Exhibit 10.8

 

PURCHASE AND SALE AGREEMENT

 

between

 

FWH Memphis Beale Street, LLC, the SELLER

 

 

and

 

CWI Beale Street Hotel, LLC, the BUYER

 

Dated as of December 7, 2012

 

Hampton Inn & Suites Memphis – Beale Street

175 Peabody Place, Memphis, TN 38103

 

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TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS

2

SECTION 1.1.

Defined Terms

2

ARTICLE II. SALE, PURCHASE PRICE AND CLOSING

8

SECTION 2.1.

Sale of Asset

8

SECTION 2.2.

Purchase Price

11

SECTION 2.3.

Earnest Money

11

SECTION 2.4.

The Closing

12

ARTICLE III. STUDY PERIOD

13

SECTION 3.1.

Study Period

13

SECTION 3.2.

Title and Survey

14

SECTION 3.3.

Environmental Audit

15

SECTION 3.4.

Franchise

16

SECTION 3.5.

Assumption and Assignment of Leases

17

SECTION 3.6.

Buyer Audit Requirements

17

SECTION 3.7.

Buyer’s Due Diligence Reports

18

ARTICLE IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER

19

SECTION 4.1.

General Seller Representations and Warranties

19

SECTION 4.2.

Representations and Warranties of the Seller as to the Asset

21

SECTION 4.3.

Covenants of the Seller Prior to Closing

23

SECTION 4.4.

Updating

25

ARTICLE V. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER

25

SECTION 5.1.

Formation; Existence

25

SECTION 5.2.

Power; Authority

26

SECTION 5.3.

No Consents

26

SECTION 5.4.

No Conflicts

26

SECTION 5.5.

Anti-Terrorism Laws

26

SECTION 5.6.

Bankruptcy

27

SECTION 5.7.

AS-IS, WHERE-IS

27

ARTICLE VI. CONDITIONS PRECEDENT TO CLOSING

28

SECTION 6.1.

Conditions Precedent to the Seller’s Obligations

28

SECTION 6.2.

Conditions to the Buyer’s Obligations

30

ARTICLE VII. CLOSING DELIVERIES

31

SECTION 7.1.

The Buyer Closing Deliveries

31

SECTION 7.2.

The Seller Closing Deliveries

32

ARTICLE VIII. TRANSACTION COSTS; RISK OF LOSS

33

SECTION 8.1.

Transaction Costs

33

SECTION 8.2.

Risk of Loss

34

ARTICLE IX. ADJUSTMENTS

35

SECTION 9.1.

Adjustments

35

SECTION 9.2.

Closing Statement

38

SECTION 9.3.

Accounts Receivable

39

ARTICLE X. INDEMNIFICATION

39

 

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SECTION 10.1.

Indemnification by the Seller

39

SECTION 10.2.

Indemnification by the Buyer

40

SECTION 10.3.

Limitations on Indemnification

40

SECTION 10.4.

Survival and Process

40

SECTION 10.5.

Holdback or Guaranty

41

SECTION 10.6.

Indemnification as Sole Remedy

41

ARTICLE XI. TERMINATION; REMEDIES

41

SECTION 11.1.

Termination

41

SECTION 11.2.

Termination; Remedies Upon Termination

41

ARTICLE XII. MISCELLANEOUS

42

SECTION 12.1.

Brokers

42

SECTION 12.2.

Confidentiality and Press Release

43

SECTION 12.3.

Escrow Provisions

44

SECTION 12.4.

Successors and Assigns; No Third-Party Beneficiaries

44

SECTION 12.5.

Assignment

45

SECTION 12.6.

Further Assurances

45

SECTION 12.7.

Notices

45

SECTION 12.8.

Entire Agreement

46

SECTION 12.9.

Amendments

46

SECTION 12.10.

No Waiver

47

SECTION 12.11.

Days

47

SECTION 12.12.

Governing Law

47

SECTION 12.13.

Severability

47

SECTION 12.14.

Section Headings

47

SECTION 12.15.

Counterparts; Execution by Facsimile

47

SECTION 12.16.

Rules of Construction

47

SECTION 12.17.

Waiver Of Jury Trial

48

SECTION 12.18.

Time is of the Essence

48

SECTION 12.19.

Bulk Sale; Occasional Sale

48

 

 

 

Schedules/Exhibits

 

 

 

 

 

Schedule A —

Land

 

Schedule B —

Diligence Materials List

 

Schedule 2.1(c) —

Excluded Property

 

Schedule 4.1(c) —

Consents

 

Schedule 4.1(d) —

Conflicts with Agreements

 

Schedule 4.1(e) —

Litigation—Seller

 

Schedule 4.2(a) —

Operating Agreements

 

Schedule 4.2(c) —

Tenant Leases

 

Schedule 4.2(e) —

Litigation

 

Schedule 4.2(j) —

Licenses and Permits

 

Exhibit A —

Form Assignment of Leases

 

Exhibit B —

Form Assignment of Contracts

 

Exhibit C —

Form Bill of Sale

 

Exhibit D —

Form Assignment of Intangibles

 

 

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Exhibit E —

Audit Request Materials

 

Exhibit F —

Form of Audit Representation Letter

 

 

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PURCHASE AND SALE AGREEMENT

 

This PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of the 7th day of
December, 2012 (the “Effective Date”) between FWH Memphis Beale Street, LLC, a
Delaware limited liability company (the “Seller”) and CWI Beale Street Hotel,
LLC, a Delaware limited liability company (the “Buyer”).

 

RECITALS

 

A.        The Seller owns (1) the leasehold interest in the land more
particularly described in Schedule A attached hereto pursuant to that certain
Lease Agreement dated December 31, 1998 between the Memphis Center City Revenue
Finance Corporation and Peabody Place Hotel Company GP (as successor to Peabody
Place Hotel Company, L.P.), as assigned to the Seller pursuant to that certain
Assignment and Assumption of Lease dated January 8, 2010 (the “Hotel Lease”),
together with all of the Seller’s right, title and interest in and to all
easements, covenants and other rights appurtenant thereto and all right, title
and interest of the Seller, if any, in and to any (a) land lying in the bed of
any street, road, avenue or alley, open or closed, in front of or adjoining
thereto and to the center line thereof, and (b) unpaid award or payment which
may hereafter be payable with respect to any taking by condemnation (the
“Land”); (2) the hotel facility located on the Land having an address at 175
Peabody Place, Memphis, TN 38103, and commonly known as the “Hampton Inn &
Suites Memphis – Beale Street”, together with all improvements and structures
constituting real property located on, over or under the Land (the “Hotel”);
(3) the leasehold interests in certain parking spaces and a transformer room,
access easements, and other rights and interests pursuant to that certain
Parking Garage Operations and Lease Agreement dated April 16, 1999 between
Peabody Place Hotel Company GP and Peabody Place L.P., as amended by that
certain First Amendment to Parking Garage Operations and Lease Agreement dated
February 1, 2001 and that certain Second Amendment to Parking Garage Operations
and Lease Agreement dated July 16, 2002, and as assigned to Seller and amended
pursuant to that certain Assignment, Assumption, Estoppel and Amendment of
Parking Garage Lease dated January 8, 2010 (the “Parking Lease”, and
collectively, with the Hotel and the Land, the “Property”); and (4) the
Asset-Related Property (as defined below).  The Land, the Hotel and the
Asset-Related Property shall be referred to herein as the “Asset”.

 

B.        The Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller, the Asset, all on the terms and conditions hereinafter
set forth.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

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ARTICLE I.

 

DEFINITIONS

 

SECTION 1.1.      Defined Terms. The capitalized terms used herein will have the
following meanings.

 

“Accounts Receivable” means all amounts which the Seller is entitled to receive,
whether billed or unbilled, from the operation of the Hotel, but are not paid,
as of the Closing, including, without limitation, charges accrued prior to the
Closing for the use or occupancy of any guest, conference, meeting or banquet
rooms or other facilities at the Hotel, or for the sale or provision of other
goods or services provided prior to the Closing.

 

“Act of Bankruptcy” shall mean if a party hereto shall (a) apply for or consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(b) admit in writing its inability to pay its debts as they become due, (c) make
a general assignment for the benefit of its creditors, (d) file a voluntary
petition or commence a voluntary case or proceeding under the Federal Bankruptcy
Code (as now or hereafter in effect), (e) be adjudicated bankrupt or insolvent,
(f) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts, (g) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary case or
proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), or
(h) take any corporate action for the purpose of effecting any of the foregoing;
or if a proceeding or case shall be commenced, without the application or
consent of a party hereto, in any court of competent jurisdiction seeking
(1) the liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of debts, of such party, (2) the appointment of a
receiver, custodian, trustee or liquidator of such party or of all or any
substantial part of its assets, or (3) other similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order (including an order for relief entered in an involuntary case under the
Federal Bankruptcy Code, as now or hereafter in effect) judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) consecutive days.

 

“Additional Deposit” shall mean Two Hundred and Fifty Thousand Dollars
($250,000).

 

“Affiliate Buyers” shall have the meaning assigned thereto in SECTION 6.1(f).

 

“Agreement” shall mean this Purchase and Sale Agreement, together with the
exhibits and schedules attached hereto, as the same may be amended, restated,
supplemented or otherwise modified.

 

“Anti-Money Laundering and Anti-Terrorism Laws” shall have the meaning assigned
thereto in SECTION 4.1(h)(i).

 

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“Acquisition Threshold” means that the Buyer and/or Affiliate Buyers,
respectively, and the Seller and/or Other Sellers, respectively, have satisfied
and/or are willing and able to satisfy all of the conditions to close the
acquisition of at least 4 of the 5 hotels under this Agreement and the Related
Agreements; provided, however, the Acquisition Threshold shall not be satisfied
unless it includes the Hampton Inn & Suites Memphis – Beale Street hotel located
in Memphis, Tennessee.

 

“Asset” shall have the meaning assigned thereto in “Recitals” paragraph A.

 

“Asset-Related Property” shall have the meaning assigned thereto in
SECTION 2.1(b).

 

“Assignment of Contracts” shall have the meaning assigned thereto in
SECTION 7.1(c).

 

“Assignment of Intangibles” shall have the meaning assigned thereto in
SECTION 7.2(f).

 

“Assignment of Leases” shall have the meaning assigned thereto in
SECTION 7.1(b).

 

“Audit Representation Letter” shall have the meaning assigned thereto in
SECTION 3.5.

 

“Basket Limitation” shall mean an amount equal to One Hundred Thousand Dollars
($100,000).

 

“Bill of Sale” shall have the meaning assigned thereto in SECTION 7.2(a).

 

“Bookings” shall have the meaning assigned thereto in SECTION 2.1(b)(vii).

 

“Books and Records” shall have the meaning assigned thereto in
SECTION 2.1(b)(xiv).

 

“Broker” shall mean Hodges Ward Elliott, Inc.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on
which banks are authorized or required by law to be closed in New York City, New
York.

 

“Buyer” shall have the meaning assigned thereto in the Preamble to this
Agreement.

 

“Buyer’s Knowledge” shall mean the actual knowledge of the Buyer based upon the
actual knowledge of Michael Medzigian, Michael Coolidge and Gil Murillo without
any duty on the part of such Person to conduct any independent investigation or
make any inquiry of any Person.

 

“Buyer Related Entities” shall have the meaning assigned thereto in
SECTION 10.1.

 

“Cap Limitation” shall mean an amount equal to Six Hundred and Thirty-Four
Thousand, Nine Hundred Twenty Dollars and Sixty-four Cents ($634,920.64).

 

“Closing” shall have the meaning assigned thereto in SECTION 2.4(a).

 

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“Closing Date” shall have the meaning assigned thereto in  SECTION 2.4(a).

 

“Closing Documents” shall mean any certificate, assignment, instrument or other
document delivered pursuant to this Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute. Any reference herein to a particular provision of the
Code shall mean, where appropriate, the corresponding provision in any successor
statute.

 

“Cut-Off Time” shall have the meaning assigned thereto in SECTION 9.1.

 

“Defaulted Agreement” shall have the meaning assigned thereto in SECTION 6.1(f).

 

“De-Identification” shall have the meaning assigned thereto in SECTION 3.4(b).

 

“Drop Dead Date” shall mean February 28, 2013.

 

“Earnest Money” shall mean, the Initial Deposit, the Additional Deposit and the
Extension Deposit, if applicable, all together with all accrued interest
thereon.

 

“Effective Date” shall have the meaning assigned thereto in the Preamble to this
Agreement.

 

“Employees” shall mean, at any time, all persons who are employed in the
ownership, operation and maintenance (whether on a full-time or part-time basis)
of the Hotel.

 

“Employment Acts” shall have the meaning assigned thereto in SECTION 9.1(l).

 

“Environmental Laws” shall have the meaning assigned thereto in SECTION 4.2(f).

 

“Equipment Leases” shall have the meaning assigned thereto in
SECTION 2.1(b)(vi).

 

“Escrow Account” shall have the meaning assigned thereto in SECTION 12.3(a).

 

“Escrow Agent” shall have the meaning assigned thereto in SECTION 2.3(a).

 

“Executive Order” shall have the meaning assigned thereto in SECTION 4.1(h)(i).

 

“Extended Closing Date’ shall mean February 19, 2013.

 

“Extension Deposit” shall mean Two Hundred Thousand Dollars ($200,000).

 

“FF&E” shall have the meaning assigned thereto in SECTION 2.1(b)(i).

 

“FIRPTA” shall have the meaning assigned thereto in SECTION 7.2(g).

 

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“Franchise Agreement” shall mean that certain Franchise License Agreement dated
December 16, 2009, by and between Franchisor and the Seller.

 

“Franchise Approval Period” shall have the meaning assigned thereto in
SECTION 3.4(a).

 

“Franchisor” shall mean Hampton Inns Franchise LLC or its successors or assigns.

 

“Governmental Authority” shall mean any federal, state or local government or
other political subdivision thereof, including, without limitation, any agency
or entity exercising executive, legislative, judicial, regulatory or
administrative governmental powers or functions, in each case to the extent the
same has jurisdiction over the Person or property in question.

 

“Government List” shall mean any of (i) the two lists maintained by the United
States Department of Commerce (Denied Persons and Entities), (ii) the list
maintained by the United States Department of Treasury (Specially Designated
Nationals and Blocked Persons), and (iii) the two lists maintained by the United
States Department of State (Terrorist Organizations and Debarred Parties).

 

“Guest Ledger” means any and all charges accrued to the open accounts of any
guests or customers at the Hotel as of the Cut-Off Time for the use or occupancy
of any guest, conference, meeting or banquet rooms or other facilities at the
Hotel, any restaurant, bar or banquet services, or any other goods or services
provided by or on behalf of the Seller at the Hotel.

 

“Hazardous Materials” shall mean any substance, gas, material, chemical,
biological/microbial matter, or waste whose presence, nature, quantity or
intensity of existence, use, manufacture, disposal, transportation, spill,
release or effect, either by itself or in combination with other materials is
(i) potentially injurious to the public health, safety or welfare of the
environment or the Property, (ii) regulated, monitored or designated by any
Governmental Authority or by applicable federal, state or local law as
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including PCBs, asbestos, petroleum, urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 USC
9601(14)), as amended (“CERCLA”), (iii) defined as a “hazardous waste” or
“hazardous material” under any federal, state or local statute, regulation or
ordinance, including without limitation, pursuant to CERCLA, the United States
Resource Conservation and Recovery Act of 1976 (42 USC 6903(5)), as amended, and
the regulations promulgated pursuant to said laws; or (iv) a basis for liability
of the owner of the Property to any Governmental Authority or third party.

 

“Hotel” shall have the meaning assigned thereto in “Recitals” paragraph A.

 

“Hotel Lease” shall have the meaning assigned thereto in “Recitals” paragraph A.

 

“Indemnitor” shall have the meaning assigned thereto in SECTION 10.4.

 

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“Indemnitee” shall have the meaning assigned thereto in SECTION 10.4.

 

“Initial Closing Date’ shall mean January 28, 2013.

 

“Initial Deposit” shall mean Five Hundred Thousand Dollars ($500,000).

 

“Intangible Property” shall have the meaning assigned thereto in
SECTION 2.1(b)(xii).

 

“Inventories” shall have the meaning assigned thereto in SECTION 2.1(b)(x).

 

“IRS” shall mean the Internal Revenue Service.

 

“Land” shall have the meaning assigned thereto in “Recitals” paragraph A.

 

“Licenses and Permits” shall have the meaning assigned thereto in
SECTION 2.1(b)(ii).

 

“Losses” shall have the meaning assigned thereto in SECTION 10.1.

 

“Management Agreement” shall mean that certain Management Agreement, which is
dated as of January 8, 2010 by and between Seller and Manager.

 

“Manager” shall mean Peabody Place Inn Group, LLC solely in its role as the
manager of the Property under the Management Agreement.

 

“Miscellaneous Personal Property” shall have the meaning assigned thereto in
SECTION 2.1(b)(xiii).

 

“New Franchise” shall have the meaning assigned thereto in SECTION 3.4.

 

“Operating Agreements” shall mean all maintenance, service and supply contracts,
management agreements, credit card service agreements, booking and reservation
agreements, and all other contracts and agreements which are held by or for the
account of Seller in connection with the operation of the Hotel, other than the
Franchise Agreement, the Management Agreement, Tenant Leases, Equipment Leases,
the Bookings, and Licenses and Permits.

 

“Other Sellers” shall have the meaning assigned thereto in SECTION 6.1(f).

 

“Parking Lease” shall have the meaning assigned thereto in “Recitals” paragraph
A.

 

“Permitted Title Exceptions” shall have the meaning set forth in SECTION 3.2.

 

“Person” shall mean a natural person, partnership, limited partnership, limited
liability company, corporation, trust, estate, association, unincorporated
association or other entity.

 

“PIP” shall have the meaning assigned thereto in SECTION 3.4.

 

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“Property” shall have the meaning assigned thereto in “Recitals” paragraph A.

 

“Property and Equipment” shall have the meaning assigned thereto in
SECTION 2.1(b)(ix).

 

“Purchase Price” shall have the meaning assigned thereto in SECTION 2.2(a).

 

“Related Agreements” shall mean (i) the Purchase and Sale Agreement between FWH
Birmingham Colonnade, LLC and CWI Birmingham Hotel, LLC, dated as of the date
hereof for the Hampton Inn—Birmingham Colonnade, Birmingham, AL, (ii) the
Purchase and Sale Agreement between FWH Atlanta Downtown, LLC and CWI Atlanta
Downtown Hotel, LLC, dated as of the date hereof for the Hampton Inn &
Suites—Downtown Atlanta, Atlanta Georgia, (iii) the Purchase and Sale Agreement
between FWH Legacy Park Frisco, LLC and CWI Legacy Park Hotel, LLC, dated as of
the date hereof for the Hampton Inn & Suites Legacy Park—Frisco, TX, and
(iv) the Purchase and Sale Agreement between FWH Baton Rouge, LLC and CWI Baton
Rouge Hotel, LLC, dated as of the date hereof for the Hilton Garden Inn Baton
Rouge Airport—Baton Rouge, LA.

 

“Retail Merchandise” shall have the meaning assigned thereto in
SECTION 2.1(b)(xi).

 

“Retained Accounts Receivable” shall have the meaning assigned thereto in
SECTION 9.3(b).

 

“Seller” shall have the meaning assigned thereto in the Preamble to this
Agreement.

 

“Seller Related Entities” shall have the meaning assigned thereto in
SECTION 10.2.

 

“Seller Releasees” should be defined as the Seller, its parent, subsidiaries and
affiliates and their respective members, managers, directors, shareholders,
partners, officers,  employees, agents, representatives and consultants,
including without limitation the Manager.

 

“Seller’s Knowledge” shall mean the actual knowledge of Edwin F. Ansbro, Robert
M. Solmson, or Robert Todd Solmson, without any duty on the part of such Person
to conduct any independent investigation or make any inquiry of any Person.

 

“Study Period” shall mean the period commencing at 9:00 a.m. Central Time on the
Effective Date, and continuing until 5:00 p.m. Central Time on January 7, 2013.

