Exhibit 10.9

Execution Copy

Hotel: Orlando SpringHill Suites and Orlando Fairfield Inn & Suites
(Construction)

PURCHASE CONTRACT

between

GROVE STREET ORLANDO, LLC (“SELLER”)

AND

APPLE EIGHT HOSPITALITY, INC.

(“BUYER”)

Dated: September 26, 2007

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TABLE OF CONTENTS

 

          Page No.

ARTICLE I

   DEFINED TERMS    1

1.1

   Definitions    1

ARTICLE II

   PURCHASE AND SALE; PURCHASE PRICE; PAYMENT; EARNEST MONEY DEPOSIT    7

2.1

   Purchase and Sale    7

2.2

   Purchase Price    8

2.3

   Allocation    8

2.4

   Payment    8

2.5

   Earnest Money Deposit    8

ARTICLE III

   REVIEW PERIOD    9

3.1

   Review Period    9

3.2

   Due Diligence Examination    10

3.3

   Restoration    10

ARTICLE IV

   SURVEY AND TITLE APPROVAL    10

4.1

   Survey    10

4.2

   Title    10

4.3

   Survey or Title Objections    11

ARTICLE V

   ASSIGNMENT OF MANAGEMENT AGREEMENT    11

ARTICLE VI

   COMMISSIONS    12

ARTICLE VII

   REPRESENTATIONS, WARRANTIES AND COVENANTS    12

7.1

   Seller’s Representations. Warranties and Covenants    12

7.2

   Buyer’s Representations. Warranties and Covenants    15

7.3

   Survival    16

ARTICLE VIII

   ADDITIONAL COVENANTS    16

8.1

   Subsequent Developments    16

8.2

   Construction of Hotel    16

8.3

   Plans and Specifications    16

8.4

   Commencement of Construction; Substantial Completion    17

8.5

   Inspections    17

8.6

   Punch List    17

8.7

   re-Opening Program    17

8.8

   Construction Warranty    18

8.9

   Other Obligations of Seller Before Closing    18

8.10

   Third Party Consents    18

8.11

   Access to Financial Information    19

8.12

   Bulk Sales    19

8.13

   Indemnification    19

8.14

   Section 1031 Exchange    21

8.15

   Liquor Licenses    21

8.16

   Escrow Funds    21

 

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8.17

   Environmental    21

8.18

   Property Agreements    21

8.19

   Subdivision    22

ARTICLE IX

   CONDITIONS FOR CLOSING    22

9.1

   Buyer’s Conditions for Closing    22

9.2

   Seller’s Conditions for Closing    23

ARTICLE X

   CLOSING AND CONVEYANCE    24

10.1

   Closing    24

10.2

   Seller’s Deliveries    24

10.3

   Buyer’s Deliveries    25

ARTICLE XI

   COSTS    26

11.1

   Seller’s Costs    26

11.2

   Buyer’s Costs    26

ARTICLE XII

   ADJUSTMENTS    26

12.1

   Adjustments    26

12.2

   Reconciliation and Final Payment    27

12.3

   Employees    27

ARTICLE XIII

   CASUALTY AND CONDEMNATION    28

13.1

   Risk of Loss; Notice    28

13.2

   Buyer’s Termination Right    28

13.3

   Procedure for Closing    28

ARTICLE XIV

   DEFAULT REMEDIES    29

14.1

   Buyer Default    29

14.2

   Seller Default    29

14.3

   Attorney’s Bees    29

ARTICLE XV

   NOTICES    30

ARTICLE XVI

   MISCELLANEOUS    31

16.1

   Performance    31

16.2

   Binding Effect; Assignment    31

16.3

   Entire Agreement    31

16.4

   Governing Law    31

16.5

   Captions    31

16.6

   Confidentiality    31

16.7

   Closing Documents    31

16.8

   Counterparts    31

16.9

   Severability    31

16.10

   Interpretation    32

16.1 1

   (Intentionally Omitted)    32

16.12

   Further Acts    32

16.13

   Joint and Several Obligations    32

16.14

   (Intentionally Omitted)    32

16.15

   Title to Property    32

 

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EXHIBITS AND SCHEDULES:

 

Exhibit A    Legal Description Exhibit B    (Intentionally Omitted) Exhibit C   
(Intentionally Omitted) Exhibit D    (Intentionally Omitted) Exhibit E   
Environmental Reports Exhibit F    (Intentionally Omitted) Exhibit G    Escrow
Agreement Exhibit H    Construction Warranty Exhibit I    (Intentionally
Omitted) Exhibit J    Management Agreement

 

Schedule 8.16    Form of Post-Closing Agreement Schedule 10.2(a)    Form of
Limited Warranty Deed Schedule 10.2(b)    Form of Bill of Sale Schedule 10.2(c)
   Form of Assignment of Hotel Contracts Schedule 10.2(d)    Form of FIRPTA
Schedule 10.2(e)    Form of Key Money Release Agreement

 

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PURCHASE CONTRACT

This PURCHASE CONTRACT (this “Contract”) is made and entered into as of
September     , 2007, by and between GROVE STREET ORLANDO, LLC, a Georgia
limited liability company (“Seller”), with its principal office at One Overton
Park, 3625 Cumberland Boulevard, Suite 400, Atlanta, Georgia 30339, and APPLE
EIGHT HOSPITALITY, INC., a Virginia corporation, with its principal office at
814 East Main Street, Richmond, Virginia 23219, or its affiliates or assigns
(“Buyer”).

RECITALS

A. Seller will be the fee simple owner of the land located in Orlando, FL and
identified in Exhibit A attached hereto and incorporated herein by reference.
Seller intends to construct two hotels on such land, one to contain 200 rooms
and to be operated as a SpringHill Suites by Marriott and one to contain 200
rooms and to be operated as a Fairfield Inn & Suites.

B. Buyer is desirous of purchasing such land and the hotel to be constructed
thereon from Seller upon completion of the hotel, and Seller is desirous of
selling such land and hotel to Buyer, for the purchase price and upon terms and
conditions hereinafter set forth.

AGREEMENT:

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

ARTICLE I

DEFINED TERMS

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

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

“Appurtenances” shall mean all rights, titles, and interests of Seller
appurtenant to the Land and Improvements, including, but not limited to, (i) all
easements, rights of way, rights of ingress and egress, tenements,
hereditaments, privileges, and appurtenances in any way belonging to the Land or
Improvements, (ii) any land lying in the bed of any alley, highway, street, road
or avenue, open or proposed, in front of or abutting or adjoining the Land,
(iii) any strips or gores of real estate adjacent to the Land, and (iv) the use
of all alleys, easements and rights-of-way, if any, abutting, adjacent,
contiguous to or adjoining the Land.

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“Architect” shall mean the architect for the Hotels, Spencer, Maxwell & Bullock.

“Brand” shall mean SpringHill Suites by Marriott and Fairfield Inn & Suites by
Marriott, the hotel brands or franchises under which the Hotels will operate.

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

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

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

“Construction Warranty” shall have the meaning set forth in Section 8.8.

“Contractor” shall mean the contractor for the Hotel, RJ Griffin & Company.

“Contracts, Plans and Svecs” shall mean the Plans and Specifications and all
other contracts, plans, drawings, specifications, surveys, soil reports,
engineering reports, inspection reports, and other technical descriptions and
reports.

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

“Deposits” shall mean, to the extent held by Seller or Manager, all prepaid
rents and deposits (including, without limitation, any reserves for replacement
of FF&E and for capital repairs and/or improvements), including, but not limited
to, refundable security deposits and rental deposits, and all other deposits for
advance reservations, banquets or future services, made in connection with the
use or occupancy of the Improvements; provided, however, that “Deposits” shall
exclude reserves for real property taxes and insurance, in each case, to the
extent pro rated on the settlement statement such that Buyer receives a credit
for (a) taxes and premiums in respect of any period prior to Closing and (b) the
amount of deductibles and other self-insurance and all other potential
liabilities and claims in respect of any period prior to Closing.

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

“Earnest Money Deposit” shall have the meaning set forth in Section 2.5(a).

“Effective Time” shall have the meaning set forth in Section 10.1.

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

“Escrow Agent” shall have the meaning set forth in Section 2.5(a).

“Escrow Agreement” shall have the meaning set forth in Section 2.5(b).

“Escrow Funds” shall have the meaning set forth in Section 8.16.

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

 

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“FF&E” shall mean all tangible personal property and fixtures of any kind (other
than personal property (i) owned by guests of the Hotel, (ii) leased by Seller
pursuant to an FF&E Lease, specifically including, but not limited to, vehicles,
or (iii) constituting personal property owned by the Manager) attached to, or
located upon and used in connection with the ownership, maintenance, use or
operation of the Land or Improvements as of the date hereof (or acquired by
Seller and so employed prior to Closing), including, but not limited to, all
furniture, fixtures, equipment, signs and related personal property; all
heating, lighting, plumbing, drainage, electrical, air conditioning, and other
mechanical fixtures and equipment and systems; all elevators, and related motors
and electrical equipment and systems; all hot water heaters, furnaces, heating
controls, motors and equipment, all shelving and partitions, all ventilating
equipment, and all disposal equipment; all spa, health club and fitness
equipment; all equipment used in connection with the use and/or maintenance of
the guestrooms, restaurants, lounges, business centers, meeting rooms, swimming
pools, indoor and/or outdoor sports facilities and other common areas and
recreational areas; all carpet, drapes, beds, furniture, televisions and other
furnishings; all stoves, ovens, freezers, refrigerators, dishwashers, disposals,
kitchen equipment and utensils, tables, chairs, plates and other dishes,
glasses, silverware, serving pieces and other restaurant and bar equipment,
apparatus and utensils.

“FF&E Leases” shall mean all leases of any FF&E and other contracts permitting
the use of any FF&E at the Improvements that are assumed by Buyer. The telephone
systems for the Hotels shall be owned by Seller and not leased.

“Fixed Asset Supplies” shall mean such items as defined in the Management
Agreement.

“Force Maieure” shall mean (i) strikes, lockouts or labor disputes, (ii) the
inability through no fault of Seller to obtain labor or materials or reasonable
substitutes therefor, (iii) acts of God and adverse weather conditions,
(iv) enemy or hostile governmental action or acts of terrorism, (v) governmental
restrictions such as embargoes, (vi) civil commotion, (vii) fire or other
casualty or (viii) other conditions similar to those enumerated above that are
beyond the reasonable control of Seller, but in each case excluding any such
events or conditions that merely result in increased costs to Seller.

“Hotel” shall mean collectively the hotels to be constructed on the Land,
including all Improvements and Personal Property associated therewith, to be
known generally as the “Orlando (Seaworld) Fairfield Inn & Suites” and the
“Orlando (Seaworld) Springhill Suites”.

