer taxes payable in connection with the conveyance of the Real
Property pursuant to this Agreement (“Transfer Taxes”); and (iii) one-half of
any escrow fees.

 

(b)                              Purchaser’s Closing Costs.  In addition to the
other costs and expenses to be paid by Purchaser set forth elsewhere in this
Agreement, Purchaser shall pay for the following costs in connection with the
transaction contemplated hereunder:  (i) the fees and expenses of its own

 

37

 

accountants and attorneys; (ii) the cost of the premium for the Title Policy,
the cost of any endorsements or modifications to the Title Policy and the cost
of any mortgagee policy; (iii) the fees, costs and expenses incurred by
Purchaser in connection with its due diligence activities, including the
Inspections and Studies, the Commitment and Survey; (iii) one hundred percent
(100%) of all Sales Taxes relating to the Purchase Price allocated to the
Personal Property and any intangible property, if any pursuant to Section 2.3
and the Allocation Amendment; provided, however, solely in the event that
Seller’s mortgage lender fails to agree to assign Seller’s existing mortgage to
Purchaser’s mortgage lender, Seller (and not Purchaser) shall then pay any and
all Sales Taxes  relating to the Purchase Price allocated to the Personal
Property and any intangible property, if any; (v) all costs and expenses
incurred by Purchaser in connection with any financing incurred by Purchaser,
and (vi) one-half of any escrow fees and costs.

 

(c)                               Tax Certificates.  Seller and Purchaser shall
execute and deliver such Transfer Tax and Sales Tax returns, and similar
documents required to be filed with respect to the transfer of the Hotel
(collectively, the “Tax Certificates”) as may be required by law or deemed
reasonably necessary by either party.

 

(d)                             Any closing costs not specifically allocated in
this Agreement between Purchaser and Seller shall be borne and paid in
accordance with local custom in New York City.

 

(e)                               Survival.  The provisions of this Section 8.5
shall survive the Closing.

 

8.6                            Real Estate Commissions.

 

Seller will pay any brokerage commissions and finder’s fees to any company
and/or Person in connection with the negotiation of the transaction contemplated
hereunder that Seller has agreed to pay.  Purchaser represents to Seller that it
has not dealt with, engaged or has been involved with any Person or entity in
connection with or relating to the transactions contemplated hereunder, the
introduction of the Purchaser to the Hotel or to Seller.  Seller and Purchaser
shall indemnify, protect, save and hold forever harmless each other, the
trustees and beneficiaries thereof, the agents, employees and representatives
thereof from and against any and all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses, including without limitation,
court costs and attorney’s fees and expenses, that each may incur, suffer or
sustain, or for which each may become obligated or liable in connection with a
breach of the representations set forth in this Section 8.6.  This Section 8.6
shall survive the Closing or earlier termination of this Agreement.

 

8.7                            Hotel Employees.

 

(a)                               Existing Employees.  Seller shall, or shall
cause Manager to, terminate or arrange for the termination of all Hotel
Employees to be effective as of the Closing and, subject to the provision in
Section 8.2(g), shall, or shall cause Manager to, pay (i) to Hotel Employees all
wages, severance pay, bonuses, benefits and other compensation (including earned
and accrued but not taken vacation and sick time of any Hotel Employee (the
“Accrued Vacation and Sick Time”) and (ii) all payroll taxes and other
employment taxes that any Hotel Employee is owed through termination, pursuant
to statute or contract.  Purchaser covenants to Seller that Purchaser or its
management company shall, before the Closing, offer employment (to be effective
as of the

 

38

 

Closing) to a sufficient number of Hotel Employees on substantially the same
terms and conditions as their employment prior to the Closing Date and for a
sufficient period of time so that the actions of the parties pursuant to this
Agreement shall not trigger the application of the federal Worker Adjustment and
Retraining Notification Act or applicable state laws with respect to employees
regarding transfers of businesses (collectively; the “WARN Act”).  Nothing in
this Section, however, shall require Purchaser or Purchaser’s management company
to retain for any period of time any Hotel Employee who accepts an offer of
employment, is hired by Purchaser or Purchaser’s management company but is
subsequently unable to establish identity and work authorization for employment
verification, who does not pass a criminal background check or who fails to pass
any drug test requirement of Purchaser or Purchaser’s management company.  It is
further agreed, that nothing within this Section shall prohibit the Purchaser or
Purchaser’s management company from subsequently terminating any rehired Hotel
Employee for cause in accordance with the WARN Act and its implementing
regulations.  In addition, no part of this provision is intended to alter, nor
does it alter, the at will status of the Hotel Employees.  Seller will use
commercially reasonable efforts to cause Manager to cooperate with Purchaser and
Purchaser’s management company to cause an orderly transfer of the Hotel
Employees who accept employment with Purchaser or Purchaser’s management
company, to the employ of Purchaser or its management company, as applicable. 
Seller and Purchaser acknowledge that Purchaser or Purchaser’s management
company may, but is not obligated to, offer employment to the General Manager
and other management level employees, so long as Purchaser or Purchaser’s
management company otherwise hires a sufficient number of employees so as not to
trigger the WARN Act.  Manager shall remain fully responsible for all liability
and obligations to the General Manager and other management level Hotel
Employees who are not rehired by Purchaser or Purchaser’s management company and
to Hotel Employees who do not accept Purchaser’s or its management company’s
offer of employment.  No Hotel Employee shall be obligated to accept Purchaser’s
or its management company’s offer for employment.  Nothing in this Agreement
shall require Purchaser or its management company to assume any obligations
under any employee benefit plans, programs or arrangements currently maintained
for Hotel Employees, and Seller shall, or shall cause Manager to, retain and be
solely responsible for all obligations under such plans, programs or
arrangements.

 

(b)                              WARN Act.  As long as Purchaser has received a
list of all Hotel Employees or Seller has otherwise identified the Hotel
Employees to Purchaser prior to the Closing, Purchaser will be responsible for
all obligations, if any, arising with respect to such terminated Hotel Employees
under, pursuant to, and in accordance with the provisions of the WARN Act and
applicable state laws with respect to employees regarding transfers of
businesses.  Purchaser agrees to indemnify Seller and Seller’s manager and hold
Seller and Seller’s manager harmless from and against any and all costs and
expenses (including, without limitation, reasonable attorneys’ fees) incurred by
Seller or Seller’s manager under the WARN Act arising or relating to the sale or
at any time after the Closing Date.

 

(c)                               Survival.  The provisions of this Section 8.7
shall survive the Closing.

 

39

 

8.8                            Disbursements and Other Actions by Escrow Agent.

 

At the Closing, Escrow Agent shall promptly undertake all of the following as
and to the extent reflected on the settlement statement executed by Seller at
Closing:

 

(a)                               Disbursements.  Disburse all funds deposited
with Escrow Agent by Purchaser as follows:

 

(i)                                  If, as a result of the prorations and
credits pursuant to Section 8.2 above, amounts are to be charged to the account
of Seller, deduct the total amount of such charges;

 

(ii)                              Deduct and pay to the appropriate third party
all items chargeable to the account of Seller pursuant to Section 8.5 above;

 

(iii)                          Pay to the appropriate third party from funds
deposited by Purchaser all items chargeable to the account of Purchaser pursuant
to Section 8.5 above;

 

(iv)                          Disburse the balance of the funds due to Seller to
or as directed by Seller; and

 

(v)                              Disburse any remaining funds to or as directed
by Purchaser.

 

All amounts and payees with respect to the items listed above shall be shown on
the Closing Statement.

 

(b)                              Recordation of Deed.  Cause the Deed to be
recorded in the applicable recording office in the county where the Hotel is
located (with instructions to return the Deed to Purchaser after recordation),
and obtain conformed copies thereof for distribution to Seller and Purchaser;

 

(c)                               Title Policy.  Issue to Purchaser the Title
Policy (including any endorsements issued in connection therewith);

 

(d)                             Closing Documents.  Deliver to Purchaser and
Seller the other applicable fully-executed documents; and

 

(e)                               Miscellaneous Actions.  Take such other
actions as Seller and Purchaser may deem reasonably necessary or convenient for
the consummation of the Closing, as set forth in closing instruction letters
provided by parties.

 

8.9                            Conditions Precedent to Purchaser’s Obligations.

 

Purchaser’s obligations under this Agreement are conditioned upon the
satisfaction or waiver by Purchaser of the following conditions:

 

(a)                               Accuracy of Representations and Warranties. 
Subject to Section 5.3, Seller’s representations and warranties set forth in
this Agreement shall continue to be true and accurate in all material respects.

 

40

 

 

(b)                              Performance of Obligations and Covenants. 
Seller shall have performed all of its obligations in all material respects
under this Agreement, including, without limitation, the covenants contained in
Section 6.1 and the delivery of the documents set forth in Section 8.4(b).

 

(c)                               Litigation.  There shall be no judicial,
quasi-judicial, administrative or other proceeding initiated by a Person or
entity that is not an affiliate of Purchaser pending that seeks to enjoin the
consummation of the sale and purchase hereunder as of the Closing Date;
provided, however, in the event that this condition is not satisfied as of
Closing Date, then, without limiting any other cure rights provided in this
Agreement, Seller shall have the right to adjourn the Closing in accordance with
Section 8.1(b).

 

(d)                             Title Policy.  Seller shall deliver title to the
Real Property as required by this Agreement subject only to Permitted
Exceptions; provided, however, in the event that this condition is not satisfied
as of the Closing Date, then, without limitation of any other cure rights
provided in this Agreement, Seller shall have the right to adjourn the Closing
in accordance with Sections 3, 4 and 8.1(b).

 

If any of the foregoing conditions have not been satisfied as of the Closing
Date for reasons other than a Purchaser default, then Purchaser, subject to any
applicable notice and cure periods as provided in other provisions of this
Agreement (including, without limitation, Sections 7.2 and 8.1(b)), shall be
entitled to terminate this Agreement pursuant to this Section 8.9 by giving
Seller written notice to such effect, whereupon (i) this Agreement shall
automatically terminate, (ii) the Escrow Agent shall immediately release and
return the Earnest Money (including any interest accrued thereon) to Purchaser,
(iii) each party shall pay one-half (1/2) of the expenses of escrow and
(iv) neither party shall have any further obligation to the other party
hereunder, except for the Surviving Obligations; provided, however, that
notwithstanding the foregoing, in the event that Purchaser terminates this
Agreement due to a Seller default (excluding any termination of this Agreement
by Purchaser pursuant to this Section 8.9), Section 7.2 shall control the
rights, remedies and obligations of the parties.  If Purchaser has knowledge
that a condition remains unsatisfied but nonetheless elects not to terminate
this Agreement or to pursue any remedies it may have under Article VII and
proceeds with Closing, then such unsatisfied condition shall be deemed waived by
Purchaser, and such waiver will be deemed to include any and all Claims
associated with the same, including any post-closing survivability or
post-closing indemnity, and Seller shall have no liability with respect to the
specific unsatisfied condition so waived.

 

8.10                    Conditions Precedent to Seller’s Obligations.

 

Seller’s obligations under this Agreement are conditioned upon the satisfaction
or waiver by Seller of the following conditions:

 

(a)                               Accuracy of Representation and Warranties. 
Purchaser’s representations and warranties set forth in this Agreement shall
continue to be true and accurate in all material respects.

 

(b)                              Performance of Obligations.  Purchaser shall
have performed all of its obligations in all material respects under this
Agreement, including, without limitation, the delivery of the documents set
forth in Section 8.4(a).

 

41

 

(c)                               Franchise Termination and Release.  Seller
shall have received a Voluntary Notice of Termination as provided in Section
6.3(c).

 

(d)                             Litigation.  There shall be no judicial,
quasi-judicial, administrative or other proceeding initiated by a Person or
entity that is not an affiliate of Seller pending that seeks to enjoin the
consummation of the sale and purchase hereunder as of the Closing Date.

 

If any of the forgoing conditions have not been satisfied as of the Closing Date
as the result of Purchaser default, then Seller, subject to any applicable
notice and cure periods as provided in other provisions of this Agreement
(including without limitation, Section 7.1), shall be entitled to terminate this
Agreement and Section 7.1 shall control the rights, remedies and obligations of
the parties.  If Seller has knowledge that a condition remains unsatisfied but
nonetheless elects not to terminate this Agreement or to pursue any remedies it
may have under Article VII and proceeds with the Closing, then such unsatisfied
condition shall be deemed waived by Seller, and such waiver will be deemed to
include any and all Claims associated with the same, including any post-closing
survivability or post-closing indemnity, and Purchaser shall have no liability
with respect to the specific unsatisfied condition so waived.

 

IX. CONDEMNATION AND RISK OF LOSS

 

9.1                            Notice.

 

Seller shall promptly notify Purchaser in writing of any condemnation proceeding
filed or any casualty to the Real Property occurring prior to the Closing.

 

9.2                            Condemnation.

 

If any condemnation proceeding filed prior to the Closing may result in a loss
of all or more than fifteen percent (15%) of the Real Property or any portion of
the Real Property that would cause a loss of ingress or egress to the Real
Property or otherwise materially and adversely impair the operation of the Hotel
(any or all of the foregoing instances shall be referred to herein as the
“Condemnation Threshold”), then this Agreement shall, at Purchaser’s sole
election, either (i) continue in effect without modification of the terms
thereof, in which event, upon the Closing, Purchaser shall be entitled to any
compensation, awards, or other payments or relief resulting from such
condemnation proceeding, or (ii) terminate by Purchaser’s written notice to
Seller and Escrow Agent delivered within five (5) days after receipt by
Purchaser of notice of such condemnation, in which event (a) this Agreement
shall automatically terminate, (b) the Escrow Agent shall immediately release
and return the Earnest Money (including any interest accrued thereon) to
Purchaser, (c) each party shall pay one-half (1/2) of the expenses of escrow and
(d) neither party shall have any further obligation to the other party
hereunder, except for the Surviving Obligations.  If Purchaser does not elect to
terminate this Agreement within such time period, or if any such occurrence does
not meet the Condemnation Threshold, then this Agreement shall continue in
effect without modification of the terms thereof, in which event, upon the
Closing, Purchaser shall be entitled to any compensation, awards, or other
payments or relief resulting from such condemnation proceeding, except with
respect to such portion of the compensation, award or payment, if any, which
shall equal the costs of repairs or restoration performed by or on behalf of
Seller for repairs or restoration performed by Seller prior to the

 

42

 

Closing Date in connection with and in order to remediate the Hotel as a result
of such condemnation, which portion shall be retained by Seller.

 

9.3                            Casualty.

 

In the event of fire, casualty or any other damage of any kind whatsoever
(insured or uninsured) to the Hotel occurring after the Effective Date which is
reasonably estimated to cost in excess of fifteen percent (15%) of the Purchase
Price to repair, replace or remediate (the “Casualty Threshold”), Purchaser may,
at its option, terminate this Agreement by written notice to Seller within
thirty (30) days after Purchaser’s receipt of the notice of casualty referred to
above or at Closing, whichever is earlier, whereupon (i) this Agreement shall
automatically terminate, (ii) the Escrow Agent shall immediately release and
return the Earnest Money (including any interest accrued thereon) to Purchaser,
(iii) each party shall pay one-half (1/2) of the expenses of escrow and
(iv) neither party shall have any further obligation to the other party
hereunder, except for the Surviving Obligations.  If Purchaser does not elect to
terminate this Agreement within such time period, or if any such occurrence
costs less than the Casualty Threshold to repair, replace or remediate, then:

 

(a)                               the parties shall proceed to the Closing
pursuant to the terms and conditions hereof, without modification of the terms
of this Agreement and without any reduction in the Purchase Price except as set
forth in Section 9.3(b); and

 

(b)                              Seller shall assign to Purchaser at Closing all
of Seller’s interest in any insurance proceeds (except only, rent loss and
business interruption insurance, and any similar insurance attributable to the
period preceding the interruption insurance, and any similar insurance
attributable to the period preceding the Closing Date) that may be payable to
Seller on account of any such fire, casualty or other damage (provided that the
amount of such insurance proceeds credited to Purchaser plus any other credits
to Purchaser set forth below will never exceed the Purchase Price), and
Purchaser will receive a credit against the Purchase Price for any such proceeds
that are received and retained by any creditor of Seller and for the amount of
any deductibles under any policies related to such proceeds, to the extent such
deductibles or insurance proceeds have not been previously expended or are
otherwise required to reimburse Seller for actual expenditures of restoration or
the reasonable cost of securing the insurance proceeds.

