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AGREEMENT OF PURCHASE AND SALE
 

 
THE SELLER PARTIES
 
Identified herein
 

 
“SELLERS”
 

 
PYRAMID HOTEL OPPORTUNITY VENTURE LLC, a Delaware limited liability company
 

 
“BUYER”
 

 

 

 

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                        AGREEMENT OF PURCHASE AND SALE
 
                                    INDEX
 
ARTICLE I ASSETS PURCHASED AND SOLD
12
     
Section 1.01
Purchase and Sale
12
Section 1.02
Personal Property
12
Section 1.03
Operating Agreements
12
Section 1.04
Intangible Property
13
Section 1.05
Franchise Agreements
14
Section 1.06
Management Agreements
14
Section 1.07
Land and Hotels
15
Section 1.08
Operating Leases
15
     
ARTICLE II PURCHASE PRICE
15
     
Section 2.01
Price
15
Section 2.02
Deposit
16
Section 2.03
Balance of Purchase Price
16
Section 2.04
Escrow Agent
16
Section 2.05
Reserve Accounts
17
Section 2.06
Capital Expenditure Plans
17
     
ARTICLE III OPERATION OF THE PROPERTY
17
     
Section 3.01
Operation in the Ordinary Course of Business
17
Section 3.02
Liquor License
18
Section 3.03
Cooperation
18
     
ARTICLE IV PRORATIONS AND ADJUSTMENTS
18
     
Section 4.01
Closing Statement/Operations Settlement
18
Section 4.02
Taxes and Rents
19
Section 4.03
Utilities
19
Section 4.04
Assigned Operating Agreements and Management
Agreements
 
20
Section 4.05
Room Revenues; Reservations; Tray Ledger; Accounts
Receivable and House Funds
 
20
Section 4.06
Accounts Payable and Expenses
21
Section 4.07
Guests’ Property
22
     
ARTICLE V EMPLOYEES
22
     
Section 5.01
Salaries, Etc.
22
Section 5.02
Employee Claims
22

ARTICLE VI REPESENTATIONS AND WARRANTIES OF SELLERS
23
     
Section 6.01
Existence and Good Standing
23
Section 6.02
Authority
23
Section 6.03
Litigation
23
Section 6.04
Condemnation
23
Section 6.05
Title to Personal Property
23
Section 6.06
Compliance with Applicable Law
24
Section 6.07
Taxes
24
Section 6.08
Financial Statements
24
Section 6.10
Insolvency
24
Section 6.11
FIRPTA
24
Section 6.12
Exclusivity
24
Section 6.13
Money Laundering
24
     
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER
26
     
Section 7.01
Existence and Good Standing
26
Section 7.02
Authority
26
Section 7.03
No Conflict
26
Section 7.04
Money Laundering
26
Section 7.05
AS IS
27
     
ARTICLE VIII REMEDIES
29
     
Section 8.01
Seller’s Remedies
29
Section 8.02
Buyer’s Remedies
29
Section 8.03
Post-Closing Matters
30
     
ARTICLE IX CONDITIONS
30
     
Section 9.01
Seller’s Obligation
30
Section 9.02
Buyer’s Obligation
30
     
ARTICLE X CLOSING DELIVERIES
31
     
Section 10.01
Documents and Instruments to Be Delivered At or Before
Closing 
 
31
     
ARTICLE XI TITLE TO REAL PROPERTY
33
     
Section 11.01
Title Insurance Commitments
33
Section 11.03
Survey
33
Section 11.04
Access to Property; Due Diligence
34
     
ARTICLE XII THE CLOSING
34
Section 12.01
Time and Place
34
Section 12.02
Payment of Purchase Price
34
Section 12.03
Closing Costs
34
Section 12.04
Revenue and Expense Prorations
36
Section 12.05
Closing Documents
36
     
ARTICLE XIII INSURANCE, CONDEMNATION AND CASUALTY
36
     
Section 13.01
Insurance
36
Section 13.02
Condemnation and Casualty
36
     
ARTICLE XIV MISCELLANEOUS COVENANTS AND PROVISIONS
37
     
Section 14.01
Assignment; Successors and Assigns
38
Section 14.02
Counterparts
38
Section 14.03
Waiver
38
Section 14.04
Amendments
38
Section 14.05
Further Agreements
38
Section 14.06
Attorney’s Fees
38
Section 14.07
Entire Agreement
38
Section 14.08
Brokers and Finders
38
Section 14.09
Notices
38
Section 14.10
Section Headings; Interpretation
40
Section 14.11
Governing Law
40
Section 14.12
Disclosure of Confidential Information/Public Announcements/
Communication with Governmental Authorities/Communication
with Employees
 
 
 
 
40
Section 14.13
Non-Solicitation
42
Section 14.14
Time of Essence
42
     
EXHIBIT “A”
Legal Description of Land
 
EXHIBIT “B”
Assignment and Assumption of Intangible Property
 
EXHIBIT “C”
Assignment and Assumption of Hotel Rex Management Agreement
 
EXHIBIT “D”
Assignment and Assumption of Operating Agreements
 
EXHIBIT “E”
Schedule of Franchise Agreements and Guarantees of Franchise
   
Agreements
 
EXHIBIT “F”
Bill of Sale (Personal Property)
 
EXHIBIT “G”
Schedule of Management Agreements
 
EXHIBIT “H”
Schedule of Operating Agreements
 
EXHIBIT “I”
Schedule of Operating Leases
 
EXHIBIT “J”
Purchase Price Allocation Schedule
 
EXHIBIT “K”
Schedule of Sellers
 
EXHIBIT “L”
Litigation Schedule
 
EXHIBIT “M”
Title and Survey Defects
 
EXHIBIT “N”
Schedule of Operating Agreements to be Terminated by Sellers
 
EXHIBIT “O”
Environmental Reports
 

 
 

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AGREEMENT OF PURCHASE AND SALE

AGREEMENT OF PURCHASE AND SALE made and entered into as of July 5, 2005, by and
between Sellers and Buyer.
 
DEFINITIONS
 
For the purposes of this Agreement, the parties agree that the following terms
shall have the following meanings:
 

1.  
Accounts Receivable: All accounts receivable relating to the Hotels, other than
the Tray Ledgers, accruing prior to the Transfer Time (including, without
limitation, receivables and revenues for food, beverage and telephone use).

 

2.  
Agreement: This Agreement of Purchase and Sale by and between Buyer and Sellers
providing for the sale and purchase of the Property.

 

3.  
Assignment and Assumption of Hotel Rex Management Agreement: Unless the Hotel
Rex Management Agreement is terminated at Closing as provided in Section 1.06(d)
hereof, an assignment and assumption of the Hotel Rex Management Agreement in
the form attached hereto as Exhibit “C” and by this reference incorporated
herein, pursuant to which (i) the Operating Tenant of the Hotel Rex San
Francisco shall assign and transfer to Buyer all of such Operating Tenant’s
right, title and interest in and to, and Buyer shall assume all of such
Operating Tenant’s right, title and interest in and to, and obligations and
liabilities under, the Hotel Rex Management Agreement first accruing from and
after Closing, and (ii) Sellers and such Operating Tenant shall indemnify, hold
harmless and defend Buyer from and against any loss, cost or damage arising
under the Hotel Rex Management Agreement prior to the Transfer Time and (iii)
Buyer shall indemnify, hold harmless and defend such Operating Tenant from and
against any loss, cost or damage arising under the Hotel Rex Management
Agreement from and after the Transfer Time.

 

4.  
Assignment and Assumption of Intangible Property: An assignment and assumption
of the Intangible Property in the form attached hereto as Exhibit “B” and by
this reference incorporated herein, pursuant to which (i) each Seller and/or
Operating Tenant shall assign and transfer to Buyer all of such Seller’s and/or
Operating Tenant’s right, title and interest in and to, and Buyer shall assume
all of such Seller’s and/or Operating Tenant’s right, title and interest in and
to, and obligations and liabilities under, the Intangible Property first
accruing from and after Closing, to the extent that such assignments are legally
and contractually permitted, (ii) Sellers and such Operating Tenant shall
indemnify, hold harmless and defend Buyer from and against any loss, cost or
damage arising under any Intangible Property prior to the Transfer Time and
(iii) Buyer shall indemnify, hold harmless and defend such Seller from and
against any loss, cost or damage arising under any Intangible Property from and
after the Transfer Time.

 

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5.  
Assignment and Assumption of Operating Agreements: An assignment and assumption
of the Operating Agreements in the form attached hereto as Exhibit “D” and by
this reference incorporated herein, pursuant to which (i) each Seller and/or
Operating Tenant shall assign and transfer to Buyer all of such Seller’s and/or
Operating Tenant’s right, title and interest in and to, and Buyer shall assume
all of such Seller’s and/or Operating Tenant’s right, title and interest in and
to, and obligations and liabilities under, the Operating Agreements first
accruing from and after Closing, and (ii) such Seller and/or Operating Tenant
shall indemnify, hold harmless and defend Buyer from and against any loss, cost
or damage arising under any Operating Agreements prior to the Transfer Time and
(iii) Buyer shall indemnify, hold harmless and defend such Seller and/or
Operating Tenant from and against any loss, cost or damage arising under any of
the Operating Agreements from and after the Transfer Time.

 

6.  
Bill of Sale (Personal Property): A bill of sale in the form attached hereto as
Exhibit “F” and by this reference incorporated herein, pursuant to which each
Seller and/or Operating Tenant shall transfer and convey to Buyer the Personal
Property owned by such Seller and/or Operating Tenant in an “AS IS, WHERE IS”
condition and without recourse or express or implied warranty other than such
Seller’s and/or Operating Tenant’s limited warranty of title and freedom from
encumbrance (other than (i) any liens or mortgages assumed or entered into by
Buyer, or (ii) any personal property sales tax or other tax arising from the
transactions contemplated pursuant to this Agreement).

 

7.  
Broker: Banc of America Securities LLC.

 

8.  
Buyer: Pyramid Hotel Opportunity Venture LLC, a Delaware limited liability
company, or its Permitted Assignee(s).

 

9.  
Closing: The consummation of the transactions contemplated by this Agreement
which shall occur on the Closing Date.

 

10.  
Closing Date: A date which is no later than forty-five (45) days following the
Effective Date unless extended pursuant to Section 1.06 hereof, or such earlier
date agreed to by Sellers and Buyer.

 

11.  
Closing Statement: As defined in Section 4.01.

 

12.  
Data Room Web Site: A secure web site established by Sellers in which various
due diligence materials relating to the Property have been or will be made
available to Buyer.

 

13.  
Deeds: The deeds pursuant to which each Seller shall convey to Buyer the Land
and Hotel which such Seller owns free and clear of all encumbrances save and
except for the Permitted Exceptions relating to such Land and Hotel. Such Deeds
shall be by special warranty deed (in the case of the Land and Hotel located in
South Carolina) and by grant deeds (in the case of the Land and Hotels located
in California) having limited warranty-type covenants and in the forms as are
customary for commercial transactions in the jurisdiction in which each Hotel is
located.

 

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14.  
Deposit: The sum of Three Million Six Hundred Thousand and No/100 Dollars
($3,600,000.00) and any interest accrued thereon.

 

15.  
Effective Date: The date on which this Agreement is executed and accepted by the
last of Buyer and all Sellers, such date to be entered into the first paragraph
of this Agreement.

 

16.  
Employees: Those individuals employed by Managers at the Hotels.

 

17.  
Escrow Agent: The Talon Group, Orlando Commercial Services Division, a division
of First American Title Insurance Company, whose address is 111 North Orange
Avenue, Suite 1285, Orlando, Florida 32801, Attention: Michael Moore.

 

18.  
Franchise Agreements: The Franchise Agreements in effect with respect to certain
Hotels as identified on the attached Exhibit “E”.

 

19.  
Franchisors: Each “Franchisor” or “Licensor” under the Franchise Agreements for
the Hotels.

 

20.  
Guaranty of Franchise Agreements: Those certain guaranty agreements with respect
to franchisee’s obligations under each Franchise Agreement as identified on the
attached Exhibit “E”.

 

21.  
Hotels: The hotel buildings and all accessory buildings and structures, if any,
and all fixtures placed on or attached thereto, owned by Sellers and located on
the parcels comprising the Land. Each of the Hotels is at times herein referred
to individually as a Hotel.

 

22.  
Hotel Rex Management Agreement: That certain Management Agreement with respect
to the Hotel Rex San Francisco as identified on the attached Exhibit “G”.

 

23.  
House Funds: Cash on hand at the Hotels.

 

24.  
Intangible Property: All of Sellers’ and Operating Tenants’ respective right,
title and interest in and to all intangible property in the possession of
Sellers and Operating Tenants and used in connection with the Land, Hotels or
Personal Property, including without limitation, all licenses and permits (but
specifically excluding any and all licenses and permits to sell alcohol, unless
and until the same are permitted to be transferred under applicable law, as
provided in Section 3.03 hereof), approvals, authorizations and other
entitlements, all guaranties and warranties related to the Hotels and the
Personal Property or the construction, fabrication or maintenance thereof, all
plans and specifications relating to the Improvements and any landscaping, all
tradenames, logos, telephone numbers, websites and domains (including access to
FTP file content) and signage rights used by Sellers and Operating Tenants in
connection with the operation of the Hotels, and all books, records, reports,
test results, environmental assessments, surveys and other documents, materials,
promotional material, tenant data, marketing and leasing material and forms, and
keys related to Sellers’ and Operating Tenants’ operation of the Hotels and
Sellers’ and Operating Tenants’ maintenance and repair of the Property.

 

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25.  
Inventory: All inventory located at the Hotels, including without limitation,
all mattresses, pillows, bed linens, towels and Operating Supplies.

 

26.  
Knowledge: As to Sellers, the actual knowledge, after due inquiry of the current
general managers of the respective Hotels, of (A) (i) Marcel Verbaas and (ii)
Travis Snyder and (B) as to the representation of Sellers set forth in
Section 6.08, Mark Patten; and as to Buyer, the actual knowledge of Kevin M.
Luebbers and Warren Q. Fields; without any duty of inquiry or investigation
(excepting, in the case of Sellers, due inquiry of the current general managers
of the Hotels), and expressly excluding the knowledge of any other shareholder,
partner, member, trustee, beneficiary, director, officer, manager, employee,
agent or representative of the Sellers or Buyer or any of their affiliates. For
the purposes of this definition, the term “actual knowledge” means, with respect
to any person, the conscious awareness of such person at the time in question,
and expressly excludes any constructive or implied knowledge of such person.

 

27.  
Land: Those certain parcels of land more particularly described in Exhibit “A”
attached hereto and incorporated herein by reference, and all rights and
appurtenances thereto.

 

28.  
Management Agreements: The Management Agreements in effect with respect to each
Hotel as identified on Exhibit “G” attached hereto.

 

29.  
Management Termination Fees: As defined in Section 1.06 hereof.

 

30.  
Managers: Each “Manager” of a Hotel under and pursuant to the Management
Agreements.

 

31.  
Material Operating Agreements: Those Operating Agreements that (A)(i) require
more than thirty (30) days notice to terminate, or (ii) are terminable upon
notice of thirty (30) days or less and require payment of a termination fee, or
(iii) are not terminable by Sellers for convenience or upon sale of the affected
Property, and (B) either (i) require aggregate annual payments (including any
termination fee) in excess of Twenty Thousand and No/100 Dollars ($20,000.00)
per Operating Agreement during the remaining term of such Operating Agreement
after the Closing, or (ii) have an unexpired term following the Closing
(including any mandatory renewal terms that are exercisable by the counterparty
thereto) of more than one (1) year.

 

32.  
Operating Agreements: The contracts, agreements, leases (including, but not
limited to, commercial space leases and equipment leases, and those certain room
agreements in which third parties have been given certain rights to rooms or
services at each Hotel from and/or after the Closing Date), maintenance
agreements and service contracts in effect with respect to each Hotel including,
but not limited to, those listed in Exhibit “H” attached hereto and incorporated
herein by this reference.

 

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33.  
Operating Leases: Those certain lease agreements by and between each Seller, as
“Landlord,” and each Operating Tenant, as amended, and more particularly
described on Exhibit “I” attached hereto and incorporated herein by this
reference, pursuant to which each Operating Tenant leases its respective Hotel.

 

34.  
Operations Settlement: A final accounting prepared by Sellers’ and Buyer’s
accountants in the period between eight o’clock p.m. on the day prior to the
Closing Date and eight o’clock a.m. (local time) on the Closing Date, the
results of which shall be incorporated into the closing statement.

 

35.  
Operating Supplies: Any and all operating supplies, whether consumables or
non-consumables, used or consumed in the ordinary course of business at the
Hotels and owned by Sellers or Operating Tenants, including without limitation,
paper products, soap, cleaning supplies, food, and non-alcoholic and alcoholic
beverages, provided that to the extent that any applicable law prohibits the
transfer of alcoholic beverages from Sellers to Buyer, such beverages shall not
be considered a part of Operating Supplies until such time as the same may
lawfully be transferred after Closing, at which point the same shall be
transferred (pending any post-Closing transfer, such alcoholic beverages shall
be subject to the terms of any post-Closing liquor license operating agreement
entered into pursuant to the terms hereof).

 

36.  
Operating Tenants: The entities identified as the Operating Tenants of each
Operating Lease, which are affiliates of Sellers. Each such entity is at times
herein referred to as an “Operating Tenant.”

 

37.  
Other Revenues: All revenues earned by Sellers from the operation of the Hotels
other than Room Revenues, including, without limitation, revenues from the sale
of food, the sale of alcoholic and nonalcoholic beverages, rental of meeting and
banquet rooms, telephone sales, pay television sales, valet and parking
services, and other similar revenues, together with any sales tax or other taxes
thereon.

 

38.  
Permitted Assignee: Any entity or entities wholly owned by Buyer or controlled
by Buyer which shall be formed by Buyer prior to the Closing Date for purposes
of acquiring all or any portion of or interest in the Property.

 

39.  
Permitted Exceptions: Any and all (i) restrictions, easements, reservations,
covenants and other matters of record (including, without limitation, all
instruments, matters and items set forth as exceptions to title in the Title
Commitments) and zoning and land use ordinances and laws of any governmental
authority (except for monetary liens, mortgages and encumbrances which shall be
paid by Sellers prior to Closing and other matters to be cured by Sellers
pursuant to this Agreement, and subject to Sellers’ obligations under Section
3.01 hereof); (ii) general taxes and assessments for the year of the Closing and
thereafter and special taxes and assessments, in each case to the extent not
then due and payable as of the Closing Date; (iii) encroachments, overlaps,
boundary line disputes, unrecorded easements or other matters disclosed or
indicated by or shown on the Surveys or their updates or which would be
disclosed or indicated by or shown on a current, accurate survey or a personal
inspection of the Property; (iv) leases and tenancies in writing for any areas
of the Land or Hotels which are listed on the attached Exhibit “H” and are to be
assumed by Buyer; (v) disputed liens or encumbrances for which Sellers shall
have provided bond or security satisfactory to the Title Company in order to
remove same as exceptions from the Title Policies; and (vi) liens, mortgages and
encumbrances created by Buyer.