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

“Improvements” shall mean all buildings, structures, fixtures, parking areas and
other improvements now existing or to be constructed on the Land, and all
related facilities.

“Indemnified Party” shall have the meaning set forth in Section 8.13(c)(i).

“Indemnifying Party” shall have the meaning set forth in Section 8.13(c)(i).

“Key Money” shall mean such money as defined in the Management Agreement which
is equal to Five Hundred Thousand and No/100 Dollars ($500,000.00)

 

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

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

“Legal Action” shall have the meaning set forth in Section 8.13(c)(ii).

“Legal Requirements” shall mean any and all statutes, laws, ordinances, zoning
and other codes, rules, regulations and requirements of any governmental
authority applicable to the Property or any of the parties to this Contract.

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

“Liquor Licenses” shall have the meaning set forth in Section 8.15.

“Management Agreement” shall mean collectively the two management agreements to
be entered into by Seller and the Manager on or before November 9,2007 in the
forms attached hereto as Exhibit J.

“Manager” shall mean Marriott International, Inc.

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

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

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

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

“Plans and Specifications” shall have the meaning set forth in Section 8.3.

“Pre-Opening Costy” shall have the meaning set forth in Section 8.7.

“Pre-Opening Program” shall have the meaning set forth in Section 8.7.

 

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“Punch List Items” shall mean such items (i) as are reasonably necessary or
appropriate to fully complete the construction, equipping and furnishing of the
Hotel in accordance with this Contract and (ii) that, unless otherwise agreed by
Buyer in its sole discretion, (a) individually and in the aggregate do not and
will not prohibit, cause a delay in or otherwise adversely affect, under
applicable Legal Requirements, the Management Agreement or otherwise, the
opening of the Hotel for business to the public or the continued occupancy and
operation of the Hotel as contemplated under the Brand and (b) may be corrected
or completed, subject to delays caused by Force Majeure, within not more than
sixty (60) days.

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

“Purchase Price” shall have the meaning set forth in Section 2.2.

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

“Records” shall mean all books, records, promotional material, tenant data,
guest history information (other than any such information owned exclusively by
the Manager), marketing and leasing material and forms ‘(including but not
limited to any such records, data, information, material and forms in the form
of computerized files located at the Hotel), market studies prepared in
connection with Seller’s current annual plan and other materials, information,
data, legal or other documents or records (including, without limitation, all
documentation relating to any litigation or other proceedings, all zoning and/or
land use notices, relating to or affecting the Property, all business plans and
projections and all studies, plans, budgets and contracts related to the
development, construction and/or operation of the Hotel) owned by Seller and/or
in Seller’s possession or control, or to which Seller has access or may obtain
from the Manager, that are used in or relating to the Property and/or the
operation of the Hotel, including the Land, the Improvements or the FF&E, but
excluding information as to the costs incurred in the construction of the Hotel
and the installation of FF&E, Seller’s partnership tax returns, financial
information, business plans and projections prepared for internal partnership
disclosure or informational purposes and partner’s K-1, provided that Seller
shall furnish to Buyer (and the term “Records” shall include) a list of the
general contractors, architects and engineers providing goods and/or services in
connection with the construction of the Hotel, all construction warranties and
guaranties in effect at Closing and copies of the final plans and specifications
for the Hotel.

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

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

 

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“SEC” shall have the meaning set forth in Section 8.11

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

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

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

“Substantial Completion,” including variations thereof such as “Substantially
Complete” and “Substantially Completed” shall mean : (i) the Architect has
issued a certificate of substantial completion using the industry standard AIA
form without material modification certifying that the Hotel has been
constructed substantially in accordance with the Plans and Specifications and
the Legal Requirements, (ii) at least a temporary certificate of occupancy
authorizing the opening of the Hotel for business to the public and for
operation under the Brand has been issued by the local governing authority and
is in full force and effect, (iii) all other final and unconditional consents,
approvals, licenses and operating permits necessary or appropriate for the Hotel
to open for business to the public and to operate under the Brand have been
issued by and obtained from all applicable governmental and regulatory
authorities, subject to Punch List Items; (iv) the Hotel is fully furnished,
fitted and equipped and ready to open for business to the public and operate
under the Brand, subject to Punch List Items; (iii) all contractors,
subcontractors, suppliers, mechanics, materialmen and other persons or entities
providing labor or materials for the construction and development of the Hotel
shall have been paid in full (or adequate provision for payment of such persons
or entities has been made to Buyer’s satisfaction), subject to punch List Items
and (iv) the Manager has approved the completion, furnishing and equipping of
the Hotel and is prepared to commence (or authorize the commencement of)
operation of the Hotel, and all of the other conditions set forth in the
Management Agreement have been satisfied, subject to Punch List Items.

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

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

“Third Party Consents” shall have the meaning set forth in Section 8.10.

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

 

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

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

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

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

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

ARTICLE II

PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;

EARNEST MONEY DEPOSIT

2.1 Purchase and Sale. Seller agrees to sell and convey to Buyer or its
Affiliates and/or assigns, and Buyer or its assigns agrees to purchase from
Seller, the Property, in consideration of the Purchase Price and upon the terms
and conditions hereof. All of the Property shall be conveyed, assigned, and
transferred to Buyer at Closing, free and clear of all mortgages, liens,
encumbrances, licenses, franchises (other than the Management Agreements that
may be expressly assumed by Buyer), concession agreements, security interests,
prior assignments or conveyances, conditions, restrictions, rights-of-way,
easements, encroachments, claims and other matters affecting title or
possession, except for the Permitted Exceptions and Marriott’s right to enter
into agreements pursuant to and in accordance with the Management Agreement(s).

 

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2.2 Purchase Price. Buyer agrees to pay, and Seller agrees to accept, as
consideration for the conveyance of the Property, subject to the adjustments
provided for in this Contract, the amount of Fifty-four Million Eight Hundred
Thousand and No/100 Dollars ($54,800,000.00) (the “Purchase Price”).

2.3 Allocation. Buyer and Seller shall attempt to agree on an allocation of the
Purchase Price among Real Property, tangible Personal Property and intangible
property related to the Property. In the event Buyer and Seller do not agree,
each pasty shall be free to allocate the Purchase Price to such items as they
deem appropriate, subject to and in accordance with applicable laws.

2.4 Payment. The portion of the Purchase Price, less the Earnest Money Deposit
and interest earned thereon, if any, which Buyer elects to have applied against
the Purchase Price (as provided below) shall be paid to Seller in cash,
certified funds or wire transfer, at the Closing of the Property. At the
Closing, the Earnest Money Deposit, together with interest earned thereon, if
any, shall, at Buyer’s election, be returned to Buyer or shall be paid over to
Seller by Escrow Agent to be applied to the Purchase Price on behalf of Buyer.

2.5 Earnest Money Deposit.

(a) Within one (1) Business Day following the full execution and delivery of
this Contract, Buyer shall deposit the sum of One Million and No/100 Dollars
($1,000,000.00) in cash, certified bank check or by wire transfer of immediately
available funds (together with all interest earned thereon, the “Earnest Money
Deposit”) with the Title Company (“Escrow Agent”) who shall in turn deposit the
Earnest Money in an account at a federally insured financial institution
designated by Seller. If, pursuant to the provisions of Section 3.1 of this
Contract, Buyer elects to terminate this Contract at any time prior to the
expiration of the Review Period, then the Escrow Agent shall return the Earnest
Money Deposit to Buyer promptly upon written notice to that effect from Buyer.

(b) The Earnest Money Deposit shall be held by Escrow Agent subject to the terms
and conditions of an Escrow Agreement dated as of the date of this Contract
entered into by Seller, Buyer and Escrow Agent (the “Escrow Agreement”). The
Earnest Money Deposit shall be held in an interest-bearing account in a
federally insured bank or savings institution reasonably acceptable to Seller
and Buyer, with all interest to accrue to the benefit of the party entitled to
receive it and to be reportable by such party for income tax purposes. Buyer’s
Federal Tax Identification Number is                         . Seller’s Federal
Tax Identification Number is 26-0726477.

ARTICLE III

REVIEW PERIOD

3.1 Review Period. Buyer shall have a period through 6:00 p.m. Eastern Time on
October 11,2007 (the “Review Period”), to evaluate the legal, title, survey,
construction, physical condition, structural, mechanical, environmental,
economic, permit status, franchise status, financial and other documents and
information related to the Property. Within two (2) Business Days following the
date of this Contract, Seller, at Seller’s sole cost and expense, will

 

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deliver to Buyer (or make available at the Hotel) for Buyer’s review, to the
extent not previously delivered to Buyer and to the extent such items are in
Seller’s possession or can be obtained by Seller through commercially reasonable
efforts, true, correct and complete copies of the following, together with all
amendments, modifications, renewals or extensions thereof:

(a) All real estate and personal property tax statements with respect to the
Land and notices of appraised value for the Real Property for the current year
(if available) and each of the two (2) calendar years prior to the current year;

(b) Engineering, mechanical, architectural and construction plans, drawings,
specifications and contracts (except that Seller may redact any information in
contracts for the construction of the Hotel or the purchase of FF&E regarding
the costs thereof), payment and performance bonds (if any), title policies,
reports and commitments, zoning information and marketing and economic data
relating to the Land or the Hotel and the construction, development,
installation and equipping thereof, as well as copies of all environmental
reports and information, topographical, boundary or “as built” surveys,
engineering reports, subsurface studies and other Contracts, Plans and Specs
relating to or affecting the Hotel. If the Hotel is purchased by Buyer, all such
documents and information relating to the Hotel shall thereupon be and become
the property of Buyer without payment of any additional consideration therefor;

(c) All agreements for real estate commissions, brokerage fees, finder’s fees or
other compensation payable by Seller in connection therewith; and

(d) All notices received by Seller from governmental authorities in connection
with the Land for the current year and each of the two (2) calendar years prior
to the current year and all other notices received by Seller from governmental
authorities at any time that relate to any noncompliance or violation of law
that has not been corrected.