 

“Supplies” shall mean all china, glassware, stemware, bath mats, bath rugs,
shower curtains, tools, linens, towels, uniforms, bedding, silverware,
engineering, maintenance, cleaning and housekeeping supplies, matches and
ashtrays, fuel, soap and other toiletries, stationary, menus, directories and
other printed materials, all other similar supplies and materials (whether
located at the Property or stored off-site or ordered for future use at the
Property as of the Closing).

 

“Survival Period” shall have the meaning assigned thereto in SECTION 10.4.

 

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“Taxes” means, and is specifically limited to, all tax liabilities with respect
to the Property, which, if unpaid, could impose successor or continuing
liability on the Buyer, including to the extent applicable any gross or net
receipts, sales, use tax, charge, assessment, duty, or levy (including any
interest, additions to tax, or civil or criminal penalties thereon) of the
United States or any state or local jurisdiction therein, or of any other nation
or any jurisdiction therein.

 

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

 

“Tenant Leases” shall have the meaning assigned thereto in SECTION 2.1(b)(v).

 

“Title Company” shall mean First American Title Insurance Company.

 

“Title Policy” shall mean a standard form ALTA Leaseholder’s Policy of Title
Insurance issued by the Title Company insuring the Buyer’s good and indefeasible
leasehold title to the Property subject only to the Permitted Title Exceptions
in an amount equal to the portion of the Purchase Price allocated to the
Property pursuant to SECTION 2.2(b).

 

“Trade Payables” shall have the meaning assigned thereto in SECTION 9.1(j).

 

“UCC” shall mean the Uniform Commercial Code.

 

“Uniform System of Accounts” shall have the meaning assigned thereto in
SECTION 2.1(b)(ix).

 

ARTICLE II.

 

SALE, PURCHASE PRICE AND CLOSING

 

SECTION 2.1.                       Sale of Asset.

 

(a)                               On the Closing Date and pursuant to the terms
and subject to the conditions set forth in this Agreement, the Seller shall sell
to the Buyer, and the Buyer shall purchase from the Seller, the Asset.

 

(b)                              The Asset shall include all Asset-Related
Property. For purposes of this Agreement, “Asset-Related Property” shall mean
any and all of the following which is owned or used by the Seller in connection
with the Property:

 

(i)                                  all tangible personal property consisting
of all furniture, furnishings, fixtures, machinery, and other personal property
of every kind located on or used in the operation of the Property including,
without limitation, all guest room furnishings, lobby and

 

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public area furnishings, all artwork, lighting fixtures, kitchen, lounge,
meeting room and restaurant equipment and furnishings (including, without
limitation, all silver serving pieces, tables, chairs, podiums and staging
platforms, and linens), laundry and dry cleaning equipment, safes, safe deposit
boxes, pool chairs and equipment, vehicles, rugs, mats, carpeting, appliances,
devices, engines, telephone and other communications equipment, televisions and
other video equipment, plumbing fixtures and other equipment, and all other
equipment and other personal property which are now, or may hereafter prior to
the Closing Date be, placed in or on or attached to the Property and are used in
connection with the operation of the Property (but not including items owned or
leased by tenants or which are leased under the Equipment Leases by the Manager)
(the “FF&E”);

 

(ii)                              all right, title and interest in and to (to
the extent transferable under applicable law) all licenses, permits and
authorizations presently issued in connection with the operation of all or any
part of the Property as it is presently being operated (the “Licenses and
Permits”);

 

(iii)                          all right, title and interest in and to (to the
extent assignable) all warranties, if any, issued by any manufacturer,
contractor, subcontractor, supplier or workman in connection with the
maintenance, repair, construction or installation of equipment or any component
of the improvements included as part of the Property or FF&E;

 

(iv)                          all right, title and interest in and to (to the
extent assignable) all Operating Agreements;

 

(v)                              all right, title and interest in and to all
leases, subleases, licenses, contracts and other agreements, granting a real
property interest to any other Person for the use or occupancy of all or any
part of the Property (including without limitation all cell towers, billboards,
and parking lots), other than the Bookings (the “Tenant Leases”) and all
security and escrow deposits or other security held by or for the benefit of, or
granted to, the Seller in connection with, such Tenant Leases;

 

(vi)                          all right, title and interest in and to all leases
and purchase money security agreements for any equipment, machinery, vehicles,
furniture or other personal property located at the Hotel or used in the
operation of the Hotel (the “Equipment Leases”), together with all deposits made
thereunder;

 

(vii)                      all right, title and interest in and to all bookings
and reservations for guest, conference, meeting and banquet rooms or other
facilities at the Hotel for dates from and after the Closing Date (the
“Bookings”), together with all deposits held by the Seller with respect thereto;

 

(viii)                  all right, title and interest in and to the Guest Ledger
as set forth in SECTION 9.3(a);

 

(ix)                          all items included within the definition of
“Property and Equipment” under the latest edition of the Uniform System of
Accounts for the Lodging Industry, as published by the Hotel Association of New
York City, Inc. (the “Uniform System of

 

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Accounts”) and used in the operation of the Hotel, including, without
limitation, linen, china, glassware, tableware, uniforms and similar items
(“Property and Equipment”);

 

(x)                              all “Inventories” as defined in the Uniform
System of Accounts and used in the operation of the Hotel, such as Supplies,
provisions in storerooms, refrigerators, pantries, and kitchens, beverages in
wine cellars and bars, other merchandise intended for sale or resale, and
similar items and including all food and beverages which are located at the
Hotel, or ordered for future use at the Hotel as of the Closing, but expressly
excluding any alcoholic beverages to the extent the sale or transfer of the same
is not permitted under applicable law (the “Inventories”);

 

(xi)                          all merchandise located at the Hotel and held for
sale to guests and customers of the Hotel, or ordered for future sale at the
Hotel as of the Cut-Off Time, but not including any such merchandise owned by
any tenant at the Property or by the Manager (“Retail Merchandise”);

 

(xii)                      all right, title and interest in and to (to the
extent such are assignable) all names, tradenames, trademarks, service marks,
logos, the Hotel’s website and web address, and other similar proprietary rights
and all registrations or applications for registration of such rights used in
the operation of the Hotel (the “Intangible Property”);

 

(xiii)                  all right, title and interest in and to (including
without limitation to the extent not included in SECTION 2.1(b)(i) above) the
Hotel’s telephone numbers, printed marketing materials and any slides, proofs or
drawings used to produce such materials, to the extent such slides, proofs or
drawings are in the Seller’s possession or control (“Miscellaneous Personal
Property”); and

 

(xiv)                  to the extent in the Seller’s possession or control, all
surveys, architectural, consulting and engineering blueprints, plans and
specifications and reports, if any, related to the Hotel, all books and records,
if any, related to the Hotel (collectively, “Books and Records”), and any
goodwill of the Seller related to the Hotel; provided, however, that the Seller
may retain a copy of all such books and records.

 

(c)                               Excluded Property.  Notwithstanding anything
to the contrary in SECTION 2.1(a) and SECTION 2.1(b), the property, assets,
rights and interests set forth in this SECTION 2.1(c) are expressly excluded
from the Asset:

 

(i)                                  Cash.  Except for deposits expressly
included in SECTION 2.1(b) and except for any cash on hand or in house banks for
which the Seller receives a credit under SECTION 9.1(k), all cash on hand or on
deposit in any house bank, operating account or other account maintained in
connection with the ownership of the Hotel, including, without limitation, any
reserves maintained by the Seller or the Manager as required by the Management
Agreement or the Franchise Agreement (subject to SECTION 9.1(k));

 

(ii)                              Third Party Property.  Any fixtures, personal
property or equipment owned by (A) the lessor under any Equipment Leases,
(B) the supplier or vendor under any other Operating Agreements, (C) the tenant
under any Tenant Lease, (D) [any Employees, (E) the Manager or (F) any guests or
customers of the Hotel, including, without

 

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limitation, those items set forth on Schedule 2.1(c) attached hereto; provided,
however, that at Closing the Buyer will have the same rights to the use and
benefit to any of the foregoing as the Seller and the Hotel currently possess,
unless otherwise terminated pursuant to the terms of this Agreement; and

 

(iii)                          Receivables.  Any Retained Accounts Receivable as
set forth in SECTION 9.3(b).

 

SECTION 2.2.                       Purchase Price.

 

(a)                               The consideration for the purchase of the
Asset shall be $30,000,000.00 (the “Purchase Price”), which shall be paid by the
Buyer to the Seller at the Closing in immediately available funds by wire
transfer to such account or accounts that the Seller shall designate to the
Buyer; provided that such amount shall be reduced by the Earnest Money and
adjusted for Closing adjustments and credits provided for in ARTICLE IX and
elsewhere in the Agreement.

 

(b)                              The Seller and the Buyer agree that the
Purchase Price shall be allocated between the Property and the Asset-Related
Property as of the Closing for federal, state and local tax purposes in
accordance with the applicable provisions of Section 1060 of the Code.  The
Seller and the Buyer agree to file federal, state and local tax returns
consistent with such allocations agreed upon between the parties; provided,
however, if the Seller and the Buyer cannot mutually agree upon allocation of
the Purchase Price, each party shall file federal, state and local returns based
on each party’s own determination of the proper allocations of the Purchase
Price, each bearing its own consequences of any discrepancies.  The provisions
of this SECTION 2.2(b) shall survive the Closing.

 

SECTION 2.3.                       Earnest Money.

 

(a)                               Within 3 Business Days of the Effective Date,
the Buyer shall deposit with the Title Company, as escrow agent (in such
capacity, “Escrow Agent”), cash in an amount equal to the Initial Deposit in
immediately available funds by wire transfer to such account as Escrow Agent
shall designate to the Buyer. If the Initial Deposit is not deposited by the
Buyer by 5:00 p.m. (Central Time) on the third Business Day following the
Effective Date, the Seller shall have the right, in the Seller’s sole and
absolute discretion, upon written notice to the Buyer delivered prior to the
Buyer’s deposit of the Earnest Money with the Title Company, to terminate this
Agreement whereupon this Agreement shall terminate and neither party hereto
shall have any further rights, liabilities or obligations hereunder except for
those that expressly survive the termination of this Agreement.

 

(b)                              Within 2 Business Days after the expiration of
the Study Period, if Buyer does not terminate this Agreement prior to or on the
Study Period pursuant to SECTION 3.1(a), the Buyer shall deposit with the Escrow
Agent, and increase the Earnest Money by, an amount equal to the Additional
Deposit in immediately available funds by wire transfer.  Failure of the Buyer
to deliver the Additional Deposit as provided herein shall result in the
automatic termination of this Agreement whereupon the Initial Deposit shall be
immediately returned to the Seller and this Agreement shall terminate and
neither party hereto shall have any further rights,

 

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liabilities or obligations hereunder except for those that expressly survive the
termination of this Agreement.

 

(c)                               If the Buyer elects to extend the Initial
Closing Date pursuant to SECTION 2.4(a), then on or before the expiration of the
Initial Closing Date, the Buyer shall deposit with the Escrow Agent, and
increase the Earnest Money by, an amount equal to the Extension Deposit in
immediately available funds by wire transfer.  Failure of the Buyer to deliver
the Extension Deposit as provided herein (or otherwise close on or before the
Initial Closing Date) shall be a default by the Buyer under this Agreement,
unless the Buyer is otherwise expressly entitled to terminate this Agreement and
elects to so terminate prior to the due date of such Extension Deposit.

 

(d)                             Upon delivery by the Buyer to Escrow Agent and
upon receipt of an executed form W-9, any and all portions of the Earnest Money
will be deposited by Escrow Agent in an account acceptable to the Buyer and the
Seller and shall be held in escrow in an interest-bearing account in accordance
with the provisions of SECTION 12.3. Any interest earned on the Earnest Money
while held by Escrow Agent shall be paid to the party to whom the Earnest Money
is paid, except that if the Closing occurs, the Buyer shall receive a credit for
such interest in accordance with SECTION 2.2(a).

 

SECTION 2.4.                       The Closing.

 

(a)                               Subject to the provisions of SECTION 11.1, the
closing of the purchase and sale of the Asset (the “Closing”) shall take place
on the Initial Closing Date, or, if extended as described below, the Extended
Closing Date, or such other earlier date as mutually agreed to by the Buyer and
the Seller (such date or any extension thereof as described below, the “Closing
Date”), Time Being Of The Essence with respect to the Buyer’s and the Seller’s
obligations hereunder on the Closing Date, subject only to the rights to adjourn
the Closing Date as it may otherwise be extended pursuant to SECTION 4.4 or as a
result of either party’s cure right under SECTION 11.2.  The Buyer may extend
the Initial Closing Date for no longer than the Extended Closing Date upon
written notice to the Seller of such extension delivered to the Seller prior to
the expiration of the Initial Closing Date and delivery of the Extension Deposit
in immediately available funds by wire transfer to the Escrow Agent on or prior
to the expiration of the Initial Closing Date.  Any extension of the Initial
Closing Date or other adjournment of the Closing Date (including without
limitation as the result of either party’s cure right under SECTION 11.2)
pursuant to the express terms of this Agreement shall be deemed to be an
extension or adjournment of the closing date under all of the other Related
Agreements (and will require the delivery of the extension deposits under the
other Related Agreements in the same manner as set forth above and vice versa in
the event of any extension or adjournment of the closing date under any of the
Related Agreements).  Notwithstanding anything to the contrary herein, if the
Closing shall not have occurred on or before the Drop Dead Date for any reason
other than a material breach or default by the Seller or the Buyer, then either
such non-defaulting party shall have the right to terminate this Agreement
subject to the terms and provisions of SECTION 11.1.

 

(b)                              The Closing shall be held on the Closing Date
at the offices of the Escrow Agent or at such other location agreed upon by the
parties hereto.

 

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(c)                               Notwithstanding any other provision herein to
the contrary, there shall be no requirement that the Seller and the Buyer
physically attend the Closing, and all funds and documents to be delivered at
the Closing may be delivered to Escrow Agent unless the parties hereto mutually
agree otherwise. The Buyer and the Seller hereby authorize their respective
attorneys to execute and deliver to Escrow Agent any additional or supplementary
instructions as may be necessary or convenient to implement the terms of this
Agreement and facilitate the closing of the transactions contemplated hereby,
provided that such instructions are consistent with and merely supplement this
Agreement and shall not in any way modify, amend or supersede this Agreement.

 

ARTICLE III.

 

STUDY PERIOD

 

SECTION 3.1.                       Study Period.

 

(a)                               The Buyer shall have the right, upon prior
reasonable written notice to the Seller to examine the books and records
relating to the Property, to enter upon the Land and to perform, at the Buyer’s
expense, such economic, surveying, engineering, environmental, topographic and
marketing tests, studies and investigations as the Buyer may deem appropriate,
taking care to cause minimal interference with the business conducted on the
Property; provided that (i) no invasive testing may be conducted without the
Seller’s prior written consent, which may be withheld by the Seller in its sole
discretion, and (ii) none of the Buyer or any of its representatives, lender,
consultants and agents shall (x) cause any damage or make any physical changes
to any of the Property or (y) intentionally or unreasonably interfere with the
rights of Hotel guests or others who may have a legal right to use or occupy the
Property or (z) otherwise intentionally or unreasonably interfere with the
operation of the Property.  The Seller or its representatives shall have the
right to be present to observe any testing or other inspection performed on any
of the Property.  If for any reason, or no reason, the Buyer notifies the
Seller, in writing, prior to 5:00 p.m. Central Time on the last day of the Study
Period that it has determined not to proceed to Closing, this Agreement
automatically shall terminate, the Earnest Money shall be immediately returned
to the Buyer, and, upon return of the Earnest Money, the Buyer and the Seller
shall have no further rights, liabilities or obligations hereunder (except as
expressly survive the termination of this Agreement).

 

(b)                              Promptly after the Effective Date, and
throughout the term of this Agreement as any of the materials listed in Schedule
B become available to the Seller or are amended or updated, (to the extent not
previously provided or made available to the Buyer) the Seller shall deliver to
the Buyer, copies of such materials which are in, or come into, the Seller’s
possession or control.

 

(c)                               Buyer hereby agrees to indemnify, defend and
hold the Seller, and its employees, guests, contractors, tenants, manager and
their respective invitees harmless from all personal injury or property damage
suffered or incurred by or claimed against the foregoing arising directly out of
any due diligence activities conducted or the entry upon the Land by any of
Buyer, its representatives, lenders, consultant or agents, provided, however,
such indemnity shall not cover liability arising from pre-existing conditions
unless such pre-existing conditions

 

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are exacerbated by the Buyer or its consultants, agents, contractors, employees
or representatives, in which case the Buyer shall be liable for and to the
extent of the exacerbated condition and not the pre-existing condition.  The
Buyer, at its own expense, shall restore any damage to the Property caused by
any of the tests or studies made by the Buyer, or its agents or contractors, but
specifically excluding restoring or correcting any environmental or other damage
to the Real Property that is discovered as a result of such tests or studies. 
The Buyer and any of its agents and contractors shall maintain at all times
during their entry upon any of the Property for the purpose of conducting any
due diligence activities, commercial general liability insurance with limits of
not less than Two Million Dollars ($2,000,000) combined single limit, bodily
injury, death and property damage insurance per occurrence.  Upon the Seller’s
request, Buyer (or its agents or contractor) will deliver a certificate issued
by the insurance carrier of each such policy to the Seller prior to any entry
upon any Property.

 

(d)                             The Buyer’s obligations under this SECTION 3.1
shall survive any termination of this Agreement or the Closing of the
transaction contemplated herein.

 

SECTION 3.2.                       Title and Survey.

 

(a)                               The Seller shall order and cause to be
delivered to each of the Buyer and the Seller a commitment for the Title Policy
from the Title Company, together with all underlying title exception documents. 
The Buyer shall, at its expense, order and cause to be delivered to each of the
Buyer and the Seller, an ALTA survey of the Property.  After receipt of the
survey and the title commitment, the Buyer shall notify the Seller of any
defects in title or survey shown by such commitment and/or ALTA survey that the
Buyer is unwilling to accept.  Within 5 days after such notification, the Seller
shall notify the Buyer whether the Seller is willing to cure such defects; the
Seller’s failure to so notify the Buyer shall be deemed to be the Seller’s
refusal to cure all such defects (except for any defects consisting of those
items in the last sentence of this SECTION 3.2 below expressly required to be
cured by the Seller).  The Seller may cure any defect by causing the Title
Company, at the Seller’s sole cost and expense, to omit such defect as an
exception to the Title Policy or to “insure over” such defect to the Buyer’s
reasonable satisfaction.  If the Seller is willing to cure such defects, the
Seller shall act promptly, diligently and use commercially reasonable efforts to
cure such defects at its expense.  Subject to those items below expressly
required to be cured by the Seller, if the Seller is unwilling or unable to cure
any other such defects by Closing (or fails to notify Buyer and therefore has
elected not to cure such defects), then the Buyer shall elect, within 5 days
after written notice thereof from the Seller to the Buyer (or within 5 days
after the Seller’s time for giving notice has expired without any notice from
the Seller), by giving the Seller written notice that the Buyer either
(i) waives such defects and shall proceed to Closing without any abatement in
the Purchase Price with respect thereto, or (ii) terminates this Agreement and
shall be entitled to receive a full and immediate refund of the Earnest Money
and, upon return of the Earnest Money, this Agreement shall terminate and the
Buyer and the Seller shall have no further rights, liabilities or obligations
hereunder (except as expressly survive the termination of this Agreement).  In
the event that the Buyer does not make such election within the applicable time
frame, the Buyer shall be deemed to have elected to waive any such defects
pursuant to clause (i) above.  Subject to those items below expressly required
to be cured by the Seller, all title matters not objected to by the Buyer during
the Study Period (or objected to but which the Seller declines, or is deemed to
decline, to cure as provided above without the Buyer thereafter electing

 

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to terminate this Agreement) shall be deemed “Permitted Title Exceptions.” 
Notwithstanding the foregoing, if any such defects of title consist of mortgages
or deeds of trust, any other monetary liens and/or tax liens (other than with
respect to the Hotel Lease and the Parking Lease and liens for taxes not yet due
and payable, all of which shall be deemed to be Permitted Title Exceptions), the
Buyer shall be deemed to have notified the Seller that the Buyer is unwilling to
accept such defects and the Seller covenants and agrees that at or prior to
Closing the Seller shall cure by payment, bonding, or escrow deposit acceptable
to the Title Company (and the Escrow Agent is authorized to pay and discharge at
Closing from the Seller’s proceeds, if not so cured) and cause to be cancelled
and discharged such monetary title defects.

