EXHIBIT 10.1

 

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

 

between

 

GASLAMP HOLDINGS, LLC

 

as Seller

 

and

 

CWI MISSION VALLEY HOTEL, LLC

 

as Purchaser

 

Courtyard by Marriott — Mission Valley

 

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TABLE OF CONTENTS

 

ARTICLE

 

PAGE

 

 

 

 

I. DEFINITIONS

 

 

1

 

 

 

 

II. SALE AND PURCHASE OF PROPERTY

 

6

2.1

Purchase of Property

 

6

2.2

Purchase Price and Terms of Payment

 

6

2.2.1

Earnest Money Deposit

 

6

2.2.2

Balance of Purchase Price

 

6

2.2.3

Independent Contract Consideration

 

7

2.3

Assumption of the Contracts

 

7

2.4

Franchise Agreement

 

7

2.5

Liquor Licenses and Alcoholic Beverages

 

7

 

 

 

 

III. ESCROW

 

8

3.1

Opening of Escrow

 

8

3.2

Intentionally Omitted

 

8

3.3

Additional Escrow Holder Requirements

 

8

3.4

Deposit of Funds

 

8

3.5

Release of Funds by Escrow Holder

 

9

 

 

 

 

IV. CONDITION OF TITLE

 

9

4.1

Title Commitment

 

9

4.2

Title Insurance Policy

 

9

4.2.1

Title Policy

 

9

4.2.2

Involuntary Encumbrances

 

10

4.2.3

Voluntary Encumbrances

 

11

4.3

Inspection and Due Diligence Review

 

12

4.4

Notice of Non-Satisfaction

 

13

4.5

Condition of the Property

 

14

 

 

 

 

V. CLOSING

 

21

5.1

Closing Date

 

21

5.2

Action Prior to the Close of Escrow by Seller

 

22

5.3

Action Prior to the Close of Escrow by Purchaser

 

23

5.4

Recording of Deed

 

23

5.5

Prorations

 

23

5.5.1

Taxes

 

23

5.5.2

Advance Reservations

 

23

5.5.3

Utility Service

 

24

5.5.4

Revenue From Operations

 

24

5.5.5

Accounts Payable and Operating Expenses

 

24

5.5.6

Miscellaneous Permits and Taxes

 

24

5.5.7

Contracts

 

24

 

 

 

 

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5.5.8

Other Income

 

24

5.5.9

Other Expenses

 

24

5.5.10

Ticket and Gift Shop Inventory

 

25

5.5.11

House Banks

 

25

5.5.12

Delayed Adjustments

 

25

5.5.13

Proration Allocation

 

25

5.5.14

Survival

 

25

5.6

Guest Property

 

25

5.6.1

Safe Deposit Boxes

 

25

5.6.2

Baggage Inventory

 

26

5.7

Closing Costs

 

26

5.8

California Real Estate Withholding

 

26

5.9

Distribution of Funds and Documents Following Close of Escrow

 

26

5.10

Possession

 

27

 

 

 

 

VI. ADDITIONAL COVENANTS AND INDEMNITIES

 

27

6.1

Purchaser’s Covenants

 

27

6.1.1

Indemnification

 

27

6.1.2

Seller’s Accounts Receivable

 

28

6.2

Seller’s Covenants

 

28

6.2.1

Indemnification

 

28

6.2.2

Termination of Management Agreements

 

29

6.2.3

Operation of the Hotel

 

29

6.3

Employee Matters

 

29

6.4

Transition

 

30

6.5

No Obligations of Escrow Holder

 

30

 

 

 

 

VII. REPRESENTATIONS AND WARRANTIES

 

30

7.1

By Purchaser

 

30

7.1.1

Organization and Standing

 

30

7.1.2

Due Authorization

 

30

7.1.3

Lack of Conflict

 

31

7.1.4

Solvency/Bankruptcy

 

31

7.2

By Seller

 

31

7.2.1

Organization and Standing

 

31

7.2.2

Due Authorization

 

31

7.2.3

Lack of Conflict

 

31

7.2.4

Non-Foreign Seller

 

31

7.2.5

Solvency/Bankruptcy

 

32

7.2.6

Tax Returns

 

32

7.2.7

Financial Information

 

32

7.2.8

Litigation

 

32

7.2.9

Foreign Persons

 

32

7.2.10

Existing Management Agreement

 

32

7.2.11

Employees

 

33

7.2.12

Contracts

 

33

7.2.13

Environmental Matters

 

33

 

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7.2.14

Permits

 

33

7.2.15

Condemnation Actions; Special Assessments

 

33

7.2.16

Bankruptcy

 

33

 

 

 

 

VIII. CONDITIONS PRECEDENT TO CLOSE OF ESCROW

 

34

8.1

Conditions to Seller’s Obligations

 

34

8.2

Conditions to Purchaser’s Obligations

 

34

8.3

Failure of Conditions to Close of Escrow

 

35

 

 

 

 

IX. LIQUIDATED DAMAGES

 

35

9.1

Default by Purchaser

 

35

9.2

Default by Seller

 

36

 

 

 

 

X. BROKERS

 

37

 

 

 

 

XI. NOTICES

 

37

 

 

 

 

XII. MISCELLANEOUS

 

38

12.1

Governing Law

 

38

12.2

Professional Fees and Costs

 

38

12.3

Exhibits and Schedules a Part of This Agreement

 

39

12.4

Executed Counterparts

 

39

12.5

Assignment

 

39

12.6

IRS - Form 1099-S

 

39

12.7

Successors and Assigns

 

39

12.8

Time is of the Essence

 

39

12.9

Entire Agreement

 

40

12.10

Further Assurances

 

40

12.11

Waiver

 

40

12.12

Headings

 

40

12.13

Risk of Loss

 

40

12.13.1

Risk of Loss

 

40

12.13.2

Material Loss

 

41

12.13.3

Nonmaterial Loss

 

41

12.13.4

Eminent Domain

 

41

12.14

Construction of Agreement

 

42

12.15

Tax Deferred Exchange

 

42

12.16

No Public Disclosure

 

43

12.17

Covenants, Representations and Warranties

 

43

12.18

Confidentiality

 

43

12.19

Limitation on Liability

 

44

12.20

No Third-Party Beneficiaries

 

45

12.21

Electronic and Facsimile Signatures

 

45

12.22

Purchaser Audit Rights

 

45

12.23

Waiver of Jury Trial

 

46

 

 

 

 

XIII. EXECUTION

 

47

 

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PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

 

This PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Agreement”) is
dated this  16th day of October, 2012 (the “Effective Date”), and is made by and
between GASLAMP HOLDINGS, LLC, a California limited liability company
(“Seller”), and CWI MISSION VALLEY HOTEL, LLC, a Delaware limited liability
company (“Purchaser”).

 

RECITALS

 

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

 

AGREEMENT

 

NOW, THEREFORE, for valuable consideration, including the performance of the
promises, covenants, representations and warranties hereinafter set forth, the
parties, intending to be legally and equitably bound, agree as follows:

 

I.

 

DEFINITIONS

 

As used in this Agreement, the following terms have the meanings ascribed to
them in this Article I:

 

“Additional Deposit.”  As set forth in Section 2.2.1 hereof.

 

“Alcoholic Beverages.”  All unopened wine, beer and other alcoholic beverages
located at the Real Property and held for consumption and/or sale in the
operation of the Hotel.

 

“Assignment of Contracts.”  As set forth in Section 5.2(d) hereof.

 

“Assignment of Intangibles.”  As set forth in Section 5.2(c) hereof.

 

“Bill of Sale.”  As set forth in Section 5.2(b) hereof.

 

“Bookings.”  All contracts or reservations for the use or occupancy of guest
rooms, meeting rooms and/or banquet facilities of the Hotel for periods on and
after the Closing Date which are made in Seller’s ordinary course of business
for the Hotel.

 

“Casualty.”  As set forth in Section 12.13.1 hereof.

 

“Casualty Notice.”  As set forth in Section 12.13.1 hereof.

 

“Casualty Renovation Cost.”  As set forth in Section 12.13.1 hereof.

 

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“Close of Escrow.”  As set forth in Section 5.1 hereof.

 

“Closing Date.”  As set forth in Section 5.1 hereof.

 

“Contracts.”  All (a) leases of furniture and equipment, contracts and
agreements used and/or executed in connection with the ownership and/or
operation of the Hotel and/or the Property, as described on Schedule “A”
attached hereto, (b) equipment leases and contracts with the franchisor under
the Franchise Agreement and/or its affiliates executed in connection with, or as
a requirement under, the Franchise Agreement (including any property management
and reservation software systems), (c) all contracts, agreements and other
obligations terminable on not more than thirty (30) days prior notice without
penalty, and (d) all other contracts and agreements (including the Bookings)
entered into by Seller in the ordinary course of business after the date hereof
as permitted, and disclosed to Purchaser as required, by the terms of this
Agreement, but excluding the Franchise Agreement.

 

“Cooperating Party.”  As set forth in Section 12.15 hereof.

 

“Cut-Off Time.”  As set forth in Section 5.5.4 hereof.

 

“Deed.”  As set forth in Section 5.2(a) hereof.

 

“Due Diligence Materials.”  As set forth in Section 4.3 hereof.

 

“Due Diligence Period.”  As set forth in Section 4.3 hereof.

 

“Earnest Money Deposit.”  The Initial Deposit and the Additional Deposit, and
all interest accrued thereon.

 

“Effective Date.”  As set forth in the Preamble.

 

“Environmental Damages.”  As set forth in Section 4.5(g) hereof.

 

“Environmental Reports.”  As set forth in Section 7.2.13 hereof.

 

“Environmental Requirements.”  As set forth in Section 4.5(h) hereof.

 

“Escrow.”  As set forth in Section 3.1 hereof.

 

“Escrow Holder.”  First American Title Insurance Company — New York Division,
633 Third Avenue, New York, NY 10017, Attention:  Jill Siegel, Telephone
No. (212) 551-9458, Telecopier No. (212) 331-1411, E-mail address:
jsiegel@firstam.com.

 

“Evolution.” Evolution Hospitality, LLC, a California limited liability company.

 

“Exchangor.”  As set forth in Section 12.15 hereof.

 

“Excluded Assets.”  The Proprietary Computer Systems, all marks and intangible
property proprietary to Seller and/or Evolution, the marks “Courtyard by
Marriott” and “Marriott” and all derivatives thereof, all items of Personal
Property, Inventory and Intangible

 

2

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Property that include the marks “Courtyard by Marriott” and “Marriott” and all
logos of the franchisor under the Franchise Agreement, the Excluded Documents,
cash, cash equivalents, checks and other funds, including, without limitation,
till money, house banks, Seller’s Accounts Receivable, notes, securities and
other evidence of indebtedness held at the Hotel as of the Cut-Off Time, and
balances on deposit to the credit of Seller with banking institutions, all of
which shall be retained by Seller.

 

“Excluded Documents.”  All (a) internal memoranda, correspondence, analyses,
documents or reports prepared by or for Seller or any affiliate or agent of
Seller in connection with the sale of the Property, (b)  tax returns and
financial statements of Seller (exclusive of operating statements of the Hotel
which shall be available for review by Purchaser) for or in connection with its
ownership or operation of the Property, (c) communications between Tarsadia,
Seller or any affiliate of either of them, and their attorneys or other agents
or representatives, (d) employee personnel files of Seller and any manager of
the Hotel (including Evolution), (e) appraisals, assessments or other valuations
of the Property in the possession of Seller or Tarsadia, (f) original bills,
invoices, receipts and checks relating to expenses incurred prior to the Closing
Date (provided that Purchaser shall be entitled to copies of such items), and
(g) any confidential or proprietary information of Tarsadia in Seller’s
possession, in each case however embodied.

 

“Extension Deposit”  As set forth in Section 5.1 hereof.

 

“Food Inventory.”  All unopened food, food stuffs, menu stock and non-alcoholic
beverages located at the Real Property and held for consumption and/or sale in
the operation of the Hotel.

 

“Franchise Agreement.”  That certain Franchise Agreement between Marriott
International, Inc., as franchisor, and Gaslamp Holdings, LLC, as franchisee,
for the Hotel.

 

“Franchisor Approval.”  As set forth in Section 2.4 hereof.

 

“Franchisor Approval Period.”  As set forth in Section 2.4 hereof.

 

“Good Funds.”  A deposit of cashier’s check, certified funds, or confirmed wire
transfer of funds.

 

“Hazardous Materials.”  As set forth in Section 4.5(i) hereof.

 

“Hotel.”  The hospitality business (including restaurant and lounge services and
businesses) operated and conducted by Seller on the Real Property.

 

“Improvements.”  The buildings, structures, and other permanent improvements
located on the Land, including, without limitation, electrical distribution
systems, HVAC systems, walkways, driveways, parking lots, recreational
facilities, plumbing, swimming pool, lighting, and mechanical equipment and
fixtures installed thereon, and all rights, benefits and privileges appurtenant
thereto.

 

“Independent Contract Consideration.”  As set forth in Section 2.2.3 hereof.

 

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“Initial Deposit.”  As set forth in Section 2.2.1 hereof.

 

“Intangible Property.”  All (a) fictitious business names and logos used by
Seller in the operation of the Hotel and which are identified exclusively with
the Hotel, but excluding the names “Courtyard by Marriott,” “Marriott,” and all
derivatives thereof, (b) local (Area Code 619) telephone and facsimile exchange
numbers identified exclusively with the Hotel, (c) transferable licenses,
permits and warranties now in effect with respect to the Property, specifically
excluding, however, the Liquor Licenses, and the Franchise Agreement,
(d) transferable certificates (including the Certificate of Occupancy for the
Real Property), licenses, permits and warranties now in effect with respect to
the Property (specifically excluding, however, the Liquor Licenses) at no cost
to Seller, and (e) all other intangible property located at the Real Property
and used by Seller exclusively in connection with the ownership and operation of
the Hotel, but excluding the Excluded Assets, the Excluded Documents, the
Proprietary Computer Systems and the Proprietary Information.

 

“Intermediary.”  As set forth in Section 12.15 hereof.

 

“Inventory.”  The Food Inventory, and all unopened operating inventories,
materials and supplies used in connection with the operation of the Hotel and
located thereat and not held for sale to the general public, including linens,
bath towels, paper goods and guest supplies, but excluding the Alcoholic
Beverages.

 

“Land.”  The land more particularly described on Exhibit “B” attached hereto and
upon which the Improvements are located.

 

“Land Rights.”  All easements, rights-of-way, strips, zones, licenses,
transferable hereditaments, privileges, tenements and appurtenants belonging to
the Land, and any right or interest in any open or proposed highways, streets,
roads, avenues, alleys, easements, strips, gores and rights-of-way in, across,
in front of, contiguous to, abutting or adjoining the Land, and other rights and
benefits running with the Land and/or the owner of the Land.

 

“Latent Defects.”  As set forth in Section 4.5(c) hereof.

 

“Liabilities.”  As set forth in Section 12.15 hereof.

 

“Liquor Licenses.”  The liquor licenses relating to the operation of the
restaurant and lounge businesses at the Real Property, as may be described in
Section 2.5 hereof.

 

“Liquor Transfer Agreement.”  As set forth in Section 2.5 hereof.

 

“Non-Foreign Affidavit.”  As set forth in Section 5.2(e) hereof.

 

“Notice.”  As set forth in Article XI hereof.

 

“Opening of Escrow.”  As set forth in Section 3.1 hereof.

 

“Permits.”  As set forth in Section 4.5(a) hereof.

 

“Permitted Exceptions.”  As set forth in Section 4.2.1 hereof.

 

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“Personal Property.”  All (a) keys and combinations to all doors, cabinets,
enclosures and other locks on or about the Real Property, (b) Restaurant
Equipment, furniture, equipment, appliances, televisions, telephone systems,
artwork, machinery, tools, trade fixtures and other personal property owned by
Seller, located on the Real Property, and which are used exclusively in
connection with the operation of the Hotel and/or the Real Property, (c) copies
of files maintained or generated by Seller in the course of Seller’s operation
of the Hotel (excluding the Excluded Documents and other materials proprietary
to Seller) which are located on the Real Property, and (d) all other personal
property located at the Real Property with respect to which Seller is the owner
thereof and which is used by Seller exclusively in connection with the ownership
and operation of the Hotel and/or the Real Property; but excluding, however,
(i) the Inventory and the Alcoholic Beverages, and related items, (ii) cash,
cash equivalents and Seller’s Accounts Receivable, (iii) the personal property
owned by any tenant or guest on the Real Property, (iv) the Liquor Licenses,
(v) all refunds and claims for refunds for real property and personal property
taxes in connection with the Property for any period prior to the Close of
Escrow, and (vi) all tax and utilities and other deposits.

 

“Property.”  The Land, the Improvements, the Land Rights, the Hotel, the
Personal Property, the Inventory, Seller’s rights under the Contracts, and the
Intangible Property.

 

“Proprietary Computer Systems.”  The computer software, hardware, programs,
processes and procedures set forth on Schedule “C” attached hereto.

 

“Proprietary Information.”  As set forth in Section 12.18 hereof.

 

“Purchase Price.”  As set forth in Section 2.2 hereof.

 

“Real Property.”  The Land, the Improvements and the Land Rights.

 

“Regulations.”  As set forth in Section 4.5(a) hereof.

 

“Reports.  As set forth in Section 4.5(d) hereof.

 

“Restaurant Equipment.”  All equipment, furniture, fixtures, utensils,
glassware, silverware and china used in connection with the operation of all
restaurants and lounges on the Real Property.

 

“Seller’s Accounts Receivable.”  All accounts receivable and other sums owing
Seller in connection with the operation of the Hotel existing on and prior to
the Close of Escrow.

 

“Seller’s Post-Closing Obligations.”  As set forth in Section 12.19 hereof.

 

“Survey.”  As set forth in Section 4.2.1 hereof.

 

“Tarsadia.”  Tarsadia Investments, LLC, a California limited liability company.

 

“Title Commitment.”  As set forth in Section 4.1 hereof.

 

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“Title Insurer.”  First American Title Insurance Company — National Commercial
Services, 633 Third Avenue, New York, NY 10017, Attention:  Jennifer D.
Panciera, Telephone No. (212) 850-0653, Telecopier No. (646) 487-6940, E-mail
address: JPanciera@firstam.com.

 

“Title Policy.”  As set forth in Section 4.2.1 hereof.

 

“WARN Act.”  As set forth in Section 6.3 hereof.

 

II.

 

SALE AND PURCHASE OF PROPERTY

 

2.1                               Purchase of Property.  As of the Close of
Escrow, and subject to the terms and conditions of this Agreement, Seller shall
sell, assign, convey, transfer and deliver to Purchaser, and Purchaser shall
purchase and acquire from Seller, all of Seller’s right, title and interest in
and to the Property, free and clear of all monetary liens and encumbrances
(other than the Contracts and the Permitted Exceptions), at the purchase price
provided in Section 2.2 hereof.

 

2.2                               Purchase Price and Terms of Payment.  The
purchase price for the Property (“Purchase Price”) shall be Eighty-Five Million
Dollars ($85,000,000.00), reduced by an amount equal to the purchase price for
the Liquor Licenses and the Alcoholic Beverages, and shall consist of and be
payable as follows:

 

2.2.1                     Earnest Money Deposit.  On or before three
(3) business days after the date of the execution hereof by Purchaser, Seller
and Escrow Holder, Purchaser shall deliver to Escrow Holder, in Good Funds, the
sum of Three Million Dollars ($3,000,000.00) (the “Initial Deposit”).  The
Initial Deposit shall become non-refundable to Purchaser (except as otherwise
provided in this Agreement) if Purchaser does not terminate this Agreement prior
to the expiration of the Due Diligence Period pursuant to the provisions of
Section 4.4 hereof.

 

Unless Purchaser has elected to terminate this Agreement in accordance with the
provisions of Section 4.4 hereof, prior to the expiration of the Due Diligence
Period, Purchaser shall deposit with Escrow Holder, in Good Funds, the
additional sum of Three Million Dollars ($3,000,000.00) (the “Additional
Deposit”), for an Earnest Money Deposit of Six Million Dollars ($6,000,000.00).

 

The Earnest Money Deposit shall be held by Escrow Holder in accordance with the
terms of this Agreement.  At such time as Purchaser is required hereunder to
deposit the Additional Deposit, the Earnest Money Deposit shall become
non-refundable to Purchaser, except in the event of an (a) uncured default by
Seller of its material obligations under this Agreement, (b) failure of a
condition precedent to Purchaser’s obligations as set forth in this Agreement,
or (c) except as otherwise specifically provided in this Agreement.  The Earnest
Money Deposit shall be applied to the Purchase Price on the Close of Escrow.

 

2.2.2                     Balance of Purchase Price.  Not later than 11:00 AM
California time on the Closing Date, Purchaser shall deposit with Escrow Holder,
in Good Funds, the balance of the Purchase Price, reduced or increased by such
amounts required to take into account such

 

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prorations, credits, costs or other adjustments which are required by this
Agreement and which can be computed and determined as of the time for the
required deposit hereunder.

 

2.2.3                     Independent Contract Consideration.  Contemporaneously
with the delivery of the Initial Deposit, Purchaser shall deliver to Escrow
Holder, in Good Funds, by wire transfer, the sum of One Thousand Dollars
($1,000.00) (the “Independent Contract Consideration”), which amount Seller and
Purchaser bargained for and agreed to as consideration for Seller’s execution,
delivery and performance of this Agreement.  The Independent Contract
Consideration is in addition to and independent of any other consideration or
payment provided for in this Agreement, and shall be released to Seller by
Escrow Holder upon receipt thereof, and is nonrefundable.

 

2.3                               Assumption of the Contracts.  As additional
consideration, Purchaser shall, on and as of the Close of Escrow, at its sole
cost and expense, assume and agree to pay all sums and perform, fulfill and
comply with all other covenants and obligations which are to be paid, performed
and complied with by Seller under the Contracts which first arise on and after
the Close of Escrow.  Seller shall indemnify, defend, protect and hold Purchaser
harmless from all breaches, claims, liabilities, losses and damages (including
attorneys’ fees and related costs, whether or not legal proceedings are
instituted) arising under the Contracts for all periods prior to the Close of
Escrow.  Purchaser shall indemnify, defend, protect and hold Seller, Tarsadia,
Evolution and their affiliates, harmless from all breaches, claims, liabilities,
losses and damages (including attorneys’ fees and related costs, whether or not
legal proceedings are instituted) arising under the Contracts (including,
without limitation, those arising from or as a result of the assignment and
assumption thereof) for all periods on and after the Close of Escrow.

 

2.4                               Franchise Agreement.  Purchaser shall, at its
election, either assume the Franchise Agreement or cause the
cancellation/termination thereof (without fee, liability or penalty to Seller),
all at Purchaser’s sole cost and expense, and in each case with the full release
of Seller (and any guarantors) from liability under the Franchise Agreement for
all periods after the Close of Escrow.  Seller agrees to cooperate with
Purchaser’s efforts to apply for and obtain either the assignment and assumption
of the Franchise Agreement or a new franchise agreement, including Purchaser’s
preparation of a property improvement plan, all at no cost or expense to
Seller.  Within fifteen (15) days of the Effective Date, Purchaser shall submit
to Marriott International, Inc. its application for the assignment and
assumption of the Franchise Agreement or for a new franchise, and shall
diligently pursue the processing thereof, in good faith using commercially
reasonable efforts to cause Franchisor to commit in writing, in form and
substance reasonable acceptable to the parties, to (a) terminate the Franchise
Agreement, with no cost, expense or liability to Seller, and (b) allow Purchaser
to receive a license to continue operating the Hotel as a Courtyard by Marriott
after the Close of Escrow pursuant to a new franchise agreement in the form and
substance acceptable to Purchaser (in Purchaser’s reasonable discretion)
(collectively, the “Franchisor Approval”). If Purchaser has not obtained the
Franchisor Approval by the last day of the Due Diligence Period, Purchaser may
elect to terminate this Agreement and cancel the Escrow in accordance with the
provisions of Section 4.4 hereof.

 

2.5                               Liquor Licenses and Alcoholic Beverages.  The
Liquor Licenses and Alcoholic Beverages located at the Hotel shall be conveyed
to Purchaser (or its designee) pursuant to a separate purchase and sale
agreement (the “Liquor Transfer Agreement”) in the form and content

 

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attached hereto as Exhibit “D,” to be executed by Purchaser and Seller
concurrently herewith, which shall reflect a purchase price for the Liquor
Licenses of Fifteen Thousand Dollars ($15,000.00), and for the Alcoholic
Beverages a purchase price equal to Seller’s cost thereof.

 

Notwithstanding anything to the contrary in this Agreement, title to the
Alcoholic Beverages shall be conveyed to Purchaser by Seller, without the
necessity of any further action by Seller, on the date (but not sooner than the
Close of Escrow) that Purchaser obtains its temporary liquor licenses as
described hereinabove.