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

3.2 Due Diligence Examination. At any time and from time to time, from and after
the date hereof though Closing of the Property, Buyer and/or its representatives
and agents shall have the right to enter upon the Property at all reasonable
times for the purposes of reviewing all Records and other data, documents and/or
information relating to the Property and conducting such surveys, appraisals,
engineering tests, soil tests (including, without limitation, Phase I and,
subject to Seller’s prior written consent not to be unreasonably withheld,
conditioned or delayed,

 

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Phase II environmental site assessments), inspections of construction and other
inspections and other studies as Buyer deems reasonable and necessary or
appropriate to evaluate the Propeity, subject to providing advance (not less
than 24 hours) notice to Seller unless otherwise agreed to by Buyer and Seller
(the “Due Diligence Examination”). Notwithstanding the foregoing, Buyer
acknowledges and agrees that Buyer’s access to the Property prior to the date
Seller takes fee simple title to the Property shall also be subject to the terms
and conditions of that certain Contract for Sale and Purchase dated
February 12,2007 by and between Busch Properties of Florida, Inc. as seller and
Marriott Hotel Services, Inc. as buyer, which has been assigned to Seller, a
copy of which has been provided to Buyer. Seller shall have the right to have
its representative present during Buyer’s physical inspections of the Property,
provided that failure of Seller to do so shall not prevent Buyer from exercising
its due diligence, review and inspection rights hereunder. Buyer agrees to
exercise reasonable care when visiting the Property, in a manner which shall not
materially adversely affect the operation of the Propeity or the Management
Agreement.

3.3 Restoration. Buyer covenants and agrees not to damage or destroy any portion
of the Property in conducting its examinations and studies of the Property
during the Due Diligence Examination and, if Closing does not occur, shall
repair any portion of the Property damaged by the conduct of Buyer, its agents
or employees, to substantially the condition such portion(s) of the Property
were in immediately prior to such examinations or studies. Buyer shall
indemnify, defend and hold Seller harmless from and against any and all
liability, claims, demands, damages or expenses of any kind, including
reasonable attorneys’ fees, caused directly by such entry upon the Property.
This Section 3.3. shall survive the termination of, or the closing of, the
transactions contemplated by this Agreement for a period of one (1) year.

ARTICLE IV

SURVEY AND TITLE APPROVAL

4.1 Survey. Within two days after execution of this Contract by Buyer and
Seller, Seller shall deliver to Buyer true, correct and complete copies of the
most recent survey of the Land. In the event that an update of the survey or a
new survey (such updated or new survey being referred to as the “Survey”) is
desired by Buyer, then Buyer shall be responsible for all costs related thereto.

4.2 Title. Within two days after execution of this Contract by Buyer and Seller,
Seller shall deliver to Buyer Seller’s existing title insurance commitment,
including copies of all documents referred to therein, for the Real Property.
Buyer shall order (i) a Commitment for Title Insurance (the “Title Commitment”)
issued by LandAmerica American Title Company, 7505 N. Plano Road, Suite 3100,
Richardson, Texas, 75082 Attn: Debby Moore (the “Title Company”), for the most
recent standard form of owner’s policy of title insurance in the state in which
the Real Property is located, covering the Real Property, setting forth the
current status of the title to the Real Property, showing all liens, claims,
encumbrances, easements, rights of way, encroachments, reservations,
restrictions and any other matters affecting the Real Property and pursuant to
which the Title Company agrees to issue to Buyer at Closing an Owner’s Policy of
Title Insurance on the most recent form of ALTA owner’s policy available in the
state in which the Land is located (or if an ALTA form of policy is not issued
in such state, the form customarily issued in such state) and, to the extent
applicable and available in such state,

 

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extended coverage, comprehensive, access, single tax parcel, contiguity, Fairway
and such other endorsements as may be required by Buyer (collectively, the
“Title Policy”); and (ii) true, complete, legible and, where applicable,
recorded copies of all documents and instruments (the “Exception Documents”)
referred to or identified in the Title Commitment, including, but not limited
to, all deeds, lien instruments, leases, plats, surveys, reservations,
restrictions, and easements affecting the Real Property. If requested by Seller,
Buyer shall promptly provide Seller with a copy of the Title Commitment issued
by the Title Company.

4.3 Survey or Title Objections. If Buyer discovers any title or survey matter
which is objectionable to Buyer, Buyer may provide Seller with written notice of
its objection to same before the expiration of the Review Period. If Buyer fails
to so object in writing to any such matter set forth in the Survey or Title
Commitment, it shall be conclusively assumed that Buyer has approved same and
each shall become a Permitted Exception (defined below), except as otherwise
provided in Section 9.1(i). If Buyer disapproves any condition of title, survey
or other matters by written objection to Seller on or before the expiration of
the Review Period, Seller shall elect either to attempt to cure or not cure any
such item by written notice sent to Buyer within five (5) days after Seller’s
receipt of notice from Buyer, and if Seller commits in writing to attempt to
cure any such item, Seller shall be given until the Closing Date to cure any
such defect. In the event Seller shall fail to cure a defect which Seller has
committed in writing to cure prior to Closing, or if a new title defect arises
after the date of Buyer’s Title Commitment or Survey, as applicable, but prior
to Closing, then Buyer may elect, in Buyer’s sole and absolute discretion:
(i) to waive such objection and proceed to Closing, or (ii) to terminate this
Contract and receive a return of the Earnest Money Deposit, and any interest
thereon. The items shown on the Title Commitment which are not objected to by
Buyer as set forth above (other than (i) exceptions and title defects arising
after the Review Period, (ii) those exceptions objected to by Buyer which Seller
has elected not to cure; (iii) those standard exceptions which are ordinarily
and customarily omitted in the state in which the Hotel is located, so long as
Seller provides the appropriate owner’s affidavit, gap indemnity or other
documentation reasonably required by the Title Company for such omission and
(iv) as provided in Section 9.1(j)) are hereinafter referred to as the
“Permitted Exceptions.” In no event shall Permitted Exceptions include liens, or
documents evidencing liens, securing any indebtedness or any mechanics’ or
materialmen’s liens or any claims or potential claims therefor covering the
Property or any portion thereof (“Seller Liens”), each of which shall be paid in
full or satisfied by Seller and released at Closing.

ARTICLE V

ASSIGNMENT OF MANAGEMENT AGREEMENT(S)

Seller shall enter into the Management Agreement(s) governing the use of the
Brand for the Hotel. At the Closing, Seller shall assign its interest in the
Management Agreement to Buyer (other than Seller’s rights to the Key Money and
the right to receive the Key Money from Manager, which rights Seller shall
retain), and Buyer’s shall assume Seller’s obligations thereunder arising or
required to be performed on and after the Closing Date, subject to the consent
of Manager to such assignment and assumption. Notwithstanding the foregoing, at
Buyer’s option, in lieu of Seller’s assigning to Buyer Seller’s interest in the
Management Agreement, Buyer shall have the right to negotiate with the Manager a
new management agreement, to be effective as of the Closing Date, replacing the
existing Management Agreement and containing terms and conditions acceptable to
Buyer. In such case, Seller and the Manager

 

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shall terminate the existing Management Agreement, as of the Closing Date. Buyer
agrees to apply for and use reasonable efforts, and Seller shall cooperate with
Buyer, to obtain the Manager’s written consent to the assignment to Buyer of the
Management Agreement, together with the assignment to Buyer of all waivers of
any brand standard necessary or appropriate for the operation of the Hotel under
the Brand. It shall be a condition to Closing for Buyer and Seller that the
Manager provide the foregoing consent. In the event Buyer is not successful in
negotiating a form of new management agreement with Marriott, despite Buyer’s
good faith, diligent efforts to do so, on or before October 15,2007, then Buyer
shall have the right to terminate this Agreement by written notice to Seller
received by Seller by 5:00 p.m. Eastern Time, October 15,2007 in which case the
Earnest Money Deposit shall be immediately returned by the Escrow Agent and
neither Seller nor Buyer shall have further rights or obligations hereunder.
Buyer shall be responsible for paying all costs (other than Seller’s, which
shall be paid by Seller) related to the assignment of the Management Agreement
(or to the termination of the Management Agreement and the execution of a new
management agreement), including but not limited to, the payment of license,
application, transfer and similar fees thereunder, provided that Seller shall
pay all costs and fees of its attorneys and consultants and all costs associated
with any releases or other provisions requested by or for the benefit of Seller,
in each case, incurred in connection with such assignment and/or termination and
execution of any new franchise agreement. Seller shall use best efforts to
promptly provide all information required by the Manager in connection with each
such assignment and amendment (or in connection with a new management
agreement), and Seller and Buyer shall diligently pursue obtaining each the
same.

ARTICLE VI

COMMISSIONS

Seller and Buyer each represents and warrants to the other that it has not
engaged any broker, finder or other pasty in connection with the transaction
contemplated by this Contract. Buyer and Seller each agree to save and hold the
other harmless from any and all losses, damages, liabilities, costs and expenses
(including, without limitation, attorneys’ fees) involving claims made by any
other agent, broker, or other person by or through the acts of Buyer or Seller,
respectively, in connection with this transaction.

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1 Seller’s Representations, Warranties and Covenants. Seller hereby
represents, warrants and covenants to Buyer as follows:

(a) Authority; No Conflicts. Seller is a limited liability company duly formed
and validly existing in the State of Georgia. Seller has obtained all necessary
consents to enter into and perform this Contract and is fully authorized to
enter into and perform this Contract and to complete the transactions
contemplated by this Contract. No consent or approval of any person, entity or
governmental authority is required for the execution, delivery or performance by
Seller, and this Contract is hereby binding and enforceable against Seller.
Neither the execution nor the performance of, or compliance with, this Contract
by Seller has resulted, or will result, in any violation of, or default under,
or acceleration of, any obligation under any

 

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existing corporate chaster, certificate of incorporation, bylaw, articles of
organization, limited liability company agreement or regulations, partnership
agreement or other organizational documents and under any, mortgage indenture,
lien agreement, promissory note, contract, or permit, or any judgment, decree,
order, restrictive covenant, statute, rule or regulation, applicable to Seller
or to the Hotel.

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

(c) Bankruptcy. Neither Seller, nor to Seller’s knowledge, any of its members,
are insolvent or the subject of any bankruptcy proceeding, receivership
proceeding or other insolvency, dissolution, reorganization or similar
proceeding.

(d) Pending Claims. Seller has not received any written notice of: (i) any
claims, demands, litigation, proceedings or governmental investigations pending
or threatened against Seller or any Affiliate of Seller (collectively, “Seller
Parties”) or related to the Property, (ii) any special assessments or
extraordinary taxes except as set forth in the Title Commitment, and (iii) any
pending or threatened condemnation or eminent domain proceeding which would
affect the Property or any part thereof. To Seller’s knowledge there are no
pending arbitration proceedings or unsatisfied arbitration awards, or judicial
proceedings or orders respecting awards, which might become a lien on the
Property or any portion thereof, or other pending, actual or, to Seller’s
knowledge, threatened litigation claims, charges, complaints, petitions or
unsatisfied orders by or before any administrative agency or court which affect
the Property or might become a lien on the Property (collectively, the “Pending
Claims”).

(e) [Intentionally Omitted.]

