Exhibit 10.40

Chicago (O’Hare) (Hilton Garden Inn)

PURCHASE CONTRACT

between

CHICAGO RIVER ROAD LODGING ASSOCIATES, L.L.C. (“SELLER”)

(“SELLER”)

AND

APPLE TEN HOSPITALITY OWNERSHIP, INC. (“BUYER”)

AND

RAYMOND MANAGEMENT COMPANY, INC.
(“INDEMNITOR”)

Dated: May 27, 2011

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Page No.

 

 

 

 

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ARTICLE I

DEFINED TERMS

 

1

 

 

 

 

 

 

1.1

Definitions

 

1

 

 

 

 

ARTICLE II

PURCHASE AND SALE; PURCHASE PRICE; PAYMENT; EARNEST MONEY DEPOSIT

 

6

 

 

 

 

 

 

2.1

Purchase and Sale

 

6

 

 

 

 

 

 

2.2

Intentionally Omitted

 

6

 

 

 

 

 

 

2.3

Purchase Price

 

6

 

 

 

 

 

 

2.4

Allocation

 

7

 

 

 

 

 

 

2.5

Payment

 

7

 

 

 

 

 

 

2.6

Earnest Money Deposit

 

7

 

 

 

 

ARTICLE III

REVIEW PERIOD

 

7

 

 

 

 

 

 

3.1

Review Period

 

7

 

 

 

 

 

 

3.2

Due Diligence Examination

 

9

 

 

 

 

 

 

3.3

Restoration

 

9

 

 

 

 

 

 

3.4

Seller Exhibits

 

9

 

 

 

 

ARTICLE IV

SURVEY AND TITLE APPROVAL

 

9

 

 

 

 

 

 

4.1

Survey

 

9

 

 

 

 

 

 

4.2

Title

 

9

 

 

 

 

 

 

4.3

Survey or Title Objections

 

10

 

 

 

 

 

 

4.3

Existing Loan

 

10

 

 

 

 

ARTICLE V

TERMINATION OF MANAGEMENT AGREEMENT

 

10

 

 

 

 

ARTICLE VI

BROKERS

 

11

 

 

 

 

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

11

 

 

 

 

 

 

7.1

Seller’s and Indemnitor’s Representations, Warranties and Covenants

 

11

 

 

 

 

 

 

7.2

Buyer’s Representations, Warranties and Covenants

 

15

 

 

 

 

 

 

7.3

Survival

 

15

 

 

 

 

ARTICLE VIII

ADDITIONAL COVENANTS

 

16

 

 

 

 

 

 

8.1

Subsequent Developments

 

16

 

 

 

 

 

 

8.2

Operations

 

16

 

 

 

 

 

 

8.3

Third Party Consents

 

17

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8.4

Employees

 

17

 

 

 

 

 

 

8.5

Estoppel Certificates

 

18

 

 

 

 

 

 

8.6

Access to Financial Information

 

18

 

 

 

 

 

 

8.7

Bulk Sales

 

18

 

 

 

 

 

 

8.8

Indemnification

 

18

 

 

 

 

 

 

8.9

Escrow Funds

 

21

 

 

 

 

 

 

8.10

Liquor Licenses

 

21

 

 

 

 

ARTICLE IX

CONDITIONS FOR CLOSING

 

21

 

 

 

 

 

 

9.1

Buyer’s Conditions for Closing

 

21

 

 

 

 

 

 

9.2

Seller’s Conditions for Closing

 

22

 

 

 

 

ARTICLE X

CLOSING AND CONVEYANCE

 

22

 

 

 

 

 

 

10.1

Closing

 

22

 

 

 

 

 

 

10.2

Deliveries of Seller and Indemnitor

 

23

 

 

 

 

 

 

10.3

Buyer’s Deliveries

 

24

 

 

 

 

ARTICLE XI

COSTS

 

25

 

 

 

 

 

 

11.1

Seller’s Costs

 

25

 

 

 

 

 

 

11.2

Buyer’s Costs

 

25

 

 

 

 

ARTICLE XII

ADJUSTMENTS

 

25

 

 

 

 

 

 

12.1

Adjustments

 

25

 

 

 

 

 

 

12.2

Reconciliation and Final Payment

 

27

 

 

 

 

 

 

12.3

Employees

 

27

 

 

 

 

ARTICLE XIII

CASUALTY AND CONDEMNATION

 

27

 

 

 

 

 

 

13.1

Risk of Loss; Notice

 

27

 

 

 

 

 

 

13.2

Buyer’s Termination Right

 

28

 

 

 

 

 

 

13.3

Procedure for Closing

 

28

 

 

 

 

ARTICLE XIV

DEFAULT REMEDIES

 

28

 

 

 

 

 

 

14.1

Buyer Default

 

28

 

 

 

 

 

 

14.2

Seller Default

 

29

 

 

 

 

 

 

14.3

Attorney’s Fees

 

29

 

 

 

 

ARTICLE XV

NOTICES

 

29

 

 

 

 

ARTICLE XVI

MISCELLANEOUS

 

30

 

 

 

 

 

 

16.1

Performance

 

30

 

 

 

 

 

 

16.2

Binding Effect; Assignment

 

30

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16.3

Entire Agreement

 

30

 

 

 

 

 

 

16.4

Governing Law

 

30

 

 

 

 

 

 

16.5

Captions

 

30

 

 

 

 

 

 

16.6

Confidentiality

 

30

 

 

 

 

 

 

16.7

Closing Documents

 

30

 

 

 

 

 

 

16.8

Counterparts

 

30

 

 

 

 

 

 

16.9

Severability

 

31

 

 

 

 

 

 

16.10

Interpretation

 

31

 

 

 

 

 

 

16.11

(Intentionally Omitted)

 

31

 

 

 

 

 

 

16.12

Further Acts

 

31

 

 

 

 

 

 

16.13

Joint and Several Obligations

 

31

 

 

 

 

ARTICLE XVII

JOINDER BY INDEMNITOR

 

32

 

 

 

 

 

 

17.1

Indemnification by Indemnitor

 

32

 

 

 

 

SCHEDULES:

 

 

 

 

 

EXHIBITS:

 

 

 

Exhibit A

Legal Description

Exhibit B

List of FF&E

Exhibit C

List of Hotel Contracts

Exhibit D

Consents and Approvals

Exhibit E

Environmental Reports

Exhibit F

Claims or Litigation Pending

Exhibit G

Escrow Agreement

Exhibit H

Existing Loan Information

iii

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PURCHASE CONTRACT

This PURCHASE CONTRACT (this “Contract”) is made and entered into as of May 27,
2011, by and between CHICAGO RIVER ROAD LODGING ASSOCIATES, L.L.C., a Wisconsin
limited liability company (“Seller”) with a principal office at 8333 Greenway
Boulevard, Suite 200, Middleton, Wisconsin 53562 and APPLE TEN HOSPITALITY
OWNERSHIP, INC., a Virginia corporation, with its principal office at 814 East
Main Street, Richmond, Virginia 23219, or its affiliates or assigns (“Buyer”),
and joined in by Raymond Management Company, Inc., a Wisconsin Corporation
(“Indemnitor”), with its principal office at 8333 Greenway Boulevard, Suite 200,
Middleton, Wisconsin 53562.

RECITALS

A. Seller is the fee simple owner of that certain 251-room hotel property
commonly known as the Hilton Garden Inn Chicago O’Hare Airport, located at 2930
South River Road, Des Plaines, Illinois 60018 (the “Hotel”) identified in
Exhibit A attached hereto and incorporated by reference.

          B. Buyer is desirous of purchasing the Hotel from Seller, and Seller
is desirous of selling the Hotel to Buyer, for the purchase price and upon terms
and conditions hereinafter set forth.

AGREEMENT:

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

ARTICLE I
DEFINED TERMS

          1.1 Definitions. The following capitalized terms when used in this
Contract shall have the meanings set forth below unless the context otherwise
requires:

          “Additional Deposit” shall mean $125,000.00.

          “Affiliate” shall mean, with respect to Seller or Buyer, any other
person or entity directly or indirectly controlling (including but not limited
to all directors and officers), controlled by or under direct or indirect common
control with Seller or Buyer, as applicable. For purposes of the foregoing, a
person or entity shall be deemed to control another person or entity if it
possesses, directly or indirectly, the power to direct or cause direction of the
management and policies of such other person or entity, whether through the
ownership of voting securities, by contract or otherwise.

          “Appurtenances” shall mean all rights, titles, and interests of a
Seller appurtenant to the Land and Improvements, including, but not limited to,
(i) all easements, rights of way, rights of

1

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ingress and egress, tenements, hereditaments, privileges, and appurtenances in
any way belonging to the Land or Improvements, (ii) any land lying in the bed of
any alley, highway, street, road or avenue, open or proposed, in front of or
abutting or adjoining the Land, (iii) any strips or gores of real estate
adjacent to the Land, and (iv) the use of all alleys, easements and
rights-of-way, if any, abutting, adjacent, contiguous to or adjoining the Land.

          “Brand” shall mean Hilton Garden Inn, the hotel brand or franchise
under which the Hotel operates.

          “Business Day” shall mean any day other than a Saturday, Sunday or
legal holiday in the Commonwealth of Virginia.

          “Closing” shall mean the closing of the purchase and sale of the
Property pursuant to this Contract.

          “Closing Date” shall have the meaning set forth in Section 10.1.

          “Contracts, Plans and Specs” shall mean all construction plans,
drawings, specifications, surveys, soil reports, engineering reports, inspection
reports, and other technical descriptions and reports, in Seller’s possession or
control.

          “Deed” shall have the meaning set forth in Section 10.2(a).

          “Deposits” shall mean, to the extent assignable, all prepaid rents and
any cash balances in lender required reserves for replacement of FF&E and for
capital repairs and/or improvements (“Lender Required Reserves”), refundable
security deposits and rental deposits, and all other deposits for advance
reservations, banquets or future services, made in connection with the use or
occupancy of the Improvements; provided, however, that to the extent Seller has
not received or does not hold all of the prepaid rents and/or deposits
attributable to the Leases related to the Property, Buyer shall be entitled to a
credit against the cash portion of the Purchase Price allocable to the Property
in an amount equal to the amount of the prepaid rents and/or deposits
attributable to the Leases transferred at the Closing of such Property, and
provided further, that “Deposits” shall exclude (i) reserves for real property
taxes and insurance, in each case, to the extent pro rated on the settlement
statement such that Buyer receives a credit for (a) taxes and premiums in
respect of any period prior to Closing and (b) the amount of deductibles and
other self-insurance and all other potential liabilities and claims in respect
of any period prior to Closing, and (ii) utility deposits.

          “Due Diligence Examination” shall have the meaning set forth in
Section 3.2.

          “Earnest Money Deposit” shall have the meaning set forth in Section
2.6(a).

          “Environmental Requirements” shall have the meaning set forth in
Section 7.1(f)

          “Escrow Agent” shall have the meaning set forth in Section 2.6(a).

          “Escrow Agreement” shall have the meaning set forth in Section 2.6(b).

          “Exception Documents” shall have the meaning set forth in Section 4.2.

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          “Existing Franchise Agreement” shall mean that certain franchise
license agreement between the Seller and the Franchisor, granting to Seller a
franchise to operate the Hotel under the Brand.

          “Existing Loan” shall mean the loan identified on Exhibit H.

          “Existing Lender” shall mean the lender identified on Exhibit H.

          “Existing Management Agreement” shall mean that certain management
agreement between the Seller and the Manager for the operation and management of
the Hotel.

          “FF&E” shall mean all tangible personal property and fixtures of any
kind (other than personal property (i) owned by guests of the Hotel or (ii)
leased by Seller pursuant to an FF&E Lease) attached to, or located upon and
used in connection with the ownership, maintenance, use or operation of the Land
or Improvements as of the date hereof (or acquired by Seller and so employed
prior to Closing), including, but not limited to, 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
and equipment, all shelving and partitions, all ventilating equipment, and all
disposal equipment; all spa, health club 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. A current list of FF&E is attached hereto as Exhibit B (which list
will not include the mechanical fixtures, elevators, and all similar items which
are fixtures of the Hotel).

          “FF&E Leases” shall mean all leases of any FF&E and other contracts
permitting the use of any FF&E at the Improvements that are assumed by Buyer.

          “Financial Statements” shall have the meaning set forth in Section
3.1(b).

          “Franchisor” shall mean Hilton Worldwide, Inc. or its Affiliate.

          “Hotel Contracts” shall have the meaning set forth in Section 10.2(d).

          “Improvements” shall mean all buildings, structures, fixtures, parking
areas and other improvements to the Land, and all related facilities.

          “Indemnification Agreement” shall have the meaning set forth in
Article XVII.

          “Indemnified Party” shall have the meaning set forth in Section
8.8(c)(i).

          “Indemnifying Party” shall have the meaning set forth in Section
8.8(c)(i).

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          “Initial Deposit” shall have the meaning set forth in Section 2.6(a).

          “Land” shall mean, collectively, a fee simple absolute interest in the
real property more fully described in Exhibit A, which is attached hereto and
incorporated herein by reference, together with all rights (including without
limitation all air rights and development rights), alleys, streets, strips,
gores, privileges, appurtenances, advantages and easements belonging thereto or
in any way appertaining thereto.

          “Leases” shall mean all leases, franchises, licenses, occupancy
agreements, “trade-out” agreements, advance bookings, convention reservations,
or other agreements demising space in, providing for the use or occupancy of, or
otherwise similarly affecting or relating to the use or occupancy of, the
Improvements or Land, together with all amendments, modifications, renewals and
extensions thereof, and all guaranties by third parties of the obligations of
the tenants, licensees, franchisees, concessionaires or other entities
thereunder.

          “Legal Action” shall have the meaning set forth in Section 8.8(c)(ii).

          “Licenses” shall mean all permits, licenses, franchises, utility
reservations, certificates of occupancy, and other documents issued by any
federal, state, or municipal authority or by any private party related to the
development, construction, use, occupancy, operation or maintenance of the
Hotel, including, without limitation, all licenses, approvals and rights
(including any and all existing waivers of any brand standard) necessary or
appropriate for the operation of the Hotel under the Brand.

          “Liquor Licenses” shall have the meaning set forth in Section 8.10.

          “Manager” shall mean Raymond Management Company, Inc.

          “New Franchise Agreement” shall mean the franchise license agreement
to be entered into between Buyer and the Franchisor, granting to Buyer a
franchise to operate the Hotel under the Brand on and after the Closing Date.

          “New Management Agreement” means the management agreement to be
entered into between Buyer and the Manager for the operation and management of
the Hotel on and after the Closing Date.

          “Other Property” shall have the meaning set forth in Section 16.14.

          “Pending Claims” shall have the meaning set forth in Section 7.1(e).

          “Permitted Exceptions” shall have the meaning set forth in Section
4.3.

          “Personal Property” shall mean, collectively, all of the Property
other than the Real Property.

          “PIP” shall mean a product improvement plan for any Hotel, as required
by the Manager or the Franchisor, if any.

4

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          “PIP Escrow Agreement” shall have the meaning set forth in Section
11.1.

          “Post-Closing Agreement” shall have the meaning set forth in Section
8.9.

          “Property” shall mean, collectively, (i) all of the following with
respect to the Hotel: the Land, Improvements, Appurtenances, FF&E, Supplies,
Leases, Deposits, Records, Service Contracts, Warranties, Licenses, FF&E Leases,
Contracts, Plans and Specs, Tradenames, Utility Reservations, as well as all
other real, personal or intangible property of Seller related to any of the
foregoing and (ii) any and all of the following that relate to or affect in any
way the design, construction, ownership, use, occupancy, leasing, maintenance,
service or operation of the Real Property, FF&E, Supplies, Leases, Deposits or
Records: Service Contracts, Warranties, Licenses, Tradenames (except “Cool Pool”
tm, the right to which Seller shall retain), Contracts, Plans and Specs and FF&E
Leases.

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

          “Real Property” shall mean, collectively, all Land, Improvements and
Appurtenances with respect to the Hotel.

          “Records” shall mean all books, records, promotional material, guest
history information (other than any such information owned exclusively by the
Manager), marketing and leasing material and forms (including but not limited to
any such records, data, information, material and forms in the form of
computerized files located at the Hotel), any marketing plan prepared in
connection with Seller’s current annual operating budget (including, without
limitation, all documentation relating to any pending litigation or other
proceedings, all zoning and/or land use notices, relating to or affecting the
Property owned by Seller and/or in Seller’s possession or control, or to which
Seller has access or may obtain from the Manager, that are used in or relating
to the Property and/or the operation of the Hotel, including the Land, the
Improvements or the FF&E, and proforma budgets and projections and all
construction warranties and guaranties in effect at Closing and copies of the
record plans and specifications for the Hotel, as available.

