Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as
of August 16, 2013 (the “Effective Date”), by and among BH/NV HAWKS CAY PROPERTY
HOLDINGS, LLC, a Delaware limited liability company (“Seller”), and CWI KEYS
HOTEL, LLC, a Delaware limited liability company (“Purchaser”).  Seller and
Purchaser are sometimes referred to collectively in this Agreement as the
“Parties” and individually as a “Party”.

 

RECITALS

 

A.           Seller is the sole holder of the leasehold interest in the land
(the “Submerged Lands”) subject to that certain Sovereignty Submerged Lands
Lease (the “Submerged Lands Lease”) dated April 22, 2011 between the Board of
Trustees of the Internal Improvement Trust Fund of the State of Florida
(“Submerged Lands Lessor”) and Seller operates upon the Submerged Lands a marina
(the “Marina”) with 59 boat slips which are owned by Seller, and 33 boat slips
which are owned by third parties including, without limitation, boat slips owned
by Residential Unit Owners and operated by Seller as part of the Rental Program.

 

B.           Seller is the sole holder of the fee simple interest in the that
land and all appurtenances thereto which is more particularly described in
Exhibit “B” hereto (the “Land”) and to that certain destination resort located
at 61 Hawks Cay Boulevard, Duck Key, Florida and currently operated as the
“Hawks Cay Resort” and including, without limitation: (i) 177 hotel guest rooms
(the “Hotel”); (ii) that certain residential villa identified as “Villa 7064”;
(iii) approximately fourteen thousand eight hundred (14,800) square feet of
indoor meeting space; (iv) an approximately seven thousand (7,000) square foot
spa facility; (v) five (5) swimming pools, (vi) six (6) food and beverage
outlets commonly referred to as “Ocean”, “Alma”, “Beach Grill”, “Island Time”,
“Indies Grill” and “Emack and Bolio’s” (collectively, the “F&B Outlets”);
(vii) a tennis center with eight (8) tennis courts; (viii) a private saltwater
lagoon; (ix) approximately ten thousand (10,000) square feet of retail and
office space; and (x) approximately twenty-six thousand six hundred seventy-two
(26,672) square feet of dormitory-style employee housing capable of
accommodating approximately one hundred forty (140) people (collectively, and
together with the Marina, the “Resort”).

 

C.           The Resort is contiguous to two hundred ninety-seven (297) two,
three or four bedroom villas (the “Villas”), of which two hundred fifty-three
(253) Villas participate in a Rental Program offered by the Resort.

 

D.           Subject to the terms and conditions hereof, Seller desires to sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser desires to
acquire from Seller, all of Seller’s right, title and interest in the Property,
together with all rights, benefits, privileges and appurtenances pertaining
thereto, for such consideration as is hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and certain other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

 

 

ARTICLE 1

 

DEFINITIONS

 

1.1         Definitions.  Whenever used herein, all defined words and phrases,
unless the context otherwise requires, shall have the meanings assigned to each
as set forth and described on Exhibit “A” attached hereto.

 

ARTICLE 2

 

SALE AND PURCHASE OF PROPERTY

 

2.1         Purchase of Property.

 

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

 

(a)            Seller’s fee interest in the Land; and

 

(b)         all the buildings, structures (surface and sub-surface),
installations and other improvements and fixtures as shall constitute real
property located on the Land and the Submerged Lands.

 

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

 

(a)          all FF&E owned by Seller and located at, affixed or attached to, or
to be affixed or attached to the Real Property or held in reserve storage for
future use exclusively in connection with the Resort, subject to such
depletions, substitutions and replacements as shall occur and be made in the
ordinary course of business prior to the Closing Date;

 

(b)          all  opened and unopened food and beverages whether in use or held
in reserve storage for future use exclusively in connection with the operation
of the Resort, subject to such depletions, substitutions and replacements as
shall occur and be made in the ordinary course of business prior to the Closing
Date (collectively, the “Consumables”);

 

(c)          all Supplies, whether in use or held in reserve storage for future
use in connection with the operation of the Resort, subject to such depletions,
substitutions and replacements as shall occur and be made in the ordinary course
of business prior to the Closing Date;

 

(d)          all of Seller’s right, title and interest in and to all service and
maintenance contracts, supply contracts, and other contracts or agreements
(whether oral or written) relating to the maintenance, operation, provisioning
or equipping of the Resort, together with all related written warranties and
guaranties, to the extent assignable or transferable (collectively, the
“Contracts”);

 

 

(e)          all of Seller’s right, title and interest in and to all equipment
leases set forth on Exhibit “D”, to the extent assignable or transferrable
(collectively, the “Equipment Leases”);

 

(f)           all of Seller’s right, title and interest in and to the books,
records, files, computer data, operating reports, plans and specifications
(whether complete or incomplete and whether or not the same have been submitted
to any Governmental Authority in connection with development, renovation or
other construction taking place on the Property) and other documentation to the
extent relating to the ownership and operation of the Resort, including, without
limitation, records relating to the Bookings, and any responses or notices from
any Governmental Authority with respect to any plans, specifications, drawings
or other material submitted to any Governmental Authority in connection with any
contemplated development, renovation or other construction at the Property, but
excluding (A) the personnel files and employment records for all Resort
Employees (except for employees retained/rehired by Purchaser), (B) items that
belong to or are proprietary to Resort Manager or its affiliates or other third
parties, (C) internal memoranda regarding the sale, financing and/or valuation
of the Resort, and (D) materials and information that are covered by the
attorney-client privilege or any confidentiality agreement entered into by or
binding on Seller or its affiliates;

 

(g)          all of Seller’s right, title and interest in and to the contracts,
reservations and sales files for the use or occupancy of guest rooms of the
Hotel and the Villas (collectively, the “Bookings”) and the aggregate amount of
any deposits received by or on behalf of Seller (whether paid in cash or by
credit card) as a down payment for any Bookings;

 

(h)          all of Seller’s right, title and interest in and to all licenses,
permits, consents, authorizations, approvals, certificates of occupancy,
ratifications, certifications, registrations, exemptions, variances, exceptions
and similar consents granted or issued by any Governmental Authority, to the
extent assignable or transferrable  (collectively, the “Permits”);

 

(i)           all of Seller’s right, title and interest in and to the Space
Leases; and

 

(j)           all of Seller’s right, title and interest in and to, (1) all
intangible personal property used in connection with the ownership or operation
of the Resort, including, without limitation, telephone numbers, post office
boxes, warranties and guaranties, signage rights, utility and development rights
and privileges, trademarks (excluding any trademarks, service marks or symbols
related to the name “Behringer Harvard”) and general intangibles; and (2) all
websites and domains exclusively used for the Resort.

 

Notwithstanding the foregoing, if the fair market value of the Personal Property
exceeds fifteen percent (15%) of the fair market value of the Property, then
Purchaser shall have the right to assign its right to acquire such excess
Personal Property to a wholly-owned “taxable REIT subsidiary” in accordance with
the conditions and requirements of Section 9.11 hereof.

 

2.1.3     Excluded Assets. The following items are expressly excluded from the
transaction contemplated by this Agreement:

 

(a)          any fixtures, personal property or intellectual property owned by
(i) third parties (including, without limitation, equipment lessors, suppliers,
vendors and licensors) under Contracts, Equipment Leases, Rental Management
Agreements  or Permits, (ii) Resort Manager, (iii) any Resort Employees or
(iv) any guests or customers of the Resort;

 

 

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

 

(c)          any Excluded Liabilities; and

 

(d)          any items expressly excluded from Section 2.1.2 or identified on
Schedule 2.1.3.

 

2.2         Purchase Price.

 

2.2.1     The total purchase price for the Property shall be One Hundred
Thirty-Three Million Eight Hundred Twenty-Five Thousand Dollars
($133,825,000.00) (the “Purchase Price”), as increased or decreased by
prorations and adjustments pursuant to and in accordance with this Agreement,
and will be paid by Purchaser by wire transfer of immediately available good
funds to Escrow Agent on the Closing Date.

 

2.2.2     As additional consideration for the purchase and sale of the Property
and if Purchaser proceeds to Closing, at the Closing, Purchaser will assume all
of the covenants and obligations of Seller which are to be performed subsequent
to the Closing (all such covenants and obligations of Seller to be performed
prior to Closing to remain Excluded Liabilities of Seller) pursuant to all Space
Leases, Equipment Leases, Bookings (to the extent described on Schedule 2.2.2,
as the same may be attached hereto by the Parties within three (3) Business Days
after the Effective Date in accordance with Section 9.20, and as modified by
Seller at Closing), Contracts, Rental Management Agreements, Permits and gift
certificates (to the extent described on Schedule 2.2.2, as the same may be
attached hereto by the Parties within three (3) Business Days after the
Effective Date in accordance with Section 9.20, and as modified by Seller at
Closing)  transferred to and assumed by  Purchaser at Closing.  In addition, if
Seller and Purchaser mutually agree in writing (which may be evidenced by the
Closing Statement) that Purchaser will receive a credit at the Closing for the
cost of any such obligations that Seller is otherwise obligated to perform prior
to the Closing but has not performed prior to the Closing, Purchaser will assume
such obligation to the extent of such credit provided to Purchaser.  Purchaser
hereby agrees to honor all Bookings set forth on Schedule 2.2.2 at the rate or
price previously agreed to by Seller.  The liabilities assumed by Purchaser in
accordance with the provisions of this Section 2.2.2 shall be referred to herein
as the “Assumed Liabilities.”

 

2.2.3     Without limiting the foregoing, contemporaneously with the execution
and delivery of this Agreement, Purchaser has paid or agrees to pay to Seller as
further consideration for this Agreement, in cash, the sum of One Hundred
Dollars ($100.00) (the “Independent Consideration”), in addition to the Earnest
Money and the Purchase Price.  The Independent Consideration is independent of
any other consideration provided hereunder, shall be fully earned by Seller upon
the effective date of this Agreement, and is not refundable under any
circumstances.

 

2.3         Earnest Money.

 

2.3.1     Concurrently with the execution and delivery of this Agreement,
Purchaser, Seller and First American Title Insurance Company, as escrow agent
(“Escrow

 

 

Agent”) have executed or will promptly execute escrow instructions (the “Escrow
Instructions”), in a form reasonably acceptable to Purchaser, Seller and Escrow
Agent.

 

2.3.2     No later than 5:00 p.m. (Eastern Time) three (3) Business Days after
the Effective Date, Purchaser shall deposit the sum of Two Million Dollars
($2,000,000) in cash as an earnest money deposit (together with any interest
earned thereon, the “Good Faith Deposit”) by wire transfer to Escrow Agent.  If
the Good Faith Deposit is not timely made, Seller may terminate this Agreement
at any time prior to receipt by the Escrow Agent of the Good Faith Deposit, in
which case this Agreement shall immediately terminate and neither Party shall
have any further obligation to the other Party hereunder, except each Party
shall continue to be obligated under the indemnity and other provisions in this
Agreement that expressly survive termination of this Agreement (collectively,
the “Surviving Obligations”).

 

2.3.3     If the Due Diligence Period expires without Purchaser having
terminated this Agreement, then no later than 5:00 p.m. (Eastern Time) three
(3) Business Days after the expiration of the Due Diligence Period, Purchaser
shall deposit an additional Three Million Dollars ($3,000,000) in cash as an
earnest money deposit (together with any interest earned thereon, the “Second
Deposit”) by wire transfer to Escrow Agent (the Good Faith Deposit and the
Second Deposit and any interest earned thereon are collectively referred to
herein as the “Earnest Money”).  Failure of Purchaser to make the Second Deposit
as required pursuant to this Section 2.3.3 shall be deemed a material default by
Purchaser under this Agreement and, in lieu of any other right or remedy that
Seller may have at law or in equity, Seller shall have the right to immediately
terminate this Agreement whereupon this Agreement shall automatically terminate,
Escrow Agent shall promptly distribute the Good Faith Deposit to Seller and
neither party shall have any further obligation to the other party hereunder,
except for the Surviving Obligations.

 

2.3.4     The Earnest Money shall be delivered to, held and disbursed by Escrow
Agent in escrow in an interest-bearing account pursuant to the terms of this
Agreement and the Escrow Instructions. If the Closing occurs in accordance with
the terms and provisions of this Agreement, the Earnest Money shall be paid to
Seller and credited against the Purchase Price.  The Earnest Money shall be
immediately refunded to Purchaser if Purchaser elects to terminate this
Agreement pursuant to any of Purchaser’s rights to terminate as set forth in
this Agreement or as the result of any material default by Seller or a failure
to satisfy any of the conditions set forth in Section 6.1 to the extent that
Purchaser elects to receive a refund of the Earnest Money pursuant to and in
accordance with Section 5.2 of this Agreement.  If the Closing does not occur
because of a default by Purchaser and Seller has the right and elects to
terminate this Agreement as a result of such default, the Earnest Money shall be
immediately paid to Seller pursuant to and in accordance with Section 5.1 of
this Agreement.

 

2.4         Allocation.  The aggregate Purchase Price shall be allocated by
Purchaser between the Real Property and the Personal Property included within
the Property as of the Closing Date in accordance with the applicable provisions
of Section 1060 of the Code.  At least ten (10) days prior to the Closing Date,
Seller shall prepare and deliver to Purchaser an allocation of the aggregate
Purchase Price consistent with Section 1060 of the Code and Seller shall consult
with Purchaser in connection with the preparation of such allocation and such
allocation shall be subject to Purchaser’s approval.  Seller and Purchaser agree
to file federal, state and local tax returns consistent with such allocations
agreed upon between the parties; provided, however, if the Parties cannot agree
upon allocation of the Purchase Price, each Party shall file federal, state and
local returns based on each Party’s own determination of the proper allocations
of the Purchase Price, each bearing its own consequences of any discrepancies. 
This Section 2.4 shall survive the Closing.

 

 

2.5         Closing.

 

2.5.1     The consummation of the transactions contemplated by this Agreement
(the “Closing”) shall occur on or before the date that is thirty (30) days after
the expiration of the Due Diligence Period (the “Target Closing Date”);
provided, however, that notwithstanding the foregoing:

 

(a)          Purchaser shall have the right, in its sole and absolute
discretion, to accelerate the date of Closing to any date selected and specified
by Purchaser upon written notice (the “Acceleration Election Notice”) from
Purchaser to Seller delivered at least fifteen (15) days prior to the
accelerated date of Closing specified in the Acceleration Election Notice (the
“Accelerated Closing Date”); provided, however, (i) the Accelerated Closing Date
shall not occur on any date on which prepayment of Seller’s financing which is
secured by the Property is prohibited; and (ii) Purchaser shall have the
one-time right to revoke such Acceleration Election Notice upon written notice
to Seller at least five (5) Business Days prior to such Accelerated Closing Date
provided that Purchaser shall reimburse and indemnify, defend, and hold Seller
harmless for any breakage costs and/or other fees and expenses that Seller is
required to pay its lender due to Purchaser’s revocation of the Acceleration
Election Note and the Closing Date must occur within ten (10) Business Days of
Seller’s notice to its Lender that the Closing has been delayed.  The provisions
of this Section 2.5.1(a) shall survive the termination of this Agreement and/or
Closing; and

 

(b)          Purchaser shall have the right, in its sole and absolute
discretion, to extend the date of Closing one time for a period of up to ten
(10) Business Days in the aggregate (or such additional time if necessary to
comply with the provisions of Seller’s financing), by delivering written notice
(an “Extension Election Notice”) to Seller at least three (3) Business Days
prior to the then-scheduled Closing Date, provided that if the Extension
Election Notice specifies an extended date for the Closing that is after the
Target Closing Date, then within two (2) Business Days following the delivery of
the Extension Election Notice, Purchaser shall deposit an additional One Million
Dollars ($1,000,000) with Escrow Agent (the “Extension Deposit”); provided,
however, (i) the extension of the Closing under the Extension Election Notice
shall not cause the Closing to occur on any date on which prepayment of Seller’s
financing which is secured by the Property is prohibited; and (ii) Purchaser
shall reimburse and indemnify, defend, and hold Seller harmless for any breakage
costs and/or other fees and expenses that Seller is required to pay its lender
due to Purchaser’s exercise of its extension right in this Section 2.5.1(b).
Upon payment of the Extension Deposit, the Extension Deposit and any interest
earned thereon shall be deemed included with and a part of the Earnest Money for
all purposes of this Agreement and shall be credited to the Purchase Price at
Closing.  For avoidance of doubt, Purchaser’s delivery of an Extension Election
Notice shall not operate to waive or nullify Purchaser’s right to subsequently
accelerate the Closing by delivery of an Acceleration Election Notice pursuant
to Section 2.5.1(a) above.  The provisions of this Section 2.5.1(b) shall
survive the termination of this Agreement and/or Closing.

 

2.5.2     Notwithstanding the foregoing, if any of the conditions to Closing set
forth in Section 6.1 are not fully satisfied by the then-scheduled date of
Closing, Purchaser shall have the option, exercisable by notice delivered to
Seller at any time on or prior to the then-scheduled date of Closing, to extend
the then-scheduled date of Closing without payment of any Extension Deposit
until the date that is five (5) Business Days after the satisfaction of all of
the conditions to Closing set forth in Section 6.1 (the “Outside Closing Date”);
provided, further, Purchaser shall have the right to terminate this Agreement at
any time after the Target Closing Date pursuant to this Section 2.5 (and be
entitled to an immediate return of the Earnest Money

 

 

(including all interest thereon if Purchaser elects to receive a return of such
Earnest Money pursuant to and in accordance with Section 5.2 hereof)) by
delivering written notice to Seller at any time after the Target Closing Date
but prior to the date on which all of the conditions to Closing set forth in
Section 6.1 are fully satisfied.  If Purchaser delivers written notice of its
intent to terminate this Agreement (“Purchaser Termination Notice”) as the
result of Seller’s failure to satisfy all conditions to Closing set forth in
Section 6.1 on or prior to the Target Closing Date pursuant to the express terms
of this Agreement, the effective date of such termination as set forth in the
Purchaser Termination Notice shall be ten (10) days from the date Seller
receives the Purchaser Termination Notice; provided, however, if Seller does, in
fact, satisfy all of the conditions to Closing set forth in Section 6.1 prior to
or on such later date (as set forth in the Purchaser Termination Notice),
Purchaser will have no right to terminate this Agreement pursuant to this
Section 2.5.

 

2.6         Due Diligence.

 

2.6.1     The “Due Diligence Period” will commence on the Effective Date and
will expire on the date that is thirty (30) days after the Effective Date.  To
the extent within the possession or reasonable control of Seller, its
Subsidiaries or Resort Manager, Seller shall make available to Purchaser for
Purchaser’s review and due diligence documentation, agreements, reports and
other items relating to the Property as Purchaser may reasonably request,
including, without limitation, those items more fully set forth on Exhibit “F”
attached hereto.  Purchaser and its representatives, lender(s), consultants and
agents shall have the right, at reasonable times and on reasonable prior notice
to Seller, to enter upon the Property to conduct such inspections,
investigations, tests and studies as Purchaser shall deem necessary (including,
without limitation, environmental site assessments, engineering tests and
studies, physical examinations, feasibility studies and other due diligence
investigations of the Property), provided that, Seller shall have the right to
be present during such assessments and investigations and any such testing
and/or investigations shall be performed in a manner that does not unreasonably
interfere with or impair the operations at the Resort (including the use thereof
by Seller’s tenants, guests and their respective invitees) and no intrusive
drilling or testing shall be performed without Seller’s prior written approval
(such approval not to be unreasonably withheld, conditioned or delayed).  Prior
to conducting any on-site inspection of the Property, other than mere visual
examination, Purchaser or its representatives, lender(s), consultants and/or
agents, as applicable, shall obtain and during the period of such inspection or
testing shall maintain, at such party’s expense, commercial general liability
insurance, including a contractual liability endorsement, and personal injury
liability coverage, which insurance policies must have limits for bodily injury
and death of not less than One Million Dollars ($1,000,000) for any one
occurrence and not less than One Million Dollars ($1,000,000) for property
damage liability for any one occurrence.  Purchaser shall indemnify, defend and
hold harmless Seller and its respective affiliates, subsidiaries, officers,
directors, members, shareholders, and agents from any Claims arising from or
related to Purchaser’s or its tenants, guests, invitees, agents or contractors
entry upon the Property for any inspections, investigations, tests and studies,
for any personal injury or property damage suffered or incurred by or claimed
due to such inspections, investigations, tests and studies or for any liens that
attach to the Property arising out of the inspections whether prior to or after
the Effective Date except (i) for the discovery of existing conditions at the
Property so long as following such discovery Purchaser does not exacerbate such
conditions through its actions; and (ii) to the extent caused by the gross
negligence or willful misconduct of Seller or the Resort Manager, or any of
their respective agents, employees or contractors.  After any such entry,
Purchaser shall promptly restore the Property to its prior condition, if its
condition was changed by such entry.  This Section 2.6.1 shall survive the
Closing and any termination of this Agreement.

 

 

2.6.2    Purchaser acknowledges that certain information regarding the Resort
and/or the Property that has been or will be made available by Seller and/or
Resort Manager to Purchaser is proprietary and confidential in nature and has
been provided to Purchaser solely to assist Purchaser in determining the
desirability of purchasing the Property (the “Confidential Diligence
Information”).  Subject only to the provisions of Section 9.16, Purchaser agrees
not to disclose the contents of the Confidential Diligence Information or any of
the provisions, terms or conditions contained therein to any party outside of
Purchaser’s organization other than its attorneys, partners, agents,
accountants, engineers, consultants, lenders franchisor, hotel manager, or
investors (collectively, for purposes of this Section 2.6.2, the “Permitted
Outside Parties”).  The Confidential Diligence Information shall not include
information that is publicly available (or becomes publicly available except as
a result of disclosure by Purchaser or any of the Permitted Outside Parties) or
any information that is required by law or court order to be disclosed.   
Purchaser agrees not to divulge the contents of the Confidential Diligence
Information except in strict accordance with the confidentiality standards set
forth in this Section 2.6.2 and Section 9.16.  In permitting Purchaser and the
Permitted Outside Parties to review the Confidential Diligence Information to
assist Purchaser in determining the desirability of purchasing the Property,
Seller has not waived any privilege or claim of confidentiality with respect
thereto, and no third-party benefits or relationships of any kind, either
express or implied, have been offered, intended or created by Seller, and any
such claims are expressly rejected by Seller and waived by Purchaser and the
Permitted Outside Parties, for whom, by its execution of this Agreement,
Purchaser is acting as an agent with regard to such waiver.