(f) Licenses, Permits and Approvals. The Real Property complies with, and upon
construction of the Hotel the Real Property shall comply with, all applicable
licenses, permits and approvals and federal, state or local statutes, laws,
ordinances, rules, regulations, requirements and codes including, without
limitation, those regarding zoning, land use, building, fire, health, safety,
environmental, subdivision, water quality, sanitation controls and the Americans
with Disabilities Act, and similar rules and regulations relating and/or
applicable to the ownership, use and operation of the Property as it is
contemplated to be operated. Seller has received, or by the Closing shall have
received, all licenses, permits and approvals required or needed for the lawful
conduct, occupancy and operation of the business of the Hotel, and each license
and permit will be received and in full force and effect as of the Closing. No
licenses, permits or approvals necessary for the lawful conduct, occupancy or
operation of the business of the Hotel shall require any approval of a
governmental authority for transfer of the Property.

(g) Architect and Contractor. The Manager has approved the Architect to design
the Hotel and the Contractor to serve as the general contractor for the
construction of the Hotel.

(h) Management Agreement and Management Agreement. There are no management
agreements, franchise agreements, license agreements or similar agreements for
the operation or management of the Hotel or relating to the Brand, to which
Seller is a party or which are binding upon the Property, other than the
Management Agreement.

 

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Of the foregoing representations and warranties, only the following shall
survive Closing: subsections (a), (b), (c), (f and (h), with the representations
and warranties contained in subsection (d) and (g) being merged into the Closing
and therefore, not surviving Closing.

7.2 Buyer’s representations, warranties and covenants. Buyer represents,
warrants and covenants:

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

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

7.3 Survival. All of the representations and warranties are true, correct and
complete in all material respects as of the date hereof and the statements set
forth therein (without qualification or limitation as to a pasty’s knowledge
thereof except as expressly provided for in this Article VII) shall be true,
correct and complete in all material respects as of the Closing Date. The
representations and warranties made herein which by the terms above shall
survive Closing for a period of one (1) year and shall not be deemed to merge
into or be waived by any Seller’s Deed or any other closing documents. In the
event any of Seller’s or Buyer’s foregoing representations and warranties are
untrue as of the Closing and the non-representing party has actual knowledge of
the untruth of such representation and warranty (whether through written
disclosure by the other party or otherwise) and such pasty elects to close the
transaction contemplated by this Agreement notwithstanding the existence of such
untrue representation and warranty, then, in such case, the non-representing
party waives any claim against the other party due to such untrue representation
and warranty, including any claim against the Escrow Funds.

ARTICLE VIII

ADDITIONAL COVENANTS

8.1 Subsequent Developments. After the date of this Contract and until the
Closing Date, Seller shall use best efforts to keep Buyer fully informed of all
subsequent developments of which Seller has knowledge (“Subsequent
Developments”) which would cause any of Seller’s representations or warranties
contained in this Contract to be no longer accurate in any material respect.

 

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8.2 Construction of Hotel.

(a) Subject to the terms and conditions of this Contract, Seller shall
(i) construct the Hotel on the Land (a) in a good, workmanlike and diligent
manner, (b) in compliance in all material respects with the Plans and
Specifications approved by Manager and with all Legal Requirements and (c) in
accordance with all requirements of the Management Agreement and (ii) cause the
Hotel to be fully equipped with the FF&E (that meets or exceeds the Brand
standards as of the date of final design approval by the Manager) and otherwise
fully furnished and stocked with merchandise, supplies, inventory and other
Personal Property as required by the Management Agreement, including, without
limitation, linens, bath towels and other supplies at least at a 2-par level for
all suites or rooms of the Hotel, in each case such that the Hotel can be opened
for business to the public and operated to full capacity under the Brand. All
expenses of constructing, equipping and furnishing the Hotel in accordance with
this Contract shall be the sole responsibility of Seller, and Buyer shall have
no obligation whatsoever to adjust the Purchase Price or pay any additional
costs as a result of unforeseen events or circumstances affecting the cost of
constructing, equipping or furnishing the Hotel.

8.3 Plans and Specifications. Seller agrees to deliver to Buyer the schematic
design (including representative interior finishes) for its review during the
Review Period. Further, Seller hereby agrees to deliver to Buyer the plans and
specifications for the construction of the Hotel, which plans and specifications
shall be compliant with the Management Agreement(s) and shall be subject to
Buyer’s reasonable review and approval. Thereafter, Seller shall obtain the
approval of the Manager and Buyer with respect to all material changes to such
plans and specifications after the date hereof. Such plans and specifications
and all revisions thereto, as approved by the Manager and Buyer, shall
constitute the “Plans and Specifications” for purposes of this Contract.

8.4 Commencement of Construction: Substantial Completion. Seller shall use
commercially reasonable efforts to obtain, or cause the Contractor to obtain, a
building permit and all other permits, licenses and approvals of governmental
authorities required for the construction, equipping and furnishing of the Hotel
in accordance with the Plans and Specifications and this Contract, and, if
construction has not already commenced, shall cause the Contractor to commence
construction of the Hotel not later than June 30,2008. Thereafter, Seller shall
diligently pursue construction of the Hotel in accordance with this Contract and
shall cause the Contractor to Substantially Complete the Hotel no later than
March 30,2009, subject only to delays caused by Force Majeure. Seller shall
promptly notify Buyer of each event or condition of Force Majeure and the
anticipated delay caused thereby.

8.5 Inspections. Buyer shall have the right to inspect the Property to monitor
and observe the development and construction of the Hotel. All such inspections
shall require reasonable prior notice to Seller and shall be conducted in a
manner that will minimize any interference with the development and construction
of the Hotel. Buyer shall indemnify, defend and hold Seller harmless from and
against any and all expenses, costs and liabilities (including but not limited
to reasonable attorneys’ fees) for damage or injury to persons or property
arising out of or relating to its entry onto the Land for any such inspections.

8.6 Punch List. Upon notification from the Contractor that the Hotel is
Substantially Completed and ready for inspection, Seller shall prepare a “punch
list” with the assistance of the Architect and the Manager. Seller acknowledges
that final acceptance of the work on the Hotel

 

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shall be made only with the approval of Buyer and the Manager. The costs of
completing the Punch List Items that are not completed as of the date of
Closing, as reasonably estimated by the Seller with the approval of Buyer, such
approval not to be unreasonably withheld, plus twenty-five percent (25%) of such
costs, shall be retained by the Title Company from the Purchase Price and shall
be disbursed to Seller once all of the Punch List Items have been satisfactorily
completed. Seller shall correct or complete all Punch List Items, or cause the
same to be corrected or completed, at Seller’s expense, with all diligence and
in any event within sixty (60) days after Substantial Completion of the Hotel.

8.7 Pre-Ovening Program. It is contemplated that certain activities must be
undertaken prior to the Closing Date so that the Hotel can function in an
orderly and businesslike manner at the Effective Time (“Pre-Opening Program”).
Seller shall cooperate in good faith with the Pre-Opening program and shall
provide the Manager and Buyer reasonable access to the Property at least six
(6) months in advance of the Closing in order to conduct their activities
related to the Pre-Opening Program; provided that the Pre-Opening Program shall
not be permitted to interfere with or delay the activities of Seller in
completing the Hotel. Seller shall pay in a timely manner all costs associated
with the Pre-Opening Program or otherwise related to the pre-opening operations
of the Property up to but not including the Effective Time, regardless of when
such costs are payable (the “Pre-Opening Costs”). Seller shall also fund all
working capital accounts, reserve accounts and other accounts required under the
Management Agreement, to be funded before the Effective Time, but Seller shall
receive a credit therefor at Closing to the extent in Section 12.1(c).

8.8 Construction Warranty. At the Closing, Seller shall assign to Buyer all
construction warranties with respect to the Hotel, which assignment shall be in
form and substance reasonably satisfactory to Buyer, including a warranty by the
Contractor, for the period ending not sooner than one (1) year after the date
the Hotel is Substantially Completed, in the form of the warranty attached
hereto as Exhibit H (the “Construction Warranty”).

8.9 Other Obligations of Seller Before Closing. From and after the date hereof
through the Closing on the Property Seller shall perform and comply with all of
the following:

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

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

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

 

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

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

(f) Seller shall not, without first obtaining the written approval of Buyer,
which approval shall not be unreasonably withheld, conditioned or delayed, enter
into any FF&E Leases, Service Contracts, Leases or other contracts or agreements
related to the Hotel, or extend any existing such agreements, unless such
agreements (x) can be terminated, without penalty, upon thirty (30) days’ prior
notice or (y) will expire prior to the Closing Date.

8.10 Third Party Consents. Prior to the Closing Date, Seller shall, at Seller’s
expense, (i) obtain any and all third party consents and approvals (x) required
in order to transfer the Hotel to Buyer or (y) which, if not obtained, would
materially adversely affect the operation of the Hotel and (ii) use best efforts
to obtain all other third party consents and approvals (all of such consents and
approvals in (i) and (ii) above being referred to collectively as the “Third
Party Consents”); provided, however, the consents required under Article V shall
be handled as provided therein.

8.11 Access to Financial Information. Buyer’s representatives shall have access
to, and Seller and its Affiliates shall cooperate with Buyer and furnish upon
request, all financial and other information relating to the Hotel to the extent
necessary to enable Buyer’s representatives to prepare audited financial
statements in conformity with Regulation S-X of the Securities and Exchange
Commission (the “SEC”) and other applicable rules and regulations of the SEC and
to enable them to prepare a registration statement, report or disclosure
statement for filing with the SEC on behalf of Buyer or its Affiliates, whether
before or after Closing and regardless of whether such information is included
in the Records to be transferred to Buyer hereunder. Seller shall also provide
to Buyer’s representative a signed representation letter in form and substance
reasonably acceptable to Seller sufficient to enable an independent public
accountant to render an opinion on the financial statements related to the
Hotel. Buyer will reimburse Seller for costs reasonably incurred by Seller to
comply with the requirements of this Section 8.11. The provisions of this
Section shall survive Closing or termination of this Contract.

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

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

(a) Indemnification of Buyer. Without in any way limiting or diminishing the
warranties, representations or agreements herein contained or the rights or
remedies available to Buyer for a breach hereof, Seller hereby agrees to
indemnify, defend and hold harmless Buyer

 

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and its respective designees, successors and assigns from and against all
losses, judgments, liabilities, claims, damages or expenses (including
reasonable attorneys’ fees) of every kind, nature and description in existence
before, on or after Closing, whether known or unknown, absolute or continent,
joint or several, arising out of or relating to:

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

(ii) subject to the terms of Sections 7.1, 7.2, and 8.16, the breach of any
representation, warranty, covenant or agreement of Seller contained in this
Contract;

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

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

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

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

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

(ii) the conduct and operation by Buyer of its business at the Hotel after the
Closing; and

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

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

(i) The party seeking indemnification (the “Indemnified Party”) shall give
prompt written notice to the party or parties from which it is seeking
indemnification (the “Indemnifying Party”) of any assertion of liability by a
third party which might give rise to a claim for indemnification based on the
foregoing provisions of this Section 8.13, which notice shall state the nature
and basis of the assertion and the amount thereof, to

 

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the extent known; provided, however, that no delay on the past of the
Indemnified Party in giving notice shall relieve the Indemnifying Party of any
obligation to indemnify unless (and then solely to the extent that) the
Indemnifying Pasty is prejudiced by such delay.