          “Release” shall have the meaning set forth in Section 7.1(f).

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

          “SEC” shall have the meaning set forth in Section 8.6.

          “Seller Liens” shall have the meaning set forth in Section 4.3.

          “Seller Parties” shall have the meaning set forth in Section 7.1(e).

          “Service Contracts” shall mean contracts or agreements, such as
maintenance, supply, service or utility contracts.

          “Supplies” shall mean all merchandise, supplies, inventory and other
items used for the operation and maintenance of guest rooms, restaurants,
lounges, swimming pools, health clubs, spas, business centers, meeting rooms and
other common areas and recreational areas located

5

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within or relating to the Improvements, including, without limitation, all food
and beverage (alcoholic and non-alcoholic) inventory, office supplies and
stationery, advertising and promotional materials, china, glasses,
silver/flatware, towels, linen and bedding (all of which shall be 2-par level
for all suites or rooms in the Hotel), guest cleaning, paper and other supplies,
upholstery material, carpets, rugs, furniture, engineers’ supplies, paint and
painters’ supplies, employee uniforms, and all cleaning and maintenance
supplies, including those used in connection with the swimming pools, indoor
and/or outdoor sports facilities, health clubs, spas, fitness centers,
restaurants, business centers, meeting rooms and other common areas and
recreational areas.

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

          “Third Party Consents” shall have the meaning set forth in Section
8.3.

          “Title Commitment” shall have the meaning set forth in Section 4.2.

          “Title Company” shall have the meaning set forth in Section 4.2.

          “Title Policy” shall have the meaning set forth in Section 4.2.

          “Title Review Period” shall have the meaning set forth in Section 4.3.

          “Tradenames” shall mean all telephone exchanges and numbers, trade
names, trade styles, trade marks, and other identifying material, and all
variations thereof, together with all related goodwill (it being understood and
agreed that the name of the hotel chain to which the Hotel is affiliated by
franchise, license or management agreement is a protected name or registered
service mark of such hotel chain and cannot be transferred to Buyer by this
Contract, provided that all such franchise, license, management and other
agreements granting a right to use the name of such hotel chain or any other
trademark or trade name and all waivers of any brand standard shall be assigned
to Buyer to the extent Seller has any right to make such assignment).

          “Utility Reservations” shall mean Seller’s interest in the right to
receive immediately on and after Closing and continuously consume thereafter
water service, sanitary and storm sewer service, electrical service, gas service
and telephone service on and for the Land and Improvements in capacities that
are adequate continuously to use and operate the Improvements for the purposes
for which they were intended, including, but not limited to (i) any right to the
present and future use of wastewater, drainage, water and other utility
facilities to the extent such use benefits the Real Property, (ii) any
reservations of or commitments covering any such use in the future, and (iii)
any wastewater capacity reservations relating to the Real Property. Buyer shall
be responsible for any requests or documents to transfer the Utility
Reservations, at Buyer’s sole cost and expense.

          “Warranties” shall mean all warranties, guaranties, indemnities and
claims for the benefit of Seller with respect to the Hotel, the Property or any
portion thereof, including, without limitation, all warranties and guaranties of
the development, construction, completion, installation, equipping and
furnishing of the Hotel, and all indemnities, bonds and claims of Seller related
thereto.

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ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;
EARNEST MONEY DEPOSIT

          2.1 Purchase and Sale. Seller agrees to sell and convey to Buyer or
its Affiliates and/or assigns, and Buyer or its assigns agrees to purchase from
Seller, the Property, in consideration of the Purchase Price and upon the terms
and conditions hereof. All of the Property shall be conveyed, assigned, and
transferred to Buyer at Closing, free and clear of all mortgages, liens,
encumbrances, licenses, franchises (other than any hotel franchise or any other
Licenses assumed by Buyer and the Existing Loan), concession agreements,
security interests, prior assignments or conveyances, conditions, restrictions,
rights-of-way, easements, encroachments, claims and other matters affecting
title or possession, except for the Permitted Exceptions.

          2.2 Intentionally Deleted.

          2.3 Purchase Price. Buyer agrees to pay, and Seller agrees to accept,
as consideration for the conveyance of the Property, subject to the adjustments
provided for in this Contract, the amount of THIRTY-EIGHT MILLION and No/100
Dollars ($38,000,000.00) (the “Purchase Price”).

          2.4 Allocation. Buyer and Seller shall acting reasonably, in good
faith, and based on objective standards and appraisals of value, on an
“open-book” basis, attempt to agree, prior to the expiration of the Review
Period, on an allocation of the Purchase Price among Real Property, tangible
Personal Property and intangible property related to the Property. In the event
Buyer and Seller do not agree, each party shall be free to allocate the Purchase
Price to such items as they deem appropriate, subject to and in accordance with
applicable laws.

          2.5 Payment. The portion of the Purchase Price, less the Earnest Money
Deposit and interest earned thereon, if any, which Buyer elects to have applied
against the Purchase Price (as provided below), less the Escrow Funds, less the
outstanding principal balance of the Existing Loan, shall be paid to Seller in
cash, certified funds or wire transfer, at the Closing of the Property. At the
Closing, the Earnest Money Deposit, together with interest earned thereon, if
any, shall, at Buyer’s election, be returned to Buyer or shall be paid over to
Seller by Escrow Agent to be applied to the portion of the Purchase Price on
behalf of Buyer, and the Escrow Funds shall be deposited into an escrow account
pursuant to the Post-Closing Agreement as contemplated by Section 8.9.

          2.6 Earnest Money Deposit.

                    (a) Within three (3) Business Days after the full execution
and delivery of this Contract, Buyer shall deposit the sum of One Hundred
Twenty-five Thousand and No/100 Dollars ($125,000.00) in cash, certified bank
check or by wire transfer of immediately available funds (the “Initial Deposit”)
with the Title Company, as escrow agent (“Escrow Agent”), which sum shall be
held by Escrow Agent as earnest money. If, pursuant to the provisions of Section
3.1 of this Contract, Buyer elects to terminate this Contract at any time prior
to the expiration of the Review Period, then the Escrow Agent shall return the
Earnest Money Deposit to Buyer

7

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promptly upon written notice to that effect from Buyer. If Buyer does not elect
to terminate this Contract on or before the expiration of the Review Period,
Buyer shall, within three (3) Business Days after the expiration of the Review
Period deposit the Additional Deposit with the Escrow Agent. The Initial Deposit
and the Additional Deposit, and all interest accrued thereon, shall hereinafter
be referred to as the “Earnest Money Deposit.”

                    (b) The Earnest Money Deposit shall be held by Escrow Agent
subject to the terms and conditions of an Escrow Agreement dated as of the date
of this Contract entered into by Seller, Buyer and Escrow Agent (the “Escrow
Agreement”). The Earnest Money Deposit shall be held in an interest-bearing
account in a federally insured bank or savings institution reasonably acceptable
to Seller and Buyer, with all interest to accrue to the benefit of the party
entitled to receive it and to be reportable by such party for income tax
purposes.

ARTICLE III
REVIEW PERIOD

          3.1 Review Period. Buyer shall have a period through 6:00 p.m. Eastern
Time on the date that is forty-five (45) days after the date of this Contract,
unless a longer period of time is otherwise provided for in this Contract and
except as otherwise agreed to by Buyer and Seller (the “Review Period”), to
evaluate the legal, title, survey, construction, physical condition, structural,
mechanical, environmental, economic, permit status, franchise status, financial
and other documents and information related to the Property. Within five (5)
Business Days following the date of this Contract, Seller, at Seller’s sole cost
and expense, will deliver to Buyer (or make available at the Hotel) for Buyer’s
review, to the extent not previously delivered to Buyer, true, correct and
complete copies of the following, together with all amendments, modifications,
renewals or extensions thereof:

                    (a) All Warranties and Licenses currently in force relating
to the Hotel or any part thereof;

                    (b) Income and expense statements and budgets for the Hotel,
for the current year to date and each of the three (3) prior fiscal years (the
“Financial Statements”), and Seller shall provide to Buyer copies of all income
and expense statements generated by Seller or any third party that relate to the
operations of the Hotel and that contain information not included in the
financial statements, if any, provided to Buyer by the Manager, provided that
Seller also agrees to provide to Buyer’s auditors and representatives all
financial and other information necessary or appropriate for preparation of
audited financial statements for Buyer and/or its Affiliates as provided in
Section 8.6, below;

                    (c) All real estate and personal property tax statements
with respect to the Hotel and notices of appraised value for the Real Property
for the current year (if available) and each of the three (3) calendar years
prior to the current year;

                    (d) To the extent available and in Seller’s possession,
engineering, mechanical, architectural and construction plans, drawings,
specifications and contracts, payment and performance bonds, title policies,
reports and commitments, zoning information, as well as copies of all
environmental reports and information, topographical, boundary or “as built”

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surveys, engineering reports, subsurface studies and other Contracts, Plans and
Specs relating to or affecting the Hotel. If the Hotel is purchased by Buyer,
all such documents and information relating to the Hotel shall thereupon be and
become the property of Buyer without payment of any additional consideration
therefor;

                    (e) All FF&E Leases, Services Contracts, Leases and, if
applicable, a schedule of such Leases of space in the Hotel, and all agreements
for real estate commissions, brokerage fees, finder’s fees or other compensation
payable by Seller in connection therewith; and

                    (f) All notices received from governmental authorities in
connection with the Hotel that relate to any noncompliance or violation of law
that has not been corrected.

                    (g) All documents related to the Existing Loan.

          Seller shall, upon request of Buyer, make available to Buyer and
Buyer’s representatives and agents, for inspection and copying during normal
business hours or as otherwise agreed, Records located at Seller’s corporate
offices including items identified in 3.1(a)-(f) above, and Seller agrees to
provide Buyer copies of all other reasonably requested information that is
relevant to the management, operation, use, occupancy or leasing of or title to
the applicable Hotel and the plans specifications for development of the Hotel.
At any time during the Review Period, Buyer may, in its sole and absolute
discretion, elect not to proceed with the purchase of the Property for any
reason whatsoever by giving written notice thereof to Seller, in which event:
(i) the Earnest Money Deposit shall be promptly returned by Escrow Agent to
Buyer together with all accrued interest, if any, (ii) this Contract shall be
terminated automatically, (iii) all materials supplied by Seller to Buyer shall
be returned promptly to Seller, and (iv) both parties will be relieved of all
other rights, obligations and liabilities hereunder, except for the parties’
obligations pursuant to Sections 3.3 and 16.6 below.

          3.2 Due Diligence Examination. At any time during the Review Period,
and thereafter through Closing of the Property, Buyer and/or its representatives
and agents shall have the right to enter upon the Property at all reasonable
times for the purposes of reviewing all Records and other data, documents and/or
information relating to the Property and conducting such surveys, appraisals,
engineering tests, soil tests (including, without limitation, Phase I and Phase
II environmental site assessments), inspections of construction and other
inspections and other studies as Buyer deems reasonable and necessary or
appropriate to evaluate the Property, subject to providing reasonable advance
notice to Seller unless otherwise agreed to by Buyer and Seller (the “Due
Diligence Examination”). Seller shall have the right to have its representative
present during Buyer’s physical inspections of its Property, provided that
failure of Seller to do so shall not prevent Buyer from exercising its due
diligence, review and inspection rights hereunder. Buyer agrees to exercise
reasonable care when visiting the Property, in a manner which shall not
materially adversely affect the operation of the Property. Seller and Buyer
shall also agree during the Review Period which FF&E Leases shall be assumed by
Buyer. Failure, to agree on FF&E Leases shall give either party the right to
terminate the agreement.

          3.3 Restoration. Buyer covenants and agrees not to damage or destroy
any portion of the Property in conducting its examinations and studies of the
Property during the Due Diligence

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Examination and, if closing does not occur, shall repair any portion of the
Property damaged by the conduct of Buyer, its agents, employees or contractors,
to substantially the condition such portion(s) of the Property were in
immediately prior to such examinations or studies.

          3.4 Seller Exhibits. Buyer shall have until the end of the Review
Period to review and approve the information on Exhibits B, C, D, E and F. In
the event Buyer does not approve any such Exhibit or the information contained
therein prior to the end of the Review Period, Buyer shall be entitled to
terminate this Contract by notice to Seller and the Earnest Money Deposit shall
be returned to Buyer with all interest thereon and both parties shall be
relieved of all rights, obligations and liabilities hereunder except for the
parties’ obligations pursuant to Sections 3.3 and 16.6. Silence by Buyer through
the end of the Review Period shall be deemed approval of all information on the
foregoing exhibits.

ARTICLE IV
SURVEY AND TITLE APPROVAL

          4.1 Survey. Seller has delivered to Buyer true, correct and complete
copies of the most recent surveys of the Real Property. In the event that an
update of the survey or a new survey (such updated or new surveys being referred
to as the “Survey”) are desired by Buyer, then Buyer shall be responsible for
all costs related thereto.

          4.2 Title. Seller has delivered to Buyer its existing title insurance
policy, including copies of all documents referred to therein, for its Real
Property. Buyer’s obligations under this Contract are conditioned upon Buyer
being able to obtain, at its sole cost and expense, for the Property (i) a
Commitment for Title Insurance (the “Title Commitment”) issued by Chicago Title
Company, Attn: Debby Moore, 5501 LBJ Freeway, Suite 200, Dallas, TX 75240 (the
“Title Company”), for the most recent standard form of owner’s policy of title
insurance in the state in which the Real Property is located, covering the Real
Property, setting forth the current status of the title to the Real Property,
showing all liens, claims, encumbrances, easements, rights of way,
encroachments, reservations, restrictions and any other matters affecting the
Real Property and pursuant to which the Title Company agrees to issue to Buyer
at Closing an Owner’s Policy of Title Insurance on the most recent form of ALTA
(where available) owner’s policy available in the state in which the Land is
located, with extended coverage and, to the extent applicable and available in
such state, comprehensive, access, single tax parcel, contiguity, Fairway and
such other endorsements as may be required by Buyer (collectively, the “Title
Policy”); and (ii) true, complete, legible and, where applicable, recorded
copies of all documents and instruments (the “Exception Documents”) referred to
or identified in the Title Commitment, including, but not limited to, all deeds,
lien instruments, leases, plats, surveys, reservations, restrictions, and
easements affecting the Real Property. Buyer shall promptly provide Seller with
a copy of the Title Commitment issued by the Title Company.

          4.3 Survey or Title Objections. If Buyer discovers any title or survey
matter which is objectionable to Buyer, Buyer may provide Seller with written
notice of its objection to same on or before the expiration of the Review Period
(the “Title Review Period”). If Buyer fails to so object in writing to any such
matter set forth in the Survey or Title Commitment during the Title Review
Period, it shall be conclusively assumed that Buyer has approved same. If Buyer
disapproves any condition of title, survey or other matters by written objection
to Seller on or

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before the expiration of the Title Review Period, Seller shall elect either to
attempt to cure or not cure any such item by written notice sent to Buyer within
ten (10) days after its receipt of notice from Buyer, and if Seller commits in
writing to attempt to cure any such item, then Seller shall be given until the
Closing Date to cure any such defect. In the event Seller shall fail to cure a
defect which Seller has committed in writing to cure prior to Closing, or if a
new title defect arises after the date of Buyer’s Title Commitment or Survey, as
applicable, but prior to Closing, then Buyer may elect, in Buyer’s sole and
absolute discretion: (i) to waive such objection and proceed to Closing, or (ii)
to terminate this Contract and receive a return of the Earnest Money Deposit,
and any interest thereon. The items shown on the Title Commitment which are not
objected to by Buyer as set forth above (other than exceptions and title defects
arising after the Title Review Period and other than those standard exceptions
which are ordinarily and customarily omitted in the state in which the Hotel is
located, so long as Seller provides the appropriate owner’s affidavit, gap
indemnity or other documentation reasonably required by the Title Company for
such omission) are hereinafter referred to as the “Permitted Exceptions.”
Regardless of whether Buyer does not object to same, in no event shall Permitted
Exceptions include liens, or documents evidencing liens, securing any
indebtedness, any mechanics’ or materialmen’s liens or any claims or potential
claims therefor covering the Property or any portion thereof (including FF&E or
other equipment financing or leases other than the lease of a passenger van
which shall be assumed by Buyer) attributable to a claim arising prior to the
Closing Date (“Seller Liens”), each of which shall be paid in full by Seller and
released at Closing.