 

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40.  
Personal Property: All furniture, furnishings, fixtures, equipment, vehicles,
machinery, appliances, dishes, utensils, cookware, materials, linen, china,
glassware, tableware, uniforms and similar items, whether in use or held in
stock for future use, in connection with the operation of each Hotel, subject to
such depletion and including such re-supplies prior to the Closing Date as shall
occur in the ordinary course of business, and Inventory, located at the Hotels,
owned and used by any Seller or any Operating Tenant, and used by any Seller or
any Operating Tenant solely in connection with the operation of the Hotels,
including but not limited to all items included within the definition of
“Property and Equipment” under the Uniform System of Accounts for the Lodging
Industry, Ninth Revised Edition, 1996, as published by the Hotel Association of
New York City, Inc., but (subject to the provisions of Section 1.02)
specifically excluding any Personal Property that is leased by any Seller from a
third-party pursuant to any lease listed on the attached Exhibit “H” and therein
specifically identified, and all Rooms Agreements.

 

41.  
Property: A collective term which shall mean all of the Land, Hotels, Intangible
Property and Personal Property.

 

42.  
Purchase Price: The amount specified in Section 2.01 as the purchase price for
the Property.

 

43.  
Purchase Price Allocation Schedule: The schedule attached hereto as Exhibit “J”
pursuant to which the Purchase Price is allocated among each Property for the
purposes of calculating title insurance premiums and other closing costs.

 

44.  
Room Revenues: All revenues from the rental of guest rooms of the Hotels (but
excluding any items included in the definition of Other Revenues), together with
any and all sales or other taxes thereon.

 

45.  
Sellers: Shall mean those entities more particularly described on Exhibit “K”
attached hereto and by this reference incorporated herein. Each such entity is
at times herein referred to as a “Seller.”

 

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46.  
Surveys: The surveys of each parcel comprising the Land and the Hotel located on
such parcel obtained by Buyer prior to execution of this Agreement. Each of the
Surveys is at times herein referred to as a “Survey.”

 

47.  
Title Company: First American Title Insurance Company through the Talon Group,
Orlando Commercial Services Division, a division of First American Title
Insurance Company, whose address is 111 North Orange Avenue, Suite 1285,
Orlando, Florida 32801, Attention: Michael Moore.

 

48.  
Title Insurance Commitments: The commitments of title insurance issued by Title
Company and provided by Sellers to Buyer with respect to each parcel comprising
the Land prior to the execution of this Agreement. Each of the Title Commitments
is at times herein referred to as a “Title Commitment.”

 

49.  
Title Policies: The owner’s policies of title insurance to be issued to Buyer
pursuant to the terms of the Title Insurance Commitments and this Agreement.
Each of the Title Policies is at times herein referred to as a “Title Policy.”

 

50.  
Transfer Time: 12:01 a.m. (local time) on the Closing Date.

 

51.  
Tray Ledgers: Any accounts receivable of registered guests who have not checked
out and who are occupying rooms on the evening prior to, and the morning of, the
Closing Date.

 
AGREEMENT
 
ARTICLE I
 
ASSETS PURCHASED AND SOLD
 
Section 1.01 Purchase and Sale.»
 
Subject to the terms and conditions of this Agreement and in consideration of
the performance of the covenants contained herein, Buyer agrees to purchase from
Sellers and Sellers agree to sell to Buyer, all of Sellers’ right, title and
interest in and to the Property.
 
Section 1.02 Personal Property.»
 
Subject to the terms and conditions of this Agreement, at Closing Sellers agree
to assign, transfer and convey the Personal Property to Buyer pursuant to the
Bill of Sale (Personal Property). In the event that any Personal Property is
owned by any Operating Tenant, Sellers agree to cause such Operating Tenant to
assign, transfer and convey any such Personal Property to Buyer at Closing,
pursuant to a bill of sale in the same form as the Bill of Sale (Personal
Property).
 
Section 1.03 Operating Agreements.»
 
At Closing, each Seller shall assign and transfer to Buyer all of such Seller’s
right, title and interest in and to, and Buyer shall assume all of such Seller’s
obligations and liabilities first arising from and after Closing under, the
Operating Agreements pursuant to the Assignment and Assumption of Operating
Agreements; provided, however, that Sellers shall terminate or cause to be
terminated as of the Closing Date, at Buyer’s cost and expense, all Operating
Agreements listed on Exhibit “N” attached hereto, provided that the same can be
terminated pursuant to their terms. Buyer shall pay all out of pocket fees and
expenses of third parties under the Operating Agreements in regard to such
assignments, transfers and terminations, including any transfer charges
reasonably necessary to obtain the consent of any such third party. Sellers
shall promptly provide Buyer with complete copies of any new contracts,
agreements, leases (including, but not limited to, commercial space leases and
equipment leases), maintenance agreements and service contracts in effect with
respect to each Hotel entered into subsequent to the Effective Date and prior to
the Closing Date (“New Operating Agreements”). Notwithstanding the foregoing,
Sellers reserve the right to provide Buyer with access to all Operating
Agreements and New Operating Agreements via the Data Room Web Site in lieu of
delivering hard copies of such Operating Agreements and New Operating Agreements
to Buyer; provided, Sellers shall give prior notice to Buyer of any New
Operating Agreements entered into subsequent to the Effective Date, including
but not limited to any that are provided in the Data Room Web Site. Sellers
shall not enter into any material New Operating Agreement(s) which will obligate
Buyer following Closing, except those which (i) are terminable without payment
or penalty on thirty (30) or fewer days notice or (ii) have otherwise been
reasonably approved by Buyer. Buyer shall have five (5) business days to approve
or disapprove any material New Operating Agreement to be entered into prior to
Closing following a written request therefor by any Seller, which approval may
be granted or withheld in Buyer’s reasonable discretion. Buyer’s failure to
provide a written response to such Seller within five (5) business days
following a written request from such Seller shall be deemed an approval of such
New Operating Agreement by Buyer. After such approval or deemed approval of any
New Operating Agreement, such approved or deemed approved New Operating
Agreement shall be and be deemed to be an Operating Agreement to be assigned by
Seller and assumed by Buyer hereunder. Buyer understands and agrees that it is
solely Buyer’s responsibility to obtain any and all contracts, agreements,
leases (including, but not limited to, commercial space leases and equipment
leases), maintenance agreements and service contracts necessary to conduct
business at the Hotels from and after the Closing Date. Buyer’s failure to
obtain any of the same which are necessary or convenient to the operation of the
Hotels shall not affect or delay the performance of Buyer’s obligations under
this Agreement. In the event that any Operating Tenant is a party to and holder
of rights under any Operating Agreement, Sellers agree to cause such Operating
Tenant to assign and transfer such rights to Buyer at Closing, pursuant to an
assignment and assumption agreement in the same form as the Assignment and
Assumption of Operating Agreements, or if such Operating Agreement is listed on
Exhibit “N” attached hereto and can be terminated pursuant to its terms, to
terminate the same as herein required.
 

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Section 1.04 Intangible Property.»
 
At Closing, each Seller shall assign and transfer to Buyer all of such Seller’s
right, title and interest in and to, and Buyer shall assume all of each Seller’s
obligations and liabilities first arising from and after Closing under, the
Intangible Property, pursuant to the Assignment and Assumption of Intangible
Property. Sellers have, to Sellers’ Knowledge, provided Buyer with copies of all
documents comprising the Intangible Property which were in Sellers’ possession
and in effect as of the Effective Date. Sellers shall promptly provide Buyer
with copies of any documents comprising Intangible Property issued to Sellers or
entered into by any Seller subsequent to the Effective Date and prior to the
Closing Date. Notwithstanding the foregoing, Sellers reserve the right to
provide Buyer with access to all such documents comprising Intangible Property
via the Data Room Web Site in lieu of delivering hard copies of such documents
comprising Intangible Property to Buyer; provided, Sellers shall give prior
notice to Buyer of any new Intangible Property received subsequent to the
Effective Date, including but not limited to any that are provided in the Data
Room Web Site. Buyer understands and agrees that it is solely Buyer’s
responsibility to obtain any and all Intangible Property necessary to conduct
business at the Hotels from and after the Closing Date. Buyer’s failure to
obtain any Intangible Property which are necessary or convenient to the
operation of the Hotels shall not affect or delay the performance of Buyer’s
obligations under this Agreement. In the event that any Operating Tenant is the
holder of rights under any Intangible Property, Sellers agree to cause such
Operating Tenant to assign and transfer such rights to Buyer at Closing,
pursuant to an assignment and assumption agreement in the same form as the
Assignment and Assumption of Intangible Property.
 

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Section 1.05 Franchise Agreements.»
 
Buyer and Sellers acknowledge that in connection with, and as a condition to
Sellers’ obligations hereunder, the Franchise Agreements and the Guaranty of
Franchise Agreements shall be terminated at Buyer’s expense, all as of the
Closing Date. Buyer acknowledges that as a condition to the termination of the
Franchise Agreements and Guaranty of Franchise Agreements, each Franchisor shall
require that Buyer satisfy such Franchisor’s requirements for issuance of new
Franchise Agreement and shall require that the applicable Operating Tenant
execute and deliver to such Franchisor before Closing its standard form of
termination of Franchise Agreement. Buyer agrees that Buyer will timely submit
its applications for a new franchise agreement to replace each of the Franchise
Agreements to be terminated at Closing, together with the appropriate
application fee, and will proceed with all due diligence and good faith to
satisfy each Franchisor’s requirements for issuance of a new franchise agreement
prior to the Closing Date. Buyer hereby acknowledges and agrees that Buyer shall
be responsible for the termination fee (or in the event such Franchisor does not
approve Buyer as a new franchisee, the applicable liquidated damages, if any,
set forth in the applicable Franchise Agreement), if any, due to any Franchisor
pursuant to the applicable Franchise Agreement. Buyer further agrees that in no
event shall issuance of a new franchise agreement that is required to terminate
an existing Franchise Agreement or Guaranty of Franchise Agreement be a
condition to Buyer’s obligation to close hereunder and Buyer’s failure to obtain
any such new franchise agreement prior to the Closing Date shall under no
circumstances excuse Buyer from any of its obligations hereunder. If Buyer has
not satisfied all requirements of each Franchisor for issuance of a new
franchise agreement as of the Closing Date, and as a result any such Franchisor
does not issue a new franchise agreement to Buyer as of the Closing Date, then
Buyer shall pay and indemnify and hold Sellers and the Operating Tenants
harmless from and against any and all loss, costs, liability, damages and
expenses (including, without limitation, reasonable attorneys’ fees and any
liquidated damages payable to such Franchisor) incurred by any Seller or
Operating Tenant as a result of the failure of Buyer to obtain a replacement
franchise agreement for each Franchise Agreement terminated at Closing.
 
Section 1.06 Management Agreements.»
 
(a) Prior to the execution of this Agreement, Sellers have furnished Buyer with
copies of all Management Agreements in Sellers’ possession or control (or made
such Management Agreements available to Buyer via the Data Room Web Site in lieu
of delivering hard copies of the Management Agreements to Buyer).
 
(b) Sellers shall cause the applicable Operating Tenant under each of the
Management Agreements other than the Hotel Rex Management Agreement to terminate
such Management Agreements as of or prior to Closing. Sellers shall provide
written notice of termination to the Managers of the Management Agreements
within three (3) business days of the Effective Date in the form and manner
required pursuant to each such Management Agreement. In the event any Management
Agreement other than the Hotel Rex Management Agreement requires a minimum
notice period prior to termination that extends beyond the outside Closing Date
hereunder and the applicable Manager thereunder does not agree to an earlier
termination of such Management Agreement, Buyer and Sellers shall each have the
right to postpone the Closing Date until the earliest date on which all such
Management Agreements other than the Hotel Rex Management Agreement can be
terminated.
 

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(c) At Closing, Seller shall pay all applicable termination fees with respect to
the termination of the Management Agreements (the “Management Termination
Fees”).
 
(d) The Sellers shall cause the Operating Tenant of the Hotel Rex to provide
written notice of termination of the Hotel Rex Management Agreement to the
Manager within three (3) business days of the Effective Date in the form and
manner required pursuant to the Hotel Rex Management Agreement. Buyer
acknowledges and agrees that the termination of the Hotel Rex Management
Agreement shall not be a condition to close the transactions contemplated
pursuant to this Agreement, that the minimum notice period to terminate the
Hotel Rex Management Agreement is ninety (90) days. Buyer and Sellers hereby
agree to use good faith efforts to obtain the Hotel Rex Manager’s agreement to
terminate the Hotel Rex Management Agreement at Closing at no additional cost to
Sellers; provided, however, in the event that the Hotel Rex Manager does not so
agree, Buyer acknowledges and agrees that Buyer shall assume all of the
applicable Operating Tenant’s obligations under the Hotel Rex Management
Agreement accruing from and after the Transfer Time, which assignment and
assumption shall be accomplished through the execution by such parties of the
Assignment and Assumption of Hotel Rex Management Agreement at Closing. Sellers
shall use good faith efforts to obtain the applicable Manager’s consent to the
assumption of the Hotel Rex Management Agreement by Buyer, provided however
Buyer hereby agrees that Buyer shall indemnify and hold Sellers and the
Operating Tenants harmless from and against any and all loss, costs, liability,
damages and expenses (including, without limitation, reasonable attorneys’ fees)
incurred by any Seller or Operating Tenant as a result of the failure to obtain
the Hotel Rex Manager’s consent to the Assignment and Assumption of Hotel Rex
Management Agreement.
 
Section 1.07 Land and Hotels.»
 
At Closing, each Seller shall convey title to the Land and Hotels owned by such
Seller to Buyer pursuant to the Deeds.
 
Section 1.08 Operating Leases.»
 
At or prior to Closing, Sellers, at Sellers’ sole cost and expense, shall
terminate the Operating Leases.
 
ARTICLE II
 
PURCHASE PRICE
 
Section 2.01Price.»
 
The Purchase Price for the Property shall be One Hundred Nine Million and No/100
Dollars ($109,000,000.00), all cash, subject to closing adjustments as provided
in this Agreement. Sellers and Buyer agree that the Purchase Price shall be
allocated among each Hotel as set forth on the attached Exhibit “J”.
 

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Section 2.02 Deposit.»
 
Provided that the Deposit has not already been lodged with Escrow Agent prior to
execution of this Agreement, upon execution of this Agreement by Buyer, the
Deposit, in the form of a cashier’s or certified check or wire transfer, shall
be immediately deposited with the Escrow Agent by Buyer. Such Deposit shall be
deposited by the Escrow Agent into an interest-bearing, fully-insured account.
In the event that the Deposit has not been lodged with Escrow Agent within one
(1) business day following the Effective Date, this Agreement shall immediately
terminate. The Deposit shall be applied to payment of the Purchase Price at
Closing or shall otherwise be paid as herein provided. Buyer acknowledges and
agrees the Deposit is “At Risk” and is not refundable to Buyer except as
expressly provided in this Agreement. All interest earned in said account of the
Escrow Agent shall be reported by the Escrow Agent to the Internal Revenue
Service as income to Buyer (and Buyer agrees to execute a W-9 form and any other
federal tax documents necessary in connection therewith).
 
Section 2.03  Balance of Purchase Price.»
 

 
The balance of the Purchase Price for the Property (subject to the adjustments
and/or prorations provided in this Agreement) shall be paid by Buyer by wire
transfer of good funds to Escrow Agent at Closing as set forth in Section 12.02.
 
Section 2.04 Escrow Agent.»
 

 
(a) The Escrow Agent, in its capacity as holder of the Deposit in escrow, joins
in the execution of this Agreement for the limited purpose of acknowledging and
agreeing to the provisions of this Section 2.04.
 
(b) The duties of the Escrow Agent shall be as follows:
 
(1) The Escrow Agent shall hold and disburse the Deposit in accordance with the
terms and provisions of this Agreement.
 
(2) If this Agreement shall be terminated by the mutual written agreement of
Sellers and Buyer, or if the Escrow Agent shall be unable to determine at any
time to whom the Deposit should be paid, or if a dispute shall develop between
Sellers and Buyer concerning to whom the Deposit should be paid and delivered,
then and in any such event, the Escrow Agent shall pay and deliver such in
accordance with the joint written instructions of Sellers and Buyer. In the
event that such written instructions shall not be received by the Escrow Agent
within ten (10) days after the Escrow Agent has served a written request for
instructions upon Sellers and Buyer, then the Escrow Agent shall have the right
to pay and deliver the Deposit into an appropriate court of proper jurisdiction
in the state of Florida, and interplead Sellers and Buyer in respect thereof,
and thereupon the Escrow Agent shall be discharged of any obligations in
connection with this Agreement.
 
(3) If costs or expenses are incurred by the Escrow Agent in its capacity as
holder of the Deposit in escrow because of litigation or a dispute between
Sellers and Buyer arising out of the holding of the Deposit in escrow, Sellers
and Buyer shall each pay the Escrow Agent one-half of such reasonable costs and
expenses not to exceed a total of $2,000.00. Except for such costs or expenses,
no fee or charge shall be due and payable to the Escrow Agent for its services
as escrow holder only.
 
(4) By joining herein, the Escrow Agent undertakes only to perform the duties
and obligations imposed upon the Escrow Agent under the terms of this Agreement
and expressly does not undertake to perform any of the other covenants, terms
and provisions incumbent upon Sellers and Buyer hereunder.
 
(5) Buyer and Sellers hereby agree and acknowledge that the Escrow Agent assumes
no liability in connection herewith except for its negligence or willful
misconduct; that the Escrow Agent shall never be responsible for the validity,
correctness or genuineness of any document or notice referred to under this
Agreement; and that in the event of any dispute under this Agreement, the Escrow
Agent may seek advice from its own legal counsel and shall be fully protected in
any action taken by it in good faith in accordance with the good faith opinion
of its legal counsel.
 
Section 2.05 Reserve Accounts.»
 
All funds held in bank accounts, cash accounts and all funds held in reserve
accounts for furniture, fixtures and equipment, for capital expenditures, or for
other matters relating to the operation of the Hotels, whether such accounts are
held in the name of the Sellers, Operating Tenants or Managers on behalf of
Sellers or Operating Tenants, shall be retained by Sellers. In the event that
any such funds are held by a Manager, Buyer may elect to have Manager retain
such funds on behalf of Buyer and reimburse Sellers at Closing for the amount so
retained by such Manager in lieu of such amount being delivered by Manager to
the applicable Seller.
 
Section 2.06 Capital Expenditure Plans.»
 
Sellers have heretofore incurred in the calendar year 2005, and will continue to
incur, expenditures with respect to the Hotels pursuant to existing capital
expenditure plans and/or property improvement plans (if any) prior to Closing.
Prior to the execution of this Agreement, the Sellers have delivered and Buyer
hereby acknowledges receipt of the current budget for the expenditures
contemplated by this Section 2.06, and all renovation, property improvement
plans or capital improvement contracts entered into by Sellers with respect to
such expenditures. Sellers agree to not change the scope of the work
contemplated by such budgets prior to Closing; provided, however, with respect
to that certain Hotel known as the Holiday Inn located in Columbia, South
Carolina, the applicable Seller shall not be required to incur any expenditures
required by any capital expenditure plan in effect with respect to such Hotel
unless the same, in Sellers’ good faith, reasonable judgment, are immediately
necessary to protect the physical integrity or lawful operation of the Hotel or
the health or safety of its occupants.
 
ARTICLE III
 
OPERATION OF THE PROPERTY
 
Section 3.0 1   Operation in the Ordinary Course of Business.»
 