 

(b)                              The Seller shall promptly bring to the Buyer’s
attention any defect in title which the Seller becomes aware of and which were
created by, under or through the Seller to the extent not included in the
initial title commitment received by the Buyer pursuant to SECTION 3.2(a) (each,
an “Intervening Lien”).  To the extent that there exist any Intervening Liens,
other than the Permitted Title Exceptions, the Seller may, at its sole option,
undertake, at its expense, all necessary actions to remove and cure any and all
such Intervening Liens prior to Closing; provided, however, that in the event
that the Seller elects not to remove and cure any Intervening Liens, other than
the Permitted Title Exceptions, and such exist at Closing, the Buyer shall have
the right to terminate this Agreement whereupon the Earnest Money shall be
returned immediately to the Buyer, and, upon return of the Earnest Money, this
Agreement shall terminate and the Buyer and the Seller shall have no further
rights, liabilities or obligations hereunder (except as expressly survive the
termination of this Agreement); provided, further, the Seller shall have the
unconditional commitment to remove any Intervening Lien, other than the
Permitted Title Exceptions, created directly by the affirmative actions of the
Seller, or to the extent created at the Seller’s express direction by its agents
and/or representatives (including the Manager), and the failure to so remove
shall be a material breach of this Agreement.

 

SECTION 3.3.                       Environmental Audit.  The Buyer shall, at its
option and expense, order a Phase I environmental audit.  If such audit reveals
the existence of conditions which, in the reasonable judgment of the Buyer,
require further investigation (including without limitation borings, soil
samples or other invasive testing), then the Buyer will provide prompt written
notice to the Seller of such additional testing required (including the scope
and specifications of such additional testing).  Within 5 days of such notice,
the Seller shall elect in writing to the Buyer, at the Seller’s sole discretion,
to either (a) allow such additional testing pursuant to the scope and
specifications contained in the Buyer’s notice or (b) disallow such further
environmental investigation (any failure by the Seller to respond timely will be
deemed to be an election of (b) above).  If the Seller elects (or is deemed to
have elected) not to allow such additional testing, then the Buyer shall elect,
within 5 days after written notice thereof from the Seller to the Buyer (or
within 5 days after the Seller’s time for giving notice has expired without any
notice from the Seller), by giving the Seller written notice that the Buyer
either (i) waives such additional testing and shall proceed to Closing without
any abatement in the Purchase Price with respect thereto, or (ii) terminates
this Agreement, whereupon the Earnest Money shall be returned immediately to the
Buyer, and, upon return of the Earnest Money, this Agreement shall terminate and
the Buyer and the Seller shall have no further rights, liabilities or
obligations hereunder (except as expressly survive the termination of this
Agreement).  In the event that the Buyer does not make such election within the
applicable time frame, the Buyer shall be deemed to have elected to waive such
additional testing pursuant to clause (i) above.

 

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SECTION 3.4.                       Franchise

 

(a)                               Within 3 Business Days after the Effective
Date, the Buyer shall submit a franchise application to Franchisor, together
with all required related documents and submittals, and shall pay all fees and
costs imposed by Franchisor in connection with such application.  The Buyer
acknowledges that the Seller has obtained and delivered to the Buyer the product
improvement plan required by the Franchisor with respect to the Hotel (the
“PIP”).  During the Study Period (and commencing immediately upon the Effective
Date), the Buyer shall use its commercially reasonable efforts, and pay all
costs and expenses therewith associated, to obtain a franchise commitment (the
“New Franchise”) with respect to the Property from the current Franchisor, all
upon terms and conditions reasonably acceptable to the Buyer; provided that the
Buyer agrees that it will accept (if not able to negotiate any more favorable
terms from Franchisor) (i) a term ending at the current expiration date of the
existing Franchise Agreement, (ii) Franchisor’s standard fees (without requiring
any waiver or reduction), and (iii) Franchisor’s current standard form of
franchise agreement.  The Seller and the Buyer shall cooperate with each other
and the Franchisor to expedite completion of the same.  If the Buyer does not
receive the New Franchise or approval thereof from the Franchisor on or before
the expiration of the Study Period, the Buyer may, at its option, upon written
notice to the Seller have up to an additional 15 days to obtain the New
Franchise or approval thereof (the Study Period as so extended solely for such
purposes, the “Franchise Approval Period”); provided that the Buyer shall review
and approve the PIP prior to the expiration of the Study Period and, if the
Buyer has not elected to terminate this Agreement prior to the expiration of the
Study Period, the Seller shall be deemed to have approved of the PIP.  If,
despite Buyer’s good faith, commercially reasonable efforts, the Buyer does not
receive the New Franchise or approval thereof from the Franchisor on or before
the expiration of the Franchise Approval Period, the Buyer may, at its option,
upon written notice to the Seller and the Escrow Agent terminate this Agreement,
at which time the Earnest Money shall be returned promptly to the Buyer and upon
return of the Earnest Money, the Buyer and the Seller shall have no further
rights, liabilities or obligations hereunder (except as expressly survive the
termination of this Agreement).  If the Buyer does not elect to terminate, to
the extent permitted, on or before the expiration of the Franchise Approval
Period, the Earnest Money shall remain non-refundable, except as otherwise
expressly set forth in this Agreement, and the Buyer’s obligation to purchase
the Property shall be conditional only as otherwise provided in accordance with
the terms of this Agreement. All costs of the New Franchise, including, without
limitation, costs associated with any required property improvement plan
(including the PIP), attorneys’ fees and costs of Franchisor, and reserves
required by Franchisor, shall be the responsibility of the Buyer.

 

(b)                              If the Buyer elects not to obtain a New
Franchise from Franchisor (but instead elects another franchisor or brand or
elects not to have any franchise or brand) or the Buyer does not obtain the New
Franchise and does not terminate this Agreement in accordance with
SECTION 3.4(a) and proceeds to Closing, the Buyer shall (i) pay all cancellation
fees, termination fees, removal fees or other amounts owed to Franchisor as a
result of cancellation and termination of the Franchise Agreement,
(ii) immediately upon Closing, cease operating the Property as a “System Hotel”
within the Franchisor system, including, without limitation, not directly or
indirectly representing or giving the impression that it is a present or former
franchisee or licensee of Franchisor or that the Property was previously a
“System Hotel,” and (iii) immediately upon Closing, at its sole cost and
expense, immediately and permanently

 

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remove or cause to be removed from the Property all identifying characteristics,
marks and intellectual property of Franchisor and its “System Hotels,”
including, without limitation, all electronic systems, signs, fixtures,
furniture, furnishings, equipment, advertising materials, stationery, supplies,
forms and other items containing the words, trademark, service marks or insignia
for a “System Hotel,” return to Franchisor its intellectual property and other
materials proprietary to Franchisor, make such alterations as may be necessary
and required by Franchisor to distinguish the Hotel from its former appearance
and other “System Hotels” and allow Franchisor to enter upon the Property to
complete any of the foregoing not completed by the Buyer within thirty days
after Closing (collectively, “De-Identification”).  The De-Identification will
involve, among other things, all de-identification required by the Franchise
Agreement and compliance with all other requirements of the Franchise Agreement
that arise as a result of the sale of the Property to the Buyer.  Upon Closing
and in the event that the Buyer does not obtain a New Franchise from Franchisor
(but instead elects another franchise or brand or elects not to have any
franchise or brand), the Buyer agrees to indemnify and hold the Seller harmless
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable attorneys’ fees and costs) arising from the termination of
the Franchise Agreement hereunder and/or the Seller’s ability or inability to
obtain a release of Seller or any Seller related guarantor of the Franchise
Agreement and any failure by the Buyer to comply with all obligations arising in
connection with De-Identification and any obligations imposed by Franchisor on
the owner of the Property after Closing.

 

SECTION 3.5.                       Assumption and Assignment of Leases

 

(a)                               Hotel Lease.  As soon as practical following
the Effective Date, the Seller shall contact the landlord under the Hotel Lease
and the Seller and the Buyer shall use their commercially reasonable best
efforts, at the Buyer’s sole cost and expense (provided that the Buyer and the
Seller will split equally any assignment or transfer fee to assign the Hotel
Lease), to obtain such landlord’s or any other required Person’s consent to the
assignment of the Hotel Lease contemplated hereunder, together with an
assignment and assumption agreement in a form or forms as reasonably acceptable
to the Seller and the Buyer to reflect the assignment of the Hotel Lease to the
Buyer (without any substantive modification to any of the terms thereof
required).  The Buyer shall cooperate to timely provide any and all information
reasonably requested by the landlord under the Hotel Lease.

 

(b)                              Parking Lease.  As soon as practical following
the Effective Date, the Seller shall contact the landlord under the Parking
Lease and the Seller and the Buyer shall use their commercially reasonable best
efforts, at the Buyer’s sole cost and expense, to obtain such landlord’s consent
to the assignment of the Parking Lease contemplated hereunder, together with an
assignment and assumption agreement in a form or forms as reasonably acceptable
to the Seller and the Buyer to reflect the assignment of the Parking Lease to
the Buyer (without any substantive modification to any of the terms thereof
required).  The Buyer shall cooperate to timely provide any and all information
reasonably requested by the landlord under the Hotel Lease.

 

SECTION 3.6.                       Buyer Audit Requirements.  The Seller agrees
to use commercially reasonable efforts to promptly deliver to the Buyer all of
the audit request materials listed on Exhibit E; provided, however, the Seller
shall deliver all such materials within its possession (or which are

 

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otherwise reasonably accessible to the Seller as of the Effective Date) prior to
the expiration of the Study Period; provided further, the Seller acknowledges
and agrees to use its good faith efforts to also provide such additional
information related to both the operation of the Property during the Seller’s
period of ownership of the Property and the Seller as requested by the Buyer (or
its accountants) which is deemed relevant and reasonably necessary (as
reasonably determined by the Buyer, with the understanding than any such inquiry
that is made by the Buyer or its accountants shall pertain solely to the affairs
of the Seller as the owner of the Property and shall not extend to the financial
or other information of any direct or indirect owner of the Seller) to enable
the Buyer and its accountants to prepare financial statements in compliance with
(a) Rule 3-05 of Regulation S-X of the Securities and Exchange Commission which
audit will commence immediately upon Closing and which is required to be
completed and filed with the Securities and Exchange Commission within 75 days
after Closing; (b) any other rule issued by the Securities and Exchange
Commission and applicable to the Buyer; and (c) any registration statement,
report or disclosure statement filed with the Securities and Exchange Commission
by, or on behalf of, the Buyer.  Notwithstanding the foregoing and upon Buyer’s
written request, the Seller shall engage (at the Buyer’s sole cost and expense)
McGladrey LLP to commence any and all such required audits.  The Seller
acknowledges and agrees that the foregoing is a representative description of
the information and documentation that the Buyer and its accountants may require
in order to comply with (a), (b) and (c) above.  In connection with the
foregoing post-Closing audit(s), and in furtherance of the Seller’s obligations
to assist the Buyer pursuant to this SECTION 3.6, the Seller covenants and
agrees to execute and deliver to McGladrey LLP the audit representation letter
solely for the benefit of McGladrey LLP, the form of which is attached hereto as
Exhibit F (the “Audit Representation Letter”), provided that the form of such
Audit Representation Letter may be modified as required to account for any
issues identified during the audit.  Notwithstanding the foregoing, to the
extent permitted by law and without in any way limiting any of the Buyer’s
rights and remedies expressly provided for under this Agreement (but subject to
the limitations on such rights and remedies as expressly provided for under this
Agreement), the Buyer, its agents, consultants and any other Person claiming by,
through or under the Buyer (but expressly excluding McGladrey LLP) (a) shall
have no claims against Seller Releasees solely as a result of the audit
contemplated by this SECTION 3.6 or the Audit Representation Letter, and (b)
hereby waive and release any claims against Seller Releasees that may arise
solely from, or as a result of, such audit or the Audit Representation Letter,
unless, in either of (a) or (b), such parties would otherwise have a claim
expressly provided for under this Agreement (but subject to the limitations on
any such claim as expressly provided for under this Agreement).  The Seller’s
obligations under this SECTION 3.6 shall survive the Closing for a period of 12
months.  The Buyer’s obligations under this SECTION 3.6 shall survive any
termination of this Agreement.

 

SECTION 3.7.                       Buyer’s Due Diligence Reports.  In the event
the transaction contemplated by this Agreement is not closed for any reason
whatsoever, the Seller may elect to have the Buyer deliver to the Seller
originals or copies of all third party reports, documents, studies, analyses,
and other written information obtained by the Buyer with respect to the
Property, including results of physical inspections, engineering studies,
engineering drawings and specifications, surveys, Hazardous Materials reports,
soil tests, site plans, feasibility studies, market studies, property
improvement plans, architectural plans, specifications and drawings, title
reports, permits, approvals and authorizations (whether obtained from
Governmental Authorities or third parties); and all other work product
(excluding attorney client privileged materials, internal memoranda, and
appraisals) generated by third parties for the Buyer solely in connection with
the Property; provided, however, in the event the Buyer delivers any or all of
the aforementioned materials to the Seller, the Buyer makes

 

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no representation or warranty as to the accuracy or completeness of the same and
the Seller shall have no right to rely on such materials.  In consideration for
the Buyer providing all such aforementioned materials, the Seller shall pay the
Buyer an amount equal to one-half of the actual out-of-pocket costs incurred by
the Buyer in obtaining such materials (as evidenced by invoices, purchase orders
and the like).  The provisions of this SECTION 3.7 shall survive the termination
of this Agreement.

 

ARTICLE IV.

 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER

 

SECTION 4.1.                       General Seller Representations and
Warranties. The Seller hereby represents and warrants to the Buyer, as of the
date hereof, as follows:

 

(a)                               Formation; Existence.  The Seller is a
Delaware limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware.

 

(b)                              Power and Authority. The Seller has all
requisite power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement, the sale and purchase
of the Asset and the consummation of the transactions provided for in this
Agreement have been duly authorized by all necessary action on the part of the
Seller. This Agreement has been duly executed and delivered by the Seller and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights and by general principles of equity (whether applied in a
proceeding at law or in equity).

 

(c)                               No Consents. Except as set forth in Schedule
4.1(c), no consent, license, approval, order, permit or authorization of, or
registration, filing or declaration with, any court, administrative agency or
commission or other Governmental Authority or instrumentality, domestic or
foreign, is required to be obtained or made in connection with the Seller’s
execution, delivery and performance of this Agreement or any of the transactions
required or contemplated hereby.

 

(d)                             No Conflicts. The execution, delivery and
compliance with, and performance of the terms and provisions of, this Agreement,
and the sale and purchase of the Asset, will not (i) conflict with or result in
any violation of the Seller’s organizational documents, (ii) except as set forth
in Schedule 4.1(d), conflict with or result in any violation of any provision of
any bond, note or other instrument of indebtedness, contract, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which the Seller is a party in its individual capacity, or (iii) violate any
existing term or provision of any order, writ, judgment, injunction, decree,
statute, law, rule or regulation applicable to the Seller or its assets or
properties.

 

(e)                               Litigation with Respect to Seller.  Except as
set forth in Schedule 4.1(e), there is no action, suit, claim or proceeding
pending against the Seller or any of its assets in any court, before any
arbitrator or before any Governmental Authority or other Person (i) that would

 

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materially adversely affect the Seller, (ii) that seeks restraint, prohibition,
damages, or other relief in connection with this Agreement or the transactions
contemplated hereby, or (iii) would delay consummation of any of the
transactions contemplated hereby.  The Seller is not subject to any judgment,
decree, injunction, rule or order of any court or other Governmental Authority
relating to the Seller’s participation in the transactions contemplated by this
Agreement.  The Seller has not received any written notice of any such
threatened action or proceeding or litigation.

 

(f)                                Bankruptcy.  No Act of Bankruptcy has
occurred with respect to the Seller.

 

(g)                              Foreign Person. The Seller is not a “foreign
person” as defined in Internal Revenue Code Section 1445 and the regulations
issued thereunder.

 

(h)                              Anti-Terrorism Laws.

 

(i)                                  None of the Seller or, to Seller’s
Knowledge, any of its affiliates, is in violation of any laws relating to
terrorism, money laundering or the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism) (the “Executive Order”) (collectively, the “Anti-Money Laundering and
Anti-Terrorism Laws”).

 

(ii)                              None of the Seller or, to Seller’s Knowledge,
any of its affiliates, is acting, directly or indirectly, on behalf of
terrorists, terrorist organizations or narcotics traffickers, including those
persons or entities that appear on the Annex to the Executive Order, or are
included on any relevant lists maintained by the Office of Foreign Assets
Control of U.S. Department of Treasury, U.S. Department of State, or other U.S.
government agencies, all as may be amended from time to time.

 

(iii)                          None of the Seller, or, to Seller’s Knowledge,
any of its affiliates or, without inquiry, any of its brokers or other agents,
in any capacity in connection with the purchase of the Property (A) conducts any
business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any person included in the lists set forth in
the preceding paragraph; (B) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order; or (C) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Money Laundering and
Anti-Terrorism Laws.

 

(iv)                          The Seller understands and acknowledges that the
Buyer may become subject to further anti-money laundering regulations, and
agrees to execute instruments, provide information, or perform any other acts as
may reasonably be requested by the Buyer, for the purpose of: (A) carrying out
due diligence as may be required by applicable law to establish the Seller’s
identity and source of funds; (B) maintaining records of such identities and
sources of funds, or verifications or certifications as to the same; and (C)
taking any other actions as may

 

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be required to comply with and remain in compliance with anti-money laundering
regulations applicable to the Seller.

 

(v)                              Neither the Seller, nor any person controlling
or controlled by the Seller, is a country, territory, individual or entity named
on a Government List, and the monies used in connection with this Agreement and
amounts committed with respect thereto, were not and are not derived from any
activities that contravene any applicable anti-money laundering or anti-bribery
laws and regulations (including funds being derived from any person, entity,
country or territory on a Government List or engaged in any unlawful activity
defined under Title 18 of the United States Code, Section 1956(c)(7)).

 

SECTION 4.2.                       Representations and Warranties of the Seller
as to the Asset. The Seller hereby represents and warrants to the Buyer, as of
the date hereof, as follows:

 

(a)                               Operating Agreements.  A correct and complete
list of all material Operating Agreements (and any amendments or modification
thereof) affecting the Property as of the date hereof are set forth on Schedule
4.2(a) attached hereto.  None of such material Operating Agreements have been
modified or amended in any material way, except as set forth on Schedule 4.2(a)
and all material Operating Agreements are in full force and effect.  To Seller’s
Knowledge, the Seller has delivered to the Buyer true and complete copies of
each material Operating Agreement to the extent in the Seller’s possession or
control.  The Seller has neither given nor received any written notice of a
default under any material Operating Agreement which default remains uncured
and, to the Seller’s Knowledge, there is no existing condition that, with notice
or lapse of time or both, would constitute a material default by any party under
any material Operating Agreement.

 

(b)                              Employees. None of the Seller or any of its
affiliates has any employees with respect to the ownership, operation or
maintenance of the Property (other than those in the employ of the Manager). 
Neither the Seller nor, to Seller’s Knowledge, Manager are parties to any
written employment agreement, collective bargaining agreement or compensation
agreement.  To the Seller’s Knowledge, there are no union organization efforts
pending or threatened with respect to any of the Employees.