 

III.

 

ESCROW

 

3.1                               Opening of Escrow.  Purchaser and Seller shall
open an escrow (the “Escrow”) with Escrow Holder by depositing with Escrow
Holder the Initial Deposit and three (3) copies of this Agreement duly executed
(in counterparts or otherwise) by Seller and Purchaser.  The time when Escrow
Holder so receives the Initial Deposit and the copies of this Agreement, fully
executed by the parties and executes and delivers copies thereof to Seller and
Purchaser, shall be deemed the “Opening of Escrow.”  Purchaser and Seller shall
execute and deliver to Escrow Holder, in a timely fashion, such instruments and
funds as are reasonably necessary to close the Escrow and consummate the sale
and purchase of the Property (or the exchange thereof, if applicable) in
accordance with the terms and provisions of this Agreement.

 

3.2                               Intentionally Omitted.

 

3.3                               Additional Escrow Holder Requirements.  If
there are any requirements imposed by Escrow Holder relating to the duties or
obligations of Escrow Holder, or if Escrow Holder requires any other additional
instructions, the parties agree to make such deletions, substitutions and
additions to this Agreement which do not cause more than a ministerial or de
minimis change to this Agreement or its intent. Any such changes requested by
Escrow Holder shall be subject to written approval of the parties, which
approval shall not be unreasonably withheld or conditioned.

 

3.4                               Deposit of Funds.  Except as otherwise
provided in this Agreement, all funds deposited into the Escrow by Purchaser
shall be immediately deposited by Escrow Holder into Treasury Bills or other
short-term United States Government obligations, in repurchase contracts for the
same, or in a federally insured money market account, subject to the control of
Escrow Holder in a bank or savings and loan association, or such other
institution approved by Purchaser; provided, however, that such funds must be
readily available as necessary to comply with the terms of this Agreement and
Escrow Holder’s escrow instructions (including the return of the Earnest Money
Deposit (or any portion thereof then on deposit with Escrow Holder) and the
Extension Deposit (if then on deposit with Escrow Holder) to Purchaser in
accordance with this Agreement), and for the Escrow to close within the time
specified in Section 5.1 of this Agreement.  Except as may be otherwise
specifically provided herein, interest on amounts placed by Escrow Holder in any
such investments or interest bearing accounts shall accrue to the benefit of
Purchaser, and Purchaser shall promptly provide to Escrow Holder Purchaser’s
completed and executed W-9 with Purchaser’s Tax Identification Number and Escrow
Holder’s Investment Instructions.

 

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3.5                               Release of Funds by Escrow Holder.  Escrow
Holder’s obligation under this Agreement to release the Earnest Money Deposit,
the Extension Deposit and any other funds, prior to the Close of Escrow is
subject to such funds having cleared through the bank, savings and loan, or
other financial institution on which such funds are drawn.  Escrow Holder shall
make such payments only in strict accordance with the provisions of this
Agreement, and Purchaser and Seller agree to save and hold Escrow Holder
harmless in disbursing and releasing the funds as specified in this Agreement. 
Purchaser and Seller represent to Escrow Holder that the release instructions
set forth in this Agreement are made of their own free will, under no duress,
and with full understanding of the consequences thereof, not relying on any
information furnished or statements made by Escrow Holder.

 

IV.

 

CONDITION OF TITLE

 

4.1                               Title Commitment.  Within five (5) business
days after the Opening of Escrow, Purchaser shall obtain from Title Insurer a
current commitment for a C.L.T.A. Owner’s Policy of Title Insurance (standard
coverage) issued by Title Insurer (the “Title Commitment”) reflecting the status
of title to the Real Property and all exceptions, including easements, licenses,
restrictions, rights-of-way, leases, covenants, reservations and other
conditions, if any, affecting the Real Property, which would appear in a
C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) if used, and
committing to issue the C.L.T.A. Owner’s Policy of Title Insurance (standard
coverage) to Purchaser in the full amount of the Purchase Price.  Accompanying
the Title Commitment, Purchaser shall obtain, to the extent available, legible
copies of the documents affecting the Real Property referred to in the Title
Commitment.

 

4.2                               Title Insurance Policy.

 

4.2.1                     Title Policy.  Effective as of the Close of Escrow,
but conditioned upon the Close of Escrow, Purchaser shall obtain from Title
Insurer a C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) (the
“Title Policy”), with liability in the amount of the Purchase Price for the Real
Property insuring fee title in the Land and Improvements and Seller’s interest
in the Land Rights as vested in Purchaser subject only to the following matters
affecting title (“Permitted Exceptions”).

 

(a)                                 All general and special property taxes and
assessments not yet delinquent, and all improvement and assessment bonds;

 

(b)                                 Supplemental taxes assessed as a result of
the sale of the Real Property by Seller to Purchaser pursuant to the provisions
of California Revenue and Taxation Code Chapter 3.5 (commencing with
Section 75);

 

(c)                                  Subject to the provisions of Section 4.4
hereof, all liens, covenants, conditions, restrictions, easements, rights of
way, and all other exceptions to title as referenced in the Title Commitment,
except (subject to the provisions of Section 4.2.2 hereof) monetary liens and
encumbrances (other than as caused by Purchaser) which Seller shall remove at or
prior to the Close of Escrow;

 

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(d)                                 All exceptions to title disclosed by or in,
or arising from or in connection with, the Survey (and any updates thereto) of
the Real Property for the Title Policy (including, without limitation,
easements, encroachments and zoning);

 

(e)                                  All security interests recorded in
connection with the Contracts;

 

(f)                                   Rights of parties in possession not shown
by the public records, easements or claims of easements not shown by the public
records, but with respect to which Purchaser has knowledge thereof;

 

(g)                                  Governmental laws, codes, ordinances and
restrictions now or hereafter in effect so far as these affect the Property or
any part thereof, including, without limitation, zoning ordinances (and
amendments and additions relating thereto) and the Americans with Disabilities
Act of 1990, as amended, and any and all other matters, known or unknown,
relating to the Property, or its condition, use, value or operation;

 

(h)                                 Any exceptions created by Purchaser or its
agents, employees and/or contractors, including without limitation, any
exceptions arising by reason of the entry on the Real Property by Purchaser or
by its agents, employees and/or contractors; and

 

(i)                                     All preprinted exceptions and exclusions
contained in the Title Policy.

 

At Purchaser’s election, Purchaser may obtain an A.L.T.A. Owner’s Policy of
Title Insurance (extended coverage); provided, however, that Purchaser’s ability
to obtain an A.L.T.A. Owner’s Policy of Title Insurance (extended coverage)
shall not be a condition precedent to Purchaser’s obligations hereunder and
shall not extend the Closing Date or delay the Close of Escrow.  In addition,
Purchaser shall have the right to obtain from Title Insurer such endorsements to
the Title Policy and/or such additional liability protection as Purchaser may
elect to obtain; provided, however, that Purchaser’s ability to obtain such
title endorsements and/or such additional liability protection shall not be a
condition precedent to Purchaser’s obligations hereunder and shall not extend or
delay the Close of Escrow.  Purchaser shall be solely responsible for
negotiating with Title Insurer with respect to such A.L.T.A. Owner’s Policy of
Title Insurance (extended coverage) and/or with respect to such title
endorsements and/or such additional liability protection as may be requested by
Purchaser, if any.

 

Seller will deliver to Purchaser a copy of any survey of the Real Property in
its possession, without warranty, and Purchaser shall be solely responsible for,
and shall assume the risk of, obtaining a survey (or updating Seller’s survey)
of the Real Property (the “Survey”) acceptable to Title Insurer for purposes of
issuing the Title Policy.

 

4.2.2                     Involuntary Encumbrances.  If, on the Closing Date,
title to the Real Property, or any portion thereof, is subject to an involuntary
monetary lien not consented to by Seller, Purchaser shall notify Seller and
Escrow Holder of the same, in writing, and the Close of Escrow shall be delayed
as provided herein, and, notwithstanding any other provision of this Agreement,
Seller shall not be deemed to be in default of its obligations under this
Agreement.  Upon receipt of such Notice specifying the lien, encumbrance or
other matter and Purchaser’s

 

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objection thereto, Seller, within five (5) business days thereafter, may elect
any of the following, which election shall be in writing delivered to Purchaser
and Escrow Holder:

 

(i)                                     Deliver to Escrow Holder an instrument,
in proper form for recording and reasonably acceptable in form and substance to
Purchaser and Title Insurer, canceling such matters, together with any other
instruments necessary thereto and the cost of recording and canceling the same,
and Title Insurer will issue its Title Policy free of such matters;

 

(ii)                                  Cause Title Insurer to “insure over” such
lien(s), encumbrance(s) or other matter(s), unless a reasonable person would
conclude that such lien(s), encumbrance(s) or other matter(s) is or would be a
material defect to Purchaser’s title; or

 

(iii)                               Terminate this Agreement and cancel the
Escrow, and cause to be refunded to Purchaser the Earnest Money Deposit (or any
portion then on deposit with Escrow Holder) and the Extension Deposit (if then
on deposit with Escrow Holder), and directing Escrow Holder to release to
Purchaser all additional funds and instruments deposited by Purchaser with
Escrow Holder, with Seller being obligated for all cancellation fees.  In such
event, Purchaser and Seller shall execute such other instruments and documents
as may be necessary to effectuate the termination of this Agreement and the
cancellation of the Escrow, whereupon the obligations and liabilities of Seller
and Purchaser shall terminate.  Notwithstanding the foregoing, however, Seller
shall provide Purchaser with two (2) business days’ Notice prior to so
terminating this Agreement and canceling the Escrow, during which two
(2) business day period Purchaser may waive and withdraw its objection(s) to
close the purchase of the Property and accept title thereto in its then existing
condition, without reduction of or credit to the Purchase Price, thereby waiving
the title defects without further recourse against or liability to Seller, in
which case Seller shall be precluded from exercising its rights under this
Subsection (iii).

 

In the event Seller elects alternative (i) or (ii) hereof, Seller may elect to
extend the Closing Date and the Close of Escrow to a date not to exceed the
earlier of the date which is three (3) business days after such title defects
are cured or sixty (60) days from the original Closing Date.  Upon the
expiration of the curative periods set forth herein, if Seller has not cured
such involuntary encumbrances, Purchaser shall have the right, upon Notice
delivered to Seller and Escrow Holder, to terminate this Agreement and cancel
the Escrow, in which case Purchaser shall be refunded the Earnest Money Deposit
(or so much thereof then on deposit with Escrow Holder) and the Extension
Deposit (if then on deposit with Escrow Holder), and Escrow Holder shall release
to Purchaser all additional funds and instruments deposited by Purchaser with
Escrow Holder, with Seller being obligated for all cancellation fees.  In such
event, Purchaser and Seller shall execute such other instruments and documents
as may be necessary to effectuate the termination of this Agreement and the
cancellation of the Escrow, whereupon the obligations and liabilities of Seller
and Purchaser shall terminate.

 

4.2.3                     Voluntary Encumbrances.  If, on the Closing Date,
title to the Real Property, or any portion thereof, is subject to an voluntary
lien resulting from Seller’s action or inaction, Purchaser shall notify Seller
and Escrow Holder of the same, in writing, and, Seller shall be obligated to
have the same cured prior to the Closing Date or Seller shall be deemed to be in
default of its obligations under this Agreement and Purchaser shall have the
right, upon

 

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Notice delivered to Seller and Escrow Holder, to terminate this Agreement and
cancel the Escrow and pursue all rights and remedies set forth herein whereupon
Purchaser shall be refunded the Earnest Money Deposit (or so much thereof then
on deposit with Escrow Holder) and the Extension Deposit (if then on deposit
with Escrow Holder), and Escrow Holder shall release to Purchaser all additional
funds and instruments deposited by Purchaser with Escrow Holder, with Seller
being obligated for all cancellation fees.

 

4.3                               Inspection and Due Diligence Review. 
Purchaser shall have the right, in its sole discretion, until 3:00 p.m.
California time on November 7, 2012, to satisfy itself, in its sole discretion,
as to the condition and extent of the Property (the “Due Diligence Period”). 
Subject to the prior termination of this Agreement, during the term of this
Agreement Seller shall use commercially reasonable efforts to cooperate and
provide Purchaser with reasonable and continuing access to the Real Property
upon one (1) business day prior Notice to Seller for the purpose of Purchaser’s
inspection and due diligence review.  In connection with such review, during
normal business hours during the Due Diligence Period, Purchaser shall be
afforded the opportunity to review reasonably available records, including
non-proprietary financial reports, the instruments evidencing the Contracts
pertaining to the Hotel which are in or under Seller’s control and relate to the
operation of the Hotel, upon reasonable Notice, except that Seller shall have no
obligation to deliver or make available to Purchaser, and Purchaser shall have
no right to review, the Excluded Documents (except as otherwise provided in
Section 12.22 hereof).  Neither Purchaser nor any of its employees, agents or
representatives shall contact or otherwise discuss this transaction and /or the
operation of the Hotel with any on-site employees of the Hotel other than the
General Manager, the Director of Sales, and the Chief Engineer (but only upon
not less than two (2) business days prior Notice to Seller and, at the election
of Seller, only in the presence of a representative of Seller).

 

Purchaser acknowledges that prior to the Effective Date of this Agreement,
Seller has delivered to Purchaser, or Seller has provided Purchaser with access
to, the information, documents, agreements and reports relating to the operation
of the Property by Seller, as identified on Schedule “E” attached hereto
(collectively the “Due Diligence Materials”).  Purchaser shall have until the
expiration of the Due Diligence Period to review and approve the Due Diligence
Materials.

 

During the Due Diligence Period, Purchaser shall also have the opportunity to
conduct a Phase I environmental audit/study of the Real Property, provided such
Phase I environmental audit/study is not invasive or intrusive.  Any
environmental audit/study proposed to be undertaken by Purchaser shall be
subject to Seller’s written approval prior to the commencement thereof.  As a
condition to any such consent, Purchaser shall obtain and maintain such public
liability insurance in an amount of Two Million Dollars ($2,000,000.00)
affecting the Real Property, naming Seller as an additional insured.

 

Purchaser, at all times, will conduct such due diligence in compliance with all
applicable laws, and in a manner so as to not cause damage, loss, cost or
expense to Seller, the Property or the tenants or guests of the Property, and
without unreasonably interfering with or disturbing any employee, tenant or
guest at the Property.  Purchaser shall not reveal to any governmental agency or
any other third party (other than Purchaser’s employees, agents, attorneys,
lenders and advisors) not approved by Seller the results of or any other
information

 

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acquired pursuant to its inspections.  Purchaser will promptly restore any
damage to the Property caused by Purchaser’s inspection to substantially the
same condition which existed immediately preceding such inspections and
examinations and will keep the Property free and clear of any mechanic’s liens
or materialmen’s liens in connection with such inspections and examinations.

 

The cost of the inspections and tests undertaken pursuant to this Section 4.3
shall be borne solely by Purchaser.  Purchaser shall indemnify, protect, defend,
and hold Seller, Seller’s lenders, Tarsadia, Evolution, and their affiliates,
owners, agents and employees harmless from and against any obligation,
liability, claim (including any claim for damage to property or injury to or
death of any persons), lien or encumbrance, loss, damage, cost or expense,
including reasonable attorneys’ fees, whether or not legal proceedings are
instituted, first occurring or arising from the acts or omissions of Purchaser
or its agents, employees or contractors in connection with, or as a result of,
such inspections, tests or examinations of the Property; provided, however, that
the foregoing indemnification and defense obligation shall not be applicable to
conditions existing prior to such inspections and testing unless, and only to
the extent, exacerbated by the conduct or actions of Purchaser or its
representatives and contractors.

 

Purchaser covenants and agrees that all such information and materials
(including the Due Diligence Materials) disclosed and/or delivered to it by
Seller, or Seller’s agents, employees and representatives, are confidential and
proprietary information, and that Purchaser shall hold the same in strict
confidence, and shall not disclose the same to anyone other than its employees
and advisors on a “need-to-know” basis subject to the confidentiality
restrictions set forth herein.  Purchaser also agrees that, in the event the
transactions contemplated in this Agreement are not consummated as provided
herein, Purchaser shall return all such information and documentation, and all
copies thereof, to Seller promptly upon Seller’s request.

 

Except as expressly provided in this Agreement, Seller makes no representations
or warranties as to the truth, accuracy or completeness of the Due Diligence
Materials or any materials, data or other information, if any, supplied to
Purchaser in connection with Purchaser’s inspection of the Property (e.g., that
such materials are complete, accurate or the final version thereof, or that all
such materials are in Seller’s possession).  It is the parties’ express
understanding and agreement that any such materials are to be provided only for
Purchaser’s convenience in making its own examination and determination prior to
the expiration of the Due Diligence Period as to whether it wishes to purchase
the Property, and, in doing so, Purchaser shall rely exclusively on its own
independent investigation and evaluation of every aspect of the Property and not
on any materials supplied by Seller.  Purchaser expressly disclaims any intent
to rely on any such materials provided to it by Seller in connection with its
inspection and agrees that it shall rely solely on its own independently
developed or verified information.

 

The obligations of Purchaser under this Section 4.3 (including its
indemnification obligations) shall survive the Close of Escrow or the
termination of this Agreement.

 

4.4                               Notice of Non-Satisfaction.  Prior to the
expiration of the Due Diligence Period, by Notice delivered to Seller and Escrow
Holder, Purchaser may in its sole and absolute discretion, for any reason or for
no reason, terminate this Agreement and cancel the Escrow, in which case the
Initial Deposit shall be promptly refunded to Purchaser, and Purchaser shall
return to Seller all materials (including the Due Diligence Materials) delivered
to it pursuant to

 

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the provisions of Section 4.3 hereof, and neither Seller nor Purchaser shall
have any further obligations under this Agreement (except as otherwise provided
in this Agreement).

 

If Purchaser fails to provide a Notice of its election to so terminate this
Agreement and cancel the Escrow within the Due Diligence Period as provided for
herein, Purchaser shall be deemed to have approved the state of the Property and
the condition of title, and shall be deemed to have irrevocably waived its
rights to terminate this Agreement and cancel the Escrow pursuant to this
Section 4.4.

 

4.5                               Condition of the Property.

 

(a)                                 EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING
DOCUMENTS TO BE DELIVERED BY SELLER TO PURCHASER AT THE CLOSE OF ESCROW, BY
ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL, PERFORM (AND
PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS CAPABLE OF
PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT INVESTIGATION,
ANALYSIS AND EVALUATION OF THE PROPERTY, AND PURCHASER AGREES THAT PURCHASER
SHALL BE CHARGED WITH KNOWLEDGE OF ALL INFORMATION WHICH IS OR SHOULD HAVE BEEN
ACQUIRED BY PURCHASER AS A RESULT OF SUCH AN INVESTIGATION, ANALYSIS,
EVALUATION, AND THE MATERIALS DELIVERED BY SELLER TO PURCHASER.  PRIOR TO THE
EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE DETERMINED, SUBJECT
TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE PROPERTY IS ACCEPTABLE
TO PURCHASER.  PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER
WILL HAVE HAD ACCESS TO AND WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT
INSPECTION, INVESTIGATION, ANALYSIS AND EVALUATION OF ALL INSTRUMENTS, RECORDS
AND DOCUMENTS WHICH PURCHASER MAY DETERMINE TO BE APPROPRIATE OR ADVISABLE TO
REVIEW IN CONNECTION WITH PURCHASER’S ACQUISITION OF THE PROPERTY AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THOSE RELATING TO ALL
ZONING REGULATIONS AND OTHER GOVERNMENTAL REQUIREMENTS (INCLUDING, WITHOUT
LIMITATION, ANY IMPACT THEREOF ON PURCHASER’S INTENDED USE AND/OR DEVELOPMENT OF
THE PROPERTY, INCLUDING PURCHASER’S ABILITY TO OBTAIN ANY SUCH APPROVALS,
PERMITS AND VARIANCES, AND ANY AMENDMENTS, WAIVERS, MODIFICATIONS, USES AND
CHANGES THERETO), SITE AND PHYSICAL CONDITIONS, TITLE MATTERS, THE DUE DILIGENCE
MATERIALS DELIVERED TO PURCHASER BY SELLER, AND ALL OTHER MATTERS AFFECTING THE
USE, OCCUPANCY, VALUE, AND CONDITION OF THE PROPERTY, AND PURCHASER WILL EITHER
HAVE DETERMINED, SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE
INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED THEREBY ARE SATISFACTORY TO
PURCHASER, OR TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE
DILIGENCE PERIOD.  PURCHASER SPECIFICALLY ACKNOWLEDGES THAT PURCHASER IS NOT
RELYING ON SELLER TO INDICATE THE RELATIVE IMPORTANCE OR MATERIALITY OF ANY

 

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OF THE INSTRUMENTS, RECORDS, DOCUMENTS AND OTHER INFORMATION MADE AVAILABLE TO
PURCHASER FOR REVIEW AND PURCHASER SHALL MAKE ITS OWN DETERMINATION AS TO THE
LEVEL OF SCRUTINY IT APPLIES TO SUCH INSTRUMENTS, RECORDS AND DOCUMENTS MADE
AVAILABLE TO PURCHASER.

 

PURCHASER ACKNOWLEDGES THAT SELLER WAS NOT THE DEVELOPER OR THE ORIGINAL OWNER
OF THE PROPERTY OR THE HOTEL.  PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR TO THE
EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE THOROUGHLY INSPECTED
AND EXAMINED, AND UNCONDITIONALLY AND IRREVOCABLY APPROVED AND ASSUMED ALL
LIABILITY FOR, ALL ELEMENTS COMPRISING THE PROPERTY, AND ALL FACTORS RELATED TO
THEIR USE AND OPERATION (BOTH CURRENT AND INTENDED USES), INCLUDING, WITHOUT
LIMITATION, THE MATERIALS DELIVERED OR MADE AVAILABLE TO PURCHASER IN CONNECTION
WITH THE PROPERTY, THE CONTRACTS, UTILITIES, PHYSICAL AND FUNCTIONAL ASPECTS OF
THE PROPERTY, THE CONSTRUCTION AND CONDITION OF THE PROPERTY, ALL MATTERS
AFFECTING AND RELATING TO TITLE, AND MUNICIPAL AND OTHER LEGAL REQUIREMENTS SUCH
AS TAXES, ASSESSMENTS AND BONDS, ZONING, USE PERMITS, BUSINESS PERMITS,
LICENSES, AND SIMILAR ENTITLEMENTS, INVESTIGATIONS OR ANALYSES OF PRESENT AND
FUTURE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, LIMITATIONS, RESTRICTIONS
OR REQUIREMENTS CONCERNING THE USE, DENSITY, LOCATION AND SUITABILITY OF THE
PROPERTY OR ANY EXISTING OR PROPOSED DEVELOPMENT, BUILDOUT, REDEVELOPMENT,
CHANGE IN USE, AND CONDITION THEREOF (COLLECTIVELY “REGULATIONS”), INCLUDING,
BUT NOT LIMITED TO: ZONING, SUBDIVISION, ENVIRONMENTAL AND OTHER SUCH
REGULATIONS; THE NECESSITY AND AVAILABILITY OF ANY GENERAL OR SPECIFIC PLAN
AMENDMENTS, REZONING, ZONE VARIANCES, CONDITIONAL USE PERMITS, BUILDING PERMITS,
ENVIRONMENTAL IMPACT REPORTS, PARCEL OR SUBDIVISION MAPS, OR ANY OTHER
GOVERNMENTAL PERMITS, APPROVALS, ENTITLEMENTS OR ACTS IN RESPECT OF THE PROPERTY
(COLLECTIVELY “PERMITS”); THE NECESSITY OR EXISTENCE OF ANY DEDICATIONS, FEES,
CHARGES, COSTS OR ASSESSMENTS THAT MAY BE IMPOSED IN CONNECTION WITH ANY
REGULATIONS OR THE OBTAINING OF ANY PERMITS; THE ECONOMIC VALUE OF THE PROPERTY,
AND THE SIZE, DIMENSIONS, LOCATION AND TOPOGRAPHY OF THE REAL PROPERTY; THE
AVAILABILITY OR ADEQUACY OF THE ACCESS TO THE REAL PROPERTY AND OF PARKING; THE
EXTENT OF INFRASTRUCTURE OR OTHER IMPROVEMENTS, IF ANY, REQUIRED TO BE BUILT BY
PURCHASER ON, NEAR OR CONCERNING THE REAL PROPERTY IN ORDER TO DEVELOP AND
BUILDOUT THE REAL PROPERTY; THE EXTENT OR CONDITION OF ANY GRADING OR OTHER SITE
WORK ALREADY PERFORMED OR HEREAFTER REQUIRED FOR PURCHASER’S PROPOSED
DEVELOPMENT AND BUILDOUT; ANY SURFACE, SOIL, SUBSOIL, GEOLOGIC OR GROUND WATER
CONDITIONS OR OTHER PHYSICAL CONDITIONS OF OR AFFECTING THE REAL PROPERTY, SUCH
AS AIRCRAFT OVERFLIGHT, TRAFFIC, CLIMATE, DRAINAGE AND AIR; THE POSSIBILITY OF
FUTURE FEES AND ASSESSMENTS OR INCREASES IN EXISTING FEES AND ASSESSMENTS BY ONE
OR MORE GOVERNMENTAL ENTITIES OR

 

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DISTRICTS; AND ALL OTHER MATTERS CONCERNING THE CONDITION, USE, DEVELOPMENT OR
SALE OF THE PROPERTY.  PURCHASER HEREBY ACKNOWLEDGES THAT NONE OF THE FOREGOING,
AND THE FAILURE OF PURCHASER TO OBTAIN ANY OF THE FOREGOING, AS THE CASE MAY BE,
SHALL BE THE BASIS FOR PURCHASER’S RIGHT TO TERMINATE THIS AGREEMENT OR OBTAIN
AN ADJUSTMENT TO THE PURCHASE PRICE, AND PURCHASER HEREBY RELEASES AND FOREVER
DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR
OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN
THIS SECTION, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE
OF ESCROW.