Sellers shall not (and Sellers shall cause Operating Tenants and Manager to
not), without the prior written consent of Buyer, (i) enter into any material
leases or tenancies with respect to the Property, (ii) enter into any material
service or maintenance agreements which are not terminable upon thirty (30) days
notice without penalty, (iii) except in the ordinary course of business, engage
or retain any new or additional employees, entities or independent contractors
whose compensation may be assumable by Buyer (or reimbursable by Buyer to
Manager), (iv) modify or release any material warranties or guaranties with
respect to the Property, (v) grant or permit any encumbrances on the Property or
contract for any construction or service for the Property which may impose any
mechanics or materialmen’s lien on the Property beyond Closing, or (vi) execute,
record in the public records and/or deliver to the other party any document
affecting title to the Property, all except as otherwise specifically
contemplated in this Agreement. Buyer shall have five (5) business days to
approve or disapprove any of the foregoing proposed actions following a written
request therefore by any Seller, which approval may be granted or withheld in
Buyer’s reasonable discretion. Buyer’s failure to provide a written response to
such Seller within five (5) business days following a written request from such
Seller shall be deemed an approval of such proposed action by Buyer. Sellers
shall and shall cause Operating Tenants to, subject to the terms of the
Management Agreements, use reasonable efforts to cause the Managers to maintain
inventory levels consistent with Managers’ prior practices and continue to
operate and maintain each Hotel in the ordinary course of business pursuant to
the terms of the Management Agreements during the period between the Effective
Date and the Closing Date.

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Section 3.02Liquor Licenses.»
 
Buyer shall make an application to the appropriate governmental authorities to
have a new liquor license at each Property issued in, or any existing liquor
license transferred to, the name of Buyer or an entity designated by Buyer in
compliance with local law, and Sellers shall cooperate with Buyer in this
regard, at Buyer’s sole cost and expense, provided, however, Buyer acknowledges
that the Holiday Inn Columbia, SC Hotel is the only Property where Seller holds
a liquor license. Buyer shall use commercially reasonable efforts, at its sole
cost and expense, to obtain the approval of applicable authorities for the
issuance of a new liquor license for each of the Hotels or transfer of the
existing liquor license prior to, or contemporaneously with, the Closing. Seller
shall cause the Managers at the other Hotels to reasonably cooperate with Buyer
with respect to transferring the existing liquor licenses to Buyer at such
Hotels, to the extent Seller has the right to do so under the applicable
Management Agreements and as permitted by law. In such event, Buyer shall
maintain liquor liability insurance in amounts currently maintained by Sellers
naming Sellers as additional insured parties, and further agrees to indemnify,
defend and hold Sellers harmless from and against any liability, cost or expense
arising out of Sellers’ cooperation with Buyer during such interim period. The
provisions of this Section 3.03 shall survive the Closing.
 
Section 3.03Cooperation.»
 
Sellers shall cooperate reasonably, at no cost to Sellers, with Buyer in
securing the transfer or issuance of any permits or licenses, including, without
limitation, a liquor license, necessary to permit the lawful, continuous
operation of any Property by Buyer immediately following the Closing Date.

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ARTICLE IV
 
PRORATIONS AND ADJUSTMENTS
 
Section 4.01 Closing Statement/Operations Settlement.»
 
(a) Closing Statement. Taxes, rents (including but not limited to any rents paid
more than one month in advance), revenues and expenses pertaining to assigned
Operating Agreements, any security deposits held by Sellers under any leases
affecting the Property (other than the Operating Leases), prepaid utility
charges, and material deviations, if any, in the amount of the Personal Property
at the Hotels occurring in the period between the first and second inventories
provided for in Section 10.02 shall be allocated and prorated between Buyer and
Sellers pursuant to a written Closing Statement to be prepared by Sellers and
executed by Buyer and Sellers at the Closing. Any additional amounts owed by
Buyer or credits due to Buyer shall be reflected in such statement and the
Purchase Price shall be adjusted accordingly.

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(b) Operations Settlement. Room Revenues for the night of the Closing Date,
prepaid deposits for confirmed reservations, hotel facilities and services for
periods after the Transfer Time, and the purchase price for the Tray Ledgers,
House Funds and Accounts Receivable shall be determined by the Operations
Settlement. With respect to the Closing Date, Buyer agrees to the Hotel’s
employees’ completion of posting of financial activity, all schedules, credit
card billings, and all other activities normally associated with the daily
activity of the Hotels. Any amounts determined to be due and owing to Sellers by
Buyer or to Buyer by Sellers pursuant to the Operations Settlement shall be
incorporated into the Closing Statements but to the extent that any of the
foregoing information is unavailable or is found to be inaccurate, the same
shall be handled as a post-closing adjustment, the obligations of which shall
survive the Closing.
 
Section 4.02 Taxes and Rents.»
 
At Closing, all general real estate and personal property taxes for the year of
the Closing and special taxes and assessments shall be prorated as of the
Closing Date (with Buyer to pay taxes attributed to the Closing Date and all
periods thereafter) using the latest available tax rates and assessments and
taking advantage of any discounts or rebates available for early payment and/or
payment before delinquency. The parties shall have no obligation to readjust
such prorations after the Closing; provided, however, if the proration is based
upon the previous tax year’s bills, the parties shall make an appropriate
adjustment upon receipt of the current tax year’s bills; Sellers shall pay
general real estate and personal property taxes for all years prior to the year
of the Closing and all special taxes or assessments then due and payable as of
the Closing Date, except that, if any assessment against the Property, or any
portion thereof, is payable in installments, Buyer shall pay any and all of such
installments which may be paid after the Closing Date, and any installment
relating to the year of Closing shall be prorated as of the Closing Date (with
Buyer to pay all portions of such installment attributed to the Closing Date and
all periods thereafter). Any tax refunds or rebates occurring or accruing with
respect to any and all time periods before the Closing Date shall remain the
property of Sellers, and, if Buyer collects or receives same, Buyer shall
promptly remit same to Sellers. The provisions of the immediately preceding
sentence shall survive the Closing. All taxes or assessments which become due
and payable on or after the Closing Date shall be paid by Buyer.
 
Section 4.03 Utilities.»
 
Prior to the Closing, Sellers shall notify all utility companies servicing their
respective portions of the Property of the anticipated change in ownership of
the Property and request that all billings after the Transfer Time be made to
Buyer at the addresses of the Hotel located on their portion of the Property.
Utility meters will be read, to the extent that the utility company will do so,
during the daylight hours on the Closing Date, with charges to that time paid by
Sellers and charges thereafter paid by Buyer. Prepaid utility charges shall be
adjusted on the Closing Statement and paid for at Closing. Charges for utilities
which are unmetered, or the meters for which have not been read on the Closing
Date, will be prorated between Buyer and Sellers as of the Transfer Time based
upon utility billings received after Closing. Sellers or Buyer, as appropriate,
shall, upon receipt, submit a copy of the utility billings for any such charges
to the other party and such party shall pay its pro rata share of such charges
to the party requesting payment within ten (10) business days from the date of
any such request. This obligation shall survive Closing.
 
Buyer shall be responsible for paying, before the Closing, all deposits required
by utility companies in order to continue service at the Hotels for periods
after the Transfer Time and shall take any other action and make any other
payments required to assure uninterrupted availability of utilities at the
Hotels and the Land for all periods after Closing. Following Closing, all
utility deposits made by any Sellers shall be refunded directly to Sellers by
the utility company holding same. This right to receive any such refund shall
survive Closing.

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Section 4.04 Assigned Operating Agreements and Management Agreements.»
 

 
(a) All income and expenses with respect to the assigned Operating Agreements
will be prorated as of the Closing Date (with income and expenses for the
Closing Date and thereafter to be allocated to Buyer). There shall be added to
the amount due to Buyer at Closing, on the Closing Statement, the amount of any
prepaid rents applicable to periods following Closing, security deposits, or
other deposits previously paid to Sellers under any assigned Operating
Agreements, and there shall be deducted from the amount due Sellers at Closing,
on the Closing Statement, any such amounts paid to and collected by Sellers
under any Operating Agreements attributable to periods including and after the
Closing Date.
 
(b) Sellers shall be responsible for all management fees and other amounts
payable or reimbursable under the Management Agreements that accrue to the
period prior to the Closing Date, including, without limitation, any accrued
incentive fees under the Management Agreements, subject to the provisions of
Section 1.06(c) hereof. In the event the Hotel Rex Management Agreement is not
terminated as of the Closing Date, Buyer shall be responsible for all management
fees and other amounts payable or reimbursable under the Hotel Rex Management
Agreement that accrue to the period from and after the Closing Date.
 
Section 4.05 Room Revenues; Reservations; Tray Ledger; Accounts Receivable and
House Funds.»
 

 
(a) Room Revenues for the night of the Closing Date (the “night of the Closing
Date” being defined for the purposes of this Section 4.05(a) to mean the night
ending concurrent with the expiration of the Operations Settlement) shall be
divided equally between Buyer and Sellers pursuant to the Operations Settlement.
Other Revenues for the night of the Closing Date shall belong solely to Sellers.
 
(b) Buyer will honor, for its account, the terms and rates of all pre-closing
reservations confirmed by Sellers or Managers for dates after the Closing Date.
Buyer authorizes Sellers and Managers to continue to accept reservations for
periods after the Closing in the ordinary course of Sellers’ or Managers’
business. Buyer recognizes that such reservations may include discounts or other
benefits provided in the ordinary course of business, including, without
limitation, benefits under any awards programs, sports team, corporate,
government or group discounts, weekend discounts or requirements that ancillary
food, beverage or other benefits be delivered by Buyer to the guest(s) holding
such reservations. Buyer agrees to honor all such reservations in accordance
with their terms. Any pre-closing deposits made to Sellers with respect to
confirmed reservations for dates after the Closing Date will be credited to
Buyer at the Operations Settlement. Any post-closing deposits received by
Sellers with respect to confirmed reservations for dates after the Closing Date
will be forwarded to Buyer upon receipt.

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Buyer will honor, for its account, all of Sellers’ room allocation agreements
and banquet facility and service agreements entered into in the ordinary course
of business consistent with past practices which have been granted to groups,
persons or other customers for periods after the Closing Date at the rates and
terms provided in such agreements.
 
Buyer agrees that Sellers cannot make and have made no representation or
warranty that any party holding a room reservation or agreement for Hotel
facilities or services will utilize such reservation or honor such agreement.
Buyer, by the execution hereof, assumes the risk of non-utilization of
reservations and nonperformance of such agreements.
 
Buyer agrees to indemnify, defend and hold Sellers harmless from and against any
claim which may be asserted against any Seller alleging that Buyer has failed to
honor any such pre-closing reservation or agreement in accordance with its
terms. The provisions of this Section 4.05(b), including, without limitation,
the assumptions of risk and indemnities by Buyer set forth above, shall survive
the Closing.
 
(c) Buyer shall purchase the Tray Ledgers from Sellers pursuant to the
Operations Settlement.
 
(d) Buyer shall purchase the House Funds, exclusive of any non-cash items, from
Sellers pursuant to the Operations Settlement.
 
(e) At Closing, Sellers shall receive a credit for all Accounts Receivable in an
amount equal to: (i) one hundred percent (100%) of all such Accounts Receivable
which are unpaid for not more than sixty (60) days; plus (ii) seventy five
percent (75%) of all such Accounts Receivable which are unpaid for more than
sixty (60) days, but not more than ninety (90) days. Seller shall not receive
any credit for any Accounts Receivable which are unpaid for more than ninety
(90) days (the “Aged Accounts Receivable”). All Aged Accounts Receivable which
are unpaid as of the Closing Date shall remain the property of Seller following
Closing and Buyer shall promptly remit to Seller all such Aged Accounts
Receivable to the extent received by Buyer, as and when received by Buyer, it
being agreed that Buyer shall not be deemed to have collected any such Aged
Accounts Receivable until such time as the payor is current in the payment to
Buyer of all amounts accruing in the month of, and all months after, the
Closing. Nothing herein shall limit Seller’s right to pursue collection of Aged
Accounts Receivable that are to remain the property of Seller following the
Closing Date, and following the Closing Date Buyer shall reasonably cooperate
with Seller with respect thereto, but Buyer will not be obligated to institute
any lawsuit or other collection procedures to collect Aged Accounts Receivable
or expend any out-of-pocket sums in connection with the collection of Aged
Accounts Receivable.
 
Section 4.06 Accounts Payable and Expenses.»
 
All accounts payable and expenses related to operations of the Property which
have accrued before the Transfer Time shall be paid by Sellers. Buyer
understands and agrees that Sellers may postpone and/or contest payment of any
account payable or expense which is the subject of a bona fide dispute, or for
which a bill is not rendered until after Closing. All accounts payable and
expenses accruing after the Transfer Time will be Buyer’s responsibility.

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Section 4.07 Apportionments/Adjustments Generally. Except as otherwise expressly
provided herein, all apportionments and adjustments shall be made on an accrual
basis in accordance with generally accepted accounting principles, consistently
applied. The computation of the adjustments shall be jointly prepared by Sellers
and Buyer. To the extent the exact amount of any adjustment item provided for in
this Article IV cannot be precisely determined on the Closing Date, the parties
shall estimate the amount thereof, for purposes of computing the net amount due
Sellers or Buyer pursuant to this Article IV and shall determine the exact
amount thereof not later than sixty (60) days after the Closing Date.
 
Section 4.08 Guests’ Property.»
 
All baggage or other property of patrons of a Property checked or left in care
of any Seller and/or Operating Tenant or Manager shall be listed in an inventory
to be prepared in duplicate and signed by Sellers’ and Buyer’s representatives
on the Closing Date. Buyer shall be responsible from and after the Closing Date
and will indemnify and hold Sellers harmless from and against all claims for all
baggage and property listed in such inventory. Sellers shall indemnify and hold
harmless Buyer from and against claims for baggage and property not listed in
such inventory but shown to have been left in custody at a Property prior to the
Closing Date. All baggage or other property of guests retained by Sellers as
security for unpaid accounts receivable may be left on such Property without any
responsibility or liability therefor on the part of Buyer, for a period not to
exceed one (1) month from Closing Date, within which time such baggage or other
property shall be removed or otherwise disposed of by Sellers.
 
ARTICLE V
 
EMPLOYEES
 
Section 5.01 Salaries, Etc. »
 
Sellers shall be responsible for the payment of the salaries, wages, accrued
vacation pay, sick leave, bonuses, pension benefits, and other benefits earned
by and due to or accrued to employees at any of the Hotels prior to the Closing
Date, together with F.I.C.A., unemployment and other taxes and benefits due from
any employer of such employees accruing prior to the Closing Date. Sellers shall
indemnify and hold Purchaser harmless from and against any and all liability,
loss, cost, damage or expense related to any of the foregoing items. Such
indemnity shall survive Closing. Sellers shall not be responsible for the
payment of any such items accruing after the Transfer Time.
 
Section 5.02 Employee Claims.»

 
(a) Buyer shall indemnify, defend and hold harmless Sellers from and against any
and all loss, costs, liability, damages and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by any Seller arising out of,
based upon or in anyway relating or incidental to or connected with (i) any
violation, actual or alleged, by any Seller, Manager or Buyer of the Worker
Adjustment Retraining and Notification Act (“WARN Act”) or any similar local,
state or federal statute or law relating to the transactions contemplated by
this Agreement (a “WARN Act Violation”) and (ii) any other labor-and/or
employee-related claims and demands occurring as of and/or after the Closing
Date or in connection with the transactions contemplated by this Agreement.

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(b) Sellers shall indemnify, defend and hold harmless Buyer from and against any
and all loss, costs, liability, damages and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by Buyer arising out of, based
upon or in anyway relating or incidental to or connected with any labor-and/or
employee-related claims and demands occurring prior to the Closing Date or in
connection with the transactions contemplated by this Agreement, other than any
WARN Act Violation.
 
(c) The provisions of this Article V shall survive the Closing.
 
ARTICLE VI
 
REPRESENTATIONS AND WARRANTIES OF SELLERS
 
Sellers represent and warrant to Buyer as follows:
 
Section 6.01 Existence and Good Standing.»
 
Sellers are duly organized, validly existing and in good standing under the laws
of the state of their respective organization.
 
Section 6.02 Authority.»
 
Seller has, and on the Closing Date will have, all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated herein pursuant to the terms and conditions of this Agreement. All
persons or entities required to approve this Agreement pursuant to Seller’s
governance documents have approved this Agreement and certified resolutions
evidencing such approval will be delivered to Buyer at Closing.
 
Section 6.03 No Conflict.»
 
The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, breach, result in a
default under, or violate any commitment, document or instrument to which any of
the Sellers is a party or by which any of the Sellers is bound.
 
Section 6.04 Litigation.»
 
Except as set forth on the schedule attached as Exhibit “L” hereto, there is no
pending and Sellers have no Knowledge of any threatened litigation, arbitration
or governmental investigations with respect to the Property in which any Seller
or any Operating Tenant is named a party which has not been resolved, settled or
dismissed.
 
Section 6.04 Condemnation.»
 
Sellers have not received any written notice of any pending condemnation
proceeding or other proceeding in eminent domain, and to the Sellers’ Knowledge,
no such condemnation proceeding or eminent domain proceeding is threatened
affecting the Property or any portion thereof.
 
Section 6.05 Title to Personal Property.»
 
Sellers have good and valid title to all tangible Personal Property, which shall
be free and clear of all liens and encumbrances as of the Closing Date.

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Section 6.06 Compliance with Applicable Law.»
 
Sellers have not received any written notice of a violation of any applicable
law with respect to the Property which have not been cured or dismissed.
 
Section 6.07 Taxes.»
 
All property, sales use and occupancy taxes which accrue prior to the Closing
Date will be paid in full or prorated at Closing.
 
Section 6.08 Financial Statements.»
 
To Sellers’ Knowledge, the financial statements delivered by Sellers to Buyer
are complete, accurate and fairly represent the historical results of the
operations and financial condition of the Hotels.
 
Section 6.09 Contracts. Sellers have no Knowledge of any material non-compliance
with any Material Operating Agreement. To Sellers’ Knowledge, the schedule of
Operating Agreements attached hereto as Exhibit “H” includes all Material
Operating Agreements.
 
Section 6.10 Insolvency.»
 
No Seller has made a 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.
 
Section 6.11 FIRPTA.»
 
No Seller is a foreign entity, foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the U.S. Bankruptcy Code
and the regulations promulgated thereunder).
 
Section 6.12 Exclusivity.»
 
No Seller has entered into any other agreement providing for a sale of all or
any of the Property or any interest therein that is still in effect, and while
this Agreement remains in force and effect, Sellers agree that they shall not
enter into any such agreement.
 
Section 6.13 Hotel Rex Management Agreement. The copy of the Hotel Rex
Management Agreement delivered by Sellers to Buyer (or posted by Sellers to the
Data Room Web Site) is a full and complete copy of the Hotel Rex Management
Agreement in all material respects.
 
Section 6.14 Franchise Agreements. The requirements to terminate the Franchise
Agreements, including the calculation of the termination fees, if any, are set
forth in the copies of the Franchise Agreements delivered by Sellers to Buyer
(or posted by Sellers to the Data Room Web Site).
 
Section 6.15 Employee Matters. To Seller’s Knowledge, Sellers have not received
any notice of violation of any employment laws or regulations with respect to
the Hotels, and to Seller’s Knowledge there are no collective bargaining
agreements in place at the Hotels other than with respect to the Hilton
Fisherman’s Wharf Hotel in San Francisco, CA.
 