 

X. DISCLAIMERS AND RELEASE

 

10.1                    Independent Investigations.

 

In entering into this Agreement, Purchaser is relying solely upon (i) its own
inspections, investigations, research and analyses of the matters set forth in
Section 6.2, and (ii) the express representations and warranties of Seller set
forth in Section 5.1 above and elsewhere in this Agreement and in the Seller’s
Certificate, and Purchaser is not relying in any way upon any other
representations, warranties, statements, plans, specifications, cost estimates,
studies, reports, descriptions, guidelines or other information or material
furnished by Seller or its representatives to Purchaser or its representatives,
whether oral or written (all such matters herein referred to as the “Delivered
Information”), express or implied, of any nature whatsoever regarding any such

 

43

 

matters.  Except as otherwise provided in an express representation or warranty
contained in Section 5.1, Seller shall have no liability with respect to the
accuracy or completeness of the Delivered Information.

 

10.2                    Disclaimer of Warranties.

 

PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
IN THIS AGREEMENT, NEITHER SELLER, OPERATING TENANT, MANAGER OR ANY OF THEIR
AFFILIATES, NOR ANY OF THEIR RESPECTIVE SHAREHOLDERS, DIRECT OR INDIRECT OWNERS,
MEMBERS, PARTNERS, TRUSTEES, BENEFICIARIES, DIRECTORS, OFFICERS, MANAGERS,
EMPLOYEES, ATTORNEYS, ACCOUNTANTS, CONTRACTORS, CONSULTANTS, AGENTS OR
REPRESENTATIVES, NOR ANY PERSON PURPORTING TO REPRESENT ANY OF THE FOREGOING,
HAVE MADE ANY REPRESENTATION, WARRANTY, GUARANTY, PROMISE, PROJECTION OR
PREDICTION WHATSOEVER WITH RESPECT TO THE HOTEL OR THE BUSINESS, WRITTEN OR
ORAL, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR ANY REPRESENTATION OR WARRANTY AS TO (A) THE CONDITION, SAFETY,
QUANTITY, QUALITY, USE, OCCUPANCY OR OPERATION OF THE HOTEL, (B) THE PAST,
PRESENT OR FUTURE REVENUES OR EXPENSES WITH RESPECT TO THE HOTEL OR THE
BUSINESS, (C) THE COMPLIANCE OF THE HOTEL OR THE BUSINESS WITH ANY ZONING
REQUIREMENTS, BUILDING CODES OR OTHER APPLICABLE LAW, INCLUDING, WITHOUT
LIMITATION, THE AMERICANS WITH DISABILITIES ACT OF 1990, (D) THE ACCURACY OF ANY
ENVIRONMENTAL REPORTS OR OTHER DATA OR INFORMATION SET FORTH IN THE DELIVERED
INFORMATION PROVIDED TO PURCHASER WHICH WERE PREPARED FOR OR ON BEHALF OF
SELLER, OR (E) ANY OTHER MATTER RELATING TO SELLER, THE HOTEL OR THE BUSINESS.

 

10.3                    Condition of Hotel.

 

SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN
SECTION 5.1 AND ELSEWHERE IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE
DELIVERED BY SELLER OR OPERATING TENANT TO PURCHASER AT CLOSING, PURCHASER
AGREES THAT:  (i) PURCHASER SHALL ACCEPT THE HOTEL IN ITS PRESENT STATE AND
CONDITION AND “AS-IS WITH ALL FAULTS”; (ii) SELLER SHALL NOT BE OBLIGATED TO DO
ANY RESTORATION, REPAIRS OR OTHER WORK OF ANY KIND OR NATURE WHATSOEVER ON THE
HOTEL (OTHER THAN AS EXPRESSLY REQUIRED BY SECTION 6.1(E)) AND, SPECIFICALLY,
BUT WITHOUT DEROGATING FROM THE GENERALITY OF THE FOREGOING, SELLER SHALL NOT BE
RESPONSIBLE FOR ANY WORK ON OR IMPROVEMENT OF THE REAL PROPERTY NECESSARY (x) TO
CAUSE THE HOTEL TO MEET ANY APPLICABLE HAZARDOUS WASTE LAWS, OR (y) TO REPAIR,
RETROFIT OR SUPPORT ANY PORTION OF THE IMPROVEMENTS DUE TO THE SEISMIC OR
STRUCTURAL INTEGRITY (OR ANY DEFICIENCIES THEREIN) OF THE IMPROVEMENTS; AND
(iii) NO PATENT OR LATENT CONDITION

 

44

 

AFFECTING THE HOTEL IN ANY WAY, WHETHER OR NOT KNOWN OR DISCOVERABLE OR
DISCOVERED AFTER THE CLOSING DATE, SHALL AFFECT PURCHASER’S OBLIGATION TO
PURCHASE THE HOTEL OR TO PERFORM ANY OTHER ACT OTHERWISE TO BE PERFORMED BY
PURCHASER UNDER THIS AGREEMENT, NOR SHALL ANY SUCH CONDITION GIVE RISE TO ANY
ACTION, PROCEEDING, CLAIM OR RIGHT OF DAMAGE OR RESCISSION AGAINST SELLER.

 

10.4                    Release.

 

EXCEPT FOR THE EXPRESS OBLIGATIONS AND LIABILITIES OF SELLER SPECIFICALLY SET
FORTH HEREIN OR IN ANY CLOSING DOCUMENTS DELIVERED BY SELLER IN CONNECTION WITH
CLOSING (THE “SELLER PARTY OBLIGATIONS”), PURCHASER AND ANYONE CLAIMING BY,
THROUGH OR UNDER PURCHASER HEREBY WAIVES ITS RIGHT TO RECOVER FROM AND FULLY AND
IRREVOCABLY RELEASES SELLER, MANAGER AND THEIR RESPECTIVE EMPLOYEES, OFFICERS,
DIRECTORS, REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT,
SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS, FIRMS, CORPORATIONS AND
ORGANIZATIONS ACTING IN ITS OR THEIR BEHALF (“RELEASED PARTIES”) FROM ANY AND
ALL CLAIMS THAT IT HAS OR MAY HAVE AGAINST ANY OF THE RELEASED PARTIES FOR ANY
COSTS, LOSS, LIABILITY, DAMAGE, EXPENSES, DEMAND, ACTION OR CAUSE OF ACTION
ARISING FROM OR RELATED TO ANY MATTERS AFFECTING THE HOTEL, OR ANY PORTION
THEREOF, INCLUDING, WITHOUT LIMITATION, SIGNAGE RIGHTS, ENTITLEMENTS, ZONING,
PARKING, TITLE DOCUMENTS OR DEFECTS, CONSTRUCTION DEFECTS, ANY AND ALL
VIOLATIONS OF APPLICABLE LAW INCLUDING VIOLATIONS OF THE AMERICANS WITH
DISABILITIES ACT OF 1990 AND ALL ENVIRONMENTAL CLAIMS AND ENVIRONMENTAL
LIABILITIES, WHETHER NOW KNOWN OR UNKNOWN TO PURCHASER.  THIS RELEASE INCLUDES
CLAIMS OF WHICH PURCHASER IS PRESENTLY UNAWARE OR WHICH PURCHASER DOES NOT
PRESENTLY SUSPECT TO EXIST WHICH, IF KNOWN BY PURCHASER, WOULD SIGNIFICANTLY
AFFECT PURCHASER’S RELEASE TO SELLER.  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, PURCHASER EXPRESSLY WAIVES ANY AND ALL RIGHTS CONFERRED UPON IT BY
ANY STATUTE OR RULE OF LAW WHICH PROVIDES THAT A RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CLAIMANT DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE SIGNIFICANTLY
AFFECTED FITS SETTLEMENT WITH THE RELEASED PARTY, INCLUDING, WITHOUT LIMITATION,
ANY PROVISIONS SIMILAR TO THE FOLLOWING:  “A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE SIGNIFICANTLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

IN THIS CONNECTION AND TO THE EXTENT PERMITTED BY LAW, AND EXCEPT FOR THE SELLER
PARTY OBLIGATIONS, PURCHASER HEREBY AGREES, REPRESENTS AND WARRANTS, WHICH
REPRESENTATION AND WARRANTY SHALL SURVIVE THE CLOSING AND NOT BE MERGED WITH THE

 

45

 

CLOSING, THAT PURCHASER REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW
UNKNOWN TO IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CLAIMS WHICH ARE
PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND PURCHASER FURTHER AGREES,
REPRESENTS AND WARRANTS, WHICH REPRESENTATION AND WARRANTY SHALL SURVIVE THE
CLOSING AND NOT BE MERGED WITH THE CLOSING, THAT THE WAIVERS AND RELEASES HEREIN
HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION AND THAT
PURCHASER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT SELLER,
EXCEPT WITH RESPECT TO THE SELLER PARTY OBLIGATIONS, FROM ANY SUCH UNKNOWN
CLAIMS WHICH MIGHT IN ANY WAY BE INCLUDED AS A PORTION OF THE CONSIDERATION
GIVEN TO SELLER BY PURCHASER IN EXCHANGE FOR SELLER’S PERFORMANCE HEREUNDER.

 

The foregoing waivers and releases shall not apply to any of the
representations, warranties, covenants, indemnities or other matters expressly
contained in this Agreement, or in any of the closing documents delivered by
Seller, to the extent same expressly survive the Closing.

 

Seller and Purchaser have each initialed this Article X, to further indicate
their awareness and acceptance of each and every provision hereof,

 

 

 

 

 

 

 

SELLER’S INITIALS

 

PURCHASER’S INITIALS

 

 

XI. MISCELLANEOUS

 

11.1                    Entire Agreement

 

This Agreement (including the Exhibits and Schedules attached hereto)
constitutes the complete and final expression of the agreement of the parties
relating to the Hotel and supersedes all previous contracts, agreements, and
understandings of the parties, either oral or written, relating to the Hotel. 
Except as expressly set forth herein, this Agreement cannot be modified, or any
of the terms hereof waived, except by an instrument in writing (referring
specifically to this Agreement) executed by the party against whom enforcement
of the modification or waiver is sought.

 

11.2                    Binding Effect.

 

This Agreement shall inure to the benefit of and be binding upon the heirs,
personal representatives, successors and permitted assigns of each of the
parties to this Agreement provided, however, the same is not intended nor shall
it be construed as creating any rights in or for the benefit of any Person or
entity other than the parties to this Agreement and their respective personal
representatives, successors and permitted assigns.

 

46

 

11.3                    Notices.

 

Any notice, communication, request, reply or advice (collectively, “Notice”)
provided for or permitted by this Agreement to be made or accepted by either
party must be in writing.  Notice shall, unless otherwise provided herein, be
given or served (a) by depositing the same in the United States mail, postage
paid, registered or certified, and addressed to the party to be notified, with
return receipt requested; or (b) by delivery by hand or overnight courier; or
(c) by facsimile transmission evidenced by confirmed receipt by the transmitting
machine; or (d) by e-mail with proof of delivery.  Notice deposited in the mail
in the manner herein above described shall be effective two (2) Business Days
after such deposit.  Notice by overnight courier shall be effective one
(1) Business Day after deposit with the courier service.  Notice given by
facsimile transmission or email shall be effective on the Business Day delivered
as evidenced by the printed delivery confirmation receipt retained by the
sender, provided that such notice is also sent concurrently by registered or
certified mail or overnight courier.  Notwithstanding the foregoing, any Notice
received after 5:00 p.m. (Eastern Time) shall be deemed to have been delivered
the following Business Day.  For the purpose of Notice, the addresses of the
parties shall be:

 

Seller:

MMG-26 LLC

 

c/o Greenfield Partners, LLC

 

50 North Water Street

 

South Norwalk, CT 06854

 

Attention: Mr. Barry P. Marcus

 

 

 

Phone No.: (203) 354-5000

 

Email: Barry.marcus@greenfieldpartners.com

 

 

With a copy to:

Magna Hospitality Group, LC

 

300 Centerville Road, Suite 300 East

 

Warwick, RI 02886

 

Attention: Mr. Robert A. Indeglia, Jr.

 

 

 

Phone No.: (401) 562-2200

 

Email: Bob.indeglia@magnahospitality.com

 

 

With a copy to:

Kaye Scholer, LLP

 

425 Park Avenue

 

New York, NY 10022

 

Attention: Jeffrey H. Kapner, Esq.

 

 

 

Phone No.: (212) 836-8397

 

Email: jkapner@kayescholer.com

 

 

Purchaser:

CWI Chelsea Hotel, LLC

 

c/o Watermark Capital Partners, LLC

 

272 E. Deerpath Road, Suite 320

 

Lake Forest, IL 60045

 

47

 

 

Attention: Michael G. Medzigian

 

 

 

Phone No.: (847) 482-8600

 

Email: medzigian@watermarkcap.com

 

 

With a copy to:

Paul Hastings LLP

 

515 S. Flower Street, 25th FL

 

Los Angeles, CA 90071

 

Attention: Rick S. Kirkbride, Esq.

 

 

 

Phone No.: (213) 683-6261

 

Email: RickKirkbride@paulhastings.com

 

The parties shall have the right from time to time to change their respective
addresses for notice by at least five (5) Business Days’ written notice to the
other party.

 

11.4                    Governing Law.

 

This Agreement, and all questions of interpretation hereof and all controversies
hereunder, shall be construed in accordance with and governed by the laws of the
State of New York (without reference to principles of conflict of laws).

 

11.5                    Interpretation.

 

The section headings contained in this Agreement are for convenience only and
shall in no way enlarge or limit the scope or meaning of the various and several
sections of this Agreement.  This Agreement shall not be construed more strongly
against either party regardless of who was more responsible for its preparation.

 

11.6                    Discharge of Obligations.

 

THE ACCEPTANCE OF THE DEED BY PURCHASER SHALL BE DEEMED TO BE A FULL PERFORMANCE
AND DISCHARGE OF EVERY REPRESENTATION AND WARRANTY MADE BY SELLER HEREIN AND
EVERY AGREEMENT AND OBLIGATION ON THE PART OF SELLER TO BE PERFORMED PURSUANT TO
THE PROVISIONS OF THIS AGREEMENT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN AND EXCEPT THOSE WHICH ARE HEREIN SPECIFICALLY STATED TO SURVIVE OR BE
PERFORMED AFTER CLOSING.

 

11.7                    Execution in Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.  For purposes of negotiating and finalizing this Agreement, any
signed document transmitted by fax machine with automatic telephonic
confirmation of receipt or by e-mail with confirmation of receipt shall be
treated in all manners and respects as an original document.  The signature of
any party transmitted as aforesaid shall be considered for all purposes as an
original signature and any such document shall be considered to have the same
binding legal effect as an original

 

48

 

document executed, delivered and exchanged between the parties.  At the request
of either party, any fax or email document shall be re-executed by both parties
in original form.  Seller and Purchaser hereby agree that neither shall raise
the use of a fax or email transmission of signatures as a defense to this
Agreement and each hereby waives such a defense.  This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which
shall be deemed to be one and the same instrument.

 

11.8                    Intentionally Omitted.

 

11.9                    Time of the Essence.

 

SUBJECT TO ANY CURE OR ADJOURNMENT RIGHTS EXPRESSLY SET FORTH HEREIN, TIME IS OF
THE ESSENCE OF THIS AGREEMENT AND OF THE OBLIGATIONS OF THE PARTIES TO PURCHASE
AND SELL THE PROPERTY, IT BEING ACKNOWLEDGED AND AGREED BY AND BETWEEN THE
PARTIES THAT ANY DELAY IN EFFECTING A CLOSING PURSUANT TO THIS AGREEMENT
MAY RESULT IN LOSS OR DAMAGE TO THE PARTY IN FULL COMPLIANCE WITH ITS
OBLIGATIONS HEREUNDER.

 

11.10            Invalid Provisions.

 

If any one or more of the provisions of this Agreement, or the applicability of
any such provision to a specific situation, shall be held invalid or
unenforceable, such provision shall be modified to the minimum extent necessary
to make it or its application valid and enforceable, and the validity and
enforceability of all other provisions of this Agreement and all other
applications of any such provision shall not be affected thereby.

 

11.11            Computation of Time.

 

The time in which any act under this Agreement is to be done shall be computed
by excluding the first day and including the last day.  If the last day of any
time period stated herein shall fall on a Saturday, Sunday or legal holiday,
then the duration of such time period shall be extended so that it shall end on
the next succeeding day which is not a Saturday, Sunday or legal holiday. 
Unless preceded by the word “business,” the word “day” shall mean a calendar
day.  The phrase “Business Day” or “Business Days” means any day other than a
Saturday, Sunday or legal holiday in the State of New York.