 

(c)                               Leases. Schedule 4.2(c) sets forth a correct
and complete list of the Tenant Leases and all material Equipment Leases for the
Hotel as of the date hereof.  Except as set forth in Schedule 4.2(c), as of the
date hereof, the Hotel Lease, the Parking Lease, and all material Equipment
Leases and Tenant Leases are in full force and effect and the Seller has
delivered to the Buyer true and complete copies of the Hotel Lease, the Parking
Lease, and all material Equipment Leases and Tenant Leases.  The Seller has
neither given nor received any written notice of a default under the Hotel
Lease, the Parking Lease, or any material Tenant Lease or Equipment Lease which
default remains uncured and, to the Seller’s Knowledge, there is no existing
condition that, with notice or lapse of time or both, would constitute a
material default by any party under the Hotel Lease, the Parking Lease, or any
material Tenant Lease or Equipment Lease.

 

(d)                             Condemnation. As of the date hereof, there is no
pending condemnation or similar proceedings affecting the Property, the Seller
has not received any written notice of any

 

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potential condemnation or similar proceedings and, to the Seller’s Knowledge,
there are no such threatened condemnation or similar proceedings.

 

(e)                               Litigation. Except as disclosed in Schedule
4.2(e) attached hereto, as of the date hereof, there are no actions, suits or
proceedings pending against the Asset in any court or before or by an
arbitration tribunal or regulatory commission, department or agency and, to the
Seller’s Knowledge, none are threatened.  Neither the Seller, nor to the
Seller’s Knowledge, Manager has received any written notice of any such
threatened action or proceeding or litigation.

 

(f)                                Environmental Matters. To the Seller’s
Knowledge, neither the Seller or Manager has, during the Seller’s ownership,
stored, produced or disposed of any Hazardous Materials at the Hotel, other than
such products typically used in the operation of hotels similar to the Hotel. 
The Seller has not received any written notice from any Governmental Authority
of a violation of any applicable Environmental Laws.  The Seller has received no
written notice from any Governmental Authority that the Seller does not have all
required governmental permits and licenses, if any, relating to Hazardous
Materials.  For the purposes of this SECTION 4.2(f), “Environmental Laws” means
any and all federal, state, county and local statutes, laws, regulations and
rules in effect on the date of this Agreement relating to the protection of the
environment or to the generation, recycling, use or reuse, sale, storage,
handling, transportation and disposal of Hazardous Materials.

 

(g)                              Title to Real Property and Personal Property. 
Other than the excluded property set forth in SECTION 2.1(c), the Seller has
good marketable title to the FF&E, Property and Equipment, Retail Merchandise
and Inventories, free and clear of all liens and encumbrances as of the Closing
Date.  The Seller shall own and have good, marketable title to the Property,
free and clear of all liens and encumbrances as of the Closing Date, other than
the Permitted Title Exceptions.

 

(h)                              Franchise Agreement.  All material conditions
and obligations to be performed by the Seller under the Franchise Agreement, as
of the date hereof, have been satisfied.  The Franchise Agreement is in full
force effect.  The Seller has neither given nor received any written notice of a
material default under the Franchise Agreement which default remains uncured
and, to the Seller’s Knowledge, there is no existing condition that, with notice
or lapse of time or both, would constitute a material default by any party under
the Franchise Agreement.

 

(i)                                  Violation of Law.  To Seller’s Knowledge,
the Seller has not received any written notice from any Governmental Authority
or other Person of a violation of any applicable material law with respect to
the ownership, operation or maintenance of the Property within the past 18
months.

 

(j)                                  Compliance with Existing Laws.  The
Licenses and Permits listed on Schedule 4.2(j) represent all of the licenses,
permits and approvals held by the Seller (or its Manager) as relates to its
ownership, operation and use of the Property or any part thereof (whether
transferable or not pursuant to applicable law), each of which is valid and in
full force

 

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and effect, and, to Seller’s Knowledge, no provision, condition or limitation
thereof has been breached or violated.

 

(k)                              Financial Information.  The Seller has provided
to the Buyer profit and loss statements and balance sheets regarding the
Property and the business operations of the Hotel for the Seller’s actual period
of ownership of the Property.  To the Seller’s Knowledge, all of the foregoing
information has been prepared in conformity with generally accepted accounting
principles and the Uniform System of Accounts and present fairly the results of
operations by the Seller (and the Manager) of the Hotel.

 

(l)                                  Taxes.  The Seller has filed or caused to
be filed (on a timely basis since its inception) all Tax Returns required to be
filed with respect to the operations of the Hotel with the appropriate
Governmental Authorities and all such Tax Returns are true, correct and complete
in all material respects.  The Seller has paid all Taxes, including penalties
and interest that were due on or before such date and during the Seller’s
ownership of the Hotel including, without limitation, all sales and use taxes
required to be paid or collected during the Seller’s ownership and operation of
the Hotel (which amounts have been collected and paid, in the ordinary course of
business, to the appropriate Governmental Authority).  There are no (i) actions
currently pending or, to the Seller’s Knowledge, threatened against the Hotel by
any Governmental Authority for the assessment or collection of Taxes; (ii)
audits or other examinations in progress nor has the Hotel nor the Seller been
notified in writing of any request for examination; or (iii) claims for
assessment or collection of Taxes that have been asserted in writing against the
Seller.  There are no outstanding agreements, waivers or consents extending the
statutory period of limitations applicable to any Taxes of the Seller, and the
Seller has not requested any extensions of time within which to file any Tax
Return.

 

SECTION 4.3.                       Covenants of the Seller Prior to Closing.
From the date hereof until Closing or earlier termination of this Agreement:

 

(a)                               Insurance. The Seller or their agents shall
keep the Property insured against fire and other hazards in coverage, amounts
and deductibles not materially less than those in effect as of the date of this
Agreement and otherwise under such terms as the Seller deems advisable
consistent with past practices.

 

(b)                              New Operating Agreements. Without the prior
written consent of the Buyer, which consent shall not be unreasonably withheld
or delayed, the Seller or the Manager or any other agents shall not enter into
any Operating Agreements or Equipment Leases, or renew, amend, terminate or
supplement any such contracts; provided that any of such parties may enter into
or renew such contracts, or amend, terminate or supplement such contracts,
without the Buyer’s consent if such contract is entered into (or renewed,
amended, terminated or supplemented, as the case may be) in the ordinary course
of business at the Property, or is necessary as a result of an emergency to life
or property at the Property and in either case, is either terminable on 90 days
or less notice, without penalty.  If the Seller or the Manager enters into or
renews any such Operating Agreement and/or Equipment Lease, terminates, or
amends or supplements any such contracts, after the date of this Agreement, then
the Seller shall promptly provide written notice and a copy thereof to the Buyer
and, unless the same required the Buyer’s prior written approval pursuant to
this paragraph (b) and such approval was not obtained, the

 

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schedule of contracts attached to the Assignment of Contracts shall be so
modified, and such contract shall be deemed added to Schedule 4.2(a) attached
hereto and Schedule 4.2(a) shall be deemed amended at the Closing to include
such contracts. If a new Operating Agreement and/or Equipment Lease, or a
renewal, amendment, termination or supplement to any such existing contract,
requires the Buyer’s prior written approval or Seller otherwise requests Buyer’s
approval and the Buyer does not object within 7 days after receipt of a copy of
such contract, then the Buyer shall be deemed to have approved such contract.
The Seller and the Manager shall observe and perform all of the material
obligations under the Hotel Lease, the Parking Lease, and the material Operating
Agreements and Equipment Leases, excluding any such Operating Agreements or
Equipment Leases which are terminated in the ordinary course of the operation of
the Hotel or as a result of a default by the other party.

 

(c)                               New Tenant Leases. Without the prior written
consent of the Buyer, the Seller or the Manager or any other agents shall not
execute any new lease, or renew, amend, terminate or supplement any existing
Tenant Lease (unless required by the terms thereof), for space at the Property. 
If the Buyer’s prior written approval was obtained on a new Tenant Lease or the
renewal, amendment or supplement of an existing Tenant Lease, such Tenant Lease
shall be deemed added to Schedule 4.2(c) attached hereto and Schedule 4.2(c)
shall be deemed amended at the Closing to include such Tenant Leases.  If the
Buyer does not object within 10 days after receipt of a copy of a request for
approval of a new Tenant Lease, or to the renewal, amendment, termination or
supplement of an existing Tenant Lease (unless required by the terms thereof),
then the Buyer shall be deemed to have approved such new Tenant Lease, renewal,
amendment, termination or supplement, as the case may be.

 

(d)                             Franchise Agreement. The Seller or the Manager
or any other agents shall observe and perform all of the material obligations
under the Franchise Agreement. Without the prior written consent of the Buyer,
the Seller shall not amend, supplement or terminate the Franchise Agreement.

 

(e)                               Assets. The Seller or the Manager or any other
agents shall not sell, exchange, assign, transfer, convey, remove or otherwise
dispose of all or any of the Asset or any interest therein except for any FF&E,
Inventories, Retail Merchandise, Miscellaneous Personal Property or Property and
Equipment that are sold, replaced or consumed in the ordinary course of business
and the Seller shall maintain the Assets in substantially the same condition as
existed as of the date hereof (reasonable wear, tear and loss excepted).  The
Seller shall (or shall cause the Manager) to also maintain all Inventories and
FF&E at levels maintained in the ordinary course of business as of the date
hereof.

 

(f)                                Operation. The Seller and the Manager shall
continue to operate and maintain the Hotel in substantially the same manner in
which it is being operated and maintained as of the date hereof, and shall
continue to require the Manager to manage the Hotel in accordance with the
Management Agreement; provided that, the Seller shall not perform, or allow to
be performed, any capital improvements at the Hotel including, without
limitation, any capital improvements or expenditures as may be contemplated by
the existing capital expenditure budget for the Hotel, other than (i) those
required in the case of an emergency to protect life or property, (ii) those
required to comply with the existing product improvement plan, if any, or

 

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other requirements imposed by the Franchisor, or (iii) those undertaken in the
ordinary course of business which are fully paid for by the Seller prior to
Closing.

 

(g)                              Management Agreement. At or prior to the
Closing, the Seller shall cause to be terminated at the Seller’s expense
(without payment of any termination fee, termination penalty or termination
damages being payable by the Buyer) the Management Agreement effective as of the
Cut-Off Time.

 

(h)                              Consents.  Upon the Buyer’s written request or
the extent specifically noted in Schedule 4.1(c), the Seller shall use
commercially reasonable efforts to obtain all of the consents set forth on
Schedule 4.1(c) or otherwise required to make the representation set forth in
SECTION 4.1(c) true and accurate without exception prior to the Closing.

 

(i)                                  Exclusivity.  Neither the Seller, nor any
Affiliate nor any of their respective members, partners, or agents (including,
without limitation, the Broker) shall offer the Property, entertain and/or
solicit offers for the Property or otherwise negotiate for the sale of the
Property or make any information about the Property available (for purpose of
sale or refinance) to any Person other than the Buyer, its Affiliates and their
respective designees, agents and/or authorized third parties.

 

SECTION 4.4.                       Updating.  The foregoing representations and
warranties under this ARTICLE IV shall be true as of the date of this Agreement
and as of the date of Closing.  In the event that the Seller becomes aware of
any changes in the foregoing representations and warranties occurring after the
Effective Date and prior to the date of Closing, the Seller shall promptly
disclose such changes in writing to the Buyer.  Should any of the Seller’s
representations and warranties either be found to be incorrect in any materially
detrimental respect as the result of any changes occurring after the Effective
Date but prior to the Closing, the Seller shall notify the Buyer of such issue
within 10 days of its discovery.  The Seller shall use reasonable efforts to
attempt to cure the same by the Closing.  If the Seller is unable to cure same
by the Closing, the Closing shall be postponed until 5 Business Days following
the Buyer’s receipt of proof reasonably satisfactory to the Buyer that such
matters have been cured, provided, however, if the Seller is unable to cure the
same within 15 days after the scheduled Closing, the Buyer shall be entitled to
elect by giving the Seller written notice that the Buyer either (i) waives the
same and shall proceed to Closing or (ii) terminates this Agreement, whereupon
the Earnest Money shall be immediately returned to the Buyer, and, upon return
of the Earnest Money, this Agreement shall terminate and the Buyer and the
Seller shall have no further rights, liabilities or obligations hereunder
(except as expressly survive the termination of this Agreement).  For avoidance
of doubt, if any of the Seller’s representations and warranties were incorrect
when made on the Effective Date, the Seller shall be in breach of this
Agreement.

 

ARTICLE V.

 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER

 

The Buyer hereby represents and warrants to the Seller, as of the date hereof,
as follows:

 

SECTION 5.1.                       Formation; Existence. It is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware.

 

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SECTION 5.2.                       Power; Authority. It has all requisite power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement, the purchase of the Asset and the
consummation of the transactions provided for herein have been duly authorized
by all necessary action on the part of the Buyer. This Agreement has been duly
executed and delivered by the Buyer and constitutes the legal, valid and binding
obligation of the Buyer enforceable against the Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights and by
general principles of equity (whether applied in a proceeding at law or in
equity).

 

SECTION 5.3.                       No Consents. No consent, license, approval,
order, permit or authorization of, or registration, filing or declaration with,
any court, administrative agency or commission or other Governmental Authority
or instrumentality, domestic or foreign, is required to be obtained or made in
connection with the Buyer’s execution, delivery and performance of this
Agreement or any of the transactions required or contemplated hereby.

 

SECTION 5.4.                       No Conflicts. The execution, delivery and
compliance with, and performance of the terms and provisions of, this Agreement,
and the acquisition of the Asset, will not (i) conflict with or result in any
violation of its organizational documents, (ii) conflict with or result in any
violation of any provision of any bond, note or other instrument of
indebtedness, contract, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party in its individual
capacity, or (iii) violate any existing term or provision of any order, writ,
judgment, injunction, decree, statute, law, rule or regulation applicable to it
or its assets or properties.

 

SECTION 5.5.                       Anti-Terrorism Laws.

 

(a)                               None of the Buyer or, to the Buyer’s
Knowledge, its affiliates, is in violation of the Executive Order or any
Anti-Money Laundering and Anti-Terrorism Law.

 

(b)                              None of the Buyer or, to the Buyer’s Knowledge,
its affiliates, is acting, directly or indirectly, on behalf of terrorists,
terrorist organizations or narcotics traffickers, including those persons or
entities that appear on the Annex to the Executive Order, or are included on any
relevant lists maintained by the Office of Foreign Assets Control of U.S.
Department of Treasury, U.S. Department of State, or other U.S. government
agencies, all as may be amended from time to time.

 

(c)                               None of the Buyer or, to the Buyer’s
Knowledge, its affiliates or, without inquiry, any of its brokers or other
agents, in any capacity in connection with the purchase of the Property (A)
conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any person included in the
lists set forth in the preceding paragraph; (B) deals in, or otherwise engages
in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order; or (C) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Money
Laundering and Anti-Terrorism Laws.

 

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(d)                             The Buyer understands and acknowledges that the
Seller may become subject to further anti-money laundering regulations, and
agrees to execute instruments, provide information, or perform any other acts as
may reasonably be requested by the Seller, for the purpose of: (A) carrying out
due diligence as may be required by applicable law to establish the Buyer’s
identity and source of funds; (B) maintaining records of such identities and
sources of funds, or verifications or certifications as to the same; and
(C) taking any other actions as may be required to comply with and remain in
compliance with anti-money laundering regulations applicable to the Buyer.

 

(e)                               Neither the Buyer, nor any person controlling
or controlled by the Buyer, is a country, territory, individual or entity named
on a Government List, and the monies used in connection with this Agreement and
amounts committed with respect thereto, were not and are not derived from any
activities that contravene any applicable anti-money laundering or anti-bribery
laws and regulations (including funds being derived from any person, entity,
country or territory on a Government List or engaged in any unlawful activity
defined under Title 18 of the United States Code, Section 1956(c)(7)).

 

SECTION 5.6.                       Bankruptcy.  No Act of Bankruptcy has
occurred with respect to the Buyer.

 

SECTION 5.7.                       AS-IS, WHERE-IS.

 

(a)                               The Buyer does hereby acknowledge, represent,
warrant and agree to and with the Seller that, except as otherwise expressly
provided in this Agreement or in any closing documents to be delivered by the
Seller to the Buyer at Closing:  (i) the Buyer is expressly purchasing the Asset
(and any part thereof) in its existing condition “AS IS, WHERE IS, AND WITH ALL
FAULTS” whether known or unknown with respect to all facts, circumstances,
conditions and defects, both patent and latent; (ii) the Seller has no
obligation to inspect for, repair or correct any such facts, circumstances,
conditions or defects or to compensate Buyer for same; (iii) the Seller has
provided the Buyer sufficient opportunity to make such independent factual,
physical and legal examinations and inquiries as the Buyer deems necessary or
appropriate with respect to the Asset and the transaction contemplated by this
Agreement; (iv) the Seller has specifically bargained for the assumption by the
Buyer of all responsibility to inspect and investigate the Asset and of all risk
of adverse conditions and has structured the Purchase Price and other terms of
this Agreement in consideration thereof; (v) the Buyer has undertaken or will
undertake all such inspections and investigations of the Asset as the Buyer
deems necessary or appropriate with respect to the Asset and the suitability of
the Asset for Buyer’s intended use, and based upon same, the Buyer is and will
be relying strictly and solely upon such inspections and examinations and the
advice and counsel of its own consultants, agents, legal counsel and officers,
the Buyer has approved or will approve the Asset in all respects, and the Buyer
is and will be fully satisfied that the Purchase Price is fair and adequate
consideration for the Asset; and (vi) the Seller is not making and has not made
any warranty or representation with respect to any materials or other data
provided by the Seller to the Buyer (whether prepared by or for the Seller or
others) or the education, skills, competence or diligence of the preparers
thereof or the physical condition or any other aspect of all or any part of the
Asset as an inducement to the Buyer to enter into this Agreement and thereafter
to purchase the Asset or for any other purpose.  Without limiting the generality
of any of the foregoing, the

 

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Buyer specifically acknowledges that the Seller does not represent or in any way
warrant the accuracy of any marketing information or pamphlets listing or
describing the Asset or the information, if any, provided by the Seller to the
Buyer; and

 

(b)                              EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE DELIVERED BY THE SELLER TO THE BUYER
AT CLOSING, THE SELLER HEREBY DISCLAIMS ALL WARRANTIES OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING WARRANTIES OF HABITABILITY AND FITNESS FOR PARTICULAR
PURPOSES), WHETHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO
WARRANTIES WITH RESPECT TO THE PROPERTY, ZONING, LAND VALUE, AVAILABILITY OF
ACCESS OR UTILITIES, INGRESS OR EGRESS, GOVERNMENTAL APPROVALS, OR THE SOIL
CONDITIONS OF THE LAND.  THE BUYER FURTHER ACKNOWLEDGES THAT, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE
DELIVERED BY THE SELLER TO THE BUYER AT CLOSING, BUYER IS BUYING THE PROPERTY
“AS IS” AND IN ITS PRESENT CONDITION AND THAT EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE DELIVERED BY THE
SELLER TO THE BUYER AT CLOSING, THE BUYER IS NOT RELYING UPON ANY OTHER
REPRESENTATION OF ANY KIND OR NATURE MADE BY THE SELLER WITH RESPECT TO THE LAND
OR THE PROPERTY, AND THAT, IN FACT, NO SUCH REPRESENTATIONS WERE MADE EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS TO BE
DELIVERED BY THE SELLER TO THE BUYER AT CLOSING.

 

ARTICLE VI.

 

CONDITIONS PRECEDENT TO CLOSING

 

SECTION 6.1.                       Conditions Precedent to the Seller’s
Obligations. The obligation of the Seller to consummate the transfer of the
Asset as contemplated by this Agreement on the Closing Date is subject to the
satisfaction (or waiver by the Seller) as of the Closing of the following
conditions:

 

(a)                               Each of the representations and warranties
made by the Buyer in this Agreement shall be true and correct in all material
respects when made and on and as of the Closing Date as though such
representations and warranties were made on and as of the Closing Date.

 

(b)                              The Buyer shall have performed or complied in
all material respects with each obligation and covenant required by this
Agreement to be performed or complied with by the Buyer on or before the
Closing.

 

(c)                               No order or injunction of any court or
administrative agency of competent jurisdiction nor any statute, rule,
regulation or executive order promulgated by any Governmental Authority of
competent jurisdiction shall be in effect or threatened in writing as of

 

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the Closing which restrains or prohibits the transfer of the Asset or the
consummation of any other transaction contemplated hereby.