          4.4 Existing Loan. Seller represents and warrants that the Existing
Loan is the only indebtedness secured by the Property and that the information
contained on Exhibit H is true, correct and complete. Neither Seller nor any
guarantor is in default or breach of any provisions of the documents evidencing
the Existing Loan and no event or circumstance has occurred or exists which but
for the passage of time would be a default under the Existing Loan. At Closing,
Buyer shall assume the Existing Loan and Buyer shall pay all administrative
fees, assumption fees and underwriting costs, if any, charged by the Existing
Lender in connection with said assumption. Seller shall cooperate with Buyer in
Buyer’s efforts related to the assumption of the Existing Loan including
executing such applications, certificates and other documents required by the
Lender and providing any information required by the Lender in connection with
the assumption of the Existing Loan. Seller shall be responsible for the costs
of its attorneys, and Buyer shall be responsible for the costs of its attorneys.
In addition, Buyer shall be responsible for the cost, if any, of Existing
Lender’s attorneys, related to the assumption of the Existing Loan.

ARTICLE V
MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT

          At or prior to the Closing, Seller shall terminate the Existing
Management Agreement and the Existing Franchise Agreement, and Seller shall be
solely responsible for all claims and liabilities arising thereunder on, prior
to or following the Closing Date. As a condition to Closing, Buyer shall enter
into the New Management Agreement and the New Franchise Agreement, effective as
of the Closing Date, containing terms and conditions acceptable to Buyer
(including, without limitation, such terms and conditions as may be required to
accommodate Buyer’s and/or Buyer’s Affiliates’ REIT structure). Seller shall be
responsible for

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paying all costs related to the termination of the Existing Management
Agreement. Buyer shall be responsible for paying all reasonable and actual costs
of the Franchisor related to the assignment or termination, as applicable, of
the Existing Franchise Agreement. Seller shall use best efforts to promptly
provide all information required by the Franchisor in connection with the New
Franchise Agreement, and Seller and Buyer shall diligently pursue obtaining the
same. As a condition to Buyer’s and Seller’s obligation to close under this
Contract, Buyer and Manager shall agree, on or before the expiration of the
Review Period, on the form and substance of the New Management Agreement.

ARTICLE VI
BROKERS

          Seller and Buyer each represents and warrants to the other that,
except for Hodges, Ward Elliott, Inc. for who’s fees and commissions Seller
shall be solely responsible, it has not engaged any broker, finder or other
party in connection with the transaction contemplated by this Contract. Buyer
and Seller each agree to save and hold the other harmless from any and all
losses, damages, liabilities, costs and expenses (including, without limitation,
attorneys’ fees) involving claims made by any other agent, broker, or other
person by or through the acts of Buyer or Seller, respectively, in connection
with this transaction.

ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS

          7.1 Seller’s and Indemnitor’s Representations, Warranties and
Covenants. Seller and the Indemnitor hereby represent, warrant and covenant to
Buyer as follows:

                    (a) Authority; No Conflicts. Seller is a limited liability
company duly formed, validly existing and in good standing in the State of
Wisconsin. Indemnitor is a corporation duly authorized, validly existing and in
good standing in the State of Wisconsin. Each of Seller and Indemnitor has
obtained all necessary consents to enter into and perform this Contract and is
fully authorized to enter into and perform this Contract (except as otherwise
noted in Exhibit “D”) and to complete the transactions contemplated by this
Contract. No consent or approval of any person, entity or governmental authority
is required for the execution, delivery or performance by Seller or Indemnitor
of this Contract, except as set forth in Exhibit D, and this Contract is hereby
binding and enforceable against Seller and Indemnitor (assuming the consents set
forth in Exhibit “D” are obtained). Neither the execution nor the performance
of, or compliance with, this Contract by Seller or Indemnitor has resulted, or
will result, in any violation of, or default under, or acceleration of, any
obligation under any existing corporate charter, certificate of incorporation,
bylaw, articles of organization, limited liability company agreement or
regulations, partnership agreement or other organizational documents and under
any, mortgage indenture, lien agreement, promissory note, contract, or permit,
or any judgment, decree, order, restrictive covenant, statute, rule or
regulation, applicable to Seller, Indemnitor or to the Hotel (except as set
forth in Exhibit “D”); provided, however, the assumption of the Existing Loan by
Buyer is subject to the consent and approval of the Existing Lender.

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                    (b) FIRPTA. Seller is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those items are defined in the
Internal Revenue Code and Income Tax Regulations).

                    (c) Bankruptcy. None of Seller, Indemnitor, or, to Seller’s
knowledge, any of its or their partners or members, is insolvent or the subject
of any bankruptcy proceeding, receivership proceeding or other insolvency,
dissolution, reorganization or similar proceeding.

                    (d) Property Agreements. A complete list of all FF&E Leases,
Service Contracts and Leases (other than those entered into by the Manager on
its own behalf) used in or otherwise relating to the operation and business of
the Hotel is attached hereto as Exhibit C-1, and, to Seller’s knowledge, a
complete list of all other FF&E Leases, Service Contracts and Leases used in or
otherwise relating to the operation and business of the Hotel is attached hereto
as Exhibit C-2. The assets constituting the Property to be conveyed to Buyer
hereunder constitute all of the property and assets of Seller used in connection
with the operation and business of the Hotel. There are no leases, license
agreements, leasing agent’s agreements, equipment leases, building service
agreements, maintenance contracts, suppliers contracts, warranty contracts,
operating agreements, or other agreements (i) to which Seller is a party or an
assignee, or (ii) to Seller’s or Indemnitor’s knowledge, binding upon the Hotel,
relating to the ownership, occupancy, operation, management or maintenance of
the Real Property, FF&E, Supplies or Tradenames, except for those Service
Contracts, Leases, Warranties, FF&E Leases and other agreements disclosed on
Exhibit C or to be delivered to Buyer pursuant to Section 3.1. The Service
Contracts, Leases, Warranties, FF&E Leases and other agreements disclosed on
Exhibit C or to be delivered to Buyer pursuant to Section 3.1 are in full force
and effect, and no default has occurred and is continuing thereunder and no
circumstances exist which, with the giving of notice, the lapse of time or both,
would constitute such a default. No party has any right or option to acquire the
Hotel or any portion thereof, other than Buyer.

                    (e) Pending Claims. There are no: (i) claims, demands,
litigation, proceedings or governmental investigations pending or threatened
against Seller, Indemnitor, the Manager or any Affiliate of any of them
(collectively, “Seller Parties”) or related to the business or assets of the
Hotel, except as set forth on Exhibit F attached hereto and incorporated herein
by reference, (ii) special assessments or extraordinary taxes except as set
forth in the Title Commitment or (iii) pending or threatened condemnation or
eminent domain proceedings which would affect the Property or any part thereof.
There are no: pending arbitration proceedings or unsatisfied arbitration awards,
or judicial proceedings or orders respecting awards, which might become a lien
on the Property or any portion thereof, pending unfair labor practice charges or
complaints, unsatisfied unfair labor practice orders or judicial proceedings or
orders with respect thereto, pending charges or complaints with or by city,
state or federal civil or human rights agencies, unremedied orders by such
agencies or judicial proceedings or orders with respect to obligations under
city, state or federal civil or human rights or antidiscrimination laws or
executive orders affecting the Hotel, or other pending, actual or, to Seller’s
or Indemnitor’s knowledge, threatened litigation claims, charges, complaints,
petitions or unsatisfied orders by or before any administrative agency or court
which affect the Hotel or might become a lien on the Hotel (collectively, the
“Pending Claims”).

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                    (f) Environmental. With respect to environmental matters, to
Seller’s and Indemnitor’s knowledge and except as described in Exhibit “E,” (i)
there has been no Release or threat of Release of Hazardous Materials in, on,
under, to, from or in the area of the Real Property, except as disclosed in the
reports and documents set forth on Exhibit E attached hereto and incorporated
herein by reference, (ii) no portion of the Property is being used for the
treatment, storage, disposal or other handling of Hazardous Materials or
machinery containing Hazardous Materials other than standard amounts of cleaning
supplies, equipment maintenance supplies, and chlorine and other chemicals for
the swimming pool, all of which are stored on the Property in strict accordance
with applicable Environmental Requirements and do not exceed limits permitted
under applicable laws, including without limitation Environmental Requirements,
(iii) no underground storage tanks are currently located on or in the Real
Property or any portion thereof, (iv) no environmental investigation,
administrative order, notification, consent order, litigation, claim, judgment
or settlement with respect to the Property or any portion thereof is pending or
threatened, (v) except as disclosed on Exhibit “E” there is not currently and,
to Seller’s and Indemnitor’s knowledge, never has been any mold, fungal or other
microbial growth in or on the Property, or existing conditions within the
Property that could reasonably be expected to result in material liability or
material costs or expenses to remediate the mold, fungal or microbial growth, or
to remedy such conditions that could reasonably be expected to result in such
growth, and (vi) except as disclosed on Exhibit E, there are no reports or other
documentation regarding the environmental condition of the Real Property in the
possession of Seller or Seller’s Affiliates, consultants, contractors or agents.
As used in this Contract: “Hazardous Materials” means (1) “hazardous wastes” as
defined by the Resource Conservation and Recovery Act of 1976, as amended from
time to time (“RCRA”), (2) “hazardous substances” as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. 9601 et seq.), as amended by the Superfund Amendment and Reauthorization
Act of 1986 and as otherwise amended from time to time (“CERCLA”); (3) “toxic
substances” as defined by the Toxic Substances Control Act, as amended from time
to time (“TSCA”), (4) “hazardous materials” as defined by the Hazardous
Materials Transportation Act, as amended from time to time (“HMTA”), (5)
asbestos, oil or other petroleum products, radioactive materials, urea
formaldehyde foam insulation, radon gas and transformers or other equipment that
contains dielectric fluid containing polychlorinated biphenyls and (6) any
substance whose presence is detrimental or hazardous to health or the
environment, including, without limitation, microbial or fungal matter or mold,
and is otherwise regulated by federal, state and local environmental laws
(including, without limitation, RCRA, CERCLA, TSCA, HMTA), rules, regulations
and orders, regulating, relating to or imposing liability or standards of
conduct concerning any Hazardous Materials or environmental, health or safety
compliance (collectively, “Environmental Requirements”). As used in this
Contract: “Release” means spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing.

                    (g) Title and Liens. Except for Seller Liens to be released
at Closing, Seller has good and marketable fee simple absolute title to the Real
Property, subject only to the Permitted Exceptions. Except for any applicable
Permitted Exceptions, Seller has good and marketable title to the Personal
Property, free and clear of all liens, claims, encumbrances or other rights
whatsoever (other than the Seller Liens to be released at Closing), and there
are no other liens, claims, encumbrances or other rights pending or of which any
Seller Party has

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received notice or which are otherwise known to any Seller Party related to any
other Personal Property. All FF&E (except for FF&E Leases), including vehicles
if any, shall be lien free at Closing.

                    (h) Utilities. All appropriate utilities, including sanitary
and storm sewers, water, gas, telephone, cable and electricity, are, to Seller’s
and Indemnitor’s knowledge, currently sufficient and available to service the
Hotel and all installation, connection or “tap-on”, usage and similar fees have
been paid.

                    (i) Licenses, Permits and Approvals. Neither Seller nor
Indemnitor has received any written notice, and neither Seller nor Indemnitor
has knowledge that the Property fails to comply with all applicable licenses,
permits and approvals and federal, state or local statutes, laws, ordinances,
rules, regulations, requirements and codes including, without limitation, those
regarding zoning, land use, building, fire, health, safety, environmental,
subdivision, water quality, sanitation controls and the Americans with
Disabilities Act, and similar rules and regulations relating and/or applicable
to the ownership, use and operation of the Property as it is now operated. To
Seller’s and Indemnitor’s knowledge, Seller has received all material licenses,
permits and approvals required or needed for the lawful conduct, occupancy and
operation of the business of the Hotel, and each license and permit is in full
force and effect, and will be received and in full force and effect as of the
Closing. No licenses, permits or approvals necessary for the lawful conduct,
occupancy or operation of the business of the Hotel, to Seller’s or Indemnitor’s
knowledge requires any approval of a governmental authority for transfer of the
Property except as set forth in Exhibit D.

                    (j) Financial Statements. Seller has delivered copies of all
prior and current (i) Financial Statements for the Hotel, and (ii) monthly
financial statements prepared by the Manager for the Hotel. Each of such
statements is, to Seller’s knowledge, complete and accurate in all material
respects and, except in the case of budgets prepared in advance of the
applicable operating period to which such budgets relate, fairly presents the
results of operations of the Hotel for the respective periods represented
thereby. Seller has relied upon the Financial Statements in connection with its
ownership and operation of the Hotel, and there are no independent audits or
financial statements prepared by third parties relating to the operation of the
Hotel other than the Financial Statements prepared by or on behalf of the
Manager, all of which have been provided to Buyer.

                    (k) Employees. All employees employed at the Hotel are the
employees of Seller, the Manager or an affiliate. There are, to Seller’s and
Indemnitor’s knowledge, no (i) unions organized at the Hotel, (ii) union
organizing attempts, strikes, organized work stoppages or slow downs, or any
other labor disputes pending or threatened with respect to any of the employees
at the Hotel, or (iii) collective bargaining or other labor agreements to which
Seller or the Manager or the Hotel is bound with respect to any employees
employed at the Hotel.

                    (l) Operations. To Seller’s and Indemnitor’s knowledge, the
Hotel has at all times been operated by Manager in accordance with all
applicable laws, rules, regulations, ordinances and codes.

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                    (m) Existing Management and Franchise Agreements. Seller has
furnished to Buyer true and complete copies of the Existing Management Agreement
and the Existing Franchise Agreement, which constitutes the entire agreement of
the parties with respect to the subject matter thereof and which have not been
amended or supplemented in any respect. There are no other management
agreements, franchise agreements, license agreements or similar agreements for
the operation or management of the Hotel or relating to the Brand, to which
Seller is a party or which are binding upon the Property, except for the
Existing Management Agreement and the Existing Franchise Agreement. To Seller’s
knowledge, the Improvements comply with, and the Hotel is being operated in
accordance with, all requirements of such Existing Management Agreement and the
Existing Franchise Agreement and all other requirements of the Manager and the
Franchisor, including all “brand standard” requirements of the Manager and the
Franchisor. The Existing Management Agreement and the Existing Franchise
Agreement are in full force and effect, and shall remain in full force and
effect until the termination of the Existing Management Agreement and the
Existing Franchise Agreement at Closing, as provided in Article V hereof. No
default has occurred and is continuing under the Existing Management Agreement
or the Existing Franchise Agreement, and no circumstances exist which, with the
giving of notice, the lapse of time or both, would constitute such a default.

                    (n) Construction of Hotel.

 

 

 

                    (i) To Seller’s and Indemnitor’s knowledge the Hotel has
been constructed in a good and workmanlike manner without encroachments not
disclosed on the Survey and in accordance in all material respects with the
record plans and specs, and all building permits and certificates of occupancy
therefor and all applicable zoning, platting, subdivision, health, safety and
similar laws, rules, regulations, ordinances and codes.

 

 

 

                    (ii) To Seller’s and Indemnitor’s knowledge the Personal
Property is in good condition and operating order.

 

 

 

                    (iii) To Seller’s and Indemnitor’s knowledge, necessary
easements for ingress and egress, drainage, signage and utilities serving the
Hotel have either been dedicated to the public, conveyed to the appropriate
utility or will be conveyed to Buyer along with the Property, or otherwise
provided for such that the Hotel may operate.

          Notwithstanding the foregoing, Buyer acknowledges that it is being
given a full opportunity to completely inspect the Property, the operation
thereof, and the financial and other information in connection therewith. In
addition, Buyer represents and warrants that it will inspect the Property and,
if it elects to close the transaction, will be familiar with and satisfied with
the condition of Property including, without limitation, the location,
condition, layout and physical condition of the Property and surrounding areas,
geotechnical data, surface, soil and subsurface conditions of the Property and
all structural matters related thereto. Therefore, except as specifically
provided in this Agreement, Seller is conveying and Buyer is accepting the
property in strictly “AS IS” condition with all faults and, except for the
specific warranties and representations provided in this Agreement, Seller is
not making any further warranties or

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representations, express or implied, including, without limitation, any warranty
of merchantability or fitness for a particular purpose. Buyer represents and
warrants that, Buyer is experienced in the acquisition of real property,
including lodging properties, and that as of the Closing Date, Buyer will be
familiar with the Property and will have made such independent investigations as
Buyer deems necessary or appropriate concerning the Property. If Buyer elects to
proceed with the purchase of the Property, any objections which Buyer may have
with respect to the Property shall be waived by the Buyer. All warranties and
representations contained in this Agreement shall survive the Closing of this
transaction for a period of twelve (12) months after Closing. No suit, cause of
action, demand or other claim of any nature whatsoever shall be made under the
foregoing representations, warranties and covenants unless the aggregate amount
of Buyer’s direct out-of-pocket losses (not including, by way of example only,
any diminution in the value of the Property) resulting from the inaccuracy or
breach of such representations, warranties and covenants exceeds, in the
aggregate, Fifty Thousand and no/100ths ($50,000.00) dollars. (the Agreed-Upon
Limit”). The Agreed-Upon Limit shall not apply to subsections 7.1(d), (e), (g),
and (i) above, Section 8.8 below (except as provided in 8.8(a)(ii)) or errors in
the proper calculation of closing credits or changes including, but not limited
to, Seller’s Costs and Buyer’s Costs under Article XI, below, and Adjustments
under Article XII, below.