 

11.12            Knowledge.

 

For the purposes of this Agreement and the documents to be delivered pursuant
hereto, references to “To Seller’s knowledge” or “Seller has no knowledge”,
“Seller obtain knowledge” or any similar phrase implying a limitation on the
basis of knowledge, such knowledge shall mean the actual, present, conscious
knowledge of Robert A. Indeglia, Jr. or Chris Morosetti after inquiry to the
General Manager of the Hotel (collectively, the “Seller Knowledge Individuals”)
on the Effective Date but without any additional further investigation or
inquiry (provided that Seller hereby confirms that the Sellers Knowledge
Individuals and the General Manager of the Hotel have read the representations
and warranties of Seller set forth in Section 5.1 and elsewhere in this
Agreement) but such individuals shall not have any individual liability in

 

49

 

connection herewith.  Without limiting the foregoing, Purchaser acknowledges
that the Seller Knowledge Individuals have not performed and are not obligated
to perform any investigation or review of any files or other information in the
possession of Seller, or to make any inquiry of any persons other than the
General Manager, or to take any other actions in connection with the
representations and warranties of Seller set forth in this Agreement.  Neither
the actual, present, conscious knowledge of any other individual or entity, nor
the constructive knowledge of the Seller Knowledge Individuals or of any other
individual or entity, shall be imputed to the Seller Knowledge Individuals.

 

For the purposes of this Agreement and the documents to be delivered pursuant
hereto, references to “To Purchaser’s knowledge” or “Purchaser has no
knowledge”, “Purchaser obtain knowledge” or any similar phrase implying a
limitation on the basis of knowledge shall mean the actual, present, conscious
knowledge of Michael C. Coolidge or Gil Murillo (collectively, the “Purchaser
Knowledge Individuals”), on the Effective Date but without any additional
further investigation or inquiry but such individuals shall not have any
individual liability in connection herewith.  Neither the actual, present,
conscious knowledge of any other individual or entity, nor the constructive
knowledge of the Purchaser Knowledge Individuals or of any other individual or
entity, shall be imputed to the Purchaser Knowledge Individuals.

 

11.13            Confidentiality.

 

(a)                               Disclosure of Confidential Information.  The
terms of the transfers contemplated in this Agreement, including the Purchase
Price and all other financial terms, as well as the non-public information
discovered by, provided to or otherwise obtained by Purchaser and Seller and
their respective agents either prior to or after the Effective Date in
connection with the Hotel or the Business (the “Confidential Information”) shall
remain confidential and shall not be disclosed by Purchaser or Seller without
the written consent of the other party except (i) to each party’s affiliates,
officers, directors, direct and individual owners, lenders, investors and
prospective investors, employees, agents and representatives (including legal
counsel, accountants and similar professionals to the extent the party deems it
reasonably necessary to inform such person(s), in which case they shall inform
each of the foregoing persons of such party’s obligations under this Section and
shall secure the agreement of such persons to be bound by the terms hereof);
(ii) as otherwise required by law, rule or regulation or as may be necessary to
obtain Permits from any governmental authority; or (iii) in connection with
Purchaser’s filings or other disclosures as required by the Securities and
Exchange Commission; provided, however, that Purchaser and Seller will advise
the other party immediately upon receiving any demand for disclosure of any
Confidential Information and the other party will have the right to attempt to
obtain a protective order or agree to an arrangement with the person or entity
demanding such Confidential Information to prevent or limit the extent of such
disclosure, prior to the applicable party’s disclosure of such Confidential
Information.

 

(b)                              Publicity.  Prior to or following Closing, any
press releases or public announcements with respect to the sale contemplated
herein or any matters set forth in this Agreement will be made only in the form
approved by both Purchaser and Seller, in such parties’ sole discretion;
provided, however, this Section 11.13(b) shall not restrict Seller or Purchaser
from public announcements or filings required or allowed per the terms of
Section 11.13(a).

 

50

 

 

(c)                               Indemnification.  Each party shall indemnify
and hold the other party harmless from and against any and all Claims suffered
or incurred by the other party and arising out or in connection with a breach by
the other party of the provisions of this Section 11.13.

 

(d)                             Survival.  The provisions of this Section 11.13
shall survive the Closing and termination of this Agreement.

 

11.14            No-Offer.

 

The delivery of this Agreement to Seller shall not be deemed an offer by
Purchaser to enter into any transaction or to enter into any other relationship
with Seller, whether on the terms contained in this Agreement or on any other
terms.  This Agreement shall not be binding upon Purchaser or Seller, nor shall
Purchaser or Seller have any obligations or liabilities or any rights with
respect hereto, unless and until both Purchaser and Seller have executed and
delivered this Agreement.

 

11.15            Privacy Laws.

 

To the extent Purchaser reviews, is given access to or otherwise obtains any
Hotel Guest Data or other customer or guest information as part of the purchase
of the Hotel, Purchaser shall at all times comply in all material respects with
all applicable Laws concerning (i) the privacy and use of such data and
information and the sharing of such information and data with third parties
(including, without limitation, any restrictions with respect to Purchaser’s or
any third party’s ability to use, transfer, store, sell, or share such
information and data), and (ii) the establishment of adequate security measures
to protect such data and information.  This Section 11.15 shall survive the
Closing or earlier termination of this Agreement.

 

11.16            Further Assurances.

 

Seller and Purchaser shall use commercially reasonable efforts (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) to effect the
transaction as contemplated in this Agreement.  This Section 11.16 shall survive
the Closing for one (1) year.

 

11.17            WAIVER OF TRIAL BY JURY; VENUE AND JURISDICTION.

 

(a)                               SELLER AND PURCHASER HEREBY EXPRESSLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY CLAIM, ACTION, PROCEEDING OR COUNTERCLAIM BY
SELLER OR PURCHASER AGAINST EACH OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(b)                              Each of Seller and Purchaser hereby irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of and agrees that venue shall be proper in any New York State or
Federal Court sitting in New York County, New York, in any action or proceeding
arising out of or relating to or connected with this Agreement, or for
recognition or enforcement of any judgment.  Each of Seller and Purchaser hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding shall be heard

 

51

 

and determined in such courts.  Each of Seller and Purchaser agrees that a final
judgment in any such action or proceeding will be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.  ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY PARTY ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN NEW YORK COUNTY, NEW YORK, AND EACH PARTY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO (1) THE JURISDICTION OF ANY SUCH
COURT IN ANY SUIT, ACTION OR PROCEEDING AND (2) THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING (INCLUDING ANY OBJECTION OF OR RELATING TO FORUM
NON-CONVENIENS).

 

(c)                               This Section 11.17 shall survive the Closing
or any earlier termination of this Agreement.

 

11.18            Intentionally Omitted.

 

11.19            Exhibits and Schedules.

 

Notwithstanding any specific reference to a section of part of this Agreement in
a disclosure set forth in any exhibit or schedule, such disclosures shall be
deemed to have been disclosed with respect to all other sections of this
Agreement to which such disclosure is reasonably apparent.  Terms used in the
schedules and exhibits and not otherwise defined therein shall have the meanings
as are ascribed to such terms in this Agreement.

 

11.20            Assignments.

 

Purchaser may not assign this Agreement without Seller’s prior written consent
which consent may be withheld in Seller’s sole discretion; provided, however,
Purchaser may assign its rights under this Agreement upon notice to but without
Seller’s consent to any affiliate of Purchaser, provided that the persons who
have control over Purchaser also have control over such affiliate of Purchaser. 
Any assignee of Purchaser shall assume in writing all obligations and
liabilities of Purchaser under this Agreement.  From and after any such
assignment, said assignee shall be substituted for Purchaser under this
Agreement, and Purchaser shall have no further obligation with respect thereto
(except, if such is the case, as a partner of the assignee).

 

11.21            Escrow Agent as Reporting Person.

 

In order to assure compliance with the requirements of Section 6045 of the Code,
and any related reporting requirements of the Code, the parties hereto agree as
follows:

 

(a)                               Reporting Person.  Escrow Agent agrees to
assume all responsibilities for information reporting required under Section
6045(e) of the Code, and Seller and Purchaser hereby designate Escrow Agent as
the person to be responsible for all information reporting under Section 6045(e)
of the Code (the “Reporting Person”).

 

(b)                              Obligations of Seller and Purchaser.  Seller
and Purchaser hereby agree (i) to provide to the Reporting Person all
information and certifications regarding such party, as reasonably requested by
the Reporting Person or otherwise required to be provided by a party to

 

52

 

the transaction contemplated hereunder under Section 6045 of the Code; (ii) to
provide to the Reporting Person such party’s taxpayer identification number and
a statement (on Internal Revenue Service Form W-9 or an acceptable substitute
form, or on any other form the applicable current or future Code sections and
regulations might require and/or any form requested by the Reporting Person),
signed under penalties of perjury, stating that the taxpayer identification
number supplied by such party to the Reporting Person is correct; and (iii) to
retain this Agreement for not less than four (4) years from the end of the
calendar year in which the Closing occurred, and to produce it to the Internal
Revenue Service upon a valid request therefore.

 

11.22            Exclusivity.

 

Following the mutual execution of this Agreement and continuing until the
termination of this Agreement pursuant to the terms and conditions hereof (and
not as the result of a termination in breach), neither Seller nor any Affiliate
of Seller nor any of their respective members, partners or agents shall (a)
offer the Hotel, (b) entertain or solicit offers for the Hotel, (c) negotiate
for its sale (either directly or indirectly), (d) enter into any letter of
intent, term sheet or purchase agreement for the sale (either directly or
indirectly) of the Hotel or any portion thereof, or (e) make information about
the Hotel available (for purpose of sale or refinance) to any Person other than
Purchaser, its Affiliates and/or their respective designees, agents.

 

11.23            No Third Party Beneficiary.

 

The provisions of this Agreement and of the documents to be executed and
delivered at the Closing are and will be for the benefit of Seller and Purchaser
only and are not for the benefit of any third party (including the Title
Company), 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
the Closing.

 

11.24            Exculpation.

 

Notwithstanding anything to the contrary contained in this Agreement, no
director, officer, employee, shareholder, member, manager, affiliate, partner or
agent of Seller nor any of the directors, officers, employees, shareholders,
members, managers, partners, joint venturers or agents of any of the directors,
officers, employees, shareholders, direct or indirect owners, members,
affiliates, managers, partners, joint venturers or agents of Seller nor any
other Person, partnership, limited liability company, corporation, joint venture
or trust, as principal of Seller, whether disclosed or undisclosed
(collectively, the “Seller Exculpated Parties”) shall have any personal
obligation or liability hereunder, and Purchaser shall not seek to assert any
claim or enforce any of Purchaser’s rights hereunder against any Seller
Exculpated Party.

 

11.25            No Recordation.

 

No party shall record this Agreement or any memorandum, notice or affidavit
hereof, or any other similar document.  Should Purchaser ever record or attempt
to record this Agreement or a memorandum, notice or affidavit hereof, or any
other similar document, then notwithstanding anything herein to the contrary,
the recordation or attempt at recordation shall constitute a default by
Purchaser and, in addition to the other remedies provided for in this Agreement
and under applicable law, Seller shall have the express right to terminate this

 

53

 

Agreement by filing a notice of termination in any office in which the
memorandum, notice, affidavit, or other document was recorded.  This Section
shall survive any early termination of this Agreement.

 

11.26            Waiver.

 

The failure to enforce any particular provision of this Agreement on any
particular occasion shall not be deemed a waiver by any party of any of its
rights hereunder, nor shall it be deemed to be a waiver of subsequent or
continuing breaches of that provision, unless such waiver be expressed in a
writing signed by the party to be bound.

 

11.27            Bulk Sales.

 

Seller and Purchaser hereby waive compliance with the bulk sales or similar laws
of the State of New York and any other relevant jurisdiction, including the Bulk
Sales notice requirements under the Sales Tax laws of each such jurisdiction.

 

11.28            Real Estate Tax Contests

 

(a)                               Pre-Closing Tax Year Contests.  Seller and/or
Operating Tenant may have filed or joined, and may hereafter file, applications
for the reduction of the assessed valuation of the Real Property for previous
tax years and may have caused or may hereafter cause certiorari proceedings to
be instituted to review such assessed valuations.  Each of Seller and/or
Operating Tenant shall have the sole right to prosecute, compromise and/or
settle such applicable proceedings with counsel of its own choosing prior to and
after the Closing Date, and Seller and/or Operating Tenant shall be entitled to
one hundred percent (100%) of any refunds, abatements or credits awarded in any
such proceedings or as a result of any compromise or settlement with respect
thereto; it being agreed that Purchaser shall have no interest in any such
refunds, abatements or credits.

 

(b)                              Closing Tax Year Contests.  Seller and/or
Operating Tenant may have filed, and may hereafter file, applications for the
reduction of the assessed valuation of the Hotel with respect to the tax year in
which the Closing occurs and may have caused or may hereafter cause certiorari
proceedings to be instituted to review such assessed valuations.  Each of Seller
and/or Operating Tenant shall have the sole right to prosecute, compromise
and/or settle such applicable proceedings with counsel of its own choosing prior
to and after the Closing Date; provided, however, after the expiration of the
Due Diligence Period, neither Seller nor Operating Tenant shall withdraw,
compromise or settle such proceedings without Purchaser’s consent, which consent
shall not be unreasonably withheld or delayed.  Any refunds, abatements or
credits awarded in such proceedings, or as a result of any compromise or
settlement with respect thereto, shall be first used to reimburse, on a pro-rata
basis, the Seller and/or Operating Tenant and Purchaser for their respective
out-of-pocket cost and expenses incurred in connection with such proceedings,
compromise and/or settlement, and the remainder of such refunds, abatements and
credits shall be prorated between Seller and Purchaser as of the Cutoff Time. 
Seller or Purchaser shall promptly pay to the other the amount necessary to
effect such proration.  If Purchaser receives an abatement or credit for the
current or any future tax year, Purchaser shall promptly pay to Seller the
amount necessary to effect such proration. Purchaser shall take such actions as

 

54

 

Seller may reasonably request to ensure that payment of any refunds or
abatements to which Seller and/or Operating Tenant is entitled to  pursuant to
this Section 11.28(b) are paid to Seller and/or Operating Tenant by the
applicable taxing authority.

 

(c)                               Cooperation.  Purchaser shall cooperate, at no
cost and expense to Purchaser, with Seller and/or Operating Tenant, and execute
and deliver any documents and instruments reasonably requested by Seller and/or
Operating Tenant in connection with any contest, audit or judicial or
administrative proceeding relating to any tax certiorari contest referred to in
Section 11.28(a) or (b).

 

(d)                             Survival.  This Section 11.28 shall survive the
Closing.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

55

 

SIGNATURE BY SELLER

 

IN WITNESS WHEREOF, this Agreement has been duty executed in multiple
counterparts by the parties hereto on the dates set forth below.

 

SELLER:

 

 

 

MMG-26 LLC,

 

a Delaware limited liability company

 

 

 

By:  /s/ Barry P. Marcus

 

Name: Barry P. Marcus

 

Title: SVP

 

 

 

SIGNATURE BY PURCHASER

 

IN WITNESS WHEREOF, this Agreement has been duly executed in multiple
counterparts by the parties hereto on the dates set forth below.

 

PURCHASER:

 

 

 

CWI CHELSEA HOTEL, LLC

 

a Delaware limited liability company

 

 

 

By:  /s/ Michael G. Medzigian

 

Name: Michael G. Medzigian

 

Title:   President and Chief Executive Officer

 

 

 

SIGNATURE BY OPERATING TENANT

 

The Operating Tenant is joining this Agreement solely for the purpose set forth
in Section 1.2(d).

 

OPERATING TENANT:

 

 

 

MMG-26 OPERATOR, LLC,

 

a Delaware limited liability company

 

 

 

 

 

 

 

 

By:

/s/ Barry P. Marcus

 

 

Name: Barry P. Marcus

 

 

Title: SVP

 

 

 

SIGNATURE BY ESCROW AGENT

 

The undersigned hereby acknowledges receipt of a fully-executed copy of this
Agreement and agrees to accept, hold, deliver and disburse the Earnest Money
strictly in accordance with the terms of the Agreement and to otherwise perform
the obligations of Escrow Agent and Reporting Person as set forth in the
Agreement.

 

 

Date:  April __, 2013

 

 

 

FIRST AMERICAN TITLE INSURANCE COMPANY

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

EXHIBIT “A”

 

(Definitions)

 

“Accrued Vacation and Sick Time” shall have the meaning set forth in
Section 8.7(a).