 

(d)                             The Buyer shall have made (or caused to have
been made) all of the deliveries required to be made by the Buyer under
SECTION 7.1.

 

(e)                               The Seller shall have received evidence that
the Franchise Agreement has been terminated.

 

(f)                                Simultaneously with the execution of this
Agreement, the Buyer or affiliates of Buyer (collectively, “Affiliate Buyers”)
are entering into the Related Agreements with other sellers that are affiliates
of Seller (collectively, “Other Sellers”).  Except as otherwise set forth below,
it shall be a condition precedent to the Seller’s obligation to close on the
sale of the Asset, that (i) the closing date under the Related Agreements shall
be the same as the Closing Date under this Agreement and (ii) the closing of the
Related Agreements shall take place simultaneously with the Closing hereunder
(i.e., the closing in this Agreement or any Related Agreement will have occurred
when all of the conditions precedent to closing set forth in the applicable
agreement have been met or waived by the appropriate party, including without
limitation the Title Company’s receipt of the applicable deed or assignment of
lease and its unconditional and irrevocable commitment to (x) record the deed or
assignment of lease; and (y) issue the Title Policy effective as of such date,
notwithstanding that such deed or assignment of lease may not have been
recorded).  If any of the Buyer or Affiliate Buyers defaults under this
Agreement or any Related Agreement, as applicable, such default shall be deemed
a default by the Buyer and the Affiliate Buyers under this Agreement and all of
the Related Agreements.  Notwithstanding the foregoing, in the event that any of
the Seller or Other Sellers is in default under this Agreement or any other
Related Agreement (any such agreement being a “Defaulted Agreement”), as
applicable, and the respective parties thereto fail to close under such
Defaulted Agreement, then, so long as the Acquisition Threshold is met, a
closing under such Defaulted Agreement shall not be a condition precedent to the
Seller’s obligation to close under this Agreement or any other Related Agreement
(so long as the Acquisition Threshold is met); provided, however, in the event
that the Acquisition Threshold is not met, then such defaults shall constitute a
default under this Agreement and all other Related Agreements and the Buyer
shall have the right to terminate this Agreement (and all other Related
Agreements) and the Seller shall be deemed in breach hereof whereupon the Buyer
shall have the remedies set forth in SECTION 11.2(c), except that the aggregate
amount of out-of-pocket costs and expenses that the Buyer will be entitled to
recover from the Seller for damages under this Agreement and the other Related
Agreements shall in no event exceed Three Hundred Thousand Dollars ($300,000.00)
under SECTION 11.2(c).  Additionally, if any of the Buyer or Affiliate Buyers
elects to terminate this Agreement or any Related Agreement, as applicable,
under any provision of this Agreement or such Related Agreement that expressly
gives the Buyer (or an Affiliate Buyer, as applicable) the right to terminate
(other than as the result of the Seller’s default for which the preceding
sentence in this clause (f) shall control), then any such notice to terminate
under any such agreement shall be deemed an election to terminate this Agreement
and all of the Related Agreements, it being the intention of the parties that
except as otherwise set forth in this clause (f), there shall be no Closing
under this Agreement unless there is a closing under the Related Agreements and
vice versa.

 

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SECTION 6.2.                       Conditions to the Buyer’s Obligations. The
obligation of the Buyer to consummate the transactions contemplated by this
Agreement and pay the Purchase Price is subject to the satisfaction (or waiver
by the Buyer) as of the Closing of the following conditions:

 

(a)                               Each of the representations and warranties
made by the Seller in this Agreement shall be true and correct in all material
respects when made and on and as of the Closing Date as though such
representations and warranties were made on and as of Closing Date subject to
any changes permitted pursuant to this Agreement.

 

(b)                              The Seller shall have performed or complied in
all material respects with each obligation and covenant required by this
Agreement to be performed or complied with by the Seller on or before the
Closing.

 

(c)                               No order or injunction of any court or
administrative agency of competent jurisdiction nor any statute, rule,
regulation or executive order promulgated by any Governmental Authority of
competent jurisdiction shall be in effect or threatened in writing as of the
Closing which restrains or prohibits the transfer of the Asset or the
consummation of any other transaction contemplated hereby.

 

(d)                             The Title Company shall have issued to the Buyer
the Title Policy (or a “marked-up” title commitment committing to issue such
Title Policy) effective and dated as of the Closing Date.

 

(e)                               The Seller shall have made (or caused to have
been made) all of the deliveries required to be made by the Seller under
SECTION 7.2 and the respective landlord under each of the Hotel Lease and the
Parking Lease shall have provided any required consent to the assignment of the
Hotel Lease and the Parking Lease as contemplated under this Agreement.

 

(f)                                The Seller shall have delivered evidence that
the Management Agreement has been terminated.

 

(g)                              Except as otherwise set forth below, it shall
be a condition precedent to the Buyer’s obligation to close on the sale of the
Asset, that (i) the closing date under the Related Agreements shall be the same
as the Closing Date under this Agreement and (ii) the closing of the Related
Agreements shall take place simultaneously with the Closing hereunder (i.e., the
closing in this Agreement or any Related Agreement will have occurred when all
of the conditions precedent to closing set forth in the applicable agreement
have been met or waived by the appropriate party, including without limitation
the Title Company’s receipt of the applicable deed or assignment of lease and
its unconditional and irrevocable commitment to (x) record the deed or
assignment of lease; and (y) issue the Title Policy effective as of such date,
notwithstanding that such deed or assignment of lease may not have been
recorded).  Notwithstanding the foregoing, in the event that any of the Seller
or Other Sellers is in default under this Agreement or any other Related
Agreement, as applicable, and, the respective parties thereto fail to close
under such Defaulted Agreement, then, so long as the Acquisition Threshold is
met, a closing under such Defaulted Agreement shall not be a condition precedent
to the Buyer’s obligation to close under this Agreement or any other Related
Agreement (so long as the Acquisition Threshold is met); provided, however, in
the event that the Acquisition Threshold is

 

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not met, then such defaults shall constitute a default under this Agreement and
all other Related Agreements and the Buyer shall have the right to terminate
this Agreement (and all other Related Agreements) and the Seller shall be deemed
in breach hereof whereupon Buyer shall have the remedies set forth in
SECTION 11.2(c), except that the aggregate amount of out-of-pocket costs and
expenses that the Buyer will be entitled to recover from the Seller for damages
under this Agreement and the other Related Agreements shall in no event exceed
Three Hundred Thousand Dollars ($300,000.00) under SECTION 11.2(c). 
Additionally, if any of the Buyer or Affiliate Buyers elects to terminate this
Agreement or any Related Agreement, as applicable, under any provision of this
Agreement or such Related Agreement that expressly gives the Buyer (or an
Affiliate Buyer, as applicable) the right to terminate (other than as the result
of the Seller’s default for which the preceding sentence in this clause
(g) shall control), then any such notice to terminate under any such agreement
shall be deemed an election to terminate this Agreement and all of the Related
Agreements, it being the intention of the parties that except as otherwise set
forth in this clause (g), there shall be no Closing under this Agreement unless
there is a closing under the Related Agreements and vice versa.

 

ARTICLE VII.

 

CLOSING DELIVERIES

 

SECTION 7.1.                       The Buyer Closing Deliveries.

 

The Buyer shall deliver, or caused to be delivered, the following at Closing:

 

(a)                               The Purchase Price in immediately available
federal funds to Escrow Agent’s account and instructions to Escrow Agent to
release the amount of the Purchase Price, as increased or decreased by
pro-rations and adjustments as provided in this Agreement, to the Seller;

 

(b)                              An assignment and assumption of the Seller’s
interest in the Tenant Leases (an “Assignment of Leases”) duly executed by the
Buyer in substantially the form of Exhibit A attached hereto;

 

(c)                               An assignment and assumption of the Operating
Agreements, Equipment Leases and Bookings (an “Assignment of Contracts”) duly
executed by the Buyer in substantially the form of Exhibit B attached hereto;

 

(d)                             An assignment and assumption agreement with
respect to the assignment of the Hotel Lease, in a form reasonably acceptable to
the Seller and the Buyer and the Title Company, duly executed by the Buyer;

 

(e)                               An assignment and assumption agreement with
respect to the assignment of the Parking Lease, in a form reasonably acceptable
to the Seller and the Buyer, duly executed by the Buyer;

 

(f)                                Any transfer tax returns which are required
by law and the regulations issued pursuant thereto in connection with the
payment of all state or local real property transfer taxes that are payable or
arise as a result of the consummation of the transactions contemplated

 

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by this Agreement, in each case, as prepared by the Title Company and approved
by the Seller and the Buyer and duly executed by the Buyer;

 

(g)                              A certificate of Buyer that the representations
and warranties of Buyer set forth in ARTICLE V are true and correct in all
material respects as of the Closing Date, subject to changes occurring in
accordance with this Agreement disclosed in such certificate;

 

(h)                              A closing statement prepared and approved by
the Seller and the Buyer, consistent with the terms of this Agreement; and

 

(i)                                  Any additional documents that the Seller or
the Title Company may reasonably require for the proper consummation of the
transactions contemplated by this Agreement, including without limitation any
requirements from the Buyer for the issuance of the Title Policy.

 

SECTION 7.2.                       The Seller Closing Deliveries.

 

The Seller shall deliver, or cause to be delivered, the following documents at
Closing:

 

(a)                               An assignment and assumption agreement with
respect to the assignment of the Hotel Lease, in a form reasonably acceptable to
the Seller and the Buyer and the Title Company, duly executed by the Seller;

 

(b)                              An assignment and assumption agreement with
respect to the assignment of the Parking Lease, in a form reasonably acceptable
to the Seller and the Buyer, duly executed by the Seller;

 

(c)                               A bill of sale (a “Bill of Sale”) duly
executed by the Seller in substantially the form of Exhibit C attached hereto,
transferring the FF&E, Property and Equipment, Inventories, Retail Merchandise,
Miscellaneous Personal Property to the Buyer;

 

(d)                             An Assignment of Leases, duly executed by the
Seller;

 

(e)                               An Assignment of Contracts, duly executed by
the Seller;

 

(f)                                A general assignment of the Licenses and
Permits and Intangible Property (the “Assignment of Intangibles”) duly executed
by the Seller in substantially the form of Exhibit D attached hereto;

 

(g)                              An affidavit that the Seller is not a “foreign
person” within the meaning of the Foreign Investment in Real Property Tax Act of
1980, as amended, in a form reasonably acceptable to the Buyer (the “FIRPTA”),
together with any state specific equivalent of the FIRPTA;

 

(h)                              A closing statement prepared and approved by
the Seller and the Buyer, consistent with the terms of this Agreement;

 

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(i)                                  All Books and Records, Licenses and Permits
(to the extent assignable), and receipts relating to the ownership, operating
and management of the Hotel;

 

(j)                                  The customary and reasonable title company
affidavits and other documentation customarily required in the State or County
in which the Land is located;

 

(k)                              A certificate of Seller that the
representations and warranties of Seller set forth in SECTION 4.1 and
SECTION 4.2 hereof are true and correct in all material respects as of the
Closing Date, subject to changes permitted in accordance with this Agreement and
disclosed in such certificate;

 

(l)                                  Evidence of organization, existence and
authority of the Seller to consummate the transactions contemplated hereunder,
and the authority of any person executing documents on behalf of such entities
reasonably satisfactory to the Buyer and the Title Company;

 

(m)                          Any transfer tax returns which are required by law
and the regulations issued pursuant thereto in connection with the payment of
all state or local real property transfer taxes that are payable or arise as a
result of the consummation of the transactions contemplated by this Agreement,
in each case, as prepared by the Title Company and approved by the Seller and
the Buyer and duly executed by the Seller;

 

(n)                              Certificates of title for any motorized
vehicles owned and included in the Asset, duly endorsed by the Seller; and

 

(o)                              Any additional documents that the Buyer or the
Title Company may reasonably require for the proper consummation of the
transactions contemplated by this Agreement.

 

ARTICLE VIII.

 

TRANSACTION COSTS; RISK OF LOSS

 

SECTION 8.1.                       Transaction Costs.  The Buyer and the Seller
agree to comply with all real estate or other transfer tax laws applicable to
the sale of the Asset.  In addition to their respective apportionment
obligations hereunder, (i) the Seller and the Buyer shall each be responsible
for the payment of the costs of their respective legal counsel, advisors and
other professionals employed thereby in connection with the transactions
contemplated by this Agreement; (ii) the Buyer will be responsible for (A) its
due diligence costs and any costs relating to the transfer of the New Franchise;
(B) the policy premiums in respect of any mortgage policies obtained by the
Buyer, (C) all costs for any new survey and environmental reports with respect
to the Property, (D) obtaining any financing the Buyer may elect to obtain
(including any fees, financing costs, mortgage and recordation taxes and
intangible taxes in connection therewith), (E) any applicable documentary
transfer taxes or assignment of lease recordation taxes; (F) the cost of the
Title Policy, and (G) all other costs which are the responsibility under
applicable law or local custom for a buyer to pay; and (iii) the Seller shall
pay for (1) all fees and expenses arising from the termination of the Management
Agreement and (2) all other costs which are the responsibility under applicable
law or local custom for a seller to pay. The fees, if any, of the Escrow Agent
and any assumption fee relating to the Hotel Lease shall be equally divided
between the Seller and the Buyer.

 

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SECTION 8.2.                       Risk of Loss.

 

(a)                               If, on or before the Closing Date, (i) the
Property or any portion thereof shall be damaged or destroyed by fire or other
casualty or (ii) any Governmental Authority or other entity having condemnation
authority shall take the Property or any portion thereof or institute an eminent
domain proceeding by delivering written notice thereof to the Seller and the
same is not dismissed prior to the Closing, then the Seller shall promptly
notify the Buyer and at Closing, the Purchase Price will be reduced by an amount
equal to (A) the net proceeds (other than on account of business or rental
interruption relating to the period prior to Closing), if any, received by the
Seller on or prior to the Closing as a result of such casualty or condemnation
plus (B) the lesser of the amount of any deductible or the cost of any damage to
the Property that falls within such deductible less (C) any amounts spent by the
Seller to restore the Property. If as of the Closing Date, the Seller has not
received all or any portion of such insurance or condemnation proceeds, then the
parties shall nevertheless consummate on the Closing Date the conveyance of the
Asset (without any credit for such as yet unpaid insurance or condemnation
proceeds except for a credit for the lesser of any deductible under such
insurance or the cost of any damage to the Property that falls within such
deductible ) and the Seller will at Closing assign to the Buyer all rights of
the Seller, if any, to the insurance or condemnation proceeds (other than on
account of business or rental interruption relating to the period prior to
Closing but including all business or rental interruption relating to the period
on or after Closing) and to all other rights or claims arising out of or in
connection with such casualty or condemnation and the Buyer may notify all
appropriate insurance companies of its interest in the insurance proceeds.

 

(b)                              Notwithstanding the provisions of
SECTION 8.2(a), if, on or before the Closing Date, the Property or any portion
thereof shall be (i) damaged or destroyed by a Material Casualty or (ii) taken
as a result of a Material Condemnation, the Buyer shall have the right,
exercised by written notice to the Seller no more than 10 Business Days after
the Buyer has received notice of such Material Casualty or Material
Condemnation, to terminate this Agreement, in which event the Earnest Money
shall be refunded to the Buyer, this Agreement shall terminate, and neither
party shall have any further rights, liabilities or obligations hereunder other
than those which expressly survive the termination of this Agreement. If the
Buyer fails to timely terminate this Agreement in accordance with this
SECTION 8.2(b), the provisions of SECTION 8.2(a) shall apply. As used in this
SECTION 8.2(b), a “Material Casualty” shall mean any damage to the Property or
any portion thereof by fire or other casualty that, in the Buyer’s reasonable
judgment, may be expected to cost in excess of Five Hundred Thousand Dollars
($500,000) to repair. As used in this SECTION 8.2(b), a “Material Condemnation”
shall mean a taking of the Property or a taking of any material portion of the
Hotel as a result of a condemnation or eminent domain proceeding (including the
institution of such proceeding pursuant to a written notice thereof to the
Seller) that impairs the use and value of the Property or otherwise causes the
Property to be non-compliant with applicable law, and which (in each instance)
cannot be restored by Seller (at Seller’s sole cost and expense) to
substantially the same use and value as before the taking.

 

(c)                               Subject to the provisions of this SECTION 8.2,
the risk of loss or damage to the Property shall remain with the Seller until
Closing.

 

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ARTICLE IX.

 

ADJUSTMENTS

 

SECTION 9.1.                       Adjustments. The Seller shall be responsible
for and shall pay promptly (or reduce the Purchase Price or credit the Buyer)
for all operating expenses or liabilities with respect to the Asset, including,
without limitation, all real property, personal property and sales and use
taxes, which accrue with respect to the Asset with respect to all periods on and
prior to the Cut-Off Time and the Buyer shall be responsible for and shall pay
promptly all operating expenses and liabilities with respect to the Asset,
including without limitation all real property, personal property and sales and
use taxes, which accrue with respect to the Asset with respect to all periods
after the Cut-Off Time. Unless otherwise provided below, the following are to be
adjusted and prorated between the Seller and the Buyer as of 11:59 P.M. (local
time at the location of the Land) on the day preceding the Closing (the “Cut-Off
Time”), based upon a 365 day year, and the net amount thereof under this
Section shall be added to (if such net amount is in the Seller’s favor) or
deducted from (if such net amount is in the Buyer’s favor) the Purchase Price
payable at Closing:

 

(a)                               Taxes and Assessments. All real estate and
personal property taxes and assessments (including, without limitation, payment
in lieu of taxes and central business district taxes, special assessments and
improvement assessments) levied against the Asset shall be prorated as of the
Cut-Off Time between the Buyer and the Seller. If the amount of any such taxes
is not ascertainable on the Closing Date, the proration for such taxes shall be
estimated based on the most recent available bill; provided, however, that after
the Closing, the Seller and the Buyer shall re-prorate the taxes and pay any
deficiency in the original proration to the other party promptly upon receipt of
the actual bill for the relevant taxable period. In the event that the Asset or
any part thereof shall be or shall have been affected by an assessment or
assessments which are payable in installments, the Seller shall, at the Closing,
be responsible for any installments due prior to the Closing and the Buyer shall
be responsible for any installments due on or after the Closing, provided that
such assessments shall in any event be prorated between the Buyer and the Seller
as of the Cut-Off Time.

 

(b)                              Water and Sewer Charges, Utilities. All utility
services shall be prorated as of the Cut-Off Time between the Buyer and the
Seller. To the extent possible, readings shall be obtained for all utilities as
of the Cut-Off Time. If not possible, the cost of such utilities shall be
prorated between the Seller and the Buyer by estimating such cost on the basis
of the most recent bill for such service; provided, however, that after the
Closing, the Seller and the Buyer shall reprorate the amount for such utilities
and pay any deficiency in the original proration to the other party promptly
upon receipt of the actual bill for the relevant billing period. The Seller
shall receive a credit for all deposits transferred to the Buyer or which remain
on deposit for the benefit of the Buyer with respect to such utility contracts,
otherwise such deposits shall be refunded to the Seller.

 

(c)                               Operating Agreements and Equipment Leases.
Charges and payments (including the reimbursement of expenses) under all
Operating Agreements and Equipment Leases.

 

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(d)                             Miscellaneous Revenues. Revenues, if any,
arising out of telephone booths, vending machines, parking, or other income
producing agreements, on an if, as and when collected basis.

 

(e)                               Tenant Leases. Any rents and other amounts
prepaid, accrued or due and payable under the Hotel Lease, the Parking Lease,
and the Tenant Leases shall be prorated as of the Cut-Off Time between the Buyer
and the Seller. The Buyer shall receive a credit for all cash security deposits
under the Tenant Leases and transferred to the Buyer hereunder (to the extent
such security deposits are not otherwise physically transferred to the Buyer). 
The Seller shall receive a credit for all cash security deposits held pursuant
to the Hotel Lease and the Parking Lease.