          7.2 Buyer’s Representations, Warranties and Covenants. Buyer
represents, warrants and covenants:

                    (a) Authority. Buyer is a corporation duly formed, validly
existing and in good standing in the Commonwealth of Virginia. Buyer has
received or will have received by the applicable Closing Date all necessary
authorization of the Board of Directors of Buyer to complete the transactions
contemplated by this Contract. No other consent or approval of any person,
entity or governmental authority is required for the execution, delivery or
performance by Buyer of this Contract, and this Contract is hereby binding and
enforceable against Buyer.

                    (b) Bankruptcy. Buyer is not insolvent nor the subject of
any bankruptcy proceeding, receivership proceeding or other insolvency,
dissolution, reorganization or similar proceeding.

          7.3 Survival. All of the representations and warranties are true,
correct and complete in all material respects as of the date hereof and the
statements set forth therein (without qualification or limitation as to a
party’s knowledge thereof except as expressly provided for in this Article VII)
shall be true, correct and complete in all material respects as of the Closing
Date. All of the representations, warranties and covenants made herein shall
survive Closing for a period of one (1) years and shall not be deemed to merge
into or be waived by the Deed or any other closing documents.

ARTICLE VIII
ADDITIONAL COVENANTS

          8.1 Subsequent Developments. After the date of this Contract and until
the Closing Date, Seller shall use best efforts to keep Buyer fully informed of
all subsequent developments of which Seller has knowledge (“Subsequent
Developments”) which would cause any of Seller’s

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representations or warranties contained in this Contract to be no longer
accurate in any material respect.

          8.2 Operations. From and after the date hereof through the Closing on
the Property, Seller shall comply with the Existing Management Agreement and the
Existing Franchise Agreement and keep the same in full force and effect and
shall perform and comply with all of the following subject to and in accordance
with the terms of such agreements:

                    (a) Continue to maintain the Property generally in
accordance with past practices of Seller and pursuant to and in compliance with
the Existing Management Agreement and the Existing Franchise Agreement,
including, without limitation, (i) using reasonable efforts to keep available
the services of all present employees at the Hotel and to preserve its relations
with guests, suppliers and other parties doing business with Seller with respect
to the Hotel, (ii) accepting booking contracts for the use of the Hotel’s
facilities retaining such bookings in accordance with the terms of the Existing
Management Agreement and the Existing Franchise Agreement, (iii) maintaining the
current level of advertising and other promotional activities for the Hotel’s
facilities, (iv) maintaining the present level of insurance with respect to the
Hotel in full force and effect until the Closing Date for the Hotel and (v)
remaining in compliance in all material respects with all current Licenses;

                    (b) Keep, observe, and perform in all material respects all
its obligations under and pursuant to the Leases, the Service Contracts, the
FF&E Leases, the Existing Management Agreement, the Existing Franchise
Agreement, the Contracts, Plans and Specs, the Warranties and all other
applicable contractual arrangements relating to the Hotel;

                    (c) Not cause or permit the removal of FF&E from the Hotel
except for the purpose of discarding worn and valueless items that have been
replaced with FF&E of equal or better quality; timely make all repairs,
maintenance, and replacements to keep all FF&E and all other Personal Property
and all Real Property in good operating condition; keep and maintain the Hotel
in a good state of repair and condition, reasonable and ordinary wear and tear
excepted; and not commit waste of any portion of the Hotel;

                    (d) Maintain the levels and quality of the Personal Property
generally at the levels and quality existing on the date hereof and keep
merchandise, supplies and inventory adequately stocked, consistent with good
business practice, as if the sale of the Hotel hereunder were not to occur,
including, without limitation, maintaining linens and bath towels at least at a
2-par level for all suites or rooms of the Hotel;

                    (e) Advise Buyer promptly of any litigation, arbitration, or
administrative hearing before any court or governmental agency concerning or
affecting the Hotel which is instituted or threatened after the date of this
Contract or if any representation or warranty contained in this Contract shall
become false;

                    (f) Not take, or purposefully omit to take, any action that
would have the effect of violating any of the representations, warranties,
covenants or agreements of Seller contained in this Contract;

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                    (g) Pay or cause to be paid all taxes, assessments and other
impositions levied or assessed on the Hotel or any part thereof prior to the
delinquency date, and comply with all federal, state, and municipal laws,
ordinances, regulations and orders relating to the Hotel;

                    (h) Not sell or assign, or enter into any agreement to sell
or assign, or create or permit to exist any lien or encumbrance (other than a
Permitted Exception) on, the Property or any portion thereof; and

                    (i) Not allow any permit, receipt, license, franchise or
right currently in existence with respect to the operation, use, occupancy or
maintenance of the Hotel to expire, be canceled or otherwise terminated.

          Seller shall promptly furnish to Buyer copies of all new, amended or
extended FF&E Leases, Service Contracts, Leases and other contracts or
agreements (other than routine hotel room bookings entered into in the ordinary
course of business) relating to the Hotel and entered into by the Manager prior
to Closing; provided, however, that in the case of any of the foregoing entered
into by the Manager on its own behalf, only to the extent Seller has knowledge
thereof or a copy of which is obtainable from the Manager. Buyer shall have the
right to extend the Review Period for a period of five (5) Business Days in
order to review any of the foregoing that are not received by Buyer at least
five (5) Business Days prior to the expiration of the Review Period. Seller
shall not, without first obtaining the written approval of Buyer, which approval
shall not be unreasonably withheld, delayed or conditioned enter into any new
FF&E Leases, Service Contracts, Leases or other contracts or agreements related
to the Hotel, or extend any existing such agreements, unless such agreements (x)
can be terminated, without penalty, upon thirty (30) days’ prior notice or (y)
will expire prior to the Closing Date.

          8.3 Third Party Consents. Prior to the Closing Date, Seller shall, at
its expense, (i) obtain any and all third party consents and approvals (x)
required in order to transfer the Hotel to Buyer (other than the Franchisor,
liquor licenses, and all related licenses, permits or approvals which require
issuance in Buyer’s name) or (y) which, if not obtained, would materially
adversely affect the operation of the Hotel, including, without limitation, all
consents and approvals referred to on Exhibit D and (ii) use best efforts to
obtain all other third party consents and approvals (all of such consents and
approvals in (i) and (ii) above being referred to collectively as, the “Third
Party Consents”).

          8.4 Employees. Upon reasonable prior notice to Seller by Buyer, Buyer
and its employees, representatives and agents shall have the right to
communicate with Seller’s staff, and, subject to the approval of the Manager,
the Hotel staff and the Manager’s staff, including without limitation the
general manager, the director of sales, the engineering staff and other key
management employees of the Hotel, at any time before Closing. Buyer shall not
interfere with the operations of the Hotel while engaging in such communication
in a manner that materially adversely affects the operation of any Property or
the Existing Management Agreements.

          8.5 Estoppel Certificates. Seller shall obtain from (i) each tenant
under any Lease affecting the Hotel which results in annual revenue greater than
$12,000 (but not from current or prospective occupants of hotel rooms and suites
within the Hotel) and (ii) each lessor under any FF&E Lease in excess of
$100,000 for the Hotel identified by Buyer as a material FF&E Lease,

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the estoppel certificates substantially in the forms provided by Buyer to Seller
during the Review Period, and deliver to Buyer not less than five (5) days
before the Closing.

          8.6 Access to Financial Information. Buyer’s representatives shall
have access to, and Seller and its Affiliates shall cooperate with Buyer and
furnish upon request, all financial and other information relating to the
Hotel’s operations to the extent necessary to enable Buyer’s representatives to
prepare audited financial statements in conformity with Regulation S-X of the
Securities and Exchange Commission (the “SEC”) and other applicable rules and
regulations of the SEC and to enable them to prepare a registration statement,
report or disclosure statement for filing with the SEC on behalf of Buyer or its
Affiliates, whether before or after Closing and regardless of whether such
information is included in the Records to be transferred to Buyer hereunder.
Seller shall also provide to Buyer’s representative a signed representation
letter in form and substance reasonably acceptable to Seller sufficient to
enable an independent public accountant to render an opinion on the financial
statements related to the Hotel. Buyer will reimburse Seller for costs
reasonably incurred by Seller to comply with the requirements of the preceding
sentence to the extent that Seller is required to incur costs not in the
ordinary course of business for third parties to provide such representation
letters. The provisions of this Section shall survive Closing or termination of
this Contract.

          8.7 Bulk Sales. At Seller’s risk and expense, Seller shall take all
steps necessary to comply with the requirements of a transferor under all bulk
transfer laws, if any, that are applicable to the transactions contemplated by
this Contract.

          8.8 Indemnification. If the transactions contemplated by this Contract
are consummated as provided herein:

                    (a) Indemnification of Buyer. Without in any way limiting or
diminishing the warranties, representations or agreements herein contained or
the rights or remedies available to Buyer for a breach hereof (except as
expressly provided therein), Seller hereby agrees to indemnify, defend and hold
harmless Buyer, its Affiliates and its and such Affiliates’ officers,
shareholders and employees from and against all losses, judgments, liabilities,
claims, damages or expenses (including reasonable attorneys’ fees) of every
kind, nature and description in existence before, on or after Closing, whether
known or unknown, absolute or continent, joint or several, arising out of or
relating to:

 

 

 

                              (i) any claim made or asserted against Buyer or
any of the Property by a creditor of Seller, including any claims based on or
alleging a violation of any bulk sales act or other similar laws;

 

 

 

                              (ii) the breach of any representation, warranty,
covenant or agreement of Seller contained in this Contract but subject to the
Agreed-Upon Limit;

 

 

 

                              (iii) any liability or obligation of Seller not
expressly assumed by Buyer pursuant to this Contract or otherwise;

 

 

 

                              (iv) any claim made or asserted by an employee of
Seller arising out of Seller’s decision to sell the Property; and

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                              (v) the conduct and operation by or on behalf of
Seller of its Hotel or the ownership, use or operation of its Property prior to
Closing.

                    (b) Indemnification of Seller. Without in any way limiting
or diminishing the warranties, representations or agreements herein contained or
the rights or remedies available to Seller for a breach hereof, Buyer hereby
agrees, with respect to this Contract, to indemnify, defend and hold harmless
Seller from and against all losses, judgments, liabilities, claims, damages or
expenses (including reasonable attorneys’ fees) of every kind, nature and
description in existence before, on or after Closing, whether known or unknown,
absolute or contingent, joint or several, arising out of or relating to:

 

 

 

                              (i) the breach of any representation, warranty,
covenant or agreement of Buyer contained in this Contract;

 

 

 

                              (ii) the conduct and operation by Buyer of its
business at the Hotel or the ownership, use of or operation of its Property
after the Closing; and

 

 

 

                              (iii) any liability or obligation of Buyer
expressly assumed by Buyer at Closing.

                    (c) Indemnification Procedure for Claims of Third Parties.
Indemnification, with respect to claims resulting from the assertion of
liability by those not parties to this Contract (including governmental claims
for penalties, fines and assessments), shall be subject to the following terms
and conditions:

 

 

 

                              (i) The party seeking indemnification (the
“Indemnified Party”) shall give prompt written notice to the party or parties
from which it is seeking indemnification (the “Indemnifying Party”) of any
assertion of liability by a third party which might give rise to a claim for
indemnification based on the foregoing provisions of this Section 8.8, which
notice shall state the nature and basis of the assertion and the amount thereof,
to the extent known; provided, however, that no delay on the part of the
Indemnified Party in giving notice shall relieve the Indemnifying Party of any
obligation to indemnify unless (and then solely to the extent that) the
Indemnifying Party is prejudiced by such delay.

 

 

 

                              (ii) If in any action, suit or proceeding (a
“Legal Action”) the relief sought is solely the payment of money damages, and if
the Indemnifying Party specifically agrees in writing to indemnify such
Indemnified Party with respect thereto and demonstrates to the reasonable
satisfaction of such Indemnified Party its financial ability to do so, the
Indemnifying Party shall have the right, commencing thirty (30) days after such
notice, at its option, to elect to settle, compromise or defend, pursuant to
this paragraph, by its own counsel and at its own expense, any such Legal Action
involving such Indemnified Party’s asserted liability. If the Indemnifying Party
does not undertake to settle, compromise or defend any such Legal Action, such
settlement, compromise or defense shall be conducted in the sole discretion of
such Indemnified Party, but such Indemnified Party shall provide the
Indemnifying Party with such information concerning such settlement, compromise
or defense as the Indemnifying Party may reasonably

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request from time to time. If the Indemnifying Party undertakes to settle,
compromise or defend any such asserted liability, it shall notify such
Indemnified Party in writing of its intention to do so within thirty (30) days
of notice from such Indemnified Party provided above.

 

 

 

                              (iii) Notwithstanding the provisions of the
previous subsection of this Contract, until the Indemnifying Party shall have
assumed the defense of the Legal Action, the defense shall be handled by the
Indemnified Party. Furthermore, (x) if the Indemnified Party shall have
reasonably concluded that there are likely to be defenses available to it that
are different from or in addition to those available to the Indemnifying Party;
(y) if the Legal Action involves other than money damages and seeks injunctive
or other equitable relief; or (z) if a judgment against Buyer, as the
Indemnified Party, in the Legal Action will, in the good faith opinion of Buyer,
establish a custom or precedent which will be adverse to the best interest of
the continuing business of the Hotel, the Indemnifying Party, shall not be
entitled to assume the defense of the Legal Action and the defense shall be
handled by the Indemnified Party, provided that, in the case of clause (z), the
Indemnifying Party shall have the right to approve legal counsel selected by the
Indemnified Party, such approval not to be unreasonably withheld, delayed or
conditioned. If the defense of the Legal Action is handled by the Indemnified
Party under the provisions of this subsection, the Indemnifying Party shall pay
all legal and other expenses reasonably incurred by the Indemnified Party in
conducting such defense.

 

 

 

                              (iv) In any Legal Action initiated by a third
party and defended by the Indemnified Party (w) the Indemnified Party shall have
the right to be represented by advisory counsel and accountants, at its own
expense, (x) the Indemnifying Party shall keep the Indemnified Party fully
informed as to the status of such Legal Action at all stages thereof, whether or
not the Indemnified Party is represented by its own counsel, (y) the
Indemnifying Party shall make available to the Indemnified Party and its
attorneys, accountants and other representatives, all books and records of
Seller relating to such Legal Action and (z) the parties shall render to each
other such assistance as may be reasonably required in order to ensure the
proper and adequate defense of such Legal Action.

 

 

 

                              (v) In any Legal Action initiated by a third party
and defended by the Indemnifying Party, the Indemnifying Party shall not make
settlement of any claim without the written consent of the Indemnified Party,
which consent shall not be unreasonably withheld, delayed or conditioned.
Without limiting the generality of the foregoing, it shall not be deemed
unreasonable to withhold consent to a settlement involving injunctive or other
equitable relief against Buyer or its respective assets, employees, Affiliates
or business, or relief which Buyer reasonably believes could establish a custom
or precedent which will be adverse to the best interests of its continuing
business.

          8.9 Escrow Funds. To provide for the timely payment of any
post-closing claims by Buyer against Seller hereunder, at Closing, Seller shall
deposit an amount equal to One Hundred Fifty Thousand and No/100 Dollars
($150,000.00) (the “Escrow Funds”) which shall be withheld from the Purchase
Price payable to Seller and shall be deposited for a period of one (1)

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year in an escrow account with the Title Company pursuant to an escrow agreement
reasonably satisfactory in form and substance to Buyer and Seller (the
“Post-Closing Agreement”), which escrow and Post-Closing Agreement shall be
established and entered into at Closing and shall be a condition to Buyer’s
obligations under this Contract. All earnings accrue to Seller and Seller may
direct investment thereof. If no claims have been asserted by Buyer against
Seller, or all such claims have been satisfied, within such 1-year period, the
Escrow Funds deposited by Seller shall be released to Seller.