 

PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER’S FAILURE TO TERMINATE THIS
AGREEMENT AND CANCEL THE ESCROW PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE
PERIOD SHALL BE CONCLUSIVELY DEEMED PURCHASER’S AFFIRMATION THAT IT HAS
COMPLETED ITS INVESTIGATIONS AND DUE DILIGENCE REVIEW OF THE PROPERTY AND,
SUBJECT TO ITS RELIANCE ON THE RESPRESENTATIONS AND WARRANTIES OF SELLER
EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE
DELIVERED BY SELLER TO PURCHASER AT THE CLOSE OF ESCROW, HAS APPROVED THE
CONDITION AND STATE THEREOF.

 

(b)                                 EXCPET FOR THE REPSRESNTATIONS AND
WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING
DOCUMENTS TO BE DELIVERED BY SELLER TO PURCHASER AT CLOSE OF ESCROW, PURCHASER
FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE WITH REAL
PROPERTY, HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER WILL ACQUIRE THE
PROPERTY IN “AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND SOLELY IN RELIANCE
ON PURCHASER’S OWN INSPECTION AND EXAMINATION.  PURCHASER WAIVES ANY OBLIGATION
ON THE PART OF SELLER, OR ANY OTHER PERSON, TO DISCLOSE ANY DEFECTS OR OTHER
DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE PROPERTY.

 

(c)                                  EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING
DOCUMENTS TO BE DELIVERED BY SELLER TO PURCHASER AT CLOSE OF ESCROW, IT IS
EXPRESSLY UNDERSTOOD AND AGREED THAT SELLER MAKES NO REPRESENTATIONS, WARRANTIES
OR GUARANTIES OF ANY KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO
THE COMPLIANCE OF THE PROPERTY WITH APPLICABLE LAWS, THE ABSENCE OF VIOLATIONS
OF LAWS, THE PHYSICAL CONDITION, PAST, PRESENT OR FUTURE OPERATION AND/OR
PERFORMANCE, OR VALUE, OF THE PROPERTY.  SELLER CONVEYS THE PROPERTY TO
PURCHASER “AS IS AND WHERE IS, WITH ALL FAULTS,” AND PURCHASER ACKNOWLEDGES THAT
SELLER MAKES NO REPRESENTATIONS, GUARANTIES OR WARRANTIES WHATSOEVER, EXPRESS OR
IMPLIED, AS TO THE QUALITY, CHARACTER, EXTENT, PERFORMANCE, CONDITION OR
SUITABILITY OF THE PROPERTY FOR ANY PURPOSE, INCLUDING, WITHOUT LIMITATION, ANY

 

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WARRANTY OR GUARANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.  PURCHASER
ACKNOWLEDGES THAT PURCHASER SHALL BE SOLELY RESPONSIBLE AND LIABLE FOR
ASCERTAINING THE TRANSFERABILITY OF ALL LICENSES, PERMITS AND OTHER GOVERNMENTAL
CONSENTS FOR THE OWNERSHIP, USE AND OPERATION OF THE PROPERTY, AND SHALL BE
SOLELY RESPONSIBLE FOR OBTAINING THE TRANSFERS THEREOF.

 

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN
THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE DELIVERED BY SELLER TO
PURCHASER AT CLOSE OF ESCROW, PURCHASER FURTHER WAIVES ANY AND ALL WARRANTIES,
GUARANTIES, CONDITIONS OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION OF SELLER WITH RESPECT
TO CONSEQUENTIAL DAMAGES) AND ALL TORT LIABILITY, INCLUDING, WITHOUT LIMITATION,
LIABILITY ARISING FROM NEGLIGENCE OR STRICT LIABILITY.  PURCHASER ALSO
ACKNOWLEDGES THAT SOME DEFECTS MAY BECOME APPARENT ONLY AFTER THE CLOSE OF
ESCROW AND HEREBY RELEASES SELLER FROM BLAME AND ALL LIABILITY FOR SUCH “LATENT
DEFECTS.”  PURCHASER HEREBY COVENANTS NOT TO BRING ANY ACTION AGAINST SELLER
BASED ON ANY OF THESE CLAIMS.  THIS SECTION SHALL SURVIVE THE CLOSE OF ESCROW.

 

EXCEPT WITH REPSECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY
SET FORTH IN THIS AGREEMENT, PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF
THE PROPERTY, DURING THE DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR
DISCLOSURE REQUIRED BY SECTION 25359.7 OF THE CALIFORNIA HEALTH AND SAFETY CODE,
OR BY ANY OTHER PROVISION OF THE CALIFORNIA CIVIL CODE, OR PURSUANT TO ANY OTHER
APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY
SELLER OF FLOOD, FIRE, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS, LANDSLIDE AND
LIQUEFACTION, OTHER GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL
CONDITIONS AND OTHER CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY,
AND PURCHASER HEREBY WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE
PROVISIONS AND HEREBY ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH
DISCLOSURE REQUIREMENTS AND WILL CONDUCT ITS OWN DUE DILIGENCE WITH RESPECT TO
ALL MATTERS COVERED THEREBY, AND HEREBY RELEASES SELLER FROM LIABILITY IN
CONNECTION THEREWITH.  PURCHASER SHALL BE DEEMED TO HAVE APPROVED ALL CONDITIONS
PERTAINING TO THE PROPERTY UNLESS IT CANCELS THE ESCROW IN ACCORDANCE HEREWITH
ON OR BEFORE THE END OF THE DUE DILIGENCE PERIOD.

 

PURCHASER ACKNOWLEDGES THAT SELLER MAY BE REQUIRED TO DISCLOSE IF THE REAL
PROPERTY LIES WITHIN THE FOLLOWING NATURAL HAZARD AREAS OR ZONES:  (A) A SPECIAL
FLOOD HAZARD AREA (ANY TYPE ZONE “A” OR “V”) DESIGNATED BY THE FEDERAL EMERGENCY
MANAGEMENT

 

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AGENCY (CAL. GOV. CODE § 8589.3); (B) AN AREA OF POTENTIAL FLOODING SHOWN ON A
DAM FAILURE INUNDATION MAP DESIGNATED PURSUANT TO CAL. GOV. CODE § 8589.5 (CAL.
GOV. CODE § 8589.4); (C) A VERY HIGH FIRE HAZARD SEVERITY ZONE DESIGNATED
PURSUANT TO CAL. GOV. CODE § 51178 OR 51179 (IN WHICH EVENT THE OWNER
MAINTENANCE OBLIGATIONS OF CAL. GOV. CODE § 51182 WOULD APPLY) (CAL. GOV. CODE §
51183.5); (D) A WILDLAND AREA THAT MAY CONTAIN SUBSTANTIAL FOREST FIRE RISKS AND
HAZARDS DESIGNATED PURSUANT TO CAL. PUB. RESOURCES CODE § 4125 (IN WHICH EVENT
(I) THE REAL PROPERTY OWNER WOULD BE SUBJECT TO THE MAINTENANCE REQUIREMENTS OF
CAL. PUB. RESOURCES CODE § 4291 AND (II) IT WOULD NOT BE THE GOVERNMENT’S
RESPONSIBILITY TO PROVIDE FIRE PROTECTION SERVICES TO ANY BUILDING OR STRUCTURE
LOCATED WITHIN THE WILDLAND AREA EXCEPT, IF APPLICABLE, PURSUANT TO CAL. PUB.
RESOURCES CODE § 4129 OR PURSUANT TO A COOPERATIVE AGREEMENT WITH A LOCAL AGENCY
FOR THOSE PURPOSES PURSUANT TO CAL. PUB. RESOURCES CODE § 4142) (CAL. PUB.
RESOURCES CODE § 4136); (E) AN EARTHQUAKE FAULT ZONE (CAL PUB. RESOURCES CODE §
2621.9); OR (F) A SEISMIC HAZARD ZONE (AND, IF APPLICABLE, WHETHER A LANDSLIDE
ZONE OR LIQUEFACTION ZONE) (CAL. PUB. RESOURCES CODE § 2694).

 

THERE IS A POSSIBILITY THAT THE REAL PROPERTY LIES WITHIN ONE OR MORE OF THE
ABOVE-REFERENCED NATURAL HAZARD AREAS OR ZONES.  BY PURCHASER’S EXECUTION OF
THIS AGREEMENT, PURCHASER (A) ACKNOWLEDGES PURCHASER’S RECEIPT OF THE FOREGOING
NOTICE GIVEN PURSUANT TO SECTIONS 8589.3, 8589.5, 51178, 51179, 51182, AND
51183.5 OF THE CALIFORNIA GOVERNMENT CODE AND SECTIONS 4125, 4291, 4129, 4142,
4136, 2621.9 AND 2694 OF THE CALIFORNIA PUBLIC RESOURCES CODE, (B) ASSUMES ALL
RISKS ASSOCIATED THEREWITH, AND (C) AS OF THE CLOSE OF ESCROW, AND AFTER
RECEIVING ADVICE OF PURCHASER’S LEGAL COUNSEL, WAIVES ANY AND ALL RIGHTS OR
REMEDIES WHATSOEVER, EXPRESS, IMPLIED, STATUTORY, OR BY OPERATION OF LAW,
PURCHASER MAY HAVE AGAINST SELLER, INCLUDING REMEDIES FOR ACTUAL DAMAGES ARISING
OUT OF OR RESULTING FROM THE REAL PROPERTY’S LOCATION WITHIN SUCH NATURAL HAZARD
AREAS OR ZONES.  THE PROVISIONS OF THIS SECTION 4.5(C) SHALL SURVIVE THE CLOSE
OF ESCROW.

 

(d)                                 EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING
DOCUMENTS TO BE DELIVERED BY SELLER TO PURCHASER AT CLOSE OF ESCROW, PURCHASER
ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLER HAS PROVIDED TO PURCHASER
CERTAIN REPORTS, STUDIES AND SURVEYS FOR OR REGARDING THE REAL PROPERTY (THE
“REPORTS”), SELLER HAS NOT VERIFIED THE ACCURACY THEREOF AND MAKES NO
REPRESENTATIONS OR WARRANTIES REGARDING THE MATTERS SET FORTH THEREIN, IT BEING
THE RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH REPORTS. 
PURCHASER AGREES THAT SELLER HAS NO LIABILITY OR RESPONSIBILITY FOR THE ACCURACY
OR CONTENTS OF ANY SUCH REPORTS.  PURCHASER HEREBY RELEASES AND FOREVER
DISCHARGES

 

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SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS
ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS
PARAGRAPH, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF
ESCROW.

 

FURTHERMORE, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT, PURCHASER ACKNOWLEDGES THAT SELLER HAS NOT AND DOES NOT
MAKE ANY REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE INTEGRATION OF
HAZARDOUS MATERIALS UPON OR WITHIN THE REAL PROPERTY.  IN THAT REGARD, PURCHASER
WILL, PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, CONDUCT ITS OWN
INVESTIGATION AND OBTAIN ITS OWN ENVIRONMENTAL ASSESSMENT REPORT TO DETERMINE IF
THE REAL PROPERTY CONTAINS ANY HAZARDOUS OR TOXIC WASTE, MATERIALS, DISCHARGE,
DUMPING OR CONTAMINATION, WHETHER SOIL, GROUNDWATER OR OTHERWISE, WHICH VIOLATES
ANY FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR
REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.

 

(e)                                  SELLER SHALL HAVE NO OBLIGATION OR DUTY TO
EXPEND FUNDS FOR, OR OTHERWISE BE RESPONSIBLE TO CONDUCT OR PERFORM, ANY
CLEAN-UP REQUIREMENT(S) AS IMPOSED BY ANY FEDERAL, STATE OR LOCAL GOVERNMENT
LAW, REGULATION, ORDINANCE OR AGENCY FOR THE REMOVAL OF ANY HAZARDOUS MATERIALS
CONTAMINATION FROM THE REAL PROPERTY.

 

(f)                                   EXCEPT AND ONLY TO THE EXTENT OF THE
REPRESENTATIONS AND WARRANTIES OF SELLER AS SET FORTH IN SECTION 7.2 OF THIS
AGREEMENT, PURCHASER, FOR ITSELF AND ITS OWNERS, SUCCESSORS AND ASSIGNS, HEREBY
RELEASES AND FOREVER DISCHARGES SELLER AND TARSADIA, EVOLUTION, AND THEIR PAST,
PRESENT AND FUTURE MEMBERS, AFFILIATES, EMPLOYEES, AGENTS, ATTORNEYS, ASSIGNS,
AND SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND FUTURE CLAIMS, DEMANDS,
OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER, WHETHER NOW
KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR
UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE
CONDITION OF THE PROPERTY, THE MATTERS ADDRESSED IN SUBSECTIONS (a), (b), (c),
(d) AND (e) OF THIS SECTION 4.5, AND WITH RESPECT TO ANY ENVIRONMENTAL DAMAGES
OR ENVIRONMENTAL REQUIREMENTS, INCLUDING, WITHOUT LIMITATIONS, THE PHYSICAL,
STRUCTURAL, GEOLOGICAL, MECHANICAL AND ENVIRONMENTAL (SURFACE AND SUBSURFACE)
CONDITION OF THE REAL PROPERTY (INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW
OR REGULATION RELATING TO HAZARDOUS MATERIALS, INCLUDING, BUT NOT LIMITED TO,
LOSSES IN CONNECTION WITH PROPERTY DAMAGE, CLAIMS BY GOVERNMENTAL AGENCIES,
DIMINUTION IN VALUE AND PERSONAL INJURY LOSSES.  PURCHASER EXPRESSLY UNDERSTANDS
AND ACKNOWLEDGES THAT IT IS POSSIBLE THAT UNKNOWN PROBLEMS, CONDITIONS OR LOSSES
MAY EXIST WITH RESPECT TO

 

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THE PROPERTY AND THAT PURCHASER EXPLICITLY TOOK SUCH RISKS INTO ACCOUNT IN
DETERMINING THE PURCHASE PRICE FOR THE PROPERTY AND ITS ELECTION TO PROCEED WITH
THE PURCHASE THEREOF, AND THAT A PORTION OF SUCH CONSIDERATION, HAVING BEEN
BARGAINED FOR BETWEEN THE PARTIES WITH THE KNOWLEDGE OF THE POSSIBILITY OF SUCH
UNKNOWN PROBLEMS, CONDITIONS OR CLAIMS, WAS GIVEN IN EXCHANGE FOR A FULL ACCORD,
SATISFACTION AND DISCHARGE OF ALL SUCH PROBLEMS, CONDITIONS AND LOSSES.  WITHOUT
LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY APPLIES TO ALL LOSSES AND
CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND
LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND AMENDMENTS AND REAUTHORIZATION
ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET SEQ.), THE RESOURCES CONSERVATION AND
RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET SEQ.), THE CLEAN WATER ACT,
(33 U.S.C. SECTIONS 466 ET SEQ.), THE SAFE DRINKING WATER ACT, (14 U.S.C.
SECTION 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT, (49 U.S.C.
SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT, (15 U.S.C.
SECTIONS 2601-2629), THE CALIFORNIA HAZARDOUS WASTE CONTROL LAW, (CALIFORNIA
HEALTH AND SAFETY CODE SECTIONS 25100-25600), THE PORTER-COLOGNE WATER QUALITY
CONTROL ACT (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 13000 ET SEQ.), AND ANY
OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR EFFECT, AS WELL AS ANY AND ALL
COMMON LAW CLAIMS.  IN ACCORDANCE WITH THE FOREGOING, PURCHASER WAIVES ALL
RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (AND ALL SIMILAR STATUTES IN ALL
OTHER STATES) WHICH STATES IN FULL AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”

 

BY INITIALING THIS AGREEMENT CLAUSE, PURCHASER ACKNOWLEDGES THAT THIS
SECTION HAS BEEN READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE
CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.

 

 

 

 

SELLER’S INITIALS

 

PURCHASER’S INITIALS

 

(g)                                  “Environmental Damages” means all claims,
judgments, damages, losses, penalties, fines, liabilities (including strict
liability), encumbrances, liens, costs, and expenses of investigation and
defense of any claim, whether or not such claim is ultimately defeated, and of
any good faith settlement of judgment, of whatever kind or nature, contingent or
otherwise matured or unmatured, foreseeable or unforeseeable, including without
limitation reasonable attorneys’ fees and disbursements and consultants’ fees,
any of which are incurred at any time as a result of the existence of Hazardous
Materials upon, about, beneath the Real Property or

 

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migrating or threatening to migrate to or from the Real Property, or the
existence of a violation of Environmental Requirements pertaining to the Real
Property, regardless of whether the existence of such Hazardous Materials or the
violation of Environmental Requirements arose prior to the present ownership or
operation of the Real Property.

 

(h)                                 “Environmental Requirements” means all
applicable present and future statutes, regulations, rules, ordinances, codes,
licenses, permits, orders, approvals, plans, authorizations, concessions,
franchises, and similar items, of all governmental agencies, departments,
commissions, boards, bureaus, or instrumentalities of the United States, states
and political subdivisions thereof and all applicable judicial, administrative,
and regulatory decrees, judgments, and orders relating to the protection of
human health or the environment.

 

(i)                                     “Hazardous Materials” means any
substance gas, material, chemical, biological/microbial matter, or waste (i) the
presence of which requires investigation or remediation under any federal, state
or local statute, regulation, ordinance or policy; or (ii) which is defined as a
“hazardous waste” or “Hazardous Material” under any federal, state or local
statute, regulation or ordinance, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.) and amendments thereto and regulations promulgated thereunder; or
(iii) which is toxic, explosive, corrosive, infectious or otherwise hazardous or
is regulated by any federal, state or local governmental authority; (iv) without
limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde; and (v) mold and fungi.

 

The provisions of this Section 4.5 shall survive the Close of Escrow.

 

V.

 

CLOSING

 

5.1                               Closing Date.  The “Closing Date” for purposes
of this Agreement shall be November 27, 2012, or such earlier or later date as
may be agreed upon, in writing, by Seller and Purchaser, and shall be the date
on which the Close of Escrow occurs.

 

Provided Purchaser is not otherwise in default of any of its obligations under
this Agreement, upon the election of Purchaser, Notice of which is delivered to
Seller and Escrow Holder not later than three (3) business days prior to the
Closing Date, and upon the concurrent delivery by Purchaser to Escrow Holder, in
Good Funds, of the additional sum of One Million Dollars ($1,000,000.00) (the
“Extension Deposit”), which shall be nonrefundable to Purchaser (subject to the
same qualifications applicable to the non-refundability of the Earnest Money
Deposit), Purchaser may, on a one time basis only, extend the Closing Date to
not later than December 12, 2012.  The Extension Deposit shall be credited to
the Purchase Price upon the Close of Escrow.

 

The “Close of Escrow” for purposes of this Agreement is defined as the earlier
of : (a) when the Deed is recorded in the Official Records of San Diego County,
California, by Escrow Holder; or (b) (i) when Title Insurer is irrevocably
committed to issue the Title Policy as contemplated in this Agreement,
(ii) Escrow Holder holds for the account of Seller and

 

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Purchaser the items and funds to be delivered to Seller and Purchaser through
the Escrow as contemplated by this Agreement, and (iii) Seller and Purchaser
have authorized the Deed to be released for recording.

 

If the Escrow has not closed on or before the Closing Date or any extension
thereof, Escrow Holder may nevertheless proceed in accordance with Escrow
Holder’s General Provisions.  In the event the Escrow and this Agreement are
canceled and terminated, upon Escrow Holder’s request, the parties shall pay to
Escrow Holder all title and escrow cancellation charges; provided, however, that
as an agreement between the parties not to concern Escrow Holder, it is agreed
that if termination of the Escrow is caused by the default of one party then
such party shall be responsible for all escrow and title cancellation charges,
and if the termination occurs where neither party is in default or where both
parties are in default, then each party shall be responsible for one-half (½) of
all title and Escrow cancellation charges.

 

5.2                               Action Prior to the Close of Escrow by
Seller.  Seller agrees that, provided Purchaser has complied with its
obligations under Section 5.3 hereof, on or before 5:00 p.m. California time on
the business day immediately preceding the Closing Date, Seller will deposit
with Escrow Holder such funds and other items and instruments (executed and
acknowledged, if appropriate) as may be necessary in order for Escrow Holder to
comply with this Agreement, including, without limitation, the following:

 

(a)                                 A Grant Deed, in the form attached hereto as
Exhibit “F”, prepared and executed by Seller and acknowledged before a Notary
Public in the manner provided under the laws of the State of California,
assigning, conveying and transferring to Purchaser the Real Property, subject
only to the Permitted Exceptions (the “Deed”);

 

(b)                                 Two (2) duplicate originals of a Bill of
Sale, in the form attached hereto as Exhibit “G”, prepared and executed by
Seller, assigning, conveying and transferring to Purchaser, without
representation or warranty, all of Seller’s right, title and interest in and to
the Personal Property and the Inventory (the “Bill of Sale”);

 

(c)                                  Two (2) duplicate originals of an
Assignment of Intangible Property, in the form attached hereto as Exhibit “H,
prepared and executed by Seller, assigning and conveying to Purchaser, at no
cost or expense to Seller, and without representation or warranty, all of
Seller’s right, title and interest in the Intangible Property (the “Assignment
of Intangibles”);

 

(d)                                 Two (2) duplicate originals of an Assignment
and Assumption of Contracts, in the form attached hereto as Exhibit “I, prepared
and executed by Seller, assigning and conveying to Purchaser, at no cost or
expense to Seller, and without representation or warranty, all of Seller’s
right, title and interest under the Contracts (the “Assignment of Contracts”);

 

(e)                                  A Non-Foreign Affidavit signed by Seller in
the form to be prepared by Escrow Holder (the “Non-Foreign Affidavit”); and

 

(f)                                   Such other funds, instruments or documents
as may be necessary to effect or carry out the covenants and obligations to be
performed by Seller pursuant to this Agreement.

 

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5.3                               Action Prior to the Close of Escrow by
Purchaser.  Purchaser agrees that on or before 11:00 a.m. California time on the
Closing Date, Purchaser will deposit with Escrow Holder all additional funds (in
Good Funds) and/or documents (executed and acknowledged, if appropriate) which
are necessary to comply with the terms of this Agreement, including without
limitation:

 

(a)                                 The funds referred to in Section 2.2.2
hereof;

 

(b)                                 Two (2) duplicate originals of the
Assignment of Contracts executed by Purchaser;

 

(c)                                  Two (2) duplicate originals of the
Assignment of Intangibles executed by Purchaser; and

 

(d)                                 Such other funds, instruments or documents
as may be necessary to effect or carry out the covenants and obligations to be
performed by Purchaser pursuant to this Agreement.

 

5.4                               Recording of Deed.  Escrow Holder will cause
the Deed to be dated and recorded in the Official Records of the County of San
Diego, State of California, and all other conveyance documents deposited with
Escrow Holder dated as of Close of Escrow, when Title Insurer is irrevocably
committed to issue the Title Policy to be issued as contemplated in this
Agreement, and Escrow Holder holds for the account of Seller and Purchaser the
items and funds (if any) to be delivered to Seller and Purchaser through the
Escrow, after payment of costs, expenses, disbursements and prorations
chargeable to Seller or Purchaser pursuant to the provisions of this Agreement.

 

The amount of any documentary transfer taxes will not be posted on the Deed, but
will be properly reported by a separate tax affidavit filed by Escrow Holder
with the Deed.

 

5.5                               Prorations.

 

5.5.1                     Taxes.  All non-delinquent real estate and personal
property general and special taxes and assessments for the Property for the
current assessment year shall be prorated as of the Closing Date.  It is
understood that any supplemental property tax bill issued as a result of the
sale of the Property pursuant to the provisions of this Agreement, shall be
borne by Purchaser.  Notwithstanding anything to the contrary in this Agreement,
Seller shall retain all right, title and interest in and to any and all property
tax (both real property and personal property) refunds and claims for refunds
with respect to the Property for any period prior to the Closing Date.  Seller
shall be responsible for, and shall pay, all sales, use and other transfer taxes
imposed in connection with the sale and transfer of the Personal Property, the
Inventory and the Intangible Property.