 

2.6.3    Purchaser acknowledges that some of the information regarding the
Resort and/or the Property that Seller has made available to Purchaser for the
purpose of assisting Purchaser in determining the desirability of purchasing the
Property may have been prepared by third parties, including the Resort Manager,
and may have been prepared prior to Seller’s ownership of the Property. 
PURCHASER HEREBY ACKNOWLEDGES THAT SELLER HAS NOT MADE AND DOES NOT MAKE ANY
REPRESENTATION OR WARRANTY REGARDING THE TRUTH, ACCURACY OR COMPLETENESS OF THE
INFORMATION, DOCUMENTS OR THE SOURCES THEREOF EXCEPT AS OTHERWISE SPECIFICALLY
SET FORTH IN THIS AGREEMENT AND IN THE OTHER CONVEYANCE DOCUMENTS DELIVERED IN
ACCORDANCE HEREWITH.  SELLER HAS NOT UNDERTAKEN ANY INDEPENDENT INVESTIGATION AS
TO THE TRUTH, ACCURACY OR COMPLETENESS OF THE INFORMATION OR
DOCUMENTS, INCLUDING ANY REPORTS OR OTHER INVESTIGATIONS COMMISSIONED BY SELLER,
RESORT MANAGER OR THEIR AFFILIATES, AND IS PROVIDING THE INFORMATION AND
DOCUMENTS SOLELY AS AN ACCOMMODATION TO PURCHASER.

 

2.6.4    Purchaser may for any reason or no reason, in its sole and absolute
discretion, elect to terminate this Agreement by notice to Seller given on or
before the expiration of the Due Diligence Period whereupon (i) this Agreement
shall automatically terminate; (ii) the Escrow Agent shall immediately release
and return the Earnest Money to Purchaser; (iii) Purchaser shall pay for the
expenses of escrow; and (iv) neither Party shall have any further obligation to
the other party hereunder, except each party shall continue to be obligated for
the Surviving Obligations.  Following any termination of this Agreement,
Purchaser shall (a) return to Seller all documents, surveys or other written
information of whatever kind or nature in the possession of Purchaser which have
been provided by Seller or Resort Manager in connection with the transaction
contemplated herein, except to the extent that Purchaser is required by
applicable law to retain such documents, surveys or other written information,
and (b) provide Seller with copies of all third party studies, reports and tests
commissioned by Purchaser and relating to the Property promptly upon Seller’s
request.

 

 

2.7       Title.

 

2.7.1    Promptly after execution of this Agreement, (i) at Purchaser’s sole
cost and expense, Purchaser shall cause First American Title Insurance Company
(the “Title Company”) to deliver to Purchaser a preliminary title report with
respect to the Real Property, together with complete and legible copies of all
instruments and documents referred to therein (collectively, the “PTR
Exceptions”), and (ii) Seller shall deliver to Purchaser Seller’s existing
survey (the “Existing Survey”) with respect to the Resort and all improvements
thereon and thereto.  Prior to expiration of the Due Diligence Period, Purchaser
may, but shall not be obligated to, at its sole cost and expense, obtain an
update to the Existing Survey, together with complete and legible copies of all
instruments and documents referred to therein (collectively, to the extent
different from the PTR Exceptions, the “Survey Exceptions,” and together with
the PTR Exceptions, the “Title Exceptions”). Prior to the date which is seven
(7) Business Days prior to the expiration of the Due Diligence Period, Purchaser
may request that Seller cure or remove any Title Exceptions that are not
acceptable to Purchaser and that do not constitute Permitted Exceptions.  Seller
shall have no obligation to cure or remove such objections of Purchaser but will
respond, if at all, to Purchaser’s objection notice no later than two
(2) business days after receipt of Purchaser’s notice indicating which, if any,
of Purchaser’s objections (not including monetary liens which Seller is
obligated to remove), Seller will discharge or remove and the method of such
discharge or removal. Failure by Seller to respond within such two (2) day
period will constitute Seller’s election not to cure Purchaser’s objections. 
After the expiration of the Due Diligence Period, Purchaser shall have no right
to terminate this Agreement due to the existence of any Title Exceptions, other
than Intervening Liens, including for any Title Exceptions that Purchaser timely
objected to in accordance with the provisions hereof that Seller did not agree
to cure, remove or address prior to the expiration of the Due Diligence Period. 
If Purchaser does not terminate this Agreement prior to the expiration of the
Due Diligence Period, all Title Exceptions to which Purchaser objected prior to
the expiration of the Due Diligence Period which Seller did not agree to cure by
the Closing shall be “Permitted Exceptions.”

 

2.7.2    From and after the Effective Date, Seller shall promptly bring to
Purchaser’s attention any Title Exceptions that would have been shown on the
preliminary title report referenced in Section 2.7.1 or on the Existing Survey
had they existed at the time of preparation thereof which (i) are created by
Seller, (ii) Seller receives written notice of, or (iii) otherwise become known
to Seller and constitute Seller’s Knowledge (each, an “Intervening Lien”).  To
the extent that there exist any Intervening Liens other than those which are
Permitted Exceptions, Seller, at its expense, shall undertake all necessary
actions to remove and/or cure, prior to Closing, any and all Intervening Liens
to which Purchaser timely objects.  Any Intervening Lien which does not already
constitute a Permitted Exception and to which Purchaser does not object to in a
writing to Seller delivered within five (5) Business Days of Purchaser having
been provided written notice or other written evidence of such Intervening Lien,
and any Intervening Lien as to which Purchaser ultimately waives in writing its
objection, shall be deemed a Permitted Exception.  In the event that any
Intervening Liens that are not Permitted Exceptions exist at Closing, Purchaser
shall have the right to terminate this Agreement, and in the event of such
termination Escrow Agent shall immediately return the Earnest Money (including
all interest thereon) to Purchaser, Purchaser shall pay for all of the expenses
of escrow and neither Party shall have any further obligation to the other party
hereunder, except each party shall continue to be obligated for the Surviving
Obligations.

 

2.7.3    At the Closing, the Title Company shall be unconditionally and
irrevocably prepared to issue a 2006 ALTA Owner’s (6/17/06) extended coverage
policy of title insurance for the Land, in favor of Purchaser, dated as of the
date of recordation of the Deed with

 

 

respect to the Land, insuring that the Land is vested in Purchaser subject to
the Permitted Exceptions, with a liability limit in an amount equal to the
mutually agreed upon value of the Real Property (the “Title Policy”).  The Title
Policy shall include those endorsements required by Purchaser and available in
the State of Florida (which Purchaser shall notify the Title Company of prior to
the expiration of the Due Diligence Period), the endorsements shall be in the
form available in the State of Florida and otherwise acceptable to Purchaser in
its sole and absolute discretion (the “Title Endorsements”).  The cost of the
base premium for such Title Policy shall be paid by Seller and any extended
coverage shall be paid by Purchaser.  In addition, the cost of all Title
Endorsements (not resulting from a Seller cure for which Seller has agreed to
pay) and the cost of any mortgagee policy of title insurance relating to the
Real Property shall be paid by Purchaser.  For avoidance of doubt, Purchaser
shall have no right to terminate this Agreement after the expiration of the Due
Diligence Period solely as the result of the Title Company’s failure to remove
any Title Exceptions or issue any Title Endorsements which were not identified
prior to the expiration of the Due Diligence Period, excluding any Intervening
Liens of which Purchaser is made aware prior to Closing but after the expiration
of the Due Diligence Period and to which Purchaser timely objects.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES

 

3.1       Seller’s Representations and Warranties.  Seller hereby represents and
warrants to Purchaser that all Recitals set forth above are true, correct and
complete and, further, as follows:

 

3.1.1    Seller has the right and authority to execute and deliver this
Agreement and all documents now or hereafter to be executed by it pursuant to
this Agreement, to transfer and convey the Property to Purchaser and to perform
its obligations hereunder.

 

3.1.2    Seller has paid all Taxes, including penalties and interest that were
due on or before such date and during Seller’s ownership of the Resort
including, without limitation, all sales and use taxes required to be paid or
collected during Seller’s ownership and operation of the Resort (collectively,
“Sales Taxes”) (which amounts have been collected and paid, in the ordinary
course of business, to the appropriate Governmental Authority) through the
Closing.  There are no (i) actions currently pending or, to Seller’s Knowledge,
threatened against the Resort by any Governmental Authority for the assessment
or collection of Taxes; (ii) audits or other examinations in progress nor has
the Resort nor Seller been notified in writing of any request for examination;
or (iii) claims for assessment or collection of Taxes that have been asserted in
writing against Seller.  There are no outstanding agreements, waivers or
consents extending the statutory period of limitations applicable to any Taxes
of Seller.

 

3.1.3    Neither Seller nor any of its Subsidiaries has (i) made a general
assignment for the benefit of creditors; (ii) filed any voluntary petition in
bankruptcy or suffered the filing of an involuntary petition in bankruptcy by
its creditors; (iii) suffered the appointment of a receiver to take possession
of all or substantially all of its assets; (iv) suffered the attachment or other
judicial seizure of all or substantially all of its assets; or (v) admitted in
writing its inability to pay its debts as they became due.

 

3.1.4    Neither Seller nor any of its Subsidiaries is (i) listed on the
Specially Designated Nationals and Blocked Persons List or any other similar
list maintained by the Office of Foreign Assets Control, Department of the
Treasury, pursuant to any authorizing statute,

 

 

executive order or regulation; (ii) a “specially designated global terrorist” or
other person listed on Appendix A to Chapter V of 31 C.F.R., as the same has
been from time to time updated and amended; or (iii) a Person either
(a) included within the term “designated national” as defined in the Cuban
Assets Control Regulations, 31 C.F.R. Part 515; or (b) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg.
49079 (published September 25, 2001) or a person similarly designated under any
related enabling legislation or any other similar Executive Orders.

 

3.1.5    Except as set forth on Schedule 3.1.5, there is no lawsuit, litigation,
arbitration, condemnation or other proceeding currently affecting the Property
(including, without limitation, any such proceeding regarding personal injury,
property damage or breach of contract, or with respect to any rental program
participation agreements, or with respect to the fire damage to the building,
improvements, equipment and other real and personal property formerly operated
at the Resort as “Tio’s Restaurant”), and neither Seller nor any of its
Subsidiaries has been served with, nor received any written notice threatening,
any such lawsuit, litigation, arbitration, condemnation or other
proceedings with regard to or which would materially adversely affect the
Property.

 

3.1.6    Except as set forth on Schedule 3.1.6, neither Seller nor any Affiliate
thereof has received written notice from any Governmental Authority declaring
that, the Property and/or the Resort is in violation of any applicable federal,
state and local Laws, ordinances and regulations (including, without limitation,
those regarding zoning, land use, building, fire, health, safety, environmental,
subdivision, water quality, sanitation controls and the Americans with
Disabilities Act of 1990, as amended).

 

3.1.7    Employee Benefit Matters.

 

(a)        Each employee who is providing services to the Resort is referred to
as a “Resort Employee”.   Each Resort Employee, and each former employee who
provided services to the Resort within the preceding twelve (12) months, is or
has been employed by the Resort Manager, and not by Seller or any of its ERISA
Affiliates, with respect to all such services.  To Seller’s Knowledge, except as
set forth on Schedule 3.1.7(a), neither Resort Manager nor, with respect to the
Resort Employees, its ERISA Affiliates sponsors, administers, maintains,
contributes to or has any obligation to contribute to, or, has any liability
with respect to any (i) employee pension benefit plans (as defined in
Section 3(2) of ERISA, whether or not subject to ERISA) (the “Employee Pension
Plans”); (ii) employee welfare benefit plans as defined in Section 3(1) of
ERISA, whether or not subject to ERISA (“Employee Welfare Plans”); or
(iii) plan, program, policy, practice, contract or other arrangement providing
for compensation, severance, termination pay, deferred compensation,
nonqualified deferred compensation, bonus, pension, profit-sharing, savings
retirement, health, medical, dental vision, hospitalization, life, disability,
accident, vacation, tuition reimbursement, any supplemental retirement, sick
leave, sabbatical, employee relocation, cafeteria benefit (Code Section 125),
dependent care (Code Section 129), performance awards, stock or stock-related
awards, fringe benefits or other employee benefits or remuneration of any kind,
whether written or unwritten, funded or unfunded, including each “employee
benefit plan,” within the meaning of Section 3(3) of ERISA (whether or not ERISA
is applicable to such plan), except such definition shall not include any
Employment Agreement (“Other Plans”).

 

(b)        Neither Seller nor, to Seller’s Knowledge, Resort Manager sponsors,
administers, maintains, contributes to or has any obligation to contribute to,
or, has any

 

 

liability with respect to any (i) Employee Pension Plans; (ii) Employee Welfare
Plans; or (iii) Other Plans, with respect to the Resort Employees.

 

(c)        With respect to the Resort Employees, none of the Seller or its ERISA
Affiliates or, to Seller’s Knowledge, Resort Manager or its respective ERISA
Affiliates sponsors, administers, participates in, contributes to or otherwise
has any liability with respect to any (i) employee pension benefit subject to
Title IV of ERISA or Section 413 or 430 of the Code; (ii) multiemployer plan (as
defined in Section 3(37) of ERISA) (“Multiemployer Plan”); (iii) “single
employer plan” within the meaning of Section 4001(a)(15) of ERISA; or
(iv) “multiple employer plan” (within the meaning of Section 413(c) of the
Code), “voluntary employees’ beneficiary association” (within the meaning of
Section 501(c)(9) of the Code) or “multiple employer welfare arrangement”
(within the meaning of Section 3(40) of ERISA. All plans of the type described
in this Section 3.1.7(c) and in Section 3.1.7(a) above shall be collectively
referred to as “Employee Benefit Plans.”

 

(d)        Seller and Resort Manager would not be treated as a single employer
under Sections 414(b), (c), (m), or (o) of the Code now or at any time in the
past.

 

(e)        To Seller’s Knowledge, Resort Manager and any Employee Benefit Plans
maintained by Resort Manager with respect to the Resort Employees and each of
such plan’s fiduciaries are in material compliance with all Laws applicable to
such Employee Benefit Plans.

 

3.1.8    Employee and Labor Matters.

 

(a)        To Seller’s Knowledge, Schedule 3.1.8(a)(i) provides a true, complete
and correct list of all the Resort Employees of Resort Manager and Schedule
3.1.8(a)(ii) provides a true, complete and correct list of all Employment
Agreements.  Seller is not a party to and does not have any obligation with
respect to any Employment Agreements.

 

(b)        To Seller’s Knowledge, with respect to the Resort Employees, Resort
Manager has been and is in compliance in all material respects with all
applicable federal, state, local and foreign laws and regulations relating to
the terms and conditions of employment and employment of labor and labor
practices, including, without limitation, wages and hours, labor relations,
employment discrimination, immigration laws and regulations, disability rights
or benefits, equal opportunity, plant closure or mass layoff issues, affirmative
action, employee benefits, leaves of absence, occupational health and safety,
workers compensation and unemployment insurance. Except as set forth in Schedule
3.1.8(b), to Seller’s Knowledge, with respect to the Resort Employees, there are
no and within the past twelve months there have been no (i) claims against
Resort Manager or Seller under any workers compensation plan or policy or for
long term disability; (ii) administrative charges, court complaints or
arbitrations pending or, to Seller’s Knowledge, threatened against Resort
Manager or Seller before the U.S. Equal Employment Opportunity Commission or any
federal, foreign, state or local court or agency, or arbitrator concerning
relating to any labor, safety or employment matters; or (iii) controversies or
investigations pending or, to Seller’s Knowledge, threatened, between Resort
Manager and any Resort Employees or former Resort Employees including any unfair
labor practice charge or complaint against Resort Manager or Seller pending
before the National Labor Relations Board or any other governmental agency.
There are no and within the past twelve (12) months there have been no labor or
employment strikes or work stoppages, or to Seller’s Knowledge, threatened by
any Resort Employees.  Seller will cause Resort Manager to make available to

 

 

Purchaser for inspection copies of all of Resort Manager’s employee handbooks
and employee rules and regulations.

 

(c)        Neither Seller nor Resort Manager is a party to any labor union,
collective bargaining, recognition or other labor agreement with respect to the
Resort Employees (collectively, the “Collective Bargaining Agreements”). 
Neither Seller nor Resort Manager has been a party to any Collective Bargaining
Agreement that has expired within the past twelve (12) months. No union or labor
organization has been certified or recognized as the representative of any
Resort Employees or to Seller’ Knowledge is seeking such certification or
recognition or is attempting to organize any of such employees.

 

(d)        No individual who is or has been classified by Seller as an
independent contractor with respect to the Resort is or was improperly
classified.  Except as set forth on Schedule 3.1.8(d), neither Seller nor, to
Seller’s Knowledge, Resort Manager has used the services of any “loan out” or
other staffing company.

 

3.1.9    Schedule 3.1.9 contains true, correct and complete list of all
Contracts (i) with an annual cost per contract or agreement in excess of Thirty
Thousand Dollars ($30,000) per annum to which or by which Seller, the Resort or
any other Property may be bound; (ii) with a term of greater than twelve (12)
months; and (iii) which cannot be terminated by Seller upon not more than thirty
(30) days written notice and without payment of any fee or penalty. 
Exhibit “C”, as the same may be attached hereto by the Parties within three
(3) Business Days after the Effective Date in accordance with Section 9.20,
contains true, correct and complete list of all Contracts (a) relating to any
portion of the Resort operated by a third party and (b) all agreements relating
to sponsorships or other similar arrangements to which Seller is a party. 
Seller has provided or will provide to Purchaser within three (3) Business Days
after the Effective Date, true, correct and complete copies of all written
Contracts (including all amendments and/or modifications thereto) and, to
Seller’s Knowledge, all Contracts are in full force and effect and Seller has
not entered into any agreements which waive, modify, compromise or amend any of
the provisions thereof.  To Seller’s Knowledge, neither Seller nor any of its
Subsidiaries have delivered or received a written notice of breach or default
under any Contract which has not been cured.

 

3.1.10  Schedule 3.1.10 contains a true, correct and complete list of all
leases, subleases, concessions or occupancy agreements in effect for use or
occupancy of the Property or the Marina, including, without limitation, the
Dolphin Connection License Agreement (collectively, the “Space Leases”).  Seller
has provided or will provide Purchaser, no later than three (3) Business Days
from the Effective Date, with true, correct and complete copies of all Space
Leases (including all amendments and/or modifications thereto) and all Space
Leases are in full force and effect.  Neither Seller nor its Subsidiaries has
delivered or received a written notice of breach or default under any Space
Lease which has not been cured.  All deposits required to have been delivered to
the under all Space Leases have been delivered and are currently being held by
Seller or its designees, as applicable.

 

3.1.11  To Seller’s Knowledge, all Permits that Seller or Resort Manager
maintains for the ownership, management, occupancy, leasing and operation of the
Resort in the manner currently operated are in full force and effect, except for
those which if not maintained in full force and effect would not reasonably be
expected to have a material adverse effect on the operation of the Resort. 
Neither Seller nor any Subsidiary thereof has received written notice of any
material violations of any Permit.

 

 

3.1.12  To Seller’s Knowledge, the existing insurance policies on the Property
are in full force and effect and no written notice of cancellation has been
received by Seller with respect to any such policy.

 

3.1.13  Schedule 3.1.13 contains a true, complete and correct list of all the
material Personal Property.  Seller owns all tangible Personal Property used in
connection with the ownership, operation and maintenance of the Resort free and
clear of any liens, other than the Permitted Exceptions, and any liens that will
be eliminated prior to or at the Closing.

 

3.1.14  To Seller’s Knowledge, neither Seller nor any Subsidiary thereof has
received written notice from any Governmental Authority declaring that the
Resort is in violation (in any material respect) of applicable building codes or
zoning laws, or any other applicable Laws (including, without limitation, those
regarding land use, fire, health, safety, environmental, subdivision, water
quality, sanitation controls and the Americans with Disabilities Act of 1990, as
amended).  The foregoing representation shall not be applicable to any reports
or studies or to any defects discovered or otherwise actually known to Purchaser
prior to the Closing.

 

3.1.15  Except as set forth on Schedule 3.1.15, any and all construction
contracts for the performance of any work on, improvement at or for the benefit
of, the Resort entered into by Seller or any of its Affiliates prior to the
Effective Date have been terminated or completed and fully paid, and there is no
amount remaining to be paid under any such construction contracts.

 

3.1.16  To Seller’s Knowledge, except as set forth in the Environmental Reports
or on Schedule 3.1.16, neither Seller nor any Affiliates thereof, have disposed
of or released Hazardous Materials at the Resort, except in accordance with
Environmental Laws.  Neither Seller nor any Affiliates thereof have received any
written notice of any pending or threatened Action or proceeding arising out the
presence of Hazardous Materials located on the land beneath the Resort, or any
alleged violation of Environmental Law.

 

3.1.17  Exhibit “D” contains true, correct and complete list of all Equipment
Leases.  Seller has provided Purchaser, or will provide Purchaser no later than
three (3) Business Days from the Effective Date, with true, correct and complete
copies of all Equipment Leases (including all amendments and/or modifications
thereto) and all Equipment Leases are in full force and effect and Seller has
not entered into any agreements which waive, modify, compromise or amend any of
the provisions thereof.  Neither Seller nor any of its Subsidiaries have
delivered or received a written notice of breach or default under any Equipment
Leases which has not been cured.

 

3.1.18  Seller licenses or has the right to use all of the Intellectual Property
necessary or required to conduct its business as currently conducted, including,
without limitation all Intellectual Property set forth on  Schedule 3.1.18, and
no such Intellectual Property has been or is now involved in any cancellation,
dispute or litigation and, to Seller’s Knowledge, no such action is threatened. 
Neither Seller nor any Affiliate thereof has received written notice of any
violation of any legal requirements related to the Intellectual Property.

 

3.1.19  Seller has provided Purchaser with a true, correct and complete copy of
the Submerged Lands Lease (including all amendments and/or modifications
thereto).  The Submerged Lands Lease is in full force and effect and Seller has
not entered into any agreements which waive, modify, compromise or amend any of
the provisions thereof.  To Seller’s Knowledge, neither Seller nor any of its
Subsidiaries have delivered or received a written notice of breach or default
under the Submerged Lands Lease which has not been cured.

 

 

3.1.20  The liquor licenses issued by the Alcoholic Beverages and Tobacco
Division of the Florida Department of Business and Professional Regulation (the
“Florida ABT”) are held by Resort Manager with respect to the Resort, and to
Seller’s Knowledge, each respective liquor license is in full force and effect. 
To Seller’s Knowledge, there is no investigation pending or threatened by the
Florida ABT.

 

3.1.21  Rental Program.

 

(a)        Set forth on Schedule 3.1.21(a) is a true, complete and accurate list
of all rental management agreements, rental program agreements and operation
agreements (collectively, the “Rental Management Agreements”) applicable to the
rental and/or management of the Residential Units and the expiration date of
each such Rental Management Agreement.  Seller has delivered or will deliver to
Purchaser within three (3) Business Days of the Effective Date, true, complete
and accurate copies of all such Rental Management Agreements.  Seller shall
update such schedule at Closing.

 

(b)        Except as set forth in Schedule 3.1.21(b), Seller does not possess or
have rights to any deposits, pre-payments, undistributed cash or other funds
owed to or payable in connection with any rental agreement or rental program
managed or operated by Seller or an Affiliate of Seller.