          8.10 Liquor Licenses. As a condition to Buyer’s obligations under this
Contract, (i) the Manager or an Affiliate thereof approved by Buyer shall have
or shall have obtained all liquor licenses and alcoholic beverage licenses
necessary or desirable to operate any restaurants, bars and lounges presently
located within the Hotel (collectively, the “Liquor Licenses”) and, in the case
of an Affiliate of the Manager, the Hotel has the right to use such Liquor
License, (ii) if permitted under the laws of the jurisdiction in which the Hotel
is located, the Manager shall execute and file any and all necessary forms,
applications and other documents (and Seller shall cooperate with the Manager in
filing such forms, applications and other documents) with the appropriate liquor
and alcoholic beverage authorities prior to Closing so that the Liquor Licenses
remain in full force and effect upon completion of Closing.

ARTICLE IX
CONDITIONS FOR CLOSING

          9.1 Buyer’s Conditions for Closing. Unless otherwise waived in
writing, and without prejudice to Buyer’s right to cancel this Contract during
the Review Period, the duties and obligations of Buyer to proceed to Closing
under the terms and provisions of this Contract are and shall be expressly
subject to strict compliance with, and satisfaction or waiver of, each of the
conditions and contingencies set forth in this Section 9.1, each of which shall
be deemed material to this Contract. In the event of the failure of any of the
conditions set forth in this Section 9.1 or of any other condition to Buyer’s
obligations provided for in this Contract, which condition is not waived in
writing by Buyer, Buyer shall have the right at its option to declare this
Contract terminated, in which case the Earnest Money Deposit and any interest
thereon shall be immediately returned to Buyer and each of the parties shall be
relieved from further liability to the other, except as otherwise expressly
provided herein, with respect to this Contract.

                    (a) All of Seller’s representations and warranties contained
in or made pursuant to this Contract shall be true and correct in all material
respects as if made again on the Closing Date.

                    (b) Buyer shall have received all of the instruments and
conveyances listed in Section 10.2.

                    (c) Seller shall have performed, observed and complied in
all material respects with all of the covenants, agreements, closing
requirements and conditions required by this Contract to be performed, observed
and complied with by Seller, as and when required hereunder.

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                    (d) All Liquor Licenses shall be in full force and effect
and shall remain in full force and effect following Closing and shall have been
or shall be transferred to, or new Liquor Licenses issued to, the Manager or an
Affiliate thereof approved by Buyer at or as of Closing, and Buyer shall have
received satisfactory evidence thereof.

                    (e) Third Party Consents in form and substance satisfactory
to Buyer shall have been obtained and furnished to Buyer.

                    (f) The Escrow Funds shall have been deposited in the escrow
account pursuant to the Post-Closing Agreement and the parties thereto shall
have entered into the Post-Closing Agreement.

                    (g) The Existing Management Agreement and the Existing
Franchise Agreement shall have been terminated.

                    (h) Buyer and the Manager shall have executed and delivered
the New Management Agreement and Buyer and the Franchisor shall have executed
and delivered the New Franchise Agreement, in each case upon terms and
conditions acceptable to Buyer in its sole and absolute discretion.

                    (i) The Existing Lender shall have approved and authorized
the closing of the assumption of the Existing Loan by Buyer.

          9.2 Seller’s Conditions for Closing. Unless otherwise waived in
writing, and without prejudice to Seller’s right to cancel this Contract during
the Review Period, the duties and obligations of Seller to proceed to Closing
under the terms and provisions of this Contract are and shall be expressly
subject to strict compliance with, and satisfaction or waiver of, each of the
conditions and contingencies set forth in this Section 9.2, each of which shall
be deemed material to this Contract. In the event of the failure of any of the
conditions set forth in this Section 9.2, which condition is not waived in
writing by Seller, Seller shall have the right at its option to declare this
Contract terminated and null and void, in which case the remaining Earnest Money
Deposit and any interest thereon shall be immediately paid to Buyer and each of
the parties shall be relieved from further liability to the other, except as
otherwise expressly provided herein.

                    (a) All of Buyer’s representations and warranties contained
in or made pursuant to this Contract shall be true and correct in all material
respects as if made again on the Closing Date.

                    (b) Seller shall have received all of the money, instruments
and conveyances listed in Section 10.3.

                    (c) Buyer shall have performed, observed and complied in all
material respects with all of the covenants, agreements, closing requirements
and conditions required by this Contract to be performed, observed and complied
with by Buyer, as and when required hereunder.

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ARTICLE X
CLOSING AND CONVEYANCE

          10.1 Closing. Unless otherwise agreed by Buyer and Seller, the Closing
on the Property shall occur on a date selected by Buyer that is the later to
occur of (a) fifteen (15) business days after expiration of the Review Period or
(b) receipt by Buyer of the New Franchise Agreement, or (c) the date that
Existing Lender has unconditionally committed to close on the assumption of the
Existing Loan by, and consent to the transfer of the Property to, Buyer;
provided that in each case all conditions to Closing by Buyer hereunder have
been satisfied. The date on which the Closing is to occur as provided in this
Section 10.1, or such other date as may be agreed upon by Buyer and Seller, is
referred to in this Contract as the “Closing Date” for the Property. The Closing
shall be held at 10:00 a.m. at the offices of the Title Company, or as otherwise
determined by Buyer and Seller.

          10.2 Deliveries of Seller and Indemnitor. At Closing, Seller or
Indemnitor, as applicable, shall deliver to Buyer the following, and, as
appropriate, all instruments shall be properly executed and conveyance
instruments to be acknowledged in recordable form (the terms, provisions and
conditions of all instruments not attached hereto as Exhibits shall be mutually
agreed upon by Buyer and Seller prior to such Closing):

                    (a) Deed. A Special Warranty deed conveying to Buyer fee
simple title to the Real Property, subject only to the Permitted Exceptions (the
“Deed”).

                    (b) Bills of Sale. Bills of sale to Buyer and/or its
designated Lessee, conveying title to the tangible Personal Property (other than
the alcoholic beverage inventories, which, at Buyer’s election and if permitted
by applicable law, shall be transferred by Seller to the Manager as holder of
the Liquor Licenses required for operation of the Hotel).

                    (c) Existing Management and Franchise Agreements. The
termination of the Existing Management Agreement and the Existing Franchise
Agreement.

                    (d) General Assignments. Assignments of all of Seller’s
right, title and interest in and to all FF&E Leases, Service Contracts and
Leases identified on Exhibit C hereto (the “Hotel Contracts”). The assignment
shall also be a general assignment and shall provide for the assignment of all
of Seller’s right, title and interest in all Records, Warranties, Licenses,
Tradenames (except “Cool Pool”TM), Contracts, Plans and Specs and all other
intangible Personal Property applicable to the Hotel.

                    (e) FIRPTA; 1099. A FIRPTA Affidavit or Transferor’s
Certificate of Non-Foreign Status as required by Section 1445 of the Internal
Revenue Code and an IRS Form 1099.

                    (f) Title Company Documents. All affidavits, gap indemnity
agreements and other documents reasonably required by the Title Company. At
Buyer’s sole expense, Buyer shall have obtained an irrevocable commitment
directly from the Title Company (or in the event the Title Company is not
willing to issue said irrevocable commitment, then from such other national
title company as may be selected by either Buyer or Seller) for issuance of an
Owner’s Policy of Title Insurance to Buyer insuring good and marketable fee
simple absolute title to the

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Real Property constituting part of the Property, subject only to the Permitted
Exceptions in the amount of the Purchase Price.

                    (g) Possession; Estoppel Certificates. Possession of the
Property, subject only to rights of guests in possession and tenants pursuant to
written leases included in the Leases, and estoppel certificates from tenants
under Leases and the lessors under FF&E Leases in form and substance acceptable
to Buyer.

                    (h) Vehicle Titles. The necessary certificates of titles
duly endorsed for transfer together with any required affidavits and other
documentation necessary for the transfer of title or assignment of leases from
Seller to Buyer of any motor vehicles used in connection with the Hotel’s
operations.

                    (i) Authority Documents. Certified copy of resolutions of
the Managing Members of Seller authorizing the sale of the Property contemplated
by this Contract, and/or other evidence reasonably satisfactory to Buyer and the
Title Company that the person or persons executing the closing documents on
behalf of Seller have full right, power and authority to do so, along with a
certificate of good standing of Seller from the State in which the Property is
located.

                    (j) Miscellaneous. Such other instruments as are
contemplated by this Contract to be executed or delivered by Seller, reasonably
required by Buyer or the Title Company, or customarily executed in the
jurisdiction in which the Hotel is located, to effectuate the conveyance of
property similar to the Hotel, with the effect that, after the Closing, Buyer
will have succeeded to all of the rights, titles, and interests of Seller
related to the Hotel and Seller will no longer have any rights, titles, or
interests in and to the Hotel.

                    (k) Plans, Keys, Records, Etc. To the extent not previously
delivered to and in the possession of Buyer, all Contracts, Plans and Specs, all
keys for the Hotel (which keys shall be properly tagged for identification), all
Records, including, without limitation, all Warranties, Licenses, Leases, FF&E
Leases and Service Contracts for the Hotel.

                    (l) Closing Statements. Seller’s Closing Statement, and a
certificate confirming the truth of Seller’s representations and warranties
hereunder as of the Closing Date.

                    (m) Indemnification Agreement. At Closing, Indemnitor shall
deliver to Buyer the Indemnification Agreement.

                    (n) PIP Escrow Agreement. At Closing, Seller shall deliver
the PIP Escrow Agreement.

          10.3 Buyer’s Deliveries. At Closing of the Hotel, Buyer shall deliver
the following:

                    (a) Purchase Price. The balance of the Purchase Price,
adjusted for the adjustments provided for in Section 12.1, below, and less any
sums to be deducted therefrom as provided in Section 2.3.

                    (b) Authority Documents. Certified copy of resolutions of
the Board of Directors of Buyer authorizing the purchase of the Hotel
contemplated by this Contract, and/or

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other evidence satisfactory to Seller and the Title Company that the person or
persons executing the closing documents on behalf of Buyer have full right,
power and authority to do so.

                    (c) Counterpart to assignments of the Hotel Contracts
pursuant to which Buyer agrees to perform assumed contracts and to hold Seller
harmless therefrom.

                    (d) Counterpart to Indemnification Agreement.

                    (e) Execution of a new Franchise Agreement.

                    (f) Execution of Management Agreement with Indemnitor.

                    (g) Miscellaneous. Such other instruments as are
contemplated by this Contract to be executed or delivered by Buyer, reasonably
required by Seller or the Title Company, or customarily executed in the
jurisdiction in which the Hotel is located, to effectuate the conveyance of
property similar to the Hotel, with the effect that, after the Closing, Buyer
will have succeeded to all of the rights, titles, and interests of Seller
related to the Hotel and Seller will no longer have any rights, titles, or
interests in and to the Hotel.

                    (h) Closing Statements. Buyer’s Closing Statement, and a
certificate confirming the truth of Buyer’s representations and warranties
hereunder as of the Closing Date.

ARTICLE XI
COSTS

          All Closing costs shall be paid as set forth below:

          11.1 Seller’s Costs. In connection with the sale of the Property
contemplated under this Contract, Seller shall be responsible for costs and
expenses of its attorneys, accountants, appraisers and other professionals,
consultants and representatives as well as all transfer and recordation taxes
(except any related to the clerk’s fee or per page fee for recording of the
deed), including, without limitation, all transfer, mansion, sales, use or bulk
transfer taxes or like taxes on or in connection with the transfer of the Real
Property and the Personal Property constituting part of the Property pursuant to
the Bill of Sale, and all accrued taxes of Seller prior to Closing and income,
sales and use taxes and other such taxes of Seller attributable to the sale of
the Property to Buyer. Seller shall be responsible for all costs related to the
termination of the Existing Management Agreement as provided in Article V.
Seller shall also be responsible for payment of all prepayment penalties and
other amounts payable in connection with the pay-off of any liens and/or
indebtedness encumbering the Property including, without limitation, all
mortgages (other than the Existing Loan), liens, vehicle loans/leases and all
other loans. Seller shall also be responsible for any fees for the performance
of the property improvement plan (PIP) review and report by the Franchisor and
the cost of completing the PIP items (including a full soft-goods renovation),
whether such costs are to be incurred before or after Closing. To the extent any
PIP items are not completed prior to Closing, Escrow Agent shall withhold the
amount necessary to complete all PIP items from Seller’s proceeds of sale and
shall hold such funds in an escrow account and pursuant to a PIP escrow
agreement to be executed and delivered at Closing (the “PIP Escrow Agreement”).
Seller shall be authorized to use Lender Required

27

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Reserves for completion of the PIP and the PIP Escrow Agreement shall so
provide. Seller shall not be required to restore Lender Required Reserves and it
is the understating of both Seller and Buyer that once the PIP has been
completed, the Lender Required Reserve account balance will likely be reduced to
zero ($0). To the extent that the cost of the PIP exceeds the Lender Required
Reserve account balance, Seller shall be responsible for those additional costs.
The PIP Escrow Agreement shall also expressly permit the immediate reimbursement
or direct payment of deposits required for purchase orders for items to be
included in the PIP, including without limitation, all soft goods. In addition,
the PIP escrow Agreement shall permit monthly progress payments for work that
extends beyond the Closing Date. The amount of the monthly progress payment
shall equal the estimated completion percentage for the PIP as confirmed and
approved by a representative of Buyer.

          11.2 Buyer’s Costs. In connection with the purchase of the Property
contemplated under this Contract, Buyer shall be responsible for the costs and
expenses of its attorneys, accountants and other professionals, consultants and
representatives. Buyer shall also be responsible for the costs and expenses in
connection with the preparation of any environmental report, any update to the
survey and the costs and expenses of preparation of the title insurance
commitment and the issuance of the title insurance policy contemplated by
Article IV and the per page recording charges and clerk’s fee for the Deed (if
applicable).

ARTICLE XII
ADJUSTMENTS

          12.1 Adjustments. Unless otherwise provided herein, at Closing,
adjustments between the parties shall be made as of 11:59 p.m. on the Closing
Date (the “Cutoff Time”), with the income and expenses accrued prior to the
Closing Date being allocated to Seller and the income and expenses accruing on
and after the Closing Date being allocated to Buyer, all as set forth below. All
of such adjustments and allocations shall be made in cash at Closing and shall
be collected through and/or adjusted in accordance with the terms of the
Existing Management Agreement. Except as otherwise expressly provided herein,
all apportionments and adjustments shall be made on an accrual basis in
accordance with generally accepted accounting principles. Buyer and Seller shall
request that the Manager determine the apportionments, allocations, prorations
and adjustments as of the Cutoff Time.

                    (a) Taxes. All real estate taxes, personal property taxes,
or any other taxes and special assessments (special or otherwise) of any nature
upon the Property levied, assessed or pending for the calendar year in which the
Closing occurs (including the period prior to Closing, regardless of when due
and payable) shall be prorated as of the Cutoff Time and, if no tax bills or
assessment statements for such calendar year are available, such amounts shall
be estimated on the basis of the best available information for such taxes and
assessments that will be due and payable on the Hotel for the calendar year in
which Closing occurs.

                    (b) Utilities. All suppliers of utilities shall be
instructed to read meters or otherwise determine the charges owing as of the
Closing Date for services prior thereto, which charges shall be allocated to
Seller. Charges accruing after Closing shall be allocated to Buyer. If elected
by Seller, Seller shall be given credit, and Buyer shall be charged, for any
utility deposits transferred to and received by Buyer at Closing.

28

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                    (c) Income/Charges. All rents, income and charges receivable
or payable under any Leases and Hotel Contracts applicable to the Property, and
any deposits, prepayments and receipts thereunder, shall be prorated between
Buyer and Seller as of the Cutoff Time.

                    (d) Accounts. All Lender Required Reserves (as adjusted
pursuant to Section 11.1 above), as well as all FF&E accounts, and all PIP
accounts, but excluding amounts held in tax and insurance escrow accounts and
utility deposits to the extent excluded from the definition of Deposits, shall
become the property of Buyer, without additional charge to Buyer and without
Buyer being required to fund the same.

                    (e) Guest Ledger. Subject to (f) below, all accounts
receivable of registered guests at the Hotel who have not checked out and were
occupying rooms as of the Cutoff Time, shall be prorated as provided herein.

                    (f) Room Rentals. All receipts from guest room rentals and
other suite revenues for the night in which the Cutoff Time occurs shall be
split equally between Buyer and Seller.

                    (g) Advance Deposits. All prepaid rentals, room rental
deposits, and all other deposits for advance registration, banquets or future
services to be provided on and after the Closing Date shall be credited to
Buyer.