 

(f)                                Licenses and Permits. All amounts prepaid,
accrued or due and payable under any Licenses and Permits (other than utilities
which are separately prorated under SECTION 9.1(b)) transferred to the Buyer
shall be prorated as of the Cut-Off Time between the Seller and the Buyer. The
Seller shall receive a credit for all deposits made by the Seller under the
Licenses and Permits which are transferred to the Buyer or which remain on
deposit for the benefit of the Buyer.

 

(g)                              Deposits for Bookings. The Buyer shall receive
a credit for all prepaid deposits for Bookings scheduled for accommodations or
events on or after the Closing Date, except to the extent such deposits are
transferred to the Buyer and for all other amounts prepaid by guests or other
customers for accommodations or events on or after the Closing Date.  The Buyer
also shall receive a credit for any and all gift certificates or similar
unredeemed entitlements outstanding as of the Closing Date acquired by any
Person for any accommodations, events or other services provided at or by the
Property.

 

(h)                              Restaurants and Bars, Etc. The Seller shall
cause the transactions in the restaurants and bars in the Hotel to be closed out
as of the Cut-Off Time and all revenues with respect thereto and with respect to
other services to guests of the Hotel, including without limitation, health club
revenues, room service revenues and banquet revenues, if any, shall be prorated
between the Seller and the Buyer as of the Cut-Off Time.

 

(i)                                  Vending Machines. The Seller shall remove
(or cause to be removed) all monies from all vending machines, laundry machines,
pay telephones and other coin-operated equipment as of the Cut-Off Time and
shall retain all monies collected therefrom as of the Cut-Off Time, and the
Buyer shall be entitled to any monies collected therefrom after the Cut-Off
Time.

 

(j)                                  Trade Payables. Except to the extent an
adjustment or proration is made under another subsection of this SECTION 9.1,
(i) the Seller shall pay (or caused to be paid) in full prior to the Closing all
amounts payable to vendors or other suppliers of goods or services to the Hotel
(the “Trade Payables”) which are due and payable as of the Cut-Off Time for
which goods or services have been delivered to the Hotel prior to Closing, and
(ii) the Buyer shall receive a credit for the amount of such Trade Payables
which have accrued, but are not yet due and payable as of the Cut-Off Time, and
the Buyer shall pay all such Trade Payables accrued as of the Cut-Off Time when
such Trade Payables become due and payable up to the amount of

 

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such credit; provided, however, the Seller and the Buyer shall reprorate the
amount of credit for any Trade Payables and pay any deficiency in the original
proration to the other party promptly upon receipt of the actual bill for such
goods or services.  The Seller shall receive a credit for all advance payments
or deposits made with respect to FF&E, Retail Merchandise, Property and
Equipment and Inventories ordered, but not delivered to the Hotel prior to the
Closing Date, and the Buyer shall pay the amounts which become due and payable
for such FF&E, Retail Merchandise, Property and Equipment and Inventories which
were ordered but not delivered prior to Closing.

 

(k)                              Cash On Hand. The Seller shall receive a credit
for all cash on hand at the Hotel and all cash on deposit in any house bank at
the Hotel as of the Closing and all such cash on hand and cash on deposit in any
house bank at the Hotel shall be transferred to and belong to the Buyer from and
after the Closing. The Seller shall retain all amounts in any operating accounts
of the Hotel in any bank, and there shall be no credit or adjustment hereunder
with respect to such cash; provided, however, the Seller shall be entitled to a
return of any reserve fund or account established pursuant to the terms of the
Management Agreement which the Seller terminates at Closing, if any.

 

(l)                                  Employee Compensation. The Seller shall pay
(or cause to be paid) all wages, payroll taxes and fringe benefits (including
accrued vacation pay) as well as social security, unemployment compensation,
health, life and disability insurance and pension fund contributions, if any, of
the Employees through the Cut-Off Time.  On the Closing Date, the Buyer shall
rehire or offer (or cause the Buyer’s manager to rehire or offer) employment at
the Property to a sufficient number of Employees in the same position or job
classification and at substantially the same wage rate or salary as such
Employee held and enjoyed immediately prior to the Closing Date and for a
sufficient period of time so as to avoid triggering the provisions of the Worker
Adjustment and Retraining Notification Act and similar local or State laws or
regulations (the “Employment Acts”).  The Buyer or the Buyer’s Property manager
shall be responsible for paying all salary and employee benefit obligations in
connection with the employment or work of the Employees on or after the Closing
Date, including any obligations under the Employment Acts arising as of or after
the Closing Date.  The Buyer shall indemnify and hold the Seller and the Manager
harmless for any liabilities, obligations, costs, expenses and damages incurred
by the Seller and the Manager and any claims, demands, actions and
administrative proceedings (including, without limitation, all reasonable
attorneys’ fees and costs incurred in connection therewith) relating to, arising
from or in connection with the Buyer’s failure to comply with its obligations
under this Section.

 

(m)                          Additional Taxes. The Buyer and the Seller each
acknowledge that certain taxes and assessments accrue and are payable to the
various local governments by any business entity operating a hotel and its
related facilities. Included in those taxes and assessments may be business and
occupation taxes, retail sales taxes, gross receipts taxes, and other special
lodging or hotel taxes and assessments. For purposes of this Agreement, all of
such taxes and assessments (expressly excluding (x) taxes and assessments
covered in SECTION 9.1(a) of this Agreement, which shall be governed by the
provisions of such Section, and (y) corporate franchise taxes, and federal,
state and local income taxes) shall be allocated between the Seller and the
Buyer such that those attributable to the period prior to the Cut-Off Time shall
be allocable to the Seller and those attributable to the period after the
Cut-Off Time shall be

 

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allocable to the Buyer (with the attribution of such taxes and assessments
hereunder to be done in a manner consistent with the attribution under this
Agreement of the applicable revenues on which such taxes and assessments may be
based). The Seller shall be obligated to pay all such taxes and assessments
which accrue with respect to the period prior to the Cut-Off Time, and the Buyer
shall be obligated to pay all such taxes and assessments which accrue with
respect to the period after the Cut-Off Time.

 

(n)                              Other. If applicable, the Purchase Price shall
be adjusted at Closing to reflect the adjustment of any other item which,
(i) under the explicit terms of this Agreement, is to be apportioned at Closing,
or (ii) is customarily prorated at the closing of similar transactions, except
to the extent otherwise provided for in this Agreement.

 

SECTION 9.2.                       Closing Statement.

 

(a)                               In connection with the prorations required
under SECTION 9.1, not later than 5 Business Days prior to the intended Closing
Date, the Seller will use commercially reasonable efforts to have prepared a
proforma of the accounting for the transaction that reflects the Seller’s good
faith estimate of how items subject to proration will be accounted for by
crediting or debiting appropriate accounts either pre or post Closing,
respectively (the “Draft Closing Statement”).  The Draft Closing Statement shall
reflect the parties’ good faith estimate of all of the prorations, credits
and/or other adjustments to be made at Closing.  On the day prior to Closing,
the Seller and the Buyer will use commercially reasonable efforts to conduct
inventories, examinations and audits of the Asset as may be necessary to verify
and/or make revisions to the Draft Closing Statement based on such audits,
examinations and inventories, and on the night preceding the Closing immediately
after the Cut-Off Time, the Seller and the Buyer will use commercially
reasonable efforts to make all final adjustments necessitated by such nights’
operations and prepare a final closing statement of prorations and adjustments
required under SECTION 9.1 with such supporting documentation as the parties
hereto may reasonably require being attached thereto.  The Buyer and the Seller
acknowledge and agree that the completion of the Draft Closing Statement
pursuant to this SECTION 9.2(a) shall not be a condition precedent to the
obligation of the Buyer or the Seller to consummate the transactions pursuant to
the terms of this Agreement.

 

(b)                              If any items to be adjusted pursuant to this
ARTICLE IX are not determinable at the Closing, or if any such adjustments made
at the Closing prove to be incorrect, the adjustment shall be made subsequent to
the Closing or corrected when the charge is finally determined.  The Buyer shall
deliver to the Seller no later than 60 days following the Closing Date (except
with respect to any item which is not reasonably determinable within such time
frame, as to which the time frame shall be extended until such item is
reasonably determinable) a schedule of prorations setting forth the Buyer’s
determination of prorations not determined at the Closing and any adjustments to
the prorations made at Closing that it believes are necessary to complete the
prorations as set forth in this ARTICLE IX. Any errors or omissions in computing
adjustments or readjustments at the Closing or thereafter shall be promptly
corrected or made, provided that the party seeking to correct such error or
omission or to make such readjustment shall have notified the other party of
such error or omission or readjustment on or prior to the date that is 30 days
following the receipt from the other party of such other party’s proposed
adjustment or readjustment.  The party owing the other party any

 

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sum pursuant to any adjustment, or readjustment or correction under this
ARTICLE IX shall pay such sum to the other party within 15 days after the same
has been determined as set forth above.

 

SECTION 9.3.                       Accounts Receivable.

 

(a)                               Guest Ledger. All revenues received or to be
received from transient guests on account of room rents for the period prior to
and including the Cut-Off Time shall belong to the Seller. At Closing, the
Seller shall receive a credit in an amount equal to: (i) all amounts unpaid as
of the Cut-Off Time charged to the Guest Ledger for all room nights up to (but
not including) the night during which the Cut-Off Time occurs, and (ii) one-half
of all amounts unpaid as of the Cut-Off Time charged to the Guest Ledger for the
room night which includes the Cut-Off Time and the Guest Ledger and all amounts
charged thereto and unpaid as of the Cut-Off Time shall become the property of
the Buyer. For the period beginning on the day immediately following the Cut-Off
Time, such revenues collected from the Guest Ledger shall belong to the Buyer.
In the event that an amount less than the total amount due from a guest is
collected and guest continued in occupancy after the Cut-Off Time, such amount
shall be applied first to any amount owing by such person to the Seller and
thereafter to such person’s amounts accruing to the Buyer.

 

(b)                              Accounts Receivable (Other than Guest Ledger).
After the Closing, the Seller shall retain the right to collect all Accounts
Receivable other than the Guest Ledger which is addressed in
SECTION 9.3(a) (such retained Accounts Receivable, the “Retained Accounts
Receivable”). The Seller shall not receive a credit for the Retained Accounts
Receivable. The Seller shall have the sole right to collect the Retained
Accounts Receivable. If any Retained Accounts Receivable are paid to the Buyer
after the Closing, the Buyer shall pay to the Seller the amounts received by the
Buyer within 10 days after receipt of such amounts without any commission or
deduction for the Buyer.

 

The provisions of ARTICLE IX and the obligations of the Seller and the Buyer
thereunder shall survive the Closing.

 

ARTICLE X.

 

INDEMNIFICATION

 

SECTION 10.1.               Indemnification by the Seller. From and after the
Closing and subject to SECTION 10.3 and SECTION 10.4, the Seller shall indemnify
and hold the Buyer, its affiliates, members and partners, and the partners,
shareholders, officers, directors, employees, representatives and agents of each
of the foregoing (collectively, “Buyer-Related Entities”) harmless from and
against any and all costs, fees, expenses, damages, deficiencies, interest and
penalties (including, without limitation, reasonable attorneys’ fees and
disbursements) suffered or incurred by any such indemnified party in connection
with any and all losses, liabilities, claims, damages and expenses (“Losses”),
arising out of, or in any way relating to (a) any breach of any representation
or warranty of the Seller contained in this Agreement, or (b) any breach of any
covenant of the Seller contained in this Agreement, or (c) any claims by third
parties for personal injury or property damage arising out of events occurring
at the Property solely during the period of the Seller’s ownership of the
Property and prior to the Closing Date.  For avoidance of doubt, if this
Agreement is terminated by Buyer or

 

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Seller prior to Closing, the terms of this SECTION 10.1 shall be void and the
Seller shall have no obligation to indemnify the Buyer pursuant to this
SECTION 10.1.

 

SECTION 10.2.               Indemnification by the Buyer. From and after the
Closing and subject to SECTION 10.3 and SECTION 10.4, the Buyer shall indemnify
and hold the Seller, its affiliates, members and partners, and the partners,
shareholders, officers, directors, employees, representatives and agents of each
of the foregoing (collectively, “Seller-Related Entities”) harmless from and
against any and all Losses arising out of, or in any way relating to, (a) any
breach of any representation or warranty by the Buyer contained in this
Agreement and (b) any breach of any covenant of the Buyer contained in this
Agreement.  For avoidance of doubt, if this Agreement is terminated by the Buyer
or the Seller prior to Closing, the terms of this SECTION 10.2 shall be void and
the Buyer shall have no obligation to indemnify the Seller pursuant to this
SECTION 10.2.

 

SECTION 10.3.               Limitations on Indemnification.  Neither the Seller
nor the Buyer shall be required to indemnify any of the other’s indemnified
parties under SECTION 10.1(a), SECTION 10.1(c) or SECTION 10.2(a), as
applicable, until the aggregate of all cumulative amounts for which any
indemnity would otherwise be payable by either the Seller or the Buyer,
respectively, under such applicable Section exceeds the Basket Limitation; and
in such event, the Seller or the Buyer, as applicable, shall be responsible for
all cumulative Losses solely to the extent they exceed the Basket Limitation
amount, but subject to the Cap Limitation below.  In no event shall the total
liability of the Seller with respect to the indemnifications provided for in
SECTION 10.1, or the liability of the Buyer with respect to the indemnification
provided for in SECTION 10.2, as applicable, exceed in the aggregate the Cap
Limitation.  Notwithstanding any other provision of this Agreement, in no event
will either the Seller or the Buyer be liable for any consequential, incidental,
special, indirect, punitive or treble damages or lost profits, whether based on
statute, contract, tort or otherwise.

 

SECTION 10.4.               Survival and Process. The (a) representations and
warranties contained in SECTION 4.2 of this Agreement shall survive for a period
of 9 months after the Closing and (b) the representations and warranties
contained in SECTION 4.1(a) and SECTION 4.1(b) and ARTICLE V and the covenants
contained in this Agreement shall survive for the shorter of the applicable
statute of limitations or 2 years after the Closing (the period beginning on the
date hereof and ending on such applicable date in clause (a) or (b) being herein
called the “Survival Period”), unless otherwise provided for in this Agreement.
Promptly after a party seeking indemnification (“Indemnitee”) obtains knowledge
of any actual or potential Loss in respect of which Indemnitee is entitled to
indemnification under this Agreement, Indemnitee shall notify the party from
whom it seeks indemnification hereunder (“Indemnitor”) of such Loss in writing. 
Upon receipt of such notice, if the claim is by a third party, Indemnitor may
assume promptly the defense and settlement of such Loss (with prior written
consent of Indemnitee, which consent shall not be unreasonably withheld, delayed
or conditioned) with counsel reasonably satisfactory to Indemnitee at
Indemnitor’s sole risk and expense and Indemnitor shall keep Indemnitee apprised
of the current status of such proceedings at all times, provided, however, that
Indemnitee (i) shall be permitted to join in the defense and settlement of such
Loss and to employ counsel at its own expense, (ii) shall cooperate with
Indemnitor at Indemnitor’s expense in the defense and settlement of such Claim
in any manner reasonably requested by Indemnitor and (iii) shall have no right
to pay or settle such Loss at any time (except with the prior written consent of
Indemnitor, which consent shall not be unreasonably withheld, delayed or
conditioned).  No Loss shall be settled by Indemnitor unless Indemnitee is fully
released from all liability with respect thereto or resulting therefrom.  If
Indemnitor does not assume the defense as

 

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provided above, Indemnitee may elect, but shall not be obligated, to contest,
defend, litigate or settle any Loss in good faith, and Indemnitor promptly will
pay to Indemnitee an amount equal to any Losses incurred by such Indemnitee in
connection therewith.

 

SECTION 10.5.               Holdback or Guaranty.  The Seller shall, at its sole
election to be made at least 5 Business Days prior to the Closing Date, either
(a) retain funds in the Seller’s account or (b) cause its parent Fairwood
Hospitality Investors, L.L.C. to provide a guaranty, in either event (i) in an
amount equal the Cap Limitation, (ii) for a period of nine (9) months following
the Closing Date, and (iii) for the sole purposes of insuring the payment of any
proceeds (not to exceed the Cap Limitation) to which any Buyer-Related Entity
may be entitled to under ARTICLE X, subject to all limitations and provisions of
ARTICLE X.

 

SECTION 10.6.               Indemnification as Sole Remedy. If the Closing has
occurred, the sole and exclusive remedy (other than the right to seek specific
performance of a covenant to be performed by the Seller or the Buyer after the
Closing) available to a party in the event of a breach by the other party to
this Agreement of any representation, warranty, covenant or other provision of
this Agreement which survives the Closing shall be the indemnifications provided
for under this ARTICLE X, unless specifically provided for elsewhere in this
Agreement.  The provisions of this ARTICLE X shall survive the Closing.

 

ARTICLE XI.

 

TERMINATION; REMEDIES

 

SECTION 11.1.               Termination. This Agreement may be terminated prior
to the Closing (a) by either party, if any of the conditions precedent to such
party’s obligations as set forth in SECTION 6.1, SECTION 6.2, or elsewhere in
this Agreement have not been satisfied or waived by such party on or prior to
the Drop Dead Date, unless the failure of such condition precedent results from
a material breach by the proposed terminating party of any of their respective
representations, warranties or covenants contained in this Agreement, or (b) by
the Seller or the Buyer in accordance with SECTION 11.2(b) or SECTION 11.2(c),
respectively, or (c) as otherwise expressly provided for in this Agreement.

 

SECTION 11.2.               Termination; Remedies Upon Termination.

 

(a)                               In the event this Agreement is terminated
pursuant to SECTION 11.1(a), the Escrow Agent shall disburse the Earnest Money
immediately to the Buyer, and, upon such disbursement, this Agreement shall
terminate and the Seller and the Buyer shall have no further rights,
liabilities, or obligations under this Agreement, except those which expressly
survive the termination of this Agreement.

 

(b)                              If there is a material breach or default by the
Buyer in the performance of its obligations under this Agreement or any Related
Agreement, provided that the Seller has notified the Buyer in writing of such
breach or default, and, if such breach or default was of a type which can be
cured and was not willful or fraudulent, such breach or default continued
without cure (as reasonable determined by the Seller) for a period of five
(5) Business Days after such notice, the Seller, at its option and as its sole
and exclusive remedy, may terminate this

 

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Agreement and the Escrow Agent shall disburse the Earnest Money (together with
the earnest money under all of the Related Agreements) immediately to the
Seller, and upon such disbursement, this Agreement shall terminate and the
Seller and the Buyer shall have no further rights, liabilities, or obligations
under this Agreement, except those which expressly survive the termination of
this Agreement.  The Buyer and the Seller hereby acknowledge and agree that it
would be impractical and/or extremely difficult to fix or establish the actual
damage sustained by the Seller as a result of such default by the Buyer, and
agree that the Earnest Money is a reasonable approximation thereof. Accordingly,
in the event that the Buyer breaches this Agreement, the Earnest Money shall
constitute and be deemed to be the agreed and liquidated damages of the Seller,
and shall be paid by the Escrow Agent to the Seller as the Seller’s sole and
exclusive remedy hereunder; provided, however, the foregoing shall not limit the
Buyer’s obligation to pay to the Seller all reasonable attorneys’ fees and costs
of the Seller to enforce the provisions of this Section. The payment of the
Earnest Money as liquidated damages is not intended to be a forfeiture or
penalty, but is intended to constitute liquidated damages to the Seller.