 

“Additional Deposit” shall have the meaning set forth in Section 8.1(c).

 

“Advance Deposits” shall have the meaning set forth in Section 1.2(b)(vii).

 

“Agreement” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Allocation Amendment” shall have the meaning set forth in Section 2.3.

 

“Allocation Outside Date” shall have the meaning set forth in Section 2.3.

 

“Baggage Inventory List” shall have the meaning set forth in Section 8.3(b).

 

“Bill of Sale and Assignment” shall have the meaning set forth in
Section 8.4(a)(ii).

 

“Bookings” shall have the meaning set forth in Section 1.2(b)(vii).

 

“Books and Records” shall have the meaning set forth in Section 1.2(b)(vi).

 

“Business” means the lodging business and all activities related thereto
conducted at the Hotel, including, without limitation, (i) the rental of any
guest rooms or other facilities at the Hotel, (ii) the maintenance and repair of
the Real Property and, to the extent applicable, the Personal Property,
(iii) the employment of the Hotel Employees, and (iv) the payment of taxes.

 

“Business Day” shall have the meaning set forth in Section 11.11.

 

“Casualty Threshold” shall have the meanings set forth in Section 9.3.

 

“Claims” shall mean any demands, claims, legal or administrative proceedings,
losses, liabilities, damages, penalties, fines, liens, judgments, costs or
expenses whatsoever (including, without limitation, reasonable attorneys’ fees
and expenses), whether direct or indirect, known or unknown, foreseen or
unforeseen.

 

“Closing” shall mean the consummation of the purchase and sale of the Hotel
pursuant to this Agreement.

 

“Closing Date” shall mean the date specified in Section 8.1(a).

 

“Closing Statement” shall have the meaning set forth in Section 8.2(a)(ii).

 

“CMP” shall have the meaning set forth in Section 8.2(c).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

A-1

 

“Commitment” shall have the meaning set forth in Section 4.1(a).

 

“Condemnation Threshold” shall have the meaning set forth in Section 9.2.

 

“Confidential Information” shall have the meaning set forth in Section 11.13(a).

 

“Consumables” shall have the meaning set forth in Section 1.2(b)(ii).

 

“Current Account” shall have the meaning set forth in Section 8.2(i).

 

“Cut-off Time” shall mean 11:59 p.m. on the date preceding the Closing Date.

 

“Deed” shall have the meaning set forth in Section 8.4(a)(i).

 

“Delivered Information” shall have the meaning set forth in Section 10.1.

 

“Due Diligence Period” shall mean a period of time commencing on the Effective
Date and ending at 5:00 PM, Eastern Time, on May 10, 2013.

 

“Earnest Money” shall have the meaning set forth in Section 2.2(b).

 

“Effective Date” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Employee Claims” shall mean any loss, damage, liability, claim, cost or expense
(including, without limitation, reasonable attorneys’ fees) relating to a past
or present Hotel Employee.

 

“Equipment Leases” shall have the meaning set forth in Section 1.2(b)(v).

 

“Escrow Agent” shall mean the Title Company specified in Section 4.1(a).

 

“Escrow Agent’s Wiring Instructions” shall have the meaning set forth in
Section 2.1.

 

“Escrow Instructions” shall have the meaning set forth in Section 2.2(c).

 

“Excluded Assets” shall have the meaning set forth in Section 1.2(c).

 

“Expendables” shall have the meaning set forth in Section 1.2(b)(iii).

 

“Extension Election Notice” shall have the meaning set forth in Section 8.1(c).

 

“Franchise Agreement” shall mean that certain License Agreement dated June 30,
2008 between Operating Tenant and Franchisor.

 

“Franchisor” shall mean Holiday Hospitality Franchising, Inc.

 

“Franchisor Approval” shall have the meaning set forth in Section 6.3(b).

 

“Franchisor Approval Period” shall have the meaning set forth in Section 6.3(b).

 

A-2

 

“Furnishings” shall have the meaning set forth in Section 1.2(b)(i).

 

“General Manager” shall mean the then current general manager of the Hotel.

 

“Good Faith Deposit” shall have the meaning set forth in Section 2.2(a).

 

“Good Faith Deposit Date” shall have the meaning set forth in Section 2.2(a).

 

“Governmental Authority” means shall mean any federal, state, county, municipal,
parish, provincial or other government, or any department, commission, board,
court, agency, committee, or quasi-governmental unit whether of the United
States of America or any instrumentality of any of them, or any other political
subdivision thereof having or asserting jurisdiction over the Hotel.

 

“Hazardous Substances” shall mean any substance or material which (i) has been
or is at any time determined by any state or federal court in a reported
decision to be a waste, pollutant, contaminant, hazardous waste or hazardous
substance, (ii) has been or is determined by any governmental authority to be a
waste, pollutant, contaminant, hazardous waste, hazardous substance or hazardous
material capable of posing a risk of injury to health, safety or property,
(iii) is described as, or has been or is determined to be a waste, pollutant,
contaminant, hazardous waste, hazardous substance, hazardous material, dangerous
or toxic chemical, material, waste or substance (“pollutant”) under any
Hazardous Waste Law; (iv) petroleum, crude oil or any fraction of petroleum or
crude oil, (v) any radioactive material, including any source, special nuclear
or by product material, as defined at 42 U.S.C. §2011 et seq., and amendments
thereto and reauthorizations thereof, (vi) asbestos containing materials in any
form or condition, (vii) polychlorinated biphenyls, (viii) methane gas or any
related substance in violation of any Hazardous Waste Laws, (ix) lead based
paint in any form or condition in violation of any Hazardous Waste Laws,
(x) bioaerosols in excess of the guidelines and recommendations established by
the United States Environmental Protection Agency (“USEPA”), and (xi) any
pathogen and airborne pathogen (naturally occurring or otherwise), toxin, or
other biological agent or condition, including without limitation any fungus
mold, mycotoxins and microbial matter (“Pathogens”), further including, without
limitation, those molds, mycotoxins, microbial matter, and airborne Pathogens
(naturally occurring or otherwise) in the USEPA guidelines on Mold Remediation
in Schools and Commercial Buildings, EPA 402-K-01-001, March 2001 and any
analogous Hazardous Waste Law.

 

“Hazardous Waste Law” shall mean any law, statute, ordinance, code, rule,
regulation, decree, resolution, requirement, standard, permit or license
(including consent decrees, judicial decisions and administrative orders),
together with all related amendments, implementing preservation, conservation or
regulation of the environment, regulations and reauthorizations, pertaining to
the protection, preservation, conservation or regulation of the environment or
public health or safety, including, without limitation, the following:  (i) the
Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq. (“RCRA”);
(ii) the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 et seq. (“CERCLA”); (iii) the Clean Water Act, 33 U.S.C.
Section 1251 et seq.; (iv) the Safe Drinking Water Act, 42 U.S.C. Section 300f
et seq.; (v) the Toxic

 

A-3

 

Substances Control Act, 15 U.S.C. Sections 2601-2629 (“TOSCA”); (vi) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.;
(vii) the Clean Air Act, 42 U.S.C. Section 7401 et seq.; (viii) the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq.; and
(ix) the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et
seq.

 

“Hotel” shall have the meaning set forth in Section 1.2(b).

 

“Hotel Contracts” shall have the meaning set forth in Section 1.2(b)(iv).

 

“Hotel Employee Schedule” shall mean such employment information for all Hotel
Employees as is provided to the Purchaser by the Manager, it being understood
and agreed that the Hotel Employee Schedule may consist only of a list of
employees (without names or Social Security numbers), with an identification of
each such employee’s department, position, pay rate (hourly or annually), tenure
(start date) and status (whether full-time or part-time).

 

“Hotel Employees” shall mean the persons employed by Manager to operate the
Hotel.

 

“Hotel Guest Data” means all guest or customer profiles, contact information
(e.g., addresses, phone numbers, facsimile numbers and email addresses),
histories, preferences and any other guest or customer information obtained or
collected by Seller, Operating Tenant and/or Manager in the Ordinary Course of
Business from guests of the Hotel relating specifically to such guests’ stay at
the Hotel.  Hotel Guest Data does not include (i) any information maintained by
Manager or its affiliates or Franchisor or its affiliates in their corporate
databases that is not specific to guest stays at the Hotel including, without
limitation, websites, central reservation databases, operational databases and
preferred guest programs of Manager or affiliates of Manager or Franchisor or
affiliates of Franchisor, and (ii) any data and information collected by Manager
or Franchisor the transfer or disclosure of which is prohibited or to the extent
that it is restricted by applicable Laws or the Franchise Agreement.

 

“Hotel Improvements” shall have the meaning set forth in Section 1.2(a)(ii).

 

“Hotel Land” shall have the meaning set forth in Section 1.2(a)(i).

 

“Inspections and Studies” shall have the meaning set forth in Section 1.3(a).

 

“Intangible Assets” shall have the meaning set forth in Section 1.2(b)(ix).

 

“Investigation Documents” shall mean and refer to those documents listed and
described on Exhibit “I”, all of which shall be deemed Confidential Information.

 

“Laws” shall mean all federal, state or local laws, statutes or regulations, in
each instance to the extent applicable to the ownership and/or operation of the
Hotel, or otherwise binding upon a party to this Agreement.

 

“Losses” shall have the meaning set forth in Section 5.5(a)(i).

 

“Manager” shall mean MHG-26 LLC.

 

A-4

 

“Management Agreement” shall mean that certain management agreement currently in
effect between Manager and Operating Tenant.

 

“Material Contract” shall mean any Hotel Contract which both (a) requires
aggregate annual payments in excess of Fifty Thousand and No/100 Dollars
($50,000.00) for any year during the term of such Hotel Contract after Closing,
and (b) cannot be terminated without cost on less than thirty (30) days’
notice.  Notwithstanding the foregoing, neither the Franchise Agreement, the
Operating Lease, the Restaurant Lease or the Management Agreement shall be a
Material Contract.

 

“Material Intervening Lien”  shall have the meaning set forth in Section 4.1(b).

 

“Material Representation Breach” shall have the meaning set forth in
Section 5.3.

 

“Material Violation” shall have the meaning set forth in Section 1.3(j).

 

“Monetary Encumbrance” shall mean an encumbrance to title that is timely raised
by Purchaser as a objection in accordance with Section 4.1(a) and/or which arise
from and after the expiration of the Objection Period, in either case, which is
(a) a mortgage, deed of trust, security agreement or financing statement caused
or created by Seller (except to the extent being assigned to Purchaser’s
mortgage lender(s) at Closing pursuant to Section 4.1(d)) or (b) a judgment or a
mechanic’s, materialman’s or broker’s lien caused by Seller which is
intentionally created, consented to or affirmatively permitted by Seller,
Operating Tenant or their respective affiliate (and not by Restaurant Tenant,
Purchaser or any other Person) which, together with any other judgment,
mechanic’s materialman’s or broker’s lien caused by Seller (and not by
Restaurant Tenant or any other Person) does not exceed Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) in the aggregate.  Notwithstanding
the foregoing, a Violation shall not be considered a Monetary Encumbrance.

 

“Mortgage Commitment Expiration Date”  shall have the meaning set forth in
Section 8.1(b).

 

“New Franchise Agreement” shall mean the franchise agreement by and between
Purchaser and Franchisor pursuant to which Purchaser shall be granted the right
to continue operating the Hotel as a Holiday Inn.

 

“New Management Agreement” shall have the meaning set forth in Section 1.3(h).

 

“Notice” shall have the meaning set forth in Section 11.3.

 

“Objection Period” shall have the meaning set forth in Section 3.1.

 

“Occupants” means the guests, tenants, licensees and other occupants of the
Hotel.

 

“Operating Lease” shall mean that certain Lease Agreement dated June 30, 2008
between Seller, as lessor, and Operating Tenant, as lessee, pursuant to which
Seller leases the Hotel to Operating Tenant.

 

A-5

 

“Operating Tenant” shall mean MMG-26 Operator, LLC, a Delaware limited liability
company.

 

“Operating Tenant Owned Property” shall have the meaning set forth in
Section 1.2(d).

 

“Ordinary Course of Business” shall mean the ordinary course of business
consistent with Seller’s, Operating Tenant’s and/or Manager’s past custom and
practice for the Business within the previous twenty-four (24) months, taking
into account the facts and circumstances in existence from time to time,
including, without limitation, actions taken by Manager pursuant to the
Management Agreement.

 

“Permits” shall have the meaning set forth in Section 1.2(b)(viii).

 

“Permitted Exceptions” shall mean all of the following: (a) real estate taxes or
installments thereof, which, although a lien on the Closing Date, are not due
and payable prior to the Closing Date, subject to adjustment as hereinafter set
forth; (b) standard printed exceptions set forth in the standard form of
commitment for owner’s title insurance in use in the State of New York, other
than those that can be removed from the Commitment by the Title Company by the
delivery by Seller of the Required Title Affidavit; (c) occupancy and other
rights of guests at the Hotel; (d) the Restaurant Lease and any other Space
Lease entered into in accordance with this Agreement; (e) those matters set
forth on Exhibit “R” hereto; and (f) any matters or encumbrances which become a
“Permitted Exceptions” under Section 3 and 4 hereof.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Personal Property” shall have the meaning set forth in Section 1.2(b).

 

“Post-Closing Escrow Agreement” shall have the meaning set forth in Section 7.3.

 

“Post-Closing Expenses” shall have the meaning set forth in Section 8.2(f).

 

“Post-Closing Non-R&W Liability Cap” shall have the meaning set forth in
Section 5.5(a).

 

“Post-Closing R&W Liability Cap” shall have the meaning set forth in
Section 5.5(a).

 

“Preliminary Closing Statement” shall have the meaning set forth in
Section 8.2(a)(i).

 

“PTR Exceptions” shall have the meaning set forth in Section 4.1(a).

 

“Purchase Orders” shall have the meaning set forth in Section 8.2(f).

 

“Purchase Price” shall have the meaning set forth in Section 2.1.

 

“Purchase Price Allocation” shall have the meaning set forth in Section 2.3.

 

“Purchaser” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Purchaser Knowledge Individuals” shall have the meaning set forth in
Section 11.12.

 

A-6

 

“Purchaser’s Certificate” shall have the meaning set forth in
Section 8.4(b)(iv).

 

“Purchaser’s Indemnity Obligations” shall have the meaning set forth in
Section 5.5(b)(i).

 

“Real Property” shall mean the Hotel Land and Hotel Improvements, as set forth
in Section 1.2(a).

 

“Related Parties” shall have the meaning set forth in Section 5.5(a)(i).

 

“Released Parties” shall have the meaning set forth in Section 10.4.

 

“Reporting Person” shall have the meaning set forth in Section 11.21(a).

 

“Restaurant Lease” means that certain Agreement of Lease dated May __, 2007
between Seller (as successor-in-interest to Sheesan Hotel LLC), as landlord and
Sheesan Restaurant 26th LLC, as tenant, as amended pursuant to that First
Amendment to Agreement of Lease dated as of June 30, 2008.

 

“Required Title Affidavit” shall have the meaning set forth in Section 8.4(a).

 

“Retained Accounts” shall have the meaning set forth in Section 8.2(i).

 

“Sales Tax” shall have the meaning set forth in Section 2.3.

 

“Second Deposit” shall have the meaning set forth in Section 2.2(b).

 

“Second Deposit Date” shall have the meaning set forth in Section 2.2(b).

 

“Seller” shall have the meaning set forth in the first paragraph of this
Agreement.

 

“Seller Knowledge Individuals” shall have the meaning set forth in
Section 11.12.

 

“Seller Party Obligations” shall have the meaning set forth in Section 10.4.

 

“Seller’s Certificate” shall have the meaning set forth in Section 8.4(a)(iii).

 

“Seller’s Indemnity Obligations” shall have the meaning set forth in
Section 5.5(a)(i).

 

“Space Leases” shall mean leases or other grants of rights to third parties to
occupy space in or about the hotel for retail or other commercial purposes, and
shall include the Restaurant Lease and any leases for space on the rooftop of
the Hotel.  Notwithstanding the foregoing, the Operating Lease shall not
constitute a Space Lease.

 

“Specified Violation” shall have the meaning set forth in Section 1.3(j).

 

“Survey” shall have the meaning set forth in Section 3.1.

 

“Surviving Obligations” shall have the meaning set forth in Section 1.3(f).

 

A-7

 

“Tax Certificates” shall have the meaning set forth in Section 8.5(c).

 

“Threshold” shall have the meaning set forth in Section 5.5(a)(i).