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

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

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

 

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

8.14 Section 1031-Exchange. Seller and Buyer may elect to effect a tax-deferred
exchange transaction satisfying the requirements of Section 1031 of the Internal
Revenue Code, as amended. Seller and Buyer each agree to reasonably cooperate
with each other in facilitating Seller’s or Buyer’s, as the case may be,
satisfaction of the requirements for such tax-deferred exchange; provided,
however, (i) in no event shall the cooperating party incur any liability in
connection with the other’s tax-deferred exchange; (ii) although Seller or Buyer
may assign this Contract to a qualified intermediary in connection with the
tax-deferred exchange, Seller or Buyer, as the case may be, ‘shall not be
released or relieved of its obligation to perform in accordance with the terms
of this Contract; (iii) the cooperating pasty shall not be required to incur any
additional cost or expense including, but not limited to, attorneys’ fees, in
connection with or attributable to the tax-deferred exchange, it being
understood and agreed that the- cooperating party shall be indemnified and held
harmless by the exchanging pasty from and against any and all of such additional
costs and expenses and (iv) no delay in Closing shall result from Seller’s or
Buyer’s tax-deferred exchange.

8.15 Liquor Licenses. If Liquor Licenses are required by Manager, Seller shall
cooperate with the Manager in filing such forms, applications and other
documents with the appropriate liquor and alcoholic beverage authorities prior
to Closing so that the Liquor Licenses remain in full force and effect upon
completion of Closing.

8.16 Escrow Funds. To provide for the timely payment of any post-closing claims
by Buyer against Seller hereunder, at Closing, the Seller shall deposit an
amount equal to Five Hundred Thousand and No/100 Dollars ($500,000.00) (the
“Escrow Funds”) shall be withheld from the Purchase Price payable to Seller and
shall be deposited for a period of one (1) year in an escrow account with the
Title Company pursuant to an escrow agreement in the form attached hereto as
Schedule 8.16 (the “Post-Closing Agreement”), which escrow and Post-Closing
Agreement shall be established and entered into at Closing and shall be a
condition to Buyer’s obligations under this Contract. If no claims have been
asserted by Buyer against Seller, or all such claims have been satisfied, within
such one-yeas period, the Escrow Funds deposited by Seller shall be released to
Seller.

8.17 Environmental. With respect to environmental matters, Seller (i) shall not
cause a Release or threat of Release of Hazardous Materials in, on, under, to,
from or in the area of the Real Property, (ii) shall not cause any portion of
the Real Property is being used for the treatment, storage, disposal or other
handling of Hazardous Materials or machinery containing

 

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Hazardous Materials, other than standard amounts of cleaning supplies and
chlorine for the swimming pool to be constructed on the Land, all of which shall
be stored on the Property in strict accordance with applicable Environmental
Requirements and shall not exceed limits permitted under applicable laws,
including without limitation Environmental Requirements, and (iii) shall not
cause any underground storage tanks to be placed on or in the Real Property or
any portion thereof. As used in this Contract: “Hazardous Materials”means
(1) “hazardous wastes” as defined by the Resource Conservation and Recovery Act
of 1976, as amended from time to time (“RCRA”), (2) “hazardous substances” as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. 9601 et seq.), as amended by the Superfund Amendment and
Reauthorization Act of 1986 and as otherwise amended from time to time
(“CERCLA”); (3) “toxic substances” as defined by the Toxic Substances Control
Act, as amended from time to time (“TSCA”), (4) “hazardous materials” as defined
by the Hazardous Materials Transportation Act, as amended from time to time
(“HMTA”), (5) asbestos, oil or other petroleum products, radioactive materials,
urea formaldehyde foam insulation, radon gas and transformers or other equipment
that contains dielectric fluid containing polychlorinated biphenyls and (6) any
substance whose presence is detrimental or hazardous to health or the
environment, including, without limitation, microbial or fungal matter or mold,
or is otherwise regulated by federal, state and local environmental laws
(including, without limitation, RCRA, CERCLA, TSCA, HMTA); rules, regulations
and orders, regulating, relating to or imposing liability or standards of
conduct concerning any Hazardous Materials or environmental, health or safety
compliance (collectively, “Environmental Requirements”). As used in this
Contract: “Release” means spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing.

8.18 Property Agreements. The assets constituting the Property to be conveyed to
Buyer hereunder shall constitute all of the property and assets to be used in
connection with the operation and business of the Hotel. There shall be no,
leases, license agreements, leasing agent’s agreements, equipment leases,
building service agreements, maintenance contracts, suppliers contracts,
warrantly contracts, operating agreements, or other agreements (i) to which
Seller is a party or an assignee, or (ii) binding upon the Property, relating to
the ownership, occupancy, operation, management or maintenance of the Real
Property, FF&E, Supplies or Tradenames, except for those Service Contracts,
Leases, Warranties and FF&E Leases to which Seller becomes a party with the
approval of Buyer or which Buyer may enter into before the Closing. As of the
Closing, any Service Contracts, Leases, Warranties and FF&E Leases to which
Seller has become a pasty shall be in full force and effect, and no default
shall have occurred and be continuing thereunder and no circumstances shall
exist which, with the giving of notice, the lapse of time or both, would
constitute such a default. No party has, and as of the Closing no party shall
have, any right or option to acquire the Property or any portion thereof, other
than Buyer.

ARTICLE IX

CONDITIONS FOR CLOSING

9.1 Buyer’s Conditions for Closing. Unless otherwise waived in writing, and
without prejudice to Buyer’s right to cancel this Contract during the Review
Period, the duties

 

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and obligations of Buyer to proceed to Closing under the terms and provisions of
this Contract are and shall be expressly subject to strict compliance with, and
satisfaction or waiver of, each of the conditions and contingencies set forth in
this Section 9.1, each of which shall be deemed material to this Contract. In
the event of the failure of any of the conditions set forth in this Section 9.1
or of any other condition to Buyer’s obligations provided for in this Contract,
which condition is not waived in writing by Buyer, Buyer shall have the right at
its option to declare this Contract terminated, in which case the Earnest Money
Deposit and any interest thereon shall be immediately returned to Buyer and each
of the parties shall be relieved from further liability to the other, except as
otherwise expressly provided herein, with respect to this Contract.

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

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

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

(d) Third Party Consents shall have been obtained and furnished to Buyer.

(e) The Hotel shall be Substantially Completed.

(f) Seller’s interest in the Management Agreement shall have been assigned to
Buyer (or Buyer and the Manager shall have entered into a new management
agreement), as provided in Article V, and the Management Agreement as so
assigned shall be in full force and effect.

(g) Buyer shall have obtained an as-built plat of survey of the Property as
completed, dated within 30 days of the Closing Date (which Buyer agrees to
obtain at its sole cost and expense) and prepared in compliance with the then
current ALTA/ACSM standards for urban properties, and such plat of survey shall
not disclose any encroachments, boundary line discrepancies or other survey
matters that, in Buyer’s reasonable judgment, would materially and adversely
affect the use, operation or value of the Property.

(h) Buyer shall have obtained (which Buyer agrees to obtain at its sole cost and
expense) an ALTA owner’s title insurance policy (or, if an ALTA form of policy
is not customarily issued in the state in which the Real Property is located, in
the form customarily issued in such state), issued by the Title Company pursuant
to the Title Commitment, insuring Buyer’s fee simple ownership in the Real
Property (i) with an effective date as of the Closing Date, (ii) with no
exceptions for filed or unfiled mechanics’ and materialmen’s liens, (iii) with
no exceptions for encroachments or other matters of survey unless approved by
Buyer and (iv) with no other exceptions to title other than the Permitted
Exceptions.

 

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(i) Buyer and the Manager shall have entered into the Management Agreement(s) in
substantially the form attached hereto as Exhibit J.

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

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

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

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

ARTICLE X

CLOSING AND CONVEYANCE

10.1 Closing. Unless otherwise agreed by Buyer and Seller, the Closing on the
Property shall occur on midnight of the date immediately preceding the date on
which the Hotel opens for business to the public in accordance with the
Management Agreement, or as soon as practical thereafter, but in no event later
than thirty (30) days after Substantial Completion of the Hotel, provided that
all conditions to Closing by Buyer hereunder have been satisfied. Buyer will
provide Seller at least five (5) days prior written notice of the Closing Date
selected by Buyer. The date on which the Closing is to occur as provided in this
Section 10.1, or such other date as may be agreed upon by Buyer and Seller, is
referred to in this Contract as the “Closing Date” for the Property. The Closing
shall be held at 10:00 a.m. at the offices of the Title Company, or as otherwise
determined by Buyer and Seller. Regardless of the Closing Date, the Closing
shall be effective as of 12:0l a.m. on the date which is the later of (i) the
Substantial Completion Date or (ii) the date immediately prior to the date on
which the Hotel opens for business to the public in accordance with the
Management Agreement (the “Effective Time”).

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

 

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(a) Deed. A Limited Warranty Deed conveying to Buyer fee simple title to the
Real Property, subject only to the Permitted Exceptions and substantially in the
form as attached hereto as Schedule 10.2(a) (the “Deed’).

(b) Bills of Sale. Bills of sale to Buyer and/or its designated Lessee,
conveying title to the tangible Personal Property substantially in the form as
attached hereto as Schedule 10.2(b) (other than the alcoholic beverage
inventories, which, at Buyer’s election, shall be transferred by Seller to the
Manager as holder of the Liquor Licenses required for operation of the Hotel).

(c) General Assignments. Assignments of all of Seller’s right, title and
interest in and to all FF&E Leases, Service Contracts and Leases and
substantially in the form as attached hereto as Schedule 10.2(c) (the “Hotel
Contracts”). The assignment shall also be a general assignment and shall provide
for the assignment of all of Seller’s right, title and interest in all Records,
Warranties, Licenses, Tradenames, Contracts, Plans and Specs and all other
intangible Personal Property applicable to the Hotel, including Seller’s
construction contract with the Contractor.

(d) FIRPTA: 1099. A FIRPTA Affidavit or Transferor’s Certificate of Non-Foreign
Status as required by Section 1445 of the Internal Revenue Code substantially in
the form as attached hereto as Schedule 10.2(d) and an IRS Form 1099.