 

5.5.2                     Advance Reservations.  At the Close of Escrow, Seller
shall provide Purchaser with a schedule of post-closing confirmed Bookings for
the Hotel.  Purchaser shall honor all such confirmed and Bookings, provided that
such Bookings were booked by Seller in a manner consistent with normal business
practices.

 

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5.5.3                     Utility Service.  Seller shall request each utility
company providing utility service to the Real Property to cause all utility
billings to be closed and billed as of the Closing Date in order that utility
charges may be separately billed for the period prior to the Closing Date and
the period on and after the Closing Date.  In the event any such utility charges
are not separately billed, the same shall be prorated.  In connection with any
such proration, it shall be presumed that utility charges were uniformly
incurred during the billing period in which the Close of Escrow occurs.

 

5.5.4                     Revenue From Operations.  As to the Hotel, all
revenues from operations, including, without limitation, guest room rentals,
revenue from the minibars (if any), banquet rooms rentals, vending machines,
coin telephones, and other income-producing equipment arising through 12:01 a.m.
California time on the Close of Escrow (the “Cut-Off Time”) shall belong to
Seller.  All revenues from operations, including, without limitation, guest room
rentals, revenue from the minibars (if any), banquet rooms rentals, vending
machines, coin telephones, and other income producing equipment arising after
the Cut-Off Time shall belong to Purchaser.  Revenue from guest room rentals for
the evening before the date of the Close of Escrow through to the day of the
Close of Escrow shall be shared by Purchaser and Seller equally.  All prepaid
rentals, room rental deposits, and all other deposits for advance reservations
and Bookings for the period after the Cut-Off Time, shall be credited to
Purchaser.

 

5.5.5                     Accounts Payable and Operating Expenses.  All
obligations and liabilities (for services and materials ordered, or otherwise)
and accounts payable for the Hotel and the Real Property owing as of the Closing
Date for merchandise, equipment, tour agents’ and travel agents’ commissions,
advertisements, supplies and other materials and services shall be prorated
between Seller and Purchaser as of the Closing Date.  Seller shall receive a
credit for all prepaid expenses.

 

5.5.6                     Miscellaneous Permits and Taxes.  All water and sewer
charges, taxes (other than ad valorem property taxes), including license taxes
or fees for licenses (other than the Liquor Licenses) which are assignable or
transferable without added cost and have a value which will survive Close of
Escrow, including, but not limited to, and any unpaid taxes payable in arrears,
shall be prorated as of the Closing Date.  Seller will be credited for that
portion of taxes and fees paid by Seller allocable to the period after the
Closing Date.

 

5.5.7                     Contracts.  All payments and receipts, as applicable,
under the Contracts shall be prorated between Purchaser and Seller as of the
Closing Date.  Seller shall receive a credit for all prepayments and deposits
thereunder.  Seller shall retain all rebates, credit enhancements, and other
sums received from any party to any of the Contracts.

 

5.5.8                     Other Income.  All other income derived by Seller from
the Property accruing or relating to the period up to and including the
Cut-Off-Time shall be paid to Seller.  All other income derived by Seller from
the Property accruing or relating to the period on and after the Cut-Off-Time
shall be paid to Purchaser.

 

5.5.9                     Other Expenses.  All other expenses and obligations
not otherwise specified in this Section 5.5 incurred in the ownership of the
Property and operation of the Hotel shall be prorated between Seller and
Purchaser as of the Closing Date.

 

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5.5.10              Ticket and Gift Shop Inventory.  Seller shall receive a
credit for all theme park and other ticket and admission passes, as well as all
gift shop and other inventory (but excluding the Inventory), held by Seller
and/or Evolution for sale at the Hotel, in an amount equal to
Seller’s/Evolution’s actual cost thereof.

 

5.5.11              House Banks.  On the Close of Escrow, Seller shall receive a
credit through the Escrow for an amount equal to all till money, cash-on-hand,
and all sums in house banks for the Hotel, in which case all right, title and
interest to the till money, cash-on-hand and house banks shall be assigned and
conveyed by Seller to Purchaser.  In the event Seller and Purchaser are unable
to agree upon the amount of the till money, cash-on-hand and house banks, the
provisions of this Section 5.5.11 shall be inapplicable, and title to the till
money, cash-on-hand and house banks shall remain with Seller.  The failure of
Purchaser and Seller to agree on the amounts of the till money, cash-on-hand and
house banks shall not be deemed a condition precedent to the obligations of
Seller and Purchaser under this Agreement.

 

5.5.12              Delayed Adjustments.  If, at any time following the Closing
Date, the amount of an item listed in this Section 5.5 shall prove to be
incorrect, the party in whose favor the error was made shall pay to the other
party within fifteen (15) days after request the sum necessary to correct such
error upon receipt of proof of such error, provided that such proof is delivered
to the party from whom payment is requested on or before one hundred eighty
(180) days after the Close of Escrow.  The acceptance of the closing statement
by either party shall not prevent later readjustment pursuant to this
Section 5.5.12.  After the Close of Escrow, each party shall have reasonable
access to the books and records of the other party with respect to all matters
set forth in this Section 5.5 for the purposes of determining the accuracy of
all adjustments and the performance of the obligations of the parties under this
Section 5.5.

 

5.5.13              Proration Allocation.  For proration purposes, the date of
the Close of Escrow shall be charged to Purchaser.

 

5.5.14              Survival.  The provisions of this Section 5.5 shall survive
the Close of Escrow.

 

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

 

5.6.1                     Safe Deposit Boxes.  On the day prior to the Closing
Date, Seller shall send written notice to guests in the Hotel who have safe
deposit boxes advising them of the sale of the Hotel to Purchaser and the
procedures to be followed pursuant to this Section 5.6.1.  On the Closing Date,
Seller shall deliver to Purchaser all keys to the safe deposit boxes in the
Hotel, all receipts and agreements relating to such safe deposit boxes, and a
complete list of the name and room number of each depositor.  Each box in use by
a Hotel guest shall then be sealed by representatives of Seller and Purchaser. 
At Purchaser’s option, guests may be requested to remove and verify the contents
of the sealed boxes prior to the Close of Escrow.  All such removals and
verifications shall be under the supervision of a representative to be agreed
upon between Purchaser and Seller.  Purchaser shall be responsible for all boxes
once the seal is broken, and for the contents of all boxes which are verified. 
Seller shall be responsible for any claims pertaining to any property allegedly
deposited in a safe deposit prior to the Closing Date,

 

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the seal of which was not broken.  Each of Seller and Purchaser shall indemnify
and hold the other harmless from and against all claims and losses arising from
such indemnifying party’s obligations under this Section 5.6.1.

 

5.6.2                     Baggage Inventory.  All guest baggage and other guest
property checked and left in the possession, care and control of Seller shall be
listed in an inventory to be prepared in duplicate and signed by Seller’s and
Purchaser’s representatives on the Closing Date.  Purchaser shall be responsible
from and after the Closing Date for all baggage (and the contents thereof) and
other guest property listed in inventory.  Purchaser agrees to indemnify and
save and hold Seller harmless from and against any claim arising out of or with
respect to the baggage listed in the inventory, and Seller agrees to indemnify
and save and hold Purchaser harmless from and against any claim arising prior to
the Closing Date out of or with respect to any guest baggage or other guest
property not listed in the inventory.

 

5.7                               Closing Costs.  Seller shall pay for the cost
of the premium for the Title Policy, except that, notwithstanding the foregoing,
Purchaser shall pay (a) the cost of that portion of the premium for the Title
Policy which is in excess of the cost of the premium for a C.L.T.A. Owner’s
Policy of Title Insurance (standard coverage) for the Real Property, and shall
also pay all additional costs for acquiring any additional endorsements to the
Title Policy not otherwise included with a C.L.T.A. Owner’s Policy of Title
Insurance (standard coverage), and (b) all costs of any survey (or update to the
Survey) required for the Title Policy.  Seller and Purchaser shall each pay
one-half of all documentary transfer taxes for the Deed.  Seller shall pay the
recording fee for the Deed.  Each of Seller and Purchaser shall pay its
respective escrow fees for the Escrow.

 

5.8                               California Real Estate Withholding.  Seller
and Purchaser appoint Escrow Holder was the withholding agent for purposes of
compliance with California Revenue and Taxation Code Section 18662.  Prior to
the Close of Escrow, Seller will provide Escrow Holder with all information and
documentation reasonably required to determine the amount, if any, to be
withheld from the proceeds of the sale transaction contemplated herein for
payment to the California Franchise Tax Board pursuant to said Revenue and
Taxation Code Section, including California Form 593-W or California Form 593-C,
whichever is applicable to Seller as of Close of Escrow.

 

5.9                               Distribution of Funds and Documents Following
Close of Escrow.  Following Close of Escrow, Escrow Holder shall distribute the
documents as follows:

 

To Seller:

 

(a)                                 The cash portion of the Purchase Price as
set forth in Section 2.2, less costs, offsets and prorations in accordance with
the provisions of this Agreement;

 

(b)                                 One (1) fully executed duplicate original of
the Bill of Sale;

 

(c)                                  One (1) fully executed executed duplicate
original of the Assignment of Intangibles;

 

(d)                                 One (1) fully executed duplicate original of
the Assignment of Contracts;

 

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(e)                                  A copy of the Title Policy issued to
Purchaser;

 

(f)                                   One (1) duplicate original or conformed
copy as appropriate, of any other document to be received by Seller through
Escrow pursuant to the provisions of this Agreement; and

 

(g)                                  One (1) copy of any other document
delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this
Agreement.

 

To Purchaser:

 

(a)                                 Any excess funds deposited by Purchaser
which remain after disbursement to Seller;

 

(b)                                 One (1) conformed copy of the Deed, the
original to be mailed to Purchaser following the recordation thereof;

 

(c)                                  One (1) fully executed duplicate original
of the Bill of Sale;

 

(d)                                 One (1) fully executed duplicate original of
the Assignment of Intangibles;

 

(e)                                  One (1) fully executed duplicate original
of the Assignment of Contracts;

 

(f)                                   One (1) duplicate original or conformed
copy as appropriate, of any other document to be received by Purchaser through
Escrow pursuant to the provisions of this Agreement;

 

(g)                                  One (1) copy of any other document
delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this
Agreement; and

 

(h)                                 The original of the Title Policy.

 

5.10                        Possession.  Purchaser shall be entitled to sole
possession of the Property on the Close of Escrow, subject to the possessory
rights of any guests of the Hotel.

 

VI.

 

ADDITIONAL COVENANTS AND INDEMNITIES

 

6.1                               Purchaser’s Covenants.

 

6.1.1                     Indemnification.  Purchaser covenants to defend,
indemnify and hold harmless Seller, Tarsadia, Evolution, and their respective
affiliates, owners, employees, agents and representatives, successors and
assigns from and against any and all claims, penalties, liabilities,
obligations, fines, losses, causes of action, fees, injuries, damages, liens,
proceedings, judgments, actions, rights, demands, costs and expenses (including,
without limitation, reasonable attorneys’ fees and court and litigation costs)
(a) arising from the acts and omissions of Purchaser and its agents, employees
or contractor occurring in connection with or as a result of, any inspections,
tests or examinations of or to the Property performed by Purchaser or at the

 

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request of Purchaser but expressly excluding (i) any pre-existing conditions at
the Hotel so long as following the discovery of such pre-existing condition,
Purchaser does not exacerbate such conditions through its actions, or
(ii) matters to the extent caused by Seller or Evolution or any of their
respective agents, employees or contractors, (b) arising from the use,
management, operation, rental, maintenance and ownership of the Property, based
upon acts, conduct or omissions occurring, on or after the Closing Date,
including, without limitation, with respect to the Contracts, (c) caused by or
arising out of any material misrepresentation by Purchaser in connection with
this Agreement, (d) arising under the Franchise Agreement (if assumed by
Purchaser) for all periods on and after the Close of Escrow (including, without
limitation, for damages, liquidated damages, fees, penalties and other sums),
(e) arising from the use of the names “Courtyard by Marriott” and “Marriott” any
materials referencing “Courtyard by Marriott” and “Marriott,” logos of
“Marriott,” and all derivatives thereof on and after the Close of Escrow,
(f) arising from any breach of this Agreement by Purchaser or any instrument or
agreement required delivered or to be delivered pursuant to the provisions of
this Agreement, including under the WARN Act and (g) arising under the Contracts
(including, without limitation, those arising from or as a result of the
assignment and assumption thereof) for all periods on and after the Close of
Escrow.  This indemnity shall survive the Close of Escrow.

 

6.1.2                     Seller’s Accounts Receivable.  On the Closing Date,
Seller shall deliver to Purchaser an update of Seller’s Accounts Receivable
list.  Thereafter, Purchaser shall promptly remit to Seller all sums received by
Purchaser in payment of any of Seller’s Accounts Receivables.  All sums received
by Purchaser from a customer, guest or patron owing Seller under a Seller
Account Receivable shall be credited, first, to the sums owing Seller, and then,
to the extent any sums remain, to Purchaser.  For a period of two (2) years
after the Close of Escrow, Seller shall have the right, from time to time, to
inspect and audit the books and records of the Hotel that pertain to income and
collections, at Seller’s sole cost (unless it is determined from such audit or
inspection that Purchaser has withheld Seller’s Accounts Receivable, then
Purchaser shall pay the costs of such audit and inspection), and Purchaser shall
provide full and complete access thereto to Seller upon not less than three
(3) business days prior Notice, to verify receipt and payment of Seller’s
Accounts Receivable.

 

6.2                               Seller’s Covenants.

 

6.2.1                     Indemnification.  Seller covenants to defend,
indemnify and hold harmless Purchaser and its affiliates, owners, employees,
agents and representatives from and against any and all claims, liabilities,
obligations, fines, losses, causes of action, fees, injuries, damages, liens,
proceedings, judgments, actions, rights, demands, costs and expenses (including,
without limitation, reasonable attorneys’ fees and court and litigation costs)
(a) arising from the ownership and operations of the Property during the period
of Seller’s ownership thereof (except as to, and specifically excluding, the
matters set forth in Section 6.1.1 hereof, Environmental Damages, Environmental
Requirements, and the matters addressed in Section 4.5 hereof), (b) arising
under the Contracts, and the Franchise Agreement prior to the Closing Date
(other than arising as a result of the transaction contemplated in this
Agreement and the assignment thereof to Purchaser), (c) caused by or arising out
of any material misrepresentation by Seller in connection with this Agreement,
(d) arising from any breach of this Agreement by Seller or any instrument or
agreement required to be delivered or to be delivered pursuant to the provisions
of

 

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this Agreement, and (e) arising under the Contracts for all periods prior to the
Close of Escrow.  This indemnity shall survive the Close of Escrow.

 

6.2.2                     Termination of Management Agreements.  Prior to the
Close of Escrow, Seller shall terminate, at Seller’s sole cost and expense, and
at no cost or expense to Purchaser, all management agreements affecting the
Hotel, and Seller shall indemnify Purchaser from and against all claims and
liabilities with respect thereto.

 

6.2.3                     Operation of the Hotel.  Seller, during the term of
this Agreement, shall carry on the business and operations of the Hotel in
substantially the same manner as heretofore carried on by it.  Prior to the
Closing Date, Seller shall maintain (or replace with policies of like amounts)
all existing insurance policies insuring the Property and the operation of the
Hotel.  Seller may enter into, extend, amend, modify or terminate any of the
Contracts as Seller deems appropriate to operate, service and maintain the
Property consistent with normal business practices; provided, however, that so
long as Purchaser is not in default of any of its obligations under this
Agreement, (a) from the date of this Agreement to the expiration of the Due
Diligence Period, Seller shall provide to Purchaser copies of new contracts or
leases which are not consistent with normal business practices, which Seller has
entered into, or intends to enter into, and (b) from and after the expiration of
the Due Diligence Period, Seller shall not, without the consent of Purchaser
(which consent shall not be unreasonably withheld, conditioned or delayed),
enter into (i) any leases of furniture, fixtures or equipment for the Hotel, or
(ii) any contract or lease other than consistent with past practices.

 

6.3                               Employee Matters.  On the Closing Date, Seller
shall pay (or cause to be paid) all employee salaries, wages, fringe benefits
and other compensation, including any applicable federal, state and local taxes,
for any employees of the Hotel which have accrued up to the Cut-Off Time. 
Seller shall terminate all of the Hotel employees effective at 3:00 p.m.
California time on the Closing Date.  Seller shall indemnify, defend and hold
harmless Purchaser against any and all labor or employment claims, liabilities
or obligations (including, without limitation, attorneys’ fees and costs) which
arise or accrue before, or arise out of events occurring before, the Closing
Date, which indemnity shall survive the Close of Escrow.

 

As of the Close of Escrow, but effective at 3:00 p.m. California time on the
Closing Date, Purchaser shall hire not less than eighty percent (80%) of the
employees of the Hotel, at substantially the same terms as Seller had provided
prior to the Closing Date, for a period of not less than ninety (90) days. 
Purchaser shall indemnify, defend and hold harmless Seller, Tarsadia, Evolution,
and their affiliates, owners and employees against any and all labor or
employment claims, liabilities or obligations (including, without limitation,
attorneys’ fees and costs) which arise or accrue from or after, or arise out of
events occurring from or after the Close of Escrow, including, without
limitation, all claims arising as a result of the transactions contemplated in
this Agreement and from the termination by Purchaser of any Hotel employee or
personnel performing services at or for the Hotel, the failure of Purchaser to
offer employment to any such employees or personnel, and Purchaser’s decision to
continue or discontinue any employment policy or practice of Seller in existence
or effect at the Hotel prior to the Close of Escrow, which indemnity shall
survive the Close of Escrow.  The foregoing indemnity shall not include coverage
for any claims, liabilities or obligations predicated on matters which occurred
prior to the Close of Escrow even though such claims, liabilities or obligations
were first

 

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instituted or brought to the attention of Seller or Purchaser after the Close of
Escrow, it being expressly understood and agreed by Seller that any such claims
or liabilities or obligations shall remain the responsibility of Seller, and
Seller shall satisfy all such claims, liabilities and obligations.  The
foregoing indemnity shall survive the Close of Escrow.

 

Purchaser acknowledges that Seller is not giving any notice under, or otherwise
complying with, the Worker Adjustment and Retraining Notification Act and/or any
applicable state law counterpart (together with all rules and regulations
promulgated thereunder, the “WARN Act”).  Purchaser agrees to hire a sufficient
number of the Hotel employees, and on such terms and conditions, as to avoid any
violation of the WARN Act in the absence of such notice, and agrees to indemnify
and defend Seller and Tarsadia, and hold them harmless, from and against any and
all loss, damage, liability, claim, cost or expense (including, without
limitation, reasonable attorneys’ fees) incurred by any of such parties as a
result of the failure to give such notice or otherwise comply with the WARN Act.

 

6.4                               Transition.  Solely for the purpose of
assisting Purchaser in connection with Purchaser’s transition to ownership and
replacement of the Hotel’s manager upon the Close of Escrow, Seller shall permit
Purchaser to establish and maintain a “shadow management operation” with respect
to the Property comprised of no more than four (4) individuals within the five
(5) calendar days preceding the Closing Date; provided, however, that Purchaser
and its shadow management operation and employees (a) shall not unreasonably
interfere with the normal management and operation of the Property, (b) shall
repair any damage to the physical condition of the Property caused by Purchaser
or its employees or agents in any such shadow management operation, and
(c) shall not be deemed to have assumed management responsibilities of the
Property prior to the Close of Escrow by virtue of any shadow management
operation.  Seller shall otherwise use its reasonable efforts to assist and
cause the Hotel’s manager to use his reasonable efforts to assist, Purchaser and
its hotel manager in a smooth transition of ownership and operation of the Hotel
during the shadow management operation period.

 

6.5                               No Obligations of Escrow Holder.  Escrow
Holder shall not be concerned with the provisions of this Article VI.

 

VII.

 

REPRESENTATIONS AND WARRANTIES

 

7.1                               By Purchaser.  Purchaser represents and
warrants to Seller that as of the date hereof and the Close of Escrow:

 

7.1.1                     Organization and Standing.  Purchaser is a limited
liability company, duly organized, validly existing, and in good standing under
the laws of the State of Delaware, is duly qualified to do business in the State
of California, and has the full power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby to be carried out by it.

 

7.1.2                     Due Authorization.  The performance of this Agreement
and the transactions contemplated hereunder by Purchaser have been duly
authorized by all necessary action on the part of Purchaser, and this Agreement
is binding on and enforceable against

 

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Purchaser in accordance with its terms.  Purchaser shall, on or prior to the
Closing Date, furnish Seller with certified resolutions evidencing that
Purchaser has been duly authorized to enter into and perform this Agreement and
the transactions contemplated hereunder.  No further consent of any shareholder,
creditor, board of directors, governmental authority or other party to such
execution, delivery and performance hereunder is required.  The
person(s) signing this Agreement, and any document pursuant hereto on behalf of
Purchaser, has full power and authority to bind Purchaser.

 

7.1.3                     Lack of Conflict.  Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any restriction, court order, judgment, law, regulation, charter, bylaw,
instrument or agreement to which Purchaser is subject.

 

7.1.4                     Solvency/Bankruptcy.  Purchaser has not (i) made any
general assignment for the benefit of creditors, (ii) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition in
bankruptcy by Purchaser’s creditors, (iii) suffered the appointment of a
receiver to take possession of all, or substantially all, of Purchaser’s assets,
(iv) suffered the attachment or other judicial seizure of all, or substantially
all, of Purchaser’s assets, (v) admitted in writing its inability to pay its
debts as they come due, or (vi) made any offer of settlement, extension or
compromise to its creditors generally, and has not considered doing or
undertaking, and has no current plans to do or undertake, any of the foregoing. 
Furthermore, Purchaser has not taken, and does not contemplate taking, against
it any such actions.

 

7.2                               By Seller.  Seller represents and warrants to
Purchaser that as of the date hereof and Close of Escrow:

 

7.2.1                     Organization and Standing.  Seller is a limited
liability company, duly organized, validly existing, and in good standing under
the laws of the State of California, and has the full power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby
to be carried out by it.

 

7.2.2                     Due Authorization.  The performance of this Agreement
and the transactions contemplated hereunder by Seller have been duly authorized
by all necessary action on the part of Seller, and this Agreement is binding on
and enforceable against Seller in accordance with its terms.  Seller shall, on
or prior to the Closing Date, furnish Purchaser with certified resolutions
evidencing that Seller has been duly authorized to enter into and perform this
Agreement and the transactions contemplated hereunder.  No further consent of
any member, manager, creditor, governmental authority or other party to such
execution, delivery and performance hereunder is required.  The
person(s) signing this Agreement, and any document pursuant hereto on behalf of
Seller, has full power and authority to bind Seller.

 

7.2.3                     Lack of Conflict.  Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any restriction, court order, judgment, law, regulation, charter, bylaw,
instrument, or agreement to which Seller or the Property (or any portion
thereof) are subject.

 

7.2.4                     Non-Foreign Seller.  Seller is not a foreign seller as
defined in the “Foreign Investment in Real Property Tax Act.”

 

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7.2.5                     Solvency/Bankruptcy.  Seller has not (i) made any
general assignment for the benefit of creditors, (ii) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition in
bankruptcy by Seller’s creditors, (iii) suffered the appointment of a receiver
to take possession of all, or substantially all of Seller’s assets,
(iv) suffered the attachment or other judicial seizure of all or substantially
all, of Seller’s assets, (v) admitted in writing its inability to pay its debts
as they come due, or (vi) made an offer of settlement, extension or composition
to its creditors generally, and has not considered doing or undertaking, and has
no current plans to do or undertake any of the foregoing.  Furthermore, Seller
has not and does not contemplate taking or having taken against it, any such
actions.

 

7.2.6                     Tax Returns.

 

(a)                                 Seller has duly and timely filed (on a
timely basis since its inception) all federal, state and local tax returns
required to be filed by it with the appropriate governmental authority(ies), and
all such returns are true, complete and correct in all material respects. 
Seller is taxed as a partnership and itself pays no income taxes.

 

(b)                                 All sales and use taxes required to be paid
or collected by Seller in the ownership and operation of the Hotel have been or
will be collected and paid, in the ordinary course of business, to the
appropriate governmental authority(ies) through the Close of Escrow.

 

(c)                                  Neither Seller nor, to Seller’s knowledge,
Evolution, (i) has received written notice for underpayment, audit or appeal of
any real estate taxes or reassessment of any real estate tax valuations with
respect to the Hotel (other normal annual increases), (ii) is a party to any
pending proceeding to contest any taxes with respect to the Hotel, or (iii) has
received any written notice of any special assessments pending with respect to
the Hotel, in each case which has not been otherwise resolved or completed.