Section 6.16 Hazardous or Toxic Substances To Sellers’ Knowledge, all of the
environmental reports in Seller’s possession concerning environmental
conditions, Hazardous Substances or Toxic Substances in, on, under or affecting
the Property have been delivered to Buyer by Sellers or posted to the Data Room
Web Site (the “Environmental Reports”) and are listed on Exhibit “O” attached
hereto. Sellers make no representations or warranties whatsoever as to the
accuracy of the information in the Environmental Reports (including, without
limitation, whether the Environmental Reports are complete with regard to
identifying, characterizing the extent of or remediation of Hazardous Substances
or Toxic Substances at any Property) or as to the environmental condition of any
Property or the compliance thereof with Environmental Laws. Buyer acknowledges
that it has hired environmental consultants and counsel to make an independent
analysis of information in the Environmental Reports and to make an independent
inspection of the Property with respect to environmental conditions. Sellers
make no representation or warranty whatsoever with respect to the presence or
absence of Hazardous Substances or Toxic Substances located on or under,
emanating from or affecting any of the Property or its compliance with, or
violation of, any Environmental Laws. As used herein, the terms “Hazardous
Substances”, “Toxic Substances” and “Environmental Laws” shall have the meanings
given to such terms in Section 7.05 hereof.

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Section 6.16 Money Laundering.»
 

 
Neither any of the Sellers nor, to Sellers’ Knowledge, any of their respective
partners, investors or shareholders or any of their respective affiliates, is in
violation of any laws relating to terrorism, money laundering or the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No.
13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism) (the “Executive Order”) (collectively,
the “Anti-Money Laundering and Anti-Terrorism Laws”).
 
Neither any of the Sellers nor, to Sellers’ Knowledge, any of their respective
partners, investors or shareholders or any of their respective affiliates, is
acting, directly or indirectly, on behalf of terrorists, terrorist organizations
or narcotics traffickers, including, without limitation, those persons or
entities that appear on the Annex to the Executive Order, or are included on any
relevant lists maintained by the Office of Foreign Assets Control of U.S.
Department of Treasury, U.S. Department of State, or other U.S. government
agencies, all as may be amended from time to time.
 
Neither any of the Sellers nor, to Sellers’ Knowledge, any of their respective
partners, investors or shareholders or any of their respective affiliates, in
any capacity in connection with the sale of the Property (i) conducts any
business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any person included in the lists set forth in
the preceding paragraph; (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order; or (iii) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Money Laundering and
Anti-Terrorism Laws.
 
Sellers understand and acknowledge that Buyer may become subject to further
anti-money laundering regulations, and agree to execute instruments, provide
information, or perform any other acts as may reasonably be requested by Buyer,
for the purpose of: (i) carrying out due diligence as may be required by
applicable law to establish any Seller’s identity and source of funds; (ii)
maintaining records of such identities and sources of funds, or verifications or
certifications as to the same; and (iii) taking any other actions as may be
required to comply with and remain in compliance with anti-money laundering
regulations applicable to any Seller.

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Neither Sellers, nor, to Sellers’ Knowledge, any person controlling or
controlled by any of the Sellers, is a country, territory, individual or entity
named on a Government List, and, to Sellers’ Knowledge, the monies used in
connection with this Agreement and amounts committed with respect thereto were
not and are not derived from any activities that contravene any applicable
anti-money laundering or anti bribery laws and regulations (including, without
limitation, funds being derived from any person, entity, country or territory on
a Government List or engaged in any unlawful activity defined under 18 USC
§1956(c)(7)). For purposes of this Agreement, “Government List” means of any of
(a) the two lists maintained by the United States Department of Commerce (Denied
Persons and Entities), (b) the list maintained by the United States Department
of Treasury (Specially Designated Nationals and Blocked Persons) and (c) the two
lists maintained by the United States Department of State (Terrorist
Organizations and Debarred Parties).
 
The representations and warranties in this Article 6 shall survive the Closing
for a period of one (1) year following the Closing Date.
 
ARTICLE VII
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Buyer represents and warrants to Sellers as follows:
 
Section 7.01 Existence and Good Standing.»
 
Buyer is a limited liability company, and is duly organized, validly existing
and in good standing under the laws of the state of its organization.
 
Section 7.02 Authority.»
 
Buyer has, and on the Closing Date will have, all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated herein pursuant to the terms and conditions of this Agreement. All
persons or entities required to approve this Agreement pursuant to Buyer’s
governance documents have approved this Agreement and certified resolutions
evidencing such approval will be delivered to Sellers at Closing.
 
Section 7.03 No Conflict.»
 
The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, breach, result in a
default under, or violate any commitment, document or instrument to which Buyer
is a party or by which it is bound.
 
Section 7.04 Money Laundering.»
 

 
Neither Buyer nor, to Buyer’s Knowledge, any of its partners, investors or
shareholders or any of their respective affiliates, is in violation of any
Anti-Money Laundering and Anti-Terrorism Laws.
 
Neither Buyer nor, to Buyer’s Knowledge, any of its partners, investors or
shareholders or any of their respective affiliates, is acting, directly or
indirectly, on behalf of terrorists, terrorist organizations or narcotics
traffickers, including, without limitation, those persons or entities that
appear on the Annex to the Executive Order, or are included on any relevant
lists maintained by the Office of Foreign Assets Control of U.S. Department of
Treasury, U.S. Department of State, or other U.S. government agencies, all as
may be amended from time to time.

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

 
Neither Buyer nor, to Buyer’s Knowledge, any of its partners, investors or
shareholders or any of their respective affiliates, in any capacity in
connection with the purchase of the Property (i) conducts any business or
engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any person included in the lists set forth in the
preceding paragraph; (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order; or (iii) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Money Laundering and
Anti-Terrorism Laws.
 
Buyer understands and acknowledges that Sellers may become subject to further
anti-money laundering regulations, and agrees to execute instruments, provide
information, or perform any other acts as may reasonably be requested by
Sellers, for the purpose of: (i) carrying out due diligence as may be required
by applicable law to establish Buyer’s identity and source of funds; (ii)
maintaining records of such identities and sources of funds, or verifications or
certifications as to the same; and (iii) taking any other actions as may be
required to comply with and remain in compliance with anti-money laundering
regulations applicable to Buyer.
 
Neither Buyer, nor, to Buyer’s Knowledge, any person controlling or controlled
by Buyer, is a country, territory, individual or entity named on a Government
List, and, to Buyer’s Knowledge, the monies used in connection with this
Agreement and amounts committed with respect thereto were not and are not
derived from any activities that contravene any applicable anti-money laundering
or anti bribery laws and regulations (including, without limitation, funds being
derived from any person, entity, country or territory on a Government List or
engaged in any unlawful activity defined under 18 USC §1956(c)(7)).
 
Section 7.05 AS IS.»
 
 BUYER EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS BEING SOLD TO
BUYER AND THAT BUYER AGREES TO PURCHASE AND ACCEPT THE PROPERTY, AND EACH AND
EVERY PART AND COMPONENT THEREOF, IN AN “AS IS, WHERE IS” CONDITION AS OF THE
CLOSING WITH NO REPRESENTATIONS OR WARRANTIES FROM SELLERS, EITHER EXPRESS OR
IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. BUYER AGREES THAT
BUYER IS NOT RELYING UPON, AND HAS NOT RECEIVED OR BEEN GIVEN, ANY
REPRESENTATIONS (EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT), STATEMENTS OR
WARRANTIES (ORAL OR WRITTEN, IMPLIED OR EXPRESS) OF OR BY ANY OFFICER, EMPLOYEE,
AGENT OR REPRESENTATIVE OF SELLERS, OR ANY SALESPERSON OR BROKER (IF ANY)
INVOLVED IN THIS TRANSACTION, AS TO THE PROPERTY OR ANY PART OR COMPONENT
THEREOF IN ANY RESPECT, INCLUDING, BUT NOT LIMITED TO, ANY REPRESENTATIONS,
STATEMENTS OR WARRANTIES AS TO THE PHYSICAL OR ENVIRONMENTAL CONDITION OF THE
PROPERTY, THE FITNESS OF THE PROPERTY FOR USE AS A HOTEL, THE FINANCIAL
PERFORMANCE OR POTENTIAL OF THE PROPERTY, THE COMPLIANCE OF THE PROPERTY WITH
APPLICABLE BUILDING, ZONING, SUBDIVISION, ENVIRONMENTAL, LIFE SAFETY OR LAND USE
LAWS, CODES, ORDINANCES, RULES, ORDERS, OR REGULATIONS, OR THE STATE OF REPAIR
OF THE PROPERTY, AND BUYER, FOR ITSELF AND ITS HEIRS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS, WAIVES ANY RIGHT TO ASSERT ANY CLAIM OR DEMAND AGAINST
SELLERS AT LAW OR IN EQUITY RELATING TO ANY SUCH MATTER, WHETHER LATENT OR
PATENT, DISCLOSED OR UNDISCLOSED, KNOWN OR UNKNOWN, NOW EXISTING OR HEREAFTER
ARISING. EXCEPT TO THE EXTENT SELLERS BREACH THIS AGREEMENT, BUYER AGREES THAT
IT SHALL HAVE NO RECOURSE WHATSOEVER AGAINST SELLERS, AT LAW OR IN EQUITY,
SHOULD THE SURVEY OR THE TITLE INSURANCE COMMITMENTS OR THE TITLE POLICIES FAIL
TO DISCLOSE ANY MATTER AFFECTING THE PROPERTY OR REVEAL ANY SUCH MATTER IN AN
INACCURATE, MISLEADING OR INCOMPLETE FASHION OR OTHERWISE BE IN ERROR. BUYER
ACKNOWLEDGES THAT IT SHALL REVIEW THE SURVEY AND THE TITLE INSURANCE COMMITMENTS
(AS SAME MAY BE MARKED AT CLOSING) AND TO DISCUSS THEIR CONTENTS WITH THE
INDEPENDENT CONTRACTORS WHO PREPARED OR ISSUED EACH OF THEM. BUYER ACCORDINGLY
AGREES TO LOOK SOLELY TO THE PREPARER OF THE SURVEY AND THE ISSUER OF THE TITLE
INSURANCE COMMITMENTS AND TITLE POLICIES FOR ANY CLAIM ARISING OUT OF OR IN
CONNECTION WITH SUCH INSTRUMENTS AND HEREBY RELEASES SELLERS FROM ANY SUCH CLAIM
(EXCEPT FOR ANY CLAIM THAT SELLERS AGREE TO CURE AS SET FORTH IN THIS
AGREEMENT).

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Buyer recognizes that the Hotels and Personal Property are not new and that
there exists a possibility that the Property is not in compliance with the
requirements which would be imposed on a newly constructed hotel by presently
effective federal, state and local building, plumbing, electrical, fire, health,
handicap, environmental and life safety laws, codes, ordinances, rules, orders
and/or regulations (collectively, the “building codes”). The Hotels and other
improvements on the Land may contain substances or materials no longer permitted
to be used in newly constructed buildings including, without limitation,
asbestos or other insulation materials, lead or other paints, wiring,
electrical, or plumbing materials and may not contain other materials or
equipment required to be installed in a newly constructed building. Buyer has
had the opportunity, as set forth in Section 11.04, to conduct such
investigations and inspections of the Property as Buyer deemed necessary with
respect to all such matters. Buyer agrees to accept and shall accept the
Property in an “AS-IS, WHERE IS” condition and at Closing to accept and assume
the risk of noncompliance of the Property with all such building codes. Buyer
waives any right to excuse or delay performance of its obligations under this
Agreement or to assert any claim against Sellers (before or after Closing)
arising out of any failure of the Property to comply with any such building
codes.
 
It is specifically understood and agreed by Sellers and Buyer that Sellers do
not make, and shall not be deemed to have made, any representation, warranty or
covenant with respect to (i) any Environmental Laws that may affect any of the
Property or (ii) the presence or absence of any Hazardous or Toxic Substances
in, on, above, under or about any of the Property. As used in this Section 7.05,
(A) the term “Environmental Laws” means all federal, State and local laws,
codes, ordinances, rules, orders and regulations now or hereafter in effect
relating to pollution or the protection of the environment, including without
limitation, all laws, codes, ordinances, rules, orders and regulations governing
the generation, use, collection, treatment, storage, transportation, recovery,
removal, discharge, spill or disposal of any or all Hazardous or Toxic
Substances, and (B) the term “Hazardous Substances” or “Toxic Substances” means
materials and substances defined as “hazardous substances”, “hazardous wastes”,
“toxic substances” or “toxic wastes” in (I) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9675,
as amended by the Superfund Amendments and Reauthorization Act of 1988, and any
further amendments thereto and rules, orders and regulations thereunder; (II)
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections
6901-6992, as amended by the Hazardous and Solid Waste Amendments of 1984, and
any further amendments thereto and rules, orders and regulations thereunder; or
(III) any other Environmental Laws.

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It is understood and agreed by Sellers and Buyer that in the event of any
conflict between the terms and provisions of this Section 7.05 and any other
term or provision of this Agreement, the relevant term or provision of this
Section 7.05 shall control and govern. The provisions of this Section 7.04 shall
survive Closing.
 
ARTICLE VIII
 
REMEDIES»
 
Section 8.01 Sellers’ Remedies.»
 
If Buyer defaults under any provision of this Agreement before the Closing,
Buyer and Sellers agree that the damages that Sellers will sustain as a result
thereof will be substantial, but the actual damages will be difficult or
impossible to ascertain. Accordingly, Buyer and Sellers agree that, in the event
of Buyer’s default, Sellers may, as their sole and exclusive remedies, terminate
this Agreement by written notice to Buyer in which event Sellers shall receive
the Deposit as liquidated damages for such default, the amount of which Deposit
Buyer and Sellers agree is not punitive or a penalty but is just, fair and
reasonable, and the Escrow Agent shall immediately pay the Deposit to Sellers.
 
Section 8.02 Buyer’s Remedies.»
 
In the event of a default hereunder on the part of any Seller before Closing, or
if there shall be an inaccuracy or breach of any representation or warranty
contained (or deemed contained) in Article VI of this Agreement made as of the
Effective Date or as of the Closing Date as if then made, Buyer’s sole and
exclusive remedies hereunder shall be either: (1) the right to terminate this
Agreement and receive a return of the full amount of the Deposit, plus interest
thereon, or (2) the right to seek specific performance hereof, provided that
Buyer must file a suit for specific performance in the appropriate jurisdiction
within ninety (90) days from the date of such default by such Seller.
 
The parties waive all damages and remedies for defaults prior to Closing except
as provided in this Agreement. Following Closing, RFS Partnership, L.P., shall
be liable for obligations of Wharf Associates that survive Closing pursuant to
the terms of this Agreement; provided, however, that, following Closing, Wharf
Associates shall only be liable for its own obligations that survive Closing
pursuant to the terms of this Agreement and shall not be liable for the
obligations of RFS Partnership, L.P., or any other Seller. All Sellers shall be
jointly and severally liable for any and all obligations of any Seller or all
Sellers under this Agreement.

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Section 8.03 Post-Closing Matters.»
 
Notwithstanding the terms and provisions of Sections 8.01 and 8.02 or any other
term or provision of this Agreement, Sellers and Buyer shall each retain the
right to seek and obtain relief for events occurring, or the breach of any
representation and warranty discovered, after the Closing Date provided that:
(a) this transaction in fact closes; (b) the obligations for which relief is
sought are obligations which by their express terms are to survive Closing or
which by their express terms are to performed following Closing (including any
indemnities hereunder, if any); and (c) such relief shall be limited to a suit
for monetary damages, unless expressly otherwise provided in this Agreement.
Except for obligations which by their express terms are to survive Closing or
which by their express terms are to be performed following Closing, the terms
and provisions of this Agreement shall not survive the Closing and shall merge
into the Deeds from Sellers to Buyer. The provisions of this Section 8.03 shall
survive Closing.
 
ARTICLE IX
 
CONDITIONS
 
Section 9.01 Sellers’ Obligation.»
 
In addition to any other conditions precedent for the benefit of Sellers
expressly set forth in this Agreement, the obligation of Sellers to perform this
Agreement is subject to the following conditions unless waived in writing by
Sellers:
 
(a) The representations and warranties of Buyer in this Agreement shall be true
and correct in all material respects as of the Closing Date as if made on and as
of the Closing Date.
 
(b) Each of the documents referred to in Article X hereof to be executed and
delivered by Buyer shall have been fully executed and delivered as contemplated
hereby.
 
(c) Buyer shall have performed all obligations required to be performed by it
under this Agreement on or prior to the Closing Date.
 
Section 9.02 Buyer’s Obligation.»
 
In addition to any other conditions precedent for the benefit of Buyer expressly
set forth in this Agreement, the obligation of Buyer to perform this Agreement
is subject to the following conditions unless waived in writing by Buyer:
 
(a) The representations and warranties of Sellers in this Agreement shall be
true and correct in all material respects as of the Closing Date as if made on
and as of the Closing Date, subject to matters or circumstances of which Buyer
becomes aware prior to Closing and does not provide written notice thereof to
Seller on or prior to the Closing Date; it being understood and agreed by Buyer
and Seller that upon closing of the transactions contemplated herein, Buyer
shall be deemed to have waived any violation by Seller of any representations or
warranties hereunder of which Buyer had knowledge prior to the Closing.
 
(b) Buyer shall have received written waiver of any right of first refusal or
right of first offer in a form reasonably acceptable to the Title Company (if
such right of first refusal or right of first offer would otherwise be an
exception to the Title Policies) and in recordable form, (if the document
containing such right of first refusal or right of first offer was itself
recorded) to purchase any Land and Hotel held by any Franchisor or Manager and
of any other Purchase Rights held by or for the benefit of any other party.

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(c) Each of the documents referred to in Article X hereof to be executed and
delivered by any of the Sellers and/or Operating Tenants shall have been fully
executed and delivered as contemplated hereby.
 
(d) The Title Company shall be in a position to “mark up” the Title Commitments
or deliver the Title Policies to Buyer for the Land and Hotels, in either case
in conformance with the provisions of Article XI hereof.
 
(e) Sellers shall have performed all obligations required to be performed by
them under this Agreement on or prior to the Closing Date.
 
(f) No Material Change in Condition shall have occurred with respect to the
Property during the period from the Effective Date through and including the
Closing Date. As used herein, the term “Material Change in Condition” means any
change in the condition of any of the Hotels and the Land on which the same are
located, or any of the Personal Property, from the condition the same was in on
the Effective Date, reasonable wear and tear, to the extent permitted by this
Agreement, casualty and taking excepted, that would require the expenditure of
(i) $1,000,000 or more with respect to any individual Hotel or parcel of the
Land on which such Hotel is located, or any of the Personal Property, or (ii)
$2,000,000 or more with respect to all of the Hotels and the Land on which the
same are located and all of the Personal Property in the aggregate, to restore,
repair, replace, remediate or otherwise cure (the “Material Change Threshold”),
unless Sellers credit Buyer at Closing an amount equal to the amount by which
the cost to repair, replace, remediate or otherwise cure the Material Change in
Condition exceeds the Material Change Threshold.
 

 
ARTICLE X
 
CLOSING DELIVERIES
 
Section 10.01 Documents and Instruments To Be Delivered At or Before Closing.»
 
At Closing, Sellers (and/or Operating Tenant) and Buyer shall execute and
deliver to each other or the Escrow Agent, as the parties may agree, the
following documents and instruments:
 
(a) Sellers shall execute and deliver to Buyer the Deeds.
 
(b) Each Seller and/or Operating Tenant and Buyer shall execute and deliver to
each other a Bill of Sale (Personal Property).
 
(c) Each Seller and/or Operating Tenant and Buyer shall execute and deliver to
each other counterparts of an Assignment and Assumption of Intangible Property.
 
(d) Each Seller and/or Operating Tenant and Buyer shall execute and deliver to
each other counterparts of an Assignment and Assumption of Operating Agreements.
 
(e) The Hotel Rex Operating Tenant and Buyer shall execute and deliver to each
other counterparts of an Assignment and Assumption of Hotel Rex Management
Agreement, if permitted pursuant to Section 1.06(d) hereof.