(e) Title Comaang Documents. All affidavits, gap indemnity agreements and other
documents reasonably required by the Title Company.

(f) Possession. Possession of the Property.

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

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

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

 

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

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

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

(a) Purchase Price. The balance of the Purchase Price, adjusted for the
adjustments provided for in Section 12.1, below, and less any sums to be
deducted therefrom as provided in Section 2.4.

(b) Authority Documents. Certified copy of resolutions of the Board of Directors
of Buyer authorizing the purchase of the Hotel contemplated by this Contract,
and/or other evidence satisfactory to Seller and the Title Company that the
person or persons executing the closing documents on behalf of Buyer have full
right, power and authority to do so.

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

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

(e) Key Money Release Agreement. Buyer shall deliver to Seller an irrevocable
release of any interest or right it may have or acquire in the Key Money
substantially in the form as attached hereto as Schedule 10.3 (e) (the “Key
Money Release Agreement”) such that Seller shall be entitled to receive the Key
Money from Manager unencumbered by Buyer or any other party.

ARTICLE XI

COSTS

All Closing costs shall be paid as set forth below:

11.1 Seller’s Costs. In connection with the sale of the Property contemplated
under this Contract, Seller shall be responsible for all transfer and
recordation taxes, including, without limitation, all transfer, sales, use or
bulk transfer taxes or like taxes on or in connection with the transfer of the
Personal Property constituting part of the Property pursuant to the Bill of
Sale, in each case except as otherwise provided in Section 12 and all accrued
taxes of Seller prior to Closing and income, sales and use taxes and other such
taxes of Seller attributable to the sale of

 

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the Property to Buyer. Seller shall also be responsible for the costs and
expenses of its attorneys, accountants, appraisers and other professionals,
consultants and representatives. Seller shall also be responsible for payment of
all prepayment penalties and other amounts payable in connection with the
pay-off of any liens and/or indebtedness encumbering the Property. Seller shall
also be responsible for all Pre-Opening Costs to the extent provided in
Section 8.7.

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

ARTICLE XII

ADJUSTMENTS

12.1 Adjustments. Unless otherwise provided herein, at Closing, adjustments
between the parties of income and expenses related to the Property shall be made
as of the Effective Time, as set forth below. All of such adjustments and
allocations shall be made in cash at Closing and shall be collected through
and/or adjusted in accordance with the terms of the Management Agreement. Except
as otherwise expressly provided herein, all apportionments and adjustments shall
be made on an accrual basis in accordance with generally accepted accounting
principles.

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

(b) Utilities. All suppliers of utilities shall be instructed to read meters or
otherwise determine the charges owing as of the Effective Time for services
prior thereto, which charges shall be allocated to Seller. Charges accruing
after Effective Time shall be allocated to Buyer. Buyer shall not be charged and
Seller shall not be credited, for any utility tap-on charges.

(c) Accounts. All working capital accounts, reserve accounts and escrow accounts
(including all FF&E accounts), petty cash, cash in cash registers and cash in
vending machines but excluding amounts held in tax and insurance escrow accounts
and utility deposits to the extent excluded from the definition of Deposits)
held by or on behalf of Seller, the Manager or the Manager with respect to the
Hotel shall become the property of Buyer at Closing without Buyer being required
to fund the same.

 

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(d) Advance Deposits, etc. All income generated by the Hotel, including receipts
from guest room or suite rentals, all prepaid rentals, room rental deposits, and
all other deposits for advance registration, banquets or services, whether
attributable to the period before the Effective Time or to the period after the
Effective Time, shall be credited to Buyer.

(e) Other Costs. All other costs attributable to the period before the Effective
Time, including the cost of property and liability insurance and all Pre-Opening
Costs, shall be allocated to Seller (subject to the limitations provided in
Section 8.7), and all costs attributable to the period after the Effective Time
shall be allocated to Buyer.

12.2 Reconciliation and Final Payment. Seller and Buyer shall reasonably
cooperate after Closing to make a final determination of the allocations and
prorations required under this Contract within one hundred twenty(l20) days
after the Closing Date, or, in the case of a real estate tax proration, as soon
as is reasonably practical. Upon the final reconciliation of the allocations and
prorations under this Section, the party which owes the other party any sums
hereunder shall pay such party such sums within ten (10) days after the
reconciliation of such sums. The obligations to calculate such prorations, make
such reconciliations and pay any such sums shall survive the Closing.

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

ARTICLE XIII

CASUALTY AND CONDEMNATION

13.1 Risk of Loss; Notice. Prior to Closing and the delivery of possession of
the Property to Buyer in accordance with this Contract, all risk of loss to the
Property (whether by casualty, condemnation or otherwise) shall be borne by
Seller. In the event that (a) any loss or damage to the Hotel shall occur prior
to the Closing Date as a result of fire or other casualty, or (b) Seller
receives notice that a governmental authority has initiated or threatened to
initiate a

 

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condemnation proceeding affecting the Hotel, Seller shall give Buyer immediate
written notice of such loss, damage or condemnation proceeding (which notice
shall include a certification of (i) the amounts of insurance coverages in
effect with respect to the loss or damage and (ii) if known, the amount of the
award to be received in such condemnation).

13.2 Buyer’s Termination Right. If, prior to Closing and the delivery of
possession of the Property to Buyer in accordance with this Contract, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Hotel or (b) there is any substantial casualty loss or damage to the Hotel,
Buyer shall have the option to terminate this Contract, provided Buyer delivers
written notice to Seller of its election within twenty (20) days after the date
Seller has delivered Buyer written notice of any such loss, damage or
condemnation as provided above, and in such event, the Earnest Money Deposit,
and any interest thereon, shall be delivered to Buyer and thereafter, except as
expressly set forth herein, no party shall have any further obligation or
liability to the other under this Contract. In the context of condemnation,
“substantial”shall mean condemnation of such portion of the Hotel (or access
thereto) as could, in Buyer’s reasonable judgment, render use of the remainder
impractical or unfeasible for the uses herein contemplated, and, in the context
of casualty loss or damage, “substantial”shall mean a loss or damage in excess
of One Million and No/110 Dollars ($1,000,000.00) in value.

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

ARTICLE XIV

DEFAULT REMEDIES

14.1 Buyer Default. If Buyer defaults under this Contract after the Review
Period, and such default continues for ten (10) days following written notice
from Seller, then at Seller’s election by written notice to Buyer and as
Seller’s sole and exclusive remedies on account of such default, either (i) this
Contract shall be terminated and of no effect, in which event the Earnest Money
Deposit, including any interest thereon, shall be paid to and retained by the
Seller as Seller’s as liquidated damages for Buyer’s default or failure to
close, and both Buyer and Seller shall thereupon be released from all
obligations hereunder or (ii) Seller may treat this Contract as being in full
force and effect and seek to specifically enforce Buyer’s obligation to purchase
the Property pursuant to the terms of this Contract.

14.2 Seller Default. If Seller defaults under this Contract, and such default
continues for ten (10) days following written notice from Buyer, Buyer may
elect, as Buyer’s sole and exclusive remedy, either (i) to terminate this
Contract by written notice to Seller delivered to Seller at any time prior to
the completion of such cure, in which event the Earnest Money Deposit, including
any interest thereon, shall be returned to the Buyer, and Seller shall reimburse

 

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Buyer for all reasonable third party costs attributable to Buyer’s investigation
of the Property and thereafter both the Buyer and Seller shall thereupon be
released from all obligations with respect to this Contract, except as otherwise
expressly provided herein; or (ii) to treat this Contract as being in full force
and effect by written notice to Seller delivered to Seller at any time prior to
the completion of such cure, in which event the Buyer shall have the right to an
action against Seller for damages (excluding consequential damages based upon
allegations that default by Seller under this Agreement negatively affected the
purchase price under any other contracts pursuant to which Buyer purchased
property from Affiliates of Seller), specific performance and all other rights
and remedies available at law or in equity.

14.3 Attorney’s Fees. Anything to the contrary herein notwithstanding, if it
shall be necessary for either the Buyer or Seller to employ an attorney to
enforce its rights pursuant to this Contract because of the default of the other
party, and the non-defaulting party is successful in enforcing such rights, then
the defaulting party shall reimburse the non-defaulting party for the
non-defaulting party’s reasonable attorneys’ fees, costs and expenses.

ARTICLE XV

NOTICES

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

 

If to Buyer:    c/o Apple REIT Eight, Inc.    814 East Main Street    Richmond,
Virginia 23219    Attention: Justin Knight    Fax No.: (804) 344-8129
with a copy to:    c/o Apple REIT Eight, Inc.    814 East Main Street   
Richmond, Virginia 23219    Attention: Dave Buckley    Fax No.: (804) 727-6349

 

29

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If to Seller:    Grove Street Orlando, LLC    One Overton Park    3625
Cumberland Boulevard    Suite 400    Atlanta, GA 30339    Attention: James M.
Stormont, Jr.    Fax No.: 770-818-4101 with a copy to:    Sheley & Hall, P.C.   
303 Peachtree street    Suite 4440    Atlanta, GA 30308    Attn: Raymond P.
Sheley, Esq.    Fax No: 404-880-1351

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

ARTICLE XVI

MISCELLANEOUS

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

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

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

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

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

16.6 Confidentiality. Except as either party may reasonably determine is
required by law (including without limitation laws and regulations applicable to
Buyer or its Affiliates who may be public companies): (i) prior to Closing,
Buyer and Seller shall not disclose the existence of this Contract or their
respective intentions to purchase and sell the Property or generate or
participate in any publicity or press release regarding this transaction, except
to Buyer’s and Seller’s legal counsel and lenders, Buyer’s consultants and
agents, the Manager, the Manager and the Title Company and except as
necessitated by Buyer’s Due Diligence Examination and/or shadow management,
unless both Buyer and Seller agree in writing and as necessary to

 

30

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effectuate the transactions contemplated hereby and (ii) following Closing, the
parties shall coordinate any public disclosure or release of information related
to the transactions contemplated by this Contract, and no such disclosure or
release shall be made without the prior written consent of Buyer, and no press
release shall be made without the prior written approval of Buyer and Seller.

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

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

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

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

16.11 (Intentionally Omitted).

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

16.13 Joint and Several Obligations. If Seller consists of more than one person
or entity, each such person or entity shall be jointly and severally liable with
respect to the obligations of Seller under this Contract.