 

“Title Company” shall have the meaning set forth in Section 4.1(a).

 

“Title Policy” shall have the meaning set forth in Section 4.1(a).

 

“Title Report” shall have the meaning set forth in Section 4.1(a).

 

“Transfer Taxes” shall have the meaning set forth in Section 8.5(a).

 

“Violation” shall have the meaning set forth in Section 1.3(j).

 

“Voluntary Notice of Franchise Termination” shall have the meaning set forth in
Section 6.3(c).

 

“WARN Act” shall have the meaning set forth in Section 8.7(a).

 

A-8

 

EXHIBIT “B”

 

(Legal Description of the Hotel Land)

 

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 a point on the northerly side of 26th Street, distant 221 feet
10-1/2 inches westerly from the corner formed by the intersection of the
northerly side of 26th Street and the westerly side of Avenue of the Americas
which said point is opposite the middle of a party wall;

 

and

 

RUNNING THENCE northerly, and part of the way through said party wall and
parallel with the westerly side of Avenue of the Americas, 98 feet 9 inches;

 

THENCE westerly and parallel with the northerly side of 26th Street, 65 feet
7-1/2 inches;

 

THENCE southerly and parallel with the westerly side of party wall, 98 feet 9
inches to the northerly side of 26th Street;

 

THENCE easterly along the northerly side of 26th Street, 65 feet 7-1/2 inches to
the point or place of BEGINNING

 

B-1

 

 

EXHIBIT “C”

 

(Escrow Instructions)

 

Escrow Agent agrees to hold in escrow the Earnest Money delivered to Escrow
Agent pursuant to this Agreement upon the following terms and conditions:

 

(a)                               The Earnest Money shall be invested in a money
market account.  All interest earned on the Earnest Money shall accrue in favor
of Purchaser and shall be credited against the Purchase Price at Closing except
in the case of a release of the Earnest Money by Escrow Agent to Seller
following a termination of this Agreement in which case, all accrued interest
shall be released to Seller by Escrow Agent along with the Earnest Money.

 

(b)                              Escrow Agent shall deliver the Earnest Money to
Seller or to Purchaser, as the case may be, on the following conditions:

 

(i)          To Seller, upon the consummation of the Closing.

 

(ii)      To Seller, upon receipt of written demand therefore, which demand
shall be signed by Seller and shall state that either (x) Seller has terminated
the Agreement pursuant to its rights thereunder and has the right to a return of
the Earnest Money in accordance with the terms of the Agreement including,
without limitation, as set forth in clause (iv) below; or (y) Purchaser has
defaulted in the performance of its obligations under this Agreement and Seller
is entitled to the Earnest Money in accordance with this Agreement; provided,
however, that Escrow Agent shall not honor such demand until at least seven (7)
Business Days after the date on which Escrow Agent shall have delivered a copy
of such demand to Purchaser, nor thereafter if Escrow Agent shall have received
a notice of objection from Purchaser given in accordance with the provisions of
clauses (c) and (d) of this Exhibit C within such seven (7) Business Day period.

 

(iii)  To Purchaser, upon receipt of written demand therefore, which demand
shall be signed by Purchaser and shall state that either (x) Purchaser has
terminated the Agreement pursuant to its rights thereunder and has the right to
a return of the Earnest Money in accordance with the terms of the Agreement
including, without limitation, as set forth in clause (iv) below; or (y) Seller
has defaulted in the performance of its obligations under this Agreement and
Purchaser is entitled to the Earnest Money in accordance with this Agreement;
provided, however, Escrow Agent shall not honor such demand until at least seven
(7) Business Days after the date on which Escrow Agent shall have delivered a
copy of such demand to Seller, nor thereafter if Escrow Agent shall have
received a notice of objection from Seller given in accordance with the
provisions of

 

C-1

 

clauses (c) and (d) of this Exhibit C within such seven (7) Business Day period.

 

(iv)  Notwithstanding anything to the contrary in clause (ii) or clause (iii) of
this Section (b), to Purchaser, upon receipt of written demand therefore on or
prior to the last day of the Due Diligence Period, which demand shall (x) be
signed by Purchaser and (y) shall contain a certification from Purchaser to
Escrow Agent stating (A) that Purchaser has delivered a notice of termination to
Seller pursuant to Section 1.3(f) of this Agreement that complies with the terms
and conditions of this Agreement on or prior to the expiration of the Due
Diligence Period, (B) the date of delivery of such notice of termination to
Seller, (C) the date that is the last day of the Due Diligence Period, and (D)
that enclosed with such written demand is a true and complete copy of such
notice of termination (and a copy of such notice of termination shall be
included with such written demand).  Purchaser shall deliver a copy of such
written demand to Seller concurrently with its delivery thereof to Escrow Agent.

 

(c)                               Any notice to or demand upon Escrow Agent
shall be in writing, signed by the party delivering such notice or demand, and
shall be sufficient only if received by Escrow Agent via email and/or in the
manner, set forth in Section 11.3 of the Agreement, and within the applicable
time periods set forth herein, if any.

 

(d)                             Upon receipt of a demand for the Earnest Money
made by Seller or Purchaser under clauses (b)(ii), or (iii) of this Exhibit C,
Escrow Agent shall promptly deliver a copy thereof to the other party.  The
other party shall have the right to object to the delivery of the Earnest Money
by delivering to Escrow Agent notice of objection within seven (7) Business Days
after the date Escrow Agent delivers such copy to the other party, but not
thereafter.  Upon receipt of such notice of objection, Escrow Agent shall
promptly deliver a copy thereof to the other party.

 

(e)                               If (i) Escrow Agent shall have received a
notice of objection as provided for in clause (d) of this Exhibit C within the
time therein prescribed or (ii) any other disagreement or dispute shall arise
between the parties or any other persons resulting in adverse claims and demands
being made for the Earnest Money, whether or not litigation has been instituted,
then and in any such event, Escrow Agent shall refuse to comply with any claims
or demands on it, and shall continue to hold the Earnest Money until Escrow
Agent receives either (y) a written notice signed by both parties directing the
disbursement of the Earnest Money, or (z) a final order of a court of competent
jurisdiction, entered in an action, suit or proceeding in which Seller and
Purchaser are parties, directing the disbursement of the Earnest Money, in
either of which events Escrow Agent shall then disburse the Earnest Money in
accordance with such direction.  Escrow Agent shall not be or become liable in
any way or to any person for its refusal to comply with any such claims and
demands unless and until it has received such direction.  Upon compliance with
such direction, Escrow Agent shall be released of and from all liability
hereunder.

 

C-2

 

(f)                                Notwithstanding the foregoing, Escrow Agent
shall have the right following one or more of the circumstances described in
clauses (e)(i) or (ii) of this Exhibit C, on notice to the parties, to deposit
the Earnest Money with a court of competent jurisdiction.  Upon the taking by
Escrow Agent of such action, Escrow Agent shall be released of and from all
liability hereunder.

 

(g)                              Escrow Agent shall not have any duties or
responsibilities, except those set forth in this Exhibit C and shall not incur
any liability (i) in acting upon any signature, notice, demand, request, waiver,
consent, receipt or other paper or document believed by Escrow Agent to be
genuine and Escrow Agent may assume that any person purporting to give it any
notice on behalf of any party in accordance with the provisions hereof has been
duly authorized to do so, or (ii) in otherwise acting or failing to act under
this Exhibit C except in the case of Escrow Agent’s gross negligence or willful
misconduct.

 

(h)                              Seller and Purchaser acknowledge that Escrow
Agent is acting solely as stakeholder at the request of Seller and Purchaser and
for their convenience, that Escrow Agent shall not be deemed to be the agent of
either of the parties, and that Escrow Agent shall not be liable to either of
the parties, except for its gross negligence or willful misconduct.

 

(i)                                  Seller and Purchaser hereby jointly and
severally agree to indemnify Escrow Agent for, and to hold it harmless against,
any loss, liability, damage or expense incurred by it arising out of or in
connection with Escrow Agent’s entering into and/or performing its obligations
under this Agreement so long as such loss, liability, damage or expense does not
arise out of Escrow Agent’s gross negligence or willful misconduct.

 

(j)                                  Purchaser shall pay all income tax on all
interest earned on the Earnest Money and Escrow Agent shall report all such
interest to Purchaser.  Purchaser’s tax identification number is 80-0911353. 
Seller’s tax identification number is as follows: 20-8520402.

 

The provisions of this Exhibit C shall survive the Closing or earlier
termination of this Agreement.

 

C-3

 

EXHIBIT “D”

 

(Material Contracts)

 

 

1.            Time Warner Cable of New York City Hotel Agreement dated April 20,
2007 with Time Warner Cable of New York City.

 

2.            Hudson Energy Agreement dated November 30, 2012 between Hudson
Energy Services, LLC and Operating Tenant.

 

3.            Rooms Laundry Service Agreement dated September 27, 2012 between
Magna Hotel Group and Prestige Industries LLC.

 

D-1

 

EXHIBIT “E”

 

(Permits)

 

Liquor License

New York State

 

Elevator Permit

Department of Buildings

 

Food Service Establishment

Department of Health and Mental Hygiene

 

Certificate of Boiler Inspection

Department of Buildings

 

Sales Tax Registration

From New York State Department of Taxation and Finance

 

Fire Systems

Fire Department - City of New York

 

 

E-1

 

EXHIBIT “F”

 

BILL OF SALE AND ASSIGNMENT

 

This ASSIGNMENT AND BILL OF SALE (this “Bill of Sale”) is executed as of
___________, 2013 by MMG-26 LLC, a Delaware limited liability company
(“Seller”), and MMG-26 Operator, LLC, a Delaware limited liability company
(“Operating Tenant”) in favor of CWI Chelsea Hotel, LLC, a Delaware limited
liability company (“Purchaser”).

 

RECITALS:

 

WHEREAS, pursuant to that certain Purchase and Sale Agreement, dated as of
________ __, 2013 (as same may have been or may hereafter be assigned, amended,
modified or otherwise supplemented, the “Purchase Agreement”; all capitalized
terms used but not defined herein shall have the meaning ascribed to them in the
Purchase Agreement), among Seller and Purchaser, Seller has agreed to sell and
Purchaser has agreed to purchase the Hotel; and

 

WHEREAS, pursuant to the Purchase Agreement, the Closing for the Hotel is
occurring on the date hereof, and Seller and Operating Tenant are required to
convey, assign and otherwise transfer the Purchased Assets (as hereinafter
defined) to Purchaser at Closing.

 

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

 

1.                                    Transfer of Property.  Seller and
Operating Tenant hereby sell, convey, transfer, assign and deliver unto
Purchaser, all of their respective legal and beneficial right, title and
interest in and to all of the Personal Property, including, without limitation,
those Hotel Contracts listed on Exhibit “F-1” attached hereto, the Equipment
Leases listed on Exhibit “F-2” and the assignable Permits listed on Exhibit
“F-3” attached hereto, all as described and defined in the Purchase Agreement,
but in all cases, excluding any Excluded Assets (collectively, the “Purchased
Assets”).

 

2.                                    Assumption and Indemnity.  Purchaser
assumes and agrees to perform all duties and obligations related to the
Purchased Assets arising from or attributable to the period from and after the
Closing Date.

 

3.                                    Purchase Agreement Governs.  This Bill of
Sale is delivered pursuant to, and is subject to the express representations,
warranties, covenants, and agreements set forth in the Purchase Agreement.  This
Bill of Sale is only intended to effectuate the sale, transfer and conveyance to
Purchaser of the Purchased Assets in accordance with the provisions of the
Purchase Agreement, and nothing herein shall expand the rights, covenants,
obligations, representations or warranties of Seller or Purchaser (express or
implied) beyond what is provided for in the Purchase Agreement, and the terms of
this Bill of Sale shall be understood and construed accordingly.  To the extent
that any provision of this Bill of Sale is inconsistent with the provisions of
the Purchase Agreement, the provisions of the Purchase Agreement shall govern.

 

F-1

 

4.                                    THIS BILL OF SALE IS MADE ON AN “AS-IS,
WHERE-IS, WITH ALL FAULTS” BASIS, WITHOUT RECOURSE AND WITHOUT ANY
REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED) WHATSOEVER EXCEPT AS MAY
EXPRESSLY BE SET FORTH IN THE PURCHASE AGREEMENT.

 

5.                                    Terms Defined.  Initially capitalized
terms used but not defined herein have the respective meanings given to them in
the Purchase Agreement.

 

6.                                    Additional Assurances.  Purchaser and
Seller shall, as may be reasonably requested by the other party from time to
time, provide such additional assurances, execute and deliver such instruments,
assignments, certificates, or other documents, and take such actions as
reasonably shall be necessary or desirable to evidence and to give full effect
to the provisions of this Bill of Sale.

 

7.                                    Binding Effect and Assignment.  This Bill
of Sale shall be binding upon Seller, Operating Tenant and their respective
successors and assigns, and shall inure to the benefit of Purchaser and its
successors and assign.

 

8.                                    Governing Law.  This Bill of Sale shall be
governed by and construed in accordance with the laws of the State of New York
(without reference to conflicts of laws principles).

 

9.                                    Counterparts.  This Bill of Sale may be
executed in counterparts, each of which shall constitute an original, but all of
which shall collectively constitute one instrument.

 

(Signatures appear on following page)

 

F-2

 

IN WITNESS WHEREOF, Seller and Operating Tenant have executed this Bill of Sale
under seal as of the date first above written.

 

 

SELLER:

 

 

 

 

 

 

MMG-26 LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

OPERATING TENANT:

 

 

 

 

 

 

MMG-26 Operator, LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

PURCHASER:

 

 

 

 

 

 

CWI Chelsea Hotel, LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

F-3

 

EXHIBIT “F-1”

 

(Hotel Contracts)

 

F-1-1

 

EXHIBIT “F-2”

 

(Equipment Leases)

 

F-2-1

 

EXHIBIT “F-3”

 

(Permits)

 

F-3-1

 

 

EXHIBIT “G”

 

THIS SELLER’S CLOSING CERTIFICATE (the “Seller’s Certificate”) is made as of the
_____________ 2013, MMG-26 LLC, a Delaware limited liability company (“Seller”),
in favor of CWI CHELSEA HOTEL, LLC, a Delaware limited liability company (the
“Purchaser”), in furtherance of that certain Purchase and Sale Agreement by and
among Seller and Purchaser, dated March ___, 2013 (the “Purchase Agreement”).

 

Recitals:

 

A.        Pursuant to the Purchase Agreement, Seller agreed to sell and
Purchaser agreed to purchase the Hotel (as defined in the Purchase Agreement)
located at 121-125 West 26th Street, New York, New York.

 

B.        Section 8.4(a)(iii) of the Purchase Agreement requires the delivery of
this Seller’s Certificate.

 

Certificate:

 

NOW THEREFORE, pursuant to the Purchase Agreement, Seller hereby certifies and
confirms to Purchaser as follows:

 

1.         Subject to Section 5.3 of the Purchase Agreement, all of the
representations and warranties of Seller set forth in the Purchase Agreement are
true and correct in all material respects as of the date hereof.

 

2.         This Seller’s Certificate is subject to the terms and conditions of
the Purchase Agreement, including all applicable limitations on liability and
all applicable survival limitations contained in the Purchase Agreement,
including in Section 5.4 and 5.5 thereof.

 

The undersigned have executed this Seller’s Certificate as of the date set forth
above.

 

MMG-26 LLC,
a Delaware limited liability company

 

By:

 

 

 

 

Printed name:

 

 

 

 

Title:

 

 

 

G-1

 

EXHIBIT “H”

PURCHASER’S CLOSING CERTIFICATE

 

THIS PURCHASER’S CLOSING CERTIFICATE (the “Purchaser’s Certificate”) is made as
of _____________ 2013 by CWI CHELSEA HOTEL, LLC, a Delaware limited liability
company (the “Purchaser”), in favor of MMG-26 LLC, a Delaware limited liability
company (“Seller”), in furtherance of that certain Purchase and Sale Agreement
by and among Seller and Purchaser dated __________, 2013 (the “Purchase
Agreement”).

 

Recitals:

 

A.        Pursuant to the Purchase Agreement, Seller agreed to sell and
Purchaser agreed to purchase the Hotel (as defined in the Purchase Agreement)
located at 121-125 West 26th Street, New York, New York.

 

B.        Section 8.4(b)(iii) of the Purchase Agreement requires the delivery of
this Purchaser’s Certificate.

 

Certificate:

 

NOW THEREFORE, pursuant to the Purchase Agreement, Purchaser hereby certifies
and confirms to Seller as follows:

 

1.         All of the representations and warranties of Purchaser set forth in
the Purchase Agreement are true, complete and correct in all material respects
as of the date hereof.