 

(c)        To Seller’s Knowledge, Seller has received no written notice of any
pending claims, suits or other actions, court proceedings, mediations,
arbitrations made with Resort Manager, Seller, any governmental agency or any
other agency with respect to the rental or management of a Residential Unit.

 

3.1.22  Association.

 

(a)        Seller has complied, and will continue to comply, in a timely manner
and in all material respects with all governing documents, rules and regulations
and orders of the Association (including payment of Association assessments).

 

(b)        To Seller’s Knowledge, Seller has paid all outstanding and due and
payable assessments and other charges of any kind or nature billed to Seller by
the Association through the Effective Date, and all such assessments and other
charges accruing from the time period from the Effective Date to the Closing
Date will be paid in full or will be prorated at Closing.

 

(c)        To Seller’s Knowledge, Seller has not received any written notice of
any material violation with respect to the Governing Documents.

 

(d)        Except as set forth in Schedule 3.1.22(d), Seller is not a party to
any agreements with the Association or any Residential Unit Owner.

 

(e)        Two of the three directors of the governing body of the Association
were appointed by Seller and Seller has the right to continue to appoint two of
three directors of the governing body of the Association.

 

For purposes of this Section 3.1, “to Seller’s Knowledge” shall mean the actual
knowledge (without independent investigation or inquiry) of Michael J. O’Hanlon,
Jeffrey D. Burns, Mark Mance, Simon Hallgarten and/or David Zeuske and shall not
be construed to refer to

 

 

the knowledge of any other employee, officer, director, shareholder or agent of
Seller or any Affiliate of Seller, and shall not include imputed or constructive
knowledge.

 

3.2       Purchaser’s Representations and Warranties.  Purchaser hereby
represents and warrants to Seller, as of the date hereof, as follows:

 

3.2.1    Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.

 

3.2.2    Purchaser has the right and authority to execute and deliver this
Agreement and all documents now or hereafter to be executed by it pursuant to
this Agreement to perform its obligations hereunder.

 

3.2.3    The performance by Purchaser of its respective obligations under this
Agreement will not conflict with or result in the breach of any of the terms of
any agreement or instrument to which Purchaser is a party or is otherwise bound,
and no consent from third parties are required for the performance of any
obligations hereunder.

 

3.2.4    Neither Purchaser nor any of its Affiliates is (i) listed on the
Specially Designated Nationals and Blocked Persons List or any other similar
list maintained by the Office of Foreign Assets Control, Department of the
Treasury, pursuant to any authorizing statute, executive order or regulation;
(ii) a “specially designated global terrorist” or other person listed on
Appendix A to Chapter V of 31 C.F.R., as the same has been from time to time
updated and amended; or (iii) a Person either (a) included within the term
“designated national” as defined in the Cuban Assets Control Regulations,
31 C.F.R. Part 515; or (b) designated under Sections 1(a), 1(b), 1(c) or 1(d) of
Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) or
a person similarly designated under any related enabling legislation or any
other similar Executive Orders.

 

3.2.5    Purchaser has not (i) made a general assignment for the benefit of
creditors; (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition in bankruptcy by its creditors; (iii) suffered
the appointment of a receiver to take possession of all or substantially all of
its assets; (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets; or (v) admitted in writing its inability to pay
its debts as they became due.

 

3.3       Update of Representations and Warranties.  Each of the Parties’
respective representations and warranties set forth in Sections 3.1 and 3.2
shall be deemed to have been remade at and as of the Closing.

 

3.4       Survival.  The representations and warranties made in this Agreement
shall not merge into any instrument delivered at the Closing but shall survive
Closing for a period of six (6) months (the “Survival Period”).

 

3.5       Covenants of Seller.  Seller covenants and agrees that, until the
earlier of the termination of this Agreement or the Closing, Seller shall:

 

(a)        at all times from and after the Effective Date until the Closing,
conduct its business, maintain and operate the Resort in a manner consistent
with the past practices of the Resort, and in the ordinary course of business;

 

 

(b)        use its commercially reasonable efforts to maintain the levels of
inventories of FF&E, Supplies and Consumables at the Resort at the values or
quantity as of the Effective Date, subject in each case, to the sale and
replacement of the Consumables and Supplies in the normal and ordinary course of
operations at the Resort;

 

(c)        timely make all repairs, maintenance, and replacements to keep the
Resort (including, but not limited to, all FF&E and all other Personal Property)
in good operating condition consistent with past practices, and not commit any
waste of any portion of the Property;

 

(d)        continue to take guest reservations and to book functions and
meetings and otherwise to promote the business of the Resort in generally the
same manner as it did during the twelve (12) months prior to the Effective Date;

 

(e)        pay all Sales Taxes due on or which have accrued through the Closing
in respect of the operations and use of the Resort;

 

(f)        not amend or cause or, to the extent within Seller’s control, permit
the amendment of the Governing Documents;

 

(g)        not cause or, to the extent within Seller’s control, permit its
designees on the board of directors of the Association to increase any regular
assessments from the amount in effect as of the Effective Date, or to levy any
special assessments, and Seller shall not cast any vote as a member of the
Association to cause or permit any of the foregoing;

 

(h)      provide Purchaser with information regarding the preparation, approval
and implementation of the 2014 budgets for the Association upon request by
Purchaser;

 

(i)         cause its designees on the board of directors of the Association to
operate the Association in compliance in all material respects with all
requirements of the Governing Documents at all times after the Effective Date
and prior to the Closing Date;

 

(j)         on the Closing Date, cause the removal of all designees of Seller
(or any Affiliate of Seller) as directors and/or officers of the Association to
the extent permitted by law or the Governing Documents;

 

(k)        not sell, refinance or otherwise transfer or otherwise dispose of any
Property or any other interest in the Resort other than contemplated by this
Agreement; provided, however, that Seller may commence discussions with its
mortgage lender(s) relating to refinancing of the Property prior to Closing or
the earlier termination of this Agreement;

 

(l)         not retain any architect, designer, contractor or other consultant
or approve, amend and/or modify, or submit to any Governmental Authority any
plans and specifications for or related to the design, development and/or
construction of the “Tio’s Restaurant” property without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed;

 

(m)       not take the following actions after the expiration of the Due
Diligence Period unless Seller has obtained the prior written consent of
Purchaser (which consent shall not be unreasonably withheld, conditioned or
delayed):

 

 

(i)            terminate any Space Lease or execute, modify or terminate, or
waive any material rights or remedies with respect to any single contract or
other commitment of any kind (expressly excluding group bookings or other
reservation contracts or commitments in the ordinary course of business) in
excess of Thirty Thousand Dollars ($30,000) or which is not terminable (without
fee or penalty) upon thirty (30) days’ prior notice;

 

(ii)           cause or permit the removal of any Personal Property from the
Resort except for Consumables or Supplies in the ordinary course of operations
at the Resort or for the purpose of discarding worn and valueless items that
have been replaced with personal property of equal or greater quality;

 

(iii)          grant options or rights to acquire any interest in the Property;
or

 

(iv)          grant any easement, covenant, lien or other encumbrance affecting
title to the Property that is not a Permitted Encumbrance.

 

(n)        Seller agrees to promptly deliver to Purchaser all of the audit
request materials listed on Exhibit “H”; provided, however, that (i) Seller
shall deliver all such materials within its possession (or which are otherwise
reasonably accessible to Seller as of the Effective Date) not later than the
date that is fifteen (15) days prior to the Target Closing Date and (ii) if any
audit request materials are not applicable or if Seller cannot provide any audit
request materials because such materials are not reasonably accessible to Seller
as of the Effective Date, Seller shall notify Purchaser in writing of such
matter within 5 days after the Effective Date, specifying which audit request
materials Seller is not able to provide.  Seller acknowledges and agrees to use
its good faith efforts to also provide such additional information which is
deemed relevant and reasonably necessary (as reasonably determined by Purchaser)
to enable Purchaser and its accountants to prepare financial statements in
compliance with (i) Rule 3-05 of Regulation S-X of the Securities and Exchange
Commission which audit will commence immediately upon Closing and which is
required to be completed and filed with the Securities and Exchange Commission
within seventy-five (75) days after Closing; (ii) any other rule issued by the
Securities and Exchange Commission and applicable to Purchaser; and (iii) any
registration statement, report or disclosure statement filed with the Securities
and Exchange Commission by, or on behalf of, Purchaser.  Notwithstanding the
foregoing, Seller shall engage (at Purchaser’s sole cost and expense) McGladrey
LLP to commence any and all such required audits.  Seller acknowledges and
agrees that the foregoing is a representative description of the information and
documentation that Purchaser and its accountants may require in order to comply
with (i), (ii) and (iii) above.  In connection with the foregoing post-Closing
audit(s), and in furtherance of Seller’s obligations to assist Purchaser
pursuant to this Section, Seller covenants and agrees to execute and deliver to
McGladrey LLP the audit representation letter, the form of which are attached
hereto as Exhibit “I” (each, an “Audit Representation Letter”), provided that
the form of such Audit Representation Letters may be modified as required to
account for any issues identified during the audit.  Seller’s obligations under
this Section 3.5(n) shall survive the Closing for a period of twelve (12)
months.

 

3.6       Covenants of Seller and Purchaser.

 

3.6.1    Third-Party Consents.  Seller shall cooperate with Purchaser in
obtaining all required consents from third parties for the acquisition of the
Property by Purchaser, including, without limitation, the approval of the
transfer of the Submerged Land Lease after Closing, which allows for use of the
Marina.

 

 

3.6.2    Permits.  Seller shall cooperate and shall cause Resort Manager to
cooperate, at no cost or expense to Seller or Resort Manager, with Purchaser in
Purchaser’s efforts to cause the Permits to be transferred to Purchaser to the
extent permitted by applicable Law, including without limitation, any Permit
required for the service of alcoholic beverages at the Resort (a “Liquor
Permit”).  If the Liquor Permit cannot be transferred to Purchaser or
Purchaser’s Resort manager by Seller or Resort Manager, or otherwise obtained by
Purchaser prior to the scheduled Closing, then, to the extent permitted by
applicable Law, Seller or Resort Manager, as the case may be, shall cooperate
with Purchaser by entering an interim alcoholic beverage management agreement,
in form and substance reasonably satisfactory to Purchaser (the “Interim
Beverage Agreement”), with respect to the sale of alcoholic beverages at the
Resort, at no additional cost to Seller (or Resort Manager).  Seller shall
cooperate with Purchaser if Purchaser elects to apply for an interim/temporary
liquor license so that alcoholic beverages may continue to be served at the
Resort pending issuance of the permanent Liquor Permit, at no additional cost to
Seller.

 

3.6.3    Submerged Land Lease.  Seller shall cooperate, at no cost or expense to
Seller, with Purchaser in Purchaser’s efforts to cause Submerged Lands Lessor
either to (i) consent to the assignment of the Submerged Lands Lease to
Purchaser pursuant to an assignment and assumption agreement or (ii) enter into
a new lease agreement with Purchaser with respect to the Submerged Lands on
substantially the same terms as the existing Submerged Lands Lease, in either
case, in a form and upon terms acceptable to Purchaser in its reasonable
discretion.  If (a) Submerged Lands Lessor does not consent to such assignment
of Submerged Lands Lease and (b) Submerged Lands Lessor has not entered into a
new lease agreement with Purchaser with respect to the Submerged Lands in each
case at or prior to the scheduled Closing, then, to the extent permitted by
applicable Law and the terms of the Submerged Lands Lease, Seller shall
cooperate with Purchaser by entering an interim operating agreement, management
agreement, license or other agreement, in form and substance reasonably
satisfactory to Seller and Purchaser and at no additional cost to Seller (the
“Interim Marina Agreement”), pursuant to which Purchaser shall operate the
Marina, pay all operating and other costs relating to such operation, and
collect and retain all revenues arising from such operation, until such time as
Submerged Lands Lessor has consented to such assignment of the Submerged Lands
Lease or has entered into a new lease agreement with Purchaser with respect to
the Submerged Lands, subject to Purchaser’s obligation to indemnify Seller for
any losses in connection therewith.  Without limiting the generality of the
foregoing, Seller covenants and agrees to remedy any default by Seller under the
terms of the Submerged Lands Lease, at Seller’s sole cost expense, in each case
as is necessary or required by the Submerged Lands Lessor as a condition to the
assignment to Purchaser of the Submerged Lands Lease and/or execution by the
Submerged Land Lessor of a new Submerged Lands Lease.

 

3.6.4    Association Estoppel.  Seller shall cooperate with Purchaser in
requesting that the Association execute an estoppel certificate in favor of
Purchaser in a form reasonably acceptable to Purchaser and Seller (the
“Association Estoppel Certificate”); provided, however, Purchaser shall have the
right in its sole discretion to request any representation and warranty from the
Association in the Association Estoppel Certificate that Purchaser deems
necessary or advisable, but the condition to Purchaser’s obligations described
in Section 6.1.10 will nonetheless be satisfied so long as Purchaser receives
the executed Association Estoppel Certificate in the form reasonably approved by
Purchaser and Seller.

 

3.6.5    Guest Baggage and Lost and Found.  All baggage, laundry, valet parcels
and other property of guests checked or left in the care of the Resort and
located at the Resort on the Closing Date shall be inventoried, sealed and
tagged jointly by Seller and Purchaser immediately after the Closing.  Purchaser
hereby indemnifies Seller against all claims, losses or

 

 

liabilities with respect to such baggage arising out of the acts or omissions of
Purchaser after the Closing.  Seller hereby indemnifies Purchaser against all
claims, losses or liabilities with respect to such baggage arising out of the
acts or omissions of Seller prior to the Closing.  The terms and provisions of
this Section 3.6.5 shall survive the Closing.

 

3.6.6    Safe Deposits.  At the Closing, Seller shall deliver to Purchaser all
keys to all safe deposit boxes at the Resort, a complete list of the name and
room number of each depositor, and all agreements and receipts relating thereto,
and a representative of Seller and Purchaser shall seal all safe deposit boxes. 
Following the Closing, if any depositor advises Purchaser that any contents of
its safe deposit box are missing and the seal of the safe deposit box was not
broken prior to the depositor’s request to receive the contents of the safe
deposit box, Seller shall indemnify and hold Purchaser harmless from and against
any liability or responsibility for the items claimed to be missing from the
safe deposit box.  Following the Closing, if any depositor advises Purchaser
that any contents of its safe deposit box are missing and the seal of the safe
deposit box was broken prior to the depositor’s request to review the contents
of the safe deposit box, Purchaser shall indemnify and hold Seller harmless from
and against any liability or responsibility for the items claimed to be missing
from the safe deposit box.  The terms and provisions of this Section 3.6.6 shall
survive the Closing.

 

3.6.7    Employees and Warn Act.  The Parties agree to make a joint announcement
to all Persons working at the Resort concerning the sale of the Resort, which
announcement shall take place at the Resort at a time mutually agreeable to the
Parties, but not more than five (5) days prior to the Closing Date, or such
earlier time as mutually agreed upon by the Parties.  In the event that
Purchaser does not enter into a new management agreement with Resort Manager
with respect to the Property, Purchaser shall cause its manager to offer
continued employment to all employees of Resort Manager that are working at the
Resort in a manner such that the actions of the parties pursuant to this
Agreement will not trigger the application of the Worker Adjustment and
Retraining Notification Act (29 U.S.C. §2101 et seq.) (the “WARN Act”). 
Purchaser shall indemnify, defend and hold the Seller and Resort Manager
harmless from and against any and all claims, liabilities, costs and expenses
(including reasonable attorneys’ fees and costs) arising in connection with any
WARN Act claim brought by any employee of Resort Manager that works at the
Resort.

 

3.7       “AS IS, WHERE IS” SALE.

 

3.7.1    THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT HAS BEEN NEGOTIATED
BETWEEN SELLER AND PURCHASER. THIS AGREEMENT REFLECTS THE MUTUAL AGREEMENT OF
SELLER AND PURCHASER.  OTHER THAN THE MATTERS REPRESENTED IN SECTION 3.1 HEREOF,
BY WHICH ALL OF THE FOLLOWING PROVISIONS OF THIS SECTION 3.7 ARE LIMITED,
PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ANY OF SELLER’S
SUBSIDIARIES, AFFILIATES, AGENTS OR REPRESENTATIVES, AND PURCHASER HEREBY
ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE.

 

3.7.2    EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY CLOSING DOCUMENTS
CONTEMPLATED HEREBY, SELLER SPECIFICALLY DISCLAIMS, AND NEITHER SELLER NOR ANY
OF SELLER’S AFFILIATES NOR ANY OTHER PERSON IS MAKING, ANY REPRESENTATION,
WARRANTY OR ASSURANCE WHATSOEVER TO PURCHASER, AND NO WARRANTIES OR
REPRESENTATIONS OF

 

 

ANY KIND OR CHARACTER, EITHER EXPRESS OR IMPLIED, ARE MADE BY SELLER OR RELIED
UPON BY PURCHASER WITH RESPECT TO THE STATUS OF TITLE TO OR THE MAINTENANCE,
REPAIR, CONDITION, DESIGN OR MARKETABILITY OF THE PROPERTY, OR ANY PORTION
THEREOF, INCLUDING BUT NOT LIMITED TO (i) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (v) ANY CLAIM BY PURCHASER FOR
DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO THE
PROPERTY OR RESORT, (vi) THE FINANCIAL CONDITION OR PROSPECTS OF THE PROPERTY OR
RESORT AND (vii) THE COMPLIANCE OR LACK THEREOF OF THE PROPERTY OR RESORT WITH
GOVERNMENTAL REGULATIONS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL LAWS, NOW
EXISTING OR HEREAFTER ENACTED OR PROMULGATED, IT BEING THE EXPRESS INTENTION OF
SELLER AND PURCHASER THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
PROPERTY WILL BE CONVEYED AND TRANSFERRED TO PURCHASER IN ITS PRESENT CONDITION
AND STATE OF REPAIR, “AS IS, WHERE IS, WITH ALL FAULTS”.  PURCHASER REPRESENTS
THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER OF REAL
ESTATE, AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
PURCHASER’S CONSULTANTS IN PURCHASING THE PROPERTY.  PURCHASER HAS BEEN GIVEN A
SUFFICIENT OPPORTUNITY TO CONDUCT AND HAS CONDUCTED OR WILL CONDUCT SUCH
INSPECTIONS, INVESTIGATIONS AND OTHER INDEPENDENT EXAMINATIONS OF THE PROPERTY
AND RELATED MATTERS AS PURCHASER DEEMS NECESSARY, INCLUDING BUT NOT LIMITED TO
THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND WILL RELY UPON SAME AND
NOT UPON ANY STATEMENTS OF SELLER (EXCLUDING THE LIMITED MATTERS REPRESENTED BY
SELLER IN SECTION 3.1 HEREOF OR IN ANY CLOSING DOCUMENTS CONTEMPLATED HEREBY)
NOR OF ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF SELLER.  PURCHASER
ACKNOWLEDGES THAT ALL INFORMATION OBTAINED BY PURCHASER WAS OBTAINED FROM A
VARIETY OF SOURCES, AND SELLER WILL NOT BE DEEMED TO HAVE REPRESENTED OR
WARRANTED THE COMPLETENESS, TRUTH OR ACCURACY OF ANY OF THE DOCUMENTS OR OTHER
SUCH INFORMATION HERETOFORE OR HEREAFTER FURNISHED TO PURCHASER EXCEPT TO THE
EXTENT EXPRESSLY SET FORTH IN SECTION 3.1 HEREOF.  UPON THE CLOSING, PURCHASER
WILL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO,
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER’S INSPECTIONS AND INVESTIGATIONS. PURCHASER ACKNOWLEDGES AND AGREES
THAT, UPON THE CLOSING, SELLER WILL SELL AND CONVEY TO PURCHASER, AND PURCHASER
WILL ACCEPT THE PROPERTY, “AS IS, WHERE IS, WITH ALL FAULTS”.  PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS COLLATERAL TO OR AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF
SELLER OR ANY THIRD PARTY. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY
ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE
PROPERTY FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN.  PURCHASER
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE “AS IS, WHERE IS”

 

 

NATURE OF THIS SALE AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE
MATTERS THAT MAY BE ASSOCIATED WITH THE PROPERTY.  PURCHASER, WITH PURCHASER’S
COUNSEL, HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS
AGREEMENT AND UNDERSTANDS THE SIGNIFICANCE OF EACH AND AGREES THAT THE
DISCLAIMERS AND OTHER AGREEMENTS SET FORTH HEREIN ARE AN INTEGRAL PART OF THIS
AGREEMENT, AND THAT SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO
PURCHASER FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS
SET FORTH IN THIS AGREEMENT.

 

3.7.3    PURCHASER COVENANTS AND AGREES ON BEHALF OF ITSELF AND PURCHASER’S
AFFILIATES NOT TO SUE SELLER AND THE SELLER PARTIES AND RELEASE SELLER AND THE
SELLER PARTIES OF AND FROM AND WAIVES ANY CLAIM OR CAUSE OF ACTION, INCLUDING
WITHOUT LIMITATION ANY STRICT LIABILITY CLAIM OR CAUSE OF ACTION, THAT PURCHASER
OR PURCHASER’S AFFILIATES MAY HAVE AGAINST SELLER OR THE SELLER PARTIES UNDER
ANY ENVIRONMENTAL LAW, WHETHER NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED,
RELATING TO ENVIRONMENTAL MATTERS OR ENVIRONMENTAL CONDITIONS IN, ON, UNDER,
ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT, OR BY
VIRTUE OF ANY COMMON LAW RIGHT, NOW EXISTING OR HEREAFTER CREATED, RELATED TO
ENVIRONMENTAL CONDITIONS OR ENVIRONMENTAL MATTERS IN, ON, UNDER, ABOUT OR
MIGRATING FROM OR ONTO THE PROPERTY; PROVIDED, HOWEVER, THAT NOTWITHSTANDING THE
FOREGOING, IN THE EVENT THAT PURCHASER IS SUED BY A THIRD PARTY IN RESPECT OF
ANY CLAIM OR CAUSE OF ACTION WAIVED BY PURCHASER PURSUANT TO THE FOREGOING
PROVISIONS OF THIS SECTION 3.7.3, PURCHASER SHALL HAVE THE RIGHT TO IMPLEAD
SELLER AND/OR THE APPLICABLE SELLER PARTIES. THE TERMS AND CONDITIONS OF THIS
SECTION 3.7 WILL EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT OR THE
CLOSING, AS THE CASE MAY BE, AND WILL NOT MERGE WITH THE PROVISIONS OF ANY
CLOSING DOCUMENTS AND ARE HEREBY DEEMED INCORPORATED INTO THE DEED AS FULLY AS
IF SET FORTH AT LENGTH THEREIN.