[Signatures Begin on Following Page]

 

31

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

 

SELLER: GROVE STREET ORLANDO, LLC, a Georgia limited liability company By:   GSP
Orlando, LLC its managing member   By:   /s/ Kevin M. Kern   Name:   Kevin M.
Kern   Title:   Manager

[Signatures continue on the next page]

 

32

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BUYER: APPLE EIGHT HOSPITALITY, INC., a Virginia corporation

By:

 

/s/ Dave Buckley

Name:

 

Dave Buckley

Title:

 

Vice President

 

33

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EXHIBIT A

LEGAL DESCRIPTION

A portion of Lot 1, SHADOW WOOD, according to the plat thereof, as recorded in
Plat Book 27, Pages 71 and 72, Public Records of Orange County, Florida, lying
in Section 7, Township 24 South, Range 29 East, Orange County, Florida, being
more particularly described as follows:

BEGIN at the southeast corner of said Lot 1; said corner being a point on a
non-tangent curve, concave northwesterly, having a radius of 7854.33 feet and a
central angle of 00°03'12", thence run southwesterly, along the southerly
boundary line of said Lot 1, the following courses and distances; on a tangent
bearing of S 85°56'14" W, run 7.07 feet along the arc of said curve to the point
of reverse curvature with a curve, concave southeasterly, having a radius of
3060.00 feet and a central angle of 10°06'43"; thence run, southwesterly along
the arc of said curve, a distance of 540.05 feet; thence, departing the
southerly boundary line of said Lot 1, run N 14°07'17" W, a distance of 54.71
feet; thence run N 00°02'46" W, a distance of 594.52 feet to a point of
curvature of a curve, concave westerly, having a radius of 2626.83 feet and a
central angle of 02°44'16"; thence run northerly, along the arc of said curve, a
distance of 125.52 feet to a point; thence run 89°40'06" E, a distance of 552.60
feet to a point on the east boundary line of said Lot 1; thence run S 00°19'54"
E, along the east boundary line of said Lot 1, a distance of 690.77 feet to the
WINT OF BEGINNING

 

Page 2 of 10

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EXHIBIT B

(Intentionallv Omitted)

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EXHIBIT C

(Intentionallv Omitted)

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

EXHIBIT D

(Intentionally Omitted)

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

EXHIBIT E

ENVIRONMENTAL REPORTS

Phase 1 Environmental Site Assessment dated April 13, 2007, prepared by EE&G
Environmental Services LLC.

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EXHIBIT F

(Intentionally Omitted)

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EXHIBIT G

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) made the      day of September, 2007,
by and among GROVE STREET ORLANDO, LLC, a Georgia limited liability company,
(“Seller”), APPLE EIGHT HOSPITALITY, INC., a Virginia corporation, or its
assigns (“Buyer”), and LANDAMERICA -AMERICAN TITLE (“Escrow Agent”).

R E C I T A L S

WHEREAS, pursuant to the provisions of Section 2.5 of that certain Purchase
Contract dated September     , 2007 (the “Contract”) between Seller and Buyer
(the “Paxties”), the Parties have requested Escrow Agent to hold in escrow in
accordance with the provisions, upon the terms, and subject to the conditions,
of this Agreement, the Earnest Money Deposit (as defined in the Contract); and

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

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

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

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

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

B. If at any time after the expiration of the Review Period, Buyer claims
entitlement to all or any portion of the Earnest Money Deposit, Buyer shall give
written notice to Escrow Agent stating that Seller has defaulted in the
performance of its obligations under the Contract beyond the applicable grace
period, if any, or that Buyer is otherwise entitled to the return of the Earnest
Money Deposit or applicable portion thereof and shall direct Escrow Agent to
return the Earnest Money Deposit or applicable portion thereof to Buyer (the
“Buyer’s Notice”). Escrow Agent shall promptly deliver a copy of Buyer’s Notice
to Seller. Seller shall have five (5) business days after receipt of the copy of
Buyer’s Notice to deliver written notice to Escrow Agent and Buyer objecting to
the release of the Earnest Money Deposit or applicable portion thereof to Buyer
(“Seller’s Objection Notice”). If Escrow Agent does not receive a

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

timely Seller’s Objection Notice, Escrow Agent shall release the Earnest Money
Deposit or applicable portion thereof to Buyer. If Escrow Agent does receive a
timely Seller’s Objection Notice, Escrow Agent shall release the Earnest Money
Deposit or applicable portion thereof only upon receipt of, and in accordance
with, written instructions signed by Seller and Buyer, or the final order of a
court of competent jurisdiction.

C. If, at any time after the expiration of the Review Period, Seller claims
entitlement to the Earnest Money Deposit or applicable portion thereof, Seller
shall give written notice to Escrow Agent stating that Buyer has defaulted in
the performance of its obligations under the Contract, and shall direct Escrow
Agent to release the Earnest Money Deposit or applicable portion thereof to
Seller (the “Seller’s Notice”). Escrow Agent shall promptly deliver a copy of
Seller’s Notice to Buyer. Buyer shall have five (5) business days after receipt
of the copy of Seller’s Notice to deliver written notice to Escrow Agent and
Seller objecting to the release of the Earnest Money Deposit or applicable
portion thereof to Seller (“Buyer’s Objection Notice”). If Escrow Agent does not
receive a timely Buyer’s Objection Notice, Escrow Agent shall release the
Earnest Money Deposit or applicable portion thereof to Seller. If Escrow Agent
does receive a timely Seller’s Objection Notice, Escrow Agent shall release the
Earnest Money Deposit or applicable portion thereof only upon receipt of, and in
accordance with, written instructions signed by Buyer and Seller, or the final
order of a court of competent jurisdiction.

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

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

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

C. Escrow Agent shall not be bound or in any way affected by any notice of any
modification or cancellation of this Agreement, or of any fact or circumstance
affecting or alleged to affect rights or liabilities hereunder other than as is
herein set forth, or affecting or alleged to affect the rights and liabilities
of any other person, unless notice of the same is delivered to Escrow Agent in
writing, signed by the proper parties to Escrow Agent’s satisfaction and, in the
case of modification, unless such modification shall be approved by Escrow Agent
in writing.

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

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

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

 

If to Buyer:

   C/O Apple REIT Eight, Inc.    814 East Main Street    Richmond, Virginia
23219    Attention: Justin Knight    Fax No.: (804) 344-8129

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

with a copy to:

   c/o Apple REIT Eight, Inc.    814 East Main Street    Richmond, Virginia
23219    Attention: Dave Buckley    Fax No.: (804) 727-6349

If to Seller:

   Grove Street Orlando, LLC    One Overton Park    3625 Cumberland Boulevard   
Suite 400    Atlanta, GA 30339    Attention: James M. Stormont, Jr.    Fax No.:
770-818-4101

with a copy to:

   Sheley & Hall, P.C.    303 Peachtree street    Suite 4440    Atlanta, GA
30308    Attn: Raymond P. Sheley, Esq.    Fax No: 404-880-1351

If to Escrow Agent:

   LandAmerica American Title Company - 1951    2505 N. Plano Road, Ste. 3100   
Richardson, Texas 75082    Attn: Debby S. Moore    Fax No.: (214) 570-0210

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

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

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

[Signature on Next Page]

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

 

SELLER: GROVE STREET ORLANDO, LLC, a Georgia limited liability company By: GSP
Orlando, LLC its managing member By:  

 

Name:  

 

Title:  

 

BUYER: APPLE EIGHT HOSPITALITY, INC., a Virginia corporation By:  

 

Name:  

 

Title:  

 

ESCROW AGENT: LANDAMERICA AMERICAN TITLE By:  

 

Name:  

 

Title:  

 

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EXHIBIT H

CONSTRUCTION WARRANTY

The Contractor hereby warrants to Seller and Buyer that all materials and
equipment furnished with respect to the Property are new and the work performed
by the Contractor with respect to the Property is of good and workmanlike
quality, free from faults and defects, and in conformance with all contract
documents. Work not conforming to these requirements, including substitutions
not properly approved and authorized, may be considered defective. The foregoing
warranty excludes remedy for damage or defect caused by abuse, modifications not
executed by the Contractor, improper or insufficient maintenance, improper
operation, or normal wear and tear and normal usage. If required by Seller or
Buyer, the Contractor shall furnish satisfactory evidence as to the kind and
quality of materials and equipment.

The Contractor hereby guarantees to Seller and Buyer all work performed and
materials and equipment furnished with respect to the Property against defects
in materials and workmanship for a period of one year from the date of
substantial completion of the entire Property, or for a longer period if so
specified in the contract documents.

The Contractor shall, within a reasonable time after receipt of written notice
thereof, and without reimbursement under the construction contract, make good
any defects in materials, equipment and workmanship which may develop within
periods for which said material, equipment and workmanship are guaranteed and
make good any damage to other work caused by the repairing of such defects.

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

EXHIBIT I

(Intentionally Omitted)

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EXHIBIT J

MANAGEMENT AGREEMENTS

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SCHEDULE 8.16

Form of Post-Closing Agreement

POST-CLOSING ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) is made as of
                             by and among GROVE STREET ORLANDO, LLC, a Georgia
limited liability company (“Seller”); APPLE EIGHT HOSPITALITY, INC., a Virginia
corporation (“Buyer”; collectively with Seller, the “Parties”); and LANDAMERICA
AMERICAN TITLE COMPANY (“‘Escrow Agent”).

RECITALS

A. Pursuant to the Purchase Contract dated                              (the
“Purchase Contract”) among Seller and Buyer, Seller agreed to sell and Buyer
agreed to purchase certain hotel property, more particularly described therein.
Unless otherwise defined herein, all capitalized terms used herein shall have
the respective meanings as set forth in the Purchase Contract.

B. The Parties have agreed to place a portion of the Purchase Price in escrow
with Escrow Agent upon the terms and conditions set forth below.

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

Appointment of Escrow Agent. Seller and Buyer hereby appoint Escrow Agent to
serve as escrow agent hereunder, and the Escrow Agent agrees to act as escrow
agent hereunder in accordance with the provisions, upon the terms and subject to
the conditions of this Agreement.

1. The Deposit. Upon the closing of the transactions contemplated by the
Purchase Contract, the sum of Five Hundred Thousand and 001100 Dollars
($500,000.00) (the “Deposit”) shall be withheld from the Purchase Price
otherwise payable to Seller at Closing and shall be delivered to Escrow Agent.
Subject to the rights and obligations of the Parties to direct the investment,
transfer, delivery or otherwise disposition of the Deposit pursuant to this
Agreement, Escrow Agent shall keep the Deposit and all interest thereon and
other sums earned from investments thereof (collectively, the “Escrowed Funds”)
in Escrow Agent’s possession, in escrow, pursuant to this Agreement. Escrow
Agent shall invest the Deposit as mutually agreed by the Parties. Any interest
or other sums earned on investments of the Deposit shall belong solely to
Seller.