 

7.2.7                     Financial Information.  To Seller’s knowledge, the
financial information provided to Purchaser regarding the Hotel represents, in
all material respects, correct and complete copies of all such financial
information as it exists in Seller’s records and presents fairly the results of
the operations of the Hotel for the periods indicated.

 

7.2.8                     Litigation.  To Seller’s knowledge, neither Seller nor
the Real Property is a party to any litigation or other proceeding affecting the
Real Property which, if, adversely determined, would have a material adverse
effect on the operation of the Hotel thereon (consistent with Seller’s
operation), nor has Seller received any written notice that any such litigation
or other proceedings are to be instituted.

 

7.2.9                     Foreign Persons.  Seller and its owners, and their
respective principals, shall not transfer the proceeds obtained as a result of
this Agreement to any person or entity listed on the Office of Foreign Assets
Control list as “Terrorist” and “Specially Designated Nationals and Blocked
Persons,” or otherwise be in violation of the International Money Laundering
Abatement and Financial Anti-Terrorism Act of 2001.

 

7.2.10              Existing Management Agreement.  No management agreement
affecting the Property exists other than the existing Management Agreement with
Evolution which will be terminated at the Closing, at Seller’s sole cost and
expense.

 

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7.2.11              Employees.  All employees of the Hotel are employees of
Evolution.  Seller does not employ any employees in connection with the
operation of the Hotel and is not a party to any written employment, or
collective bargaining agreement, or compensation agreement or union contract. To
Seller’s knowledge, there are no union organization efforts pending or
threatened with respect to any of the Hotel employees.

 

7.2.12              Contracts.  The copies of the Contracts delivered by Seller
to Purchaser are true and correct copies thereof and represent all material
contracts, space leases, equipment leases and other material agreements used/or
executed in connection with the ownership and operation of the Hotel.  Seller is
not, to Seller’s knowledge, in material default under any of the terms and
provision thereof, nor has it sent or, to Seller’s knowledge, received any
written notice of default except as has been provided to Purchaser.

 

7.2.13              Environmental Matters.  Seller has provided Purchaser with
complete copies of all environmental site assessment reports,  and remediation
or compliance studies or audits (the “Environmental Reports”) as they exist in
Seller’s files, which are in the possession, custody or control of Seller or its
agents.  Except for any and all matters that are set forth in the Environmental
Reports, to Seller’s knowledge, neither Seller nor Evolution has, during its
ownership or operation of the Hotel, as the case may be, stored, produced or
disposed of any Hazardous Materials on the Real Property, other than such
products typically used in the operations of the hotels similar to the Hotel. 
Seller has received no written notice from any governmental authority alleging
or otherwise asserting that the Hotel or the operation of the Hotel are in
violation of any law, rule or regulation relating to Hazardous Materials. 
Seller has not received any written notice from any governmental agency, board
or department that Seller does not have all required governmental permits and
licenses, if any, relating to Hazardous Materials.

 

7.2.14              Permits.  All Permits maintained by or behalf of Seller for
the operation of the Hotel are (a) set forth on Schedule 7.2.14 to this
Agreement, and (b) in full force and effect.  To Seller’s knowledge, as of the
date hereof, there exist no material violations of any Permit.

 

7.2.15              Condemnation Actions; Special Assessments.  Seller has no
knowledge of any pending or threatened condemnation actions with respect to the
Real Property.

 

7.2.16              Bankruptcy.  No bankruptcy or other insolvency proceeding,
voluntary or involuntary, relating to Seller or the Land or the Hotel is pending
or threatened against Seller.

 

Wherever the phrase “to Seller’s knowledge” or any similar phrase stating or
implying a limitation on the basis of knowledge appears in this Agreement,
unless specifically otherwise qualified, such phrase shall mean only the present
actual knowledge of John Blem, without any duty of inquiry, any imputation of
the knowledge of another to him, or independent investigation of the relevant
matter by any of such individual(s), and without any personal liability. 
Wherever the phrase “in Seller’s possession”, “in the possession of Seller” or
similar phrase appears in this Agreement, such phrase shall be deemed to mean
only to the extent the material or other item referred to by such phrase is
located at the Hotel or in Seller’s offices in Orange County, California.

 

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Notwithstanding any provision of this Agreement to the contrary, should any of
the foregoing representations and warranties of Seller become false or
inaccurate prior to the Close of Escrow, and Seller discloses the same to
Purchaser, in writing, prior to the Close of Escrow, then Purchaser’s sole
recourse shall be to either (i) terminate this Agreement and cancel the Escrow,
in which case the Earnest Money Deposit (or any portion then on deposit with
Escrow Holder) and the Extension Deposit (if then on deposit with Escrow Holder)
shall be returned to Purchaser and neither Seller nor Purchaser will have any
further liability or obligation under this Agreement (except for those
obligations which survive in accordance with their terms), or (ii) proceed with
the closing, without reservation, in which case Purchaser shall be deemed to
have waived all claims against Seller and Tarsadia with respect to such false or
inaccurate representation and warranty.

 

VIII.

 

CONDITIONS PRECEDENT TO CLOSE OF ESCROW

 

8.1                               Conditions to Seller’s Obligations.  The
obligation of Seller to close the Escrow shall be subject to the satisfaction or
Notice of its waiver (delivered to Purchaser and Escrow Holder), in whole or in
part, by Seller of each of the following conditions precedent:

 

(a)                                 Except by reason of a default by Seller,
Escrow Holder is in a position to and will deliver to Seller the instruments and
funds accruing to Seller pursuant to the provisions of this Agreement;

 

(b)                                 There is no existing uncured material breach
of any of the covenants, representations, warranties or obligations of Purchaser
set forth in this Agreement that has not been waived by Seller;

 

(c)                                  Purchaser shall not be in material default
of any of its obligations under the Liquor Transfer Agreement; and

 

(d)                                 Seller (and all guarantors) have been
released from all obligations under the Franchise Agreement by the franchisor
thereunder.

 

The foregoing conditions contained in this Section 8.1 are intended solely for
the benefit of Seller.  Seller shall at all times have the right to waive any
condition precedent, provided that such waiver is in writing and delivered to
Purchaser and Escrow Holder.

 

8.2                               Conditions to Purchaser’s Obligations.  The
obligations of Purchaser to close the Escrow shall be subject to the
satisfaction or Notice of its waiver (delivered to Seller and Escrow Holder), in
whole or in part, by Purchaser of each of the following condition precedent:

 

(a)                                 Except by reason of a default by Purchaser,
Escrow Holder is in a position to and will deliver to Purchaser the instruments
and funds, if any, accruing to Purchaser pursuant to the provisions of this
Agreement;

 

(b)                                 The “Seller” under the Liquor Transfer
Agreement shall not be in material default of its obligations thereunder;

 

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(c)                                  The existing management agreement for the
Hotel shall be terminated by Seller and Evolution; and

 

(d)                                 There is no existing uncured material breach
of any of the covenants, representations, warranties or obligations of Seller
set forth in this Agreement that has not been waived by Purchaser.

 

The foregoing conditions contained in this Section 8.2 are intended solely for
the benefit of Purchaser.  Purchaser shall at all times have the right to waive
any condition precedent, provided that such waiver is in writing and delivered
to Seller and Purchaser.

 

8.3                               Failure of Conditions to Close of Escrow. 
Escrow Holder shall be responsible for confirming, on or before the Close of
Escrow, that the conditions to the Close of Escrow set forth in Sections 8.1 and
8.2 hereof, and as set forth elsewhere in this Agreement, have been satisfied. 
Purchaser and Seller hereby agree to deliver their Notices to Escrow Holder, on
or before the Close of Escrow, of the satisfaction or waiver of all other
conditions to the Close of Escrow hereunder, and, in the event that both
Purchaser and Seller specifically notify and instruct Escrow Holder, in writing,
to proceed to the Close of Escrow hereunder, all such other conditions to the
Close of Escrow hereunder that are not otherwise satisfied shall be deemed to
have been waived by both Purchaser and Seller.  Escrow Holder shall not proceed
to the Close of Escrow hereunder unless both Purchaser and Seller specifically
notify and instruct Escrow Holder to do so.

 

IX.

 

LIQUIDATED DAMAGES

 

9.1                               Default by Purchaser.  IN THE EVENT THE
CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT
OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF PURCHASER, PURCHASER AND
SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE
THE DAMAGES WHICH SELLER MAY SUFFER.  THEREFORE, PURCHASER AND SELLER DO HEREBY
AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL DAMAGES THAT SELLER WOULD SUFFER
IN THE EVENT THAT PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE
PROPERTY IS AND SHALL BE, AS SELLER’S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW
OR IN EQUITY), AN AMOUNT EQUAL TO THE EARNEST MONEY DEPOSIT AND THE EXTENSION
DEPOSIT (IF DUE OR OTHERWISE DEPOSITED WITH ESCROW HOLDER).  SAID AMOUNT SHALL
BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE FAILURE OF PURCHASER TO CLOSE
AND CONSUMMATE THE TRANSACTIONS HEREIN CONTEMPLATED.  ALL OTHER CLAIMS TO
DAMAGES OR OTHER REMEDIES IN CONNECTION WITH PURCHASER’S FAILURE TO CLOSE AND
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN ARE EXPRESSLY WAIVED BY SELLER;
HOWEVER, SELLER RESERVES ITS RIGHTS TO LEGAL AND EQUITABLE DAMAGES AND REMEDIES
FOR ANY OTHER DEFAULT BY PURCHASER HEREUNDER.  THE PAYMENT OF SUCH AMOUNT AS
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF CALIFORNIA CIVIL CODE

 

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SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, 1676 AND 1677.  SELLER
HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389.  UPON
DEFAULT BY PURCHASER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL
HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY
INDEMNIFICATION OBLIGATIONS, THE RIGHTS OF SELLER RESERVED HEREIN, AND FOR THE
RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM PURCHASER AND ESCROW
HOLDER.  IN THE EVENT PURCHASER FAILS TO AUTHORIZE ESCROW HOLDER TO RELEASE THE
EARNEST MONEY DEPOSIT AND THE EXTENSION DEPOSIT (IF DUE OR OTHERWSIE DEPOSITED
WITH ESCROW HOLDER) WITHIN FIVE (5) BUSINESS DAYS OF THE DEMAND OF SELLER
WHEREIN SELLER ALLEGES THE DEFAULT AND NONPERFORMANCE BY PURCHASER, THEN, WITH
RESPECT TO SUCH ALLEGED DEFAULT AND NON-PERFORMANCE BY PURCHASER, THE PROVISIONS
OF THIS ARTICLE IX SHALL BE VOIDABLE AT THE ELECTION OF SELLER.

 

 

 

 

SELLER’S INITIALS

 

PURCHASER’S INITIALS

 

9.2                               Default by Seller.  IN THE EVENT THE CLOSING
AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS
HEREIN PROVIDED BY REASON OF ANY DEFAULT OF SELLER, PURCHASER AND SELLER AGREE
THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES
WHICH PURCHASER MAY SUFFER.  THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE
THAT, IN THE EVENT OF SUCH DEFAULT, IN ADDITION TO ATTORNEYS’ FEES AND COSTS
PURSUANT TO SECTION 12.2 HEREOF, PURCHASER MAY, AS ITS SOLE RECOURSE AND REMEDY
(AT LAW OR IN EQUITY), EITHER:  (a) PURSUE AN ACTION AGAINST SELLER FOR SPECIFIC
PERFORMANCE; OR (b) RECEIVE (i) THE RETURN OF THE EARNEST MONEY DEPOSIT AND THE
EXTENSION DEPOSIT (IF OTHERWISE DEPOSITED WITH ESCROW HOLDER), AND
(ii) REIMBURSEMENT OF OUT-OF-POCKET EXPENSES ACCORDING TO PROOF NOT TO EXCEED AN
AGGREGATE OF TWO HUNDRED THOUSAND DOLLARS ($200,000.00); PROVIDED, HOWEVER,THAT
IF SELLER INTENTIONALLY BREACHES ITS OLBIGATION TO CONVEY THE PROEPRTY TO
PURCHASER IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, THEN SELLER SHALL PAY
TO PURCHASER THE SUM OF THREE MILLION DOLLARS ($3,000,000.00), SAID AMOUNT SHALL
BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE INTENTIONAL FAILURE OF SELLER
TO CLOSE AND CONSUMMATE THE TRANSACTIONS HEREIN CONTEMPLATED.  ALL OTHER CLAIMS
TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH SELLER’S FAILURE TO CLOSE AND
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN (OTHER THAN AS SPECIFIED IN
(a) AND (b) HEREOF) ARE EXPRESSLY WAIVED BY PURCHASER.  THE REFUND OF THE
EARNEST MONEY DEPOSIT AND EXTENSION DEPOSIT (IF OTHERWISE DEPOSITED WITH ESCROW
HOLDERS) AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN
THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR

 

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3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER PURSUANT TO
CALIFORNIA CIVIL CODE SECTION 1671.  PURCHASER HEREBY WAIVES THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 3389.  UPON DEFAULT BY SELLER, IF THIS AGREEMENT
IS TERMINATED BY PURCHASER, NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION
OBLIGATIONS, THE RIGHTS OF PURCHASER RESERVED HEREIN, AND FOR THE RIGHT OF
PURCHASER TO COLLECT SUCH LIQUIDATED DAMAGES FROM SELLER.

 

 

 

 

SELLER’S INITIALS

 

PURCHASER’S INITIALS

 

X.

 

BROKERS

 

Seller and Purchaser each agree to indemnify, protect, defend and hold the other
harmless from and against any claims, actions, suits or demands for payment of
any commission, finder’s fee or other sum initiated by any broker, commission
agent or other person which such party or its representatives has engaged or
retained or with which it has had discussions concerning, in connection with the
transaction contemplated by this Agreement or the sale of the Property by
Seller.  Notwithstanding the foregoing, however, Seller shall pay a commission
to Jones Lang LaSalle pursuant to a separate agreement.

 

XI.

 

NOTICES

 

Except as otherwise expressly provided in this Agreement, all notices, requests,
demands and other communications hereunder (“Notice”) shall be in writing and
shall be deemed delivered by (i) hand delivery upon receipt, (ii) registered
mail or certified mail, return receipt requested, postage prepaid, upon delivery
to the address indicated in the Notice, (iii) by confirmed telecopy or facsimile
transmission when sent, or (iv) overnight courier (next business day delivery)
on the next business day at 12:00 noon, whichever shall occur first, as follows:

 

To
Seller:                                                                                                                                                                                            
Gaslamp Holdings, LLC
Attention:  Manager
620 Newport Center Drive
Fourteenth Floor
Newport Beach, CA  92660
Telecopier:  (949) 610-8216

 

With a Copy
to:                                                                                                                                                        
TARSADIA INVESTMENTS, LLC
Attention:  Edward G. Coss, Esq.
620 Newport Center Drive
Fourteenth Floor
Newport Beach, CA  92660
Telecopier:  (949) 610-8222

 

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To Escrow
Holder:                                                                                                                                          
First American Title Insurance Co.
New York Division
Attention: Jill Siegel
633 Third Avenue
New York, NY 10017
Telecopier: (212) 331-1411

 

To
Purchaser:                                                                                                                                                                    
CWI Mission Valley Hotel, LLC
Attention: Michael G. Medzigian
272 E. Deerpath Road, Suite 320
Lake Forest, IL 60045
Telecopier:  (847) 482-8696

 

With a Copy
to:                                                                                                                                                        
Paul Hastings LLP
Attention: Rick S. Kirkbride
515 South Flower Street, 25th Fl.
Los Angeles, CA 90071
Telecopier:  (213) 996-3261

 

Any correctly addressed Notice that is refused, unclaimed or undelivered because
of an act or omission of the party to be notified shall be considered to be
effective as of the first day that the Notice was refused, unclaimed or
considered undeliverable by the postal authorities, messenger or overnight
delivery service.  The parties hereto shall have the right from time to time,
and at any time, to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of
America, by giving to the other party at least thirty (30) days prior Notice
thereof, in the manner prescribed herein; provided, however, that to be
effective, any such change of address must be actually received (as evidenced by
a return receipt).  Telephone numbers and email addresses, if listed, are listed
for convenience purposes only and not for the purposes of giving Notice pursuant
to this Agreement.

 

XII.

 

MISCELLANEOUS

 

12.1                        Governing Law.  This Agreement shall be governed by
and construed in accordance with the laws of the State of California.  If any
legal action is necessary to enforce the terms and conditions of this Agreement,
the parties hereby agree that the Superior Court of California, County of
Orange, shall be the sole jurisdiction and venue for the bringing of the action.

 

12.2                        Professional Fees and Costs.  If a lawsuit,
arbitration or other proceedings are instituted by any party to enforce any of
the terms or conditions of this Agreement against any other party hereto, the
prevailing party in such litigation, arbitration or proceedings shall be
entitled, as an additional item of damages, to such reasonable attorneys’ and
other professional fees and costs (including, but not limited to, witness fees),
court costs, arbitrators’ fees, arbitration administrative fees, travel
expenses, and other out-of pocket expenses or costs of such other proceedings. 
For the purposes of this section, any party receiving an arbitration award or a
judgment for damages or other amounts shall be deemed to be the prevailing
party, regardless of

 

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amount of the damage awarded or whether the award or judgment was based on all
or some of such party’s claims or causes of action, and any party against whom a
lawsuit, arbitration or other proceeding is instituted and later voluntarily
dismissed by the instituting party shall be deemed to be the prevailing party.

 

12.3                        Exhibits and Schedules a Part of This Agreement. 
The Exhibits and Schedules attached hereto are incorporated in this Agreement by
reference and are hereby made a part hereof.

 

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

 

12.5                        Assignment.  Purchaser may not, and shall have no
right or power to, assign, convey and otherwise transfer all or any part of its
interest or rights herein without the prior written consent of Seller, which
consent may be withheld in Seller’s sole discretion, and any attempted
assignment without Seller’s written consent shall be void, invalid and
unenforceable.  Notwithstanding the foregoing, however, Purchaser may assign and
transfer all of its rights and obligations under this Agreement to one (1) or
more wholly owned subsidiary(ies) thereof, or to an entity that is controlled
by, controls or is under common control with Purchaser, provided, however, that
Purchaser shall not be released of its obligations under this Agreement as a
result of any such assignment.  Any assignment as permitted in the preceding
sentence shall be conditioned upon Purchaser delivering to Seller and Escrow
Holder, within forty-eight (48) hours of any such assignment, Notice thereof,
together with a copy of such assignee’s organizational and formation documents
and instruments, a Certificate of Good Standing for such assignee, and copies of
the resolutions of Purchaser and such assignee authorizing such assignment.  As
a further condition to any such permitted assignment, Purchaser shall cause its
assignee to execute an assignment and assumption agreement of Purchaser’s
obligations under this Agreement (in form and content reasonably and mutually
acceptable), and such other documents and instruments as Escrow Holder may
reasonably request.

 

12.6                        IRS - Form 1099-S.  For purposes of complying with
Section 6045 of the Internal Revenue Code of 1986, as amended, Escrow Holder
shall be deemed the “person responsible for closing the transaction” and shall
be responsible for obtaining the information necessary to file with the Internal
Revenue Service Form 1099-S, “Statement for Recipients of Proceeds from Real
Estate, Broker and Barter Exchange Transactions.”

 

12.7                        Successors and Assigns.  Subject to the provisions
of Section 12.5 hereof, this Agreement shall be binding upon and inure to the
benefit of the parties’ respective successors and permitted assigns.

 

12.8                        Time is of the Essence.  Time is of the essence of
this Agreement.

 

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12.9                        Entire Agreement.  This Agreement, and Exhibits and
Schedules and other documents and instruments attached to or referenced herein,
contain all representations and the entire understanding and agreement between
the parties hereto with respect to the purchase and sale of the Property, and
all prior and contemporaneous understandings, letters of intent, agreements and
representations, whether oral or written, are entirely superseded.  In executing
this Agreement, each of Seller and Purchaser expressly disclaim any reliance on
any oral or written representations, warranties, comments, statements or
assurances made by Seller, Purchaser, and any of their respective affiliates,
and their respective agents, employees, representatives, attorneys or brokers,
as an inducement or otherwise, to Purchaser’s and Seller’s respective execution
hereof.  No amendment of this Agreement shall be binding unless in writing and
executed by the parties hereto.

 

12.10                 Further Assurances.  Whenever and so often as requested by
a party, the other party will promptly execute and deliver or cause to be
executed and delivered all such other and further instruments, documents or
assurances, and promptly do or cause to be done all such other and further
things as may be necessary and reasonably required in order to further and more
fully vest in such requesting party all rights, interests, powers, benefits
privileges and advantages conferred or intended to be conferred upon it by this
Agreement, or to effectuate the termination of this Agreement and cancellation
of the Escrow (if otherwise permitted hereunder).  The terms of this section
shall survive the Close of Escrow and/or termination of this Agreement.

 

12.11                 Waiver.  The failure or delay (without regard to the
length of time of such failure or delay) by either party to enforce or insist on
the strict performance of any covenant, term, obligation, provision, right,
option or condition hereunder, or to pursue any action, claim or right arising
from any breach, default, or non-performance of any term, obligation or
provision of this Agreement, shall not constitute or be construed as a waiver or
forgiveness of such covenant, term, obligation, provision, right, option,
condition, breach, default or non-performance.  To be binding upon and against a
party, any waiver must (a) be in writing, (b) be delivered to the party in whose
favor the waiver is made (in accordance with the provisions of Article XI
hereof), and (c) identify and specify, in reasonable detail, the covenant, term,
obligation, provision, right, option, condition, breach, default or
non-performance being waived; any purported waiver not complying therewith shall
not be effective or binding on the parties hereto.  In addition, any previous
waiver for the benefit of a party may not be relied upon or be enforced by such
party’s successors and assigns, and shall not be binding on the waiving party. 
Under no circumstances shall a waiver by either party complying with the
provisions hereof constitute or be construed as a continuing waiver of any
subsequent failure, default, breach or non-performance of any covenant, term,
obligation, provision, right, option or condition under this Agreement.

 

12.12                 Headings.  The headings of this Agreement are for purposes
of convenience only and shall not limit or define the meaning of the provisions
of this Agreement.

 

12.13                 Risk of Loss.

 

12.13.1       Risk of Loss.  Until the Closing Date, Seller shall bear the risk
of loss should there be damage to any of the Improvements by fire or other
casualty (collectively “Casualty”).  If, prior to the Closing Date, any of the
Improvements shall be damaged by any Casualty, Seller shall promptly deliver to
Purchaser a Notice (“Casualty Notice”) of such event.  Upon Purchaser’s receipt
of a Casualty Notice, Seller and Purchaser shall meet promptly to

 

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estimate the cost to repair and restore the Improvements to good condition and
to replace the damaged Personal Property (the “Casualty Renovation Cost”).  If
the parties are unable to agree on the cost of restoration, the matter will be
submitted to an engineer designated by Seller and an engineer designated by
Purchaser, each licensed to practice in the state in which the Land is located,
and the engineers shall resolve the dispute.  Each party hereto shall bear the
costs and expenses of its own engineer.

 

12.13.2       Material Loss.  If the Casualty Renovation Cost exceeds (i) ten
percent (10%) of the Purchase Price in the event the Casualty is insured
against, or (ii) five percent (5%) of the Purchase Price in the event the
Casualty is not insured against, either party hereto may, at its option, elect
to terminate this Agreement by Notice to the other party within five (5) days
after the date that the Casualty Renovation Cost is determined, in which case
the Earnest Money Deposit (or any portion then on deposit with Escrow Holder)
and the Extension Deposit (if then on deposit with Escrow Holder) shall be
delivered to Purchaser, and neither party shall have any further rights or
obligations hereunder, except for any continuing confidentially and indemnity
obligations as provided in this Agreement.  If both parties hereto fail to
timely make its election to terminate this Agreement, then the Close of Escrow
shall take place as provided herein without reduction of the Purchase Price, and
Seller shall assign the insurance proceeds to Purchaser.

 

12.13.3       Nonmaterial Loss.  If the Casualty Renovation Cost is (i) ten
percent (10%) or less of the Purchase Price in the event the Casualty is insured
against, or (ii) five percent (5%) or less of the Purchase Price in the event
the Casualty is not insured against, then, in any such event, neither party
hereto shall have any right to terminate this Agreement, but the Closing shall
take place as provided herein without reduction of the Purchase Price, and
Seller shall assign the insurance proceeds to Purchaser.