                    (h) Accounts Receivable. To the extent not apportioned at
Closing and subject to (e) and (f) above, all accounts receivable and credit
card claims as of the Cutoff Time shall remain the property of Seller, and
Seller and Buyer agree that the monies received from debtors owing such accounts
receivable balances after Closing, unless otherwise provided in the New
Management Agreement, shall be applied as expressly provided in such remittance,
or if not specified then to the Seller’s outstanding invoices to such account
debtors in chronological order beginning with the oldest invoices, and
thereafter, to Buyer’s account.

                    (i) Accounts Payable. To the extent not apportioned at
Closing, any indebtedness, accounts payable, liabilities or obligations of any
kind or nature related to Seller or the Property for the periods prior to and
including the Closing Date shall be retained by Seller and promptly allocated to
Seller and evidence thereof shall be provided to Buyer, and Buyer shall not be
or become liable therefor, except as expressly assumed by Buyer pursuant to this
Contract or otherwise, and invoices received in the ordinary course of business
prior to Closing shall be allocated to Seller at Closing.

                    (j) Restaurants, Bars, Machines, Other Income. All monies
received in connection with bar, restaurant, banquet and similar and other
services at the Hotel (other than amounts due from any guest and included in
room rentals) prior to the close of business for each such operation for the
night in which the Cutoff Time occurs shall belong to Seller, and all other
receipts and revenues (not previously described in this Section 12.1) from the
operation of any department of the Hotel shall be prorated between Seller and
Buyer at Closing.

                    (k) Existing Loan Interest. Interest on the outstanding
principal balance of the Existing Loan shall be prorated between Seller and
Buyer as of the Closing Date with interest up to and including the Closing Date
being allocated to Seller. If interest is paid to the Existing

29

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Lender in arrears, then Seller shall credit Buyer with the interest payment for
the month in which Closing occurs.

          12.2 Reconciliation and Final Payment. Seller and Buyer shall
reasonably cooperate after Closing to make a final determination of the
allocations and prorations required under this Contract within one hundred
eighty (180) days after the Closing Date; provided, however, failure to make a
final reconciliation within 180 days shall not relieve the parties’ obligations
under this section to make a final reconciliation. Upon the final reconciliation
of the allocations and prorations under this Section, the party which owes the
other party any sums hereunder shall pay such party such sums within ten (10)
days after the reconciliation of such sums. The obligations to calculate such
prorations, make such reconciliations and pay any such sums shall survive the
Closing.

          12.3 Employees. Unless Buyer or the Manager expressly agrees
otherwise, none of the employees of the Hotel shall become employees of Buyer,
as of the Closing Date; instead, such employees shall become employees of the
Manager or Affiliate of Manager. Seller shall not give notice under any
applicable federal or state plant closing or similar act, including, if
applicable, the Worker Adjustment and Retraining Notification Provisions of 29
U.S.C., Section 2102, the parties having agreed that a mass layoff, as that term
is defined in 29 U.S.C., 2101(a)(3), will not have occurred. Any liability for
payment of all wages, salaries and benefits, including, without limitation,
accrued vacation pay, sick leave, bonuses, pension benefits, COBRA rights, and
other benefits accrued or earned by and due to employees at the Hotel through
the Cutoff Time, together with F.I.C.A., unemployment and other taxes and
benefits due with respect to such employees for such period, shall be charged to
Seller, in accordance with the Existing Management Agreement, for the purposes
of the adjustments to be made as of the Cutoff Time. All liability for wages,
salaries and benefits of the employees accruing in respect of and attributable
to the period from and after Closing shall be charged to Buyer, in accordance
with the New Management Agreement. To the extent applicable, all such
allocations and charges shall be adjusted in accordance with the provisions of
the Existing Management Agreement.

ARTICLE XIII
CASUALTY AND CONDEMNATION

          13.1 Risk of Loss; Notice. Prior to Closing and the delivery of
possession of the Property to Buyer in accordance with this Contract, all risk
of loss to the Property (whether by casualty, condemnation or otherwise) shall
be borne by Seller. In the event that (a) any loss or damage to the Hotel shall
occur prior to the Closing Date as a result of fire or other casualty, or (b)
Seller receives notice that a governmental authority has initiated or threatened
to initiate a condemnation proceeding affecting the Hotel, Seller shall give
Buyer immediate written notice of such loss, damage or condemnation proceeding
(which notice shall include a certification of (i) the amounts of insurance
coverages in effect with respect to the loss or damage and (ii) if known, the
amount of the award to be received in such condemnation).

          13.2 Buyer’s Termination Right. If, prior to Closing and the delivery
of possession of the Property to Buyer in accordance with this Contract, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Hotel or (b) there is any substantial casualty loss or damage to the Hotel,
Buyer shall have the option to terminate this Contract, provided Buyer

30

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delivers written notice to Seller of its election within twenty (20) days after
the date Seller has delivered Buyer written notice of any such loss, damage or
condemnation as provided above, and in such event, the Earnest Money Deposit,
and any interest thereon, shall be delivered to Buyer and thereafter, except as
expressly set forth herein, no party shall have any further obligation or
liability to the other under this Contract. In the context of condemnation,
“substantial” shall mean condemnation of such portion of a Hotel (or access
thereto) as could, in Buyer’s reasonable judgment, render use of the remainder
impractical or unfeasible for the uses herein contemplated, and, in the context
of casualty loss or damage, “substantial” shall mean a loss or damage in excess
of One Hundred Thousand and No/100 Dollars ($100,000.00) in value.

          13.3 Procedure for Closing. If Buyer shall not timely elect to
terminate this Contract under Section 13.2 above, or if the loss, damage or
condemnation is not substantial, each applicable Seller agrees to pay to Buyer
at the Closing all insurance proceeds or condemnation awards which Seller has
received as a result of the same, plus an amount equal to the insurance
deductible, and assign to Buyer all insurance proceeds and condemnation awards
payable as a result of the same, in which event the Closing shall occur without
Seller replacing or repairing such damage. In the case of damage or casualty, at
Buyer’s election, Seller shall repair and restore the Property to its condition
immediately prior to such damage or casualty and shall assign to Buyer all
excess insurance proceeds.

ARTICLE XIV
DEFAULT REMEDIES

          14.1 Buyer Default. If Buyer defaults under this Contract after the
Review Period, and such default continues for thirty (30) days following written
notice from Seller (provided no notice shall extend the time for Closing), then
at Seller’s election by written notice to Buyer, this Contract shall be
terminated and of no effect, in which event the Earnest Money Deposit, including
any interest thereon, shall be paid to and retained by the Seller as Seller’s
sole and exclusive remedy hereunder, and as liquidated damages for Buyer’s
default or failure to close, and both Buyer and Seller shall thereupon be
released from all obligations hereunder.

          14.2 Seller Default. If Seller defaults under this Contract, and such
default continues for thirty (30) days following written notice from Buyer,
Buyer may elect, as Buyer’s sole and exclusive remedy, either (i) to terminate
this Contract by written notice to Seller delivered to that Seller at any time
prior to the completion of such cure, in which event the Earnest Money Deposit,
including any interest thereon, shall be returned to the Buyer, and thereafter
both the Buyer and Seller shall thereupon be released from all obligations with
respect to this Contract, except as otherwise expressly provided herein; or (ii)
to treat this Contract as being in full force and effect by written notice to
Seller delivered to Seller at any time prior to the completion of such cure, in
which event the Buyer shall have the right to an action against the defaulting
Seller for damages, specific performance and all other rights and remedies
available at law or in equity. In the absence of an election of remedy on or
before the end of any cure period (but in no event later than thirty (30) days
after initial notice of default), the remedy set forth in 14.2(i) above shall be
deemed elected.

          14.3 Attorney’s Fees. Anything to the contrary herein notwithstanding,
if it shall be necessary for either the Buyer or Seller to employ an attorney to
enforce its rights pursuant to

31

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

this Contract because of the default of the other party, then the non-prevailing
party shall reimburse the prevailing party for the prevailing party’s reasonable
attorneys’ fees, costs and expenses.

          14.4 Limitation of Claims. No claim on account of a Seller default
under Section 14.2 above, shall be brought against Seller unless damages exceed
the Agreed-Upon Limit. Any such claim of Seller default which does not result in
the termination of this Offer must be asserted within one (1) year of the
Closing Date or it shall be deemed waived.

ARTICLE XV
NOTICES

          All notices required herein shall be deemed to have been validly
given, as applicable: (i) if given by telecopy, when the telecopy is transmitted
to the party’s telecopy number specified below and confirmation of complete
receipt is received by the transmitting party during normal business hours or on
the next Business Day if not confirmed during normal business hours, (ii) if
hand delivered to a party against receipted copy, when the copy of the notice is
receipted or rejected, (iii) if given by certified mail, return receipt
requested, postage prepaid, two (2) Business Days after it is posted with the
U.S. Postal Service at the address of the party specified below or (iv) on the
next delivery day after such notices are sent by recognized and reputable
commercial overnight delivery service marked for next day delivery, return
receipt requested or similarly acknowledged:

 

 

 

 

If to Buyer:

Apple Ten Hospitality Ownership, Inc.
814 E. Main Street
Richmond, Virginia 23219
Attention: Sam Reynolds
Fax No.: (804) 344-8129

 

 

 

 

with a copy to:

Apple REIT Ten, Inc.
814 E. Main Street
Richmond, Virginia 23219
Attention: Legal Dept.
Fax No.: (804) 344-8129

 

 

 

 

If to Seller:

Chicago River Road Lodging Associates, L.L.C.
c/o Raymond Management Company
8333 Greenway Blvd., Ste. 200
Middleton, WI 53562
Attention: Bob Bruni
Fax No.: (608) 662-8365

 

 

 

 

If to Indemnitor

Raymond Management Company
8333 Greenway Blvd., Ste 200
Middleton, WI 53562
Attn: Bob Bruni

32

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

 

 

 

 

 

Fax No.: (608) 662-8365

          Addresses may be changed by the parties hereto by written notice in
accordance with this Section.

ARTICLE XVI
MISCELLANEOUS

          16.1 Performance. Time is of the essence in the performance and
satisfaction of each and every obligation and condition of this Contract.

          16.2 Binding Effect; Assignment. This Contract shall be binding upon
and shall inure to the benefit of each of the parties hereto, their respective
successors and assigns.

          16.3 Entire Agreement. This Contract and the Exhibits constitute the
sole and entire agreement between Buyer and Seller with respect to the subject
matter hereof. No modification of this Contract shall be binding unless signed
by both Buyer and Seller.

          16.4 Governing Law. The validity, construction, interpretation and
performance of this Contract shall in all ways be governed and determined in
accordance with the laws of the State in which the Real Property is located
(without regard to conflicts of law principles).

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

          16.6 Confidentiality. Except as either party may reasonably determine
is required by law (including without limitation laws and regulations applicable
to Buyer or its Affiliates who may be public companies): (i) prior to Closing,
Buyer and Seller shall not disclose the existence of this Contract or their
respective intentions to purchase and sell the Property or generate or
participate in any publicity or press release regarding this transaction, except
to Buyer’s and Seller’s legal counsel and lender, Buyer’s consultants and
agents, the Manager, the Manager, the Franchisor and the Title Company and
except as necessitated by Buyer’s Due Diligence Examination, unless both Buyer
and Seller agree in writing and as necessary to effectuate the transactions
contemplated hereby and (ii) following Closing, the parties shall coordinate any
public disclosure or release of information related to the transactions
contemplated by this Contract, and no such disclosure or release shall be made
without the prior written consent of Buyer, and no press release shall be made
without the prior written approval of Buyer and Seller.

          16.7 Closing Documents. To the extent any Closing documents are not
attached hereto at the time of execution of this Contract, Buyer and Seller
shall negotiate in good faith with respect to the form and content of such
Closing documents prior to Closing.

          16.8 Counterparts. This Contract may be executed in counterparts by
the parties hereto, and by facsimile signature, and each shall be considered an
original and all of which shall constitute one and the same agreement.

33

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

          16.10 Interpretation. For purposes of construing the provisions of
this Contract, the singular shall be deemed to include the plural and vice versa
and the use of any gender shall include the use of any other gender, as the
context may require.

          16.11 (Intentionally Omitted)

          16.12 Further Acts. In addition to the acts, deeds, instruments and
agreements recited herein and contemplated to be performed, executed and
delivered by Buyer and Seller, Buyer and Seller shall perform, execute and
deliver or cause to be performed, executed and delivered at the Closing or after
the Closing, any and all further acts, deeds, instruments and agreements and
provide such further assurances as the other party, the Franchisor, licensing
authority, or the Title Company may reasonably require to consummate the
transaction contemplated hereunder.

          16.13 Joint and Several Obligations. If Seller consists of more than
one person or entity (but not including member or members of Seller), each such
person or entity shall be jointly and severally liable with respect to the
obligations of Seller under this Contract.

ARTICLE XVII
JOINDER BY INDEMNITOR

          17.1 Indemnification by Indemnitor. Indemnitor hereby covenants and
agrees that:

                    (a) Indemnitor is and shall be jointly and severally liable
with Seller for the performance of all of Seller’s obligations and liabilities
under this Contract and all documents and instruments executed in connection
therewith, including, without limitation, all of Seller’s obligations and
liabilities that survive Closing;

                    (b) The obligations of Indemnitor hereunder shall not be
limited, diminished or impaired in any way by virtue of any right or remedy
Buyer may have against Seller under this Contract or by virtue of any other
provision of this Contract;

                    (c) Buyer shall not be obligated to proceed first against
Seller before resorting to Indemnitor under this Article XVII for payment and
performance;

Indemnification claims and procedures with respect to the indemnification
obligations of Indemnitor under this Article XVII shall be consistent with those
provided for in Section 8.8(c) of this Contract. Seller shall cause Indemnitor
to provide, and Indemnitor shall provide, at Closing an indemnification
agreement in form and substance satisfactory in form and substance to Buyer with
respect to the foregoing indemnifications (the “Indemnification Agreement”),

34

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

which shall be a condition to Buyer’s obligation to close under this Contract.
Except as provided in this Contract, the covenants, agreements, representations
and warranties of Indemnitor set forth in this Article XVII shall be continuing,
and shall not be deemed to merge into or be waived by the Deeds or other closing
documents and shall survive Closing on the Property.

[Signatures Begin on Following Page]

35

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IN WITNESS WHEREOF, this Contract has been executed, to be effective as of the
date first above written, by the Buyer and Seller.