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(f) Sellers shall deliver written evidence of termination of the Management
Agreements, subject, however, to the Sellers’ right to assign the Hotel Rex
Management Agreement pursuant to Section 1.06(d) hereof.
 
(g) Subject to the provisions of Section 1.05, Sellers shall deliver written
evidence of termination of the Franchise Agreements.
 
(h) Each of Sellers and Buyer shall deliver a certificate reaffirming the truth
and accuracy of its representations and warranties as if made on and as of the
Closing Date and such representations and warranties shall be deemed remade as
of the Closing Date, subject to the provisions of Section 9.02(a) hereof.
 
(i) Sellers shall deliver possession of the Property to Buyer, together with all
keys, including, without limitation, keys for all security systems, rooms and
offices.
 
(j) Sellers shall deliver an estoppel certificate from those tenants under space
leases listed in Exhibit “H” attached hereto, who are obligated to provide such
estoppels pursuant to the terms of each such applicable space lease, and/or as
otherwise required under Exhibit “M” attached hereto, containing such
information as is required thereunder, dated no earlier than thirty (30) days
prior to the Closing Date.
 
(k) Sellers shall deliver, or shall have delivered prior to the Closing Date,
any instruments required under Exhibit “M” attached hereto to cure any of the
title and survey defects therein specified, all of which shall be in form and
substance reasonably satisfactory to the title Company.
 
(l) Sellers and Buyer shall execute a closing statement.
 
(m) Each Seller shall execute and deliver, at Closing, a so-called “Non-Foreign
Affidavit” (pursuant to Section 1445 of the Internal Revenue Code).
 
(n) If applicable and customary, each Seller of any Land and Hotel located in
California shall execute and deliver to Escrow Agent a Real Estate Withholding
Certificates (Form 593-C) and such other documents as are required by local
custom and practice in the states, counties and municipalities of California and
South Carolina wherein any of the Property is located.
 
(o) Sellers shall deliver written evidence of termination of the Operating
Agreements listed on Exhibit “N” attached hereto.
 

 
(p)  Buyer shall complete and deliver at Closing a Form 1099 as required by the
Internal Revenue Code.
 
(q) Buyer and Sellers shall execute such other affidavits, authorizing
resolutions, and documents as may be reasonably required by the Title Company to
effectuate the transactions contemplated by this Agreement and to induce the
Title Company to insure title to the Hotels and the Land on which the same are
located as described herein, including authorizing consent or resolutions and,
in the case of Sellers, mechanics’ liens and parties in possession affidavits
and a “gap indemnity” to the extent customary in each applicable jurisdiction.

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ARTICLE XI
 
TITLE TO REAL PROPERTY
 
Section 11.01 Title Insurance Commitments.»
 
Prior to the execution of this Agreement, Sellers obtained the Title Insurance
Commitments and delivered the same to Buyer. Buyer hereby acknowledges that
Buyer has approved the Title Insurance Commitments and has accepted the Title
Insurance Commitments as so delivered to Buyer as evidence of the status of
Sellers’ title to the Hotels and Land. It is understood and agreed by Buyer and
Sellers that, notwithstanding any other term or provision of this Agreement to
the contrary, Sellers shall have no obligation to pay for any endorsements to
the Title Policies and, if desired or required by Buyer, the premiums and costs
of such endorsements shall be at Buyer’s sole cost and expense. If Buyer
defaults under this Agreement or terminates this Agreement for any reason
hereunder (other than a default by any of the Sellers), then Buyer shall pay any
and all search and examination fees, cancellation fees and other costs or
charges assessed in connection with the services of the title insurer, the
cancellation of the Title Insurance Commitments or the non-issuance of the Title
Policies. The foregoing sentence shall survive any termination of this Agreement
by Buyer (other than by reason of a default by any of the Sellers). Upon Buyer’s
selection of a lender, Buyer shall notify Seller whether such lender requires
co-title insurance with respect to the transactions contemplated herein, and
what such requirements are, if any. Buyer acknowledges and agrees that (i) Buyer
shall be responsible for all additional costs, fees and premiums resulting from
its election to have the Title Policies co-insured, (ii) such co-insurer shall
be a nationally-recognized title insurance company, and (iii) Buyer shall not
have the right to extend the Closing Date in order to accommodate the lender’s
co-insurance requirements.
 
Section 11.02 Title Defects.»
 
Prior to the execution of this Agreement, Buyer has objected to, and Sellers
have agreed to cure, those title matters, if any, set forth on Exhibit “M”
attached hereto and by this reference incorporated herein (the “Title Defects”).
Sellers shall have thirty (30) days from the Effective Date to cure any such
Title Defects except for monetary liens and encumbrances which may be paid at
Closing. If Sellers fail to cure any of the Title Defects (other than monetary
liens and encumbrances, which Sellers shall be obligated to cure at Closing),
Buyer’s sole and exclusive remedy shall be to either (i) terminate this
Agreement by written notice to Sellers given on or before the Closing Date
without recourse against Sellers and to obtain a refund of the Deposit from the
Escrow Agent, or (ii) to accept title to the Land and Hotels in their then
condition without reduction of the Purchase Price or reservation of any claim
against Sellers.
 
Section 11.03 Survey.»
 
Prior to the execution of this Agreement, Sellers have provided Buyer with
copies of any surveys of the Land which Sellers have in their possession or
control. Prior to the execution of this Agreement, Buyer has obtained and
provided Sellers and Title Company with a copy of, Surveys of the Hotels and
Land prepared by a licensed surveyor in the state in which the Hotel which is
the subject of the Survey is located and otherwise meeting the ALTA requirements
and standards. Prior to the execution of this Agreement, Buyer has objected to,
and Sellers have agreed to cure, those survey matters, if any, set forth on
Exhibit “M” attached hereto and by this reference incorporated herein (the
“Survey Defects”). Sellers shall have thirty (30) days from the Effective Date
to cure any such Survey Defects. If Sellers fail to cure any of the Survey
Defects, Buyer’s sole and exclusive remedy shall be to either (i) terminate this
Agreement by written notice to Sellers given on or before the Closing Date
without recourse against Sellers and to obtain a refund of the Deposit from the
Escrow Agent, or (ii) to accept the condition of the Land and Hotels in their
then condition without reduction of the Purchase Price or reservation of any
claim against Sellers.

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

 
Section 11.04 Access to Property; Due Diligence.»
 
Buyer acknowledges that prior to the Effective Date, Buyer has had the
opportunity to inspect and conduct a full inspection and investigation of the
Property and, subject to the provisions of Section 9.02(f) hereof, accepts the
condition of the Property in its “AS IS”“WHERE IS” condition and acknowledges
that Buyer has no right to terminate this Agreement except as otherwise
expressly provided in this Agreement.
 
ARTICLE XII
 
THE CLOSING
 
Section 12.01 Time and Place.»
 
Subject to the conditions in Article IX, and the casualty and condemnation
provisions in Article XIII, the Closing shall take place on the Closing Date at
10:00 a.m. (local time) at the office of the Escrow Agent, or at such other
date, place and time as Buyer and Sellers may mutually agree upon in writing. At
the request of either party, Buyer and Sellers shall reasonably cooperate to
accomplish this Closing “by mail.” Buyer shall take possession of the Property
effective as of the Closing Date.
 
Section 12.02 Payment of Purchase Price.»
 
At the Closing, Buyer shall deliver by wire transfer of good funds the balance
of the Purchase Price (subject to adjustments and/or prorations provided in this
Agreement) to the Escrow Agent no later that 12:00 p.m. (Eastern Time) on the
Closing Date (or such later time as the final Closing Statement has been agreed
upon by the parties). The Deposit and the balance of the Purchase Price (as
adjusted) shall be paid to each of the Sellers, in such amounts as directed by
the Sellers, by the Escrow Agent by wire transfer of good funds to such bank
accounts specified by Sellers after delivery of the closing documents by Sellers
to the Title Company but before recordation of the Deeds or any other instrument
all as more particularly set forth in the escrow closing instructions of Sellers
and Buyer. With respect to the transfer of the Land and Hotels located in
California, the Escrow Agent shall be responsible for withholding any taxes due
from the applicable Sellers on account of such transfers, based on the Real
Estate Withholding Certificates (Form 593-C) delivered by such Sellers at
Closing if applicable, and remitting same to the California Franchise Tax Board.
Funds representing the Deposit and funds representing the balance of the
Purchase Price shall be wired to Sellers’ bank accounts no later than 5:00 P.M.
(Eastern Time) on the Closing Date (or such later time as the final Closing
Statement has been agreed upon by the parties).
 
Section 12.03 Closing Costs.»

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

 

 
(a)  Sellers shall pay the following costs and expenses at Closing:
 
(1) Sellers’ prorated share of real estate and tangible personal property taxes,
rents or assessments as set forth in this Agreement.
 
(2) The cost of issuing the Title Insurance Commitments and the premium for
issuance of the Title Policies for the Doubletree Del Mar Hotel and the Beverly
Heritage Hotel.
 
(3) Sellers’ own legal expenses.
 
(4) One-half of the closing fee and/or settlement fee charged by the Escrow
Agent with respect to the Doubletree Del Mar Hotel and the Holiday Inn,
Columbia, SC Hotel, and all of the closing fee and/or settlement fee charged by
the Escrow Agent with respect to the Beverly Heritage Hotel.
 
(5) Any transfer taxes or stamp taxes pertaining to the transfer of the Property
from Sellers to Buyer.
 
(6) All costs of satisfying in full any existing debt secured by the Property
and removing any monetary encumbrances from the Title Policies.
 
(7) Sellers shall pay the Broker fees.
 
(8) All Management Termination Fees.
 
(9) Any and all other costs and expenses expressly allocated to Sellers under
this Agreement or customarily payable by sellers in the jurisdictions where the
Property is located.
 
(b) Buyer shall pay the following costs and expenses at Closing:
 
(1) Costs of transferring, terminating or canceling any Operating Agreements.
 
(2) Costs of recording the Deeds and any other transfer documents requiring
recordation.
 
(3) The cost of issuing the Title Insurance Commitments and the premium for
issuance of the Title Policies for the Holiday Inn Columbia, SC Hotel, the Hotel
Rex and the Fisherman’s Wharf Hotel, and any fees or additional premiums charged
with respect to any of the Hotels in connection with any co-insurance requested
by Buyer pursuant to Article 11.
 
(4) All premiums and costs for issuing any endorsements or additional coverage
to the Title Policy and any title insurance premium or cost (including
endorsements and additional coverage with respect thereto) related to Buyer’s
financing.
 
(5) Any indebtedness or mortgage related taxes and recording or other fees
relating to any mortgage, deed of trust or other security instrument executed by
Buyer.
 

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

(6) Costs of supplying tax certificates to the Title Company, if and to the
extent applicable.
 
(7) All fees, costs and expenses incurred with respect to any purchase money
financing.
 
(8) Buyer’s prorated share of all real estate and tangible personal property
taxes, rents, or assessments as set forth in this Agreement.
 
(9) Buyer’s own legal expenses.
 
(10) One-half of the closing fee and/or settlement fee charged by the Escrow
Agent with respect to the Doubletree Del Mar Hotel and the Holiday Inn,
Columbia, SC Hotel, and all of the closing fee and/or settlement fee charged by
the Escrow Agent with respect to the Hotel Rex and the Fisherman’s Wharf Hotel.
 
(11) The cost of preparing the Surveys.
 
(12) Any UCC searches.
 
(13) Any costs or expenses incurred by Buyer in connection with its inspections
and due diligence preformed on the Property.
 
(14) All Franchise Agreement termination fees or liquidated damages, as
applicable, pursuant to Section 1.05 hereof.
 
(15) Any and all other costs and expenses expressly allocated to Buyer under
this Agreement or customarily payable by buyers in the jurisdictions where the
Property is located.
 
Section 12.04 Revenue and Expense Prorations.»
 
Pursuant to Article IV, Sellers and Buyer will make appropriate apportionments
and prorations of expenses, rents, taxes and revenues and settle them by
appropriate credits on the Closing Statement or pursuant to the Operations
Settlement, as the case may be.
 
Section 12.05 Closing Documents.»
 
At the Closing, Buyer and Sellers shall also execute and deliver such documents
as are specified or contemplated by this Agreement, including, but not limited
to, those required by Sections 4.01 and 10.01.
 
ARTICLE XIII
 
INSURANCE, CONDEMNATION AND CASUALTY
 
Section 13.01 Insurance.»
 
All Sellers’ insurance policies, including, without limitation, fire and any
additional hazard insurance, shall be cancelled by Sellers as of the Transfer
Time, and any refunded premiums shall be retained by Sellers. Buyer will be
responsible for acquiring and placing its own insurance in force from and after
the Transfer Time.
 
Section 13.02 Condemnation and Casualty. 
 
(a) If, before the Closing, any Seller receives notice that any Hotel or Hotels
and any parcel or parcels comprising the Land are to be wholly condemned, or to
be condemned in such substantial part that the value of the portion of the
Hotels and Land so condemned exceeds Twelve Million and No/100 Dollars
($12,000,000.00), or if one or more of the Hotels is wholly or partially
destroyed by fire or other casualty, or if so much of the Hotels is damaged by
fire or other casualty to the extent that the cost of repairing such damage
shall exceed Twelve Million and No/100 Dollars ($12,000,000.00) as determined by
the casualty insurer(s) insuring the Hotels, then, in any such event, Buyer and
each of the Sellers shall each have the right to terminate this Agreement by
delivering notice of termination in writing to the other party within thirty
(30) days after the receipt of notice of such condemnation or casualty (but not
later than the Closing Date) (which notice will, to the extent then known,
contain the amount of compensation offered for such condemnation or the amount
of insurance proceeds offered to be paid on account of such casualty, as the
case may be) and upon giving such notice of termination the Deposit shall be
returned by the Escrow Agent to Buyer, and Sellers and Buyer shall each be
released and discharged from any further obligation to each other hereunder
except for those which expressly survive the termination of this Agreement;
provided, however, that if neither Buyer nor Sellers elects to terminate this
Agreement, the purchase contemplated herein shall be consummated without
reduction of the Purchase Price, within the later of (i) fifteen (15) days after
the expiration of such thirty (30) day period or (ii) the Closing Date, but
Buyer shall be entitled to all proceeds of fire or other casualty insurance or
condemnation (other than proceeds relating to business interruption or loss for
periods prior to the Transfer Time), Buyer shall receive a credit to the
Purchase Price for any deductibles with respect to any insurance proceeds and
Sellers shall have no responsibility for the restoration and repair of the
Property.»

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

 

 
(b) If, before the Closing, any one or more Hotel is damaged by fire or other
casualty to the extent that the cost of repairing or restoring the same shall be
less than an amount equal to Twelve Million and No/100 Dollars ($12,000,000.00),
or if any Seller receives notice that any Hotel and/or Land is to be partially
condemned but that the value of the Land and Hotels to be condemned does not
exceed Twelve Million and No/100 Dollars ($12,000,000.00), then, and in any such
event, the Closing shall proceed as scheduled and Sellers shall assign to Buyer
the proceeds (excluding proceeds for business interruption or loss for periods
prior to the Transfer Time) of any casualty insurance or any condemnation award,
as the case may be, Buyer shall receive a credit to the Purchase Price for any
deductibles with respect to any insurance proceeds and Sellers shall have no
responsibility for restoration or repair of the Property.
 
ARTICLE XIV
 
MISCELLANEOUS COVENANTS AND PROVISIONS
 
Section 14.01 Assignment; Successors and Assigns.»
 
Except as otherwise provided in this Section 14.01, neither this Agreement nor
any right or interest herein may be assigned by Buyer without the prior written
approval of Sellers. Notwithstanding anything to the contrary, (i) Buyer shall
have the right to designate one or more of the Permitted Assignees to take title
to any of the Property without obtaining Sellers’ consent, provided that Buyer
gives written notice of such designation to Sellers so that all applicable
transfer documents may be properly prepared prior to the Closing, and (ii) Buyer
may assign all or any portions of this Agreement to one or more Permitted
Assignees without obtaining Sellers’ consent; provided that (1) such Permitted
Assignee(s) assumes in writing all of Buyer’s applicable obligations and
liabilities hereunder, (2) a copy of the assignment and assumption of this
Agreement is provided to Sellers promptly following execution thereof and (3)
Buyer shall not be released from any of its obligations to Sellers hereunder.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.

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Section 14.02 Counterparts.»
 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument.
 
Section 14.03 Waiver.»
 
No failure or delay in acting by any party to this Agreement shall be deemed a
waiver of such party’s rights. Any waiver of rights or remedies shall be
required to be signed by the party charged with the waiver in order for such
waiver to be effective.
 
Section 14.04 Amendments.»
 
This Agreement may be modified or amended only by the written consent of Sellers
and Buyer.
 
Section 14.05 Further Agreements.»
 
Each party agrees that it will execute and deliver to the other party any
additional documents, agreements or instruments necessary or reasonable to give
effect to this Agreement or any provision hereof.
 
Section 14.06 Attorneys’ Fees.»
 
In the event that any party is required to retain the services of an attorney to
enforce or otherwise litigate or defend any matter or claim arising out of or in
connection with this Agreement, then the prevailing party shall be entitled to
its reasonable attorneys’ fees from the non-prevailing party.
 
Section 14.07 Entire Agreement.»
 
This Agreement sets forth all the promises, representations, agreements,
conditions and understandings relative to the transactions set forth herein, and
neither Sellers nor Buyer are relying upon any promises, representations,
agreements, conditions or understandings, either oral or written, (which are
hereby superseded in their entirety) other than those expressed in this
Agreement.
 
Section 14.08 Brokers and Finders.»
 
Sellers and Buyer each represent and warrant to the other that it has not
employed, retained or consulted any broker, agent or other finder with respect
to the Property or in carrying on negotiations relative to this Agreement,
except as provided for in this Section 14.08, and Sellers and Buyer shall
indemnify and hold the other harmless from and against any and all claims,
demands, causes of action, debts, liabilities, judgments and damages (including
costs and reasonable attorneys’ fees incurred in connection with the enforcement
of this indemnity) which may be asserted or recovered against the other on
account of any brokerage fee, commission, or other compensation arising in
breach of this representation and warranty. Sellers and Buyer hereby acknowledge
that Broker, a licensed real estate broker involved in the negotiation of the
transactions contemplated herein, shall be paid a sales commission by Sellers at
Closing if, and only if, the transactions contemplated by this Agreement are
closed and consummated.
 
Section 14.09 Notices.»
 