 

2.         This Purchaser’s Certificate is subject to the terms and conditions
of the Purchase Agreement, including all applicable limitations on liability and
all applicable survival limitations contained in the Purchase Agreement,
including in Section 5.4 and 5.5 thereof.

 

The undersigned have executed this Purchaser’s Certificate as of the date set
forth above.

 

PURCHASER:

 

CWI CHELSEA HOTEL, LLC,
a Delaware limited liability company

 

By:

 

 

 

 

Printed name:

 

 

 

 

Title:

 

 

 

H-1

 

EXHIBIT “I”

 

(Investigation Documents)

 

1.            Annual P&Ls with departmental details for period of ownership
through December 2012

 

2.            Monthly P&Ls with departmental details for 2011, 2012 and YTD 2013

 

3.            Monthly 2013 Forecast

 

4.            Opening Balance sheet from Seller’s acquisition of the Property

 

5.            Fixed asset schedule as of the time of Seller’s acquisition of the
Property, and if not available, the year end fixed asset schedule in the same
year

 

6.            Fixed asset schedule as of 12/31/12

 

7.            Latest available accounts payable aging report

 

8.            Year end balance sheets for period of ownership and month end
balance sheets for YTD 2013

 

9.            General ledger for 2011, 2012 and YTD 2013

 

10.    2013 monthly operating budget with detailed departmental breakdown

 

11.    Annual (i.e. month of December) STAR Reports for period of ownership
through December 2012 and each month of 2013

 

12.    Real and personal property tax bills for 2009, 2010, 2011, 2012, and 2013

 

13.    Copies of any open property tax appeals that have been prepared or filed

 

14.    Most recent Personal Property Schedule filed with assessor

 

15.    Loss runs for all insurance coverages for the past 3 years

 

16.    List of all vehicles including: year, make, model, VIN number, number of
passengers, mileage, and vehicle use

 

17.    Copies of all service contracts

 

18.    Copies of all equipment/capital leases

 

19.    Copies of all permits & licenses

 

20.    Copies of all leases

 

21.    Copies of most recent health, fire, building and elevator inspection
reports

 

I-1

 

22.    Copies of most recent environmental reports

 

23.    Copies of most recent engineering reports

 

24.    Seller's preliminary report of title

 

25.    Survey (as-built), legal description, architectural and engineering plans
and specifications, as well as a site plan with zoning specifications (if in
Seller’s possession)

 

26.    Current levels of inventories including F&B, linen, guest supplies and
operating supplies

 

27.    Organizational chart showing executive committee members, managers,
supervisors, and all personnel in the A&G, sales & marketing and engineering
departments

 

28.    Employee census listing all employees by corresponding position, salary
or wage scale, benefits to which they are entitled, accrued benefits including
vacation and any other payments

 

29.    A summary of the health insurance program available to employees,
including the scope of benefits offered, the cost of the insurance by employee
with a breakdown of both the employer’s contribution and the employee’s
contribution

 

30.    A summary of workers’ compensation insurance coverage as well as a
summary of claims experience for each of the last three years

 

31.    Most recent group bookings pace report

 

32.    Detailed list of advanced reservations and bookings, including name of
party, deposit received, rate guaranteed, dates, status, and other pertinent
information

 

33.    Capital expenditures for the period of ownership to date

 

34.    2013 capital expenditures budget

 

35.    Copy of change of ownership PIP

 

36.    Copies of the 2012 and 2013 marketing plans

 

37.    Market segmentation reports for 2011, 2012 and YTD 2013

 

38.    List of top 10 customers based on room nights or revenue for 2011, 2012
and YTD 2013

 

39.    Brand contribution reports for 2011, 2012 and YTD 2013

 

40.    Copy of two most recent Quality Assurance reports issued by Holiday Inn

 

41.    December 2011, December 2012 and most recent 2013 guest satisfaction
reports from Holiday Inn (showing monthly and YTD results

 

I-2

 

42.    Photos of the property

 

I-3

 

EXHIBIT “J”

 

(Equipment Leases)

 

1.            Copier Lease – XEROX

 

2.            DVR Lease - Time Warner Cable

 

J-1

 

EXHIBIT “K”

 

(Form of Post-Closing Escrow Agreement)

 

This POST-CLOSING ESCROW AGREEMENT (this “Agreement”) is made and entered into
this [___] day of ______, 2013, by and among FIRST AMERICAN TITLE INSURANCE
COMPANY (“Escrow Agent”), MMG-26 LLC, a Delaware limited liability company
(“Seller”), and CWI CHELSEA HOTEL, LLC, a Delaware limited liability company
(“Purchaser”).

 

RECITALS

 

WHEREAS, Seller and Purchaser have entered into that certain Purchase and Sale
Agreement dated as of April __, 2013 (as the same may have been amended,
modified or otherwise supplemented, the “Purchase Agreement,” all capitalized
terms used but not defined herein shall have the meanings set forth in the
Purchase Agreement), pursuant to which Seller has agreed to sell, and Purchaser
has agreed to buy, the Hotel (as defined in the Purchase Agreement) in
accordance with the terms and conditions contained herein; and

 

WHEREAS, the Closing has occurred as of the date hereof, but as required
pursuant to Section 7.3 of the Purchase Agreement and as a material inducement
for Purchaser to consummate the Closing, Purchaser, Seller and Escrow Agent have
agreed to execute and deliver this Agreement.

 

NOW THEREFORE, in consideration of the premises and of the mutual conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

1.         Establishment of Escrow.  As a condition precedent to the Closing,
Seller has concurrently with the execution and delivery of this Agreement,
deposited with Escrow Agent an amount equal to $1,600,000 (the “Surviving
Obligations Escrow Funds”).  By execution of this Agreement, Escrow Agent hereby
acknowledges receipt of the Surviving Obligations Escrow Funds, which Surviving
Obligations Escrow Funds shall be deposited into an interest-bearing account to
be held and disbursed by Escrow Agent in accordance with the terms hereof. 
Neither Seller nor Purchaser shall have any right to request a disbursement of
any portion of the Surviving Obligations Escrow Funds except in strict
accordance with this Agreement.  Notwithstanding anything to the contrary
contained herein or in the Purchase Agreement, in no event shall Seller be
required to make any additional deposit(s) with Escrow Agent.

 

2.         Disbursement of the Surviving Obligations Escrow Funds.

 

A.        The Surviving Obligations Escrow Funds shall be held in escrow to
secure, subject to Sections 5.3, 5.4, and 5.5 of the Purchase Agreement,
Seller’s Indemnity Obligations.  In the event that after the Closing Date
Purchaser, acting in good faith, delivers to Escrow Agent a notice (the “Claim
Notice”) that Purchaser has suffered a Loss as a result of any Seller’s
Indemnity Obligations which Seller is responsible for pursuant to the Purchase
Agreement, which Claim Notice shall certify the amount of Losses Purchaser
estimates have been incurred with respect to the applicable Seller’s Indemnity
Obligation (the “Claim

 

K-1

 

Amount”), Escrow Agent shall retain a portion of the Surviving Obligations
Escrow Funds, equal to the Claim Amount, in escrow until all of the claims which
gave rise to such Claim Notice have been (i) settled pursuant to a written
settlement agreement entered into between Purchaser and Seller, in which case
the Claim Amount shall be disbursed in accordance with the instructions set
forth in such settlement agreement or (ii) adjudicated pursuant to a final
non-appealable judgment with respect thereto rendered by a court of competent
jurisdiction, in which case, the Claim Amount shall be disbursed in accordance
with such final non-appealable judgment.

 

B.        In the event that prior to _______, 20131 (the “First Release Trigger
Date”) Purchaser shall (a) not have delivered a Claim Notice to Escrow Agent and
Seller or (b) have delivered one or more Claim Notices to Escrow Agent and
Seller with aggregate Claim Amounts which are equal to or less than $500,000,
Seller shall have the right to send a direction letter to Escrow Agent and
Purchaser requesting the return of $1,100,000.00 (the “First Release Amount”)
from the Surviving Obligations Escrow Funds.  In the event that prior to the
First Release Trigger Date Purchaser shall have delivered one or more Claim
Notices to Escrow Agent and Seller with aggregate Claim Amounts then outstanding
which exceed $500,000 (such excess amount over $500,000 shall be referred to
herein as the “Excess Amount”),  Seller shall have the right to send a direction
letter to Escrow Agent requesting the return of an amount from the Surviving
Obligations Escrow Funds equal to $1,100,000 less the Excess Amount.

 

C.        In the event that prior to ________, 20142 (the “Second Release
Trigger Date”) Purchaser shall not have delivered a Claim Notice to Escrow Agent
and Seller, Seller shall have the right to send a direction letter to Escrow
Agent requesting the return of the then balance of the Surviving Obligations
Escrow Funds.  In the event that prior to the Second Release Trigger Date,
Purchaser shall have delivered one or more Claim Notices to Escrow Agent and
Seller, Seller shall have the right to send a direction letter to Escrow Agent
requesting the return of the then balance of the Surviving Obligations Escrow
Funds less the amount of aggregate Claim Amounts which are then outstanding.

 

D.        Promptly after Escrow Agent’s receipt of a direction letter from
Seller, Escrow Agent shall send a copy of such direction letter to Purchaser. 
In the event that Purchaser sends a written objection to Escrow Agent within
five (5) business days after Purchaser’s receipt of such direction letter from
Escrow Agent objecting to the return of all or a portion of the Surviving
Obligations Escrow Funds, which Purchaser acknowledges it can only do if it has
sent a Claim Notice to Escrow Agent and Seller with a Claim Amount in excess of
the amount Escrow Agent is directed to release prior to the expiration of the
First Release Trigger Date (in the event of a direction notice delivered by
Seller pursuant to Section 2B above) or the Second Trigger Date (in the event of
a direction notice delivered by Seller pursuant to Section 2C above), Escrow
Agent shall (a) continue to hold the disputed portion of the Surviving
Obligations Escrow Funds until the disposition of the disputed portion of the
Surviving Obligations Escrow Funds has been (i) settled pursuant to a written
settlement agreement entered

 

 

 

 

1   [Note: add date that is 6 months from Effective Date]

 

2   [Note: add date that is 9 months from Effective Date]

 

K-2

 

into between Purchaser and Seller, in which case the disputed portion of the
Surviving Obligations Escrow Funds shall be disbursed in accordance with the
instructions set forth in such settlement agreement or (ii) adjudicated pursuant
to a final non-appealable judgment with respect thereto rendered by a court of
competent jurisdiction, in which case, the disputed portion of the Surviving
Obligations Escrow Funds shall be disbursed in accordance with such final
non-appealable judgment and (b) deliver any undisputed portion of the Surviving
Obligations Escrow Funds to Seller within one (1) business day after the
expiration of such five (5) business day period.  Subject to Sections 2(B) and
(C) above, in the event that Purchaser does not send such an objection notice to
Escrow Agent within such five (5) business day period, Escrow Agent shall
deliver any requested amount of the Surviving Obligations Escrow Funds to Seller
within one (1) business day after the expiration of such five (5) business day
period.

 

3.         Interest.  Any interest earned on the Surviving Obligations Escrow
Funds shall be reinvested and become part of the applicable Surviving
Obligations Escrow Funds.  Seller shall be responsible for the payment of all
income tax due on such interest.

 

4.         Escrow Agent.

 

A.        General.  Escrow Agent shall act as escrow agent and hold and disburse
the Surviving Obligations Escrow Funds pursuant to the terms and conditions of
this Agreement.

 

B.        Limited Duties.  Escrow Agent undertakes to perform only such duties
as are expressly set forth in this Agreement.  Escrow Agent shall incur no
liability whatsoever to Seller or Purchaser except for its own willful
misconduct or gross negligence in its capacity as escrow agent; provided,
however Escrow Agent shall not disburse any portion of the Surviving Obligations
Escrow Funds except in strict accordance with this Agreement.

 

C.        Resignation.  Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving notice of such resignation to Seller
and Purchaser specifying a date upon which such resignation shall take effect,
whereupon a successor escrow agent shall be appointed by Purchaser and shall be
reasonably acceptable to Seller.  Escrow Agent shall deliver the Surviving
Obligations Escrow Funds to any successor escrow agent so appointed.

 

D.        Indemnification.  Seller and Purchaser hereby jointly and severally
agree to indemnify Escrow Agent for, and to hold it harmless against, any loss,
liability, damage or expense incurred without gross negligence or willful
misconduct on the part of Escrow Agent arising out of or in connection with its
entering into and/or performing under this Agreement.

 

E.         Interpleader.  In the event of conflicting instructions to Escrow
Agent, or if Escrow Agent is named or joined in any lawsuit relating to this
Agreement or the Surviving Obligations Escrow Funds, Escrow Agent is hereby
additionally authorized and empowered, at Escrow Agent's option, to deliver the
Surviving Obligations Escrow Funds in interpleader to a court of competent
jurisdiction, whereupon Escrow Agent shall be released from any further
obligations or liabilities under this Agreement.

 

5.         Notices.  Any notices, communications or other deliveries required to
be sent under this Agreement shall be delivered in accordance with Section 11.3
of the Purchase Agreement.

 

K-3

 

6.         Governing Law.  The validity, construction, interpretation and
performance of this Agreement shall in all ways be governed and determined in
accordance with the laws of the State of New York.

 

7.         Captions.  The captions used in this Agreement have been inserted
only for purposes of convenience and the same shall not be construed or
interpreted so as to limit or define the intent or the scope of any part of this
Agreement.

 

8.         Counterparts; Electronic Signatures.  This Agreement may be executed
in counterparts by the parties hereto, and by facsimile signature, and each
shall be considered an original and all of which shall constitute one and the
same agreement.  Any signature pages delivered electronically (whether by
facsimile, or in a .pdf file or otherwise) shall constitute an original for all
purposes hereunder.

 

9.         Severability.  If any provision of this Agreement shall, for any
reason, be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement but shall be confined in its operation to the
provision or provisions hereof directly involved in the controversy in which
such judgment shall have been rendered, and this Agreement shall be construed as
if such provision had never existed, unless such construction would operate as
an undue hardship on Seller or Purchaser or would constitute a substantial
deviation from the general intent of the parties as reflected in this Agreement.

 

10.       No Waiver.  The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.  Any waiver must be in writing.

 

11.       Waiver of Jury Trial; Venue.

 

A.        EACH PARTY HERETO WAIVES ANY RIGHT TO JURY TRIAL IN THE EVENT ANY
PARTY FILES AN ACTION RELATING TO THIS AGREEMENT OR TO THE TRANSACTIONS OR
OBLIGATIONS CONTEMPLATED BY THIS AGREEMENT.

 

B.        Each of Seller, Purchaser and Escrow Agent hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of and agrees that venue shall be proper in any New York State or
Federal Court sitting in New York County, New York, in any action or proceeding
arising out of or relating to or connected with this Agreement, or for
recognition or enforcement of any judgment.  Each of Seller, Purchaser and
Escrow Agent hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding shall be heard and determined in such
courts.  Each of Seller, Purchaser and Escrow Agent agrees that a final judgment
in any such action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. 
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY PARTY ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY NEW YORK STATE OR FEDERAL
COURT SITTING IN NEW YORK COUNTY, NEW YORK, AND EACH PARTY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER

 

K-4

 

HAVE TO (1) THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING
AND (2) THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING (INCLUDING
ANY OBJECTION OF OR RELATING TO FORUM NON-CONVENIENS).

 

12.       Date for Performance.  If the time period by which any right, notice,
option or election provided under this Agreement must be exercised, or by which
any act required hereunder must be performed, expires on a Saturday, Sunday or
legal or bank holiday, then such time period will be automatically extended
through the close of business on the next following business day.

 

13.       No Third Party Beneficiary.  The provisions of this Agreement are and
will be for the benefit of Seller, Purchaser and Escrow Agent 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.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

K-5

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date first written above.

 

 

SELLER:

 

 

 

 

 

 

 

 

MMG-26 LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PURCHASER:

 

 

 

 

 

 

 

CWI CHELSEA HOTEL, LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

ESCROW AGENT:

 

 

 

 

 

 

 

FIRST AMERICAN TITLE
INSURANCE COMPANY

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

K-6

 

EXHIBIT L-1

 

(Audit Request Materials)3

 

3-05 Audit Due Diligence.