2. Disbursement of Escrowed Funds. The Escrowed Funds shall be disbursed to pay
for any sums owed by Seller to Buyer pursuant to Section 8.16 and/or 12.1 of the
Purchase Contract. The Escrowed Funds shall be held by Escrow Agent for a period
of one (1) year after the Closing. All Escrowed Funds held by Escrow Agent at
the end of such one-year period, and which are not claimed by Buyer pursuant to
the mechanism set forth in Section 4 below, shall be returned to Seller.

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

  3. Procedure for Claiming Escrowed Funds.

If, at any time and from time to time, Buyer claims entitlement to any of the
Escrowed Funds, Buyer shall give written notice to Escrow Agent stating the
amount of the Escrowed Funds required to be disbursed in accordance with the
terms of this Agreement, the nature of the claim and such other documentation as
may be necessary to allow Seller to verify the claim, and shall direct Escrow
Agent to release such Escrowed Funds to the Buyer (the “Buyer’s Notice”) with a
copy of such Buyer’s Notice to Seller. Seller shall have five (5) business days
after receipt of the copy of Buyer’s Notice to deliver written notice to Escrow
Agent and Buyer objecting to the release of the Escrowed Funds (“Seller’s
Objection Notice”). If Escrow Agent does not receive a timely Seller’s Objection
Notice, Escrow Agent shall release the Escrowed Funds or applicable portion
thereof to Buyer or the third pasty, as applicable. If Escrow Agent does receive
a timely Seller’s Objection Notice, Escrow Agent shall release the Escrowed
Funds only upon receipt of, and in accordance with, written instructions signed
by Seller and Buyer, or the final order of a court of competent jurisdiction.

 

  4. Limitations on Liability and Duties of Escrow Agent.

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

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

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

E. Escrow Agent shall not be bound or in any way affected by any notice of any
modification or cancellation of this Agreement, or of any fact or circumstance
affecting or alleged to affect rights or liabilities hereunder other than as is
herein set forth, or affecting or alleged to affect the rights and liabilities
of any other person, unless notice of the same is delivered to Escrow Agent in
writing, signed by the proper parties to Escrow Agent’s satisfaction and, in the
case of modification, unless such modification shall be approved by Escrow Agent
in writing.

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

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

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

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

If addressed to Seller, to:

Grove Street Orlando, LLC

One Overton Park

3625 Cumberland Boulevard

Suite 400

Atlanta, GA 30339

Attention: James M. Stormont, Jr

Fax No.: 770-818-4101

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

with a copy to:

Sheley & Hall, P.C.

303 Peachtree street

Suite 4440

Atlanta, GA 30308

Attn: Raymond P. Sheley, Esq.

Fax No: 404-880-1351

 

  (ii) If addressed to Buyer, to:

Apple Eight Hospitality, Inc.

8214 East Main Street

Richmond, Virginia 23219

Attn: Sam Reynolds

Fax No.: (804) 344-8129

 

  (iii) If addressed to Escrow Agent, to:

LandAmerica American Title Company

8201 Preston Road, Suite 280

Dallas, Texas 75225

Attn: David Long

Fax No.: (214) 368-0039

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

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

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

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

 

SELLER: GROVE STREET ORLANDO, LLC, a Georgia limited liability company By: GSP
Orlando, LLC its managing member By:  

 

Name:  

 

Title:  

 

BUYER: APPLE EIGHT HOSPITALITY, INC., a Virginia corporation By:  

 

Name:  

 

Title:  

 

ESCROW AGENT: LANDAMERICA AMERICAN TITLE COMPANY By:  

 

Name:  

 

Title:  

 

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SCHEDULE 10.2(a)

Form of Limited Warranty Deed

Prepared by and return to:

 

 

 

 

   

 

 

 

 

SPECIAL WARRANTY DEED

THIS INDENTURE, made by GROVE STREET ORLANDO, LLC, a Georgia limited liability
company, whose address is c/o Grove Street Partners, LLC, One Overton Park, 3625
Cumberland Boulevard, Suite 400, Atlanta, GA 30339 (hereinafter called
“Grantor”), hereby conveys with limited warranty covenants to APPLE EIGHT
HOSPITALITY, INC, a Virginia corporation, whose address is c/o Apple REIT Eight,
Inc., 814 East Main Street, Richmond, Virginia 23219 (hereafter called
(“Grantee”), for the sum of Ten and No/100 Dollars ($10.00), the land, buildings
and improvements which land is described on Exhibit A hereto (said land,
building and improvements being collectively referred to as the “Property”).
Together with all and singular the hereditaments and appurtenances thereunto
belonging, or in any wise appertaining; and the reversion or reversions,
remainder or remainders, rents, issues, and profits thereof; and all the estate,
right, title, interest, claim, or demand whatsoever, of Grantor, either in law
or in equity, of, in, and to the Property, with the said hereditaments and
appurtenances.

The Property is conveyed subject to the rights of all tenants or lessees or
other persons in possession and subject to all matters set out on Exhibit B
hereto, and Grantor will warrant and forever defend the title to the Property
against the lawful claims and demands of persons claiming by, through, or under
Grantor, except as aforesaid, but against none other. Grantor makes no other
warranties or covenants.

IN WITNESS WHEREOF, Grantor has executed this limited warranty deed this     
day of                     ,2009.

 

Witnessed:    

GROVE STREET ORLANDO, LLC, a

Georgia limited liability company

 

      Signature    

GSP Orlando, LLC, a Georgia limited liability

company, its managing member

 

      Printed Name     By:  

 

    Name:  

 

 

    Title:  

 

Signature      

 

      Printed Name      

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STATE OF                                          )

                                                               ) ss.:

COUNTY OF                                      )

On this      day of                     , 2009 before me personally came
                            ,to me known, who being by me duly sworn, did depose
and say that he is                          of GSP Orlando, LLC, a Georgia
limited liability company, sole member of Grove Street Orlando, LLC, a Georgia
limited liability company which signed the foregoing instrument and that he
signed his name thereto as the act and deed of said                             
for the use and purposes therein mentioned.

 

 

  Notary Public  

 

My Commission expires:

 

 

 

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Exhibit A to the Limited Warranty Deed

Legal Description

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Exhibit B to the Limited Warranty Deed

Permitted Exceptions

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SCHEDULE 10.2(b)

Form of Bill of Sale

BILL OF SALE

THIS BILL OF SALE (“Bill of Sale) is made this      day of                     ,
2007, by GROVE STREET ORLANDO, a Georgia limited liability company (“Seller”),
in favor of APPLE EIGHT HOSPITALITY, INC., a Virginia corporation (“Purchaser”).

WITNESSETH:

WHEREAS, Seller and Purchaser entered into that certain Agreement of Sale dated
as of September , 2007 (“Agreement”) with respect to the sale of that certain
real property identified on Exhibit A and the improvements located thereon (all
of such improvements and real property collectively hereinafter referred to as
the “Real Property.” (Any term with its initial letter capitalized and not
otherwise defined herein shall the meaning set forth in the Agreement).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller does hereby absolutely and
unconditionally give, grant, bargain, sell, transfer, set over, assign, convey,
release, confirm and deliver to Purchaser all of Seller’s right, title and
interest in and to those certain items of personal property described on Exhibit
B attached hereto and made a part hereof relating to the Property (the “Personal
Property”), without representation or warranty of any kind whatsoever except as
set forth in and subject to the terms of the Agreement. Seller represents and
warrants that it owns the Personal Property free and clear of all liens and
encumbrances and that it has the full right and authority to convey the Personal
Property to Purchaser.

WITH RESPECT TO ALL MATTERS TRANSFERRED, WHETHER TANGIBLE OR INTANGIBLE,
PERSONAL OR REAL, SELLER EXPRESSLY DISCLAIMS A WARRANTY OF MERCHANTABILITY AND
WARRANTY FOR FITNESS FOR A PARTICULAR USE OR ANY OTHER WARRANTY EXPRESSED OR
IMPLIED THAT MAY ARISE BY OPERATION OF LAW OR UNDER THE UNIFORM COMMERCIAL CODE
FOR THE STATE IN WHICH THE PROPERTY IS LOCATED (OR ANY OTHER STATE), EXCEPT TO
THE EXTENT SPECIFICALLY STATED HEREIN.

This Bill of Sale shall be binding upon and inure to the benefit of the
successors, assigns, personal representatives, heirs and legatees of Purchaser
and Seller.

This Bill of Sale shall be governed by, interpreted under, and construed and
enforceable in accordance with, the laws of the State of Florida.

 

    Dated:                             ,2007

     

GROVE STREET ORLANDO, a Georgia

limited liability company

  By:   GSP Orlando, LLC, a Georgia limited     liability company, its managing
member   By:  

 

  Name:  

 

  Title:  

 

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Exhibit A to the Bill of Sale

Legal Description

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SCHEDULE 10.2(c)

Form of Assignment of Hotel Contracts

[To be provided]

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SCHEDULE 10.2(d)

Form of FIRPTA and 1099

FIRPTA CERTIFICATE

CERTIFICATE REGARDING FOREIGN INVESTMENT

IN REAL PROPERTY TAX ACT

(ENTITY TRANSFEROR)

Section 1445 of the Internal Revenue Code provides that a transferee (purchaser)
of a U.S. real property interest must withhold tax if the transferor (seller) is
a foreign person. For U.S. tax purposes (including section 1445), the owner of a
disregarded entity (which has legal title to a U. S., real property interest
under local law) will be the transferor of the property and not the disregarded
entity. To inform the transferee (purchaser) that withholding of tax is not
required upon the disposition of a U.S. real property interest by GROVE STREET
ORLANDO, LLC, a Georgia limited liability company (“Transferor”) Transferor
hereby certifies:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code and
Income Tax Regulations)

2. Transferor is not a disregarded entity as defined in
Section 1.1445-2(b)(2)(iii);

3. Transferor’s Federal Employer Identification Number is
                                        

 

4. Transferor’s office address is:    c/o of Grove Street Partners, LLC      
One Overton Park       3625 Cumberland Boulevard       Suite 400       Atlanta,
GA 30339   

5. The address or description of the property which is the subject matter of the
disposition is:

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

Transferor declares that it has examined this certification and to the best of
its knowledge and belief, it is true, correct and complete, and further declares
that the individual executing this certification on behalf of Transferor has
full authority to do so.

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DATED:                             ,2007       GROVE STREET ORLANDO, LLC, a  
Georgia limited liability company   By:   GSP Orlando, LLC, a Georgia limited  
  liability company, its managing member   By:  

 

  Name:  

 

  Title:  

 

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Exhibit A to the FIRPTA

Legal Description

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SCHEDULE 10.3(e)

Form of Key Money Release Agreement

[To be provided]