All notices, demands and requests required, permitted or given pursuant to the
provisions of this Agreement shall be in writing, and either hand delivered in
person or delivered by certified mail, postage prepaid, return receipt
requested, or by Federal Express or other similar overnight courier service,
addressed as follows:

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

 
 
If to Buyer:
Pyramid Hotel Opportunity Venture LLC
 
c/o Pyramid Advisors LLC
 
c/o Pyramid/Contrarian Investment LLC
1071 Camelback Street, Suite 111
Newport Beach, California 92660
Attention: William D. Booth, Jr.
Fax: 949-720-9123
wdbooth@aol.com
     
with a copy to:
     
One Post Office Square, Suite 3100
Boston, MA 02109
Attention: Mr. Warren Q. Fields
Fax: 617-946-2040
wfields@pyramidadvisors.com
     
and:
     
Goulston & Storrs, P.C.400 Atlantic Avenue
Boston, MA 02110
Attention: Harold Stahler, Esq.
Fax: 617-574-7642
hstahler@goulstonstorrs.com
     
and:
     
Michael Quinn - Executive Director
Morgan Stanley, US RE Investing Division
1585 Broadway, Floor 37
New York, NY 10036
Fax: 212-507-4175
Michael.Quinn@morganstanley.com
   
If to Sellers
CNL Hotels & Resorts, Inc.
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida 32801-3336
Attention: Marcel Verbaas, Senior Vice President and Chief Investment Officer
Fax: (407) 650-1085
Mverbaas@cnl.com
     
with a copy to:
     
Lowndes, Drosdick, Doster, Kantor
& Reed, P.A.
215 N. Eola Drive
Orlando, Florida 32802-2809
Attention: Richard J. Fildes
407-650-1085
Rich.Fildes@lowndes-law.com

 
 

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

Any notice, demand or request which shall be served upon any of the parties in
the manner aforesaid shall be deemed sufficiently given (i) upon being hand
delivered in person, or (ii) upon being transmitted by facsimile transmission
provided a copy is sent pursuant to (iii) the following business day, or (iii)
upon being deposited with Federal Express or other similar overnight courier
service; provided, however, the time period in which any response to such
notice, demand or request must be given shall commence on the date of actual
delivery of the notice, demand or request to the address to which it is sent
(rather than delivery to the specific addressee). Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given as provided below shall be deemed delivery of the notice, demand or
request sent. The addresses given above may be changed by any party by prior
notice to all other parties given in the manner provided herein.
 
Section 14.10 Section Headings; Interpretation.»
 
The section headings of this Agreement are for reference only and shall not be
used to construe or interpret this Agreement. All terms and words used in this
Agreement, regardless of the number or gender in which they are used, shall be
deemed to include any other number and any other gender as the context may
require. If any term or condition of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be held legally invalid or
unenforceable, the remainder of this Agreement, and the application of such
terms or conditions to persons or circumstances other than those as to which it
is held legally invalid or unenforceable, shall not be affected thereby and each
term and condition of this Agreement shall be valid to the fullest extent
permitted by law.
 
Section 14.11 Governing Law.»
 
This Agreement shall be governed by the laws of the state of Florida; provided,
however, that with respect to matters that relate to a specific portion of the
Property, then this Agreement shall be governed by the laws of the state where
such Property is located.
 
Section 14.12 Disclosure of Confidential Information/ Public Announcements/
Communication with Governmental Authorities/ Communication with Employees. »
 

 
(a) The parties hereto acknowledge and agree that the existence of this
Agreement, the terms of this Agreement and any other information disclosed in
the due diligence materials delivered to or produced by Buyer or any other
documents, materials, data or other information with respect to the Property
which is not generally known to the public (the "Confidential Information")
shall in all respects remain confidential and shall not be disclosed by the
Buyer except as provided herein. Buyer may disclose Confidential Information to
officers, directors, employees, attorneys, accountants, consultants, lenders,
financial advisors, partners, investors prospective tenants and purchasers
(collectively, “Representatives”), who in the reasonable business judgment of
such party, need to know the Confidential Information for the purpose of
evaluating the transactions contemplated by this Agreement, or in connection
with any litigation between Buyer and Sellers arising under the transactions
contemplated by this Agreement. Buyer will inform its Representatives of its
confidentiality obligations under this Agreement, and such Representatives shall
agree to be bound by the terms and conditions of this Agreement, before Buyer
may disclose any Confidential Information to its Representatives; provided,
however, any such prospective tenants and purchasers shall not have a right or
license to access or inspect the Property or to contact the Manager or any of
the Hotel employees. The disclosure of any Confidential Information by any
Representative in breach of this Agreement will constitute a breach of this
Agreement by Buyer, for which Buyer will be liable. If Buyer or any of its
Representatives is required by any subpoena, interrogatories, request for
production, or other legal process or by any applicable law or regulation to
disclose any Confidential Information, Buyer will give (to the extent not
prohibited by law) Sellers prompt written notice of the requirement and will
cooperate with the Sellers so that Sellers, at their expense, may seek an
appropriate protective order. In the absence of a protective order, Buyer and
its Representatives may disclose only such Confidential Information as may in
Buyer's reasonable opinion, be necessary to avoid any penalty, sanction, or
other material adverse consequence, and Buyer will use commercially reasonable
efforts to secure confidential treatment of any Confidential Information so
disclosed.

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

 
(b) Notwithstanding the foregoing, any party hereto shall have the right to make
a public announcement regarding the transaction described in this Agreement,
provided, however, that, prior to and as a condition precedent to such public
announcement, all other parties hereto shall approve the timing, form and
substance of any such public announcement, except if a party hereto is required
to make a public announcement under any securities law, the party making such
public announcement may do so only after having provided the other party with a
copy of such public announcement and only as long as such public announcement is
made in strict accordance with the applicable law requiring such public
announcement be made. Any public announcement made on the Effective Date (or the
next business day) shall have been agreed to by the parties as to its form and
content prior to the parties executing this Agreement.
 
(c) Without limiting the generality of the provisions in subsection (a) above,
Buyer shall not, through its officers, employees, managers, contractors,
consultants, agents, representatives or any other person (including, without
limitation, Buyer’s third party consultants), directly or indirectly,
communicate with any governmental authority or any official, employee or
representative thereof, involving any matter with respect to the Property
without the Sellers’ prior written consent, which consent shall not be
unreasonably withheld, unless such communication is arranged by the Sellers.
Notwithstanding the foregoing, Buyer and its representatives and consultants
shall have the right to review building department, health department and other
local governmental authority records with respect to the Property and the
operation of the Hotels and request written or verbal confirmation of zoning and
any other compliance by the Land or Hotels with any applicable laws, without any
requirement to obtain the consent of the Sellers. Notwithstanding the foregoing,
Buyer shall have the right to communicate with the applicable governmental
authority in connection with the issuance of any liquor licenses required for
the sale of liquor at the Hotels, and any and all other permits or licenses
required to be transferred or applied for in connection with the sale of the
Hotels, all without the prior consent of the Sellers; provided, however, that
(i) Buyer shall provide Sellers with regular updates regarding the progress of
any and all such communications; and (ii) no inspections of the Hotels by the
applicable governmental authorities shall occur unless a representative of the
Sellers is present during such inspections.

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

 
(c) Communication with Employees. Without limiting the generality of the
provisions in subsection (a) above, Buyer shall not, through its officers,
employees, managers, contractors, consultants, agents, representatives or any
other person (including, without limitation, Buyer’s third party consultants),
directly or indirectly, communicate with any Employees or any person
representing any Employees involving any matter with respect to the Property,
the Employees or this Agreement, without the prior written consent of Sellers
and Managers, which consent may be withheld in the sole discretion of Sellers
and Managers, unless such communication is arranged by the Sellers and/or
Managers. Buyer shall not, through its officers, employees, managers,
contractors, consultants, agents, representatives or any other person
(including, without limitation, Buyer’s third party consultants), cause Sellers
to be in violation of any Management Agreement with respect to contact or
communication with any Employees. Notwithstanding the foregoing, the Sellers
shall reasonably cooperate with Buyer in order to arrange communications,
pursuant to a schedule to be reasonably agreed upon by the parties in order to
allow Buyer to interview the Employees for possible continued employment, and
Buyer shall apprise the Sellers from time to time as to its plans for
communicating with such Employees, and to complete such communications in
advance of the Closing.
 
Section 14.13 Manager Deliverables. Sellers shall use commercially reasonable
efforts to cause the Managers to deliver, on or prior to the Closing Date, a
complete list of (i) all gift certificates issued with respect to the Property
that are outstanding as of the Closing Date and (ii) all bookings and
reservations for guest, conference, meeting and banquet rooms or other
facilities at the Property that are outstanding as of the Closing Date.
 
Section 14.14 Non-Solicitation.»
 
After the Closing, Sellers and their affiliates shall not solicit for employment
any employees of any of the Hotels to which Buyer (or its manager(s)) has
offered employment contemporaneously with the Closing; provided, however, a
general solicitation by Sellers or any of their affiliates of any such employees
for employment with Sellers made in connection with a specific market or
industry-wide solicitation for employment shall not be a violation of this
Section 14.13.
 
Section 14.15 Mutual Indemnity for Third Party Personal Injury and Property
Damage Claims.
 
(a)  Sellers’ Indemnity. Sellers agree to indemnify, defend and hold harmless
Buyer of and from all liabilities, losses, damages, costs or expenses
(including, without limitation, court costs and reasonable attorneys’ fees)
which Buyer may suffer or incur by reason of any act occurring, or cause of
action accruing, on or prior to the Closing Date and arising from any personal
injury or property damage suffered by any third party at or on the Property on
or prior to the Closing Date, including, without limitation, any claims by
employees of any of the Sellers, Operating Tenants or Managers.

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

 
(b)  Buyer’s Indemnity. Buyer agrees to indemnify, defend and hold harmless
Sellers of and from all liabilities, losses, damages, costs or expenses
(including, without limitation, court costs and reasonable attorneys’ fees)
which Sellers may suffer or incur by reason of any act occurring, or cause of
action accruing, after the Closing Date and arising from any personal injury or
property damage suffered by any third party at or on the Property after the
Closing Date, including, without limitation, any claims by employees of Buyer.
 
Section 14.16Time of Essence.»
 
Time is of the essence of this Agreement and each term and provision hereof;
provided, however (unless specifically provided to the contrary elsewhere in
this Agreement), when the date by which any action, event or condition is to
occur or any notice or other communication is to be given falls on a Saturday,
Sunday or legal holiday, the date by which such action, event or condition is to
occur or such notice or other communication is to be given shall be
automatically extended to the business day immediately succeeding such Saturday,
Sunday or legal holiday.
 
SIGNATURES ON FOLLOWING PAGES
 

 
 

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

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of
the date first above written.
 

 
BUYER:
     
PYRAMID HOTEL OPPORTUNITY
VENTURE LLC,
a Delaware limited liability company
By: Pyramid/Contrarian Managing Member LLC, its Managing Memeber LLC, its
     
 
By: /s/ William Booth
 
Name: William D. Booth, Jr.
 
Its: Manager
     
Date Executed: July 1, 2005
   

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

 
SELLERS:
 
RFS PARTNERSHIP, L.P.,
a Tennessee limited partnership
 
By: CNL ROSE GP CORP.,
a Delaware corporation
its sole general partner
 
By: /s/ Marcel Verbaas____________________________________________________
Name: Marcel Verbaas
Title: Senior Vice President
     
Date Executed: July 5, 2005
     
ROSE SPE 1, LP,
a Delaware limited partnership
 
By: ROSE SPE 1 GP, LLC,
a Delaware limited liability company,
its sole general partner
 
By: /s/ Marcel Verbaas____________________________________________________
Name: Marcel Verbaas
Title: Senior Vice President
 
Date Executed: July 5, 2005
 
WHARF ASSOCIATES,
a California general partnership,
 
By: RFS FINANCING
PARTNERSHIP II, L.P.,
a Tennessee limited partnership,
as managing partner
 
By: RFS WHARF
PROPERTY CORPORATION,
a Tennessee corporation, as general partner
 
By: /s/ Marcel Verbaas____________________________________________________
Name: Marcel Verbaas
Title: Senior Vice President
 
Date Executed: July 5, 2005

 
 

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

 
For Purposes of Acknowledging and Agreeing only to the provisions of Section
2.04 of this Agreement:
 
 
ESCROW AGENT:
     
THE TALON GROUP, a division of First American Title Insurance Company
         
 
By: /s/ Keren Baki
 
Name: Keren Baki  
 
Title: Commercial Closing Operations Supervisor  
     
Date Executed: July 5, 2005
       

 

 

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

EXHIBIT “A”

Legal Descriptions of Land

See A-1, A-2, A-3, A-4 and A-5 attached.

 
 

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

EXHIBIT A-1
 
LEGAL DESCRIPTION
 

Beverly Heritage, Milpitas / San Jose
1820 Barber Lane
Milpitas, CA 95035
Santa Clara County

Parcel One:

Parcel A as shown on the Parcel Map filed for record July 17, 1979 in Book 445
of Maps, Pages 47 and 48, Santa Clara County Records.

 
Parcel Two:
 
An easement for ingress and egress as granted in the Deed recorded July 7, 1981
in Book G196, Page 5 of Official Records, described as follows:

Said easement being a portion of that certain 7.806 acre parcel of land labeled
“Parcel B” on the above described Parcel Map and being described as follows:

A strip of land of the uniform width of 15 feet measured at right angles lying
contiguous to and Westerly of the Easterly boundary line of said “Parcel B” and
extending Southerly along the Easterly Boundary line of Parcel B, 256.51 feet
from the Southerly boundary line of Barber Lane (60 feet wide) to the terminus
of common ingress/egress easement benefiting Parcels A, B and C as shown on the
above mentioned Parcel Map, said point being the terminus of the herein
described easement.

 
APN: 086-03-018
 

 

 
 

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

EXHIBIT A-2
 
LEGAL DESCRIPTION
 
San Diego Del Mar (Doubletree)
11915 El Camino Real
San Diego, CA 92130
San Diego County

Real property in the City of San Diego, County of San Diego, State of
California, described as follows:
 
Parcel A:
 
Parcel 1 of Parcel Map No. 18098, in the City of San Diego, County of San Diego,
State of California, filed in the Office of the County Recorder of San Diego
County, August 25, 1998 as File No. 1998-0541314 of Official Records.
 

 
Parcel B:
 
A non-exclusive easement for vehicular and pedestrian ingress, egress and
circulation purposes over, along and across that portion of Parcel 4 of Parcel
Map No. 15957, in the City of San Diego, County of San Diego, State of
California, filed in the Office of the County Recorder of San Diego County, on
January 17, 1990 as File No. 90-028024 of Official Records, delineated and
designated thereon as “Water and Sewer Easement Granted Hereon”, and that
portion of Parcel 3 of said Parcel Map No. 15957 delineated and designated
thereon as “Water and Drainage Easement Granted Hereon”.
 

 
Parcel C:
 
A non-exclusive easement for (a) vehicular parking, in areas other than the area
which may be improved with the office building(s) approximately 40 feet in
height and containing approximately 55,000 square feet of aggregate floor area
contemplated by North City West Planned District Development Plan Permit No.
88-0941, in such number of parking spaces as may be required from time to time
for Parcel 1 of said parcel Map No. 15957 to be in compliance with said Permit
No. 88-0941 and any other applicable requirements, and (b) vehicular and
pedestrian ingress, egress and circulation purposes on, over, along and across
that portion of Parcel 4 of said Parcel Map No. 15957, other than such improved
area and other than that portion of said Parcel 4 delineated and designated on
said Parcel Map No. 15957 as “Water and Sewer Easement Granted Hereon”.
 

 

 
 

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

EXHIBIT A-2 - CONTINUED
 
LEGAL DESCRIPTION
 
San Diego Del Mar (Doubletree)
11915 El Camino Real
San Diego, CA 92130
San Diego County

 
Parcel D:
 
Non-exclusive easements over and across the common area, as conveyed, set forth
and described in that certain “Agreement Between Landowners Including Easements
with Covenants and Restrictions” dated September 26, 1994, executed by and
between Tiger Development One, a California limited partnership; Kmart
Corporation, a Michigan corporation and Carmel Valley Partners I, a California
general partnership, recorded September 29, 1994 as instrument no. 1994-0579026
of Official Records, in the Office of the County Recorder of San Diego County,
California.
 
APN: 307-410-13-00
 

 
 

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

EXHIBIT A-3
 
LEGAL DESCRIPTION
 
Hotel Rex -- San Francisco
562 Sutter Street
San Francisco, CA 94102
San Francisco County

 
All that certain tract, piece or parcel of land situate in the City of San
Francisco, County of San Francisco, State of California, described as follows:

BEGINNING AT A POINT ON THE NORTHERLY LINE OF SUTTER STREET DISTANT THEREON 87
FEET 9-¼ INCHES EASTERLY FROM THE EASTERLY LINE OF MASON STREET; THENCE EASTERLY
ALONG SAID LINE OF SUTTER STREET 49 FEET 8-¾ INCHES; THENCE AT A RIGHT ANGLE
NORTHERLY 137 FEET 6 INCHES; THENCE AT A RIGHT ANGLE WESTERLY 50 FEET; THENCE AT
A RIGHT ANGLE SOUTHERLY 50 FEET; THENCE AT A RIGHT ANGLE EASTERLY 3-¼ INCHES;
THENCE AT A RIGHT ANGLE SOUTHERLY 87 FEET 6 INCHES TO THE POINT OF BEGINNING.
BEING A PORTION OF 50 VARA LOT NO. 358 IN BLOCK NO. 166.

Assessor’s Lot 010, Block 0284

 
 

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

EXHIBIT A-4
 
LEGAL DESCRIPTION
 

Hilton Hotel - San Francisco - Fisherman’s Wharf
 
590 Bay Street
 
San Francisco, California 94133
 
San Francisco County
 

 
REAL PROPERTY IN THE CITY OF SAN FRANCISCO, COUNTY OF SAN FRANCISCO, STATE OF
CALIFORNIA, DESCRIBED AS FOLLOWS:
 
BEGINNING AT THE POINT OF INTERSECTION IF THE NORTHERLY LINE OF BAY STREET WITH
THE EASTERLY LINE OF JONES STREET; RUNNING THENCE NORTHERLY ALONG SAID LINE OF
JONES STREET 275 FEET TO THE SOUTHERLY LINE ON NORTH POINT STREET; THENCE AT A
RIGHT ANGLE EASTERLY ALONG SAID LINE OF NORTH POINT STREET 77 FEET; THENCE AT A
RIGHT ANGLE SOUTHERLY 137 FEET AND 6 INCHES; THENCE AT A RIGHT ANGLE EASTERLY
198 FEET; THENCE AT A RIGHT ANGLE SOUTHERLY 137 FEET AND 6 INCHES TO THE
NORTHERLY LINE OF BAY STREET; THENCE AT A RIGHT ANGLE WESTERLY ALONG SAID LINE
OF BAY STREET 275 FEET TO THE POINT OF BEGINNING.
 
BEING PART OF 50 VARA BLOCK NO. 213.
 

 
APN: Lot: 003 Blk: 0029
 

 
 

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

EXHIBIT A-5
 
LEGAL DESCRIPTION
 

 
Holiday Inn Columbia - Coliseum USC
630 Assembly Street
Columbia, SC 29201

Parcel I

All that tract, piece, parcel of land containing 43722.81 sq. ft. or 1.0037
acres as delineated and shown on plat prepared for Realty & Financial Services,
Inc., dated August 6, 1993; said plat having been prepared by Hussey, Gay, Bell
& Young, Inc., Columbia, S.C.; said parcel being located in the City of
Columbia, Richland County, S.C., to the North of Blossom Street and to the East
of Assembly Street as shown on said plat and commencing at the intersection of
the road right of way of Devine Street and Assembly Street; said intersection
being the Southeastern corner of Assembly Street and Devine Street and
designated as P.O.B. Parcel 1 on said plat, thence going from commencement or
beginning point N 68°00’40” E for a distance of 208.68’ feet to an iron marker;
thence turning and running S 22°01’12”E for a distance of 209.14 feet to an iron
marker; thence turning and running S 67°55’44” W for a distance of 103.70 feet
to an “X’ in the top of a concrete retaining wall, thence turning and running S
67°55’44”W for a distance of 105.41 feet to an. iron marker; thence turning and
running N 21°53’00” W for a distance of 209.35 feet to the point of beginning or
commencement; said property being bounded generally on the North by Devine
Street, on the East by lands of N/F John A. Scarborough and N/F Gillis Coleman
et al, on the South by lands of N/F Realty & Financial Service, Inc. (Parcel II
and lands of N/F Church of Jesus Christ of Latter Day Saints, and on the West by
Assembly Street.