 

ARTICLE 4

 

TRANSFER TAX, PRORATIONS AND OTHER CLOSING COSTS

 

4.1       Transfer Taxes; Reserves.  If any Governmental Authority determines
that documentary transfer taxes or similar fees or taxes (“Transfer Taxes”) are
due in connection with the transactions contemplated hereby (when considered
individually or when considered with any prior transfers of any direct or
indirect ownership or other individual interests in the Resort), Seller shall be
responsible for payment of such Transfer Taxes at Closing and shall file all
necessary Tax Returns with respect to all Transfer Taxes.  Purchaser shall
cooperate with Seller in filing such Tax Returns to the extent required by
applicable law.  Purchaser shall be responsible for payment of the cost of any
mortgage documentary taxes or intangibles taxes on any financing obtained by
Purchaser.

 

4.2       Prorations; Credits and Adjustments.

 

 

4.2.1     All assets and liabilities of the Resort, determined in accordance
with the Uniform System (provided that all non-Resort assets and liabilities, if
any, shall be determined in accordance with generally accepted accounting
principles), shall be prorated (whether or not Seller or the Resort shall have
been invoiced therefor prior to the Cut-Off Time) as of 12:00 a.m. Eastern
Daylight Time on the date of Closing (the “Cut-Off Time”).  In connection with
the foregoing:

 

(a)          Not later than ten (10) Business Days prior to the then-scheduled
date of Closing, Seller shall prepare a proforma of the accounting for the
transaction that reflects how items subject to proration and/or adjustment will
be accounted for under this Section 4.2 or under any other provisions of this
Agreement (the “Preliminary Closing Statement”), a copy of which shall be
delivered to Purchaser for Purchaser’s review, with such supporting
documentation as the Parties hereto may reasonably require being attached
thereto; and

 

(b)          On the day prior to Closing, Purchaser and Seller will conduct
inventories, examinations and audits of the Property as may be necessary to
verify and/or make revisions to the Preliminary Closing Statement based on such
audits, examinations and inventories, and on the night preceding the Closing
immediately after the Cut-Off Time, Purchaser and Seller will make all final
adjustments necessitated by such night’s operations and prepare a final
statement of prorations and adjustments required under this Section 4.2 with
such supporting documentation as the Parties hereto may reasonably require being
attached thereto (the “Closing Statement”).

 

(c)          All prorations reflected on the Preliminary Closing Statement and
on the Closing Statement shall be made on the basis of the actual number of days
in the year and month in which the Closing occurs or in the period of
computation.

 

(d)          No prorations shall be made in relation to insurance premiums.

 

4.2.2     The following shall be prorated as of the Cut-Off Time:

 

(a)          expenses and other amounts payable under any Contracts, Equipment
Leases, the Rental Management Agreements, and the Space Leases; provided that
(i) Purchaser shall receive a credit in an amount equal to all tenant security
deposits under the Space Leases, if any, and (ii) rents and other amounts
payable under the Space Leases which are delinquent as of the Cut-Off Time shall
not be prorated as of the Cut-Off Time and shall be allocated as follows:

 

(i)        To the extent that Purchaser receives rents or other payments payable
under the Space Leases on or after the Closing Date, such payments shall be
applied first towards the payment in full of all rents and other amounts due to
Purchaser with respect to periods following the Cut-Off Time, with the balance
applied to delinquent rents or other amounts due to Seller for the period prior
to the Cut-Off Time, with Seller’s share thereof (less amounts for reasonable
out-of-pocket costs of collection) being promptly delivered to Seller by
Purchaser.  Purchaser agrees to attempt to collect any such delinquent rents
after the Closing as part of its collection process in the ordinary course, but
shall have no obligation to institute suit against any delinquent tenant.  The
provisions of this Section 4.2.2(a)(i) shall survive the Closing.

 

(ii)       With respect to any Space Leases which provide for the payment of
percentage rent by the tenant thereunder, the parties shall use good faith
efforts to prorate such percentage rent as of the Closing and, within forty-five
(45) days after Purchaser

 

 

completes the annual reconciliation of such percentage rent payments with each
such tenant, the parties agree to re-prorate percentage rent based on the actual
percentage rent paid by such tenant, and the party in whose favor such original
proration was made shall refund such difference to the other party promptly
thereafter.  The provisions of this Section 4.2.2(a)(ii) shall survive the
Closing.

 

(b)          costs and expenses related to construction, capital improvement and
other similar work performed at the Resort prior to the Cut-Off Time;

 

(c)          subject to Section 4.3 below, utility charges (including, without
limitation, charges for phone service, cable television, gas, water, sewer and
electricity);

 

(d)          installments of municipal and other governmental improvement liens
and special assessments;

 

(e)          periodic Permit fees;

 

(f)           revenues and expenses from any Hotel guest rooms, Villas (to the
extent of Seller’s interest therein) and other Resort facilities (other than
those set forth in clause (g) below) occupied on the evening immediately
preceding the Cut-Off Time, including any Sales Taxes, room taxes and other
taxes charged to guests in such rooms, or Villas, all use fees, maintenance
fees, owner fees, service fees, housekeeping fees and any similar fees assessed
or charged in connection with the Rental Program, all parking charges, sales
from mini-bars, in-room food and beverage, telephone, facsimile and data
communications, in-room movie, laundry, and other service charges allocable to
such rooms or Villas and all other revenues otherwise arising from Villa Owners
with respect to the evening immediately preceding the Cut-Off Time, shall be
divided 50:50 between Seller and Purchaser (where a complete meeting package
(“CMP”) guest is staying on a CMP rate, the food and beverage revenues shall be
allocated based on whether the applicable meal or service occurred before or
after the Cut-Off Time); provided, however, that to the extent that either
Seller or Resort Manager, as applicable, records in the ordinary course the
times at which food and beverage sales, telephone, facsimile or data
communication, in-room movie, laundry, and other services are ordered by guests,
then the same shall be prorated when orders for the same were received.  All
revenues from restaurants and other service operations conducted at the Resort
shall be prorated based on whether the same accrued before or after the Cut-Off
Time as described in the preceding sentence.  The revenues referred to in this
clause (f) are referred to collectively as “guest revenues”.  Guest revenues
shall be calculated after first deducting applicable discounts, credit card
charges and travel agent commissions, and after writing down to zero all guest
ledger charges (i) that are disputed by the guest, (ii) that are for personnel
of Seller, the Resort Manager or their Affiliates, (iii) that are complimentary
or (iv) that are in-house charges.

 

(g)          revenues and expenses from conferences, receptions, meetings, and
other functions occurring in any conference, banquet or meeting rooms at the
Resort, including usage charges and related taxes, food and beverage sales,
valet parking charges, equipment rentals, and telecommunications charges, shall
be prorated based on when the function took place.  The revenues referred to in
this clause (g) are referred to collectively as “conference revenues”;

 

(h)          prepaid rents and prepaid room receipts and deposits, function
receipts and deposits and other reservation receipts and deposits;

 

 

(i)           accrued but unpaid vested and unvested salary, wages and bonuses,
accrued but unpaid health and welfare benefits, accrued but unpaid vested and
unvested vacation, sick and personal days, accrued but unpaid vested and
unvested fringe benefits, accrued but unpaid employee severance payments, and
other accrued but unpaid vested and unvested compensation and fringe benefits;

 

(j)           retail sales (including any tax on the sale of any Personal
Property effected pursuant to this Agreement), occupancy and liquor taxes and
like impositions accrued as of the Cut-Off Time;

 

(k)          revenue relating to the common areas of the Resort;

 

(l)           revenue (after the settlement of applicable commissions and/or
costs) relating to vending machines at the Resort;

 

(m)         all till money, cash-on-hand, and all sums in house banks for the
Resort, in which case all right, title and interest to the till money,
cash-on-hand and house banks shall be assigned and conveyed by Seller to
Purchaser and Seller shall receive a credit equal to the amount thereof,
provided that, if Seller and Purchaser cannot mutually agree upon the amount of
the till money, cash-on-hand and house banks, the provisions of this clause
(m) shall be inapplicable and title to the till money, cash-on-hand and house
banks shall remain with Seller;

 

(n)          all assessments by the Associations which are payable during the
calendar month in which the Closing occurs shall be adjusted and prorated as of
the Cut-Off Time on a cash basis, regardless of the month for which such amounts
are assessed;

 

(o)          gift certificates, if any, set forth on Schedule 2.2.2, as the same
may be attached hereto by the Parties within three (3) Business Days after the
Effective Date in accordance with Section 9.20 and updated by Seller at Closing;
provided that Purchaser shall receive a credit against the Purchase Price at the
Closing in an amount equal to the value of any gift certificates which remain
outstanding as of the Closing and further provided that Purchaser shall not
receive a credit for any complimentary rooms (or room rates below average rack
rates) granted to conventions and other meeting groups in the ordinary course of
business by Seller, as set forth on Schedule 2.2.2, as the same may be attached
hereto by the Parties within three (3) Business Days after the Effective Date in
accordance with Section 9.20 and updated by Seller at Closing;

 

(p)          any pre-paid advertising; and

 

(q)          such other items as are usually and customarily prorated between
buyers and sellers of hotel or resort properties in the area where the Resort is
located.

 

4.3         Utilities.  All suppliers of utilities shall be instructed by Seller
to read meters or otherwise determine the charges owing as of the Closing for
services prior thereto on a date that is as close as possible to the actual
Closing Date, which charges shall be allocated and, as mutually determined by
the Parties, (i) be credited in an amount thereto to Purchaser at Closing; or
(ii) allocated to and paid by Seller prior to or at Closing.  Seller will be
entitled to all deposits presently in effect with utility providers, and
Purchaser will be obligated to make its own arrangements for any deposits with
utility providers.  The provisions of this Section 4.3 shall survive the
Closing.

 

 

4.4         Taxes and Assessments.

 

4.4.1     The Parties hereby agree that all sales and/or compensating use taxes
imposed upon or due in connection with the transactions contemplated hereunder
by any Governmental Authority, if any, shall be paid by Seller.  Seller shall
file all necessary tax returns with respect to all such taxes and Purchaser
shall reasonably cooperate with Seller at no cost to Purchaser, in filing all
necessary tax returns to the extent required by applicable law.  Purchaser shall
use reasonable efforts to obtain from any applicable Governmental Authority an
exemption for any applicable sales and/or compensating use taxes imposed upon or
due in connection with the transactions contemplated hereunder, and shall
consult and coordinate with Seller on such matters during the course of
obtaining such exemption.

 

4.4.2     Except as otherwise provided in this Agreement, from and after the
Closing Date, Seller shall indemnify and defend and hold Purchaser harmless from
and against (i) any and all taxes due and payable by Purchaser for any tax
period ending before the Closing (a “Pre-Closing Tax Period”); (ii) except as
provided in Sections 4.4.3 and 4.4.4  below, any and all taxes due and payable
by Seller for a taxable period beginning prior to the day of the Closing and
ending after the day of the Closing (the “Straddle Period”) which are allocable
to the Pre-Closing Tax Period, and (iii) all reasonable out-of-pocket third
party costs and expenses, including reasonable legal fees and expenses,
attributable to any item for which indemnification is provided in clauses (i) —
(ii) above.  Except as otherwise provided in this Agreement, from and after the
Closing  Date, Purchaser shall indemnify and defend and hold Seller harmless
from and against (a) any and all taxes due and payable by Purchaser for any tax
period ending on or after the Closing (a “Post-Closing Tax Period”); (b) except
as provided in Sections 4.4.3 and 4.4.4  below, any and all taxes due and
payable by Purchaser for the Straddle Period which are allocable to the
Post-Closing Tax Period, and (c) all reasonable out-of-pocket third party costs
and expenses, including reasonable legal fees and expenses, attributable to any
item for which indemnification is provided in clauses (a) — (b) above. With
respect to a Straddle Period, taxes of Seller, other than taxes in Sections
4.4.3 and 4.4.4 below, allocable to the Pre-Closing Tax Period shall be computed
as if such taxable period ended on and included the day of the Closing; provided
that exemptions, allowances or deductions that are calculated on an annual basis
shall be allocated between the portion of the Straddle Period ending on the day
of the Closing and the portion of the Straddle Period ending after the day of
the Closing in proportion to the number of days in each such period.

 

4.4.3     All unpaid real estate and personal property taxes and other
assessments (including, without limitation, special assessments and improvement
assessments) levied against the Property for a Straddle Period shall be prorated
at Closing. Seller shall be responsible for all real property taxes and personal
property taxes and other assessments for the tax periods ending prior to the day
of the Closing and for the portion of the Straddle Period through the day prior
to the Closing and shall indemnify and defend and hold Purchaser harmless from
and against such taxes, and Purchaser shall be responsible for all real property
taxes and personal property taxes and other assessments for the tax periods
beginning the day of the Closing and for the portion of the Straddle Period
beginning on the day of the Closing and shall indemnify and defend and hold
Seller harmless from and against any such taxes.  If the amount of any such
taxes is not ascertainable at Closing, the proration for such taxes shall be
estimated based on the most recent available bill; provided, however, that after
the Closing, Seller and Purchaser shall re-prorate the taxes and pay any
deficiency in the original proration to the other party promptly upon receipt of
the actual bill for the relevant taxable period.  In the event that the Property
or any part thereof shall be or shall have been affected by an assessment or
assessments which are payable in installments, Seller shall, at the Closing, be
responsible for any installments due prior to the

 

 

Closing and Purchaser shall be responsible for any installments due on or after
the Closing, provided that such assessments shall in any event be prorated
between Purchaser and Seller as of the Cut-Off Time.

 

4.4.4     Purchaser and Seller each acknowledge that certain taxes and
assessments accrue and are payable to the various local governments by any
business entity operating a hotel and its related facilities. Included in those
taxes and assessments may be business and occupation taxes, retail sales taxes,
gross receipts taxes, and other special lodging or hotel taxes and assessments.
For purposes of this Agreement, all of such taxes and assessments (expressly
excluding (x) taxes and assessments covered in Section 4.4.3 of this Agreement,
which shall be governed by the provisions of such Section, and (y) corporate
franchise taxes, and federal, state and local income taxes) (hereinafter
referred to as “Operational Taxes”) shall be allocated between Seller and
Purchaser such that those attributable to the period ending on or prior to the
day of the Closing shall be allocable to Seller and those attributable to the
period beginning after the day of the Closing shall be allocable to Purchaser
(with the attribution of such taxes and assessments hereunder to be done in a
manner consistent with the attribution under this Agreement of the applicable
revenues on which such taxes and assessments may be based). Purchaser shall
receive a credit for any Operational Taxes attributable to the Straddle Period
through the day prior to Closing which Seller has not paid.  Except for the
Operational Taxes for which (and in the amount for which) Purchaser has received
a credit under this Section 4.4.4,  Seller shall be solely responsible for
payment of the Operational Taxes with respect to any tax period ending on or
prior to the day of the Closing and the Straddle Period through the day prior to
Closing and shall indemnify and defend and hold Purchaser harmless from and
against such Operational Taxes, and Purchaser shall be solely responsible for
payment of Operational Taxes with respect to any tax period beginning the day of
the Closing and the Straddle Period beginning the day of the Closing (and those
for which and in amount for which it receives a credit) and shall indemnify and
defend and hold Seller harmless from and against such Operational Taxes.

 

4.4.5     The provisions of this Section 4.4 shall survive the Closing.

 

4.5         Post-Closing Prorations.

 

4.5.1     If accurate prorations cannot be made at Closing because current bills
are not obtainable (as, for example, in the case of utility bills), the Parties
shall prorate such revenue or expenses at Closing on the best available
information, subject to adjustment upon receipt of the final bill or other
evidence of the applicable revenue or expense.  Seller’s obligation to pay the
Excluded Liabilities in full shall survive the Closing of the transaction
contemplated by this Agreement, and Purchaser’s obligation to pay the
liabilities related to the Property acquired at Closing in full shall survive
the Closing of the transaction contemplated by this Agreement.  If any refund of
any water rates and charges, sewer rents or similar items is issued after the
Cut-Off Time for any period that includes the period prior to the Cut-Off Time,
then such refund shall be applied as follows: first, to the cost incurred in
obtaining such refund (and appropriately prorated based on the portion of said
costs incurred prior to and after the Closing), and second, the balance of such
refund, if any, shall be prorated as of the Cut-Off Time.  The provisions of
this Section 4.5.1 shall survive the Closing.

 

4.5.2     Subject to Section 4.4.3 above, any other prorations hereunder which
cannot be finally determined as of Closing shall be determined no later than
sixty (60) days after Closing to the extent possible consistent with the
procedures set forth in Sections 4.2, 4.3, 4.4 and 4.5.  In the event that such
determination or re-proration results in an increase to the amount of Excluded
Liabilities (the “Excess Liability Amount”), Seller will be responsible for
making up

 

 

any such underpayment by making a payment to Purchaser equal to such Excess
Liability Amount within five (5) Business Days after such final determination. 
In the event that such re-proration results in a decrease to the amount of
Excluded Liabilities, Purchaser will be responsible for making up any such
overpayment by reimbursing Seller in the amount equal to such overpayment within
five (5) Business Days after such final determination.  The provisions of this
Section 4.5.2 shall survive the Closing.

 

 

4.5.3     If Seller and Purchaser are unable to agree on the final prorations
within sixty (60) days after Closing as provided in Section 4.5.2 above,  then
the Parties shall endeavor to agree upon a national accounting firm to determine
the appropriate treatment and amount of the remaining disputed items.  If the
Parties are unable to agree upon and engage such a firm within thirty (30) days
after the expiration of the sixty (60) day reconciliation period after Closing,
then either party shall have the right to institute an action in law in the
appropriate court of competent jurisdiction in accordance with Section 7.2
below.  The provisions of this Section 4.5.3 shall survive the Closing.

 

4.6         Accounts Payable; Accounts Receivable.  All obligations and
liabilities (for services and materials ordered, or otherwise) and accounts
payable for the Resort and the Real Property for merchandise, equipment, tour
agents’ and travel agents’ commissions, advertisements, supplies and other
materials and services shall be identified as of the Cut-Off Time.  Seller shall
retain all the accounts receivable as of the Cut-Off Time, and Seller shall
retain the right to pursue collection of all accounts receivable, provided that
in connection with such efforts, Seller shall have no right to terminate any
Contract that Purchaser has assumed.  Seller shall provide Purchaser with a
schedule of such accounts receivable at Closing.  Purchaser agrees to collect
such receivables on Seller’s behalf and in the ordinary course of business, and
to promptly remit such receivables when collected to Seller. To the extent not
paid by Seller at Closing, Seller hereby covenants that Seller shall retain the
obligation for payment (and shall pay prior to the earlier of (i) delinquency or
(ii) the date that is thirty (30) days after the Closing) of all trade accounts
due and payable as of the Cut-Off Time that relate to matters arising or
accruing prior to the Closing (including, without limitation, for any work
performed or materials delivered prior to Closing in connection with any capital
expenditures at the Property, as well as all other goods and services delivered
to or performed at, or for the benefit of, the Property prior to Closing) in the
ordinary course when due (subject to any disputes in connection therewith), and
Purchaser shall be responsible for all such trade accounts payable, as well as
any other trade payables that first arise or accrue from and after the Closing. 
Seller shall provide Purchaser with a schedule of any such accounts payable
which are not paid by Seller at Closing.  Revenue from room rentals (including
food and beverage receivables charged to guest room accounts) shall belong to
Seller to the extent attributable to any period prior to the Closing.  Each
Party shall promptly remit any funds that such Party receives that belong to the
other Party in accordance with the provisions of this Agreement.  Each of
Purchaser and Seller shall be responsible for the payment of any sales, use,
and/or hotel/motel occupancy taxes collected or otherwise due and payable in
connection with the revenue allocated to such party under this Section 4.6.

 

4.7         Brokers; Commissions.  Seller represents and warrants to Purchaser
that, except for Hodges Ward Elliott, Inc., Seller has not dealt with any real
estate broker in connection with this transaction, nor has Seller been
introduced to Purchaser by any other real estate broker.  Purchaser represents
and warrants to Seller that Purchaser has not dealt with any other real estate
broker in connection with this transaction, nor has Purchaser been introduced to
the Resort or to Seller by any other real estate broker.  Each Party shall
indemnify, defend and hold harmless the other from and against any Claims,
suits, demands or liabilities of any kind or nature whatsoever arising on
account of the claim of any Person, firm or corporation to a real estate
brokerage

 

 

commission or a finder’s fee or other similar compensation as a result of having
dealt with such Party and/or its Affiliates in connection with this
transaction.  Seller shall pay any and all real estate brokerage commissions,
finder’s fees or other similar compensation payable to Hodges Ward Elliott, Inc.
in connection with this Agreement and/or the transactions contemplated
hereunder.  The provisions of this Section 4.7 shall survive the Closing and any
termination of this Agreement.

 

 

4.8         Closing Costs.  Except as otherwise expressly provided in this
Agreement, Seller and Purchaser shall each pay such costs and expenses incurred
in connection with the transactions contemplated herein as is customary in the
State in which the Property is located.

 

ARTICLE 5

 

REMEDIES

 

5.1         Purchaser’s Default.  In the event that (i) Purchaser does not
terminate this Agreement prior to the expiration of the Due Diligence Period,
and Purchaser, thereafter, in breach of this Agreement (e.g., without the
material breach or default by Seller under this Agreement or the failure of a
condition to close hereunder in favor of Purchaser), fails to close the
transaction contemplated under this Agreement on the Target Closing Date (or the
Accelerated Closing Date or Outside Closing Date, as applicable), (ii) Purchaser
is in breach of any of its representations and warranties hereunder or
(iii) Purchaser fails or refuses to perform its obligations hereunder, then
Seller shall be entitled to terminate this Agreement and retain the Earnest
Money, which retention thereof shall be Seller’s sole and exclusive remedy under
this Agreement, at law or in equity, for such breach or default that results in
the failure of the transaction to close as contemplated under this Agreement. 
THE PARTIES HAVE DISCUSSED THE POSSIBLE CONSEQUENCES TO SELLER IN THE EVENT THAT
THE CLOSING FAILS TO OCCUR AS A RESULT OF PURCHASER’S BREACH OR DEFAULT UNDER
THIS AGREEMENT.  THE PARTIES HAVE DETERMINED AND HEREBY AGREE THAT IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGES TO SELLER OCCURRING
IN THE EVENT OF PURCHASER’S BREACH OR DEFAULT UNDER THIS AGREEMENT AND THE
PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
COMPENSATORY DAMAGES SELLER WOULD SUFFER IN THE EVENT OF PURCHASER’S DEFAULT
HEREUNDER, HEREBY AGREE THAT A REASONABLE ESTIMATE OF SUCH DAMAGES IS AN AMOUNT
EQUAL TO THE EARNEST MONEY DEPOSITED WITH ESCROW AGENT, AND IN THE EVENT THIS
TRANSACTION FAILS TO CLOSE DUE TO PURCHASER’S BREACH OR DEFAULT UNDER THIS
AGREEMENT, SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE SAME AS FULLY
AGREED LIQUIDATED DAMAGES.  SELLER WAIVES ANY AND ALL RIGHT TO SEEK OTHER RIGHTS
OR REMEDIES AGAINST PURCHASER FOR FAILURE TO CLOSE THIS TRANSACTION DUE TO
PURCHASER’S BREACH OR DEFAULT, INCLUDING, WITHOUT LIMITATION, SPECIFIC
PERFORMANCE.  THE PAYMENT AND RETENTION OF THE EARNEST MONEY DEPOSITED WITH
ESCROW AGENT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY,
BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.  UPON ANY SUCH
BREACH OR DEFAULT AND FAILURE TO CLOSE BY PURCHASER HEREUNDER, THIS AGREEMENT
SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT FOR THE SURVIVING OBLIGATIONS
AND THE RIGHT OF SELLER TO RETAIN SUCH EARNEST MONEY AND RECOVER ANY AMOUNTS
SELLER IS ENTITLED TO UNDER

 

 

SECTION 9.14, AND EXCEPT AS EXPRESSLY PROVIDED ABOVE. THE PARTIES AGREE THAT,
UNDER THE CIRCUMSTANCES OF THIS TRANSACTION AND THE MARKETPLACE AT THE TIME
HEREOF, THIS LIQUIDATED DAMAGES PROVISION IS REASONABLE AND IN ACCORDANCE WITH
FLORIDA LAW.