 

 

 

 

 

 

SELLER:

 

 

 

CHICAGO RIVER ROAD LODGING
ASSOCIATES, L.L.C., a Wisconsin limited
liability company

 

 

 

By:

 

 

 

 

By:

/s/ C.J. Raymond

 

 

 

 

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

 

 

 

Name: C.J. Raymond

 

 

Title: Managing Member

 

 

 

 

 

INDEMNITOR:

 

 

 

RAYMOND MANAGEMENT COMPANY, INC,
a Wisconsin Corporation

 

 

 

By:

/s/ C.J. Raymond

 

 

 

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

 

 

Name: C.J. Raymond

 

Title: President

 

 

 

BUYER:

 

 

 

APPLE TEN HOSPITALITY OWNERSHIP, INC.,
a Virginia corporation

 

 

 

By:

/s/ David Buckley

 

 

 

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

 

 

Name: David Buckley

 

Title: Vice President

36

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

EXHIBIT “A”

LEGAL DESCRIPTION OF LAND

THAT PART OF THE EAST 1/2 OF THE SOUTHEAST 1/4 OF SECTION 33 AND OF THE WEST 1/2
OF THE SOUTHWEST 1/4 OF SECTION 34, TOWNSHIP 41 NORTH, RANGE 12, EAST OF THE
THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE WEST LINE OF THE EAST 1/2 OF THE OF THE SOUTHEAST
1/4 OF SECTION 33 AFORESAID 1442.10 FEET SOUTH OF THE NORTHWEST CORNER THEREOF;
THENCE NORTH 87 DEGREES 35.5 MINUTES EAST PARALLEL WITH THE NORTH LINE OF THE
SOUTHEAST 1/4 OF SAID SECTION 33 AND THE NORTH LINE OF THE SOUTHWEST 1/4 OF
SECTION 34 AFORESAID 1843.76 FEET TO THE CENTER OF RIVER ROAD IN THE AFORESAID
SECTION 34; THENCE NORTH 17 DEGREES 33.25 MINUTES WEST ALONG THE CENTER OF SAID
ROAD, A DISTANCE OF 513.92 FEET TO A POINT OF BEGINNING; THENCE WEST ALONG A
LINE PARALLEL TO THE NORTH LINE OF THE SOUTHWEST 1/4 OF SAID SECTION 34 AND THE
NORTH LINE OF THE SOUTHEAST 1/4 OF SAID SECTION 33, 622.40 FEET MORE OR LESS TO
THE EASTERLY LINE OF PARCEL T-9A1.1 CONVEYED TO THE ILLINOIS STATE TOLL HIGHWAY
COMMISSION BY WARRANTY DEED RECORDED DECEMBER 2, 1957 AS DOCUMENT 17078113;
THENCE NORTHERLY 153.37 FEET ALONG A LINE WHICH MAKES AN ANGLE OF 100 DEGREES 41
MINUTES 58 SECONDS TO THE LEFT OF THE LAST DESCRIBED LINE; THENCE EASTERLY 285
FEET ALONG A LINE WHICH MAKES AN ANGLE OF 84 DEGREES 55 MINUTES 06 SECONDS TO
THE RIGHT OF THE LAST DESCRIBED LINE EXTENDED; THENCE NORTHWESTERLY 95.30 FEET
MORE OR LESS ALONG A LINE WHICH MAKES AN ANGLE OF 90 DEGREES 00 MINUTES 00
SECONDS TO THE LEFT OF THE LAST DESCRIBED LINE EXTENDED TO ITS INTERSECTION WITH
A LINE 625.41 FEET AS MEASURED ALONG THE WEST LINE OF THE SOUTHWEST 1/4 OF SAID
SECTION 34 SOUTH OF THE NORTH LINE OF THE SOUTHWEST 1/4 OF SAID SECTION 34;
THENCE EAST ALONG A LINE PARALLEL WITH THE NORTH LINE OF THE SOUTHEAST 1/4 OF
SAID SECTION 33 AND PARALLEL WITH THE NORTH LINE OF THE SOUTHWEST 1/4 OF SAID
SECTION 34, A DISTANCE OF 318.56 FEET MORE OR LESS TO ITS INTERSECTION WITH THE
CENTER LINE OF RIVER ROAD AND THENCE SOUTHEASTERLY ALONG THE CENTER LINE OF
RIVER ROAD 331.33 FEET MORE OR LESS TO THE POINT OF BEGINNING (EXCEPT THAT PART
CONVEYED TO THE ILLINOIS HIGHWAY AUTHORITY BY DEED RECORDED AS DOCUMENT NUMBER
26916956 AND DESIGNATED ON NORTHERN ILLINOIS TOLLWAY PLAT AS PARCEL T-94-1-001),
IN COOK COUNTY, ILLINOIS.

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

EXHIBIT B

LIST OF FF&E

 

 

 

O’HARE AIRPORT HILTON GARDEN INN

Listing of Furniture, Fixtures & Equipment

As of March 31, 2011

 

 

 

Location = 30-Room F&F

000043

 

ADA desk w/o drawer (10)

000044

 

ADA Hospitality Center (10)

000045

 

ARTWORK @ GUESTROOMS

000047

 

Custom Mirror @ King Parlor Su

000048

 

Desk with lap drawer (244)

000049

 

Drapes

000050

 

GR Closet Shelving Install

000051

 

Graco Pack ‘N Play Crib (12)

000052

 

Granite Tops - TV stands, dressers (506)

000053

 

HANGER CLOSET UNIT - 48” (242)

000054

 

Hospitality Center L- (112)

000055

 

Hospitality Center R- (132)

000057

 

King headboards (150)

000058

 

King Sleep System (1)

000059

 

Lamps - Desk

000060

 

Lamps - Floor

000061

 

Lamps - Night Stands

000062

 

Light Fixtures - Bath Wall Sconces

000063

 

Light Fixtures - Ceiling

000064

 

LOUNGE CHAIR (253)

000065

 

LUGGAGE STANDS (254)

000066

 

MATTRESS & FRAMES - KING (149)

000067

 

MIRROR @ BATHROOM (244)

000068

 

MIRROR @ BATHROOM ADA (8)

000069

 

MIRROR @ DESK (254)

000070

 

OTTOMAN (253)

000071

 

QUEEN BED FRAME (206)

000072

 

QUEEN BED SET (206)

000073

 

Queen headboard (206)

000074

 

Side table 18x20 (253)

000075

 

Single drawer night stand (403)

000076

 

Stow-Away Bed (11)

000077

 

SWIVEL DESK CHAIR (277)

2

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

 

 

 

000078

 

Tissue Box Covers

000079

 

TV Chest (253)

000081

 

Wastebaskets

Location = 35-Rm Equip

000082

 

Alarm Clock Radio (276)

000083

 

Coffee Maker (258)

000084

 

Compact Hair Dryer (264)

000085

 

Iron (Sunbeam) (258)

000086

 

Ironing Board (258)

000087

 

Ironing Organizer (258)

000088

 

Microwave Oven (254)

000089

 

Refrigerator, Black (254)

000090

 

Telepones

000348

 

Microwaves (5)

000447

 

TV Mounts

000448

 

TV 32” LCD (255)

Location = 40-Hotel F&F

000092

 

20” Table @ Pool (4)

000093

 

36” Table @ Pool (4)

000094

 

Arm Chair @ Lobby (32)

000095

 

Artwork @ Lobby

000096

 

Auto Transfer Switch, Emerg Generator

000097

 

Bar & Cabinets

000098

 

Blinds - Breakrooms

000099

 

Breakroom Chairs(15) & Tables (3)

000100

 

Cabinet, Fire-Safe

000101

 

Cabinets/Millwork

000102

 

Canopy

000106

 

Chaise Lounge @ Pool (3)

000107

 

Chandelier

000108

 

Coat Racks (4)

000109

 

Computer Rm Shelving

000111

 

Countertops

000112

 

Door Operators, Sliding Entrance

000113

 

Drapes - Valance Boards

000114

 

Drapes @ Common Area

000115

 

End Table @ Lounge (4)

000116

 

Fire Extinguishers & Cabinets

000119

 

Folding Partitions

000121

 

Garden Bench 4’ (2)

000123

 

Information Kiosk

000126

 

Interior Silk Plants

3

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

 

 

 

000127

 

Lamps @ Common Area

000128

 

Lantern @ Fireplace (2)

000129

 

Light Fixture @ Dining (6)

000130

 

Light Fixtures - Hall Sconces

000131

 

Light, Accent, Chandelier

000132

 

Light, Accent, Chandelier, Lobby

000133

 

Light, Accent, Sconce

000136

 

Lights - Accent & Night

000137

 

Lockers

000140

 

Mirror @ Public Restroom

000141

 

Mirrors, Whirpool Tubs

000142

 

Office Furnitue/Files

000143

 

Pavillion Booths

000145

 

Reception Desk

000149

 

Signage & Electrical

000150

 

Sink, Boardroom, 1-Bowl

000151

 

Sink, Breakroom (2)

000152

 

Sink, Hand, SS

000153

 

Sink, Janitor (2)

000154

 

Smoker’s Station (4)

000155

 

Stackable Chair @ Pool (30)

000156

 

Storefront, Sliding Doors, Vestibule

000157

 

Surfboards Shelf Unit

000159

 

Table @ Lobby - Focal (1)

000160

 

Table @ Lobby- Round (3)

000161

 

Table @ Lobby-Console (12)

000162

 

Table @ Lounge (12)

000164

 

Umbrella @ Pool (2)

000165

 

Valance @ Pavilion

000168

 

Waste Receptacles

000169

 

Waste Receptacles

000350

 

Bar Stools (10)

000351

 

Bench for Vestibule (2)

000352

 

Breakfast Booth Cushions

000353

 

Desks 60 X 30 (3)

000354

 

Hostess Station

000356

 

Rolled Arm Benches (2)

000357

 

Sales Office Chairs (6)

000358

 

Waitress Station

000383

 

Bar Stools {16}

000384

 

Bar Table Tops {4}

000385

 

Desk/Credenze-Sales Office

4

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

 

 

 

000386

 

Florescent Lamps-Bases&Bulbs-Mtg Rooms

000388

 

Menu Display Stand-Mirror Brass

000389

 

Portable Dance Floor

000390

 

Additional Bar Top-Granite

000406

 

Pendant Lamps (3)

000407

 

Reupholster Booth Seats

000408

 

Canopy - Canvas

000426

 

Exercise Rm - Towel Station

000428

 

Exercise Rm - Blinds

000429

 

Exercise Rm - Mirrors Frames & Sign

000430

 

Lobby Sofa (2)

000431

 

Lounge Chair (4)

000432

 

Office Furniture - Sales Cubes

000451

 

Lobby Bench

000452

 

Floor Mat

Location = 45-Hotel Equi

000172

 

Hilton OnQ PMS Software

000173

 

Automatic Scrubber - Saber 17

000174

 

Breakroom - Friges (2)

000175

 

Breakroom - Microwave

000176

 

Busi Center Printer - Inkjet 2300

000178

 

Card Reader (4)

000179

 

Carpet Extractor - Cadet 7

000180

 

Cisco Internet Routers (12)

000183

 

Conference Phone - Soundstation

000184

 

Dehumidification Unit, Pool

000185

 

Dryer - Gas 120# Micro (3)

000187

 

Exhaust System

000188

 

Generator, Emergency, 200KW

000189

 

Glass Door Freezer - Pavillion

000190

 

Glass Door Refrigerator - Pavillion

000191

 

Guest Laundry - Dryer

000192

 

Guest Laundry - Washer

000193

 

Health-O-Meter Scale

000194

 

Hotel Equipment - Contractor Misc.

000195

 

Hotel Equipment - Electrical

000196

 

Hotel Equipment - Plumbing

000197

 

Housekeeping Carts (20)

000198

 

HP Deskjet 6540

000199

 

HSI Restaurant POS Hardware

000200

 

HSI Restaurant POS Software

000201

 

Ice Machine - 30” Dispenser (8)

5

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

 

 

 

000202

 

Ice Machine - Modular Cuber (8)

000203

 

Ice Machine Filter System (2)

000204

 

Ice Machine Modular Cuber

000205

 

Interior Surveylance System

000206

 

Laundry Carts (8)

000207

 

Luggage Carts (4)

000208

 

Mitel Phone System

000209

 

OnQ Forms Software

000210

 

Onzone Sanitizer

000211

 

Optiplex GX280 - AGM-6YCCL71

000212

 

Optiplex GX280 -Sales-HYGG871

000213

 

Optiplex GX280 -Sales-8FB9M81

000214

 

OptiPlex GX280-Busi Center-BDWG81

000215

 

OptiPlex GX280 - Busi Center-3MMPL81

000216

 

Optiplex GX280 - DOS-DGB3Y61

000217

 

Optiplex GX280 - F&B Manager-17HG871

000218

 

Optiplex GX280 - GM-4JD9561

000219

 

Optiplex GX280 - Sales-1YCCL71

000220

 

OptiPlex GX280 - Sales-GKCKW71

000223

 

Hilton Training PC

000224

 

Oreck Sweepers (2)

000226

 

Pump, Recirculating, Pool

000228

 

Red Wall Phones (16)

000229

 

Safe Deposit Boxes

000230

 

Security System & Lighting

000231

 

Security System Camera

000232

 

Sound System Speakers

000233

 

Telephones

000238

 

Two-Way Radios (10)

000239

 

Utility Carts

000240

 

Vacuum - Sanitaire Backpack

000241

 

Vacuum - Sanitaire Bagless (16)

000242

 

Vacuum Wide Area 28”

000243

 

Washer - 100# OPL (2)

000244

 

Washer - 55# OPL

000245

 

Water Heater, Kitchen & Laundry Equip

000246

 

Water Softener, 25% Kitchen & Laundry

000247

 

Wheelchair - Tracer EX2

000248

 

Wireless Internet Install

000359

 

Electrial Wiring - Appliances & Cooler

000362

 

OnQ Workstation - Lenovo ThinkCentre

000363

 

OnQ Workstation - Lenovo ThinkCentre

6

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

 

 

 

000364

 

OptiPlex GX620 - Accountant-5JHVN91

000365

 

Phone System - Sales Office

000366

 

Pool Fence - Wading & Main Pool

000367

 

Printer - HP LaserJet 1320 TN - Sales Office

000368

 

Printer - Injet HP 2300

000369

 

Security System - Camera

000391

 

Carpet Cleaning Machine (1)

000393

 

Flush Kit f/Cleaning Multistack Air Conditioning Unit

000394

 

Modular Ice Cuber w/Bin (1)

000395

 

OptiPlex 745-Call Acct-CWCGPC1

000396

 

Polishing Machine f/Metal (1)

000398

 

Security Camera System & Upgrades

000409

 

HSIA Load Balancer

000410

 

LED Lobby Lights

000413

 

OnQ PC - Lenovo ThinkCentre M57

000414

 

OptiPlex 755-FOM-GTJLJH1

000415

 

OptiPlex 755-Sales-J77KBG1

000416

 

TV 42” Exercise Rm & (2) wall mounts

000433

 

Exercise Eq - AMT (2)

000434

 

Exercise Eq - Bench & Misc

000435

 

Exercise Eq - Precor 576i Exp

000436

 

Exercise Eq - Precor Trainer

000437

 

Exercise Eq - Recumbant Bike

000438

 

Exercise Eq - Stretch Trainer

000439

 

Exercise Eq - Treadmills (4)

000440

 

Exercise Equip - Electircal

000441

 

Sales Office - Voice/Data Wiring

000454

 

TV LCD 42”

000455

 

HSIA Installation

000456

 

TV LCD 32”

000457

 

OptiPlex 780-491JNN1-Maint

000458

 

Service Cart

000460

 

Heavy Duty Laundry Basket

000461

 

LG 37” LCD Monitor - 376D450C

000462

 

Cart for LCD Monitor

000463

 

Polycom Speakerphone Cases (2)

000464

 

LCD Projector Cases (2)

000465

 

Teleconference Phone (2)

000466

 

Flipchart Stand (10)

000467

 

Tripod Screen 8’ (2)

000468

 

Tripod Screen 6’ (2)

000469

 

Projector-LCD (2)

7

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

 

 

 

000470

 

Shure Combo Kit (2)

000471

 

Podium (2)

Location = 50-Sign

000249

 

Transworld Signs

Location = 55-Automobiles

000444

 

2008 Dodge Grand Caravan

000445

 

1999 Dodge Ram - Plow Truck

000446

 

Plow Truck - Plow & Salter

Location = 60-Rest F&F

000250

 

Artwork @ Meeting Room

000251

 

Banquet Table (18”X 72”X 29” (90)

000252

 

Banquet Table (30”X 72”X 29”) (8)

000253

 

Banquet Table (60” Dia X 29”) (40)

000254

 

Banquet Table Truck (4)

000255

 

Banquet Table Truck-Rounds (3)

000256

 

Bar Stool (4)

000257

 

Board Room Table

000258

 

Dining Arm Chair (40)

000259

 

Dining Side Chair (50)

000260

 

Dining Table, 24” X 33” (21)

000261

 

Dining Table, 33” X 33” (14)

000262

 

Display Stand (2 Tier, Footed)

000263

 

Folding Table Lectern (3)

000264

 

Stacking Chair @ Mtng Rms (350)

000265

 

Sink, Meeting Room, 1-Bowl

000266

 

Tall Meeting Tables (20)

000267

 

Visual Board Cabinet 60X48

Location = 65-Rest Equip

000268

 

Backbar Refrigerated Cabinet

000269

 

Banquet Cabinet - Mobile/Heated (3)

000270

 

Beverage Counter

000271

 

Bus Cart - 3 Shelf

000272

 

Cabinet - Mobile/Heated (2)

000273

 

Chafers (5)

000274

 

Charbroiler - Gas

000275

 

Clean Dishtable

000276

 

Convection Oven - Gas

000277

 

Cooler Refrigeration

000278

 

Dish Dolly

000279

 

Dishtable

000280

 

Dishwasher - Conveyor Type

000281

 

Disposer

8

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

 

 

 

000282

 

Dolly Dish Adjustable

000283

 

Dolly Dish Adjustable (2)

000284

 

Drop-In Cold Food Unit

000285

 

Drop-In Hot Food Unit

000286

 

Exhaust Hood

000287

 

Feezer Refigeration

000288

 

Food Mixer SP20 & Stand

000289

 

Food Processor

000290

 

Food Processor 3 Qrt

000291

 

Food Slicer

000292

 

Food Warmer, Drop-in (2)

000293

 

Freezer - Undercounter

000294

 

Fryer - Gas (2)

000295

 

Glass Door Freezer

000296

 

Glass Door Refrigerator

000297

 

Hand Mixer MP550

000298

 

Hand Sinks (4)

000299

 

Heat Lamps (4)

000300

 

Kettle, Electric, Tilting

000301

 

Main Galley Exhaust System

000302

 

Microwave 1000W

000303

 

Preparation Exhaust System

000304

 

Projection Screen 10’x10’

000305

 

Projection Screen 60x60 (3)

000306

 

Projection Screens - Contractor

000307

 

Projection Screens - Electrical

000308

 

Range - 60” Gas

000309

 

Range, Gas

000311

 

Refrigerated Milk Dispenser

000312

 

Refrigerated, Reach-in

000313

 

Sink 3-Compartment

000314

 

Skillet, Gas, Tilting

000315

 

Sneeze Guard Package

000316

 

Soda Lines, Kitchen

000317

 

Soak Sink - Portable

000318

 

Stacking Chair Hand Truck (4)

000319

 

Steam table pan rack

000320

 

Toaster - Conveyor Type

000321

 

Toaster, Pop-up Type (2)

000322

 

Tripod Screen

000323

 

TV 27” w/wall mount - Bar

000324

 

Underbar Modular Unit & Ice Bin

9

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

 

 

 

000325

 

Utility Cart - 2 Shelf

000326

 

Walkin Cooler/Freezer

000327

 

Wall Mounted Shelf & Pot Rack

000328

 

Wire Shelving

000329

 

Work table 60” long (2) w/sink

000330

 

Work Table 96” long

000331

 

Work Tables 120” w/Sinks

000332

 

Work Tables 72” Long (2)

000371

 

Walk-In Cooler

000372

 

HSI - POS System Workstation

000373

 

Portable Bar

000374

 

Inventory Scanner - Pantry

000375

 

Stove - Add Salamander

000417

 

Grease Filtering/Recycling Machine

000442

 

Refrigerator - Sandwhich Bar

000443

 

Vacuum Packaging Machine

000459

 

POS Terminal at Bar

10

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

EXHIBIT C

LIST OF HOTEL CONTRACTS

 

 

 

 

AAA

 

Official Appointment

The Knowland Group

 

Market Intelligence, Lead Generation-Reader Board

VFM Leonardo Sales

 

Advertising (Photoflicks Production)

PrinterOn

 

Hot Spot Printing Service

ADP

 

Payroll processing & tax filing, HRIS, Timekeeping

Comcast

 

TV cable

Comcast

 

Secondary Internet Circuit

Commercial Record Center

 

File Storage

Mickey’s Linen

 

Linen supply & laundry service F&B

Fox Valley Fire Safety

 

Fire Extinguishers

Hospitality Solutions Int’l.