 

12.13.4       Eminent Domain.  If, prior to the Close of Escrow, (i) any portion
of the Property or the Real Property is taken by condemnation or eminent domain
so as to interfere with the operation of the Hotel (more than a de minimus
amount), (ii) any portion of the parking areas on the Land which results in
there being insufficient parking for the operation of the Hotel as established
by applicable governmental codes and regulations, or (iii) any access-way to the
Land or any building with guest rooms is taken by condemnation or eminent
domain, at the election of Purchaser (in its sole and absolute discretion),
(A) this Agreement shall, upon the giving of Notice of such event or of the
condemning authorities’ intention so to take the Real Property, terminate, and
Purchaser shall receive a full and prompt refund of all sums deposited by them
with Escrow Holder and/or Seller (including, without limitation, the Earnest
Money Deposit (or any portion then on deposit with Escrow Holder) and the
Extension Deposit (if then on deposit with Escrow Holder), or (B) the
transaction contemplated herein shall proceed to close and Purchaser shall be
entitled to, and Seller shall assign to Purchaser, all awards and proceeds paid
or to be paid for such taking.  If, prior to the Close of Escrow, there is any
taking by condemnation or eminent domain which does not entitle Purchaser to
terminate this Agreement pursuant to the immediately prior sentence and
Purchaser accepts title to the Real Property subject to such taking, in which
event at the Close of Escrow all of the proceeds of any award or payment made or
to be made by reason of such taking shall be assigned by Seller to Purchaser,
and any money theretofore received by Seller in connection with such taking
shall be paid over to Purchaser, whereupon Purchaser shall pay the Purchase
Price without abatement by

 

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reason of such taking.  Seller shall not settle, agree to, or accept any award
or payment in connection with a taking of less than all of the Land and/or
Improvements without obtaining Purchaser’s prior written consent in each case,
which consent shall not be unreasonably withheld or delayed.

 

12.14                 Construction of Agreement.  The parties hereto have
negotiated this Agreement at length, and have had the opportunity to consult
with, and be represented by, their own competent counsel.  This Agreement is,
therefore, deemed to have been jointly prepared.  In determining the meaning of,
or resolving any ambiguity with respect to, any word, phrase or provision of
this Agreement, no uncertainty or ambiguity shall be construed or resolved
against any party under any rule of construction, including the party primarily
responsible for the drafting and preparation of this Agreement.

 

The words “herein,” “hereof,” “hereunder” and words of similar reference shall
mean this Agreement.  The words “this Agreement” include the exhibits, schedules
addenda and any future written modifications, unless otherwise indicated by the
context.  All words in this Agreement shall be deemed to include any number or
gender as the context or sense of the Agreement requires.  The words “will,”
“shall” and “must” in this Agreement indicate a mandatory obligation.  The use
of the words “include,” “includes” and “including” followed by one or more
examples is intended to be illustrative and is not a limitation on the scope of
the description or term for which the examples are provided.  All dollar amounts
set forth in this Agreement are stated in United States Dollars, unless
otherwise specified.  The words “day” and “days” refer to calendar days unless
otherwise stated.  The words “business day” refer to a day other than a
Saturday, Sunday or legal holiday on which banking institutions are closed.  The
words “month” and “months” refer to calendar months unless otherwise stated. 
The words “year” and “years” refer to calendar years unless otherwise stated.

 

12.15                 Tax Deferred Exchange.  Seller and Purchaser (the
“Cooperating Party”) each agree to fully cooperate with the other (and any owner
of such other party) (the “Exchangor”) (including cooperation with any
Intermediary (as defined herein) selected by Exchangor) to structure the
acquisition of the Property and/or the Real Property as an exchange of property
held for productive use in a trade or business or for investment within the
meaning of Section 1031 of the Internal Revenue Code of 1986 (as amended), and
upon request, Cooperating Party agrees to execute additional escrow
instructions, documents, agreements or instruments to effect the exchange;
provided, however, that Cooperating Party shall incur no additional costs or
expenses in this transaction, or be required to incur any additional liability,
acquire, accept or hold title to any property (other than the Property) or to
agree to the extension of the Closing Date, as a result of or in connection with
any such exchange, unless because of Cooperating Party’s default hereunder or
under any agreement executed by reason of this Section 12.15.

 

Exchangor agrees to indemnify, defend or hold Cooperating Party harmless from
and against any and all additional costs, expenses, claims, demands,
liabilities, losses, obligations, damages, recoveries, and deficiencies (such
categories being collectively referred to herein as “Liabilities”) in excess of
those Liabilities that Cooperating Party would otherwise have if the transaction
contemplated in this Agreement closes as a sale transaction, and that
Cooperating Party may incur or suffer, as a result of or in connection with
(i) the structuring of the transaction contemplated in this Agreement as an
exchange under Internal Revenue Code

 

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Section 1031 and/or (ii) the execution of any documents in connection with the
exchange.  Exchangor’s foregoing indemnity shall not indemnify Cooperating Party
for any Liabilities arising as a result of or in connection with any default by
Cooperating Party under this Agreement or any default by Cooperating Party under
any of the documents or agreements entered into by Cooperating Party in
connection with the exchange or for any negligence or willful misconduct on the
part of Cooperating Party.  Implementation of the exchange(s) contemplated in
this Section 12.15 shall not be a condition to the Close of Escrow.

 

Exchangor, at its election, may substitute for any one or more of them, one or
more persons or entities (“Intermediary”) as a party(ies) to the Escrow and this
Agreement, in which event the Intermediary shall assume and perform the
obligations of Exchangor under this Agreement (but without the release of
liability of Exchangor for such performance), and Cooperating Party agrees to
accept the performance by Intermediary and shall tender its performance to
Intermediary.

 

12.16                 No Public Disclosure.  Neither Purchaser nor Seller shall
make any public disclosure of the terms of this transaction prior to the Close
of Escrow without the prior written consent of the other party.

 

12.17                 Covenants, Representations and Warranties.  Except as
otherwise set forth in this Agreement, all of the covenants, representations and
agreements of Seller and Purchaser set forth in this Agreement shall survive the
Close of Escrow, except that all representations and warranties shall survive
only for a period of nine (9) months after the Close of Escrow.  By proceeding
with the closing of the sale transaction, Seller and Purchaser shall be deemed
to have waived, and so covenant to waive, any claims of defaults or breaches by
the other party existing on or as of the Close of Escrow whether under this
Agreement and any other document or instrument executed by the other party in
connection with this transaction, of which the waiving party was aware prior to
the Close of Escrow for which the other party shall have no liability.  For
purposes hereof, Purchaser shall be deemed to have knowledge of any such claims
of defaults or breaches if any of Michael G. Medzigian, Michael C. Coolidge or
Gil Murillo have actual knowledge of the matters giving rise thereto, without
any duty of inquiry, any imputation of the knowledge of another to him, or
independent investigation of the relevant matter by any of such individual(s),
and without any personal liability.

 

12.18                 Confidentiality.  Other than as required or permitted by
the terms of this Agreement, neither Purchaser nor seller shall release or cause
or permit to be released any press notices or releases or publicity (oral or
written) or advertising promotion relating to, or otherwise announce or disclose
or cause or permit to be announced or disclosed, in any manner whatsoever, the
terms and conditions of the purchase and sale transaction for the Property, nor
shall Purchaser or its respective agents or representatives disclose, prior to
the Close of Escrow, in any manner whatsoever, (a) the information provided to
Purchaser by Seller or its representatives, or (b) any analyses, compilations,
studies or other documents or records prepared by or on behalf of Purchaser, in
connection with Purchaser’s due diligence investigation of the Property, without
first obtaining the written consent of Seller (not to be unreasonably withheld)
(collectively, “Proprietary Information”).  The foregoing shall not preclude
Purchaser (i) from discussing the Proprietary Information with any person who is
employed by Purchaser or who, on behalf of Purchaser, is actively and directly
participating in the purchase and sale of

 

43

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the Property, including, without limitation, to Purchaser’s shareholders,
partners, members, existing or prospective lenders, attorneys, accountants and
other consultants and advisors, or (ii) from complying with all laws, rules,
regulations and court orders, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements; provided, however, that
if Purchaser is required by applicable law or legal process to disclose any
Proprietary Information, Purchaser agrees to furnish only that portion of the
Proprietary Information which Purchaser is legally compelled to disclose and to
use its best efforts to obtain assurance that, if possible, confidential
treatment will be accorded to the Proprietary Information.  Purchaser shall
inform its respective representatives of the confidential nature of the
Proprietary Information and shall direct them to be bound by the terms of this
section.  In addition to any other remedies available to Purchaser or Seller,
Purchaser and Seller shall have the right to seek equitable relief, including,
without limitation, injunctive relief or specific performance, against Purchaser
or Seller, as applicable, in order to enforce the provisions of this section. 
The provisions of this section shall survive any termination of this Agreement.

 

Purchaser agrees not to contact, directly or indirectly, any employees of the
Hotel prior to the Close of Escrow, and agrees to be liable for all of Seller’s
damages in the event of any such contact by Purchaser or any of its agents or
representatives.

 

12.19                 Limitation on Liability.  In consideration of the benefits
accruing hereunder, Seller and Purchaser agree that, in the event of any actual
or alleged failure, breach or default of this Agreement by Seller or Purchaser:

 

(a)                                 The sole and exclusive remedy shall be
against the defaulting party and its assets;

 

(b)                                 No owner of the defaulting party shall be
sued or named as a party in any suit or action;

 

(c)                                  No service of process shall be made against
any owner or employee of the defaulting party (except as may be necessary to
secure jurisdiction of the defaulting party);

 

(d)                                 No owner or employee of the defaulting party
shall be required to answer or otherwise plead to any service of process;

 

(e)                                  No judgment may be taken against any owner
or employee of the defaulting party;

 

(f)                                   Any judgment taken against any owner or
employee of the defaulting party may be vacated and set-aside at any time
without hearing;

 

(g)                                  No claims shall be made against Tarsadia;
and

 

(h)                                 No writ of execution will ever be levied
against the assets of any owner or employee of the defaulting party.

 

These covenants and agreements are enforceable both by the defaulting party and
also by any owner or employee of the defaulting party.

 

44

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Notwithstanding the foregoing, however, the restrictions set forth above in
clauses (a) — (h,) inclusive, shall not apply to the members of Seller to the
extent, and only to the extent, that Seller is unable to perform any of its
indemnification obligations pursuant to this Agreement within sixty (60) days of
Notice by Purchaser to Seller, demanding performance, and then, subject to the
limitations on liability set forth in the next paragraph of this Section 12.19,
only by reason of Seller having distributed any of its assets to any of its
members, to any of Seller’s affiliates or to any third party other than on an
arm’s length basis.

 

In addition to the foregoing, and notwithstanding any other term or provision of
this Agreement to the contrary, except as to Seller’s fraud, Seller shall have
no liability for the breach of any representation, warranty, covenant, indemnity
or other obligation expressly stated to survive the Close of Escrow
(collectively, “Seller’s Post-Closing Obligations”), unless and until the
aggregate amount of Purchaser’s out-of-pocket damages and third party expenses
directly resulting from such breaches shall exceed, and then only to the extent
the same exceeds, One Hundred Thousand Dollars ($100,000.00).  Furthermore,
Seller’s aggregate liability under this Agreement (or otherwise) for the breach
of any and all of Seller’s Post-Closing Obligations shall, in no event
individually or in the aggregate, exceed three percent (3%) of the Purchase
Price.  In no event shall Seller have any liability for special damages, loss of
profits, punitive damages, consequential damages, or damages for
diminution-in-value, but shall only be liable for Purchaser’s actual
out-of-pocket damages and third party expenses (subject to the aforementioned
cap).

 

12.20                 No Third-Party Beneficiaries.  Seller and Purchaser agree
that there are no third parties who are intended to benefit from or who are
entitled to rely on any of the provisions of this Agreement.  No third party
shall be entitled to assert any claims or to enforce any rights whatsoever
pursuant to this Agreement.  The covenants and agreements provided in this
Agreement are solely for the benefit of Seller and Purchaser and their permitted
successors and assigns respectively.

 

12.21                 Electronic and Facsimile Signatures.  The execution of
this Agreement and all Notices given hereunder and all amendments hereto, may be
effected by facsimile and/or electronically transmitted signatures, all of which
shall be treated as originals; provided, however, that the party receiving a
copy hereof with a facsimile and/or electronically transmitted signature may, by
written notice to the other, require the prompt delivery of an original
signature to evidence and confirm the delivery of the facsimile signature. 
Purchaser and Seller each intend to be bound by its respective facsimile and/or
electronically transmitted signature, and is aware that the other party will
rely thereon, and each party waives any defenses to the enforcement of the
Agreement delivered by facsimile and/or electronic transmission.

 

12.22                 Purchaser Audit Rights.  Seller shall engage (at
Purchaser’s sole cost and expense) McGladrey LLP (the “305 Auditor”) to
undertake an audit of the books and records of Seller pertaining to the Hotel
and certain limited matters involving Seller.  Notwithstanding anything to the
contrary in this Agreement, to the extent not otherwise delivered to Purchaser
in accordance with this Agreement, Seller agrees to promptly deliver to its 305
Auditor the audit request materials as listed on Exhibit “J-1” attached hereto. 
During the Due Diligence Period and for a period of seventy-five (75) days after
the Close of Escrow, Seller shall provide such additional information and/or
make available to Seller’s 305 Auditor (who shall be subject to a

 

45

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duty of confidentiality as set forth in its engagement letter with Seller) such
of the Excluded Documents as are reasonably necessary in connection with the
preparation of the audit required to be undertaken in connection with
Purchaser’s filings with the Securities and Exchange Commission; provided,
however, that Purchaser shall reimburse Seller, promptly upon Seller’s request,
for any actual costs incurred by Seller or its affiliates in undertaking such
audit and making such Excluded Documents available to Purchaser.  Seller shall
execute and provide a management representations letter in a form substantially
similar to those attached hereto as Exhibit “J-2”  required by the 305 Auditor
in connection with the preparation of any such filings.

 

12.23                 Waiver of Jury Trial.  ALL DISPUTES WITH RESPECT TO THIS
AGREEMENT, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, OR RELATED OR INCIDENTAL TO, THE TRANSACTION GIVING RISE TO THIS
AGREEMENT, SHALL BE TRIED BEFORE A JUDGE IN A COURT OF COMPETENT JURISDICTION AS
PROVIDED HEREIN, WITHOUT A JURY.  THE JUDGE IN SUCH COURT OF COMPETENT
JURISDICTION SHALL HAVE THE POWER TO GRANT ALL LEGAL AND EQUITABLE REMEDIES.  BY
EXECUTING THIS AGREEMENT, EACH PARTY HEREBY WAIVES AND COVENANTS NOT TO ASSERT
THEIR CONSTITUTIONAL RIGHT TO TRIAL BY JURY OF ANY DISPUTES RELATING TO THIS
AGREEMENT AND/OR THE ACTS OR OMISSIONS OF A PARTY HERETO THEREUNDER, WHETHER
ARISING IN CONTRACT, TORT OR OTHERWISE ARISING OUT OF, CONNECTED WITH, OR
RELATED OR INCIDENTAL TO, THE TRANSACTION GIVING RISE TO THIS AGREEMENT.  THIS
MUTUAL WAIVER OF JURY TRIAL SHALL BE BINDING UPON THE RESPECTIVE SUCCESSORS AND
ASSIGNS OF SUCH PARTIES AND UPON ALL PERSONS AND ENTITIES ASSERTING RIGHTS OR
CLAIMS OR OTHERWISE ACTING ON BEHALF OF A PARTY AND THEIR RESPECTIVE SUCCESSORS
AND ASSIGNS.

 

[The remainder of this page is intentionally left blank]
[Signatures on following page]

 

46

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XIII.

 

EXECUTION

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the 16th day of October, 2012.

 

 

SELLER:

 

 

 

GASLAMP HOLDINGS, LLC,

 

a California limited liability company

 

 

 

By:

/s/ Nilesh Madhav

 

Name:

Nilesh Madhav

 

Title:

Manager

 

 

 

PURCHASER:

 

 

 

CWI MISSION VALLEY HOTEL, LLC

 

a Delaware limited liability company

 

 

 

By:

/s/ Michael G. Medzigian

 

Name:

Michael G. Medzigian

 

Title:

President and Chief Executive Officer

 

ESCROW HOLDER HEREBY ACKNOWLEDGES
AND AGREES TO THE ESCROW INSTRUCTIONS
SET FORTH IN THIS AGREEMENT.

 

FIRST AMERICAN TITLE INSURANCE COMPANY

 

BY:

/s/ Jill Siegel

 

 

/s/ Jill Siegel, Underwriting Counsel

 

 

 

 

Dated:

10/16/12

 

 

47

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SCHEDULE “A”

 

CONTRACTS

 

COURTYARD MISSION VALLEY

 

HOTEL CONTRACTS AND SERVICE AGREEMENTS            * ‘ month to month’ terms
listed as N/A for “next renewal”

 

Vendor

 

Last
Renewal/
Expiration Date

 

Next*
Renewal/
Expiration Date

 

Notes

24 Hour Elevator

 

5-Jul-12

 

4-Ju1-13

 

Elevator Inspection and Maintenenance

ASCAP

 

1-Jan-12

 

31-Dec-12

 

Media licensing for public areas

AVMS

 

1-Apr-08

 

N/A

 

Audio Visual Service for Meeting Rooms

Brickman

 

1-Mar-12

 

N/A

 

Landscape service provider

Crystal Blue Pool

 

27-Jun-11

 

N/A

 

Pool Service/Maintenance

ECS

 

30-Mar-12

 

29-Mar-13

 

Fire Alarm Monitoring

Environmental Grease

 

7-Oct-12

 

N/A

 

Regular Hood Cleaning and Grease Trap

Global Power

 

10-Jan-1 2

 

N/A

 

Preventative Maint/Inspections for (2) Generators

Lodgenet

 

1-Nov-08

 

N/A

 

In Room PPV Movies and Cable TV

Marriott ARSO

 

1-Jan-12

 

31-Dec-12

 

Call Center Reservations

Micros

 

13-Nov-11

 

12-Nov-12

 

F&B POS Equipment support/service

Mission Linen Supply

 

20-Jul-12

 

N/A

 

Banquet Linen rental

San Diego Zoological Society

 

5-Dec-11

 

N/A

 

Discounted Ticket Agreement

Steritech

 

3-Dec-08

 

N/A

 

Pest Control Monthly Service

US Security Associates

 

14-Feb-09

 

N/A

 

Nightly Security service (10p-6a)

Waste Management

 

unknown

 

N/A

 

Trash and Recycling removal

 

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

 

EXHIBIT “B”

 

LAND LEGAL DESCRIPTION

 

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN DIEGO, COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

 

LOT 1 OF HOLIDAY INN, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF RECORDED NO. 5661, FILED IN THE OFFICE OF
THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 16, 1965.

 

APN : 444-110-05

 

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SCHEDULE “C”

 

PROPRIETARY COMPUTER SYSTEMS

 

·      Evolution’s domain Controller, which basically serves to authenticate
users back to the Evolution’s Domain.

 

·      A program called Falcon, which allows the Evolution Call Center and the
hotel to work together in terms of pricing and reservations.

 

·      Evolution’s PIX firewall, which is used to create a secure encrypted
connection between the Hotel and Evolution.

 

·      Various individual user computers, such as the GMs computer, the DOS
computer, etc.

 

·      Delphi...Users at this Hotel come back to Evolution for their access to
Delphi.  The Hotel currently operates on an “enterprise” Delphi program.  On the
Closing Date, Seller will disconnect the Hotel from the enterprise Delphi system
so that the Hotel will be operated on a “stand alone” basis (or Purchaser may
link it to its enterprise system).  Delphi will extract the data on the system
(pursuant to an “extraction agreement”) that is specific to the Hotel and move
it to the system of Purchaser, at Purchaser’s cost, and Purchaser shall be
obligated to enter into a license agreement for the use of the Delphi system
with the owner/ licensor thereof.

 

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EXHIBIT “D”

 

LIQUOR TRANSFER AGREEMENT

 

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

 

AGREEMENT FOR PURCHASE AND SALE OF LIQUOR
AND LIQUOR LICENSES, AND ESCROW INSTRUCTIONS

 

between

 

MBP LAND, LLC

 

as Seller

 

and

 

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

 

as Purchaser

 

Courtyard by Marriott — Mission Valley

 

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

 

TABLE OF CONTENTS

 

ARTICLE

 

PAGES

 

 

 

 

 

RECITALS

 

 

 

 

 

 

 

I.

AGREEMENT TO PURCHASE; PURCHASE PRICE; AND PAYMENT OF PURCHASE PRICE

 

2

 

1.1

Purchase and Sale

 

2

 

1.2

Purchase Price and Payment of Purchase Price

 

2

 

 

 

 

II.

CONDITION TO PURCHASER’S OBLIGATIONS TO PURCHASE

 

2

 

 

 

 

III.

CONDITIONS TO SELLERS’ OBLIGATIONS TO SELL

 

2

 

 

 

 

IV.

CLOSING AND DELIVERY OF THE ASSETS

 

3

 

4.1

Opening of Escrow; and Close of Escrow

 

3

 

4.2

Disbursements and Actions by Escrow Holder

 

4

 

4.3

Additional Duties of Escrow Holder

 

4

 

4.4

Rights of Escrow Holder

 

5

 

4.5

Closing Costs

 

5

 

4.6

Cancellation Fees and Expenses

 

5

 

4.7

Delivery of Liquor

 

6

 

 

 

 

V.

SELLER’ REPRESENTATIONS, WARRANTIES AND COVENANTS

 

6

 

 

 

 

VI.

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

6

 

 

 

 

VII.

COOPERATION

 

6

 

 

 

 

VIII.

BROKER’S COMMISSION

 

7

 

 

 

 

IX.

NOTICES

 

7

 

 

 

 

X.

MISCELLANEOUS PROVISIONS

 

8

 

10.1

Further Assurances

 

8

 

10.2

Covenants, Agreements, Representations and Warranties Survive Closing

 

8

 

10.3

Governing Law

 

8

 

10.4

Professional Fees and Costs

 

9

 

10.5

Exhibits and Schedules a Part of this Agreement

 

9

 

10.6

Executed Counterparts

 

9

 

10.7

Assignment

 

9

 

10.8

Successors and Assigns

 

9

 

10.9

Time Is of the Essence

 

10

 

10.10

Entire Agreement

 

10

 

10.11

Waiver

 

10

 

10.12

Headings

 

10

 

i

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10.13

Construction of Agreement

 

10

 

10.14

No Public Disclosure

 

10

 

10.15

Facsimile Signatures

 

11

 

 

 

 

 

XI.

EXECUTION

 

12

 

ii

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AGREEMENT FOR PURCHASE AND SALE OF LIQUOR
AND LIQUOR LICENSES, AND ESCROW INSTRUCTIONS

 

This AGREEMENT FOR PURCHASE AND SALE OF LIQUOR AND LIQUOR LICENSES, AND ESCROW
INSTRUCTIONS (the “Agreement”) is made and entered into as of the          day
of                   , 2012, by and between MBP LAND, LLC, a California limited
liability company (“Seller”), and
                                                                              
(“Purchaser”).

 

RECITALS

 

A.            Gaslamp Holdings, LLC, a California limited liability company
(“Hotel Owner”) and Purchaser have heretofore entered into that certain Purchase
and Sale Agreement and Escrow Instructions dated                         , 2012
(the “Hotel Purchase Agreement”), pursuant to the terms of which Hotel Owner has
agreed to sell, and Purchaser has agreed to purchase Hotel Owner’s interest in
the Property (as defined therein), located at 595 Hotel Circle South, San Diego,
California.

 

B.            Seller currently holds certain liquor license(s) used in
connection with the operation of the restaurant, lounge(s) and liquor business
conducted at the Hotel, all as listed on Exhibit “A” attached hereto
(collectively the “Licenses”).

 

C.            Subject to the terms and conditions set forth below, Purchaser
desires to purchase from Seller, and Seller desires to sell to Purchaser,
(i) the Licenses, and (ii) the opened and unopened wine, beer and other
alcoholic beverages stock located at the Hotel as of the Closing Date
(collectively the “Liquor”).  The Licenses and Liquor are sometimes collectively
referred to as the “Assets.”

 

D.            The Assets are not part of the purchase and sale contemplated by
the Hotel Purchase Agreement.

 

E.            Unless otherwise defined herein, all capitalized terms shall have
the meanings ascribed to them in the Hotel Purchase Agreement.

 

AGREEMENT

 

NOW, THEREFORE, for valuable consideration, including the promises, covenants,
representations and warranties hereinafter set forth, the receipt and adequacy
of which are hereby acknowledged, the parties, intending to be legally and
equitably bound, agree as follows:

 

1

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I.

 

AGREEMENT TO PURCHASE; PURCHASE PRICE;
AND PAYMENT OF PURCHASE PRICE

 

1.1          Purchase and Sale.  Subject to the terms and conditions of this
Agreement, Seller agrees to sell, assign and transfer to Purchaser, and
Purchaser agrees to purchase from Seller, all of Seller’s right, title and
interest in and to the Assets.