 

 

                                       

 

                                        

SELLER’S INITIALS

 

PURCHASER’S INITIALS

 

 

5.2         Seller’s Default.  In the event any breach or default by Seller
under this Agreement (including a breach by Seller of any of its representations
and warranties hereunder or Seller’s failure or refusal to perform its
obligations hereunder) without the material breach or default by Purchaser under
this Agreement or the failure of a condition to close in favor of Seller, 
Purchaser shall be entitled, as its sole and exclusive remedy for a default by
Seller, either to (i) terminate this Agreement by written notice to Seller
whereupon Escrow Agent shall immediately return the Earnest Money and Seller
shall promptly reimburse Purchaser for all of Purchaser’s verifiable
out-of-pocket costs and expenses actually incurred in this transaction up to a
maximum amount not to exceed $250,000; or (ii) maintain an action for specific
performance; provided that, in the event Purchaser elects to maintain an action
for specific performance, (a) Purchaser shall provide written notice to Seller
of Purchaser’s intention thereto, and (b) Purchaser’s claim for specific
performance shall be filed against Seller on or before thirty (30) days
following the Target Closing Date (or the Accelerated Closing Date or the
Outside Closing Date, as applicable), failing which, Purchaser shall be barred
from enforcing the obligations by specific performance.  Purchaser hereby agrees
not to file a lis pendens or other similar notice against the Property except in
connection with, and after, the proper filing of a suit for specific
performance.  Purchaser hereby waives its rights to seek damages (whether
direct, indirect, consequential or special) from Seller in any action at law or
equity for any Seller defaults covered by this Section 5.2.  Notwithstanding the
foregoing, Seller shall not be deemed to be in breach or default of this
Agreement because of the mere failure to occur of any of the conditions set
forth in Sections 6.1.4, 6.1.7, 6.1.8, 6.1.9, 6.1.10 or 6.1.11.

 

5.3         Indemnification.

 

5.3.1     Seller hereby acknowledges, covenants and unconditionally, absolutely
and irrevocably agrees to appear, indemnify, protect, defend and hold harmless,
as well as reimburse, Purchaser and its Affiliates and their respective
shareholders, members, partners, officers, directors, trustees, agents,
representatives and employees (collectively, the “Purchaser Related Parties”) to
the fullest extent provided by law, from and against, and for, any and Claims
and Losses, to the extent the Closing occurs and such Claims and Losses result
from any of the following (collectively, the “Seller Indemnity Obligations”):
(i) any and all Excluded Liabilities; (ii) any breach or default by Seller of
this Agreement including, without limitation, the representations and warranties
of Seller contained in, and as limited under, this Agreement to the extent that
such representations, warranties and/or covenants survive Closing; and (iii) any
failure of Seller and/or its Subsidiaries to have reported and/or paid any and
all Transfer Taxes assessed or assessable by any Governmental Authority arising
out of or in any way related to the acquisition of the Resort by Purchaser (when
considered alone or when aggregated with any other transfers, sales or
dispositions of interests in the Property which occurred prior to the Closing),
as well as any and all penalties and interest related to any such Transfer Taxes
(including, without limitation, costs incurred in connection with or as a result
of any audit, tax inquiry or other proceeding), which are assessed against
Purchaser and/or the Property.

 

 

 

5.3.2    Purchaser hereby acknowledges, covenants and unconditionally,
absolutely and irrevocably agrees to appear, indemnify, protect, defend and hold
harmless, as well as reimburse, Seller and its Affiliates and their respective
shareholders, members, partners, officers, directors, trustees, agents,
representatives and employees (collectively, the “Seller Related Parties”) to
the fullest extent provided by law, from and against, and for, any and Claims
and Losses, to the extent the Closing occurs and such Claims and Losses result
from any of the following (collectively, the “Purchaser Indemnity Obligations”):
(i) any and all acts, omissions or causes of action arising or accruing
subsequent to the Closing that relate to the ownership, maintenance, repair or
operation of the Resort and/or Property, including without limitation, any
claims by employees of Purchaser, its Affiliates or its property manager or
third parties; (ii) any post-Closing Claim of a Seller Indemnitee resulting from
a breach by Purchaser of its representations and warranties contained in
Section 3.2; and (iii)  any failure of Purchaser to pay any of the Assumed
Liabilities.

 

5.3.3    In the event that any party making a Claim shall commence or file any
lawsuit or proceeding (individually or collectively, a “Proceeding”) against an
Indemnitee, which Proceeding is reasonably likely result in any Claim subject to
indemnification under this Section 5.3, then Indemnitor shall either, at its
option and within ten (10) Business Days after notice by Indemnitee to
Indemnitor of the filing or commencement of any such Proceeding, promptly pay
all amounts and otherwise take whatever commercially reasonable actions
necessary to dismiss the Proceeding with prejudice; or undertake the defense
thereof by counsel chosen by Indemnitor and approved by Indemnitee (which
approval shall not be unreasonably withheld or delayed), in which case
(i) Indemnitor shall be obligated to contest and/or defend Indemnitee against
such Proceeding, at Indemnitor’s sole cost and expense, and shall keep
Indemnitee apprised of the current status of such Proceeding at all times;
(ii) Indemnitor shall be liable to Indemnitee for all reasonable, out-of-pocket
costs, and expenses (including, without limitation, reasonable attorneys’ fees,
disbursements, and court costs in connection therewith) actually incurred by
Indemnitee in connection with such Proceeding; (iii) Indemnitee shall cooperate
in all reasonable respects with Indemnitor (at Indemnitor’s sole cost and
expense) in the contest and/or defense of such Proceeding; (iv) Indemnitor shall
promptly send to Indemnitee copies of any material documents received by either
Indemnitor which relate to such Proceeding; and (v) Indemnitee (or its agent or
representative) shall have the right but not the obligation to attend meetings
and/or conference calls (including, without limitation, with  such parties and
the attorneys and/or representatives retained by Indemnitor and such parties)
and to otherwise monitor any such Proceedings.  Notwithstanding the foregoing,
(a) if the joint representation of Indemnitee (where an Indemnitee is
specifically named as a party to the applicable Proceeding) will create either
an actual or potential conflict of interest in the defense of a Claim which
conflict is unreasonable to waive, including, without limitation, arising under
rules of professional responsibility applicable to legal counsel jointly
representing Indemnitee, or material and reasonable divergence of business or
litigation interests among the joint clients with respect to strategies or
objectives in defending the Claim, or potential liability exposure in connection
with such Claim; or (b) if Indemnitor fails to in any way satisfy the foregoing
requirements and obligations of this Section 5.3.3, Indemnitee shall have the
right, at Indemnitor’s sole cost and expense, to take whatever commercially
reasonable actions are necessary to dismiss the Proceeding or to contest and/or
defend Indemnitee against such Proceeding, provided that Indemnitee shall keep
Indemnitor apprised of the current status of such Proceeding at all times.  In
connection therewith, Indemnitor covenants and agrees to pay all reasonable,
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys’ fees, disbursements, and court costs in connection therewith)
actually incurred by Indemnitee in connection with such Proceeding.  Nothing
contained in the foregoing or elsewhere in this Agreement shall apply to, or
otherwise cause Indemnitor to pay for, any costs or expenses, including
attorneys’ fees, incurred by

 

Indemnitee in connection with any cross-complaint or other Claims which may be
brought by any Indemnitee with respect to the matters which are the subject of
any such Proceeding or otherwise.

 

5.3.4    Unless otherwise provided in this Agreement, the amount(s) of any
Claims incurred by an Indemnitee for any Seller Indemnity Obligations and/or
Purchaser Indemnity Obligations, as applicable, shall be paid to Indemnitee by
Indemnitor within thirty (30) days of a written demand therefor made by
Indemnitee upon Indemnitor.

 

5.3.5    Subject to Section 9.14 below, Indemnitor agrees that Indemnitor shall
reimburse Indemnitee for all reasonable, out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys’ fees, disbursements and
court costs) incurred by Indemnitee in connection with the enforcement of this
Section 5.3, or in any Action or Proceeding brought by Indemnitee against
Indemnitor to enforce the Seller Indemnity Obligations or the Purchaser
Indemnity Obligations, as applicable, such reimbursement to be made with
thirty (30) days of a written demand therefor.  If Indemnitor fails to so pay
all or any sums due hereunder when due, the amount of such sums payable by
Indemnitor to Indemnitee shall bear interest from the date such amount is
payable hereunder at a rate equal to the prevailing prime interest rate as
published in The Wall Street Journal plus three percent (3%) per annum (but in
no event to exceed the highest permissible legal rate of interest), until
Indemnitee receives payment in full (including accrued and unpaid interest
thereon).

 

5.3.6    Each reference herein to Indemnitee shall be deemed to include
Indemnitee’s successors and assigns.  Indemnitor shall not, in any event or
under any circumstance, have the right, without obtaining the prior written
approval of Indemnitee (which approval may be granted or withheld in
Indemnitee’s sole and absolute discretion), to assign or transfer Indemnitor’s
obligations and liabilities under this Agreement, in whole or in part, to any
other Person.  Nothing contained in this Section 5.3 shall be deemed to release,
reduce or otherwise modify the obligations of Indemnitor under this Agreement.

 

5.3.7    If any Party hereto shall be a partnership and/or limited liability
company, the agreements and obligations on the part of Indemnitor herein
contained shall remain in full force and effect notwithstanding any changes in
the individuals composing the partnership and/or the limited liability company,
and the term “Indemnitor” shall include any altered or successive
partnerships/limited liability companies, but the predecessor
partnerships/limited liability companies shall not hereby be released from any
obligation or liability hereunder.

 

5.3.8    Except as provided otherwise herein, no delay on the part of Indemnitee
in exercising any right or remedy under this Agreement, or failure to exercise
the same, shall operate as a waiver in whole or in part of any such right or
remedy.  No notice to or demand on Indemnitor shall be deemed to be a waiver of
the obligations of Indemnitor or of the right of Indemnitee to take further
action to the extent permitted by and in accordance with this Agreement.

 

5.3.9    Indemnitor agrees that this Agreement shall continue to be effective,
or if previously terminated as a result of Indemnitor having fulfilled
Indemnitor’s obligations hereunder in full, or as a result of Purchaser having
released Indemnitor from the obligations and liabilities hereunder, and shall
without further act or instrument be reinstated and shall thereafter remain in
full force and effect, in either case with the same force and effect as though
such payment or portion thereof and not been made, and if applicable, as if such
previous termination had not occurred, as the case may be, if at any time any
payment or portion thereof is made by or on account of Indemnitor to Purchaser,
and such payment is set aside by any court or trustee

 

 

having jurisdiction as a voidable preference or fraudulent conveyance, rescinded
or must otherwise be returned by Purchaser upon insolvency, bankruptcy,
liquidation, reorganization, readjustment, composition, dissolution,
receivership, conservatorship, winding up or other similar proceeding involving
or affecting Indemnitor, all as though such payment had not been made, provided
that in any such circumstance such payment is returned to and received by either
Indemnitor.

 

5.3.10  Notwithstanding anything to the contrary in this Agreement, the amount
of any Loss for which indemnification is provided to an Indemnitee under this
Article 5 shall be net of any tax benefits realized or insurance proceeds
received by such Indemnitee in connection with the Claims, or any other
third-party reimbursement.  Indemnitee shall use commercially reasonable efforts
to realize any tax benefit, collect any insurance proceeds or obtain any
third-party reimbursement with respect to such Claims, and if such tax benefits,
insurance proceeds or reimbursement are realized or obtained by the Indemnitee
after the Indemnitor has paid any amount in respect of a Loss to the Indemnitee,
the Indemnitee shall reimburse the amount realized or collected by the
Indemnitee up to the amount received from the Indemnitor for such Loss.

 

5.3.11  Notwithstanding anything else to the contrary in this Agreement, an
Indemnitee which is seeking defense or indemnification for a breach of any
representations or warranties set forth in Article 3 hereof shall be entitled to
indemnification for such breach only if Indemnitee has given written notice to
Indemnitor prior to the expiration of the Survival Period; provided however, no
such limitations period shall apply to a claim of defense or indemnification for
any Retained Liabilities or Assumed Liabilities.

 

5.3.12  Seller shall not have any liability for any Seller Indemnity Obligations
under Section 5.3.1(ii) above to the Purchaser Related Parties unless the
aggregate amount of all Losses exceeds Twenty-Five Thousand Dollars ($25,000),
in which event the Purchaser Related Parties shall be entitled to
indemnification for the full amount of all such Losses.

 

5.3.13  In no event shall Seller be liable to the Purchaser Related Parties for
any Seller Indemnity Obligations under Section 5.3.1(ii) above nor shall
Purchaser be entitled to any defense or indemnification for any for any Seller
Indemnity Obligations under Section 5.3.1(ii) above for any Losses that exceed,
in the aggregate, the sum of Three Million Dollars ($3,000,000) (the “Capped
Amount”). Notwithstanding the terms and provisions of this Section 5.3 to the
contrary, Seller covenants and agrees that there is no cap on liability of
Seller and no applicable claims period for any Claims and Losses suffered and/or
incurred by Purchaser or any Purchaser Indemnitee and relating to any of the
matters set forth and described in Section 5.3.1 (i) or (iii) above.  Seller
shall have no liability with respect to any representation, warranty or
certification if, prior to the Closing, Purchaser has actual knowledge of any
breach of such representation, warranty or certification and Purchaser
nevertheless consummates the transaction contemplated by this Agreement.

 

5.3.14  At Closing, an amount equal to the Capped Amount shall be deposited into
an escrow account with Escrow Agent for the Survival Period (the “Closing
Escrow”).  Escrow Agent will hold the Closing Escrow in escrow in an
interest-bearing account of the type generally used by the Escrow Agent for the
holding of escrow funds until the expiration of the Survival Period.  The
Closing Escrow will be available to satisfy any Seller Indemnity Obligations
under Section 5.3.1(ii) above in the event that Seller fails to pay any Seller
Indemnity Obligations within thirty (30) days in accordance with Section 5.3.4
above.  If Purchaser has not made any claims to the Closing Escrow prior to the
expiration of the Survival Period, the Closing Escrow shall be promptly
delivered to Seller following the expiration of the Survival Period.  All

 

 

interest earned on the Closing Escrow shall accrue in favor of Seller.  If
Purchaser makes a written claim under Section 5.3 of this Agreement prior to the
expiration of the Survival Period, then Seller shall not be entitled to the
release of any amounts from the Closing Escrow until the earlier of (i) the
Parties agree to release the Closing Escrow to Seller or (ii) a final,
non-appealable judgment has been obtained as to Purchaser’s claim.  In all other
instances, the Escrow Agent shall not release the Closing Escrow to either Party
until the Escrow Agent has been requested in writing by Seller or Purchaser to
release the Closing Escrow and has given the other Party three (3) Business Days
to dispute, or consent to, the release of the Closing Escrow.

 

5.4       The provisions of this Article 5 shall survive the Closing and the
indemnities contained in Section 5.3 shall be the sole and exclusive remedy of
any Indemnitee for any Seller Indemnity Obligations or Purchaser Indemnity
Obligations, as applicable.

 

ARTICLE 6

 

CONDITIONS TO CLOSING

 

6.1       Conditions to Purchaser’s Obligations.  Purchaser’s obligation to
consummate the acquisition and to fund the Purchase Price contemplated by this
Agreement is subject to the satisfaction and fulfillment, as of the Closing, of
each of the following conditions precedent:

 

6.1.1    Truth of Seller’s Representations and Warranties.  The representations
and warranties of Seller contained in this Agreement were true in all material
respects when made, and are true in all material respects as remade on the
Closing Date, and Purchaser shall have received a certificate to that effect
signed by Seller; provided, however, that Seller’s representations and
warranties shall not be deemed inaccurate or breached due to any changes thereto
resulting from transactions or actions that are expressly permitted by this
Agreement or due to changes in fact after the Effective Date beyond Seller’s
reasonable control that do not constitute or result from a material breach of
the covenants applicable to it under this Agreement.  Notwithstanding the
foregoing, if any representation and warranty of Seller is no longer true as of
the Closing Date due to changes in fact after the Effective Date which do not
result from an action or actions arising from the ordinary course of business,
and Seller does not cure or otherwise remedy such change (without any obligation
to do so), then Purchaser shall have the right to elect to terminate this
Agreement in which case Purchaser shall give notice to Seller on or before the
scheduled Closing Date, in which event this Agreement shall terminate, Purchaser
shall receive a return of the Earnest Money, and neither Seller nor Purchaser
shall have any further obligations under this Agreement except for the Surviving
Obligations.  Seller shall in any event have the right to cure such breach or
inaccuracy to Purchaser’s satisfaction and, if necessary to allow such cure, the
Closing Date shall be extended for up to ten (10) days to allow such cure as
long as Seller uses its diligent and commercially reasonable efforts to effect
such cure; provided that if Seller elects in writing not to cure or fails to
give Purchaser notice of its intent to cure, Purchaser may terminate this
Agreement whereupon Escrow Company shall immediately return the Earnest Money to
Purchaser, the Parties shall each pay one-half (1/2) the costs of Escrow, and
neither party to this Agreement shall thereafter have any further rights or
liabilities under this Agreement, except for the Surviving Obligations;
provided, however, if such breach was created, intentionally consented to or
affirmatively permitted by Seller or its respective Affiliates for the purpose
of frustrating the Closing and the transactions contemplated hereby, Purchaser
shall also be entitled to reimbursement for all of Purchaser’s documented
out-of-pocket costs of this transaction actually incurred to third parties,
including reasonable attorneys’ fees and costs incurred in connection with this
Agreement, up to a maximum amount not to exceed $250,000.

 

 

6.1.2    No Litigation.  No litigation or other court action shall have been
commenced seeking to obtain an injunction or other relief from such court to
enjoin the consummation of the transaction described in this Agreement and no
preliminary or permanent injunction or other order, decree or ruling shall have
been issued by a court of competent jurisdiction or by any Governmental
Authority, that would make illegal or invalid or otherwise prevent the
consummation of the transactions described in this Agreement.

 

6.1.3    No Defaults.  Seller shall not have materially defaulted in the
performance of any of its obligations hereunder.

 

6.1.4    Title Policy.  The Title Company shall be unconditionally obligated and
prepared, subject only to payment by Purchaser of the applicable premium and
other related charges, to issue the Title Policy.

 

6.1.5    Termination of Management Agreement.  The existing Management Agreement
shall be terminated by Seller and Resort Manager in a form and manner
satisfactory to Purchaser in its reasonable discretion.

 

6.1.6    Transfer Taxes.  Seller shall deliver any Transfer Tax returns which
are required by law and the regulations issued pursuant thereto in connection
with the payment of all Transfer Taxes that are payable or arise as a result of
the consummation of the transactions contemplated by this Agreement, in each
case, as prepared by Seller and approved by Purchaser and duly executed by
Seller and/or Purchaser in accordance with applicable law.

 

6.1.7    Submerged Lands Lease.  Submerged Lands Lessor shall have either
(i) consented to the assignment of the Submerged Lands Lease to Purchaser
pursuant to an assignment and assumption agreement or (ii) entered into a new
lease agreement with Purchaser with respect to the Submerged Lands on
substantially the same terms as the existing Submerged Lands Lease, in either
case, in a form and upon terms acceptable to Purchaser in its reasonable
discretion, or if Submerged Lands Lessor has not consented to such assignment of
the Submerged Lands Lease or entered into such new lease agreement with
Purchaser, then, to the extent permitted by applicable Law and the terms of the
Submerged Lands Lease, Seller shall have entered into the Interim Marina
Agreement with Purchaser.

 

6.1.8    Liquor License Confirmation.  Purchaser or Purchaser’s Resort manager
shall have obtained the Liquor Permit, or if Purchaser or Purchaser’s Resort
manager has not obtained the Liquor Permit prior to the Closing, then, to the
extent permitted by applicable Law, Seller or Resort Manager, as the case may
be, shall have entered into an interim alcoholic beverage management agreement
with Purchaser or Purchaser’s Resort manager, in form and substance reasonably
satisfactory to Purchaser, with respect to the sale of alcoholic beverages at
the Resort.

 

6.1.9    Third-Party Consents.  All consents or approvals set forth on Schedule
6.1.9 attached hereto shall have been received by Purchaser in a form
satisfactory to Purchaser in its reasonable discretion.  Such consents shall
include, but are not limited to, the consent of the State of Florida to the
assignment of the Submerged Lands Lease from Seller to Purchaser.

 

6.1.10  Association Estoppel.  Purchaser shall have received the Association
Estoppel Certificate, duly executed by the Association.

 

 

6.1.11  Resort Manager Estoppel.  Purchaser shall have received an estoppel
certificate, duly executed by the Resort Manager, in a form reasonably
acceptable to Purchaser and Seller, provided, however, Purchaser shall have the
right in its sole discretion to request any representation and warranty from the
Resort Manager in the estoppel certificate that Purchaser deems necessary or
advisable, but the condition to Purchaser’s obligations described in this
Section 6.1.11 will nonetheless be satisfied so long as Purchaser receives the
executed estoppel certificate from Resort Manager in the form reasonably
approved by Purchaser and Seller.