 

1)           Ownership organizational chart

 

2)          Purchase and sale documents related to Seller’s acquisition of the
Property, including PSA and closing statement

 

3)           Opening journal entry for Seller’s acquisition of the Property

 

4)           Fixed asset roll-forward from the date of Seller’s acquisition of
the Property through December 31, 2012

 

5)           Operating agreement or partnership agreement of the Seller

 

6)           Loan agreements, promissory note and any guaranties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 All materials to be available at Magna’s corporate office during the week of
April 15th unless provided otherwise.

 

L-1

 

 

 

EXHIBIT L-2

 

(Additional 3-05 Audit Materials)

 

3-05 Audit
Schedule of Requests

Date
Received

Comments

NOTE:  Where possible, please provide the requested information in an electronic
format.  Also, please note there will be additional requests as we progress
through the audit as this is not an all-inclusive list.

 

 

 

Internal Controls

 

 

1                 Process narratives for the all control cycles (purchase and
payables, treasury, revenue and receivables, fixed assets, payroll, month-end
close process, etc) in place during the periods under audit.

2                 Narrative for the night auditor packet process.

3                 Availability of night audit packets for selection (selections
to be made at a later date).

4                 Narrative describing the IT environment including applications
used, IT governance structure, planned IT changes and processes for systems
developments and change management, physical and logical security and data
backup and recovery.

5                 Copies of the SOC 1 reports (formerly known as SAS 70) for the
payroll service provider for the last three years.

 

1. Will provide through discussion

 

 

 

4. Will provide through discussion

 

 

 

5. N/A - Seller does not have SOC 1 reports

General

 

 

 

L-1

 

 

3-05 Audit
Schedule of Requests

Date
Received

Comments

1                 Closed trial balances (in excel) for the years ended 12/31/12,
12/31/11, 12/31/10.

2                 December 2012, 2011 and 2010 Balance Sheets and Statements of
Operations (detailed by department).

3                 Complete general ledger detail for the years ended 12/31/12,
12/31/11 and 12/31/10.

4                 Please provide copies of the following executed agreements or
documents (if applicable):

a.              Organization chart

b.              LLC Agreement

c.               Articles of Organization

d.              Management agreement

e.               Franchise agreement

f.                Loan Agreement, Promissory Agreement and Guaranties

g.               Other material or significant contracts or agreements relevant
to the audit.

5                 Copies of 2012, 2011 and 2010 federal and state tax returns
(if available).

 

 

 

Cash

 

 

1                 Bank reconciliations for all cash accounts as of 12/31/12,
12/31/11 and 12/31/10.

2                 Listing of all bank accounts used during the last three years
(including accounts that have been closed), including name of institution and
account number.

3                 Copies of all December 2012, 2011 and 2010 bank statements.

4                 Copies of all January 2013, 2012 and 2011 bank statements.

5                 Copies of all monthly 2012, 2011 and 2010 depository cash
account bank statements.

 

 

6                 Copies of all restricted cash/escrow statements as of
12/31/12, 12/31/11 and 12/31/10.

 

6.  Tax Escrow and FFE Escrow

Notes receivable (if applicable)

 

 

1                 Rollforward of notes receivable during the period under audit
detailing beginning balance, advances, repayments and ending balance as of
12/31/12.

 

1.  N/A - no notes receivable exist

Revenue and receivables

 

 

 

L-2

 

 

3-05 Audit
Schedule of Requests

Date
Received

Comments

1                 Guest ledger and accounts receivable aging detail (city
ledger) as of 12/31/12, 12/31/11 and 12/31/10.

2                 Detail of Reserves for bad debt with explanation of adequacy
as of 12/31/12, 12/31/11 and 12/31/10.

3                 Copies of all STAR reports for 2012, 2011 and 2010 (if
available).

4                 Listing of all sales tax and occupancy tax payments made
during 2012 and 2011.  We will request copies of the corresponding tax returns
as necessary.

 

 

2. N/A - no reserves for bad debt exist

Prepaid expenses

 

 

1                 Detail of other assets and prepaids as of 12/31/12, 12/31/11
and 12/31/10 (as they’d appear on the financial statement line item).  Invoice
and payment support will be requested after we look at the detail, if necessary.

 

 

Investment in hotels

 

 

1                 Detail of investment in hotels rollforward, including listing
of all additions and dispositions, for the period from inception through
12/31/12.  We will request check copies and invoices for selected additions.

2                 Depreciation schedules as of 12/31/12, 12/31/11 and 12/31/10
for all fixed assets.

3                 Support for the initial purchase (either land or hotel),
including the Purchase and Sale agreement and closing escrow statement.

4                 FAS 141 purchase price allocation from the original purchase
of the hotel (if the hotel has never been audited).  If the hotel has never been
audited and there was significant renovation work completed since inception, we
will need details of all construction costs.

 

 

 

 

4. N/A

Deferred loan costs, franchise fees or any other deferred charges

 

 

1                 Rollforward of deferred loan costs, franchise fees or any
other deferred charges from inception detailing the initial basis, amortization,
disposals and ending balance as 12/31/12.  We will request additional support
for significant additions (if applicable).

 

 

 

L-3

 

 

3-05 Audit
Schedule of Requests

Date
Received

Comments

Accounts payable and accrued expenses

 

 

1                 Accounts payable aging detail as of 12/31/12, 12/31/11 and
12/31/10.

2                 Advance deposit ledger as of 12/31/12, 12/31/11 and 12/31/10.

3                 Reconciliations of accrued expense accounts as of 12/31/12,
12/31/11 and 12/31/10, including accrued vacation, accrued payroll, accrued
other, etc.

4                 Check register detail for the periods 1/1/13 - 2/28/13, 1/1/12
- 2/29/12 and 1/1/11 - 2/28/11.  We will request invoices for selected items and
may be required to update testing throughout the audit.

5                 Copies of December 2012, 2011 and 2010 sales tax and occupancy
tax returns.

 

 

Long-Term Debt (if applicable)

 

 

1                 Rollforward of notes payable from inception detailing
beginning balance, advances, repayments and ending balance as of 12/31/12.

2                 Loan confirmation forms for all loans held in the last three
years sent back to McGladrey for independent mailing - templates to be provided.

 

1. schedule not available, but underlying info to be provided if available

Members’ Equity

 

 

1                 Rollforward schedule for equity detailing contributions,
distributions, income/loss, and other activity from inception to 12/31/12.

2                 Schedule/detail of contributions and distributions that
occurred during 2012, 2011 and 2010.  If applicable, please provide check copies
or wire transfer statements so that we can verify the material owner
contributions/distributions.  We will make selections for the material
contributions/distributions.

 

 

Profit and Loss

 

 

1                 Copies of all legal invoices paid during the years ending
12/31/12, 12/31/11 and 12/31/10.  From this detail, we will select which legal
firms to send confirmations to, if deemed necessary.

2                 Reconciliation for the report from the payroll service
provider to the trial balance for the years ending 12/31/12, 12/31/11 and
12/31/10.

3                 Calculation of the management fees and asset management fees
paid for the years ended 12/31/12, 12/31/11 and 12/31/10.

4                 Copies of all real estate tax bills paid during 2012, 2011 and
2010.

 

 

 

L-4

 

 

3-05 Audit
Schedule of Requests

Date
Received

Comments

Interim Review

 

 

1                 Closed trial balance (in excel) for the three months ended
3/31/13 and 3/31/12.

2                 March 2013 and March 2012 Balance Sheets and Statements of
Operations (detailed by department).

3                 Bank reconciliations for all cash accounts as of 3/31/13 and
3/31/12.

4                 Copies of all March 2013 and March 2012 bank statements.

5                 Copies of all restricted cash/escrow statements as of 3/31/13
and 3/31/12.

6                 Rollforward of notes receivable detailing beginning balance at
1/1/13, advances, repayments and ending balance as of 3/31/13 (if applicable).

7                 Guest ledger and accounts receivable aging detail (city
ledger) as of 3/31/13 and 3/31/12.

8                 Detail of Reserves for bad debt with explanation of adequacy
as of 3/31/13 and 3/31/12.

9                 Detail of investment in hotels rollforward, including listing
of all additions and dispositions, for the period from 1/1/13 through 3/31/13.

10          Depreciation schedules as of 3/31/13 for all fixed assets.

11          Rollforward of deferred loan costs, franchise fees or any other
deferred charges detailing the beginning balance at 1/1/13, amortization,
disposals and ending balance as 3/31/13.

12          Accounts payable aging detail as of 3/31/13 and 3/31/12.

13          Advance deposit ledger as of 3/31/13 and 3/31/12.

14          Reconciliations of accrued expense accounts as of 3/31/13 and
3/31/12, including accrued vacation, accrued payroll, accrued other, etc.

15          Rollforward schedule for equity detailing contributions,
distributions, income/loss, and other activity from 1/1/13 to 3/31/13.

16          Copies of all real estate tax bills paid during 2013.

 

 

11. N/A - no deferred loan costs, franchise fees or any other deferred charges

 

The listing is not all inclusive.  Additional requests will be made after
reviewing detail.  There will be additional requests if the hotels have never
been audited and/or the records were kept on a basis other than GAAP (cash or
tax basis).

 

L-5

 

 

EXHIBIT L-3

 

(NOI Review information)

 

 

1)           Latest available balance sheet and detail relating to deferred
revenue and expenses

 

2)           Latest available aged receivables report — City and Guest Ledger

 

3)           Depository bank statements for the latest twelve month period
available reconciled to the general ledger

 

4)           The monthly state Property and occupancy tax report for each of the
latest twelve-month period

 

5)           Copies of monthly invoices, or other supporting documentation, from
Franchisor detailing revenues, for the latest twelve-month period

 

6)           List of all non-recurring, non-operating, or extraordinary expense
items over $10,000 for 2012 and YTD 2013

 

7)           If prepared by ADP (or other payroll processing firm) provide the
quarterly federal and state payroll tax returns for 2012 and YTD 2013, or
reconcile the ADP (or other payroll processing firm) reports to the general
ledger for the same periods

 

8)           Provide detail relating to intercompany and affiliate transactions
for 2012 and 2013 YTD

 

9)           Provide a list of expenses reimbursed to the owner/manager for 2012
and 2013 YTD

 

10)   Provide the latest available bank statement for restricted cash

 

11)   Breakdown of insurance premiums by coverage type for 2012 and YTD 2013

 

L-1

 

 

EXHIBIT L-4

 

(Audit Representation Letter)

 

[COMPANY LETTERHEAD]

 

 

 

[LETTER DATE]

 

McGladrey LLP

1 South Wacker Drive

Suite 800

Chicago, IL 60606

 

 

This representation letter is provided in connection with your audits of the
financial statements of [COMPANY NAME] (the Company) which comprise the balance
sheets as of December 31, 2012 and 2011 and the related statements of income,
changes in members’ equity and cash flows, and the related notes to the
financial statements for the years then ended. 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 accounting
principles generally accepted in the United States of America (U.S. GAAP).

 

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

 

Financial Statements

 

1.            We have fulfilled our responsibilities, as set out in the terms of
the audit arrangement letter dated [ARRANGEMENT LETTER DATE], for the
preparation and fair presentation of the financial statements referred to above
in accordance with accounting principles generally accepted in the United States
of America.

 

2.            We acknowledge our responsibility for the design, implementation,
and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement,
whether due to fraud or error.

 

3.            We acknowledge our responsibility for the design, implementation,
and maintenance of internal control to prevent and detect fraud.

 

4.            Significant assumptions used by us in making accounting estimates,
including those measured at fair value, are reasonable.

 

5.            Related party relationships and transactions have been
appropriately accounted for and disclosed in accordance with the requirements of
U.S. GAAP.

 

6.            We are not aware of any uncorrected misstatements in the
accounting records underlying the financial statements.

 

7.            The effects of all known actual or possible litigation and claims
have been accounted for and disclosed in accordance with U.S. GAAP.

 

L-2

 

 

8.            The following have been properly recorded and/or disclosed in the
financial statements:

 

a.             Amounts of contractual obligations for construction and/or
purchase of real property, equipment, other assets, and intangibles.

 

b.            All significant estimates and material concentrations known to
management that are required to be disclosed in accordance with the Risks and
Uncertainties Topic of the FASB Accounting Standards Codification. Significant
estimates are estimates at the balance sheet date that could change materially
within the next year. Concentrations refer to volumes of business, revenues,
available sources of supply, or markets for which events could occur that would
significantly disrupt normal finances within the next year.

 

c.             Assets and liabilities measured at fair value in accordance with
the Fair Value Measurements and Disclosures Topic of the FASB Accounting
Standards Codification.

 

Information Provided

 

9.            We have provided you with:

 

a.             Access to all information, of which we are aware that is relevant
to the preparation and fair presentation of the financial statements such as
records, documentation, and other matters;

 

b.            Additional information that you have requested from us for the
purpose of the audit;

 

c.             Unrestricted access to persons within the Company from whom you
determined it necessary to obtain audit evidence.

 

10.    All transactions have been recorded in the accounting records and are
reflected in the financial statements.

 

11.    We have disclosed to you the results of our assessment of risk that the
financial statements may be materially misstated as a result of fraud.

 

12.    We have no knowledge of allegations of fraud or suspected fraud,
affecting the Company’s financial statements involving:

 

a.             Management.

 

b.            Employees who have significant roles in the internal control.

 

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

 

13.    We have no knowledge of any allegations of fraud or suspected fraud
affecting the Company’s financial statements received in communications from
employees, former employees, analysts, regulators, short sellers, or others.

 

14.   We have no knowledge of noncompliance or suspected noncompliance with laws
and regulations whose effects should be considered when preparing financial
statements.

 

15.    We are not aware of any pending or threatened litigation and claims whose
effects should be considered when preparing the financial statements and we have
not consulted legal counsel concerning litigation or claims.

 

16.    We have disclosed to you the identity of the Company’s related parties
and all the related-party relationships and transactions of which we are aware.

 

L-3

 

 

17.    We are aware of no significant deficiencies, including material
weaknesses, in the design or operation of internal controls that could adversely
affect the Company’s ability to record, process, summarize, and report financial
data.

 

18.    There have been no communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting practices.

 

19.    We have no plans or intentions that may materially affect the carrying
value or classification of assets.  In that regard, long-lived assets, including
intangibles, that are impaired or to be disposed of have been recorded at the
lower of their cost or fair value.

 

20.    We are responsible for making the accounting estimates included in the
financial statements.  Those estimates reflect our judgment based on our
knowledge and experience about past and current events and our assumptions about
conditions we expect to exist and courses of action we expect to take. In that
regard, we believe:

 

a.             Adequate provisions have been made to reduce receivables to their
estimated net collectible amounts, if necessary.

 

b.            The methodology used to allocate the initial purchase price
allocation is reasonable and appropriate based on the information available.

 

21.    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. In that regard, we specifically
represent that we have not been designated as, or alleged to be, a “potentially
responsible party” by the Environmental Protection Agency in connection with any
environmental contamination.

 

b.            Other material liabilities or gain or loss contingencies that are
required to be accrued or disclosed by the Contingencies Topic of the FASB
Accounting Standards Codification.

 

c.             Guarantees, whether written or oral, under which the Company is
contingently liable.

 

d.           Arrangements with financial institutions involving compensating
balances or other arrangements involving restrictions on cash balances.

 

e.             Lines of credit or similar arrangements.

 

f.              Agreements to repurchase assets previously sold.

 

g.            Security agreements in effect under the Uniform Commercial Code.

 

h.            Other liens or encumbrances on assets and all other pledges of
assets.

 

i.                Investments in debt and equity securities.

 

j.                Liabilities that are subordinated to any other actual or
possible liabilities of the Company.

 

k.            Leases and material amounts of rental obligations under long-term
leases.

 

l.                Derivative financial instruments.

 

m.        Minutes of the meetings of directors and/or committees of directors,
or summaries of actions of recent meetings for which minutes have not yet been
prepared.

 

L-4

 

 

22.    We have evaluated the tax positions under the two-step approach for
recognition and measurement of uncertain tax positions required by the Income
Tax Topic of the FASB Accounting Standards Codification and determined that
there are no current and deferred assets and liabilities related to the
accounting for income taxes.

 

23.    The Company has satisfactory title to all owned assets.

 

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

 

25.    We agree with the findings of specialists in determining the initial
purchase price allocation.  We have adequately considered the qualifications of
the specialists in determining the amounts and disclosures used in the financial
statements and underlying accounting records. We did not give or cause any
instructions to be given to specialists with respect to the values or amounts
derived in an attempt to bias their work, and we are not otherwise aware of any
matters that have had an impact on the independence or objectivity of the
specialists.