 

1.2          Purchase Price and Payment of Purchase Price.  The purchase price
(the “Purchase Price”) for the Assets shall be as follows:

 

(a)           For the Licenses, the sum of Fifteen Thousand Dollars ($15,000);
and

 

(b)           For the Liquor, an amount equal to Seller’s invoiced cost for all
unopened items as of the Closing Date.

 

Concurrently with Purchaser’s and Seller’s execution of this Agreement, and as a
condition precedent to the effectiveness hereof, Purchaser shall deposit with
Escrow Holder its demand promissory note in an amount equal to Fifteen Thousand
Dollars ($15,000.00).  On the Liquor Delivery Date, Purchaser shall redeem the
demand promissory note by the payment of the balance of the Purchase Price to
Escrow Holder

 

II.

 

CONDITION TO PURCHASER’S OBLIGATIONS TO PURCHASE

 

Purchaser’s obligation to purchase the Licenses is subject to the satisfaction
of each of the following conditions:

 

(a)           Except as arising from the acts or omissions of Purchaser, the
approval of the Department of Alcohol Beverage Control (the “Department”) of the
transfer of the Licenses from Seller to Purchaser; and

 

(b)           The performance by the Hotel Owner of all of its obligations under
the Hotel Purchase Agreement.

 

III.

 

CONDITIONS TO SELLER’S OBLIGATIONS TO SELL

 

Seller’s obligation to transfer the Assets to Purchaser is subject to the
satisfaction of each of the following conditions:

 

(a)           The deposit by Purchaser with Escrow Holder of the Purchase Price
in cash or current funds on the Closing Date;

 

2

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(b)           The performance of Purchaser of all of its obligations under the
Hotel Purchase Agreement; and

 

(c)           As to the Licenses only, the approval by the Department of the
transfer of the Licenses from Seller to Purchaser.

 

IV.

 

CLOSING AND DELIVERY OF THE ASSETS

 

4.1          Opening of Escrow; and Close of Escrow.  Concurrently herewith,
(a) an escrow is being opened with Bay Commercial Bank (“Escrow Holder”) through
which the purchase and sale contemplated hereby shall be consummated, and (b) a
fully executed copy of this Agreement is being deposited with, and countersigned
by, Escrow Holder.  This Agreement shall constitute escrow instructions to
Escrow Holder and Escrow Holder is hereby appointed and designated to act as an
escrow holder and is authorized and instructed to follow the escrow instructions
set forth herein.  Escrow shall close on the first business day following the
date upon which the Department shall have approved the transfer of the Licenses
from Seller to Purchaser (the “Closing Date”), but in no event earlier than the
closing under the Hotel Purchase Agreement, and in no event later than the date
one hundred eighty (180) days after the closing under the Hotel Purchase
Agreement.  If the Closing Date does not occur within one hundred eighty (180)
days after the closing under the Hotel Purchase Agreement, or if the Department
terminates or fails to renew the temporary liquor license(s) which Purchaser
obtains without approving the transfer of the Licenses, then on such termination
date, (i) if the reason therefor is the result of the actions or omissions of
Seller, Seller shall be deemed in default hereunder and, at the option of
Purchaser, (A) (1) all amounts deposited by Purchaser hereunder  (including the
demand promissory note referenced in Section 1.2 above), and all interest earned
thereon, less any costs, expenses or fees to be paid by  Purchaser hereunder,
shall be returned to Purchaser, (2) Purchaser shall be relieved of its
obligations hereunder, and (3) this Agreement shall be deemed null and void and
of no further force or effect, or (B) Purchaser can proceed to acquire the
Liquor, in which case Seller shall unconditionally surrender the Licenses to the
Department, and Purchaser may pursue its rights and remedies against Seller, and
(ii) if the reason therefor is the result of the actions or omissions of
Purchaser, then (A) all amounts deposited by Purchaser hereunder and all
interest earned thereon, less any costs, expenses or fees to be paid hereunder,
shall be released to Seller, (B) Purchaser shall proceed to acquire the Liquor,
but not the Licenses, and Purchaser shall redeem the demand promissory note as
required by Section 1.2 above, and (C) Seller and Purchaser shall automatically
be relieved of any further of their respective obligations hereunder with
respect to the Licenses.

 

Notwithstanding the foregoing, however, if, despite the good faith efforts of
Seller and Purchaser, and if not otherwise arising from the acts or omissions of
Purchaser, the Department fails to consent to the transfer of the Licenses or
refuses to issue a temporary liquor license prior to the Closing Date, Seller
agrees to enter into an interim liquor management agreement with Seller, on
customary and reasonable terms (including indemnification and expense
reimbursement provisions) for a period not to exceed ninety (90) days.

 

3

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

 

4.2          Disbursements and Actions by Escrow Holder.  On the Closing Date,
Escrow Holder shall pay out of the Purchase Price the claims of the bona fide
creditors of Seller who file their claims with Escrow Holder before Escrow
Holder is notified by the Department of its approval of the transfer of the
Licenses or, if the Purchase Price is not sufficient to pay the claims in full,
Escrow Holder shall distribute the Purchase Price as follows in accordance with
Section 24074 of the California Business and Professions Code (the “Code”):

 

(i)            First, to the United States for claims based on income or
withholding taxes; and thereafter for claims based on any tax other than
specified in Section 24049 of the Code;

 

(ii)           Second, to the payment of claims for wages, salaries or fringe
benefits of employees of Seller earned or accruing prior to the sale, transfer,
or opening of an escrow for the sale thereof;

 

(iii)          Third, to the payment of claims of secured creditors to the
extent of the proceeds which arise from the sale of the security;

 

(iv)          Fourth, to the payment of claims on mechanics’ liens;

 

(v)           Fifth, to the payment of escrow fees and the payment of claims for
prevailing brokerage fees for services rendered and claims for reasonable
attorneys’ fees for services rendered;

 

(vi)          Sixth, to the payment of claims for goods sold and delivered to
Seller for resale at Seller’s licensed premises and the payment of claims for
services rendered, performed, or supplied in connection with the operation of
the licensed business, and to the payment of claims of a landlord, to the extent
of proceeds on past due rent;

 

(vii)         Seventh, to the payment of other claims which have been reduced to
court-ordered judgments, including claims for court-ordered support of a minor
child; and

 

(viii)        Eighth, to the payment of all other claims.

 

The payment shall apply only to claims arising prior to the Close of Escrow (as
referenced in the Hotel Purchase Agreement).  The payment of these claims shall
be paid pro rata if sufficient assets are not available for the payment of the
claims in full.  If Seller disputes any claim, Escrow Holder shall notify the
claimant, and the amount or pro rata amount thereof shall be retained by Escrow
Holder for a period of twenty-five (25) days, and if not attached, shall be paid
to Seller.  Escrow Holder shall make the payment or distribution within one
(1) business day after the completion of the transfer of the Licenses.  After
the payment of all claims as provided herein, Escrow Holder shall distribute any
remaining portion of the Purchase Price to Seller.  Upon such actions, the
provisions of escrow established hereby shall have been fulfilled.

 

4.3          Additional Duties of Escrow Holder.  Escrow Holder shall comply
with all provisions of Section 24074.1 of the Code including, without
limitation, the following:  (i) Escrow Holder shall acknowledge receipt of each
claim for a creditor not more than ten (10)

 

4

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

 

days after, and shall give written notice thereof to each party hereto
immediately after, the receipt by Escrow Holder of such claim, and (ii) Escrow
Holder shall, not more than ten (10) days after the Licenses have been
transferred and prior to the distribution of the Purchase Price, advise each
creditor who filed a claim against the escrow established hereunder whether or
not there are sufficient assets in the escrow to pay all creditors in full.  If
the assets in the escrow are sufficient to pay all creditors in full, Escrow
Holder shall also advise each creditor of the date on or before which payment
will be made.  If there are not sufficient assets to pay all creditors in full,
Escrow Holder shall then advise each creditor who filed the claim the
following:  (A) the total assets placed in escrow with it and the nature of each
assets; (B) the name of each creditor who filed a claim against the escrow and
the amount of said claim; (C) the amount Escrow Holder proposes to pay to each
creditor; and (D) the date on or before which said amount will be paid to the
creditors.

 

4.4          Rights of Escrow Holder.  If, without fault on the part of Escrow
Holder, any controversy or litigation with respect to the subject matter hereof
arises, the parties hereto shall jointly and severally hold Escrow Holder free
and harmless from and against any and all loss, damage, liability or expense,
including, without limitation, reasonable attorney’s fees, to which Escrow
Holder may be put or which it may incur by reason of, or in connection with,
such controversy or litigation.  If conflicting demands are made upon Escrow
Holder with respect to the subject matter hereof, the parties hereto expressly
agree that Escrow Holder shall have the absolute right, at its election, to do
either, or both, of the following:

 

(i)            Withhold and stop all proceedings and performance of the
transactions contemplated hereby and await settlement of the controversy or
litigation by filing appropriate legal proceedings or otherwise, as it may
require; or

 

(ii)           File suit for declaratory relief or interpleader and obtain an
order from the court requiring the parties to interplead and litigate in such
court their several claims and rights among themselves.  Upon the filing of any
such declaratory relief or interpleader suit, Escrow Holder shall thereupon be
fully released and discharged from all obligations to further perform any or all
duties or obligations imposed by this Agreement.

 

4.5          Closing Costs.  Purchaser shall pay all escrow fees and related
costs of Escrow Holder.  Purchaser shall pay all transfer fees to be paid in
connection with the transfer of the Licenses from Seller to Purchaser. 
Purchaser shall pay all sales and use taxes payable in connection with the
transfer of the Assets to Purchaser.  Except to the extent otherwise
specifically provided in this Section 4.5, all other expenses incurred by Seller
and Purchaser with respect to the negotiation, documentation and closing of this
transaction, including, without limitation, Purchaser’s and Seller’s attorneys’
fees, shall be borne and paid exclusively by the party incurring and/or
responsible for the same.

 

4.6          Cancellation Fees and Expenses.  In the event the escrow created
with Escrow Holder terminates because of the nonsatisfaction of any condition or
for a reason other than the default of Purchaser or Seller under this Agreement,
the cancellation charges required to be paid to Escrow Holder shall be borne
equally by Seller and Purchaser.  All other charges shall be borne by the party
incurring the same.

 

5

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4.7          Delivery of Liquor.  On the later of (i) the issuance to Purchaser
of the temporary liquor license (which shall not occur earlier than the closing
under the Hotel Purchase Agreement), or (ii) the Close of Escrow (as defined in
the Hotel Purchase Agreement) under the Hotel Purchase Agreement, Seller shall
deliver to Purchaser a Bill of Sale for the Liquor, and shall release possession
thereof to Purchaser.  The date upon which the Liquor are delivered to Purchaser
in accordance with the provisions of this Section 4.7 is hereinafter referred to
as the “Liquor Delivery Date.”

 

V.

 

SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Seller shall cooperate with Purchaser in executing such applications and
statements, and shall take such actions as may be reasonably required by the
Department in order to effectuate the transfer of the Assets from Seller to
Purchaser.  Seller shall cooperate, as may be necessary or appropriate, to
enable Escrow Holder to complete all aspects of bulk sale requirements under
applicable law, and as contemplated by Sections 4.2 and 4.3 above, so as to
convey a clear title to the Assets to Purchaser.

 

VI.

 

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Purchaser, at its sole cost, shall execute such applications and statements and
take such actions as may be required by the Department in order to effectuate
the transfer of the Liquor and the Licenses from Seller to Purchaser.

 

VII.

 

COOPERATION

 

The parties agree to cooperate in good faith with one another to the extent
practicable to arrange concurrent closings of the transactions contemplated by
this Agreement and the Hotel Purchase Agreement so as to avoid bookkeeping,
operational and other difficulties that are likely to be experienced in the
event of nonconcurrent closings.  In the event the transaction contemplated by
this Agreement closes, or is prepared to close, but the transaction contemplated
by the Hotel Purchase Agreement does not close or is canceled, Seller and
Purchaser agree that Escrow Holder shall hold in escrow the temporary liquor
license(s) issued to Purchaser until the earlier of (a) either Seller or
Purchaser, by written notice delivered to the other within ten (10) business
days following failure of the transaction under the Hotel Purchase Agreement to
close, elects to obligate both Seller and Purchaser to take immediate steps to
rescind the transaction under this Agreement and to restore the parties to their
original positions as soon as reasonably possible, or (b) the transaction
specified in the Hotel Purchase Agreement is consummated.  In the event the
Hotel Purchase Agreement is prepared to close, but the transaction contemplated
this Agreement is not, then Seller shall, upon the request of Purchaser and
until to temporary Liquor License is issued to Purchaser, manage the liquor
operations at the Hotel pursuant to the

 

6

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

 

terms of a separate liquor management agreement to be executed (as described in
Section 4.1 hereof).

 

VIII.

 

BROKER’S COMMISSION

 

Neither party hereto has had any contact or dealing regarding the matter of this
transaction, through any broker or other person who can claim a right to a
commission or finder’s fee as a procuring cause of the sale contemplated
herein.  In the event that any broker or finder perfects a claim for a
commission or finder’s fee, the party to whom the broker or finder makes a claim
shall indemnify, save harmless and defend the other party from said claim and
all costs and expenses (including reasonable attorneys’ fees) incurred by the
other party in defending against the same.

 

IX.

 

NOTICES

 

Except as otherwise expressly provided in this Agreement, all notices, requests,
demands and other communications hereunder (“Notice”) shall be in writing and
shall be deemed delivered by (i) hand delivery upon receipt, (ii) registered
mail or certified mail, return receipt requested, postage prepaid, upon delivery
to the address indicated in the Notice, (iii) by confirmed telecopy or facsimile
transmission when sent, or (iv) overnight courier (next business day delivery)
on the next business day at 12:00 noon, whichever shall occur first, as follows:

 

To
Seller:                                                                                                                    
MBP LAND, LLC

Attn:  Manager
620 Newport Center Drive
Fourteenth Floor
Newport Beach, CA 92660

 

With a Copy
to:                                                                                
Tarsadia Investments, LLC

Attention: Edward G. Coss, Esq.
620 Newport Center Drive
Fourteenth Floor
Newport Beach, CA 92660

 

To
Purchaser:                                                                                            

Attn:                                           

 

 

7

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

 

To Liquor Escrow Agent:                                 Chloe A. Flowers

Senior Vice President - Escrow Services
Bay Commercial Bank
3895 East Castro Valley Blvd., #A
Castro Valley, CA  94552
Fax: (510) 836-8979

 

Any correctly addressed Notice that is refused, unclaimed or undelivered because
of an act or omission of the party to be notified shall be considered to be
effective as of the first day that the Notice was refused, unclaimed or
considered undeliverable by the postal authorities, messenger or overnight
delivery service.  The parties hereto shall have the right from time to time,
and at any time, to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of
America, by giving to the other party at least thirty (30) days prior written
notice thereof, in the manner prescribed herein; provided, however, that to be
effective, any such change of address must be actually received (as evidenced by
a return receipt).

 

X.

 

MISCELLANEOUS PROVISIONS

 

10.1        Further Assurances.  Purchaser and Seller each agree to use their
respective best efforts promptly to proceed with respect to the transactions
contemplated by this Agreement.  Whenever and as reasonably requested so to do
by the other party, each party hereto shall execute, acknowledge and deliver, or
cause to be executed, acknowledged or delivered, any and all such further
applications, conveyances, assignments, instruments, approvals and consents and
other further instruments and documents as may reasonably be necessary,
expedient or proper in order to complete the transfer of the Licenses, and shall
do any and all other acts as so requested in order to carry out the intent and
purpose of this Agreement  Without limiting the generality of the foregoing,
Seller hereby agrees to cooperate fully with Purchaser in obtaining the approval
from the Department of the sale of the Licenses including, without limitation,
promptly upon the request of Purchaser, executing and delivering the required
Applications for Alcoholic Beverage License (ABC Form 211), the Requests to
Surrender or Cancel License (ABC Form 231), and the Notices of Withdrawal of
Application (ABC Form 209) with respect to the Licenses, which forms are
necessary in order for Purchaser to obtain a temporary license from the
Department.

 

10.2        Covenants, Agreements, Representations and Warranties Survive
Closing.  Except as otherwise set forth in this Agreement, all of the covenants,
representations and agreements of Seller and Purchaser set forth in this
Agreement shall survive the Close of Escrow.

 

10.3        Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California.  If any legal action is
necessary to enforce the terms and conditions of this Agreement, the parties
hereby agree that the Superior Court of California, County of Orange, shall be
the sole jurisdiction and venue for the bringing of the action.

 

8

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

 

10.4        Professional Fees and Costs.  If a lawsuit, arbitration or other
proceedings are instituted by any party to enforce any of the terms or
conditions of this Agreement against any other party hereto, the prevailing
party in such litigation, arbitration or proceedings shall be entitled, as an
additional item of damages, to such reasonable attorneys’ and other professional
fees and costs (including, but not limited to, witness fees), court costs,
arbitrators’ fees, arbitration administrative fees, travel expenses, and other
out-of pocket expenses or costs of such other proceedings, whether or not such
litigation or proceedings proceed to a final judgment or award.  For the
purposes of this section, any party receiving an arbitration award or a judgment
for damages or other amounts shall be deemed to be the prevailing party,
regardless of amount of the damage awarded or whether the award or judgment was
based on all or some of such party’s claims or causes of action, and any party
against whom a lawsuit, arbitration or other proceeding is instituted and later
voluntarily dismissed by the instituting party shall be deemed to be the
prevailing party.

 

10.5        Exhibits and Schedules a Part of this Agreement.  The Exhibits and
Schedules attached hereto are incorporated in this Agreement by reference and
are hereby made a part hereof.

 

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

 

10.7        Assignment.  Purchaser may not, and shall have no right or power to,
assign, convey and otherwise transfer all or any part of its interest or rights
herein without the prior written consent of Seller, which consent may be
withheld in Seller’s sole discretion, and any attempted assignment without
Seller’s written consent shall be void, invalid and unenforceable. 
Notwithstanding the foregoing, however, Purchaser may assign and transfer all of
its rights and obligations under this Agreement to one (1) or more wholly owned
subsidiary(ies) of Purchaser, or to an entity that is one hundred percent (100%)
owned by an entity that, directly or indirectly, owns one hundred percent (100%)
of Purchaser; provided, however, that Purchaser shall not be released of its
obligations under this Agreement as a result of any such assignment.  Any
assignment as permitted in the preceding sentence shall be conditioned upon
Purchaser delivering to Seller and Escrow Holder, within forty-eight (48) hours
of any such assignment, Notice thereof, together with copies of the resolutions
of Purchaser and such assignee authorizing such assignment.  As a further
condition to any such permitted assignment, Purchaser shall cause its assignee
to executed an assignment and assumption agreement of Purchaser’s obligations
under this Agreement (in form and content reasonably and mutually acceptable),
and such other documents and instruments as Escrow Holder may reasonably
request.

 

10.8        Successors and Assigns.  Subject to the provisions of Section 10.7
above, this Agreement shall be binding upon and inure to the benefit of the
parties’ respective successors and permitted assigns.

 

9

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

 

10.9        Time Is of the Essence.  Time is of the essence of this Agreement.

 

10.10      Entire Agreement.  This Agreement, and Exhibits and Schedules and
other documents and instruments attached to or referenced herein, contain all
representations and the entire understanding and agreement between the parties
hereto with respect to the purchase of the Assets, and all prior and
contemporaneous understandings, agreements and representations, whether oral or
written, are entirely superseded.  No amendment of this Agreement shall be
binding unless in writing and executed by the parties hereto.

 

10.11      Waiver.  Failure or delay by either party to insist on the strict
performance of any covenant, term, provision or condition hereunder, or to
exercise any option herein contained, or to pursue any claim or right arising
herefrom, shall not constitute or be construed as a waiver of such covenant,
term, provision, condition, option, claim or right.  Any waiver by either party
shall be effective only if in a writing delivered to the other party hereto and
setting forth, with specificity, the covenant, term, provision or condition so
waived.  Any such waiver shall not constitute or be construed as a continuing
waiver of any subsequent default.

 

10.12      Headings.  The headings of this Agreement are for purposes of
convenience only and shall not limit or define the meaning of the provisions of
this Agreement.

 

10.13      Construction of Agreement.  The parties hereto have negotiated this
Agreement at length, and have had the opportunity to consult with, and be
represented by, their own competent counsel.  This Agreement is, therefore,
deemed to have been jointly prepared.  In determining the meaning of, or
resolving any ambiguity with respect to, any word, phrase or provision of this
Agreement, no uncertainty or ambiguity shall be construed or resolved against
any party under any rule of construction, including the party primarily
responsible for the drafting and preparation of this Agreement.

 

The words “herein,” “hereof,” “hereunder” and words of similar reference shall
mean this Agreement.  The words “this Agreement” include the exhibits, addenda
and any future written modifications, unless otherwise indicated by the
context.  All words in this Agreement shall be deemed to include any number or
gender as the context or sense of the Agreement requires.  The words “will,”
“shall” and “must” in this Agreement indicate a mandatory obligation.  The use
of the words “include,” “includes” and “including” followed by one or more
examples is intended to be illustrative and is not a limitation on the scope of
the description or term for which the examples are provided.  All dollar amounts
set forth in this Agreement are stated in United States dollars, unless
otherwise specified.  The words “day” and “days” refer to calendar days unless
otherwise stated.  The words “business day” refer to a day other than a
Saturday, Sunday or legal holiday on which banking institutions are closed.  The
words “month” and “months” refer to calendar months unless otherwise stated. 
The words “year” and “years” refer to calendar years unless otherwise stated.

 

10.14      No Public Disclosure.  Other than as expressly permitted or required
by the terms of this Agreement, neither party shall make any public disclosure
of the terms of this transaction without the prior written consent of the other
party prior to the Close of Escrow.

 

10

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

 

10.15      Facsimile Signatures.  The execution of this Agreement and all
Notices given hereunder and all amendments hereto, may be effected by facsimile
signatures, all of which shall be treated as originals; provided, however, that
the party receiving a document with a facsimile signature may, by Notice to the
other, require the prompt delivery of an original signature to evidence and
confirm the delivery of the facsimile signature.  Purchaser and Seller each
intend to be bound by its respective facsimile transmitted signature, and is
aware that the other party will rely thereon, and each party waives any defenses
to the enforcement of the Agreement, and documents, and any Notices delivered by
facsimile transmission.

 

11

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

 

XI.

 

EXECUTION

 

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day
and year first above written.

 

 

SELLER:

 

 

 

MBP LAND, LLC

 

a California limited liability company

 

 

 

BY:

MKP ONE, LLC, a California limited liability company, its Manager

 

 

 

 

By:

 

 

 

Name:

Mayur Patel

 

 

Title:

Member

 

 

 

PURCHASER:

 

 

 

                                                                                     ,

 

a                                                                      

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

ESCROW HOLDER HEREBY ACKNOWLEDGES
AND AGREES TO THE ESCROW INSTRUCTIONS
SET FORTH IN THIS AGREEMENT THIS          DAY
OF                           , 2012.

 

BAY COMMERICAL BANK

 

BY:

 

 

 

Chloe Flowers

 

 

12

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EXHIBIT “A”

 

LIQUOR LICENSES

 

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

 

STATE OF CALIFORNIA

DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

ALCOHOLIC BEVERAGE LICENSE

ON-SALE GENERAL EATING PLACE

 

VALID FROM

 

EXPIRES

 

MBP LAND LLC

 

May 01, 2012

620 NEWPORT CENTER DR

Apr 30, 2013

 

14TH FL

 

 

NEWPORT BEACH, CA 92660-5420

 

 

 

 

TYPE NUMBER DUP

 

 

 

 

 

47 465627

 

 

 

 

 

AREA CODE

 

RENEWAL

 

 

 

3710 10

 

 

 

 

 

 

BUSINESS ADDRESS

DBA: COURTYARD BY MARRIOTT

 

 

(IF DIFFERENT)

595 HOTEL CIR S

 

 

 

SAN DIEGO, CA 92108-3403

 

 

 

 

CONDITIONS

 

 

 

 

 

OWNERS:

MBP LAND LLC

7

 

 

 

[g291031mm15i001.jpg]

 

 

 

IMPORTANT INFORMATION

 

EFFECTIVE PERIOD: This license is effective only for the operating period shown
above.  A new license will be sent 4 to 6 weeks after the expiration date on
your license if payment is timely.  Your license status will remain in good
standing for 60 days after the expiration date if the renewal payment was
received timely.  To check the status of you license visit
http://www.abc.ca.gov/datport/LQSMenu.html.

 

RENEWAL NOTICES: Renewal notices are sent to premises address unless a specific
mailing address is requested. If a notice is not received 30 days before
expiration date shown above, contact the nearest ABC office.  To assure receipt
of notices, advise you local ABC office of any change in address.

 

RENEWAL DATES: It is the licensee’s responsibility to pay the required renewal
fee by the expiration date shown above.