 

6.1.12  Delivery of Documents.  At or prior to Closing, Seller shall have
delivered to Purchaser or to the Title Company to hold in escrow, two (2) fully
executed, original counterparts of the following:

 

(a)        an original special warranty or limited deed, in the form attached
hereto as Exhibit “J”, prepared and executed by Seller and acknowledged before a
notary public in the manner required by the County Clerk of Monroe County,
Florida (the “Deed”), assigning, conveying and transferring to Purchaser, the
Real Property;

 

(b)        an original bill of sale, in substantially the form annexed hereto as
Exhibit “K”, duly executed and acknowledged by Seller, sufficient to convey to
Purchaser, title in and to the Personal Property (the “Bill of Sale”);

 

(c)        an assignment and assumption of the Hawks Cay Rental Management
Agreements, in the form attached hereto as Exhibit “M”, executed by a Subsidiary
of Seller, assigning and conveying to Purchaser, the Hawks Cay Rental Management
Agreements (the “Assignment of Rental Management Agreements”);

 

(d)        an assignment and assumption of Space Leases, Equipment Leases,
Contracts and Permits, in the form attached hereto as Exhibit “N”, prepared and
executed by Seller, assigning and conveying to Purchaser, the Space Leases,
Equipment Leases, Contracts and Permits (the “Assignment of Contracts and
Permits”);

 

(e)        an assignment of Intangible Property, in the form attached hereto as
Exhibit “O”, executed by Seller, assigning and conveying to Purchaser, the
Intangible Property (the “Assignment of Intangible Property”);

 

(f)        the Foreign Investment in Real Property Tax Act affidavit in
substantially the form annexed hereto as Exhibit “P” duly executed by Seller;

 

(g)        a Closing Statement mutually approved and executed by Seller;

 

(h)        a Tenant Notice Letter executed by Seller for each Space Lease;

 

(i)         documents evidencing the resignations of Seller’s designees as
directors and officers of the Association; and

 

(j)         any other documents, instruments or agreements reasonably necessary
to effectuate the transaction contemplated by this Agreement.

 

6.2       Conditions to Seller’s Obligations.  Seller’s obligation to consummate
the transfer and assignment of the Resort and the Property contemplated by this
Agreement is subject

 

 

to the satisfaction and fulfillment, as of the Closing, of each of the following
conditions precedent:

 

6.2.1    Truth of Purchaser’s Representations and Warranties.  The
representations and warranties of Purchaser contained in this Agreement were
true in all material respects when made, and are true in all material respects
as remade as of the Closing Date, and Seller shall have received a certificate
to that effect signed by Purchaser.  If any of the representations and
warranties of Purchaser were not true and correct in all material respects as of
the Effective Date or have been breached in any material respect as of the
Closing Date, then, Seller shall have the rights and remedies set forth in
Section 5.1.

 

6.2.2    No Litigation.  No litigation or other court action shall have been
commenced seeking to obtain an injunction or other relief from such court to
enjoin the consummation of the transaction described in this Agreement and no
preliminary or permanent injunction or other order, decree or ruling shall have
been issued by a court of competent jurisdiction or by any Governmental
Authority, that would make illegal or invalid or otherwise prevent the
consummation of the transactions described in this Agreement.

 

6.2.3    No Defaults.  Purchaser shall not have materially defaulted in the
performance of any obligations hereunder.

 

6.2.4    Delivery of Documents.  At or prior to Closing, Purchaser shall have
delivered to Seller, two (2) fully executed, original counterparts of the
following:

 

(a)        a Closing Statement mutually approved and executed by Purchaser; and

 

(b)        an original Bill of Sale duly executed by Purchaser;

 

(c)        an original Assignment of Rental Management Agreements duly executed
by Purchaser;

 

(d)        an original Assignment of Contracts and Permits executed by
Purchaser;

 

(e)        an original Assignment of Intangible Property executed by Purchaser;

 

(f)        a Tenant Notice Letter executed by Purchaser for each Space Lease;
and

 

(g)       any other documents, instruments or agreements reasonably necessary to
effectuate the transaction contemplated by this Agreement.

 

6.2.5    Purchase Price.  Purchaser shall have funded the Purchase Price to
Escrow Agent via wire transfer in immediately available funds.

 

The Closing shall not be deemed to have occurred until each of the deliveries
and actions described in Sections 6.1 and Section 6.2 has occurred unless such
deliveries and actions have been waived by Seller or Purchaser, as applicable,
as evidenced by such Party’s execution of the Closing Statement and
authorization to the Title Company to close the transaction.

 

 

 

ARTICLE 7
WAIVER OF TRIAL BY JURY; CONSENT

 

7.1       Waiver.  TO THE EXTENT PERMITTED BY LAW, PURCHASER AND SELLER HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE
OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN
ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE
PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.  TO THE EXTENT
THEY MAY LEGALLY DO SO, PURCHASER AND SELLER HEREBY AGREE THAT ANY SUCH CLAIM,
DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS ARTICLE 7 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

 

7.2       Consent to Jurisdiction.  To the fullest extent permitted by law,
Purchaser and Seller hereby irrevocably consents and agrees, for the benefit of
each Party, that any legal Action, suit or Proceeding against it with respect to
its obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement shall be brought in any federal or state court
sitting in Dallas, Texas (the “Designated Courts”), and hereby irrevocably
accepts and submits to the jurisdiction of the Designated Courts (and of the
appropriate appellate courts of each such Designated Court) with respect to any
such Action, suit or Proceeding.  Each Party hereto also hereby irrevocably
consents and agrees, for the benefit of each other Party, that any legal Action,
suit or Proceeding against it shall brought in any Designated Court, and hereby
irrevocably accepts and submits to the exclusive jurisdiction of each such
Designated Court with respect to any such Action, suit or Proceeding.  Each
Party hereto waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions, suits or Proceedings brought in
any such Designated Court and hereby further waives and agrees not to plead or
claim in any such Designated Court that any such Action, suit or Proceeding
brought therein has been brought in any inconvenient forum.

 

ARTICLE 8

 

CASUALTY AND CONDEMNATION

 

8.1       Casualty and Condemnation.  If, prior to the Closing, Material Damage
occurs or an action with regard to a Material Taking is commenced with respect
to the Resort and/or the Villas, then:

 

(a)        if, on or after the Effective Date but prior to Closing, an action
for condemnation or similar taking is commenced or threatened with respect to
any portion of the Resort but the same would not, if consummated, constitute a
Material Taking, then Purchaser shall remain obligated to close hereunder
without a reduction to the Purchase Price but all condemnation proceeds and
other awards applicable to the Property (other than proceeds and awards not
awarded to Seller or its Affiliates) shall be paid to Purchaser; or if, prior to
Closing, either Party, within five (5) Business Days of discovery of the action
or threatened action regarding a Material Taking may elect to terminate this
Agreement by delivery of written notice

 

to the other Party whereupon Escrow Agent shall immediately return the Earnest
Money to Purchaser and, in which event, except for the Surviving Obligations,
this Agreement shall be void and of no further force and effect, and neither
Party shall have any liability to the other by reason hereof; provided, however,
if Purchaser and Seller elect not to so terminate this Agreement pursuant to the
above, then the transactions contemplated hereby shall be closed without a
reduction in the Purchase Price but all condemnation proceeds and other awards
applicable to the Property (other than proceeds and awards not awarded to Seller
or its Affiliates) shall be paid to Purchaser; or

 

(b)        if, on or after the Effective Date but prior to Closing, any of the
improvements on the Resort are damaged or destroyed but such damage does not
constitute Material Damage, then Purchaser shall remain obligated to close
hereunder without a reduction in the Purchase Price but any insurance proceeds
and other awards applicable to the Property (other than proceeds and awards not
owned by Seller or its Affiliates) shall be paid to Purchaser and Seller shall
have paid any deductible; or, if prior to the Closing, Material Damage occurs,
then either Party, within five (5) Business Days of discovery of the events
constituting Material Damage may elect to terminate this Agreement by delivery
of written notice to the other Party whereupon Escrow Agent shall immediately
return the Earnest Money to Purchaser and, in which event, except for the
Surviving Obligations, this Agreement shall be void and of no further force and
effect, and neither Party shall have any liability to the other by reason
hereof; and if both Purchaser and Seller elect not to so terminate this
Agreement pursuant to the above, then the transaction contemplated hereby shall
be closed without a reduction in the Purchase Price but Seller shall pay any
deductible and any insurance proceeds and other awards applicable to the
Property (other than proceeds and awards not owned by Seller or its Affiliates)
shall be paid to Purchaser.

 

(c)        if, on or after the Effective Date but prior to Closing, (i) an
action for condemnation or similar taking is commenced or threatened with
respect to any portion of the Villas but the same would not, if consummated,
constitute a Material Taking or (ii) any of the Villas are damaged or destroyed
but such damage does not constitute Material Damage, then Purchaser shall remain
obligated to close hereunder without a reduction to the Purchase Price; or if,
prior to Closing, Material Damage occurs with respect to the Villas or action
regarding a Material Taking is taken or threatened with respect to the Villas,
then either Party, within five (5) Business Days of discovery of the events
constituting Material Damage or of the action or threatened action regarding
such Material Taking, may elect to terminate this Agreement by delivery of
written notice to the other Party whereupon Escrow Agent shall immediately
return the Earnest Money to Purchaser and, in which event, except for the
Surviving Obligations, this Agreement shall be void and of no further force and
effect, and neither Party shall have any liability to the other by reason
hereof; and if both Purchaser and Seller elect not to so terminate this
Agreement pursuant to the above, then the transaction contemplated hereby shall
be closed without a reduction in the Purchase Price.

 

ARTICLE 9

 

MISCELLANEOUS

 

9.1       Amendments.  No amendment, modification, supplement or waiver of any
provision of this Agreement, or consent to any departure from the terms of this
Agreement by any Party hereto shall be effective unless the same shall be in
writing and signed by all the Parties hereto, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.  No failure or delay by any Party hereto to exercise any right,

 

 

power or remedy hereunder in any manner will operate as a waiver thereof or
preclude or impair any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.

 

9.2       Notices.  Any and all notices, approvals, requests, consents, waivers,
demands or other communications permitted or required to be made under this
Agreement shall be in writing, signed by the party giving such notice, request,
consent, waiver or demand and shall be delivered (i) personally; (ii) by
reputable overnight delivery service; (iii) by registered or certified mail,
return receipt requested; or (iv) by facsimile with time and date-stamped
confirmation of receipt (provided, however, that a copy of such notice shall be
mailed in accordance with the foregoing clause (ii) promptly after the
transmission of such facsimile).  All such notices, requests, consents, waivers
or demands shall be deemed delivered, as applicable:

 

(a)        on the first (1st) Business Day on or after the date of the personal
delivery;

 

(b)        on the first (1st) Business Day on or after the date of the signed
receipt for certified or registered mail;

 

(c)        on the next Business Day for overnight delivery service; or

 

(d)        on the first (1st) Business Day on or after the date of receipt for
facsimile.

 

Notices directed to a Party shall be delivered to the parties at the address or
facsimile number as set forth below, or at such other address or facsimile
number as may be specified by written notice given in conformity with the terms
of this Section 9.2:

 

If to Seller:

 

Behringer Harvard Funds

15601 Dallas Parkway, Suite 600

Addison, Texas 75001

Attention:  Andrew Bruce

Telephone No.:  (469) 341-2456

 

And

 

Northview Hotel Group

36 Narrows Rock Road

Westport, Connecticut 06880

Attention:  Simon Hallgarten

Telephone No.:  (203) 259-1007

 

Five Star Realty Partners LLC

3344 Peachtree Road NE, Suite 2500

Atlanta, Georgia 30326

Attention:  Joseph Thomas

Telephone No.:  (404) 239-5210

 

with a copy to:

 

 

Jones Day

2727 North Harwood Street

Dallas, Texas 75201

Attention:  Michelle R. Brown

Telephone No.:  (214) 969 -3673

 

And

 

Greenberg Traurig LLP

2101 L Street NW

Washington, DC 20037

Attention:  Nelson F. Migdal

Telephone No.:  (202) 331-3100

 

If to Purchaser, then to:

 

c/o Watermark Capital Partners, LLC
272 E. Deerpath Road, Suite 320
Lake Forest, IL 60045
Attention:  Michael Medzigian
Telephone No.:  847.482.8600
Email:  medzigian@watermarkcap.com

 

with a copy to:

 

Paul Hastings LLP
515 S. Flower Street, 25th Floor
Los Angeles, CA  90071
Attention: Rick S. Kirkbride, Esq.
Telephone No.:  213.683.6261
Email:  rickkirkbride@paulhastings.com

 

Any counsel designated above or any replacement counsel who may be designated by
Purchaser or Seller or such counsel by written notice to the other Parties is
hereby authorized to give notices hereunder on behalf of its client.

 

9.3       Further Assurances.  Each Party covenants and agrees that it will at
any time and from time to time do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
documents and instruments as may reasonably be required by the Parties hereto in
order to carry out and effectuate fully the transactions herein contemplated in
accordance with this Agreement; provided, however, no Party shall be obligated
to provide any further assurance that would materially increase the liabilities
or obligations of such Party hereunder or materially reduce the rights and
benefits of such Party hereunder.

 

9.4       Entire Agreement.  This Agreement constitutes the final, complete and
exclusive statement of the agreement of the Parties hereto with respect to the
subject matter of this Agreement and supersedes all prior and contemporaneous
agreements and understandings.  No Party hereto has been induced to enter into
this Agreement by, nor is any party relying on, any representation or warranty
other than those expressly set forth herein.

 

 

9.5       Execution in Counterparts.  This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered will be
deemed an original, and such counterparts together constitute one and the same
instrument.  The executed signature pages to this Agreement may be transmitted
via facsimile or .pdf transmission, and all Parties hereto agree to send
original signatures to the other Party within two (2) Business Days thereafter;
provided, however, that, at the election of either Party, this Agreement shall
be effective upon transmittal by facsimile or .pdf (even if a Party shall not
have received an original signature page).

 

9.6       Time.  Time is of the essence in the performance of the Parties’
respective obligations under this Agreement.

 

9.7       Severability.  Whenever possible, each provision of this Agreement is
to be construed in a manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held by a court or an arbitral panel
of competent jurisdiction to be illegal, invalid or unenforceable under
applicable law, then such provision will be ineffective only to the extent of
such illegality, invalidity or unenforceability, without affecting the remainder
of this Agreement.

 

9.8       Construction.  Each Party hereto acknowledges that it and its counsel
have participated fully in the negotiation, review and revision of this
Agreement.  Accordingly, each provision of this Agreement will be construed
according to its fair meaning and not strictly for or against any party,
regardless of whether such provision was drafted by or at the request of a
particular Party or such Party’s counsel.

 

9.9       Headings.  The headings contained in this Agreement are included for
convenience only and are not intended to describe, interpret, define or limit
the scope, extent or intent of any provision of this Agreement.

 

9.10     Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS SPECIFICALLY APPLIES TO THE REAL PROPERTY RIGHTS OF
THE RESORT, WHICH SHALL BE GOVERNED BY THE JURISDICTION IN WHICH SUCH PROPERTY
IS SITUATED, EACH WITHOUT GIVING EFFECT TO ANY PRINCIPLES REGARDING CONFLICT OF
LAWS.

 

9.11     Assignment.  Neither this Agreement nor any right, interest nor
obligation hereunder may be assigned by Seller or Purchaser (except as otherwise
contemplated herein), and any attempt by Seller or Purchaser to make any such an
assignment shall be null and void.  Notwithstanding the foregoing, Purchaser may
transfer this Agreement to any Affiliate of Purchaser (the “Permitted Assignee”)
without the consent of Seller but upon prior written notice to Seller, provided
that (a) Purchaser may exercise its right to assign no more than once, (b) no
such assignment will release Purchaser from any of its liabilities under this
Agreement and Purchaser and the Permitted Assignee shall be jointly and
severally liable for all obligations of Purchaser under this Agreement which do
not survive Closing; only Permitted Assignee will have post-Closing obligations,
(c) such assignment shall not delay the Closing, (d) such assignment shall not
require Seller to obtain any additional, or revised third party consents
certificates or approvals, (e) Purchaser’s representations and warranties
contained herein shall be deemed made on the Closing Date by Purchaser and the
Permitted Assignee with respect to the Permitted Assignee, and (f) the execution
by the Purchaser and the Permitted Assignee of an assignment and assumption of
contract (in form and content reasonably satisfactory to Seller) providing for
the assumption by the Permitted Assignee of all obligations under this Agreement
(the “Assignment of Contract”) and delivery of the Assignment of Contract to
Seller.

 

 

9.12     Successors and Assigns.  Except as otherwise expressly provided herein,
this Agreement will be binding upon and inure to the benefit of the Parties
hereto and their respective heirs, successors and permitted assigns.

 

9.13     No Third-Party Beneficiaries.  This Agreement will not confer any
rights or remedies upon any Person or entity other than the Parties hereto and
their respective successors and permitted assigns.

 

9.14     Attorneys’ Fees.  If any Action arises in connection with the
interpretation or enforcement of this Agreement, the prevailing party therein
shall be entitled to receive from the other party the prevailing party’s
reasonable actual, out-of-pocket costs and expenses, including reasonable
attorneys’ fees, incurred in connection therewith, in preparation therefor and
on appeal therefrom, which amounts shall be included in any judgment therein.

 

9.15     Exclusivity.  Unless and until the earlier of (i) the termination of
this Agreement pursuant to the terms and conditions hereof or (ii) the Outside
Closing Date, neither Seller nor any Affiliate nor any of their respective
members, partners, or agents (including, without limitation, the Hodges Ward
Elliott, Inc.) shall offer the Property, entertain and/or solicit offers for the
Property or otherwise negotiate for the sale of the Property or make any
information about the Property available for purpose of sale of the Property to
any Person other than Purchaser, its Affiliates and their respective designees,
agents and/or authorized third parties.  Notwithstanding anything to the
contrary herein, Seller shall have the right to amend the terms of its existing
financing and may commence discussions with its mortgage lender(s) relating to
refinancing of the Property (but not refinance the Property) prior to Closing or
earlier termination of the Agreement.

 

9.16     Confidentiality; Publicity.  All parties to this Agreement agree that
the information contained herein, and any information exchanged between the
parties in connection with the proposed transactions described herein (including
the terms of the Agreement), is strictly confidential.  No party shall disclose
the existence of, or any of the terms contained in, this Agreement, or the
substance of any other discussions between the parties, to any other person or
entity, without the prior written consent of the other parties hereto, except to
the extent required by any applicable securities or other laws or as otherwise
permitted herein.  Notwithstanding the foregoing, all press releases and all
other publicity concerning the transactions contemplated by this Agreement shall
be drafted and prepared by Purchaser only, and Seller agrees not to deliver or
publish any press releases or other publicity regarding the sale of the Property
pursuant to this Agreement; provided, however, Purchaser shall provide copies of
all such publicity or releases to Seller and shall allow Seller a reasonable
period of time, not to exceed three (3) Business Days, to review Purchaser’s
proposed disclosure in advance of Purchaser making such disclosure but, for the
avoidance of doubt, Purchaser shall be permitted to make such disclosure and
shall not be required to obtain the consent of Seller prior to making such
disclosure.

 

9.17     Calendar/Business Days. Unless otherwise provided in this Agreement to
the contrary, all time periods shall be computed in calendar days.  If any
deadline falls on a Saturday, Sunday or national legal holiday, performance will
be due on the next Business Day.

 

9.18     Limitation Of Liability.  Notwithstanding any other provision of this
Agreement, the members, general or limited partners, shareholders, employees,
affiliates or agents of Seller will not in any manner be personally or
individually liable for the obligations of Seller hereunder or the documents to
be delivered by Seller under Section 6.1 above for any claims related to this

 

 

Agreement or the Property.  The provisions of this Section 9.18 shall survive
Closing or termination of this Agreement.

 

9.19     Florida Law Notices.

 

9.19.1  “RADON GAS:  Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time.  Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida. 
Additional information regarding radon and radon testing may be obtained from
your county health department.”

 

9.19.2  ENERGY-EFFICIENCY RATING:  Purchaser is advised that Purchaser may have
the energy-efficiency rating of the buildings located at the Property in Florida
determined.  Purchaser acknowledges that, with the execution of this Agreement,
Purchaser has independently obtained, a copy of an information brochure
regarding energy-efficiency rating prepared and provided by the Florida
Department of Community Affairs.

 

9.19.3  EROSION:  Purchaser is advised that the Property being purchased may be
subject to coastal erosion and to federal, state, or local regulations that
govern coastal property, including the delineation of the coastal construction
control line, rigid coastal protection structures, beach nourishment, and the
protection of marine turtles. Additional information can be obtained from the
Florida Department of Environmental Protection, including whether there are
significant erosion conditions associated with the shoreline of the Property
being purchased.  To the extent applicable to the Property, Purchaser hereby
waives the right to obtain from any Seller an affidavit with respect to, or a
survey meeting the requirements of Chapter 472 of the Florida Statues
delineating, the location of the coastal construction control line on the
Property.

 

9.19.4  FLOOD ZONE:  Purchaser is advised to verify by survey and with
appropriate government agencies which flood zone the Property is in, whether
flood insurance is required and what restrictions apply to improving the
Property and rebuilding in the event of casualty.  Purchaser hereby agrees that
Purchaser accepts the existing elevation of the buildings and zone designation
of the Property.

 

9.20     Exhibits and Schedules. Seller and Purchaser hereby agree that Seller
shall have until the date that is three (3) Business Days after the Effective
Date to deliver to Purchaser the exhibits and schedules referenced in this
Agreement that are not attached hereto as of the Effective Date.  In the event
that Seller fails to do so, the Due Diligence Period shall be extended until the
date that is thirty (30) days following the date that Seller delivers to
Purchaser all of the exhibits and schedules referenced in this Agreement that
are not attached hereto as of the Effective Date.

 

[Signature Pages Follow]

 

IN WITNESS WHEREOF, the Parties hereto have caused this Purchase and Sale
Agreement to be duly executed as of the date first above written.

 

 

SELLER:

 

 

 

BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By: /s/ Michael J. O’Hanlon

 

Name: Michael J. O’Hanlon

 

Title:   Chief Executive Officer

 

 

 

 

 

 

 

PURCHASER:

 

 

 

CWI KEYS HOTEL, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By: /s/ Michael G. Medzigian

 

Name: Michael G. Medzigian

 

Title:  Chief Executive Officer and President

 

 

 

EXHIBIT “A”

 

DEFINITIONS

 

“Action” means any action, suit, Proceeding, arbitration or investigation by or
before any Governmental Authority.

 

“Accelerated Closing Date” shall have the meaning set forth in Section 2.5.1(a).

 

“Acceleration Election Notice” shall have the meaning set forth in
Section 2.5.1(a).

 

“Affiliate” means, with respect to any Person or entity, any other Person or
entity directly or indirectly controlling, controlled by or under common control
with such Person or entity.  For purposes hereof, the term “control” shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of any Person or entity, or the power to
veto major policy decisions of such Person or entity, whether through the
ownership of voting securities, by agreement, or otherwise.

 

“Agreement” shall have the meaning set forth in the Preamble.

 

“Assignment of Contract” shall have the meaning set forth in Section 9.11.

 

“Association” shall mean Hawk’s Cay Community Association, Inc., a Florida
corporation not for profit.

 

“Association Interests” shall mean all of Seller’s right, title and interest in
and to the Associations and any real or personal property owned by the
Associations, and all of Seller’s right, title and interest in and to any common
elements, common areas or common facilities at the Property.

 

“Assumed Liabilities” shall have the meaning set forth in Section 2.2.2.