TMS No. 11303-13-01

AND

CONTINUED ON NEXT PAGE

 
 

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

EXHIBIT A-5
 
LEGAL DESCRIPTION CONTINUED
 

 
Holiday Inn Columbia - Coliseum USC
630 Assembly Street
Columbia, SC 29201

Parcel II:
All that tract, piece or parcel of land containing 22066.03 sq. ft. or .5066
acres as delineated and shown on a plat prepared for Realty & Financial
Services, Inc., dated August 6, 1993; said plat having been prepared by Hussey,
Gay, Bell & Young, Inc., Columbia, S.C.; said parcel being located in the City
of Columbia, Richland County, S.C. to the North of Blossom Street and to the
East of Assembly Street as shown on said plat and commencing at the intersection
of the road right of way of Devine Street and Assembly Street; said intersection
being the Southwestern corner of Assembly Street and Devine Street and being
designated as P.O.B. Parcel 1 on said plat, thence going from said point N
68°00’40” E for a distance of 208.68’ feet to a point; thence S 22°01’12”E for a
distance of 209.14 feet to an iron marker designated as P.O.B. Parcel II as
shown on said plat; thence turning and running S 22°51’33”E for a distance of
207.89 feet to an iron marker; thence turning and running S 67°28’47” W for a
distance of 108.20 feet to an iron marker; thence turning and running N
21°37’17”W for a distance of 208.70 feet to an “X” mark in the top of a concrete
retaining wall; thence turning and running N 67°55’44”E for a distance of 103.70
feet to a point of beginning or commencement; said property being bounded
generally on the North by lands N/F Realty & Financial Services, Inc. (Parcel I)
on the East by lands N/F J. Mac Pizza Hut, Inc., lands of N/F Bert and David
Brantley, and lands of N/F Roy W. Arrington, on the South of Blossom Street, and
on the West by lands of N/F Susan G. Robinson/Frank R. Ellerbe, III, and lands
of N/F Church of Jesus Christ of Latter Day Saints.

TMS No. 11303-13-11

 

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

EXHIBIT “B”

ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY
 
THIS ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY (this “Assignment”) is
made and entered into as of the ___day of ______, 2005, by and between
_____________________________, a ____________________having a mailing address at
c/o CNL Hotels & Resorts, Inc., CNL Center at City Commons, 450 South Orange
Avenue, Orlando, Florida 32801 (“Assignor”), and
________________________________, a Delaware limited liability company having a
mailing address at c/o Pyramid/Contrarian Investment LLC, 1071 Camelback Street,
Suite 111, Newport Beach, California 92660 (“Assignee”).
 
 
W I T N E S S E T H:
 
WHEREAS, Assignor and Assignee are parties to that certain Agreement of Purchase
and Sale dated _________ __, 2005 (the “Agreement”), pursuant to which Assignor
has agreed, among other things, to sell, assign, transfer and convey to Assignee
the hotel property known as “______________” (the “Hotel”); and
 
WHEREAS, in connection with the sale and purchase of the Property, Assignor has
agreed to assign to Assignee all of Assignor’s right, title and interest in and
to, and Assignee has agreed to assume from Assignor all of Assignor’s
obligations and liabilities under, the Intangible Property with respect to the
Hotel (the “Hotel Intangible Property”). Unless otherwise defined herein, all
capitalized terms used in this Assignment shall have the meaning given to such
term in the Agreement.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the parties
agree as follows:
 
1. Assignment. Assignor hereby assigns, transfers, and conveys to Assignee all
of Assignor’s right, title and interest in and to the Hotel Intangible Property,
to the extent that such assignments are legally and contractually permitted.

2. Assumption. Assignee hereby assumes all of the Assignor’s right, title and
interest in and to, and all liabilities and obligations of Assignor under the
Hotel Intangible Property which arise on or after the Transfer Time and agrees
to perform all obligations of Assignor under the Hotel Intangible Property which
are to be performed or which become due on or after the Transfer Time.

3. Indemnity by Assignee. Assignee shall indemnify, defend and hold Assignor
harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys’ fees) arising out of any Hotel Intangible
Property from and after the Transfer Time.
 
4. Indemnity by Assignor. Assignor shall indemnify, defend and hold Assignee
harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys’ fees) arising out of any Hotel Intangible
Property prior to the Transfer Time.

5. Further Assurances. Assignor covenants with Assignee and Assignee covenants
with Assignor that each will execute or procure any additional documents
necessary to establish the rights of the other hereunder.

6. Counterparts. This Assignment may be executed by the parties in counterparts,
in which event the signature pages thereof shall be combined in order to
constitute a single original document.

7. Binding Effect. This Assignment shall be binding upon and inure to the
benefit of Assignor, Assignee and their respective successors and assigns.

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date set
forth above.
 

 
ASSIGNOR:
     
a
     
By:
 
Name:
 
Title:
             
ASSIGNEE:
     
____________________________________
 
a ___________________________________
     
By:
 
Name:
 
Title:
                   

 

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

EXHIBIT “C”

ASSIGNMENT AND ASSUMPTION OF MANAGEMENT AGREEMENT
 
THIS ASSIGNMENT AND ASSUMPTION OF MANAGEMENT AGREEMENT (this “Assignment”) is
made and entered into as of the ___day of ______, 2005, by and among RFS
PARTNERSHIP, L.P., a Tennessee limited partnership having a mailing address at
c/o CNL Hotels & Resorts, Inc., CNL Center at City Commons, 450 South Orange
Avenue, Orlando, Florida 32801 (“Owner”), RFS LEASING VII, INC., a Tennessee
corporation having a mailing address at c/o CNL Hotels & Resorts, Inc., CNL
Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801
(“Tenant” and, collectively with Owner, “Assignor”), and [PYRAMID HOTEL
OPPORTUNITY VENTURE LLC], a Delaware limited liability company having a mailing
address at c/o Pyramid/Contrarian Investment LLC, 1071 Camelback Street, Suite
111, Newport Beach, California 92660 (“Assignee”), and consented to by JOIE DE
VIVRE HOSPITALITY, INC., a California corporation having a mailing address at
567 Sutter Street, San Francisco, California 94102 (“Manager”).
 
 
W I T N E S S E T H:
 
WHEREAS, Owner and Tenant entered into that certain Amended and Restated Master
Lease Agreement dated January 1, 2001; as amended by that certain Letter
Agreement, dated January 1, 2001; as amended by that certain Second Amendment to
Amended and Restated Master Lease Agreement, dated May 1, 2001; as amended by
that certain Third Amendment to Amended and Restated Master Lease Agreement,
dated October 1, 2003; as amended by that certain Fourth Amendment to Amended
and Restated Master Lease Agreement, dated October 10, 2003; as amended by that
certain Fifth Amendment to Amended and Restated Master Lease Agreement, dated
December 4, 2003 (collectively, the “Lease”), whereby Owner leased to Tenant and
Tenant leased from Owner certain real property and improvements commonly known
as the “Hotel Rex” located in San Francisco, California and as more particularly
described on Exhibit A attached hereto (the “Hotel”);
 
WHEREAS, the Hotel is managed by Manager pursuant to that certain Management
Agreement between Assignor and Manager dated as of April 28, 2003 (the
“Management Agreement”);
 
WHEREAS, concurrently with the execution of this Assignment, Owner shall sell
and convey to Assignee all of Owner’s right, title and interest in and to the
Hotel (the “Sale Transaction”), and Owner and Tenant shall terminate the Lease,
so that upon consummation of such Sale Transaction, Owner and Tenant shall have
no right, title and interest in or to the Hotel; and
 
WHEREAS, in connection with the Sale Transaction, (i) Assignor has agreed to
assign all of its rights, privileges, duties and obligations under the
Management Agreement to Assignee and Assignee has agreed to assume all of
Assignor’s rights, privileges, duties and obligations thereunder which arise on
or after the Transfer Time, all of the foregoing pursuant to the terms and
provisions of this Assignment.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the parties
agree as follows:
 
1. Assignment. Assignor hereby assigns all of its right, title and interest in
and to the Management Agreement that arise on or after the Transfer Time to
Assignee.

2. Assumption. Assignee hereby assumes all of Assignor’s right, title and
interest in and to, and all liabilities and obligations of Assignor under, the
Management Agreement that arise on or after the Transfer Time.

3.  Indemnity by Assignee. Assignee shall indemnify, defend and hold Assignor
harmless from any claim, liability, cost or expense (including, without
limitation, reasonable attorneys’ fees) arising out of the Management Agreement
from and after the Transfer Time.

4. Indemnity by Assignor. Assignor shall indemnify, defend and hold Assignee
harmless from any claim, liability, cost or expense (including, without
limitation, reasonable attorneys’ fees) arising out of the Management Agreement
prior to the Transfer Time.

[ADD INDEMNITY FROM ASSIGNEE IN EVENT MANAGER DOES NOT JOIN IN AN CONSENT TO
ASSIGNMENT]

3. Further Assurances. Each of Assignor and Assignee agrees that each will
execute or procure any additional documents necessary to establish the rights of
the others hereunder.

4. Counterparts. This Assignment may be executed by the parties in counterparts,
in which event the signature pages thereof shall be combined in order to
constitute a single original document.
 
5. Binding Effect. This Assignment shall be binding upon and inure to the
benefit of Assignor and Assignee, and their respective successors and assigns.IN
WITNESS WHEREOF, the parties have executed this Assignment as of the date set
forth above.
 

 
 

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

 
ASSIGNOR:

RFS PARTNERSHIP, L.P.,
a Tennessee limited partnership

By: CNL ROSE GP CORP.,
a Delaware corporation,
its General Partner

By: _______________________
Name: Marcel Verbaas
Title: Senior Vice President

RFS LEASING VII, INC.,
a Tennessee corporation

By: _______________________
Name: Marcel Verbaas
Title: Senior Vice President

ASSIGNEE:

PYRAMID HOTEL OPPORTUNITY LLC,
a Delaware limited liability company

By: _______________________
Name: 
Title: 
 

 

 

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

EXHIBIT “D”

ASSIGNMENT AND ASSUMPTION OF OPERATING AGREEMENTS
 
THIS ASSIGNMENT AND ASSUMPTION OF OPERATING AGREEMENTS (this “Assignment”) is
made and entered into as of the ___day of ______, 2005, by and between
_____________________________, a ____________________having a mailing address
c/o CNL Hotels & Resorts, Inc., CNL Center at City Commons, 450 South Orange
Avenue, Orlando, Florida 32801 (“Assignor”), and _______________________, a
Delaware limited liability company having a mailing address at c/o
Pyramid/Contrarian Investment LLC, 1071 Camelback Street, Suite 111, Newport
Beach, California 92660 (“Assignee”).
 
 
W I T N E S S E T H:
 
WHEREAS, Assignor and Assignee are parties to that certain Agreement of Purchase
and Sale dated _________ __, 2005 (the “Agreement”), pursuant to which Assignor
has agreed, among other things, to sell, assign, transfer and convey to Assignee
the hotel property known as “______________” (the “Hotel”); and
 
WHEREAS, in connection with the sale and purchase of the Property, Assignor has
agreed to assign to Assignee all of Assignor’s right, title and interest in and
to, and Assignee has agreed to assume from Assignor all of Assignor’s
obligations and liabilities under, the Operating Agreements with respect to the
Hotel (the “Hotel Operating Agreements”). Unless otherwise defined herein, all
capitalized terms used in this Assignment shall have the meaning given to such
term in the Agreement.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the parties
agree as follows:
 
1. Assignment. Assignor hereby assigns, transfers, and conveys to Assignee all
of Assignor’s right, title and interest in and to the Hotel Operating
Agreements, to the extent that such assignments are legally and contractually
permitted.

2. Assumption. Assignee hereby assumes all of Assignor’s right, title and
interest in and to, and all liabilities and obligations of Assignor under the
Hotel Operating Agreements which arise on or after the Transfer Time and agrees
to perform all obligations of Assignor under the Hotel Operating Agreements
which are to be performed or which become due on or after the Transfer Time.

3. Indemnity by Assignee. Assignee shall indemnify, defend and hold Assignor
harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys’ fees) arising out of any Hotel Operating
Agreement from and after the Transfer Time.

4. Indemnity by Assignor. Assignor shall indemnify, defend and hold Assignee
harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys’ fees and costs) arising out of any Hotel
Operating Agreement for the period prior to the Transfer Time.

5. Further Assurances. Assignor covenants with Assignee and Assignee covenants
with Assignor that each will execute or procure any additional documents
necessary to establish the rights of the other hereunder.

6. Counterparts. This Assignment may be executed by the parties in counterparts,
in which event the signature pages thereof shall be combined in order to
constitute a single original document.

7. Binding Effect. This Assignment shall be binding upon and inure to the
benefit of Assignor, Assignee and their respective successors and assigns.

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date set
forth above.
 

 
ASSIGNOR:
     
a
     
By:
 
Name:
 
Title:
                     
ASSIGNEE:
             
a
     
By:
 
Name:
 
Title:
                       

 

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

EXHIBIT “E”

Schedule of Franchise Agreements and Franchise Guaranty Agreements

1. Beverly Heritage: none
 
2. Hotel Rex: none
 
3. Holiday Inn Columbia:
 
(a) Holiday Inn Change of Ownership License Agreement, dated January 31, 2004,
by and between RFS Leasing VII, Inc. and Holiday Hospitality Franchising, Inc.
 
(b) Guaranty Agreement attached to License Agreement executed by RFS
Partnership, L.P.
 
(c) Master Technology Agreement, dated January 31, 2004, by and between Six
Continents Hotels, Inc. and RFS Leasing, VII, Inc.
 
4. Doubletree Del Mar:
 
(a) Franchise License Agreement, dated October 10, 2003, by and between
Doubletree Hotel Systems, Inc. and CNL Rose SPE Tenant Corp.
 
(b) Guarantee of Franchise License Agreement, dated October 10, 2003, executed
by RFS Partnership, L.P.
 
5. San Francisco Wharf:
 
(a) License Agreement, Supplemental Agreement and License Fee Rider, each dated
April 20, 1999, between Hilton Inns, Inc. and Embarcadero Hospitality
Corporation.
 
(b) Assignment and Assumption of and Amendment to License Agreement, dated
December __, 2000, between Embarcadero Hospitality Corporation and RFS Leasing
VII, Inc.
 
(c) Amendment to License Agreement, dated July 10, 2003, between Embarcadero
Hospitality Corporation and RFS Leasing VII, Inc.
 
(d) License Agreement, dated March 10, 2000, between Hilton Hotels Corporation,
as licensor, and Hilton San Francisco Fisherman’s Wharf, as licensee, with
respect to the licensing of certain programs.
 
(e) Guarantee of License Agreement, dated April 20, 1999, executed by Wharf
Associates.
 
(f) Guarantee of Franchise License Agreement executed by RFS Leasing VII, Inc.
(undated) in connection with Franchise License Agreement.
 

 

 

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

EXHIBIT “F”

LIMITED WARRANTY BILL OF SALE
 
THIS LIMITED WARRANTY BILL OF SALE (the “Bill of Sale”) is made and entered into
as of the __ day of ____________, 2005, by and between
___________________________, a __________________ (“Seller”) and
______________________________, a ____________________ (“Buyer”).
 
W I T N E S S E T H:
 
WHEREAS, Seller and Buyer are parties to that certain Agreement of Purchase and
Sale dated _________ __, 2005 (the “Agreement”), pursuant to which Seller has
agreed, among other things, to sell, assign, transfer and convey to Buyer the
portion of the Property (as defined in the Agreement) attributable to the hotel
property known as the “Fisherman’s Wharf” located in San Francisco, California
(the “Subject Property”); and
 
WHEREAS, in connection with the sale and purchase of the Subject Property,
Seller has agreed to sell, transfer and convey to Buyer all of Seller’s right,
title and interest in and to the Personal Property with respect to the Subject
Property (the “Subject Personal Property”). Unless otherwise defined herein, all
capitalized terms used in this Assignment shall have the meaning given to such
term in the Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and Ten Dollars ($10.00) and
other good and valuable consideration in hand paid by Buyer to Seller, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer do
hereby agree as follows:
 
1. Seller does hereby sell, transfer and convey to Buyer the Subject Personal
Property and Buyer hereby purchases and accepts all of the Subject Personal
Property.
 
2. EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH 2 BELOW, ALL OF THE SUBJECT
PERSONAL PROPERTY IS HEREBY SOLD, TRANSFERRED AND CONVEYED TO BUYER ON AN “AS
IS”, “WHERE IS”, “WITHOUT ALL FAULTS” BASIS, WITHOUT RECOURSE, REPRESENTATION,
IMPLIED OR EXPRESS WARRANTY, GUARANTY, PROMISE, PROJECTION OR PREDICTION
WHATSOEVER WITH RESPECT TO THE SUBJECT PERSONAL PROPERTY, WHETHER WRITTEN OR
ORAL, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Notwithstanding the foregoing to the contrary, Seller does hereby warrant to
Buyer that the Subject Personal Property is owned by Seller free and clear of
all encumbrances of whatsoever nature; EXCEPTING ONLY the liens or mortgages
assumed or entered into by Buyer, if any, and any personal property sales tax or
other tax arising from the transactions contemplated by the Agreement.
 
3. This Bill of Sale may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instruments and any of the
parties hereto may execute this Bill of Sale by signing any such counterpart.
 
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale as of the
date first above written.
 

 
 
SELLER:
     
a
         
By:
 
Name:
 
Title:
                     
BUYER:
     
a
         
By:
 
Name:
 
Title:
               

 

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

EXHIBIT “G”

Schedule of Management Agreements

1. Beverly Heritage: Management Agreement, dated January 31, 2004, by and
 between RFS Leasing VII, Inc. and Interstate Management Company, L.L.C.
 
2. Hotel Rex: Management Agreement, dated April 28, 2003, by and between RFS
 Partnership, L.P., RFS Leasing VII, Inc., and Joie De Vivre Hospitality, Inc.
 
3. Holiday Inn Columbia: Management Agreement, dated October 1, 2003, by and
 between RFS Leasing VII, Inc. and Interstate Management Company, L.L.C.; and 
First Amendment to Management Agreement, dated January 31, 2004, by and  between
RFS  Leasing VII, Inc. and Interstate Management Company, L.L.C.
 
4. Doubletree Del Mar: Management Agreement, dated October 1, 2003, by and
 between CNL Rose SPE Tenant Corp. and DT Management, Inc.
 
5. San Francisco Wharf: Management Agreement, dated November 17, 2003 by and
 between RFS Leasing VII, Inc. and Hilton Hotels Corporation.
 

 

 

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

EXHIBIT “H”

Schedule of Operating Agreements

 

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

EXHIBIT “I”

Schedule of Operating Leases

1 & 2. Beverly Heritage and Holiday Inn SC: Amended and Restated Master Lease
 Agreement, dated October 13, 2004, between RFS Partnership, L.P. and RFS
 Leasing VII, Inc., as amended by (i) Partial Termination of and Amendment to
 Amended and Restated Master Lease Agreement dated as of March 10, 2005.
 