 

A Penalty is charged for late renewal and the license can be automatically
revoked for failure to pay.

 

RENEWAL PAYMENTS: Renewal payments can be made in person by visiting your local
office or sent by mail to ABC Headquarters, 3927 Lennane Drive, Suite 100,
Sacramento, CA 95834.  If you do not have your renewal notice, your license
number and the reason for payment (ex. “renewal”) must be clearly indicated on
the check.  You can contact your local ABC office for your renewal fee amount.

 

SEASONAL LICENSES: It is the licensee’s responsibility to pay the required
renewal fee prior to the next operating period.

 

POSTING: Cover this license with glass or other transparent material and post it
on premises in a conspicuous place.

 

CONDITIONS: A copy of all applicable conditions must be kept on premises.

 

LICENSEE NAME: Only 10 names will be printed on each license. If there are more
names associated with the license, they will be indicated by “AND XX OTHERS”. 
All names are on file and available upon request from your local ABC office.

 

DBA: If you change your business name please notify you local ABC office.

 

If you have any questions regarding this license, contact your local ABC
office.  You can find the contact information for each district office at
http://www.abc.ca.gov/distmap.html.

 

NOTE: CONTACT YOUR LOCAL ABC OFFICE IF YOUR LICENSED PREMISES WILL BE
TEMPORARILY CLOSED FOR MORE THAN 15 DAYS OR WILL BE PERMANENTLY CLOSED.

 

License Serial#  384331

 

1

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

 

STATE OF CALIFORNIA

DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

ALCOHOLIC BEVERAGE LICENSE

PORTABLE BAR

 

VALID FROM

 

EXPIRES

 

MBP LAND LLC

 

May 01, 2012

620 NEWPORT CENTER DR

Apr 30, 2013

 

14TH FL

 

 

NEWPORT BEACH, CA 92660-6420

 

 

 

 

TYPE NUMBER DUP

 

 

 

 

 

68 465627 1

 

 

 

 

 

AREA CODE

 

RENEWAL

 

 

 

3710 10

 

 

 

 

 

 

BUSINESS ADDRESS

DBA: COURTYARD BY MARRIOTT

 

 

(IF DIFFERENT)

595 HOTEL CIR S

 

 

 

SAN DIEGO, CA 92108-3403

 

 

 

 

CONDITIONS

 

 

 

 

 

OWNERS:

MBP LAND LLC

7

 

 

 

[g291031mm15i001.jpg]

 

 

 

IMPORTANT INFORMATION

 

EFFECTIVE PERIOD: This license is effective only for the operating period shown
above.  A new license will be sent 4 to 6 weeks after the expiration date on
your license if payment is timely.  Your license status will remain in good
standing for 60 days after the expiration date if the renewal payment was
received timely.  To check the status of your license, visit
http://www.abc.ca.gov/datport/LQSMenu.html.

 

RENEWAL NOTICES: Renewal notices are sent to premises address unless a specific
mailing address is requested. If a notice is not received 30 days before
expiration date shown above, contact the nearest ABC office.  To assure receipt
of notices, advise you local ABC office of any change in address.

 

RENEWAL DATES: It is the licensee’s responsibility to pay the required renewal
fee by the expiration date shown above.

 

A Penalty is charged for late renewal and the license can be automatically
revoked for failure to pay.

 

RENEWAL PAYMENTS: Renewal payments can be made in person by visiting your local
office or sent by mail to ABC Headquarters, 3927 Lennane Drive, Suite 100,
Sacramento, CA 95834.  If you do not have your renewal notice, your license
number and the reason for payment (ex. “renewal”) must be clearly indicated on
the check.  You can contact your local ABC office for your renewal fee amount.

 

SEASONAL LICENSES: It is the licensee’s responsibility to pay the required
renewal fee prior to the next operating period.

 

POSTING: Cover this license with glass or other transparent material and post it
on premises in a conspicuous place.

 

CONDITIONS: A copy of all applicable conditions must be kept on premises.

 

LICENSEE NAME: Only 10 names will be printed on each license. If there are more
names associated with the license, they will be indicated by “AND XX OTHERS”. 
All names are on file and available upon request from you local ABC office.

 

DBA: If you change your business name please notify you local ABC office.

 

If you have any questions regarding this license, contact your local ABC
office.  You can find the contact information for each district office at
http://www.abc.ca.gov/distmap.html.

 

NOTE: CONTACT YOUR LOCAL ABC OFFICE IF YOUR LICENSED PREMISES WILL BE
TEMPORARILY CLOSED FOR MORE THAN 15 DAYS OR WILL BE PERMANENTLY CLOSED.

 

License Serial#  384331

 

2

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

 

SCHEDULE “E”

 

DUE DILIGENCE MATERIALS

 

1.              Annual profit and loss statements for the Hotel for 2009, 2010,
2011, and through June 30, 2012.

 

2.              Monthly profit and loss statements for the Hotel for 2009, 2010,
2011, and through June 30, 2012.

 

3.              Balance sheet for the Hotel for December 31, 2009, 2010, and
2011.

 

4.              Metrics and statistics such as occupancy, average rate, RevPAR,
etc. for the Hotel by month for the last three years including STR reports.

 

5.              Capital expenditures for the Hotel the period of January 1, 2009
through Dec. 31, 2011.

 

6.              Real and personal property tax bills for 2009, 2010 and 2011 for
the Hotel, as well as copies of any open appeals that have been prepared or
filed.

 

7.              List of all insurance coverages for the Hotel.

 

8.              Seller’s preliminary report of title for the Hotel.

 

9.              Copies of all service contracts, leases, franchise or license
agreements, permits, management agreements, union agreements, and any
instruments with respect to the Hotel that Buyer is expected to assume.

 

10.       Copies of all trademarks, trade names, and copyrights of Seller for
the Hotel.

 

11.       Copies of all environmental reports performed by the Seller for the
Hotel, if my.

 

12.       Survey (as-built), legal description, architectural and engineering
plans and specifications, as well as a site plan with zoning specifications, for
the Hotel, in each case if any.

 

13.       2012 health, fire, building and elevator inspection reports for the
Hotel, if any.

 

14.       Physical inventories of supplies, consumables, and inventories for the
Hotel, if any.

 

15.       Employee census listing all employee positions, salary or wage scale,
benefits to which they are entitled, and accrued benefits including vacation and
any other payments, in each case for the Hotel.

 

16.       A summary of the health insurance program available to employees of
the Hotel.

 

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

 

18.       Most recent group bookings pace report for the Hotel.

 

19.       Detailed list of advanced reservations and bookings for the Hotel,
including name of party, deposit received, rate guaranteed, dates, status, and
other pertinent information. Include copies of all contracts relative to future
definite group bookings and corporate and locally negotiated rates.

 

20.       List of all purveyors and sources of supplies and services for the
Hotel.

 

21.       Details of any pending or expected litigation as well as claims where
litigation has not commenced including all employee claims with respect to the
Hotel.

 

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

 

22.       List of all tenants, rent rolls, deposits, and terms of lease for the
Hotel.

 

23.       Copies of any Seller contemplated renovation expansion or
redevelopment programs, including scope of work, estimate cost of
implementation, design schemes or programs, architectural renderings and any
other reports related to a contemplated renovation, in each case for the Hotel.

 

24.       Management organization chart for all salaried employees, with
notations identifying exempt and non-exempt employees, for the Hotel.

 

25.       Copies of the 2010, 2011 and 2012 business plans, including the
marketing, advertising and public relations plans for the Hotel.

 

26.       Market segmentation reports for each of the last three years showing
average rates and room nights for each market segment, if any, for the Hotel.

 

27.       Courtyard by Marriott PIP (if any) for the Hotel.

 

28.       Current first mortgage documents including Loan Agreement and
Promissory Note for the Hotel.

 

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

 

EXHIBIT “F”

 

DEED

 

(attached)

 

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

 

RECORDING REQUESTED BY

 

AND WHEN RECORDED MAIL THIS DEED AND, UNLESS
OTHERWISE SHOWN BELOW, MAIL TAX STATEMENT TO:

 

 

 

 

 

SPACE ABOVE IS FOR THE RECORDER’S USE

 

GRANT DEED

 

THE UNDERSIGNED GRANTOR(s) DECLARE(s)

 

DOCUMENTARY TRANSFER TAX is

$                                                 

    unincorporated area   X   City of San Diego

Parcel No.  444-110-05

 

IN ACCORDANCE WITH SECTION 11932 OF THE CALIFORNIA REVENUE & TAXATION CODE,
GRANTOR (DEFINED BELOW) HAS DECLARED THE AMOUNT OF TAX THAT IS DUE BY A SEPARATE
STATEMENT NOT BEING RECORDED WITH THIS GRANT DEED.

 

 

 

           computed on the full value of the interest or property conveyed; or

 

           computed on the full value less value of liens or encumbrances
remaining at the time of sale, and

 

 

 

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,

 

GASLAMP HOLDINGS, LLC, a California limited liability company

 

hereby GRANT(S) to
                                                                                ,
a Delaware limited liability company,

 

the following described real property (land and improvements) in the CITY OF SAN
DIEGO, State of California:

 

SEE EXHIBIT “A” ATTACHED HERETO AND INCORPORATED HEREIN BY THIS REFERENCE.

 

subject to all covenants, conditions, easements, restrictions, rights of way,
and other exceptions to title of record.

 

595 Hotel Circle South

 

San Diego, CA 92108

 

 

 

Dated                                   , 2012

GASLAMP HOLDINGS, LLC,

 

a California limited liability company

 

 

 

 

BY:

 

 

NAME:

 

 

TITLE:

 

 

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

 

ACKNOWLEDGMENTS

 

STATE OF                         )

                                             ) ss

COUNTY OF                     )

 

On                                                before me,
                                                      , a notary public in and
for said County and State, personally appeared
                                                                         personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s),
acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

 

 

 

(Signature of Notary Public

 

 

This area for notorial seal

 

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EXHIBIT “G”

 

BILL OF SALE

(595 Hotel Circle South, San Diego, CA 92108)

 

GASLAMP HOLDINGS, LLC, a California limited liability company (“Seller”), in
consideration of the purchase price paid by
                                                                , a Delaware
limited liability company (“Purchaser”), as set forth in that certain Purchase
and Sale Agreement and Escrow Instructions dated                               ,
2012 (as amended and/or assigned, the “Agreement”), the terms of which are
incorporated herein by reference, the receipt and sufficiency of such
consideration being hereby acknowledged, has sold and assigned, and by this Bill
of Sale does hereby grant, assign and set over to Purchaser, its
representatives, successors and assigns, without representation or warranty
except as expressly set forth in the Agreement, and subject to the terms of the
Agreement, all of the following assets located at 595 Hotel Circle South, San
Diego, California, on which are constructed such improvements in, by and through
which is operated a hotel and hospitality business commonly known as “Courtyard
by Marriott - Mission Valley:”

 

The Personal Property (as defined in the Agreement); and

 

The Inventory (as defined in the Agreement).

 

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

 

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

 

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

 

IN WITNESS WHEREOF, this Bill of Sale is executed this          day of
                          , 2012.

 

 

GASLAMP HOLDINGS, LLC,

 

a California limited liability company

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

EXHIBIT “H”

 

ASSIGNMENT OF INTANGIBLE PROPERTY
(595 Hotel Circle South, San Diego, CA 92108)

 

This ASSIGNMENT OF INTANGIBLE PROPERTY (the “Assignment”) is dated the         
day of                               , 2012, and is made by and between GASLAMP
HOLDINGS, LLC, a California limited liability company (“Assignor”), and
                                                    , a Delaware limited
liability company (“Assignee”).

 

RECITALS

 

A.            Assignor and Assignee have previously entered into that certain
Purchase and Sale Agreement and Escrow Instructions dated
                            , 2012 (as amended and/or assigned, the
“Agreement”), pursuant to which Assignor has agreed to sell to Assignee, and
Assignee has agreed to purchase from Assignor, all of Assignor’s right title and
interest in and to that certain real and personal property (as defined in the
Agreement) located at and more commonly known as 595 Hotel Circle South, San
Diego, California, on which are constructed such improvements in, by and through
which is operated a hotel and hospitality business commonly known as “Courtyard
by Marriott - Mission Valley” (the “Hotel”).

 

B.            The effectiveness of this Assignment is dependent upon the sale,
transfer and delivery of the Property to Assignee pursuant to the Agreement, and
will not supersede any of the obligations of the parties under the Agreement.

 

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

 

AGREEMENT

 

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

 

I

 

ASSIGNMENT

 

1.1          Effective Date.  This Assignment shall take effect at and as of the
date hereof, and incorporates by this reference all covenants and obligations of
Assignor and Assignee contained in the Agreement with respect to the Intangible
Property which imply or require performance on and after the date hereof.

 

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

 

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

 

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

 

1.4          Further Assurances.  Whenever and so often as requested by a party,
the other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Assignment.

 

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

 

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

 

II

 

COUNTERPARTS

 

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

 

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

 

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

 

III

 

EXECUTION

 

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

 

 

ASSIGNOR:

 

 

 

GASLAMP HOLDINGS, LLC,

 

a California limited liability company

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

ASSIGNEE:

 

 

 

                                                                                                          ,

 

a Delaware limited liability company

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

EXHIBIT “I”

 

ASSIGNMENT AND ASSUMPTION OF CONTRACTS
(595 Hotel Circle South, San Diego, CA 92108)

 

This ASSIGNMENT AND ASSUMPTION OF CONTRACTS (the “Assignment”) is dated the
         day of                               , 2012, and is made by and between
GASLAMP HOLDINGS, LLC, a California limited liability company (“Assignor”), and
                                                      , a Delaware limited
liability company (“Assignee”).

 

RECITALS

 

A.            Assignor and Assignee are parties to that certain Purchase and
Sale Agreement and Escrow Instructions dated                           , 2012
(as amended and/or assigned, the “Agreement”) pursuant to which Assignor has
agreed to sell to Assignee, and Assignee has agreed to purchase from Assignor,
all of Assignor’s right title and interest in and to that certain Property (as
defined in the Agreement) located at and more commonly known as 595 Hotel Circle
South, San Diego, California, on which are constructed such improvements in, by
and through which is operated a hotel and hospitality business commonly known as
“Courtyard by Marriott - Mission Valley” (the “Hotel”).

 

B.            The Hotel and/or the Property are the subject of certain contracts
and leases as referenced in the Agreement (collectively the “Contracts”), used
and/or executed in connection with the ownership and/or operation of the Hotel
and/or the Property.

 

C.            The effectiveness of this Assignment is dependent upon
consummation of the sale, transfer and delivery of the Property to Assignee
pursuant to the Agreement, and will not supersede any of the obligations of the
parties under the Agreement.

 

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

 

AGREEMENT

 

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

 

I

 

ASSIGNMENT

 

1.1          Effective Date.  This Assignment shall take effect at and as of the
date hereof, and incorporates by this reference all covenants and obligations of
Assignor and Assignee contained in the Agreement with respect to the Contracts
which imply or require performance on and after the date hereof.

 

1.2          Assignment of Contracts.  Assignor hereby assigns and transfers to
Assignee all of its rights and obligations, in, under and to all of the
Contracts, without representation or

 

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

 

warranty except as expressly set forth in the Agreement and subject to the terms
of the Agreement, and delegates to Assignee all of its duties thereunder.

 

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

 

1.4          Indemnification.  Assignor agrees to indemnify and hold Assignee
harmless from and against all damages, losses, claims and liabilities (including
attorneys’ fees) pertaining to or arising in connection with the Contracts from
actions or omissions occurring prior to the date hereof.  Assignee agrees to
indemnify and hold Assignor harmless from and against all damages, losses,
claims and liabilities (including attorneys’ fees) pertaining to or arising in
connection with the Contracts from actions or omission occurring on or after the
date hereof.

 

1.5          Further Assurances.  Whenever and so often as requested by a party,
the other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Assignment.

 

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

 

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

 

II

 

COUNTERPARTS

 

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

 

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

 

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

 

III

 

EXECUTION

 

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

 

 

ASSIGNOR:

 

 

 

GASLAMP HOLDINGS, LLC,

 

a California limited liability company

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

ASSIGNEE:

 

 

 

,

 

a Delaware limited liability company

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

EXHIBIT “J-1”

 

AUDIT REQUEST MATERIALS

 

3-05 Audit

 

Date

 

 

 

Schedule of Requests

 

Received

 

Comments

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Internal Controls

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

2                 Narrative for the night auditor packet process

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

General

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

a.                                      Organization chart (Review only in
Seller’s office)

 

 

 

 

 

b.                                      LLC Agreement (Review only in Seller’s
office)

 

 

 

 

 

c.                                       Articles of Organization

 

 

 

 

 

d.                                      Management agreement

 

 

 

 

 

e.                                       Franchise agreement

 

 

 

 

 

f.                                        Loan Agreement, Promissory Agreement
and Guaranties

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

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

 

3                 Copies of all December 2010 and 2011 bank statements

 

 

 

 

 

 

 

 

 

 

 

4                 Copies of all January 2011 and 2012 bank statements

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Notes receivable (if applicable)

 

 

 

 

 

 

 

 

 

 

 

1                 Rollforward of notes receivable during the period under audit
detailing beginning balance, advances, repayments and ending balance as of
12/31/11

 

 

 

 

 

 

 

 

 

 

 

Revenue and receivables

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

4                 Listing of all sales tax and occupancy tax payments made
during 2010 and 2011. We will request copies of the corresponding tax returns as
necessary.

 

 

 

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Investment in hotels

 

 

 

 

 

 

 

 

 

 

 

1                 Detail of investment in hotels rollforward, including listing
of all additions and dispositions, for the period from inception through
12/31/11. We will request check copies and invoices for selected additions.

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Deferred loan costs, franchise fees or any other deferred charges

 

 

 

 

 

 

 

 

 

 

 

1                 Rollforward of deferred loan costs, franchise fees or any
other deferred charges from inception detailing the initial basis, amortization,
disposals and ending balance as 12/31/11. We will request additional support for
significant additions (if applicable).

 

 

 

 

 

 

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

 

Accounts payable and accrued expenses

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

5                 Copies of December2010 and 2011 sales tax and occupancy tax
returns

 

 

 

 

 

 

 

 

 

 

 

Long-Term Debt (if applicable)

 

 

 

 

 

 

 

 

 

 

 

1                 Rollforward of notes payable from inception detailing
beginning balance, advances, repayments and ending balance as of 12/31/11.

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Members’ Equity

 

 

 

 

 

 

 

 

 

 

 

1                 Rollforward schedule for equity detailing contributions,
distributions, income/loss, and other activity from inception to 12/31/11
(Review only in Seller’s office)

 

 

 

 

 

 

 

 

 

 

 

2                 Schedule/detail of contributions and distributions that
occurred during 2009, 2010 and 2011. If applicable, please provide check copies
or wire transfer statements so that we can verify the material owner
contributions/distributions. We will make selections for the material
contributions/distributions.(Review only in Seller’s office)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Interim Review

 

 

 

 

 

 

 

 

 

 

 

1                 Closed trial balance (in excel) for the nine months ended
9/30/11 and 9/30/12

 

 

 

 

 

 

 

 

 

 

 

2                 September 2011 and September 2012 Balance Sheets and
Statements of Operations (detailed by department)

 

 

 

 

 

 

 

 

 

 

 

3                 Bank reconciliations for all cash accounts as of 9/30/11 and
9/30/12

 

 

 

 

 

 

 

 

 

 

 

4                 Copies of all September 2011 and 2012 bank statements

 

 

 

 

 

 

 

 

 

 

 

5                 Copies of all restricted cash/escrow statements as of 9/30/11
and 9/30/12

 

 

 

 

 

 

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

 

6                 Rollforward of notes receivable detailing beginning balance at
1/1/12, advances, repayments and ending balance as of 9/30/12

 

 

 

 

 

 

 

 

 

 

 

7                 Guest ledger and accounts receivable aging detail (city
ledger) as of 9/30/11 and 9/30/12

 

 

 

 

 

 

 

 

 

 

 

8                 Detail of Reserves for bad debt with explanation of adequacy
as of 9/30/11 and 9/30/12

 

 

 

 

 

 

 

 

 

 

 

9                 Detail of investment in hotels rollforward, including listing
of all additions and dispositions, for the period from 1/1/12 through 9/30/12.
We will request check copies and invoices for selected additions.

 

 

 

 

 

 

 

 

 

 

 

10          Depreciation schedules as of 9/30/12 for all fixed assets

 

 

 

 

 

 

 

 

 

 

 

11          Rollforward of deferred loan costs, franchise fees or any other
deferred charges detailing the beginning balance at 1/1/12, amortization,
disposals and ending balance as 9/30/12. We will request additional support for
significant additions (if applicable).

 

 

 

 

 

 

 

 

 

 

 

12          Accounts payable aging detail as of 9/30/11 and 9/30/12.

 

 

 

 

 

 

 

 

 

 

 

13          Advance deposit ledger as of 9/30/11 and 9/30/12.

 

 

 

 

 

 

 

 

 

 

 

14          Reconciliations of accrued expense accounts as of 9/30/11 and
9/30/12, including accrued vacation, accrued payroll, accrued other, etc.

 

 

 

 

 

 

 

 

 

 

 

15          Rollforward schedule for equity detailing contributions,
distributions, income/loss, and other activity from1/1/12 to 9/30/12

 

 

 

 

 

 

 

 

 

 

 

16          Copies of all real estate tax bills paid during 2012.

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

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

 

EXHIBIT “J-2”

 

FORM MANAGEMENT REPRESENTATIONS LETTER

 

REPORT DATE

 

McGladrey LLP

1 South Wacker Drive

Suite 800

Chicago, IL 60606

 

In connection with your audits of the balance sheet of [COMPANY] (the “Company”)
as of December 31, 2011 and 2010, and the related statements of income, changes
in members’ equity and cash flows for the years then ended, we confirm that we
are responsible for the fair presentation in the financial statements of
financial position, results of operations, and cash flows in conformity with
accounting principles generally accepted in the United States of America.

 

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

 

1.              The financial statements referred to above are fairly presented
in conformity with accounting principles generally accepted in the United States
of America.

 

2.              We have made available to you all financial records and related
data and have responded truthfully to all inquiries made to you during your
audits.

 

3.              We have no knowledge of fraud or suspected fraud affecting the
Company involving:

 

a.              Management.

 

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

 

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

 

4.              We acknowledge our responsibility for the design and
implementation of programs and controls to provide reasonable assurance that
fraud is prevented and detected.

 

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

 

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

 

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

 

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

 

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

 

a.              Related-party relationships, transactions, and related amounts
receivable or payable, including sales, purchases, loans, transfers, leasing
arrangements, and guarantees, all of which have been recorded in accordance with
the economic substance of the transactions.

 

b.              Liens or encumbrances on assets and pledges of assets.

 

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

 

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

 

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

 

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

 

11.       We are responsible for making the accounting estimates included in the
[consolidated] [combined] financial statements.  Those estimates reflect our
judgment based on our knowledge and experience about past and current events and
our assumptions about conditions we expect to exist and courses of action we
expect to take.

 

12.       There are no:

 

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

 

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

 

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

 

d.              Derivative financial instruments.

 

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

 

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

 

g.               Lines of credit or similar arrangements.

 

h.              Agreements to repurchase assets previously sold.

 

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

 

j.                 Investments in debt and equity securities.

 

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

 

l.                  All leases and material amounts of rental obligations under
long-term leases.

 

13.       We are not aware of any pending or threatened litigation, claims, or
assessments, or unasserted claims or assessments that are required to be accrued
or disclosed in the financial statements in accordance with the Contingencies
Topic of the FASB Accounting Standards Codification, and we have not consulted a
lawyer concerning litigation, claims, or assessments.

 

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

 

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

 

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

 

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

 

COMPANY

 

 

 

 

 

 

 

[NAME OF CHIEF EXECUTIVE OFFICER AND TITLE OR EQUIVALENT]

 

 

 

 

 

 

 

[NAME OF CHIEF FINANCIAL OFFICER AND TITLE OR EQUIVALENT]

 

 

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EXHIBIT 7.2.14

 

PERMITS

 

County of San Diego Air Polution Control District - Certificate of Registration

 

County of San Diego Air Polution Control District - Permit to Operate

 

City of San Diego Public Utilities Department - FEWD Permit

 

Conveyance Permit - 1 Left

 

Conveyance Permit - 2 Right

 

Conveyance Permit - 3 Left

 

Conveyance Permit - 4 Right

 

Conveyance Permit - Serv 5

 

Environmental Health Permit - Pool

 

Environmental Health Permit - Restaurant Food Facility

 

Department of Environmental Health Unified Program Facility Permit

 

Department of Alcoholic Beverage Control Type 68

 

Department of Alcoholic Beverage Control Type 47

 

California State Board of Equalization Sellers Permit

 

City of San Diego Fire Rescue Department

 

City of San Diego Business Tax Certificate

 

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