 

POS Software Maintenance

Industrial Water Management

 

HVAC Water Treatment Program

Lodgenet

 

In room entertainment

Muzak

 

Lobby Music

Siemens

 

Fire Protection Panel

Sprint

 

Cell Phone Service

ThyssenKrupp Elevator

 

Elevator Maintenance

Waste management

 

Waste Removal

AT&T/Wayport

 

HSIA Support

 

 

 

 

Leases

 

 

Leasing Associates

 

2010 Ford 12 Passenger Van

Leasing Associates

 

2010 Ford 14 Passenger Bus

GFC Leasing

 

Image Runner 3225, Image runner 2018i

Hampton Inn O’Hare

 

Clear Channel Advertising share

 

 

 

Hilton

 

OnQ - PMS System

Hilton/Hotel Direct Center

 

Reservation Center - call center

Hilton

 

Primary Internet Circuit (3.0GBps INCS)

 

 

 

Tharldson Communications

 

Zero Plus Commissions

ATM Systems

 

ATM Machine

Unilever Best Foods

 

Lipton Brewed Iced Tea-Equipment Agreement

Chicago River Road Restaurant, LLC

 

Restaurant Lease

Illinois Trade Association

 

Guest Room trades for goods/services

11

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

 

 

 

 

 

Utility Contracts

 

 

Constellation New Energy

 

Electricity

Blackhawk Energy Services, LLC

 

 

D/b/a Constellation New Energy

 

 

Gas Division Illinois, LLC

 

Natural Gas Agency Agreement

Nicor Gas

 

Gas

City of Des Plaines

 

Sewer/Water

 

 

 

FIS Merchant Services

 

 

GCS/Fuse Box

 

 

12

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

EXHIBIT D

CONSENTS AND APPROVALS

 

 

A.

Consents Required Under Hotel Contracts:

 

 

 

As shown on Exhibit C to the Purchase Contract

 

 

B.

Consents Required Under Other Contracts:

 

 

 

As shown on Exhibit C to the Purchase Contract

 

 

C.

Governmental Approvals and Consents:

 

 

 

It has been our experience in general, that governmental permits and licenses
are not assignable to third party purchasers. As a consequence the Buyer will
likely be required to obtain from the appropriate governmental authorities new
licenses and permits for use in the operation of the Hotel. As a consequence of
applying for such licenses and permits, municipalities may conduct inspections
of the subject Hotel and may impose special requirements as a condition to
obtaining needed licenses and permits.

 

 

D.

Membership Approval and Consent:

 

 

 

Seller shall have received the written consent of the members of Seller owning
that percentage of membership interests needed under Seller’s Operating
Agreement to permit and authorize Seller to sell the Hotel and the Property to
Buyer under and in accordance with the terms of this Purchase Contract.

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

EXHIBIT E

ENVIRONMENTAL REPORTS

 

 

1.

Asbestos survey report by Versar dated December 2000;

 

 

2.

Phase I environmental site assessment report prepared by STS Consultants dated
January 3, 2001;

 

 

3.

Letter from STS Consultants dated February 7, 2001 to McShane regarding the
Phase I report;

 

 

4.

Phase II environmental report prepared by STS Consultants dated February 16,
2001;

 

 

5.

Phase I environmental site assessment report prepared by LandAmerica Assessment
Corporation dated December 5, 2005.

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

EXHIBIT F

CLAIMS OR LITIGATION PENDING

None

-i-

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

EXHIBIT G

ESCROW AGREEMENT

          THIS ESCROW AGREEMENT (this “Agreement”) made the ___ day of _______,
2010 by and among _____________________, a ___________ ________________
(“Seller”), _______________________ (“Indemnitor”) APPLE TEN HOSPITALITY
OWNERSHIP, INC. a Virginia corporation, or its assigns (“Buyer”), and CHICAGO
TITLE COMPANY (“Escrow Agent”).

R E C I T A L S

          WHEREAS, pursuant to the provisions of Section 2.6 of that certain
Purchase Contract dated _______ ___, 2010 (the “Contract”) between Seller and
Buyer (the “Parties”), the Parties have requested Escrow Agent to hold in escrow
in accordance with the provisions, upon the terms, and subject to the
conditions, of this Agreement, the Earnest Money Deposit as defined in the
Contract (the “Deposit”); and

          WHEREAS, the Deposit shall be delivered to Escrow Agent in accordance
with the terms of the Contract and this Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Parties hereto agree as follows:

                    1. Seller and Buyer hereby appoint Escrow Agent to serve as
escrow agent hereunder, and the Escrow Agent agrees to act as escrow agent
hereunder in accordance with the provisions, upon the terms and subject to the
conditions of this Agreement. The Escrow Agent hereby acknowledges receipt of
the Deposit. Escrow Agent shall invest the Deposit as directed by Buyer.

                    2. Subject to the rights and obligations to transfer,
deliver or otherwise dispose of the Deposit, Escrow Agent shall keep the Deposit
in Escrow Agent’s possession pursuant to this Agreement.

                    3. A. Buyer shall be entitled to an immediate return of the
Deposit at any time prior to the expiration of the Review Period (as defined in
Section 3.1 of the Contract) by providing written notice to Escrow Agent stating
that Buyer has elected to terminate the Contract pursuant to Section 3.1.

                              B. If at any time after the expiration of the
Review Period, Buyer claims entitlement to all or any portion of the Deposit,
Buyer shall give written notice to Escrow Agent stating that Seller has
defaulted in the performance of its obligations under the Contract beyond the
applicable grace period, if any, or that Buyer is otherwise entitled to the
return of the Deposit or applicable portion thereof and shall direct Escrow
Agent to return the Deposit or applicable portion thereof to Buyer (the “Buyer’s
Notice”). Escrow Agent shall promptly

-ii-

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

deliver a copy of Buyer’s Notice to Seller. Seller shall have three (3) business
days after receipt of the copy of Buyer’s Notice to deliver written notice to
Escrow Agent and Buyer objecting to the release of the Deposit or applicable
portion thereof to Buyer (“Seller’s Objection Notice”). If Escrow Agent does not
receive a timely Seller’s Objection Notice, Escrow Agent shall release the
Deposit or applicable portion thereof to Buyer. If Escrow Agent does receive a
timely Seller’s Objection Notice, Escrow Agent shall release the Deposit or
applicable portion thereof only upon receipt of, and in accordance with, written
instructions signed by Seller and Buyer, or the final order of a court of
competent jurisdiction.

                              C. If, at any time after the expiration of the
Review Period, Seller claims entitlement to the Deposit or applicable portion
thereof, Seller shall give written notice to Escrow Agent stating that Buyer has
defaulted in the performance of its obligations under the Contract, and shall
direct Escrow Agent to release the Deposit or applicable portion thereof to
Seller (the “Seller’s Notice”). Escrow Agent shall promptly deliver a copy of
Seller’s Notice to Buyer. Buyer shall have three (3) business days after receipt
of the copy of Seller’s Notice to deliver written notice to Escrow Agent and
Seller objecting to the release of the Deposit or applicable portion thereof to
Seller (“Buyer’s Objection Notice”). If Escrow Agent does not receive a timely
Buyer’s Objection Notice, Escrow Agent shall release the Deposit or applicable
portion thereof to Seller. If Escrow Agent does receive a timely Seller’s
Objection Notice, Escrow Agent shall release the Deposit or applicable portion
thereof only upon receipt of, and in accordance with, written instructions
signed by Buyer and Seller, or the final order of a court of competent
jurisdiction.

                    4. In the performance of its duties hereunder, Escrow Agent
shall be entitled to rely upon any document, instrument or signature purporting
to be genuine and purporting to be signed by and of the Parties or their
successors unless Escrow Agent has actual knowledge to the contrary. Escrow
Agent may assume that any person purporting to give any notice or instructions
in accordance with the provisions hereof has been duly authorized to do so.

                    5. A. Escrow Agent shall not be liable for any error of
judgment, or any action taken or omitted to be taken hereunder, except in the
case of Escrow Agent’s willful, bad faith misconduct or negligence, nor shall
Escrow Agent be liable for the conduct or misconduct of any employee, agent or
attorney thereof. Escrow Agent shall be entitled to consult with counsel of its
choosing and shall not be liable for any action suffered or omitted in
accordance with the advice of such counsel.

                              B. In addition to the indemnities provided below,
Escrow Agent shall not be liable for, and each of the Parties jointly and
severally hereby indemnify and agree to save harmless and reimburse Escrow Agent
from and against all loss, cost, liability, damage and expense, including
outside counsel fees in connection with its acceptance of, or the performance of
its duties and obligations under, this Agreement, including the costs and
expenses of defending against any claim arising hereunder unless the same are
caused by the willful, bad faith misconduct or negligence of Escrow Agent.

                              C. Escrow Agent shall not be bound or in any way
affected by any notice of any modification or cancellation of this Agreement, or
of any fact or circumstance affecting or alleged to affect rights or liabilities
hereunder other than as is herein set forth, or

-iii-

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

affecting or alleged to affect the rights and liabilities of any other person,
unless notice of the same is delivered to Escrow Agent in writing, signed by the
proper parties to Escrow Agent’s satisfaction and, in the case of modification,
unless such modification shall be approved by Escrow Agent in writing.

                    6. A. Escrow Agent and any successor escrow agent, as the
case may be, may resign his or its duties and be discharged from all obligations
hereunder at any time upon giving five (5) days’ prior written notice to each of
the Parties hereto. The Parties hereto will thereupon jointly designate a
successor escrow agent hereunder within said five (5) day period to whom the
Deposit shall be delivered. In default of such a joint designation of a
successor escrow agent, Escrow Agent shall retain the Deposit as custodian
thereof until otherwise directed by the Parties hereto, jointly, or until the
Deposit is released in accordance with clause (B) below, in each case, without
liability or responsibility.

                              B. Anything in this Agreement to the contrary
notwithstanding, (i) Escrow Agent, on notice to the Parties hereto, may take
such other steps as the Escrow Agent may elect in order to terminate its duties
as Escrow Agent hereunder, including, but not limited to, the deposit of the
Deposit with a court of competent jurisdiction in the Commonwealth of Virginia
and the commencement of an action of interpleaders, and (ii) in the event of
litigation between any of the Parties with respect to the Deposit, Escrow Agent
may deposit the Deposit with the court in which said litigation is pending and,
in any such event, Escrow Agent shall be relieved and discharged from any
liability or responsibility to the Parties hereto. Escrow Agent shall not be
under any obligation to take any legal action in connection with this Agreement
or its enforcement or to appear in, prosecute or defend any action or legal
proceeding which, in the opinion of Escrow Agent, would or might involve Escrow
Agent in any cost, expense, loss, damage or liability, unless and as often as
requested, Escrow Agent shall be furnished with security and indemnity
satisfactory to Escrow Agent against all such costs, expenses (including
attorney’s fees), losses, damages and liabilities.

                    7. All notices required herein shall be deemed to have been
validly given, as applicable: (i) if given by telecopy, when the telecopy is
transmitted to the party’s telecopy number specified below and confirmation of
complete receipt is received by the transmitting party during normal business
hours or on the next business day if not confirmed during normal business hours,
(ii) if hand delivered to a party against receipted copy, when the copy of the
notice is receipted or rejected, (iii) if given by certified mail, return
receipt requested, postage prepaid, two (2) business days after it is posted
with the U.S. Postal Service at the address of the party specified below or (iv)
on the next delivery day after such notices are sent by recognized and reputable
commercial overnight delivery service marked for next day delivery, return
receipt requested or similarly acknowledged:

 

 

 

 

 

(i)

If addressed to Seller or Indemnitor, to:

 

 

 

 

 

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

 

 

 

 

 

 

 

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

 

 

 

Attention:

 

 

Fax No.: (___) ___-____

-iv-

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

 

 

 

 

(ii)

If addressed to Buyer, to:

 

 

 

 

 

Apple Ten Hospitality Ownership, Inc.
814 E. Main Street
Richmond, Virginia 23219
Attn: Sam Reynolds
Fax No.: (804) 344-8129

 

 

 

 

 

with a copy to:

 

 

 

 

 

Apple REIT Ten, Inc.
814 E. Main Street
Richmond, Virginia 23219
Attn: Legal Dept.
Fax No.: (804) 727-6349

 

 

 

 

(iii)

If addressed to Escrow Agent, to:

 

 

 

 

 

LandAmerica Dallas National Division
5501 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attn: Debby Moore
Fax No.: (214) 570-0210

or such other address or addresses as may be expressly designated by any party
by notice given in accordance with the foregoing provisions and actually
received by the party to whom addressed.

                    8. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and all of which,
together, shall constitute one and the same Agreement.

                    9. The covenants, conditions and agreements contained in
this Agreement shall bind and inure to the benefit of each of the Parties hereto
and their respective successors and assigns.

-v-

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          IN WITNESS WHEREOF the Parties have executed this Agreement as of the
day and year first above written.

 

 

 

 

 

 

 

 

SELLER:

 

 

 

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By:

 

 

 

 

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Name:

 

 

 

 

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Title:

 

 

 

 

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INDEMNITOR:

 

 

 

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By:

 

 

 

 

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Name:

 

 

 

 

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Title:

 

 

 

 

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BUYER:

 

 

 

APPLE TEN HOSPITALITY OWNERSHIP, INC., a Virginia corporation

 

 

 

By:

 

 

 

 

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Name:

 

 

 

 

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Title:

 

 

 

 

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ESCROW AGENT:

 

 

 

CHICAGO TITLE COMPANY

 

 

 

By:

 

 

 

 

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Name:

 

 

 

 

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Title:

 

 

 

 

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-vi-

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EXHIBIT H

Existing Loan

Name, Address, Email and Telephone Number Lender:

Morgan Stanley Mortgage Capital
1221 Avenue of the Americas
New York, NY 10020

Name, Address, Email and Telephone Number of Servicer:

Wells Fargo Bank, N.A.
Commercial Mortgage Servicing
1901 Harrison Street
Oakland, CA 94612
Fax: (510) 446-3652

Date of Note: 1/27/2006

Maturity Date: 8/1/2016

Interest Rate: 5.99%

Original Principal Amount of Note: $22,500,000

Date and Recording Info of Security Instrument: 1/27/2006

Outstanding Principal Balance as of 5/1/11: $20,949,357.27

-vii-

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