 

(c)                               If there is a material breach or default by
the Seller in the performance of its obligations under this Agreement, provided
that the Buyer has notified the Seller in writing of such breach or default,
and, if such breach or default was of a type which can be cured and was not
willful or fraudulent, such breach or default continued without cure (as
reasonable determined by the Buyer) for a period of five (5) Business Days after
such notice, the Buyer, at its option and as its sole and exclusive remedy, may
(i) terminate this Agreement and (A) direct the Escrow Agent to deliver the
Earnest Money to the Buyer and (B) receive from the Seller an amount equal to
the actual, out-of-pocket costs and expenses incurred by the Buyer in connection
with the transactions contemplated by this Agreement not to exceed Seventy-Five
Thousand Dollars ($75,000) (and subject to an aggregate limit of Three Hundred
Thousand Dollars ($300,000.00) that the Buyer can receive under this Agreement
and the other Related Agreements), at which time this Agreement shall terminate
and the Seller and the Buyer shall have no further rights, liabilities, or
obligations under this Agreement, except those which expressly survive the
termination of this Agreement; (ii) specifically enforce the terms and
conditions of this Agreement, provided that any action for specific performance
shall be commenced no later than 30 days from the scheduled Closing Date it
being understood that if the Buyer fails to commence an action for specific
performance on or prior to the expiration of said 30-day period, the Buyer’s
sole remedies shall be limited to those set forth in clause (i) above; or
(iii) proceed to Closing notwithstanding such breach or default. 
Notwithstanding the foregoing, termination of this Agreement shall not relieve
the Seller from liability to the Buyer for any willful or fraudulent breach,
prior to such termination, of the terms and provisions this Agreement, which
liability shall survive any such termination.

 

ARTICLE XII.

 

MISCELLANEOUS

 

SECTION 12.1.               Brokers.

 

(a)                               The Seller represents and warrants to the
Buyer, as of the date hereof and as of the Closing, that it has dealt with no
broker, finder or similar person with respect to this

 

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Agreement or the transactions contemplated hereby other than Broker. The Seller
agrees to indemnify, protect, defend and hold the Buyer harmless from and
against all claims, losses, damages, liabilities, costs, expenses (including
reasonable attorneys’ fees and disbursements) and charges resulting from the
Seller’s breach of the foregoing representation in this SECTION 12.1(a). The
Seller shall be responsible for the payment of any amounts due Broker.

 

(b)                              The Buyer represents and warrants to the
Seller, as of the date hereof and as of the Closing, that it has dealt with no
broker, finder or similar person with respect to this Agreement or the
transactions contemplated hereby other than Broker. The Buyer agrees to
indemnify, protect, defend and hold the Seller harmless from and against all
claims, losses, damages, liabilities, costs, expenses (including reasonable
attorneys’ fees and disbursements) and charges resulting from the Buyer’s breach
of the foregoing representations in this SECTION 12.2(b). The provisions of
SECTION 12.1(a) and this SECTION 12.2(b) shall survive the Closing and any
termination of this Agreement.

 

SECTION 12.2.               Confidentiality and Press Release.

 

(a)                               The Buyer and the Seller, and each of their
respective affiliates shall hold as confidential all information disclosed in
connection with the transaction contemplated hereby and concerning each other,
the Asset, this Agreement and the transactions contemplated hereby and shall not
release any such information to third parties without the prior written consent
of the other parties hereto, except (i) any information which was previously or
is hereafter publicly disclosed or was available on a non-confidential basis
prior to its disclosure (other than in violation of this Agreement or other
confidentiality agreements to which affiliates of the Buyer are parties),
(ii) to their partners, investors, advisers, underwriters, analysts, employees,
affiliates, officers, directors, consultants, lenders, accountants, legal
counsel, title companies or other advisors of any of the foregoing, provided
that they are advised as to the confidential nature of such information and are
instructed to maintain such confidentiality, (iii) to any applicable
Governmental Authority in order for the Buyer to apply for and obtain any
Licenses and Permits necessary for the Buyer to own and operate the Hotel as of
the Closing, (iv) as otherwise contemplated or required by this Agreement in
order consummate the transactions contemplated by this Agreement, and (v) to
comply with any law, rule or regulation (including without limitation those of
the United States Securities and Exchange Commission) or the requirements of any
securities exchange on which such party or its parent company is listed;
provided, however, that in all events each party shall use its commercially
reasonable best efforts not to disclose the identity of the other parties hereto
(or any of their affiliates or members or investors) except with such person’s
prior written permission.  The foregoing shall constitute a modification of any
prior confidentiality agreement that may have been entered into by the parties.
The provisions of this Section shall survive the Closing or termination of this
Agreement for a period of one year.

 

(b)                              The Seller or the Buyer may issue a press
release with respect to this Agreement and the transactions contemplated hereby,
provided that the content of any such press release shall be subject to the
prior written consent of the other party hereto, not to be unreasonably
withheld, conditioned or delayed.  The provisions of this Section shall survive
the Closing or termination of this Agreement.

 

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SECTION 12.3.               Escrow Provisions.

 

(a)                               The Escrow Agent shall hold the Earnest Money
in escrow in a bank account at a federally insured banking institution (the
“Escrow Account”).

 

(b)                              The Escrow Agent shall hold the Earnest Money
in escrow in the Escrow Account until the Closing or sooner termination of this
Agreement and shall hold or apply such proceeds in accordance with the terms of
this subsection (b). The Seller and the Buyer understand that no interest is
earned on the Earnest Money during the time it takes to transfer into and out of
the Escrow Account. At the Closing, the Earnest Money shall be paid by the
Escrow Agent to, or at the direction of, the Seller. If for any reason the
Closing does not occur and either party makes a written demand upon the Escrow
Agent for payment of such amount, the Escrow Agent shall, prior to the end of
the next Business Day, give written notice to the other party of such demand. If
the Escrow Agent does not receive a written objection within 5 Business Days
after the giving of such notice, the Escrow Agent is hereby authorized to make
such payment. If the Escrow Agent does receive such written objection within
such 5 Business Day period or if for any other reason the Escrow Agent in good
faith shall elect not to make such payment, the Escrow Agent shall continue to
hold such amount until otherwise directed by joint written instructions from the
parties to this Agreement or a final judgment of a court of competent
jurisdiction. However, the Escrow Agent shall have the right at any time to
deposit the Earnest Money with the clerk of the court of the County in which the
Land is located. The Escrow Agent shall give written notice of such deposit to
the Seller and the Buyer. Upon such deposit the Escrow Agent shall be relieved
and discharged of all further obligations and responsibilities hereunder.

 

(c)                               The parties acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and for their convenience,
that the Escrow Agent shall not be deemed to be the agent of either of the
parties, and the Escrow Agent shall not be liable to either of the parties for
any act or omission on its part, other than for its gross negligence or willful
misconduct. The Seller and the Buyer shall jointly and severally indemnify and
hold the Escrow Agent harmless from and against all costs, claims and expenses,
including attorneys’ fees and disbursements, incurred in connection with the
performance of the Escrow Agent’s duties hereunder.

 

(d)                             The Escrow Agent has acknowledged its agreement
to these provisions by signing this Agreement in the place indicated following
the signatures of the Seller and the Buyer.

 

SECTION 12.4.               Successors and Assigns; No Third-Party
Beneficiaries. The stipulations, terms, covenants and agreements contained in
this Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective permitted successors and assigns (including
any successor entity after a public offering of stock, merger, consolidation,
purchase or other similar transaction involving a party hereto) and nothing
herein expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.

 

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SECTION 12.5.               Assignment. This Agreement may not be assigned by
any party hereto without the prior written consent of the other party, except
that the Buyer may assign its rights and obligations under this Agreement to an
affiliate of the Buyer provided that the Buyer will continue to remain primarily
liable under this Agreement notwithstanding any such assignment.

 

SECTION 12.6.               Further Assurances.

 

(a)                               From time to time, as and when requested by
any party hereto, the other party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.

 

(b)                              The Seller shall after the Closing and, if
requested by the Buyer, reasonably cooperate with the Buyer in the Buyer’s
preparation of audited financial statements of the Property for the calendar
year in which the Closing occurs and the three preceding calendar years, by
providing such information as may be in the possession of the Seller as shall be
required to enable an accounting firm of the Buyer’s choosing to prepare such
audited financial statements, the cost of which shall be borne by the Buyer.

 

(c)                               The provisions of this SECTION 12.6 shall
survive the Closing.

 

SECTION 12.7.               Notices. All notices, demands or requests made
pursuant to, under or by virtue of this Agreement must be in writing and shall
be (a) personally delivered, (b) delivered by express mail, Federal Express or
other comparable overnight courier service, (c) transmitted by facsimile
transmission (with confirmation printout), or (d) mailed to the party to which
the notice, demand or request is being made by certified or registered mail,
postage prepaid, return receipt requested, as follows:

 

To the Seller:

 

c/o  Fairwood Capital, LLC

850 Ridgelake Boulevard

Suite 220

Memphis, Tennessee 38120

Attention:  Mr. Robert Solmson and

Mr. Edwin Ansbro

Mr. Tom Defreece

Facsimile:  901 842-5319

Telephone:  901 842-5305

 

with a copy thereof to:

 

Wyatt, Tarrant & Combs, LLP

1715 Aaron Brenner Drive, Suite 700

Memphis, TN  38120

Attention:  Lee A. Harkavy, Esq.

 

- 45 -

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

 

Facsimile:  901 537-1010

Telephone:  901 537-1032

 

To the Buyer:

 

c/o Carey Watermark Investors Inc.

272 E. Deerpath Road, Suite 320

Lake Forest, IL 60045

Attention:  Michael G. Medzigian

Facsimile:  847 482-8696

Telephone:  847 482-8600

 

with a copy to:

 

Paul Hastings LLP

515 S. Flower Street, 25th Floor

Los Angeles, CA 90071

Attention:  Rick S. Kirkbride, Esq.

Facsimile:  213 996-3261

Telephone:  213 683-6261

 

To the Escrow Agent/Title Company:

 

First American Title Insurance Company

6077 Primacy Parkway, Suite 121

Memphis, TN 38119

Attention:  Rita Bost

Facsimile:  (901) 680-9158

Telephone:  (901) 818-6595

Email:            rbost@firstam.com

 

All notices (i) shall be deemed to have been given on the date that the same
shall have been delivered in accordance with the provisions of this Section and
(ii) may be given either by a party or by such party’s attorneys. Any party may,
from time to time, specify as its address for purposes of this Agreement any
other address upon the giving of reasonably prior notice thereof to the other
parties.

 

SECTION 12.8.               Entire Agreement. This Agreement, along with the
Exhibits and Schedules hereto contains all of the terms agreed upon between the
parties hereto with respect to the subject matter hereof, and all understandings
and agreements heretofore had or made among the parties hereto are merged in
this Agreement which alone fully and completely expresses the agreement of the
parties hereto.

 

SECTION 12.9.               Amendments. This Agreement may not be amended,
modified, supplemented or terminated, nor may any of the obligations of the
Seller or the Buyer hereunder be waived, except by written agreement executed by
the party or parties to be charged.

 

- 46 -

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

 

SECTION 12.10.       No Waiver. No waiver by either party of any failure or
refusal by the other party to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so comply.

 

SECTION 12.11.       Days.  If any action is required to be performed, or if any
notice, consent or other communication is given, on a day that is not a Business
Day, such performance shall be deemed to be required, and such notice, consent
or other communication shall be deemed to be given, on the very next day that is
a Business Day.  Unless otherwise specified herein, all references herein to a
“day” or “days” shall refer to calendar days and not Business Days.

 

SECTION 12.12.       Governing Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with, the laws of
the State in which the Land is located, without giving effect to any principles
regarding conflict of laws.

 

SECTION 12.13.       Severability. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.

 

SECTION 12.14.       Section Headings. The headings of the various Sections of
this Agreement have been inserted only for purposes of convenience, are not part
of this Agreement and shall not be deemed in any manner to modify, explain,
expand or restrict any of the provisions of this Agreement.

 

SECTION 12.15.       Counterparts; Execution by Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
and it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.  Executed counterparts of this
Agreement exchanged by facsimile or other electronic medium shall be fully
enforceable.

 

SECTION 12.16.       Rules of Construction.  The following rules shall apply to
the construction and interpretation of this Agreement:

 

(a)                               Singular words shall connote the plural number
as well as the singular and vice versa, and the masculine shall include the
feminine and the neuter.

 

(b)                              The table of contents and headings contained
herein are solely for convenience of reference and shall not constitute a part
of this Agreement nor shall they affect its meaning, construction or effect.

 

(c)                               Each party hereto and its counsel have
reviewed and revised (or requested revisions of) this Agreement, and therefore
any usual rules of construction requiring that ambiguities are to be resolved
against a particular party shall not be applicable in the construction and
interpretation of this Agreement or any exhibits hereto or amendments hereof.

 

(d)                             All references herein to the time of day shall
refer to Central Standard Time or Central Daylight Time, as applicable, unless
otherwise specifically referred to.

 

- 47 -

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

 

SECTION 12.17.       Waiver Of Jury Trial. THE SELLER AND THE BUYER HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY
AGAINST ANOTHER PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS AGREEMENT. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING AND ANY
TERMINATION OF THIS AGREEMENT.

 

SECTION 12.18.       Time is of the Essence. The Seller and the Buyer agree that
time is of the essence with respect to the obligations of the Buyer and the
Seller under this Agreement.

 

SECTION 12.19.       Bulk Sale; Occasional Sale. The Seller and the Buyer
specifically waive compliance with the Uniform Commercial Code of the State in
which the Asset is located with respect to bulk transfers, with any similar
provision under any applicable law of the County and City in which the Land is
located. The Buyer and the Seller acknowledge that the Seller is selling the
entire operating assets of a business pursuant to this Agreement, which is
intended to qualify as an occasional sale.

 

[COUNTERPART SIGNATURE PAGE FOLLOWS]

 

- 48 -

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

 

[COUNTERPART SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
under seal as of the day and year first above written.

 

 

BUYER:

CWI Beale Street Hotel, LLC

 

 

 

 

 

 

 

 

By: /s/ Michael G. Medzigian

 

 

Michael G. Medzigian

 

 

President and CEO

 

 

 

 

 

 

 

SELLER:

FWH Memphis Beale Street, LLC

 

 

 

 

By:

Fairwood Hospitality Investors, L.L.C., its member

 

 

 

 

 

By:

Fairwood Investors, LLC,

 

 

 

its Manager

 

 

 

 

 

 

By: /s/ Robert M. Solmson

 

 

Robert M. Solmson

 

 

President

 

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

 

[COUNTERPART SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

 

 

The undersigned Escrow Agent joins in the execution of this Agreement solely to
consent to and acknowledge the terms contained in SECTION 12.3 with respect to
the Escrow Account:

 

 

 

ESCROW AGENT:

 

 

 

First American Title Insurance Company

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

Its:

 

 

 

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

 

Schedule A—Land

 

See attached

 

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

 

Schedule B—Diligence Materials List

 

See attached

 

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

 

Schedule 2.1(c)—Excluded Property

 

None

 

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

 

Schedule 4.1(c)—Consents

 

 

A.                                The Hotel Lease—see SECTION 3.5(a) regarding
obtaining consent

B.                                 The Parking Lease –see
SECTION 3.5(b) regarding obtaining consent

C.                                 See Schedule 4.2(a) for operating agreements
requiring consent or notice.  The Seller shall not be required to obtain any of
these consents as a condition to Closing.

 

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

 

Schedule 4.1(d)—Conflicts with Agreements

 

See Schedule 4.1(c)

 

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

 

Schedule 4.1(e)—Litigation—Seller

 

None

 

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

 

Schedule 4.2(a)—Operating Agreements

 

A.                                Exhibit PA to Master Agreement, Participation
Agreement with AT&T dated March 23, 2005

B.                                 Lease Agreement with DEX Imaging signed
September 17, 2012

C.                                 License and Equipment Lease with World Cinema
dated March 12, 2008.  This agreement may not be assigned without the prior
written consent of World Cinema.

D.                                Services Agreement with PDQ Consulting, Inc.
dated April 16, 2012.  This agreement may not be transferred without the prior
written consent of PDQ.

E.                                  License Agreement with Saleh Ahmed dated
March 25, 2009.

F.                                   Lease Agreement with Zac’s Place, LLC dated
June 20, 2011

 

 

THE FOLLOWING ARE MONTH-TO-MONTH OR TERMINABLE CONTRACTS TO WHICH THE SELLER IS
A PARTY:

 

[1]                              Agreement for Central Monitoring of Alarm
System with AlarmTec Systems of Memphis.

[2]                              Channel Service Agreement with Avaya, Inc. 
This contract may not be assigned without the prior written consent of the other
party.

[3]                              Participating Hotel Agreement, Services
Agreement with DMX Music, Inc.

[4]                              Landscape Services Contract with Environmental
Landscape Services.

[5]                              Maintenance Agreement with Otis Elevator
Company.

[6]                              Customer Approval Form with Stamps.com

[7]                              Local Exchange Service Agreement with Time
Warner Telecom of the Mid-South LLC.

[8]                              Lease Agreement with DEX Imaging, Inc. as
amended by the Addendum to lease Agreement dated July 25, 2007.  This agreement
may not be assigned excepted to an affiliate or related entity that DEX has
approved.

[9]                              Change Order Form with Newmarket
International, Inc.

 

Ecolab provides services to the Property pursuant to a national arrangement with
the Manager (presumably covering all of its hotel properties under
management)—Seller does not have a copy of any written agreement with Ecolab.

 

BUYER ACKNOWLEDGES THAT SELLER IS STILL IN THE PROCESS OF TRACKING DOWN ITEMS TO
COMPLETE THIS SCHEDULE, AND IT IS SUBJECT TO UPDATE, CORRECTIONS, ADDITIONS, OR
DELETIONS BY SELLER AT ANY TIME PRIOR TO THE EXPIRATION OF THE STUDY PERIOD.

 

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

 

Schedule 4.2(c)—Tenant Leases

 

A.                                License Agreement with Saleh Ahmed dated
March 25, 2009 (Pizza Italia).

B.                                 Lease Agreement with Zac’s Place, LLC dated
June 20, 2011.

 

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

 

Schedule 4.2(e)—Litigation

 

None

 

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

 

Schedule 4.2(j)—Licenses and Permits

 

A.                                Certificate of Boiler Inspection # 681811 from
the State of Tennessee

B.                                 Certificate of Boiler Inspection # 681812
from the State of Tennessee

C.                                 Certificate of Boiler Inspection # 681813
from the State of Tennessee

D.                                Certificate of Boiler Inspection # 681814 from
the State of Tennessee

E.                                  Regulatory Services Permit from the State of
Tennessee, permit # 034307

F.                                   Certificate of Occupancy from the City of
Memphis, permit # B0823241

G.                                Business Tax License from Memphis / Shelby
County, License # 100002802

H.                                Elevator Operating Certificate from Memphis
and Shelby County Office of Construction Code Enforcement, Cert. # L0002987

I.                                      Food Service Establishment Permit from
Tennessee Dept of Health, permit # HE 212457

J.                                      Pool Establishment Permit (Pool) from
Tennessee Dept of Health, permit # HE 212354

K.                                Pool Establishment Permit (Whirlpool) from
Tennessee Dept of Health, permit # HE 212350

L.                                  Hotel Establishment Permit from Tennessee
Dept of Health, permit # HE 212457

M.                              Certificate of Registration from Tennessee Dept.
of Revenue, Type – Sales & Use, Account No. 105629723

N.                                Regulatory Services Permit from the Tennessee
Dept. of Agriculture, permit No. 034307

O.                                Washer and Dryer Permit with Memphis / Shelby
County Department of Health.

P.                                   Fire Alarm Certificate from Central Station
– Fire, File # S8042.

Q.                                Sign permit as evidenced by payment of Sign
Inspection Fee Invoice SR002301 from the Memphis and Shelby County Office of
Construction Code Enforcement

 

 

BUYER ACKNOWLEDGES THAT SELLER IS STILL IN THE PROCESS OF TRACKING DOWN ITEMS TO
COMPLETE THIS SCHEDULE, AND IT IS SUBJECT TO UPDATE, CORRECTIONS, ADDITIONS, OR
DELETIONS BY SELLER AT ANY TIME PRIOR TO THE EXPIRATION OF THE STUDY PERIOD.

 

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

 

Exhibit A — Form Assignment of Leases

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

(TENANT LEASES)

 

This Assignment and Assumption Agreement (the “Assignment and Assumption
Agreement”) is made and entered into as of                                  ,
2013 by and between CWI Beale Street Hotel, LLC, a Delaware limited liability
company (“Assignee”), and FWH Memphis Beale Street, LLC, a Delaware limited
liability company (“Assignor”).