 

“Bookings” shall have the meaning set forth in Section 2.1.2(g).

 

“Business Day” means any day other than a Saturday, Sunday or holiday observed
by the Federal Reserve.

 

“Capped Amount” Section 5.3.13.

 

“Claims” means all liability, claims, acts, actions, causes of actions, claims
for relief, judgments, executions, counts, suits, proceedings, demands,
lawsuits, claims of indemnity, expenses, pre-litigation procedures, accounts,
reckonings, controversies, or any combination of the same, of any nature
whatsoever, whether at law or equity, whether arising out of, from or under
foreign, federal, state, and/or local law, statute, ordinance, regulation,
common law, or any other source of law, whether sounding in contract or tort, or
pursuant to statutory remedy, brought by or otherwise commenced on behalf of any
third party.

 

“Closing” shall have the meaning set forth in Section 2.5.1.

 

“Closing Date” means the date on which the Closing of the transaction
contemplated by this Agreement actually occurs.

 

A-1

 

“Closing Escrow” shall have the meaning set forth in Section 5.3.14.

 

“Closing Statement” shall have the meaning set forth in Section 4.2.1(b).

 

“CMP” shall have the meaning set forth in Section 4.2.2(f).

 

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

 

“Confidential Diligence Information” shall have the meaning set forth in
Section 2.6.2.

 

“Consumables” shall have the meaning set forth in Section 2.1.2(b).

 

“Contracts” shall have the meaning set forth in Section 2.1.2(d).

 

“Cut-Off Time” shall have the meaning set forth in Section 4.2.1.

 

“Deed” shall have the meaning set forth in Section 6.1.12(a).

 

“Designated Courts” shall have the meaning set forth in Section 7.2.

 

“Dolphin Connection License and Agreement” means that certain Agreement dated
March 1, 2008 between Seller and Dolphin Connection, Inc.

 

“Due Diligence Period” shall have the meaning set forth in Section 2.6.1.

 

“Earnest Money” shall have the meaning set forth in Section 2.3.3.

 

“Effective Date” shall have the meaning set forth in the Preamble.

 

“Employment Agreement” means each management, employment, severance, consulting,
relocation, repatriation or expatriation agreement or other contract (whether
oral or written) between Resort Manager and any current or former employee,
other than any such management, employment, severance, consulting, relocation,
repatriation or expatriation agreement or other contract with a current or
former employee which is terminable “at will” without any obligation on the part
of Resort Manager, Seller or its Subsidiaries or Affiliates to make any payments
or provide any benefits in connection with such termination.

 

“Environmental Laws” means all federal, state and local laws, statues, rules,
codes, ordinances, regulations, orders, judgments, decrees, binding and
enforceable guidelines, policies or common law now or hereafter in effect and in
each case as amended, or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment in
each case, to the extent binding, relating to the environment, the protection of
health or Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, 42 USC §9601 et seq.; the
Resource Conservation and Recovery Act, 42 USC §6901 et seq.; the Federal Water
Pollution Control Act, 33 USC §1251 et seq.; the Toxic Substances Control Act,
15 USC §2601 et seq.; the Clean Air Act, 42 USC §7401 et seq.; the Safe Drinking
Water act, 42 USC §3803 et seq.; the Oil Pollution Act of 1990, 33 USC §2701 et
seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 USC
§11001 et seq.; the Hazardous Material Transportation Act, 49 USC §1801 et seq.;
the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it
regulates

 

Exhibit “A”-2

 

occupational exposure to Hazardous Materials) and the Puerto Rico Environmental
Public Policy Act, 12 L.P.R.A. Sec. 8001, et seq., and the rules and regulations
promulgated thereunder; any state, local or foreign counterparts or equivalents,
in each case as amended from time to time.

 

“Environmental Reports” shall mean that certain Report of Environmental Site
Assessment dated February 2007, prepared by Pond, Robinson & Associates, LP,
Project No. 062544 and Report of Phase II Environmental Site Assessment dated
April 27, 2007, prepared by Pond, Robinson & Associates, LP, Project No. 062544.

 

“Escrow Agent” shall have the meaning set forth in Section 2.3.1.

 

“Escrow Instructions” shall have the meaning set forth in Section 2.3.1.

 

“Equipment Leases” shall have the meaning set forth in Section 2.1.2(e).

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
which, together with the entity in question or any of its respective Affiliates
or Subsidiaries (or their successors), is or would have been, treated as a
single employer under Section 414 of the Code.

 

“Excess Liability Amount” shall have the meaning set forth in Section 4.5.2.

 

“Excluded Liabilities” means any liability or obligation of any nature
whatsoever, whether fixed or contingent, recorded or unrecorded, known or
unknown, with respect to the Property (to the extent accrued prior to the
Closing whether known to have existed by Seller at the Closing or otherwise and
whether constituting a breach of any representation or warranty by Seller set
forth in this Agreement or not, including, without limitation, any and all
obligations and liabilities that are known to Seller as of the Closing or become
known to Seller after the Closing for acts or omissions (including, without
limitation, personal injury or property damage or breach of contract) the events
giving rise to which occurred prior to the Closing (whether known to have
existed at the Closing or otherwise), including, but not limited to (subject to
the foregoing limitations):  (i) indebtedness, obligations and guarantees not
included within the definition of Post-Closing Accruals; (ii) any and all
accounts payable or other trade payables not included within the definition of
Post-Closing Accruals; (iii) monetary liens not included in Permitted Exceptions
which exist as of the Closing (to the extent not otherwise insured against in
and recovered under the Title Policies); (iv)obligations or liabilities relating
to acts or omissions of Seller or any of its respective Affiliates occurring
prior to the Closing or resulting from events occurring prior to Closing; (v) to
the extent not included within the definition of Post-Closing Accruals, tax
obligations, including without limitation, all federal, state, local or special
purpose district tax and withholding liabilities and obligations of Seller or
any of its respective Affiliates with respect to periods prior to the Closing,
and any interest, additions to tax, loss of elections, fines or penalties
thereon or with respect to returns filed or required to be filed in connection
therewith (including, without limitation, any recapture and including any
amounts due of which may come due and owing under applicable Law); (vi) any
liability arising from the termination, discharge, lay-off or other separation
from employment of Resort Manager’s, Seller’s or any of its respective
Affiliates’ employees prior to the Closing, except as otherwise set forth in
this Agreement; (vii) any liability or obligation arising as a result of any
grievances or any unfair labor practice charges, any Equal Employment
Opportunity Commission claims, wage and hour claims, and unemployment
compensation claims, in each case for periods prior to the Closing;
(viii) liability incurred or accrued prior to the Closing for any workers’
compensation premiums or claims pertaining to periods prior to the Closing or
for any common law or statutory claim by an employee or any other person for any
injury, occupational disease, aggravation of a previously

 

Exhibit “A”-3

 

existing injury or disease; (ix) liabilities arising from any claims by third
parties for personal injury or property damage arising out of events occurring
prior to the Closing as a result of any violation of Environmental Laws;
(x) except as otherwise provided in Section 4.8, liabilities or obligations of
Seller or its Affiliates for brokerage or other commissions relating to the
transactions contemplated herein; (xi) liabilities relating to or arising from
any contracts between Seller and any of its Affiliates; (xii) liabilities
relating to or arising from post-retirement health care benefits owed or to be
owed by Resort Manager to its employees or former employees, as the case may be,
for employment relating to the period prior to the Closing; (xiii) liabilities
under or in connection with any Employee Benefit Plan incurred or accrued prior
to the Closing; (xiv) any other liabilities arising from Resort Manager’s,
employees’ employment, whether imposed by operation of an Employment Agreements
or contracts, employee manuals or handbooks or personnel policies or otherwise,
including, but not limited to, any wage claims, holiday, vacation, personal day
and sick pay benefits, severance or layoff benefits, employee health (including
claims for COBRA coverage), welfare and pension plan benefits, Section 401(k) of
the Code and profit sharing and bonus plan benefits, WARN obligations, pending
grievances and/or arbitrations back pay and/or benefits, any other Taft-Hartley
Fund benefits, pension fund withdrawal liability, workers’ compensation
liabilities, savings bonds and wage garnishments or assignments, union agency
fees, union dues, employment discrimination, wrongful termination or similar
claims incurred or accrued before the Closing; (xv) any security and other
deposits, advance or prepaid rents, and key money (including any interest
thereon) not prorated pursuant to this Agreement and held by Seller from tenants
of the Property with Space Leases in effect as of the Closing; (xvi) any
liability or obligation for Bookings if any deposits related thereto are not
prorated pursuant to this Agreement; (xvii) any outstanding gift certificates,
gift cards and other such items that allow third parties to use rooms and other
items at no charge or at discounted rates that are not listed as an Post-Closing
Accruals attached hereto; (xviii) to the extent not included within the
definition of Post-Closing Accruals, any liability with respect to goods and
services or the purchase of goods and services to the extent such goods were
delivered at the Resort or the services were rendered prior to or at the
Closing; (xix) to the extent not included within the definition of Post-Closing
Accruals, all liability for Seller’s purchase money obligations whether
structured as debt, lease or otherwise; (xx) all liabilities or obligations for
due bill contracts or other “trade out” liabilities not included within the
definition of Post-Closing Accruals; and (xxi) any liability arising in
connection with the rental of the Villas prior to the Closing Date, and any
Rental Program established or offered prior to the Closing Date, including but
not limited to violation of state or federal securities laws and registrations.

 

“Existing Survey” shall have the meaning set forth in Section 2.7.1.

 

“Extension Election Notice” shall have the meaning set forth in
Section 2.5.1(b).

 

“Extension Deposit” shall have the meaning set forth in Section 2.5.1(b).

 

“F&B Outlets” shall have the meaning set forth in Recital B.

 

“FF&E” means all tangible personal property and fixtures of any kind (other than
personal property owned by guests or tenants of the Property) attached to, or
located upon and used in connection with the ownership, maintenance, use or
operation of the Property as of the Effective Date, including, without
limitation, all furniture, fixtures, equipment, signs and related personal
property; all heating, lighting, plumbing, drainage, electrical, air
conditioning, and other mechanical fixtures and equipment and systems; all
elevators, and related motors and electrical equipment and systems; all hot
water heaters, furnaces, heating controls, motors an equipment, all shelving and
partitions, all ventilating equipment, and all disposal equipment; all spa,
health club

 

Exhibit “A”-4

 

and fitness equipment; all equipment used in connection with the use and/or
maintenance of the guestrooms, restaurants, lounges, business centers, meeting
rooms, swimming pools, indoor and/or outdoor sports facilities and other common
areas and recreational areas; all carpet, drapes, beds, furniture, televisions
and other furnishings; all stoves, ovens, freezers, refrigerators, dishwashers,
disposals, kitchen equipment and utensils, tables, chairs, plates and other
dishes, glasses, silverware, serving pieces and other restaurant and bar
equipment, apparatus and utensils.

 

“Florida ABT” shall have the meaning set forth in Section 3.1.20.

 

“Good Faith Deposit” shall have the meaning set forth in Section 2.3.2.

 

“Governing Documents” means the Master Covenants, Bylaws of the Association,
Articles of Incorporation of the Association, any rules and regulations or other
governing documents established under the Master Covenants.

 

“Governmental Authority” means any court, tribunal, authority, agency,
commission, official or other instrumentality of the United States, or any
state, county, city or other political subdivision, arbitrator or any judicial
or quasi-judicial tribunal of competent jurisdiction.

 

“Hazardous Materials” means (i) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable law or regulations as
“hazardous substances,” hazardous materials,” “hazardous wastes,” “toxic
substances,” “pollutants,” “contaminants” or other similar term intended to
define, list or classify a substance by reason of such substance’s ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity or “EP
toxicity”, (ii) oil, petroleum or petroleum derivative substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude oil,
natural gas or geothermal resources, (iii) any flammable substances or
explosives or any radioactive materials, (iv) asbestos in any form,
(v) polychlorinated biphenyls, (vi) mold, mycotoxins or microbial matter
(naturally occurring or otherwise) and (vii) infectious waste.

 

“Hotel” shall have the meaning set forth in the Recital B.

 

“Indemnitee” means either any Person that is a member of the Purchaser Related
Parties that is entitled to be indemnified by Seller for any Seller Indemnity
Obligations or any Person that is a member of the Seller Related Parties that is
entitled to be indemnified by Purchaser for any Purchaser Indemnity Obligations,
as applicable and as the context may require.

 

“Indemnitor” means either Seller that is obligated to indemnify the Purchaser
Related Parties for the Seller Indemnity Obligations or Purchaser that is
obligated to indemnify the Seller Related Parties for the Purchaser Indemnity
Obligations as provided in Sections 5.3.1 or 5.3.2, as applicable.

 

“Independent Consideration” shall have the meaning set forth in Section 2.2.3.

 

“Intangible Property” shall mean all intangibles owned or used by Seller in the
ownership and operation of the Resort including Seller’s interests in the
Governing Documents and the Association Interests.

 

“Intellectual Property” shall mean any or all of the following and all rights
in, arising out of, or associated therewith: (i) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, confidential information, know-how,

 

Exhibit “A”-5

 

technology, processes, designs and all documentation relating to any of the
foregoing; (ii) works of authorship and art in any media, and all copyrights,
copyright registrations and applications therefor, and all other rights,
including authors’ or moral rights, corresponding thereto throughout the
universe; (iii) all computer software not purchased from or licensed by a third
party, including all source code, object code, firmware, development tools,
files, records and data, and all media on which any of the foregoing is
recorded; (iv) all trademarks, service marks, trade dress, trade names, designs,
logos, slogans and general intangibles of like nature, including those existing
under common law and all registrations and applications therefor throughout the
universe, and all goodwill associated with or symbolized by any of the
foregoing; (v) all Internet domain names; (vi) with respect to all of the
foregoing, all rights, benefits, privileges, causes of action and remedies,
including the right to bring an Action in law for infringement or other
impairment of rights, benefits or privileges, including the right to receive and
retain damages, proceeds or any other legal or equitable protections; and
(vii) any similar or equivalent rights to any of the foregoing anywhere in the
universe.

 

“Interim Marina Agreement” shall have the meaning set forth in Section 3.6.3.

 

“Intervening Lien” shall have the meaning set forth in Section 2.7.2.

 

“Land” shall have the meaning set forth in Recital B.

 

“Laws” means all laws, statutes, treaties, rules, codes, ordinances,
regulations, restrictions, official guidelines, policies, directives,
interpretations, Permits or like action of any applicable Governmental Authority
having jurisdiction over the Hotel or the Property, and the operation of the
Hotel and the rental of the Villas, which are in effect at the time.

 

“Liquor Permit” shall have the meaning set forth in Section 3.6.2.

 

“Losses” means all actual, out-of-pocket and/or, subject to the terms of this
Agreement, economic damages, liabilities, any amounts reasonably incurred to
settle any Claims, and losses (including, without limitation, reasonable
attorneys’ fees and costs, including litigation expenses incurred successfully
defending allegations of intentional misconduct) (but in all cases without
duplication with respect to any and all payments made by or on behalf of an
Indemnitor for a breach or default (including, without limitation, payments made
with respect to the underlying obligations in order to cure such a breach or
default, but expressly excluding payments made with respect to any intentional
breach or default) under the certificates and declarations provided to the Title
Company in connection with the Closing hereunder (but excluding in either case,
fraud or intentional misrepresentation by Seller or Purchaser (to the extent
caused by Seller’s or Purchaser’s actions).

 

“Main Building” shall mean that certain main building located upon the Real
Property that includes, among other things, the lobby, back office space,
guestrooms and Alma.

 

“Management Agreement” shall mean that certain Management Agreement dated
February 16, 2007 between Seller, as owner, and Resort Manager, as operator, for
Hawk’s Cay Resort and Marina.

 

“Marina” shall have the meaning set forth in Recital A.

 

Exhibit “A”-6

 

“Master Covenants” shall mean that certain Declaration of Master Covenants for
Hawk’s Cay dated November 6, 1989, recorded in Official Records Book 1119 at
Page 613, as it has been and may be amended and supplemented from time to time.

 

“Material Damage” means (i) damage to the Property, or any portion of the
Property that (a) is reasonably estimated to cost in excess of Three Million
Dollars ($3,000,000) to repair, or (b) unreasonably impairs access to or use of
and/or the conduct of business and operations in the Main Building, and/ or
(ii) damage to fifteen (15) or more Villas where such damage, in the reasonable
opinion of Purchaser, is likely to preclude any such damaged Villas from
participating in the Rental Program.

 

“Material Taking” means the permanent taking or temporary taking (i) of such
portion of the Property resulting in (a) damage that is reasonably estimated to
cost in excess of Three Million Dollars ($3,000,000), or (b) material impairs
access to or use of and/or the conduct of business and operations in the Main
Building and/or (ii) of fifteen (15) or more Villas.

 

“Operational Taxes” shall have the meaning set forth in Section 4.4.4.

 

“Outside Closing Date” shall have the meaning set forth in Section 2.5.2.

 

“Party” or “Parties” shall have the meaning set forth in the Preamble.

 

“Permits” shall have the meaning set forth in Section 2.1.2(h).

 

“Permitted Assignee” shall have the meaning set forth in Section 9.11.

 

“Permitted Exceptions” means and include all of the following: (a)  the lien of
taxes and assessments not yet due and payable; (b) any exclusions from coverage
set forth in the jacket of the owner’s policy of title insurance; (c) any
exceptions caused by Purchaser, its agents, representatives or employees;
(d) such other exceptions as the Title Company shall commit to insure over in a
manner acceptable to Purchaser in its reasonable discretion, without any
additional cost to Purchaser, whether such insurance is made available in
consideration of payment, bonding, indemnity of Seller or otherwise; (e) the
Space Leases and the Submerged Land Lease; and (f) any matters deemed to
constitute Permitted Exceptions under Section 2.7 hereof.

 

“Permitted Outside Parties” shall have the meaning set forth in Section 2.6.2.

 

“Person” means any natural person, corporation, limited liability company,
general partnership, limited partnership, organization, trust, union,
association or Governmental Authority.

 

“Personal Property” shall have the meaning set forth in Section 2.1.2.

 

“Post-Closing Accruals” means all accounts payable, accrued and unpaid expenses,
debt service payments, security deposits and similar obligations which accrue
after the Cut-Off Time.

 

“Preliminary Closing Statement” shall have the meaning set forth in
Section 4.2.1(a).

 

“Pre-Closing Tax Period” shall have the meaning set forth in Section 4.4.2.

 

Exhibit “A”-7

 

“Post-Closing Tax Period” shall have the meaning set forth in Section 4.4.2.

 

“Proceeding” shall have the meaning set forth in Section 5.3.3.

 

“Property” shall have the meaning set forth in Section 2.1.2.

 

“PTR Exceptions” shall have the meaning set forth in Section 2.7.1.

 

“Purchase Price” shall have the meaning set forth in Section 2.2.1.

 

“Purchaser” shall have the meaning set forth in the Preamble.

 

“Purchaser Indemnity Obligations” shall have the meaning set forth in
Section 5.3.2.

 

“Purchaser Related Parties” shall have the meaning set forth in Section 5.3.1.

 

“Purchaser Termination Notice” shall have the meaning set forth in
Section 2.5.2.

 

“Real Property” shall have the meaning set forth in Section 2.1.1.

 

“Rental Management Agreements” shall have the meaning set forth in
Section 3.1.21(a).

 

“Rental Program” shall mean the voluntary rental program operated by Seller or
an Affiliate of Seller to Residential Unit Owners for the Rental of Residential
Units.

 

“Residential Unit” shall mean a Villa, condominium unit or other separately
owned dwelling unit intended for residential occupancy located on the Land.

 

“Residential Unit Owner” shall mean an owner of a Residential Unit.

 

“Resort” shall have the meaning set forth in Recital B.

 

“Resort Manager” shall mean NVHG Hotel Operator, LLC, a Delaware limited
liability company.

 

“Sales Taxes” shall have the meaning set forth in Section 3.1.2.

 

“Second Deposit” shall have the meaning set forth in Section 2.3.3.

 

“Seller” shall have the meaning set forth in the Preamble.

 

“Seller Indemnity Obligations” shall have the meaning set forth in
Section 5.3.1.

 

“Seller Related Parties” shall have the meaning set forth in Section 5.3.2.

 

“Space Leases” shall have the meaning set forth in Section 3.1.10.

 

“Straddle Period” shall have the meaning set forth in Section 4.4.2.

 

“Submerged Lands” shall have the meaning set forth in Recital A.

 

“Submerged Lands Lease” shall have the meaning set forth in Recital A.

 

Exhibit “A”-8

 

“Submerged Lands Lessor” shall have the meaning set forth in Recital A.

 

“Subsidiary” or “Subsidiaries” shall mean any Person in which another Person,
directly or indirectly through subsidiaries or otherwise, beneficially owns
either (i) more than fifty percent (50%) of either the equity interests in; or
(ii) any of the voting control of, such Person.

 

“Supplies” means all merchandise, supplies, inventory and other items used for
the operating and maintenance of guest rooms, restaurants, lounges, bars, all
F&B Outlets, the Marina (but only to the extent owned by Seller), swimming
pools, health clubs, spas, business centers, meeting rooms and other common
areas and recreational areas located within or relating to the Resort,
including, without limitation, all food and beverage (alcoholic and
non-alcoholic) inventory, office supplies and stationary, advertising and
promotional materials, china, glasses, silver/flatware, towels, linen and
bedding, guest cleaning, paper and other supplies, employee uniforms, and all
cleaning and maintenance supplies, including those used in connection with the
swimming pools, health clubs, spas, fitness centers, indoor or outdoor sports
facilities (e.g., tennis courts), restaurants, business centers, meeting rooms
and other common areas and recreational areas.

 

“Survey Exceptions” shall have the meaning set forth in Section 2.7.1.

 

“Survival Period” shall have the meaning set forth in Section 3.4.

 

“Surviving Obligations” shall have the meaning set forth in Section 2.3.2.

 

“Target Closing Date” shall have the meaning set forth in Section 2.5.1.

 

“Tax” or “Taxes” means any income, gross or net receipts, property, sales, use,
capital gain, transfer, excise, license, production, franchise, employment,
social security, occupation, payroll, registration, occupancy, transient
occupancy, governmental pension or insurance, withholding, royalty, severance,
stamp or documentary, value added, or other tax, charge, assessment, duty, levy,
compulsory loan, business or occupation (including any interest, additions to
tax, or civil or criminal penalties thereon) of the United States or any state
or local jurisdiction therein, or of any other nation or any jurisdiction
therein.

 

“Tax Returns” means any report, form, return, statement or other information
(including any amendments) required to be supplied to a Governmental Authority
by a Person with respect to Taxes, including information returns, any amendments
thereof or schedule or attachment thereto and any documents with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.

 

“Tenant Notice Letter” means a notice addressed to each tenant of the Space
Leases advising such tenant of the assignment to Purchaser of the Space Lease to
which such tenant is a party thereto.