 

26.    We acknowledge that you performed the procedures specified by the
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants (AICPA) on the unaudited
balance sheets as of March 31, 2013 and 2012, and unaudited statements of
operations, member’s equity and cash flows for the three-month periods ended
March 31, 2013 and 2012, included in the financial statements. The foregoing
procedures did not constitute an audit conducted in accordance with the
standards of the PCAOB or the AICPA.  We represent that the accounting
principles used to prepare the unaudited interim financial information are
consistent with those used to prepare the financial statements as of and for the
years ended December 31, 2012 and 2011.

 

27.    We are responsible for determining that significant events or
transactions that have occurred since the balance sheet date and through [LETTER
DATE], have been recognized or disclosed in the financial statements. No events
or transactions other than those disclosed in the financial statements have
occurred subsequent to the balance sheet date and through [LETTER DATE] that
would require recognition or disclosure in the financial statements. We further
represent that as of [LETTER DATE], the financial statements were complete in a
form and format that complied with accounting principles generally accepted in
the United States of America, and all approvals necessary for issuance of the
financial statements had been obtained.

 

28.    During the course of your audit, you may have accumulated records
containing data that should be reflected in our books and records. All such data
have been so reflected. Accordingly, copies of such records in your possession
are no longer needed by us.

 

[COMPANY NAME]

 

 

[NAME OF CHIEF EXECUTIVE OFFICER AND TITLE OR EQUIVALENT]

 

[NAME OF CHIEF FINANCIAL OFFICER AND TITLE OR EQUIVALENT]

 

L-5

 

 

EXHIBIT “M”

 

(Escrow Agent’s Wiring Instructions)

 

M-1

 

 

EXHIBIT “N”

 

(Disclosed Violations)

 

(attached hereto)

 

N-1

 

 

EXHIBIT “O”

 

Form of Deed

 

 

-Bargain and Sale Deed without Covenant against Grantor’s Acts—Individual or
Corporation (single sheet)

 

CONSULT YOUR LAWYER BEFORE SIGNING THIS INSTRUMENT - THIS INSTRUMENT SHOULD BE
USED BY LAWYERS ONLY.

 

 

 

______________________________

 

This INDENTURE, made the        day of           , two thousand and thirteen

 

BETWEEN

 

MMG-26 LLC, a Delaware limited liability company

 

party of the first part, and

 

CWI CHELSEA HOTEL, LLC, a Delaware limited liability company

 

party of the second part,

 

 

WITNESSETH, that the party of the first part, in consideration of Ten Dollars
and other valuable consideration paid by the party of the second part, does
hereby grant and release unto the party of the second part, the heirs or
successors and assigns of the party of the second part forever,

 

ALL that certain plot, piece or parcel of land, with the buildings, improvements
and fixtures thereon, situate, lying and being in the City, County and State of
New York, more commonly known as _____________________, New York, New York, and
more particularly described on Exhibit A attached hereto and hereby made part
hereof.

BEING and intended to be the same premises described in the deed to the party of
the first part herein by deed dated [_________] recorded [_________] in
[_________] page [_________].

 

 

 

 

 

 

 

 

 

 

 

 

 

TOGETHER with all right, title and interest, if any, of the party of the first
part in and to any streets and roads abutting the above described premises to
the center lines thereof; TOGETHER with the appurtenances and all the estate and
rights of the party of the first part in and to said premises, buildings,
improvements, and fixtures; TO HAVE AND TO HOLD the premises, buildings,
improvements, and fixtures herein granted unto the party of the second part, the
heirs or successors and assigns of the party of the second part forever.

TAX MAP
DESIGNATION

 

Dist.:  Manhattan

 

Sec. :

AND the party of the first part, in compliance with Section 13 of the Lien Law,
covenants that the party of the first part 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 improvements
and will apply the same first to the payment of the cost of the improvement
before using any part of the total of the same for any other purpose.

The word “party” shall be construed as if it read “parties” whenever the sense
of this indenture so

 

O-1

 

 

 

Blk.:

 

Lot(s): 

requires.

IN WITNESS WHEREOF, the party of the first part has duly executed this deed the
day and year first above written.

 

 

 

 

 

 

 

MMG-26 LLC, a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

IN PRESENCE OF:

 

 

 

____________________________

 

 

 

 

 

 

 

 

 

O-2

 

 

STATE OF NEW YORK, COUNTY OF

 

On the         day of                in the year 2013, before me, the
undersigned, personally appeared                                 
                personally to me known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

STATE OF NEW YORK, COUNTY OF

 

On the         day of         in the year 2013, before me, the undersigned,
personally appeared                                                   
personally to me known to me or proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that
by his/her signature on the instrument, the person, or the entity upon behalf of
which the person acted, executed the instrument.

 

 

 

 

 

 

 

 

 

 

 

 

OUTSIDE NEW YORK STATE:

 

OUTSIDE NEW YORK STATE:

 

 

 

STATE OF         , COUNTY OF

 

On the         day of         in the year 2013, before me, the undersigned,
personally appeared                                                  personally
to me known to me or proved to me on the basis of satisfactory evidence to be
the person whose name is subscribed to the within instrument and acknowledged to
me that he/she executed the same in his/her capacity, and that by his/her
signature on the instrument, the person, or the entity upon behalf of which the
person acted, executed the instrument.

 

STATE OF                , COUNTY OF

 

On the         day of         in the year 2013, before me, the undersigned,
personally appeared                                                personally to
me known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her capacity, and that by his/her signature
on the instrument, the person, or the entity upon behalf of which the person
acted, executed the instrument.

 

 

 

________________________________ (insert city or political subdivision and state
or county or other place acknowledgment taken).

 

______________________________ (insert city or political subdivision and state
or county or other place acknowledgment taken).

 

O-3

 

 

BARGAIN AND SALE DEED
WITHOUT COVENANT AGAINST GRANTOR’S ACT

 

TITLE
NO.

 

 

 

MMG-26 LLC,

 

TO

 

SECTION:

BLOCK:

LOT:

COUNTY OR TOWN:

TAX BILLING ADDRESS:

 

 

 

 

 

 

CWI CHELSEA HOTEL, LLC, a Delaware limited liability company

 

 

 

 

 

 

 

RECORD AND RETURN BY MAIL TO:

 

O-4

 

 

Exhibit A

(Legal Description of the Hotel Land)

 

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 a point on the northerly side of 26th Street, distant 221 feet
10-1/2 inches westerly from the corner formed by the intersection of the
northerly side of 26th Street and the westerly side of Avenue of the Americas
which said point is opposite the middle of a party wall;

 

and

 

RUNNING THENCE northerly, and part of the way through said party wall and
parallel with the westerly side of Avenue of the Americas, 98 feet 9 inches;

 

THENCE westerly and parallel with the northerly side of 26th Street, 65 feet
7-1/2 inches;

 

THENCE southerly and parallel with the westerly side of party wall, 98 feet 9
inches to the northerly side of 26th Street;

 

THENCE easterly along the northerly side of 26th Street, 65 feet 7-1/2 inches to
the point or place of BEGINNING

 

O-5

 

 

EXHIBIT “P”

 

(FIRPTA Affidavit)

 

Section 1445 of the Internal Revenue Code provides that a transferee of a United
States real property interest must withhold tax if the transferor is a foreign
person.  To inform ___________________, a _______________________
(“Transferee”), that withholding of tax is not required upon the disposition of
a United States real property interest by MMG-26 LLC, a Delaware limited
liability company (“Transferor”), Transferor hereby certifies to Transferee:

 

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

 

(b)        Transferor’s U.S. employer identification number is ___________;

 

(c)        Transferor’s office address is:  c/o Magna Hospitality Group, L.C.,
The Summit at Warwick Executive Park, 300 Centerville Road, Suite 300 East,
Warwick, Rhode Island 02886.

 

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

 

Under penalties of perjury Transferor declares that it has examined this
certificate and to the best of Transferor’s knowledge and belief it is true,
correct and complete.

 

Dated:  ___________ __, 2013

 

P-1

 

 

 

 

TRANSFEROR:

 

 

 

MMG-26 LLC, a Delaware limited liability company

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

P-2

 

 

EXHIBIT “Q”

 

(Title Affidavit)

 

State of NEW YORK)

TITLE NO: [____________]

ss:

 

County of NEW YORK)

DATE: [_______], 2013

 

 

_____________ being duly sworn, deposes and says, except as set forth in
Exhibit __:

 

1.                                    That I am the [_______________] of MMG-26
LLC, a Delaware limited liability company (the “LLC”), the owner of the premises
commonly known as [_________________], New York, New York (the “Premises”) which
Premises are more particularly described in the title report to insure number
[_______________] (the “Report”) issued by [_______________] (“Title Company”).

 

2.                                    I am authorized by the LLC to make this
affidavit.

 

3.                                    That there has been no change in the
membership of the LLC since its organization.  The person(s) executing the deed
and other closing instruments executed by the LLC has the authority to bind the
LLC.

 

4.                                    There are presently no tenants in the
Premises, other than as set forth in Exhibit __.  There are no options to
purchase or rights of first refusal either pursuant to written leases or by
separate agreements.

 

5.                                    There are no street vaults adjoining or in
front of the Premises.

 

6.                                    The LLC agrees to indemnify Title Company
for any loss, cost of damage, for any unpaid vault charge(s) which have been or
may be levied by the City of New York.

 

7.                                    No demand has been made by The City of New
York for any work done at the Premises that may result in charges by the New
York City Department of Rent and Housing Maintenance Emergency Services or
charges by The New York City Department for Environmental Protection for water
tap closings or any related work.

 

8.                                    No inspection fees, permit fees,
elevator(s), sign, boiler or other charges have been levied, charged, created or
incurred that may become tax or other liens pursuant to Section 26-128 (formerly
Section 643a-14.0) of the Administrative Code of the City of New York, as
amended by Local Laws 10 of 1981 and 25 of 1984, and Section 27-4029.1 of the
Administrative Code of the City of New York as amended by LL 43, 1988 or any
other section of Law.  The LLC agrees to indemnify Title Company for any loss,
cost of

 

Q-1

 

 

damage, for any unpaid fee or charge claimed by the Department of Buildings and
entered in the records of the City Collector after the date of closing.

 

9.                                    There has been no work performed by any
agency of The City of New York to cure problems under the New York City
Hazardous Substances Emergency Response Law, nor, to my knowledge,  can any lien
be incurred pursuant to the aforementioned statute.  The LLC agrees to indemnify
Title Company from any loss, cost or damage, for any lien incurred up to the
date of this affidavit, whether filed or unfiled.

 

10.                            There are no Judgments or Federal Tax Liens
against the LLC in New York County.

 

The undersigned makes this affidavit to induce Title Company to issue its policy
of title insurance covering the Premises, knowing that Title Company will rely
upon the statements made herein to insure without exception as to the subject
matter of such statements.

 

[Signatures to Follow]

 

Q-2

 

 

 

By:

_________________________

 

 

_______________ in his capacity as _____________ of ____________, a
______________________________

 

Q-3

 

 

EXHIBIT “R”

 

(Permitted Exceptions)

 

1.            Taxes, tax liens, tax sales, water rents, sewer rents and
assessments which are liens not yet due and payable.

 

2.            The rights of the following tenants, as tenants only, with no
purchase rights, under unrecorded leases executed prior to the date hereof.

 

R-1

 

 

EXHIBIT “S”

 

(Tenant Estoppel)

 

To:

MMG-26 LLC (together with its successors and assigns, “Owner”), and any lender
of Owner (each, a “Lender”), together with such lender’s successors and assigns
(collectively, the “Estoppel Parties”)

 

 

Re:

Property Address: 121-125 West 26th Street (“Property”)
Lease Date: May __, 2007
Lease Amendments, if any: First Amendment to Agreement of Lease dated June 30,
2008
Between: Sheesan Hotel LLC (“Original Landlord”) and Sheesan Restaurant 26th LLC
(“Tenant”), and as assigned by Original Landlord to MMG-26 LLC (“Landlord”)
Square Footage Leased: Silent. Suite No./Floor: Ground Floor (“Premises”)

 

Tenant understands that Lender and/or certain of its affiliates are
contemplating making one or more loans that would be secured in part by the
Property and/or direct or indirect interests therein.  Tenant, as the tenant
under the above-referenced lease (as amended by the amendments, if any, listed
above, the “Lease”) hereby certifies to and agrees with Lender as follows.

 

1.            The Lease is in full force and effect and has not been modified,
supplemented, or amended except by the amendment(s) listed above.  The Lease
represents the entire agreement between the parties as to the Property, and
Lessee claims no rights with respect to the Property other than as set forth in
the Lease.

 

2.            Tenant has paid rent for the Premises up to and including
_________ ___, 2013.  The amount of fixed annual rent is $100,000.00; the
percentage rent is $0.00; the monthly common area or other charges are $0.00. 
The base year for operating expenses and real estate taxes, as defined in the
Lease, is July 1, 2007 to June 30, 2008.  No rent has been or will be paid more
than one (1) month in advance of its due date.

 

3.            Tenant has paid a security deposit of $0.00.  Tenant waives
collection of the deposit against Lender or any purchaser at a foreclosure sale,
unless Lender or such purchaser actually receives the deposit from Landlord.

 

4.            The commencement date of the Lease was June 30, 2008.  The Lease
termination date is the fifth anniversary of the commencement date.  Tenant has
the following option(s) to renew or extend the Lease:  two (2) five year options
to renew.

 

5.            All work to be performed to the Premises for Tenant under the
Lease has been performed in all material respects.  All payments, free rent, or
other credits, allowances or abatements required to be given under the Lease to
Tenant with respect to work to be performed to the Premises have been received
by Tenant.  Tenant is in physical occupancy of the Premises and is operating its
business in the Premises.

 

T-1

 

 

6.            There are no defaults existing under the Lease on the part of
Tenant.  To the best of Tenant’s knowledge, (i) there are no defaults existing
under the Lease on the part of Landlord, (ii) no event has occurred that now or
after the expiration of a specified period of time would permit Tenant to cancel
or terminate the Lease or to withhold, reduce or abate rent, (iii) the Lease
does not grant Tenant any abatement, termination or similar rights that would be
triggered by the occurrence or non-occurrence of any event at any other
property, and (iv) there exist no valid defenses, offsets, credits, deductions
in rent or claims against the enforcement of any of the agreements, terms,
covenants or conditions of the Lease.

 

7.            Tenant has not assigned any of its rights under the Lease or
sublet all or any portion of the Premises.  Tenant does not hold the Premises
under assignment or sublease.

 

8.            Tenant has no right or option to purchase all or any part of the
Premises or the building of which the Premises is a part.  Tenant has no right
to occupy any additional space at the Property.

 

9.            Lender shall not be liable for or bound by any modification or
amendment of the Lease, or any waiver of any terms of the Lease, that
(i) materially modifies the economic terms of the Lease, or (ii) materially and
adversely affects Landlord’s obligations under the Lease or Lender’s rights,
duties or obligations, unless such modification, amendment, or waiver was
consented to in writing by Lender.

 

10.    No actions, whether voluntary or otherwise, are pending against Tenant
under the bankruptcy laws of the United States or any state.

 

11.    The Lease, as the same may hereafter be modified, amended or extended,
and all of Tenant’s right, title and interest in and to the Premises and the
Property, including all rights, remedies and options of Tenant under the Lease,
are and shall be unconditionally subject and subordinate to the Mortgage and the
lien thereof, and to all renewals, modifications, consolidations, replacements,
substitutions and extensions of the Mortgage.

 

12.    Lender agrees that so long as no event exists on Tenant’s part that
constitutes a default under the Lease, Tenant’s leasehold estate under the Lease
shall not be terminated by Lender and Tenant’s possession of the Premises shall
not be disturbed by Lender.

 

13.    Tenant shall attorn to Lender upon any foreclosure of the lien of the
Mortgage and sale of the Property or deed-in-lieu of foreclosure of the
Property, and shall recognize Lender as the landlord or lessor under the Lease,
and shall be bound to Lender in accordance with all of the provisions of the
Lease for the balance of the term thereof, and Lender will accept the attornment
of Tenant.  Such attornment will be effective and self-operative without the
execution of any further instrument.

 

T-2

 

 

The person executing this certificate on behalf of Tenant is duly authorized to
execute this certificate.

 

Executed by Tenant on _____________, 2013.

 

 

TENANT: Sheesan Restaurant 26th LLC

 

 

 

By: ____________________________

 

Name: _________________________

 

Title: __________________________

 

 

T-3