 

RECITALS

 

WHEREAS, Assignor and Assignee are parties to that certain Purchase and Sale
Agreement, dated as of December 7, 2012 (the “Purchase Agreement”), pursuant to
which Assignee agrees to purchase, and Assignor agrees to sell, certain assets
of Assignor; and

 

WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to assign
Assignor’s interest in the Tenant Leases to Assignee, and Assignee has agreed to
assume Assignor’s obligations under the Tenant Leases.

 

AGREEMENT

 

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

 

1.            Capitalized Terms.  All capitalized terms used in this Assignment
and Assumption Agreement without definition have the meanings given to them in
the Purchase Agreement.

 

2.            Assignment and Assumption of Tenant Leases.  Assignor hereby
assigns, transfers and conveys to Assignee all of Assignor’s right, title and
interest in, to and under the Tenant Leases identified on Exhibit A, attached
hereto, effective as of the Closing Date.  Assignee does hereby accept the
foregoing assignment and does hereby assume, and agree to perform and be bound
by, all of the covenants, conditions, obligations and liabilities of Assignor
under the Tenant Leases which accrue from and after the Closing Date.

 

3.            Indemnification by Assignee.  Assignee hereby agrees to defend,
indemnify, and hold Assignor and Manager harmless from and against any and all
claims, demands, actions, causes of action, liabilities, damages, costs, and
expenses (including reasonable attorneys’ fees) arising from any default, act,
or omission on the part of Assignee, its representatives, agents, successors or
assigns, related to the Tenant Leases assigned hereby that occur from and after
the date hereof.

 

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

 

4.            Indemnification by Assignor.  Assignor hereby agrees to defend,
indemnify, and hold Assignee harmless from and against any and all claims,
demands, actions, causes of action, liabilities, damages, costs, and expenses
(including reasonable attorneys’ fees) arising from any default, act, or
omission on the part of Assignor or Manager, or their respective
representatives, agents, successors or assigns, related to the Tenant Leases
assigned hereby that occurred prior to the date hereof.

 

5.            No Representations.  This Assignment and Assumption Agreement is
made without warranty or representation, express or implied, by, or recourse
against, Assignor of any kind or nature whatsoever except as expressly provided
in, and subject to the limitations set forth in, the Purchase Agreement.

 

6.            No Third Party Beneficiaries.  Nothing expressed or implied in
this Assignment and Assumption Agreement is intended to confer upon any person,
other that the parties hereto, or their respective successors or permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Assignment and Assumption Agreement.

 

7.            Terms of the Purchase Agreement.  Assignor and Assignee
acknowledge and agree that the representations, warranties, covenants,
agreements and indemnities contained in the Purchase Agreement will not be
superseded hereby, but will remain in full force and effect to the full extent
provided therein and subject to the limitations provided for therein. In the
event of any conflict or inconsistency between the terms of the Purchase
Agreement and the terms hereof, the terms of the Purchase Agreement shall
govern.

 

8.            Governing Law.  This Assignment and Assumption Agreement will be
governed by and construed under the laws of the State in which the Land is
located without regard to conflicts of laws principles that would require the
application of any other law.

 

9.            Counterparts.   This Assignment and Assumption Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Assignment and Assumption Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.

 

10.         Successors and Assigns.  This Assignment and Assumption Agreement
and the terms and provisions hereof shall inure to the benefit of, and shall be
binding upon, the respective successors and permitted assigns of Assignor and
Assignee.

 

[Signature Page to Follow]

 

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

 

[Signature Page of Assignment and Assumption Agreement – Tenant Leases]

 

IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption
Agreement as of the date first above written.

 

 

ASSIGNOR:

 

 

 

FWH Memphis Beale Street, LLC

 

 

 

 

By: Fairwood Hospitality Investors, L.L.C., its Member

 

 

 

 

 

 

By: Fairwood Investors, LLC, its Manager

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name: Robert M. Solmson

 

 

 

 

 

Title:   President

 

 

 

 

 

ASSIGNEE:

 

 

 

CWI Beale Street Hotel, LLC

 

 

 

 

 

By:

 

 

 

 

Name:  Michael G. Medzigian

 

 

Its:       President and CEO

 

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

 

EXHIBIT A

TENANT LEASES

 

[This will be the updated Schedule 4.2(c) (Tenant Leases) of the Purchase
Agreement as of Closing].

 

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

 

Exhibit B — Form Assignment of Contracts

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

(CONTRACTS)

 

This Assignment and Assumption Agreement (the “Assignment and Assumption
Agreement”) is made and entered into as of                              , 2013
by and between CWI Beale Street Hotel, LLC, a Delaware limited liability company
(“Assignee”), and FWH Memphis Beale Street, LLC, a Delaware limited liability
company (“Assignor”).

 

RECITALS

 

WHEREAS, Assignor and Assignee are parties to that certain Purchase and Sale
Agreement, dated as of December 7, 2012 (the “Purchase Agreement”), pursuant to
which Assignee agrees to purchase, and Assignor agrees to sell, certain assets
of Assignor; and

 

WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to assign
Assignor’s interest in the Operating Agreements, Equipment Leases and Bookings
to Assignee, and Assignee has agreed to assume Assignor’s obligations under the
Operating Agreements, Equipment Leases and Bookings.

 

AGREEMENT

 

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

 

1.            Capitalized Terms.  All capitalized terms used in this Assignment
and Assumption Agreement without definition have the meanings given to them in
the Purchase Agreement.

 

2.            Assignment and Assumption of Operating Agreements, Equipment
Leases and Bookings.  Assignor hereby assigns, transfers and conveys to Assignee
all of Assignor’s right, title and interest in, to and under the Operating
Agreements and the Equipment Leases identified on Exhibit A attached hereto, and
the Bookings for all dates from and after the date hereof, effective as of the
Closing Date.  Assignee does hereby accept the foregoing assignment and does
hereby assume, and agree to perform and be bound by, all of the covenants,
conditions, obligations and liabilities of Assignor under the Operating
Agreements, Equipment Leases and Bookings which arise or accrue from and after
the Closing Date.

 

3.            Assignee hereby agrees to defend, indemnify, and hold Assignor and
Manager harmless from and against any and all claims, demands, actions, causes
of action, liabilities, damages, costs, and expenses (including reasonable
attorneys’ fees) arising from any default, act, or omission on the part of
Assignee, its representatives, agents, successors or assigns, related to the
Operating Agreements, Equipment Leases and Bookings assigned hereby that occur
from and after the date hereof.

 

4.            Assignor hereby agrees to defend, indemnify, and hold Assignee
harmless from and against any and all claims, demands, actions, causes of
action, liabilities, damages, costs, and expenses

 

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

 

(including reasonable attorneys’ fees) arising from any default, act, or
omission on the part of Assignor or Manager, or their respective
representatives, agents, successors or assigns, related to the Operating
Agreements, Equipment Leases and Bookings assigned hereby that occurred prior to
the date hereof.

 

5.            No Representations.  This Assignment and Assumption Agreement is
made without warranty or representation, express or implied, by, or recourse
against, Assignor of any kind or nature whatsoever except as expressly provided
in, and subject to the limitations set forth in, the Purchase Agreement.

 

6.            No Third Party Beneficiaries.  Nothing expressed or implied in
this Assignment and Assumption Agreement is intended to confer upon any person,
other that the parties hereto, or their respective successors or permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Assignment and Assumption Agreement.

 

7.            Terms of the Purchase Agreement.  Assignor and Assignee
acknowledge and agree that the representations, warranties, covenants,
agreements and indemnities contained in the Purchase Agreement will not be
superseded hereby, but will remain in full force and effect to the full extent
provided therein and subject to the limitations provided for therein. In the
event of any conflict or inconsistency between the terms of the Purchase
Agreement and the terms hereof, the terms of the Purchase Agreement shall
govern.

 

8.            Governing Law.  This Assignment and Assumption Agreement will be
governed by and construed under the laws of the [State in which the Land is
located] without regard to conflicts of laws principles that would require the
application of any other law.

 

9.            Counterparts.   This Assignment and Assumption Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Assignment and Assumption Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.

 

10.         Successors and Assigns.  This Assignment and Assumption Agreement
and the terms and provisions hereof shall inure to the benefit of, and shall be
binding upon, the respective successors and permitted assigns of Assignor and
Assignee.

 

[Signature Page to Follow]

 

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

 

[Signature Page of Assignment and Assumption Agreement – Contracts ]

 

IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption
Agreement as of the date first above written.

 

 

ASSIGNEE:

 

 

 

CWI Beale Street Hotel, LLC

 

 

 

 

 

By:

 

 

 

Name:  Michael G. Medzigian

 

Its:       President and CEO

 

 

 

 

 

 

 

 

 

ASSIGNOR:

 

 

 

FWH Memphis Beale Street, LLC

 

 

 

 

By: Fairwood Hospitality Investors, L.L.C., its Member

 

 

 

 

 

 

By: Fairwood Investors, LLC, its Manager

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name: Robert M. Solmson

 

 

 

 

 

Title:   President

 

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

 

EXHIBIT A

OPERATING AGREEMENTS AND EQUIPMENT LEASES

 

 

 

[This will be the updated Schedule 4.2(a) (Operating Agreement) and Schedule
4.2(c) (Equipment Leases) of the Purchase Agreement as of Closing].

 

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

 

Exhibit C — Form Bill of Sale

 

 

BILL OF SALE

 

This Bill of Sale (“Bill of Sale”) is executed and delivered on this the       
day of                           , 2013 (the “Effective Time”), by FWH Memphis
Beale Street, LLC, a Delaware limited liability company (“Seller”), in favor of
CWI Beale Street Hotel, LLC, a Delaware limited liability company (“Buyer”),
pursuant to that certain Purchase and Sale Agreement by and between Buyer and
Seller, dated December 7, 2012 (the “Purchase Agreement”).  All capitalized
terms not otherwise defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement.

 

WITNESSETH:

 

WHEREAS, in connection with the Purchase Agreement, Seller has agreed to convey,
grant, sell, transfer, assign and deliver to Buyer the FF&E, Property and
Equipment, Inventories, Retail Merchandise, and Miscellaneous Personal Property.

 

NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, that for and in
consideration of the premises and other good and valuable consideration to it in
hand paid, the receipt and sufficiency of which is hereby acknowledged, Seller
has conveyed, granted, sold, transferred, assigned and set over, and by these
presents does hereby convey, grant, sell, transfer, assign and set over, to
Buyer, its successors and assigns, all right, title and interest of Seller in
and to all of the FF&E, Property and Equipment, Inventories, Retail Merchandise,
and Miscellaneous Personal Property, except for the excluded property described
in Section 2.1(c) of the Purchase Agreement, without representation or warranty
express or implied, by, or recourse against, Seller of any kind or nature
whatsoever except as expressly provided in, and subject to the limitations set
forth in, the Purchase Agreement.

 

TO HAVE AND TO HOLD unto the Buyer, its successors and assigns, forever, free
and clear of all liens, security interests and encumbrances other than the
Permitted Title Exceptions, except as otherwise permitted by the express terms
of the Purchase Agreement.

 

Nothing in this Bill of Sale shall be construed to limit, increase, discharge,
mitigate or release any obligation or otherwise affect any right of any party
set forth or provided for in the Purchase Agreement.  In the event of any
inconsistency among the terms of this Bill of Sale and the terms of the Purchase
Agreement, the terms of the Purchase Agreement shall control.

 

[Signature Page to Follow]

 

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

 

[Signature Page to Bill of Sale]

 

IN WITNESS WHEREOF, Seller, by and through its duly authorized officer, has
caused this Bill of Sale to be executed and delivered as of the Closing Date on
the date and year first above written.

 

 

FWH Memphis Beale Street, LLC

 

 

 

 

By: Fairwood Hospitality Investors, L.L.C., its Member

 

 

 

 

 

 

By: Fairwood Investors, LLC, its Manager

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name: Robert M. Solmson

 

 

 

 

 

Title:   President

 

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

 

Exhibit D — Form Assignment of Intangibles

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

(Intangibles)

 

This Assignment and Assumption Agreement (the “Assignment and Assumption
Agreement”) is made and entered into as of                               
      , 2013 by and between CWI Beale Street Hotel, LLC, a Delaware limited
liability company (“Assignee”), and FWH Memphis Beale Street, LLC, a Delaware
limited liability company (“Assignor”).

 

RECITALS

 

WHEREAS, Assignor and Assignee are parties to that certain Purchase and Sale
Agreement, dated as of December 7, 2012 (the “Purchase Agreement”), pursuant to
which Assignee agrees to purchase, and Assignor agrees to sell, certain assets
of Assignor; and

 

WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to assign
Assignor’s interest in the Intangible Property and the Licenses and Permits to
Assignee, and Assignee has agreed to assume Assignor’s obligations under the
Intangible Property and the Licenses and Permits.

 

AGREEMENT

 

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

 

1.            Capitalized Terms.  All capitalized terms used in this Assignment
and Assumption Agreement without definition shall have the meanings given to
them in the Purchase Agreement.

 

2.            Assignment and Assumption of Intangibles and Licenses and
Permits.  Assignor hereby assigns, transfers and conveys to Assignee, to the
extent assignable, all of Assignor’s right, title and interest in, to and under
the Intangible Property and the Licenses and Permits effective as of the Closing
Date.  Assignee does hereby accept the foregoing assignment and does hereby
assume, and agree to perform and be bound by, all of the covenants, conditions,
obligations and liabilities of Assignor under the Intangible Property and the
Licenses and Permits which accrue from and after the Closing Date.

 

3.            No Representations.  This Assignment and Assumption Agreement is
made without warranty or representation, express or implied, by, or recourse
against, Assignor of any kind or nature whatsoever except as expressly provided
in, and subject to the limitations set forth in, the Purchase Agreement.

 

4.            No Third Party Beneficiaries.  Nothing expressed or implied in
this Assignment and Assumption Agreement is intended to confer upon any person,
other that the parties hereto,

 

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or their respective successors or permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Assignment and Assumption
Agreement.

 

5.            Terms of the Purchase Agreement.  Assignor and Assignee
acknowledge and agree that the representations, warranties, covenants,
agreements and indemnities contained in the Purchase Agreement will not be
superseded hereby, but will remain in full force and effect to the full extent
provided therein and subject to the limitations provided for therein. In the
event of any conflict or inconsistency between the terms of the Purchase
Agreement and the terms hereof, the terms of the Purchase Agreement shall
govern.

 

6.            Governing Law.  This Assignment and Assumption Agreement will be
governed by and construed under the laws of the [State in which the Land is
located] without regard to conflicts of laws principles that would require the
application of any other law.

 

7.            Counterparts.   This Assignment and Assumption Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Assignment and Assumption Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.

 

8.            Successors and Assigns.  This Assignment and Assumption Agreement
and the terms and provisions hereof shall inure to the benefit of, and shall be
binding upon, the respective successors and permitted assigns of Assignor and
Assignee.

 

[Signature Page to Follow]

 

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[Signature Page of Assignment and Assumption Agreement – Licenses and Permits ]

 

IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption
Agreement as of the date first above written.

 

 

ASSIGNEE:

 

 

 

CWI Beale Street Hotel, LLC

 

 

 

 

 

By:

 

 

 

Name:  Michael G. Medzigian

 

Its:       President and CEO

 

 

 

 

 

 

 

 

 

ASSIGNOR:

 

 

 

FWH Memphis Beale Street, LLC

 

 

 

 

By: Fairwood Hospitality Investors, L.L.C., its Member

 

 

 

 

 

 

By: Fairwood Investors, LLC, its Manager

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name: Robert M. Solmson

 

 

 

 

 

Title:   President

 

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Exhibit E —   Audit Request Materials

 

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Exhibit E — Audit Request Materials 3-05 Audit Schedule of Requests Date
Received 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 two
years General 1 Closed trial balances (in excel) for the years ended 12/31/10,
12/31/11 and 12/31/12 2 December 2010, 2011 and 2012 Balance Sheets and
Statements of Operations (detailed by department) 3 Complete general ledger
detail for the years ended 12/31/11 and 12/31/12 4 Please provide copies of the
following executed agreements or documents (if applicable): a. Organization
chart b. LLC Agreement c. Articles of Organization d. Management agreement e.
Franchise agreement f. Loan Agreement, Promissory Agreement and Guaranties g.
Other material or significant contracts or agreements relevant to the audit Cash
1 Bank reconciliations for all cash accounts as of 12/31/10, 12/31/11 and
12/31/12 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, 2011 and 2012 bank statements 4
Copies of all January 2011, 2012 and 2013 bank statements 5 Copies of all
monthly 2011 and 2012 depository cash account bank statements 6 Copies of all
restricted cash/escrow statements as of 12/31/10, 12/31/11 and 12/31/12 Notes
receivable (if applicable) 1 Rollforward of notes receivable during the period
under audit detailing beginning balance, advances, repayments and ending balance
as of 12/31/12 Revenue and receivables 1 Guest ledger and accounts receivable
aging detail (city ledger) as of 12/31/10, 12/31/11 and 12/31/12 2 Detail of
Reserves for bad debt with explanation of adequacy as of 12/31/10, 12/31/11 and
12/31/12 3 Star reports for the last three years Listing of all sales tax and
occupancy tax payments made during 2011 and 2012. We will request copies of the
corresponding 4 tax returns as necessary. Prepaid expenses 1 Detail of other
assets and prepaids as of 12/31/10, 12/31/11 and 12/31/12 (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.

 

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Investment in hotels 1 Detail of investment in hotels rollforward, including
listing of all additions and dispositions, for the period from inception through
12/31/12. We will request check copies and invoices for selected additions. 2
Depreciation schedules as of 12/31/10, 12/31/11 and 12/31/12 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 detailing the beginning balance, amortization, disposals and
ending balance as 12/31/12. 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, 12/31/11 and 12/31/12. 2 Advance deposit
ledger as of 12/31/10, 12/31/11 and 12/31 /12. 3 Reconciliations of accrued
expense accounts as of 12/31/10, 12/31/11 and 12/31/12, including accrued
vacation, accrued payroll, accrued other, etc. 4 Check register detail for the
periods 1/1/11 - 2/28/11, 1/1/12 - 2/28/12 and 1/1/13 - 2/28/13. We will request
invoices for selected items and may be required to update testing throughout the
audit. 5 Copies of December 2011 and 2012 sales tax and occupancy tax returns
Long-Term Debt (if applicable) 1 Rollforward of notes payable from the beginning
balance, advances, repayments and ending balance as of 12/31/12. 2 Loan
confirmation forms for all loans held in the last three years sent back to
McGladrey for independent mailing - templates to be provided. Members’ Equity 1
Rollforward schedule for equity detailing contributions, distributions,
income/loss, and other activity from inception to 12/31/12 2 Schedule/detail of
contributions and distributions that occurred during 2011 and 2012. If
applicable, please provide check copies or wire transfer statements so that we
can verify the material owner contributions/distributions. We will make
selections for the material contributions/distributions. Profit and Loss 1
Copies of all legal invoices paid during the years ending 12/31/11 and 12/31/12.
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 12/31/11 and 12/31/12 3
Calculation of the management fees and asset management fees paid for the years
ended 12/31/11 and 12/31/12. 4 Copies of all real estate tax bills paid during
2011 and 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 F — Audit Representation Letter

 

REPORT DATE

 

McGladrey LLP

1 South Wacker Drive

Suite 800

Chicago, IL 60606

 

 

In connection with your audits of the balance sheet of FWH Memphis Beale Street,
LLC (the “Company”) as of December 31, 2012 and 2011, 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.

 

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

 

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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.

 

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.

 

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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.

 

FWH Memphis Beale Street, LLC

 

 

 

By: Fairwood Hospitality Investors, L.L.C., its Member

 

 

 

 

By:      Fairwood Investors, LLC, its Manager

 

 

 

 

 

By:

 

 

[NAME OF CHIEF EXECUTIVE OFFICER AND TITLE OR EQUIVALENT]

 

 

 

 

By:

 

 

[NAME OF CHIEF FINANCIAL OFFICER AND TITLE OR EQUIVALENT]

 

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