3.
Hotel Rex: Amended and Restated Master Lease Agreement, dated January 1, 2001,
between RFS Partnership, L.P., as lessor, and RFS Leasing VII, Inc., as lessee
(as amended by that certain Letter Agreement, dated January 1, 2001; as amended
by that certain Second Amendment to Amended and Restated Master Lease Agreement,
dated May 1, 2001; as amended by that certain Third Amendment to Amended and
Restated Master Lease Agreement, dated October 1, 2003; as amended by that
certain Fourth Amendment to Amended and Restated Master Lease Agreement, dated
October 10, 2003; as amended by that certain Fifth Amendment to Amended and
Restated Master Lease Agreement, dated December 4, 2003).

 
4. DoubleTree Del Mar: Consolidated, Amended and Restated Master Lease
 Agreement, dated December 4, 2003, between Rose SPE 1, LP and CNL Rose SPE
 Tenant Corp.
 

5. SF Wharf: Amended and Restated Master Lease Agreement, dated January 1,2001,
between Wharf Associates and RFS Leasing VII, Inc., as amended by Letter
Agreement, dated January 1, 2001, and as further amended by a Second Amendment
to Amended and Restated Master Lease Agreement dated July 10, 2003.
 

 

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

EXHIBIT “J”

Purchase Price Allocation Schedule

1. Hotel Rex: $14,000,000

2. Fisherman's Wharf: $35,000,000

3. Beverly Heritage:  $17,250,000

4. Doubletree Del Mar  $34,500,000

5. Columbia:  $8,250,000

 

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

EXHIBIT “K”

Schedule of Sellers

Brand  Property Name  City, State  Seller    

--  Beverly Heritage  Milpitas CA  RFS Partnership, L.P.

--  Hotel Rex-San Francisco San Francisco CA RFS Partnership, L.P.

HOL  Columbia Coliseum  Columbia SC  RFS Partnership, L.P.

DT  Doubletree Del Mar  San Diego CA  Rose SPE 1, LP

HH  Fisherman’s Wharf  San Francisco CA Wharf Associates

 

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

EXHIBIT “L”

Litigation Schedule

CLAIMANT
OWNER/DEFENDANT
DESCRIPTION
OF CLAIM
AMOUNT OF CLAIM
INSURANCE
LITIGATION
Carmel Valley, LLC
RFS Partnership, LP/RFS Hotel Investors
 
current owner: Rose SPE 1, LP
 
Doubletree Hotel
San Diego / Del Mar
San Diego, CA
Breach of lot transfer agreement
Unspecified
No
Yes
Minarovich, R
 
current owner: Rose SPE 1, LP
 
Doubletree Hotel
San Diego/Del Mar
San Diego, CA
Personal injury
Unspecified
Yes
No
Re: Hilton Fisherman’s Wharf
Outside of a possible EEOC charge filed by the previous Sales Administrator for
discrimination (property was told that the information was filed, but it would
be sent to the proper State/Federal Office for review and determination as to
whether it would go any further), and the two grievances the property has with
the Servers that were let go due to theft, there are no further legal matters.
     
NONE
NONE
re: Holiday Inn Columbia
     
NONE
NONE
re: Hotel Rex
     
NONE
NONE
re: Beverly Heritage
     
NONE

 

 

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

EXHIBIT “M”

Title and Survey Defects

[NOTE: ITEM NOS. CORRESPOND TO ITEM NOS. IN
 
SCHEDULE B, SECTION 2 OF THE RESPECTIVE TITLE COMMITMENTS]
 
SAN DIEGO, CA
 
 

12.  
Sellers shall provide an estoppel certificate from the appropriate third party
under that certain Covenants, Conditions, Restrictions and Easements recorded
September 29, 1994 as instrument no. 1994-0579026 of Official Records, which
such third-party is required to provide pursuant to the terms thereof. Such
certificate will be in the form and content required under such instrument.
Sellers shall use good faith efforts to obtain an estoppel certificate from such
party with respect to other matters reasonably requested by Buyer. Seller will
also give notice of sale to the appropriate third party as required under such
instrument.

 

 

13.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, all of the following:

 
 
An unrecorded lease dated November 21, 1996, executed by RFS Financing
Partnership, L.P. as lessor and RFS Leasing, Inc. as lessee, as disclosed by a
Memorandum of Lease recorded November 21, 1996 as instrument no. 1996-0591903 of
Official Records.
 
 
An Amendment to said Lease was recorded November 16, 1999 as instrument no.
1999-0760459 of Official Records.
 
 
A document entitled "Assignment of Lease Agreement and Assumption Agreement, in
favor of RFS Leasing II, Inc., a Tennessee corporation, recorded January 23,
2001 as instrument no. 2001-0039012 of Official Records.
 
 

13.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, all of the following:

 
 
A Deed of Trust to secure an original indebtedness of $(Not shown) recorded July
17, 2003 as instrument no. 2003-0851943 of Official Records.
 
 
Dated:
July 10, 2003
Trustor:
RFS Partnership, L.P. and RFS Financing Partnership, L.P.
Trustee:
PRLAP, Inc.
 
Beneficiary:
 
Mortgage Electronic Registration Systems, Inc.

 
 
A document recorded February 12, 2004 as instrument no. 2004-0113344 of Official
Records provides that the deed of trust or the obligation secured thereby has
been modified. 
 
 

14.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, all of the following:

 
 

 
 
A financing statement recorded July 17, 2003 as instrument no. 2003-0851944 of
Official Records.
 
 
Debtor:
RFS Financing Partnership, L.P.
Secured party:
Mortgage Electronic Registration Systems, Inc.

 
 
An amendment to the financing statement was recorded February 12, 2004 as
instrument no. 2004-0113345 of Official Records.
 
 

15.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a financing statement recorded February 12, 2004 as instrument no.
2004-0113346 of Official Records.

 
 
Debtor:
Rose SPE I, LP
Secured party:
Mortgage Electronic Registration Systems, Inc.

 
 

16.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a financing statement recorded February 12, 2004 as instrument no.
2004-0113347 of Official Records.

 
 
Debtor:
CNL Rose SPE Tenant Corp.
Secured party:
Mortgage Electronic Registration Systems, Inc.

 
SAN FRANCISCO -- HOTEL REX
 
 

2.  
Supplemental taxes for the fiscal year 2000-2001 assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code.
Sellers to pay outstanding assessments.

 
 
 
 
First Installment:
$14,417.74, PAID
Penalty:
$1,441.77
Second Installment:
$14,417.74, DELINQUENT
Penalty:
$1,451.77
Tax Rate Area:
01-000
Lot:
010
Block:
0284

 
 

7.  
The terms and provisions contained in the document entitled "Notice-Seismic
Building Hazard (Health & Safety Code 17980.1; Government Code Section 8875.2)"
recorded January 5, 1995 as Instrument No. F-738564 in Book G291, Page 625 of
Official Records.  Seller shall provide evidence that the required seismic
strengthening has occurred and remove this notice of record or provide
documentation sufficient for the title company to remove this exception.

 
 

8.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a deed of trust to secure the performance of an agreement or other
obligation, recorded December 28, 2000 as Instrument No. 2000-G883343-00 in Book
H791, Page 159 of Official Records.

 
 
 
 
Dated:
August 1, 2000
Trustor:
Ridgelake General Partner, Inc., a Tennessee corporation
Trustee:
Commonwealth Land Title Company
Beneficiary:
Bank of America, N.A., a national banking association

 
 
A document recorded August 16, 2001 as Document No. 2001-G998316-00 in Book
H953, Page 401 of Official Records provides that the Deed of Trust or the
obligation secured thereby has been modified.
 
 

9.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a document entitled "Assignment of Leases, Rents and Profits"
recorded February 18, 2001 as Instrument No. 2001-G904531-00 in Book H827, Page
508 of Official Records, as additional security for the payment of the
indebtedness secured by the deed of trust recorded December 28, 2000 as
Instrument No. 2000-883343-00 in Book H791, Page 159 of Official Records. 

 
 

11.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a Deed of Trust to secure an original indebtedness of
$353,475,000.00 recorded November 8, 2004 as Instrument No. 2004-H846981-00 in
Reel I760, Image 0047 of Official Records.

 
 
Dated:
October 13, 2004
Trustor:
RFS Partnership, L.P.
Trustee:
Lawyers Title Company, a California corporation
 
Beneficiary:
 
Deutsche Bank Trust Company Americas, as administrative agent

 
 

12.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a document entitled "Subordination, Attornment, Security Agreement
and Assignments of Leases and Rents" recorded November 8, 2004 as Instrument No.
2004-H846982-00 in Reel I760, Image 0048 of Official Records, as additional
security for the payment of the indebtedness secured by the deed of trust
recorded November 8, 2004 as Instrument No. 2004-H846981-00 in Reel I760, Image
0047 of Official Records. 

 
SAN FRANCISCO -- FISHERMAN’S WHARF
 
 

4.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, the following:

 
 

 
 
A Deed of Trust to secure an original indebtedness of $19,300,000.00
recorded October 28, 1997 as Instrument No. 97-G251290-00 in Book G997, Page
383 of Official Records.
 
 
Dated:
October 23, 1997
Trustor:
Wharf Associates, a General Partnership
Trustee:
Old Republic Title Company
 
Beneficiary:
 
Citicorp USA, Inc., a Corporation

 
 
According to the public records, the beneficial interest under the deed of trust
has been assigned to LaSalle National Bank/ABN AMRO Bank, N.V. (as Trustee for
the registered holders of Mortgage Capital Funding, Inc., Multifamily/Commercial
Mortgage Pass-Through Certificates, Series No. 1997-MC2) by various assignments.
 
 
A document entitled "Assignment of Leases and Rents" recorded October 28,
1997 as Instrument No. 97-G251291-00 in Book G997, Page 384 of Official Records,
as additional security for the payment of the indebtedness secured by the deed
of trust.  
 
 
By mesne assignments of record (last recorded Assignment: December 3, 1997,
Instrument No. 97-G267668-00 in Book H21, Page 546), the interest under said
assignment was assigned to:
 
 

 
 
Assignee: LaSalle National Bank/ABN AMRO Bank, N.V. (as Trustee for the
registered holders of Mortgage Capital Funding, Inc., Multifamily/Commercial
Mortgage Pass-Through Certificates, Series No. 1997-MC21, its successors and
assigns.
 
 

 
 
A "Subordination and Non-Disturbance Notice" recorded October 28, 1997
as Instrument No. 97-G251318-00 in Book G997, Page 403 of Official Records.
 
 
A "Subordination and Non-Disturbance Notice" recorded October 28, 1997
as Instrument No. 97-G251311-00 in Book G997, Page 404 of Official Records.
 
 

5.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a financing statement recorded October 28, 1997 as Instrument No.
97-G251292-00 in Book G997, Page 385 of Official Records.

 
 
Debtor:
Wharf Associates
Secured party:
Citicorp USA, Inc.

 
 
The secured party's interest under the foregoing Financing Statement has since
passed to LaSalle National Bank, as Trustee by mesne assignments of record, the
last of which was recorded December 1, 1997 as Instrument No. 97-G266179-00 in
Book H019, Page 208 of Official Records.
 
 

 
 
A Continuation Statement was recorded November 6, 2002 as Instrument No.
2002-H285527-00 i Book I259, Page 574 of Official Records.
 
 

6.  
Sellers shall provide copy of an unrecorded lease dated (not set forth),
executed by Wharf Associates, a California General Partnership as lessor and
Grosvenor Bus Lines, Inc. as lessee, as disclosed by a Subordination and
Non-Disturbance Notice recorded October 28, 1997 as Instrument No. 97-G251310-00
in Book G997, Page 403 of Official Records.

 
 

7.  
Sellers shall provide copy of an unrecorded lease dated (not set forth),
executed by Wharf Associates, a California General Partnership as lessor and
California Parking Company as lessee, as disclosed by a Subordination and
Non-Disturbance Notice recorded October 28, 1997 as Instrument No. 97-G251311-00
in Book G997, Page 404 of Official Records.

 
 

9.  
Sellers shall discharge, or otherwise cause Title Company to remove as an
exception, a financing statement recorded December 20, 2002 as Instrument No.
2002-H318612-00 in Book I288, Page 1388 of Official Records.

 
 
Debtor:
Wharf Associates
Secured party:
LaSalle Bank, NA, as Trustee

 
MILPITAS, CA
 
 

9.  
Sellers shall provide a certificate of compliance from the appropriate third
party under that certain Declaration of Covenants, Conditions, Restrictions and
Easements recorded June 5, 1979 as Book E545, Page 189 of Official Records, and
document(s) declaring modifications thereof recorded June 15, 1979 as Book E571,
Page 359 of Official Records, which such third-party is required to provide
pursuant to the terms thereof. Such certificate will be in the form and content
required under such instrument. Sellers shall use good faith efforts to obtain
an estoppel certificate from such party with respect to other matters reasonably
requested by Buyer.

 

13.  
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, the following:

 
 

 
 
A Deed of Trust to secure an original indebtedness of $353,475,000.00
recorded November 03, 2004 as Document No. 18078361 of Official Records.
 
 
Dated:
October 13, 2004
Trustor:
RFS Financing Partnership, L.P., a Tennessee limited partnership
Trustee:
Lawyers Title Company, a California corporation
 
Beneficiary:
 
Deutsche Bank Trust Company Americas, as Administrative Agent

 
 
A "Subordination, Attornment, Security Agreement, and Assignment of Leases and
Rents" recorded November 03, 2004 as Document No. 18078362 of Official Records.
 
COLUMBIA, SC
 

 
7.
Sellers shall satisfy and release, or otherwise cause Title Company to remove as
an exception, a Mortgage from RFS Partnership, L.P. to Deutsche Bank Trust
Company Americas dated 10/13/2004, recorded 11/15/2004, in the Office of the
Register of Deeds for Richland County in Record Book 996, Page 3903 in the
amount of $353,475.000.00.

 

 
 

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

UCC FILINGS GENERALLY
 

 
Debtor
 
Secured Party
 
Jurisdiction
 
File Date/No.
 
Description of Collateral
 
Comments
 
 
TENNESSEE DEPT. OF STATE
 
RFS Partnership, L.P.
Deutsche Bank Trust Company Americas as Administrative Agent
Tennessee SOS
11/05/04
#104060757
Fixture filing: Real property located in:
Alabama
Milpitas, CA
Sutter St., San Francisco, CA
Denver, CO
Coral Gables, FL
Orlando, FL
W. Palm Beach, FL
Lafayette, LA
Billerica, MA
Bloomington, MN
Columbia, SC
Seller shall file termination or amendment to remove property in Milpitas and
San Francisco, CA and in Columbia, SC.
RFS Financing Partnership, L.P.
Mortgage Electronic Registration Systems, Inc.
Tennessee SOS
8/27/2002
#103034412
Fixture filing: Real property located in:
Orlando, FL
Sacramento, CA
San Diego, CA
Lakewood, CO
Marietta, GA
Crystal Lake, IL
Ann Arbor, MI
Hattiesburg, MS
Charlotte, NC
Omaha, NE
Oklahoma City, OK
Warwick, RI
Austin, TX
Ft. Worth, TX
Seller shall file termination or amendment to remove property in San Diego, CA.
RFS Leasing VII, Inc.
Deutsche Bank Trust Company Americas, as Administrative Agent
Tennessee
11/05/04
#104060758
Fixture Filing: May affect the Land, subject to review of legal description, if
any.
If property description includes any of the Land, Seller shall file termination
or amendment to remove any such Land.
Rose SPE 1, LP
Mortgage Electronic Registration Systems, Inc.
Tennessee
04/12/04, #304024983
Debtor’s name changed to Rose SPE 1, LP by Amendment
See #103034412 @ RSF Financing Partnership LP, above.
 
DELAWARE SECRETARY OF STATE
 
Rose SPE I, LP
Mortgage Electronic Registration Systems, Inc.
Delaware
04/07/04
#4113309 1
To continue TN SOS filings #10334412 (see RFS Financing Partnership, LP, above),
and #203037551.
Seller shall file termination or amendment to remove property in San Diego, CA.
Rose SPE I, LP
Mortgage Electronic Registration Systems, Inc.
Delaware
04/07/04
#4113312 5
Fixture filing. Real property located in:
Chandler, AZ
Sedona, AZ
Sacramento, CA
San Diego, CA
Lakewood, CO
New Castle, DE
Ft. Lauderdale, FL
Miami, FL
Miami Lakes, FL
Orlando, FL
Crystal Lake, IL
Louisville, KY
Ann Arbor, MI
Flint, MI
Minnetonka, MN
Hattiesburg, MS
Lincoln, NE
Fishkill, NY
Oklahoma City, OK
Tulsa, OK
Warwick, RI
Ft. Worth, TX
Laredo, TX
Tyler, TX
Seller shall file termination or amendment to remove property in San Diego, CA.

6
 

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

Debtor
 
Secured Party
 
Jurisdiction
 
File Date/No.
 
Description of Collateral
 
Comments
 
CNL Rose SPE Tenant Corp.
Mortgage Electronic Registration Systems, Inc.
Delaware
04/07/04
#4113318 2
Fixture file. Real property located in:
Chandler, AZ
Sedona, AZ
Sacramento, CA
San Diego, CA
Lakewood, CO
New Castle, DE
Ft. Lauderdale, FL
Orlando, FL
Crystal Lake, IL
Louisville, KY
Ann Arbor, MI
Flint, MI
Minnetonka, MN
Hattiesburg, MS
Lincoln, NE
Fishkill, NY
Oklahoma City, OK
Tulsa, OK
Warwick, RI
Ft. Worth, TX
Laredo, TX
Tyler, TX
Seller shall file termination or amendment to remove property in San Diego, CA.
Rose SPE I, LP
Mortgage Electronic Registration Systems, Inc.
Delaware
6/22/05
#51923235
To continue effectiveness of TN original filing #203-037550 (see also DE filing
#4113309-1 referenced herein), and TN original filing #103-034412 (see also TN
filing #304024983, also referenced herein)
Seller shall file termination or amendment to remove property in San Diego, CA.

 
 

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

Debtor
 
Secured Party
 
Jurisdiction
 
File Date/No.
 
Description of Collateral
 
Comments
 
Rose SPE I, LP
Mortgage Electronic Registration Systems, Inc.
Delaware
6/22/05
#51923243
Fixture file. Real property located in:
Chandler, AZ
Sedona, AZ
Sacramento, CA
San Diego, CA
Lakewood, CO
New Castle, DE
Ft. Lauderdale, FL
Orlando, FL
Crystal Lake, IL
Louisville, KY
Ann Arbor, MI
Flint, MI
Minnetonka, MN
Hattiesburg, MS
Lincoln, NE
Fishkill, NY
Oklahoma City, OK
Tulsa, OK
Warwick, RI
Ft. Worth, TX
Laredo, TX
Tyler, TX
Seller shall file termination or amendment to remove property in San Diego, CA.
 
CALIFORNIA SECRETARY OF STATE
 
RSF Leasing VII, Inc.
Safemark Systems, L.P.
California
06/24/02
#0217660449
235 Safes with Pedestals (Leased)
Termination or assignment should be filed.

 

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

EXHIBIT “N”

Schedule of Operating Agreements to be Terminated by Sellers

NONE

2
 

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

EXHIBIT “O”

ENVIRONMENTAL REPORTS

 
Property
Report
Date
Firm
Beverly Heritage
       
ESA Phase I
8/1/2003
Professional Service Industries, Inc
       
Doubletree Del Mar
       
ESA Phase I
6/20/2003
Professional Service Industries, Inc
       
Hilton Fisherman's Wharf
       
ESA Phase I
6/20/2003
Professional Service Industries, Inc
       
Holiday Inn Columbia
       
ESA Phase I
8/1/2003
Professional Service Industries, Inc
       
Hotel Rex
       
ESA Phase I
8/1/2003
Professional Service Industries, Inc