 

“Title Company” shall have the meaning set forth in Section 2.7.1.

 

“Title Endorsements” shall have the meaning set forth in Section 2.7.3.

 

“Title Exceptions” shall have the meaning set forth in Section 2.7.1.

 

Exhibit “A”-9

 

“Title Policy” shall have the meaning set forth in Section 2.7.3.

 

“Transfer Taxes” shall have the meaning set forth in Section 4.1.

 

“Uniform System” means the Uniform System of Accounts for the Lodging Industry
that is published by the Hotel Association of New York City, Inc. and approved
by the American Hotel & Motel Association, in effect at the time in question
(currently, the 10th Revised Edition, 2006).

 

“Villa Owners” shall mean the owners of the Villas.

 

“Villas” shall have the meaning set forth in Recital C.

 

Exhibit “A”-10

 

EXHIBIT “B”

 

LEGAL DESCRIPTION

 

(See Attached)

 

Exhibit “B”

 

EXHIBIT “C”

 

LIST OF CONTRACTS

 

(See Attached)

 

Exhibit “C”

 

EXHIBIT “D”

 

LIST OF EQUIPMENT LEASES

 

 

(See Attached)

 

Exhibit “D”

 

EXHIBIT “E”

 

INTENTIONALLY DELETED

 

Exhibit “E”

 

EXHIBIT “F”

 

DILIGENCE MATERIALS

 

 

(See Attached)

 

Exhibit “F”

 

EXHIBIT “G”

 

INTENTIONALLY DELETED

 

Exhibit “G”

 

EXHIBIT “H”

 

AUDIT REQUEST MATERIALS

 

(See Attached)

 

Exhibit “H”

 

EXHIBIT “I”

 

AUDIT REPRESENTATION LETTER

 

[COMPANY LETTERHEAD]

 

[LETTER DATE]

 

McGladrey LLP

1 South Wacker Drive

Suite 800

Chicago, IL 60606

 

 

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

 

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

 

Financial Statements

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Exhibit “I”

 

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

 

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

 

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

 

Information Provided

 

9.            We have provided you with:

 

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

 

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

 

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

 

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

 

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

 

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

 

a.             Management.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Exhibit “I”

 

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

 

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

 

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

 

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

 

21.    There are no:

 

a.             Violations or possible violations of laws or regulations whose
effects should be considered for disclosure in the financial statements or as a
basis for recording a loss contingency. In that regard, we specifically
represent that we have not been designated as, or alleged to be, a “potentially
responsible party” by the Environmental Protection Agency in connection with any
environmental contamination.

 

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

 

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

 

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

 

e.             Lines of credit or similar arrangements.

 

f.              Agreements to repurchase assets previously sold.

 

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

 

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

 

i.                Investments in debt and equity securities.

 

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

 

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

 

l.                Derivative financial instruments.

 

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

 

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

 

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

 

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

 

25.    We agree with the findings of specialists in determining the initial
purchase price allocation.  We have adequately considered the qualifications of
the specialists in determining the

 

Exhibit “B”

 

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

 

26.    We acknowledge that you performed the procedures specified by the
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants (AICPA) on the unaudited
balance sheets as of September 30, 2013 and 2012, and unaudited statements of
operations, member’s equity and cash flows for the nine-month periods ended
September 30, 2013 and 2012, included in the financial statements. The foregoing
procedures did not constitute an audit conducted in accordance with the
standards of the PCAOB or the AICPA.  We represent that the accounting
principles used to prepare the unaudited interim financial information are
consistent with those used to prepare the financial statements as of and for the
years ended December 31, 2012 and 2011.

 

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

 

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

 

[COMPANY NAME]

 

 

 

[NAME OF CHIEF EXECUTIVE OFFICER AND TITLE OR EQUIVALENT]

 

 

 

 

[NAME OF CHIEF FINANCIAL OFFICER AND TITLE OR EQUIVALENT]

 

 

 

Exhibit “I”

 

EXHIBIT “J”

 

FORM OF DEED

 

RECORD AND RETURN TO:

 

Rick S. Kirkbride, Esq.

Paul Hastings LLP

515 S. Flower Street, 25th Floor

Los Angeles, CA 90071

 

THIS INSTRUMENT PREPARED BY:

 

Michelle R. Brown

Jones Day

2727 North Harwood

Dallas, Texas 75201

 

 

 

 

 

SPECIAL WARRANTY DEED

 

STATE OF FLORIDA

§

 

 

§

KNOW ALL PERSONS BY THESE PRESENTS:

COUNTY OF MONROE

§

 

 

That BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC, a Delaware limited liability
company, whose address is 15601 Dallas Parkway, Suite 600, Addison, Texas
75001-6026 (“Grantor”), for and in consideration of the sum of Ten
Dollars ($10.00) and other good and valuable consideration to it in hand paid by
CWI KEYS HOTEL, LLC, a Delaware limited liability company, whose address is
                                                                          
(hereinafter, whether one or more, referred to as “Grantee”), the receipt and
sufficiency of which are hereby acknowledged and confessed, and subject to the
exceptions, liens, encumbrances, terms and provisions to conveyance and warranty
hereinafter set forth and described, has GRANTED, BARGAINED, SOLD and CONVEYED,
and by these presents does hereby GRANT, BARGAIN, SELL and CONVEY, unto Grantee
all of the real property situated in Monroe County, Florida, described on
Exhibit A, which is attached hereto and made a part hereof for all purposes,
together with all and singular the rights, benefits, privileges and
appurtenances thereon or in anywise appertaining thereto, and together with all
buildings, structures (surface and sub-surface), installations and other
improvements and fixtures located thereon and any right, title, and interest of
Grantor in and to adjacent streets, alleys, strips, gores, and rights-of-way
(such land, rights, benefits, privileges, appurtenances, improvements, and
interests being hereinafter referred to as the “Property”).

 

This conveyance is made and accepted subject and subordinate to those
encumbrances and exceptions (the “Permitted Encumbrances”) set forth on
Exhibit B, which is attached hereto and made a part hereof for all purposes.

 

TO HAVE AND TO HOLD the Property, subject to the Permitted Encumbrances, unto
Grantee, its successors and assigns, forever; and Grantor does hereby bind
itself, its successors and assigns, to

 

Exhibit “J”

 

WARRANT AND FOREVER DEFEND all and singular the Property unto Grantee, its
successors and assigns, against every person whomsoever lawfully claiming or to
claim the same, or any part thereof, except as to the exceptions to conveyance
and warranty contained herein, by, through or under Grantor, but not otherwise.

 

Section 3.7 of the Purchase and Sale Agreement by and among Grantor and Grantee
is hereby incorporated by reference into this Special Warranty Deed as fully as
if set forth at length herein.

 

Grantee, by its acceptance hereof, hereby assumes and agrees to pay any and all
standby fees, taxes, and assessments by any taxing authority for the calendar
year 2013, and subsequent years.

 

REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.

 

EXECUTED by the undersigned to be effective as of                 , 2013.

 

 

WITNESSES:

 

 

GRANTOR:

 

 

 

 

 

 

 

BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC,

 

 

 

 

Witness Signature

 

 

a Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

Printed Name

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

Witness Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

Printed Name

 

 

 

 

Exhibit “J”

 

STATE OF TEXAS

§

 

 

§

 

COUNTY OF DALLAS

§

 

 

The foregoing instrument was acknowledged before me on this              day of
                                    , 2013, by
                                  ,                                of BH/NV
HAWKS CAY PROPERTY HOLDINGS, LLC, a Delaware limited liability company, on
behalf of said company. He/she is personally known to me.

 

 

 

 

 

 

 

 

Printed Name:

 

 

 

 

 

 

Notary Public in and for the State of Texas

 

 

 

 

 

 

My Commission Expires:

 

 

 

 

 

 

 

 

 

(SEAL)

 

 

 

 

 

 

 

 

 

 

Doc Stamps:

 

 

 

 

 

 

 

 

 

Recording Fee:

 

 

 

 

 

Exhibit “J”

 

EXHIBIT A

to
Special Warranty Deed

 

PROPERTY DESCRIPTION

 

Exhibit “J”

 

EXHIBIT B

to
Special Warranty Deed

 

PERMITTED ENCUMBRANCES

 

Exhibit “J”

 

EXHIBIT “K”

 

BILL OF SALE
(61 Hawks Cay Boulevard, Duck Key, Florida)

 

BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC, a Delaware limited liability company
(“Seller”), in consideration of the purchase price paid by CWI KEYS HOTEL, LLC,
a Delaware limited liability company (“Purchaser”), as set forth in that certain
Purchase and Sale Agreement dated August     , 2013 (as amended and/or assigned,
the “Agreement”), the terms of which are incorporated herein by reference, the
receipt and sufficiency of such consideration being hereby acknowledged, has
sold and assigned, and by this Bill of Sale does hereby grant, assign and set
over to Purchaser, its representatives, successors and assigns, without
representation or warranty except as expressly set forth in the Agreement, and
subject to the terms of the Agreement, all of the following assets located at 61
Hawks Cay Boulevard, Duck Key, Florida, on which are constructed such
improvements in, by and through which is operated a hotel and resort business
commonly known as “Hawks Cay Resort”:

 

The Personal Property (as defined in the Agreement).

 

To have and to hold same unto Purchaser, its successors and assigns forever.

 

 

 

[The Remainder of This Page Has Been Intentionally Left Blank]

 

Exhibit “K”

 

IN WITNESS WHEREOF, this Bill of Sale is executed this          day of
                , 2013.

 

 

BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC,

 

a Delaware limited liability company

 

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

Exhibit “K”

 

EXHIBIT “L”

 

INTENTIONALLY DELETED

 

 

Exhibit “M”

 

EXHIBIT “M”

 

ASSIGNMENT AND ASSUMPTION OF RENTAL MANAGEMENT AGREEMENTS

(61 Hawks Cay Boulevard, Duck Key, Florida)

 

This ASSIGNMENT AND ASSUMPTION OF RENTAL MANAGEMENT AGREEMENTS (the
“Assignment”) is dated the          day of                   , 2013, and is made
by and between HAWKS CAY RENTAL MANAGER LLC, a Delaware limited liability
company (“Assignor”), and CWI KEYS HOTEL, LLC, a Delaware limited liability
company (“Assignee”).

 

RECITALS

 

A.        BH/NV Hawks Cay Property Holdings, LLC, a Delaware limited liability
company (“Seller”), and Assignee are parties to that certain Purchase and Sale
Agreement dated August       , 2013 (as amended and/or assigned, the
“Agreement”) pursuant to which Seller has agreed to sell to Assignee, and
Assignee has agreed to purchase from Seller, all of the right title and interest
in and of Seller to that certain Property (as defined in the Agreement) located
at and more commonly known as 61 Hawks Cay Boulevard, Duck Key, Florida, on
which are constructed such improvements in, by and through which is operated a
hotel and resort business commonly known as “Hawks Cay Resort” (the “Resort”).

 

B.         As part of the Resort and/or the Property, Assignor maintains a
rental program for villas located contiguous to the Resort and leases certain
villas pursuant to Rental Management Agreements, as referenced and defined in
the Agreement (the “Assigned Agreements”), executed in connection with the
ownership and/or operation of the Resort and/or the Property.

 

C.         All capitalized terms shall have the meanings ascribed to them in the
Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual benefits
accruing to the parties hereto, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:

 

I

 

ASSIGNMENT

 

1.1       Effective Date.  This Assignment shall take effect at and as of the
date hereof.

 

1.2       Assignment of Assigned Agreements.  To the extent assignable, Assignor
hereby assigns and transfers to Assignee all of its rights and obligations, in,
under and to the Assigned Agreements, without representation or warranty except
as expressly set forth in the Agreement and subject to the terms of the
Agreement, and delegates to Assignee all of its duties thereunder.

 

1.3       Assumption of Assigned Agreements.  Assignee hereby accepts the
assignment made hereby and assumes and agrees to pay and perform, as a direct
obligation, all sums, payments, duties and obligations required to be paid and
performed on and after the date hereof by Assignor under the Assigned Agreements
assigned hereby to the same extent as if Assignee had been an original party
thereto.

 

1.4       Indemnification.  Assignor agrees to indemnify and hold Assignee
harmless from and against all damages, losses, claims and liabilities (including
reasonable attorneys’ fees) pertaining to or

 

Exhibit “M”

 

arising in connection with the Assigned Agreements from actions or omissions
occurring prior to the date hereof in accordance with the indemnification
obligations under Section 5.3 of the Agreement.  Assignee agrees to indemnify
and hold Assignor harmless from and against all damages, losses, claims and
liabilities (including attorneys’ fees) pertaining to or arising in connection
with the Assigned Agreements from actions or omissions occurring on or after the
date hereof in accordance with the indemnification obligations under Section 5.3
of the Agreement.

 

1.5       Further Assurances.  Whenever and so often as requested by a party,
the other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Assignment;
provided, however, no Party shall be obligated to provide any further assurance
that would materially increase the liabilities or obligations of such Party
hereunder or materially reduce the rights and benefits of such Party hereunder.

 

1.6       Successors and Assigns.  The rights and obligations of the parties
hereto shall be for the benefit of, and binding upon, the successors and assigns
of the parties hereto.

 

1.7       Governing Law.  This Assignment shall be governed by and construed in
accordance with the laws of the State of Florida applicable to agreements made
and to be wholly performed within said state.

 

II

 

COUNTERPARTS

 

This Assignment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.  This Assignment
shall become effective upon the due execution and delivery of this Assignment to
the parties hereto.

 

[The Remainder of This Page Has Been Intentionally Left Blank]

 

Exhibit “M”

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment the day and
year first above written.

 

 

ASSIGNOR:

 

 

 

HAWKS CAY RENTAL MANAGER LLC,

 

a Delaware limited liability company

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

ASSIGNEE:

 

 

 

CWI KEYS HOTEL, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Exhibit “M”

 

EXHIBIT “N”

 

ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND PERMITS
(61 Hawks Cay Boulevard, Duck Key, Florida)

 

This ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND PERMITS (the “Assignment”) is
dated the          day of                   , 2013, and is made by and between
BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC, a Delaware limited liability company
(“Assignor”), and CWI KEYS HOTEL, LLC, a Delaware limited liability company
(“Assignee”).

 

RECITALS

 

A.        Assignor and Assignee are parties to that certain Purchase and Sale
Agreement dated August       , 2013 (as amended and/or assigned, the
“Agreement”) pursuant to which Assignor has agreed to sell to Assignee, and
Assignee has agreed to purchase from Assignor, all of Assignor’s right title and
interest in and to that certain Property (as defined in the Agreement) located
at and more commonly known as 61 Hawks Cay Boulevard, Duck Key, Florida, on
which are constructed such improvements in, by and through which is operated a
hotel and resort business commonly known as “Hawks Cay Resort” (the “Resort”).

 

B.         As part of the Resort and/or the Property, Assignor has entered into
the Space Leases, the Equipment Leases and Contracts, as referenced and defined
in the Agreement, and obtained the Permits, as referenced and defined in the
Agreement, that are used in connection with the ownership and/or operation of
the Resort and/or the Property.  The Space Leases, Equipment Leases, Contracts
and Permits are referred to herein as the “Contracts and Permits.”

 

C.         All capitalized terms shall have the meanings ascribed to them in the
Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual benefits
accruing to the parties hereto, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:

 

I

 

ASSIGNMENT

 

1.1       Effective Date.  This Assignment shall take effect at and as of the
date hereof.

 

1.2       Assignment of Contracts and Permits.  To the extent assignable,
Assignor hereby assigns and transfers to Assignee all of its rights and
obligations, in, under and to all of the Contracts and Permits, without
representation or warranty except as expressly set forth in the Agreement and
subject to the terms of the Agreement, and delegates to Assignee all of its
duties thereunder.

 

1.3       Assumption of Contracts and Permits.  Assignee hereby accepts the
assignment made hereby and assumes and agrees to pay and perform, as a direct
obligation, all sums, payments, duties and obligations required to be paid and
performed on and after the date hereof by Assignor under the Contracts and
Permits assigned hereby to the same extent as if Assignee had been an original
party thereto.

 

1.4       Indemnification.  Assignor agrees to indemnify and hold Assignee
harmless from and against all damages, losses, claims and liabilities (including
reasonable attorneys’ fees) pertaining to or

 

Exhibit “N”

 

arising in connection with the Contracts and Permits from actions or omissions
occurring prior to the date hereof in accordance with the indemnification
obligations under Section 5.3 of the Agreement.  Assignee agrees to indemnify
and hold Assignor harmless from and against all damages, losses, claims and
liabilities (including attorneys’ fees) pertaining to or arising in connection
with the Contracts and Permits from actions or omissions occurring on or after
the date hereof in accordance with the indemnification obligations under
Section 5.3 of the Agreement.

 

1.5       Further Assurances.  Whenever and so often as requested by a party,
the other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Assignment;
provided, however, no Party shall be obligated to provide any further assurance
that would materially increase the liabilities or obligations of such Party
hereunder or materially reduce the rights and benefits of such Party hereunder.

 

1.6       Successors and Assigns.  The rights and obligations of the parties
hereto shall be for the benefit of, and binding upon, the successors and assigns
of the parties hereto.

 

1.7       Governing Law.  This Assignment shall be governed by and construed in
accordance with the laws of the State of Florida applicable to agreements made
and to be wholly performed within said state.

 

II

 

COUNTERPARTS

 

This Assignment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.  This Assignment
shall become effective upon the due execution and delivery of this Assignment to
the parties hereto.

 

[The Remainder of This Page Has Been Intentionally Left Blank]

 

Exhibit “N”

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment the day and
year first above written.

 

 

ASSIGNOR:

 

 

 

BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

ASSIGNEE:

 

 

 

CWI KEYS HOTEL, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Exhibit “M”

 

EXHIBIT “O”

 

ASSIGNMENT OF INTANGIBLE PROPERTY
(61 Hawks Cay Boulevard, Duck Key, Florida)

 

This ASSIGNMENT OF INTANGIBLE PROPERTY (the “Assignment”) is dated the         
day of                             , 2013, and is made by and between BH/NV
HAWKS CAY PROPERTY HOLDINGS, LLC, a Delaware limited liability company
(“Assignor”), and CWI KEYS HOTEL, LLC, a Delaware limited liability company
(“Assignee”).

 

RECITALS

 

A.        Assignor and Assignee have previously entered into that certain
Purchase and Sale Agreement dated August       , 2013 (as amended and/or
assigned, the “Agreement”), pursuant to which Assignor has agreed to sell to
Assignee, and Assignee has agreed to purchase from Assignor, all of Assignor’s
right title and interest in and to that certain Property (as defined in the
Agreement) located at and more commonly known as 61 Hawks Cay Boulevard, Duck
Key, Florida, on which are constructed such improvements in, by and through
which is operated a hotel and hospitality business commonly known as “Hawks Cay
Resort”.

 

B.         As part of the Resort and/or the Property, Assignor owns Intangible
Property, as referenced and defined in the Agreement, that is used in connection
with the ownership and/or operation of the Resort and/or the Property.

 

C.         All capitalized terms shall have the meanings ascribed to them in the
Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual benefits
accruing to the parties hereto, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:

 

I

 

ASSIGNMENT

 

1.1       Effective Date.  This Assignment shall take effect at and as of the
date hereof.

 

1.2       Assignment of Intangible Property.  To the extent assignable, Assignor
hereby assigns and transfers to Assignee, without representation or warranty
except as expressly set forth in the Agreement, and subject to terms of the
Agreement, all of its right, title and interest in and to all of the Intangible
Property.

 

1.3       Assumption of Intangible Property.  Assignee hereby accepts the
assignment made hereby and assumes and agrees to perform, as a direct
obligation, all duties and obligations required to be performed on and after the
date hereof by Assignor in connection with the Intangible Property assigned
hereby, to the same extent as if Assignee had been an original party thereto.

 

1.4       Further Assurances.  Whenever and so often as requested by a party,
the other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be

 

Exhibit “O”

 

necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Assignment;
provided, however, no Party shall be obligated to provide any further assurance
that would materially increase the liabilities or obligations of such Party
hereunder or materially reduce the rights and benefits of such Party hereunder.

 

1.5       Successors and Assigns.  The rights and obligations of the parties
hereto shall be for the benefit of, and binding upon, the successors and assigns
of the parties hereto.

 

1.6       Governing Law.  This Assignment shall be governed by and construed in
accordance with the laws of the State of Florida applicable to agreements made
and to be wholly performed within said state.

 

II

 

COUNTERPARTS

 

This Assignment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.  This Assignment
shall become effective upon the due execution and delivery of this Assignment to
the parties hereto.

 

[The Remainder of This Page Has Been Intentionally Left Blank]

 

Exhibit “O”

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment the day and
year first above written.

 

 

ASSIGNOR:

 

 

 

BH/NV HAWKS CAY PROPERTY HOLDINGS, LLC,

 

a Delaware limited liability company

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

ASSIGNEE:

 

 

 

CWI KEYS HOTEL, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Exhibit “M”

 

EXHIBIT “P”

 

FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT AFFIDAVIT

 

CERTIFICATE OF NON FOREIGN STATUS

 

Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of
a U.S. real property interest must withhold tax if the transferor is a foreign
person.  For U.S. tax purposes (including Section 1445), the owner of a
disregarded entity (which has legal title to a U.S. real property interest under
local law) will be the transferor of the property and not the disregarded
entity.  To inform the transferee (buyer) that withholding of tax is not
required upon the disposition of a U.S. real property interest by BH/NV Hawks
Cay Property Holdings, LLC, a Delaware limited liability company (“Seller”),
which is a wholly owned subsidiary of BH/NV Hawk’s Cay, LLC, a Delaware limited
liability company (“Transferor”), the undersigned hereby certifies the following
on behalf of Transferor:

 

1.         Seller is wholly owned subsidiary of Transferor and is a disregarded
entity as defined in Section 1.14445-2(b)(2)(iii) of the Income Tax
Regulations.  Seller is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the Internal Revenue Code
and the Income Tax Regulations).

 

2.         Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and the Income Tax Regulations).  Transferor is not a disregarded entity
(as such term is defined in Section 1.1445-2(b)(2)(iii) of the Income Tax
Regulations).

 

3.         Transferor’s U.S. employer identification number is 41-2220774.

 

4.         Transferor’s address is 15601 Dallas Parkway, Suite 600, Addison,
Texas 75001-6026.

 

5.         Transferor understands that this certification may be disclosed to
the Internal Revenue Service by the transferee (buyer) and that any false
statement contained herein could be punished by fine, imprisonment, or both.

 

Under penalties of perjury, the undersigned declares that the undersigned has
examined this certification and to the best of the undersigned’s knowledge and
belief it is true, correct and complete, and the undersigned further declares
that the undersigned has the authority to sign this document on behalf of
Transferor.

 

Exhibit “M”

 

Executed as of the        day of                     , 2013, at
                        ,                             .

 

 

TRANSFEROR:

 

 

 

 

 

 

 

 

 

a

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

Exhibit “P